Sir Niall Ferguson (not related to the person after which the law is named) is a Scots professor who is currently a Senior Fellow at Stanford University and has studied and been a professor at many of the world’s most prestigious universities including, Harvard, the London School of Economics, New York University, Oxford and Hamburg University. He is an economic/international historian and currently lives in the US. He was knighted by HRH Charles III.

I have been studying Ferguson’s works since 1994, when I was assigned his PhD thesis as a reading. In February of this year, Ferguson (linked here) published a 34-page working paper at Hoover titled “Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power”

The paper uses historical case studies to highlight the current situation in the US as the dominant global power. It describes and discusses an economic “law” (Ferguson’s Law is named after Adam Ferguson (1723-1816), a Scottish philosopher and historian), which states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power. The paper describes the “Ferguson Limit” which is the point where the cost of servicing the national debt exceeds expenditures on defence. Once across this line, economic and political forces combine to pull apart the geopolitical hold that a great power has.

I am not one to embrace the notion that the “American Empire” is about to collapse. I also do not subscribe to historical inevitability. The arrow of time only moves in one direction and the future is open to current leaders to choose whichever path they want. Our Prime Minister has made it clear that Canada, while wanting to remain a friend and military ally to the US, is moving rapidly to disengage from the once symbiotic relationship that tied us in a near death grip to American economic and military hegemony.

There is a popular conviction among the majority in the US that America will always be a great power. This belief is only natural since for over 90% of the population, it has always been the case. Why would it change now? There are manifold reasons.

It’s different this time. Not because of any single issue, although it is easy to blame the current administration for today’s ills based on its heavy-handed approach to practically everything. But these issues began decades ago. We are approaching a nexus where all of the wheels within all of the wheels are beginning to wobble. But empires do not die from a single blow. The Roman, British, Austo-Hungarian, and Soviet empires all took decades to decay and eventually collapse. That raises the question of how far along this path America is. If it is just beginning, then there is time and potential for a course correction that will save it — along with its friends and allies — from ruin. But if it is closer to the end than to the beginning …

The current US Administration and its tendency to be the Sherrif of Nottingham rather than Robin Hood (take from the poor to give to rich friends) can easily be dismissed as an American problem. Sadly, it is much more than that because the US has the largest military budget in the world, the largest economy and it is a world hegemon. Thus, America’s financial concerns become the concerns of economies and markets that span the globe. Since “Liberation Day” (2 April 2025) there has been a simultaneous flight away from the US dollar as well as US Treasury notes. Individually, these two actions are not unusual. What is unusual is that US bonds and US dollars are being sold in large amounts at the same time. The world is a walking away from America, while the US is simultaneously telling almost everyone, friend and foe alike, that “we don’t need you.” The response from the rest of the world is “we no longer trust you.” This is a dangerous juxtaposition.

The collapse of the USSR in 1991 created a unipolar world. Although this collapse brought theretofore unknown freedom to millions of people, it also brough great instability. Countries began to disintegrate and the stability that the Cold War had served to maintain evaporated. One of the unexpected consequences of this unipolar world was a belief that the men and women in Washington “ruled the world.” It was not true then, and although it remains a firmly held belief now, it is not true today. It was, and is, an illusion.

I know that my posts are supposed to be mostly about military thought and theory and most of what I have said above is economic and political in nature. But when considering geostrategy, economics, politics and military theory are inextricably bound together. And I have not even mentioned the wolf at the door: climate change. Now more than at any time since the end of World War II, it is important for our leaders to study these interrelated disciplines more holistically. Canada finally seems to have chosen a PM that has some inkling of this necessity even while our southern neighbour has chosen leaders who are breathtakingly ignorant not only of the interconnectivity, but even of each individual discipline!

Can we disengage quickly enough to save ourselves? I cannot say.