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Five forces move history
Finding the pattern
One way to find them is to look for what hasn't happened in your own lifetime and check whether it happened before it. Studying the last 500 years shows the same pattern: monetary, political, and geopolitical orders break down, and they break down for the same reasons.
Debt, wealth, and order
The first force is the debt cycle. When debt payments grow, they squeeze out spending, like plaque building up in a circulatory system. When it becomes painful, the debt is restructured. One person's debts are another person's assets, so a government running a large deficit must find buyers for the bonds it sells.
The second is the gap in wealth and values. As it widens, it threatens democracy, because irreconcilable differences mean people stop compromising and stop following the system. The third is the world order: after a war, the winner sets the rules, as America did in 1945. When that order weakens, there is no court to settle disputes.
Nature and invention
The fourth is nature. Droughts, floods, and pandemics have historically killed more people than wars. The fifth is human inventiveness, which keeps raising life expectancy, productivity, and per capita GDP. These forces can be measured, and so can how they interact.
How do debt cycles end?
Economists Carmen Reinhart and Kenneth Rogoff documented hundreds of years of sovereign defaults and banking crises in their book 'This Time Is Different.' Their data show that governments have repeatedly restructured, inflated away, or defaulted on debts when payments became too heavy. The pattern appears across very different countries and eras.
How did the winners of World War II set the rules?
In July 1944, delegates from 44 Allied nations met at Bretton Woods, New Hampshire. They created the International Monetary Fund and the World Bank and tied currencies to the US dollar, which was in turn convertible to gold. The arrangement shaped the postwar monetary order for roughly three decades.
Why have pandemics killed more than wars?
The Black Death in the 1300s killed an estimated third or more of Europe's population, according to historians. The 1918 influenza pandemic is estimated to have killed around 50 million people worldwide, more than the roughly 20 million deaths attributed to World War I. Disease can spread across continents faster than armies can move.
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