“The closer the collapse of empire, the crazier its laws are.”
– Marcus Cicero
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July 10, 2024 — “It can’t happen here.”
Even in the Grey Swan inbox, it’s a common refrain – referring to just about anything. A fascist takeover of the United States? It can’t happen here. A communist takeover of the United States? It can’t happen here.
An AI takeover of the United States? Well, the jury may be out on that.
Truth is, “fascism,” “communism” even “capitalism” are artifacts of a linear progression of events in history.
In his Manuscripts of 1844, Karl Marx argues that the United States Declaration of Independence and the ensuant Constitution represent the political emancipation of the once-feudal class.
He argued for economic emancipation next… no one, even through violent revolution, has figured out how to get that box checked.
Our own empire is so far off script from the original documents, we’re left wondering (consistently): What’s next?
As an investor – or even as a citizen – it can be helpful to take a broad step back and look through the broader “megapolitical” lens.
Proposed: The United States is an empire heavily in debt, and in decline. Our politics on display this election are only a testament. The tides are ebbing against the political class, but they don’t even seem to notice. Or care. They’re too busy navel gazing their own delusions.
Today, our first position is articulated by Grey Swan Investment Fraternity contributor John Robb, who looks at how the collapse of the Soviet Union could, in fact, happen “here.” Among other writers, Mr. Robb cites one of our favorites. [hint: his initials are Niall Furgeson.} Enjoy ~~ Addison
CONTINUED BELOW…
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CONTINUED…
The Collapse of Complex Nations
John Robb, Global Guerrillas
If the US did collapse, what would it look like? Would it be;
- An authoritarian networked movement that rapidly seizes government control,
- a hot, protracted civil war as networked tribes vie for control or
- a rapid political and geographic devolution as we saw with the Soviet Union?
Currently, the leading model is the slouching shoulder shrug of a Soviet-style collapse. Let’s dig into this model to understand why.
“In Russia, normalcy broke down in a series of steps.
First, people stopped being afraid to speak their minds.
Then, they stopped taking the authorities seriously.
Lastly, the authorities stopped taking each other seriously.”
Dmitry Orlov
Dmitry Orlov’s brilliant 2011 book “Reinventing Collapse” and historian Niall Ferguson’s recent “We’re All Soviets Now” detail many parallels between the USSR’s collapse and the situation the US faces today. They are both short reads, well worth reading in full. With these parallels in mind, let’s construct a more comprehensive framework for a Soviet-style US collapse.
‘Victory’
The foundational premise of this model is;
- The Cold War profoundly damaged the US and the USSR.
- When the USSR collapsed, the US had the opportunity to reorient its decision-making (new goals, new assumptions, etc.) to heal itself of the damage, but it failed to do so. George Washington’s farewell address would have been an excellent place to start for the inspiration required for this reorientation.
- As a result of this lack of action, the US is now on the same descent to collapse the Soviet Union experienced in the 90’s.
The Military-Industrial Complex
The central factor contributing to the collapse of the Soviet Union was the unsustainable amount of money it spent on the national security state.
- The pressures of the Cold War, combined with a culturally Russian defensive paranoia (Kennen’s central insight in Containment), led them to spend as much as ~20% of their GDP on it (more than double the US burden) and likely far more if the USSR’s internal security was included.
- This burden made them vulnerable to economic disruption. For example, a US-led effort to radically reduce the price of oil (the USSR, and now Russia, the largest producer of oil in the world) in the 80s put extreme strain on their economy.
- Furthermore, they couldn’t reduce their expenditures because of new strategic threats — from cruise missiles to plans for a “Star Wars” defense.
Victory in the Cold War should have allowed the US to reduce its defense expenditures and balance its budget using the surplus (another recommendation from Washington). Unfortunately, the US couldn’t turn off the military-industrial complex (Eisenhower warned against it in his farewell address after battling it for a decade).
We couldn’t muster the political support needed to reduce its size meaningfully. Furthermore, the millions working for it turned every event into an opportunity to continue it.
For example, the response to 9/11 didn’t just result in the small amount of new money needed for the law enforcement and special operations required to prevent another terrorist incident in the future; it was used to justify a prolonged continuation of the national security state well into the new Century.
Worse, as the threat of terrorism faded, this system found a new way to justify its existence: regime change, NATO expansion, and nation-building. ~~ John Robb, Global Guerrillas
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2024 – The Real Election Year Surprise
We’re forecasting an October Election Surprise that almost no one sees coming — and this time it’ll be way more devastating than anything you’ve seen before. Click here to learn about 2024’s real October Election Surprise » It’s not at all what you think. |
So it goes,
Addison Wiggin
Founder, The Wiggin Sessions
P.S. How did we get here? An alternative view of the financial, economic, and political history of the United States from Demise of the Dollar through Financial Reckoning Day and on to Empire of Debt— all three books are available in their third post-pandemic editions.
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites:Bookshop.org; Books-A-Million; or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com
