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Daily Missive

Twilight of an Empire Built on Post-War Credit

Loading ...Addison Wiggin

April 3, 2025 • 4 minute, 57 second read


Empire of DebtmanufacturingTrade war

Twilight of an Empire Built on Post-War Credit

“Five million manufacturing jobs were lost while racking up trade deficits of $19 trillion…”

– Donald Trump, during his Rose Garden “Liberation Day” speech

 

April 3, 2025 — In the aftermath of World War II, the United States inherited a world too exhausted to argue. Europe was rubble. Japan was radioactive. The Soviet Union had a big army and no grocery stores.

And so, without firing another shot, America took command — not through conquest, but through capital. The U.S. didn’t occupy the world. She underwrote it.

And as the rest of the world rebuilt, the U.S. went from being 80% of global manufacturing to about 16% today.

By and large, America outsourced its blue-collar workforce—the men and women behind the “Arsenal of Democracy” that won World War II—to become a more service-based economy, one that relied increasingly on debt to maintain its standard of living.

As we wrote in Empire of Debt, “We came, we saw, we borrowed.” That became our imperial motto.

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The Pax Americana era was born — not of iron and blood, but debt and dollars.

The U.S. dollar became the world’s reserve currency, backed not by gold after 1971, but by confidence and carrier groups. Through the Bretton Woods system, we institutionalized American economic supremacy. Through the Marshall Plan, we bought allies. Through NATO, we kept rivals on the defensive.

Call it idealism, or call it empire — it didn’t matter. As long as the credit held up, the Pax could continue.

Our multinationals expanded supply chains into China, Vietnam, and Mexico. Silicon Valley wrote the software.

Wall Street financed the risk. McDonald’s and Marvel made sure the culture followed. Meanwhile, the U.S. ran perpetual trade deficits and borrowed against the future like the repo man would never knock.

As we warned two decades ago: “An empire financed by debt rather than tribute is a curious thing… it depends on the kindness of strangers and the willingness of creditors.”

But by the 2010s, that kindness was wearing thin.

America had become a consumption colossus — addicted to cheap imports, distracted by imperial pretensions, and financially hollowed out.

The factories that once won wars were turned into parking lots and data centers. Entire towns rusted while Wall Street toasted global arbitrage.

The free market, it turned out, was great at creating wealth — just not evenly and not locally.

Enter Trump.

A real-estate tycoon with an instinct for leverage, he saw what the Ivy League economists couldn’t admit: globalism gutted the empire from within. Tariffs weren’t about fine-tuning trade deficits. They were about throwing a wrench into the post-war machine — forcing a national reckoning with our outsourced economy.

Trump’s strategy — if you could call it that — was a streetwise inversion of the Pax Americana formula. Instead of lending to secure influence, he threatened to cut off trade to reassert dominance. Think of it as the Empire of Debt’s margin call.

The world is no longer organized around American generosity or credibility.

We’re entering Pax Technica Multipolaris — a fractured landscape where blocs compete over chips, cables, AI engines, and the rocks beneath Greenland’s ice. The U.S. wants to re-industrialize. China is engineering an AI autocracy. Russia, as always, bets on energy and entropy.

This isn’t isolationism. It’s imperial triage. As Trump posted on Truth Social today amid the market turmoil:

“The operation is over! The patient lived, and is healing. The prognosis is that the patient will be far stronger, bigger, better, and more resilient than ever before. Make America great again!”

The phrase “leader of the free world” has lost its luster. America isn’t leading by moral example or strategic clarity. It’s clawing back relevance with tariffs, sanctions, and semiconductor subsidies. And the patient may yet die when its unpaid past debts come due.

As Empire of Debt warned, “Empires do not fall by invasion, they fall by financial suicide — by spending too much, borrowing too much, and believing too much in their own myths.”

That prophecy feels less like a warning now and more like a ledger entry — overdue, unpaid, and bearing interest. And President Trump’s moves to reverse this course may prove too little, too late.

Addison Wiggin
Grey Swan

P.S. Today, we just released our latest research on the growing “Chip Wars.” You can check it out here.

At their core, the Chip Wars are a geopolitical and economic power struggle over semiconductors — the tiny, unimaginably complex wafers that power everything from smartphones and satellites to drones, data centers, and nuclear weapons.

Semiconductors are the oil of the 21st century — but unlike oil, you can’t just drill for them. They require precision manufacturing, rare earth materials, cutting-edge design, and globalized supply chains stretching across politically unstable terrain. The most advanced chips are so complicated that a single fabrication plant (fab) can cost $14 billion and require components from a dozen countries.

The U.S., China, Taiwan, South Korea, Japan, and Europe are all scrambling to control — or at least not be cut off from — this critical supply. With rising tariffs, our research focuses on the best opportunities for U.S. investors today. It’s worth checking out, as is picking up some of the companies we’ve identified after today’s market discount.

Do you have any suggestions on content, angles, or ideas we should be pursuing? Please add your ideas or suggestions right here: addison@greyswanfraternity.com


Europe’s Increasing Irrelevancy

October 7, 2025 • Addison Wiggin

Europe’s GDP has flatlined over the past 15 years, against a doubling in GDP for the U.S. and even bigger GDP gains in China.

While the U.S. leads the world in AI spending, and China leads in technology like drones, what does Europe lead the world in? Regulation.

They spend more time penalizing U.S. tech firms for regulatory violations than encouraging their own tech ecosystem.

Europe’s Increasing Irrelevancy
Another Day, Another Circular AI Investment

October 7, 2025 • Addison Wiggin

Liquidity is flowing again, but conviction isn’t. U.S. M2 money supply has been expanding for months, even before the recent interest rate cut.

Currently, it’s up 4.8% year over year. That’s the fastest pace since 2022. That’s just enough to drive stocks higher in the short-term. Even algorithms and systematic funds will respond mechanically and buy stocks when they see liquidity rise. It’s the most fundamental indicator.

The volatility index (VIX)’s rise to 16.6, up over 2% this week, shows that big money is hedging, even as the market indices rise. After all, with signs of a slowing economy – and a government shut down – it’s hardly business as usual.

Another Day, Another Circular AI Investment
The Ghost of Bastiat

October 6, 2025 • Addison Wiggin

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

The Ghost of Bastiat
The Dollar’s Long Goodbye

October 6, 2025 • Addison Wiggin

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Dollar’s Long Goodbye