Before we get started with today’s topic, let us get one thing straight from the outset:

Our magnificent and benevolent God-Emperor, Donaldus Triumphus Magnus, has done more to bring peace and prosperity to the United States of America than the last four Presidents combined. He has done a better job than any of his predecessors since Saint Reagan of the Right to give the United States a booming economy and keep the USA out of unnecessary wars of intervention. He has already accomplished more in less than two years in office than his predecessor, Barack Hussein Odumbass, did in eight.

These are not hyperbolic claims. As I pointed out in yesterday’s post, every one of these points is easily backed up by evidence.

The US economy is growing at rates not observed since the Clinton era, while unemployment is unequivocally down across all socioeconomic groups, and continues to trend downwards. The labour market in the US is getting so tight that business are being forced to raise wages – kicking and screaming all the way – in industries where pay has remained more or less flat for years.

On top of all of these material accomplishments, Donald Trump has done more to restore America’s sense of national pride and identity than anyone since, again, his illustrious predecessor, President Reagan. Not since those halcyon days has the USA had a more firm grasp of who and what is, and therefore is not, an “American”.

President Trump’s accomplishments are amazing, especially considering that many thought that his candidacy was nothing more than some sort of ridiculous joke when it was announced. Even some of those who count ourselves among his strongest supporters today thought so – I was one such.

Unfortunately, terrible trials lie ahead. And not even the God-Emperor can stop the coming darkness.

For the simple fact is that the peace and the prosperity that we see right now is an illusion.

The first thing you need to understand is that the God-Emperor is only a half-comic title. We of the Hard Right call President Trump this because it sounds really funny, because it suits him well, and because it cheeses off the Left like you wouldn’t believe. Yet there is a strong element of truth to the title.

It takes an emperor to rule an empire – and, whether Americans like the fact or not, America is an empire, not a republic.

The second thing to understand is that empires always – ALWAYS – crumble and fall. There is not a single example in all of human history of a multi-ethnic, multi-regional, multi-lingual, multi-cultural empire that lasted more than a few hundred years. They ALWAYS break up and eventually collapse, because empires are ruled by military force and intimidation, while republics and federations are ruled by common bonds of kinship, language, history, and trade.

The end of the American empire has been predicted for many years by many pundits, most of whom are far wiser and better informed than I am. The timing of these predictions may well leave a lot to be desired – but the general theme of such predictions is always consistent.

America’s empire will fall, sooner or later. And the absolute best-case scenario that we can hope for is that its various disparate parts will simply figure out how to coexist without bloodshed.

Recent events have made it perfectly clear that peaceful coexistence is now a vain hope. Bloodshed and war on a truly horrific scale are now inevitable.

The crises that will bring about America’s fall are absolutely clear and obvious to anyone with sense enough to count time to music: an overstretched military empire; a massive invasion by hordes of non-citizens pretending to be citizens; deep loss of trust in the institutions and powers of government; declining public infrastructure and increasing costs of the same; and, of course, rampant debasement of the currency.

Like many other writers of the Hard Right, I have written extensively about several of these topics, so I will not waste time here on yet another extended screed about the perils and follies of unrestricted mass migration. What I want to concentrate on here is the one factor of the fall of the American empire that is measurable and mathematically certain.

That factor is, of course, debt.

To paraphrase Isaac Asimov’s writing in Foundation – at some point in the hundred years just past, historians will draw a line and state that, “Here marks the fall of the American experiment”. The marker for this line will basically fall wherever historians agree that Americans compromised their future through excessive debt-creation and deficit spending.

There are many places where that line can be drawn: the creation of the Federal Reserve system in 1913; the start of the Fed’s open-market operations in 1920; the passage of the Sixteenth Amendment to the Constitution, which gave the Federal government for the first time the power to tax income; the passage of the Social Security Act in 1935, which gave the Federal government the power to tax people for entirely redistributive purposes; the Social Security Amendments of 1965, which created the massive burden of Medicare; or even perhaps the decoupling of the US dollar from the gold standard and the end of the Bretton Woods standard in 1971.

It does not really matter exactly where that line is drawn, though, except for purposes of pedantry. The reality is that the United States is doomed.

This fact is mathematically inescapable and as unbending and ruthless as a law of Newtonian physics.

Consider first the size of the US economy relative to all of its peers:

Now let’s take a look at the total amount of debt to GDP of the USA. First let us see how much debt the USA has relative to the size of its current economy:

That is pretty bad, but it is not without historical precedent.

What is without historical precedent is the projection of what will happen in the future:

This chart should by rights have everyone who looks at it shitting his pants.

No nation in history has ever survived a public debt burden as large as America’s for more than a hundred years – and no nation in history has ever been able to endure a debt burden seven times the size of its economy.

Next, let us take a look at the amount of money – not debt, but money – floating around in the US economy right now:

Finally, we need to look at the valuation levels of American publicly traded companies, to see whether their share prices are “reasonable” given their profits:

Put all of these variables together into a fairly simple but highly accurate theoretical framework of how business cycles work, and a very clear prediction emerges.

First: the massive boom in US government debt is simply not sustainable. This is immediately obvious to anyone with two brain cells to rub together. The coming wave of Social Security entitlement withdrawals, combined with the already huge drawdowns on government revenues imposed by Medicare, welfare, and other entitlement programs, already ensures that the government spends about $1 trillion more than it takes in.

One trillion dollars, by the way, is roughly the size of Indonesia’s economy. The gap between what the US government spends and what it gets is the same amount of money produced by ALL of the citizens of Indonesia, which has a population of roughly 267 million people.

That isn’t just scary. It’s insane. But that isn’t even the worst part. The worst part can be found in the fact that…

Second: much (though not all) of the wealth generated over the last ten years or so, is a fiction. It was created by vast amounts of money released into the financial system by the US Federal Reserve and other central banks, who basically monetised the Federal debt by buying Treasury securities and putting the money from those sales back into the financial system.

Normally, the monetisation of a nation’s debt leads to hyperinflation. Why did this not happen in America’s case?

Because the massive expansion of government debt was a desperate attempt to offset the contraction in private and corporate debt. When the US economy cratered in 2008, individuals, households, and corporations all began shedding debt and deleveraging. In a credit-based economy, this is about the worst thing that can possibly happen, because a credit-based economy requires constant expansion of debt, and therefore of indebtedness, in order to continue functioning.

That deleveraging, however, has ended. Corporations have cleaned up their balance sheets and are now sitting on Biblical amounts of cash – and it isn’t really doing anything. Yet some of the hottest stocks in the market not only have no cash, but are going massively into debt and are not turning any real profit.

Netflix is profitable and growing fast – but is burning through billions in cash every quarter and leveraging up on debt. Tesla lost $2 billion last year, is burning through cash at an insane pace, and yet is worth more than Honda. The Hudson Yards development project in Manhattan involves $25 billion worth of development money for an area that is only about 28 acres in size.

No matter where you look in the stock market these days, you see companies that generate little to no profit, have almost no cash on hand, and are often very heavily leveraged on debt, trading at valuations that make no sense whatsoever when looking at basic, boring fundamentals.

What gives?

Simple. There is too much money chasing too little real “stuff” in the economy, and the only reason why hyperinflation has not hit yet is because the normal “transmission mechanisms” between newly created money and individual households has more or less broken. The newly minted money created from monetising debt does not go to individuals first, it goes to financial institutions and corporations instead – who have nothing to do with it but create paper wealth in the form of massive amounts of derivative trading, and underwriting highly sketchy and questionable ideas (like, say, Tesla).

This will not end well. All it takes is for a few large projects or investments to go sour, and suddenly all hell will break loose again.

The banks may not be leveraged up to their eyeballs anymore – back in 2007, many European and American investment banks were leveraged by 30x or more, meaning that they had $30 in liabilities for every $1 in assets on their balance sheets. But they are still pretty highly leveraged, so all it takes is for them to see perhaps 8% of their assets go screwy before they are suddenly bankrupt.

This will happen again. It is a mathematical certainty. There is no escaping it. A central bank CANNOT produce that much money, and have it misinvested so thoroughly across so much of the economy, without serious adverse effects.

When – not if – the next crash comes, there will be no stopping it. The Federal Reserve is out of ideas and out of ammunition.

The only question is, what will trigger the next collapse?

Right now, interest rates are rising because the Federal Reserve wants to check inflation without hurting economic growth. That is like dancing on the edge of a razor blade, not least because standard macroeconomic theory as taught in almost every economics department in the world says that some small level of inflation is good. (Hint: they’re all wrong.) But they don’t want too much inflation because this causes problems with prices and debt repayment. So they have to find the “right” level, of roughly 1-2% inflation per year.

But, as interest rates rise, the amount of money that the US government spends on paying the interest on its debt rises too. And the more debt that the government issues, the more money it pays in interest.

You see the predicament that the US Federal government finds itself in. The books cannot be balanced – it just isn’t going to happen given current and future liabilities. So the Treasury has to keep issuing debt. And then issuing more debt to pay interest on previous debt. And so on.

There are only three possible ways out of this situation.

The first is a radical demographic shift in the US population. The reason why Social Security and Medicare are such huge drags on the Federal budget is because there are a lot of old farts retiring soon – and far fewer young and stupid whippersnappers to take their places as productive members of society.

The problem of too many retirees drawing on the labour of too few workers is impossible to solve short of forcing every single Millennial and Gen-Z woman to pop out 5 or more children. This is, to put it mildly, somewhat unlikely. And even then, the effects of that many new workers hitting the workforce would not be felt for another 30 years – by which time the entitlement avalanche will already have hit.

The second is to dramatically increase the age at which retirees become eligible for Federal benefits such as Social Security and Medicare, and to completely overhaul the welfare system so that payouts are slashed to the bone. This will meet with truly staggering amounts of resistance from the electorate, especially from older voters, at least in the US.

Interestingly, the Russians tried this exact method to fix their coming entitlements problem. They upped the pension eligibility ages for both men and women – and the youth of the country exploded. They launched massive protests throughout the country, because given life expectancies in Russia, most young men knew that they would never see a single cent of their pensions, and neither would their families.

Yet the step had to be taken, because otherwise Russia’s pension scheme would have bankrupted the entire country.

America faces a different problem and the resistance comes from a different demographic, but the net result is the same: a coming “fiscal cliff” combined with a flood of funny money that will drown the entire country.

And that leads us to the third, and by far most likely outcome:

A final crack-up boom, whereby the US economy implodes under the combined weight of so many bad investments getting liquidated all at once; a Federal Reserve unable to do anything about it any more; a US dollar that loses its global reserve currency status as competitive alternatives emerge in the form of the ruble, the yuan, or even cryptocurrencies; and a bankrupted country unable to make payments on its obligations to its debtors.

This is how the epic winning of the last two years will end: with an economic cataclysm that not even Donald Trump will be able to fix. Nobody will be able to fix it.

I do not know for sure that such a catastrophe will take place on his watch. But all of the information that I am seeing at present indicates that the country is fast coming up on a huge market correction that will make 2008 look like a minor speed-bump.

President Trump will most likely not survive such a disaster if it occurs before the 2020 election cycle. If it does – and I suspect it will – then whoever replaces him will almost surely be a hard-Left progressive who will be far worse than Obarmy ever was.

At that point, the grand American experiment in republican government will be at an end.

It was fun while it lasted, but sooner or later, empires always fall. And America’s time for a fall is, very sadly, rapidly approaching.