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A Postmortem Of Niall Ferguson's Otherwise Epic Lecture: Empires On The Edge Of Chaos
Niall Ferguson: Empires on the Edge of Chaos [10] from Australian Broadcasting Corporation [11] on FORA.tv [12]
A few words on this IMO must watch lecture - Niall Ferguson: Empires on the Edge of Chaos [13]
While Fergie is brilliant in his historical analysis, he gets a few niggling points wrong - Which I suspect is in part from having an Anglocentric viewpoint, which leads one to ignore some fairly hushed up (by the MSM) points of the good 'ol US of A, and in part from his rather British nature of believing in above all else, order, honoring of contracts, rule of law, and other quaint genteel notions of civil society.
Point One: Interest payments as a share of US revenue [14]
Fergie assumes that since China is getting out of US debt and into commodities, the US will have some problem making interest payments. Given the current state of America exceptionalism lawlessness (MBS, Robosigning, MF Global, etc., etc., ab surdium, ad nauseam)... It should be apparent to anyone paying close attention that in order to solve these problems, the Fed will simply... Print.
After all, it's not like "preserving the value of the currency those treasury bonds you bought" is included anywhere in the fine print or anything. Given that (as Zerohedge has well documented) contract law in the US is now interpreted to the advantage of the highest political bidder, at this point defaulting on an "unspoken agreement" with a bunch of foreigners is a very low threshold to cross indeed.
Point Two: Gold investing [15]
Fergie states that 10% of one's well-heeled portfolio should be held in gold, but no more: Deflation will keep the price in check. This ignores the fact that gold does well in deflation as well as inflation, which is because of doubts about the soundness of the currency (debt deflation requires future printing to "make good" on the debt to save the system). Also, see Point One.
Point Three: Fear of hyperinflation [16]
Fergie again states that the problem facing the US is not inflation, but deflation. Again, please kindly refer to Point One.
I fail to see how this ends any other way than with a crisis of the (soon to be known as the former) world's reserve currency. We now return to your regularly scheduled coverage of the collapse of the US Empire and the death of it's King Dolla, courtesy of Zerohedge. That is all.