Difference between revisions of "Ferguson's law"
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==Comparisons of Chinese, Russian and American government debt to GDP == | ==Comparisons of Chinese, Russian and American government debt to GDP == | ||
*[[China]] - China's national debt to GDP ratio is around 90.1%. This means that China's total national government debt is equivalent to roughly 90.1% of its total GDP (However, many financial analyst believe that China inflates its GDP). | *[[China]] - China's national debt to GDP ratio is around 90.1%. This means that China's total national government debt is equivalent to roughly 90.1% of its total GDP (However, many financial analyst believe that China inflates its GDP). | ||
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*[[United States]] - 118% | *[[United States]] - 118% | ||
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*[[Russian Federation]] - 23% | *[[Russian Federation]] - 23% | ||
Revision as of 21:06, February 26, 2025
“Ferguson’s Law” states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power."[1] It based on an essay by the Scottish philosopher and historian Adam Ferguson entitled History of Civil Society (1767), Part V, Section V.[2]
Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson
Abstract: Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power by Niall Ferguson (British historian and Chairman, Hoover Applied History Working Group). Hoover Institution, Stanford University History Working Paper 202502, Hoover Institution, February 21, 2025:
| “ | Are there financial determinants of great-power decline and fall? This paper proposes “Ferguson’s Law,” which states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power. The paper identifies the “Ferguson limit,” or the point at which interest payments exceed defense spending, as the tipping point after which the centripetal forces of the aggregate debt burden tend to pull apart the geopolitical grip of a great power. This is because the debt burden draws scarce resources towards itself, reducing the amount available for national security, and leaving the power increasingly vulnerable to military challenge. Using historical case studies that are analogous to the situation of the modern United States as the dominant global power, the paper shows that it is very rare but not unprecedented for a great power to return to the right side of the Ferguson limit. The paper is timely, as the United States began violating Ferguson’s Law for the first time in nearly a century in 2024.[3] | ” |
Comparisons of Chinese, Russian and American government debt to GDP
- China - China's national debt to GDP ratio is around 90.1%. This means that China's total national government debt is equivalent to roughly 90.1% of its total GDP (However, many financial analyst believe that China inflates its GDP).
- United States - 118%
- Russian Federation - 23%
War debt and the collapse of empires
External links
- Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power: “Ferguson’s Law,” which states that any great power that spends more on debt servicing than on defense risks ceasing to be a great power." - Hoover Institution
- Debt Has Always Been the Ruin of Great Powers. Is the U.S. Next?, Niall Ferguson Substack
- Debt Has Always Been the Ruin of Great Powers. Is the U.S. Next?, Wall Street Journal, 2025
- CBO: Federal Interest Payments Now Exceed Defense Spending, Forbes, February 7, 2024
References
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution (Download PDF)
- ↑ Ferguson’s Law: Debt Service, Military Spending, and the Fiscal Limits of Power, Hoover Institution (Download PDF)