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.

States have endeavoured, in some instances, by pawning their credit, instead of employing their capital, to disguise the hazards they ran. They have found, in the loans they raised,…

Ultimately, history shows the solution might be a more permanent devaluation. > The Roman Empire serves is the archetypal example of what lies ahead. By the late second century, Rome faced rising military costs to defend its vast borders, while the tax base stagnated. Rather than cutting spending, Emperors began shaving coins or diluting the purity of the denarius. Under Augustus, the coin was nearly…