Is This Empire In Decline?

Empires rise and fall, we know this from our study of history. The ancient Egyptians had many dynasties and ruled for thousands of years. There were also the Greeks, Persians and Romans, all built societies and empires that rose and then declined. The rising is the easier part to understand, but it is the decline that teaches us the more important lessons.

Can the United States be all things to all peoples and not by its own hand drive itself into decline? Arrogance and foolish behavior can drive any empire into decline, and I think the United States is no exception. The good works that we do as a nation, we would like to think are remembered by the people we help, but I seriously doubt it. Staying in a country too long, like fish, start to smell bad after a while. We should know enough when to leave. Our economy is suffering from our government’s ambitions and over extending itself to the point of being detrimental to our security and our economy. The discussion of our security I will leave to the Generals, they have raised this point numerous times lately in the press and on TV. I have written about the deteriorating effects our policies, at home and abroad, have had on our domestic economy. For those that can afford to pay $4 a gallon for gas, you can stop reading right here. For those of you, like me, that are seeing the price of gas cut deeply into their disposal income, you can continue to read on.

Our economy has been built on cheap energy. Cheap energy is now a thing of the past. We live in a world where everyone wants and needs oil. The days when the United States could influence the price of oil are gone. The government had an opportunity to meet the needs of its people over 30 years ago, but no one cared enough to bring this about. There is a lot of talk about leadership in government, but the bottom line is that nothing was done, and now the American people are suffering. People that need to drive will cut out those consumer non- durables and services that they may be able to live without. For a while and perhaps for a long time, the economy is not going to grow at even a slow pace, if at all. The service sector of the economy that has been the area of growth over the most recent years will see grow slow and in some sectors decline. As the inflation picks up, there will be additional costs to society that are not even being talked about right now. There will be a significant period of time before incomes increase and can absorb the increased cost of energy.

If government spending continues to grow and waste is not removed from the budget, the dollar will continue to decline in world currency markets. We can not fool all of the people all of the time. Investors that buy our US Treasury notes and bonds will demand a premium in the form of higher interest rates which will fall on the tax payers and their children. By trying to be all things to all people, we have increased our national debt and run a budget deficit. What have we achieved? We have weaken the value of the dollar as a result of our debts and have increased the price of all things that we import.

Fear is a powerful motivator and it has been used to control and influence people. But, like anything else that is over used, it becomes meaningless. National security is important to all Americans. Personal security will trump national security when it comes to putting food on the table, clothes on our backs and a roof over our heads. If the electorate is fooled into believing that monsters lay in wait, then another four years will see a continuation of past policies and mistakes. At some point, we either correct the policies that have driven our economy to where it is now, or, it goes even lower. But, there will be a price to be paid. Global investors will make their investment decisions based on the world as they see it, not as we would like them to see it.

As I said at the beginning, understanding how an empire rises is the easy part, analyzing how an empire declines is a little harder, and the test is given first and the lesson afterwards. Stay tuned.