Naked empires

The US just celebrated its 250th anniversary of independence. In 1978, British theorist John Glubb proposed that major historical empires average roughly 250 years; the life of empires begin with pioneers and conquests; peak with commerce, affluence, intellect; and end with decadence and decline. Glubb argued that collapse stems from internal moral decay, overemphasis on comfort and entertainment, and loss of public duty rather than external defeat.

The US has been bigger than an empire, it has been a superpower that aimed to rule all over the world. Technology supported this aim and globalisation gave it its epitome. But there have also been severe hiccups in this pursuit; the 1929 Great Depression being one. In WWI, the US and several European countries temporarily abandoned the gold standard so that central banks could print extra money to fund the wars – money was created from thin air. Once the war ended, governments and banks did not restore strict monetary discipline. The expanded supply of money and credit continued into the 1920s. Fiat and fractional-reserve banking system created new money through lending without holding equivalent gold reserves. In fractional-reserve banking, the bank keeps 10% of deposited money and lends away the rest. That same money when put in another account become a deposit that the banks can lend away again. This expanded credit supply pushes financial assets upward. The inflated economy, which was actually based on loans and debt creation, enters a speculative environment wherein assets are bubbled up. The stocks-bubble eventually burst in the 1929 stock-market crash, ensuing the Great Depression.

But the lesson learnt was not to go back to a disciplined gold standard, rather it was decided in August 1971 to quit the gold standard for good! But just before that in May, Nixon and Kissinger made agreement with the Saudi royal family that the Saudis would price their oil exclusively in US dollars; and in July, Kissinger visited Beijing, with Pakistan's help, to arrange normalisation between China and the US and to offer China to become a free-market haven for US industries. So, there were arrangements – of the world economy running on dollars; getting China as the biggest industrial backyard for US companies; and the leisure of financial engineering via creating modern financial instruments that create excessive debt (leverage), cheap money and misaligned incentives, which systematically distort asset values and detach markets from economic realities. Instruments like artificial liquidity, securitisation and financialisation loops, synthetic leverage and the derivative markets create artificial demand, bidding prices up far beyond intrinsic value. This fake wealth inflation and accumulation, being unsustainable, has cyclically issued economic recessions and debt crisis every few years.

The problem is that this system was not only adopted by the US and its allies, but it was imposed upon the whole world. The world was effectively divided into 'with us' or 'against us'. If you were not in the Capitalist camp then you were in the Communist camp and the US was willing to war against you with all its military prowess. World politics and world economy were controlled by international organisations and all were forcefully knit in one globalised chain that syphoned global surplus wealth towards the West – but only until it didn't!

The rise of China as an economic giant and its surplus wealth; Russia's reassertion as a political and military force; the re-alliance of the two post-1996; the conversion of the US and Europe into consumer economies, inflated with cheap leverage and speculative asset-trade, ready to crumble upon their mounting debts; and most of all the arrogance of the Empire – is leading to their collapse.

The Great Recession of 2007 – which started with the housing bubble, leading to the fall of major banks, and several European states facing sovereign debt crisis – showed the structural defects of the western system and how the global economy was footed on shifting grounds. And now again, the world is bracing for yet another financial breakdown, with many speculating the burst of the AI bubble.

And as Glubb said, the real dangers to the Empire are not external; commerce, affluence, intellect ultimately lead to decadence and decline. But the capitalist economic system constructed by the US has been exported to most states of the world, and all are bound to fall with it. Almost all states are running on national debt, all have loan-based economies, all have central banks linked to a US/IMF/WB-controlled central banking, all have a ruling plutocracy, all have extensive rich-poor divide, and all have entered the unsustainable sovereign debt crisis zone. We live in an unequal, unjust, fake world.

The US has a debt of approximately $40 trillion. Its 2026 budget is around $7 trillion, of which $1 trillion goes to interest payments and $1 trillion goes to defence. The government does not have the remaining $5 trillion needed to run the country, and it has to borrow $2 trillion to fill the gap. Miniature this to understand other states.

Take Pakistan: we have approximately $295 billion in debt, and our 2026 budget is around $67 billion. Of this, about $29 billion goes to interest payments and $10 billion goes toward defence, leaving approximately $28 billion for everything else. The government collects $42 billion in net revenues, leaving a gap of $25 billion that is filled mostly by domestic and partially by external borrowing.

How does this system leave the people of Pakistan? One comparison goes like this: out of the 177 million bank accounts existing in the country, 51% hold less than Rs5,000; 20% hold up to Rs50,000; 27% hold between Rs50,000 and 10 lakh; and only 3% exceed Rs10 lakh. This reveals that heavy wealth is concentrated in very few hands. Moreover, according to an FBR source, nearly 9,000 Pakistanis (representing a mere 0.00005% of accounts) hold Rs750 billion in bank deposits - and they have paid zero income tax. Are we also an 'empire' in miniature?

How do we expect all this to keep working? How much can you inflate the economy, how much can you overvalue assets, how much can you keep borrowing without repaying, how much can you keep spending without really earning anything? How many nations can you destroy by wars and how many with sanctions? How much can you force humanity to live in lies and deceit? And how long can you expect a house of cards to stand!