Have we crossed the Ferguson Limit?
- The Chairman
- 1 day ago
- 3 min read
America is the greatest economic engine the world has ever known. We built the post–World War II system. We anchored global trade in the dollar. We secured sea lanes. We projected strength through economic and military dominance.
But today, a serious question must be asked:
Have we crossed the Ferguson Limit?
What Is the Ferguson Limit?
The concept comes from historian Niall Ferguson.
The idea is simple — and sobering:
When a nation spends more on interest payments on its debt than it spends on its military, it begins to lose its status as a global power.
In other words:
If servicing yesterday’s borrowing costs more than defending today’s security, decline may not be far behind.
The Numbers: Defense vs. Interest
U.S. Defense Spending
Managed by the United States Department of Defense, the U.S. defense budget currently runs approximately:
$850–$900 billion annually
Roughly 3–3.5% of GDP
Larger than the next several nations combined
This funds:
Personnel
Aircraft carriers
Nuclear deterrence
Cyber defense
Space Force
Global strategic positioning
U.S. National Debt & Interest
The debt, overseen by the United States Department of the Treasury, has reached approximately:
$34–$35 trillion
Debt-to-GDP ratio: over 120%
Annual interest payments: $900 billion to $1+ trillion
For the first time in modern history, interest payments are rivaling — and in some projections exceeding — military spending.
That is the Ferguson Limit.
Why This Matters
History offers warnings:
Spain in the 1600s
France before the Revolution
Britain after World War II
Each saw global influence diminish once debt overwhelmed fiscal flexibility.
When interest consumes massive portions of federal revenue:
Tax pressure increases
Inflation risks rise
Social spending strains grow
Defense modernization slows
Economic growth becomes constrained
You cannot project power abroad if you are financially handcuffed at home.
The Bigger Economic Issue
This is not just a military discussion. It’s a math problem.
When:
Debt grows faster than GDP
Interest rates remain elevated
Deficits persist
You enter what economists call a debt spiral risk.
And here’s the part we must confront honestly:
Interest is now one of the largest line items in the federal budget.
We are paying trillions for the privilege of past spending decisions.
A Financial Literacy Lesson for Every American
I tell my students this all the time:
If your interest payments exceed your investment into productive assets, you lose control of your financial future.
That principle applies to households.
It applies to businesses.
And it applies to nations.
America must decide:
Are we investing in growth — or financing consumption?
Can We Reverse Course?
Yes. But it requires:
Fiscal discipline
Economic growth policies
Entitlement reform
Lower structural deficits
Encouraging productivity and private-sector expansion
America still has:
The world’s reserve currency
Deep capital markets
Innovation leadership
Energy independence potential
A culture of entrepreneurship
We are not in decline — but we are at an inflection point.
The Strategic Question
The Ferguson Limit is not about panic.
It’s about trajectory.
Can we grow faster than we borrow?
Can we reform before markets force reform?
Can we choose discipline before crisis imposes it?
History shows that great powers rarely collapse overnight.
They decline slowly — then suddenly.
The numbers deserve attention.
Because freedom is not just defended on battlefields.
It is defended in budgets.
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