Discretionary Military Spending Is The First To Go In A Sovereign Debt Crisis

Consider this NY Times headline: Pentagon Seeks Biggest Military Cuts Since Before 9/11.

When I read the article I immediately recalled Niall Ferguson’s presentation, Fiscal Crises and Imperial Collapses: Historical Perspectives on Current Predicaments.

Professor Ferguson has given several versions of this lecture. A video of the one he gave last May at the Peterson Institute for International Economics is embedded below. The lecture runs for about 54 minutes and is highly recommended for anyone interested in world economics. At 51:45 Ferguson discusses the geopolitical consequences of crises of public finance. His first of three bullets is this:

  • In fiscal stabilizations, discretionary military spending is usually the first casualty.

Click here to see Ferguson’s slide presentation. See in particular slides 33-36 >

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