Full Breakdown
Liaquat Ahamed Warns of U.S. Debt Risks, Citing the 1873 Silver Crisis
6/3/2026, 12:08:28 AM
The Current Debt Landscape and Ahamed’s Alarm
The United States now carries about $39 trillion in debt, a level that crossed the 100 percent of gross domestic product (GDP) mark in late April. Ahamed warned that the debt-to-GDP ratio could climb to roughly 120 percent by 2036, while geopolitical friction with China and a fragmented fiscal consensus in Washington leave fewer buffers than in earlier crises.
The 1873 Silver Collapse: A Historical Parallel
In 1873, Germany, fresh from its victory in the Franco-Prussian War, seized French silver reserves to weaken a rival. The action triggered a worldwide plunge in silver prices, froze roughly half of global precious-metal holdings, and sparked a depression that endured for two decades. Ahamed sees this “craziness” of market bubbles as echoing today’s massive spending on data centers and other speculative projects.
Historical Debt-Reduction Cases
Britain emerged from the Napoleonic Wars with debt near 200 percent of GDP and lowered it gradually over the next fifty years while its empire expanded. The United States finished World War II with debt above 100 percent of GDP and trimmed the ratio over roughly twenty-five years. Ahamed stresses that political discipline, institutional credibility, and the absence of external shocks separate successful debt reductions from failures.
Official Statements and Government Responses
Ahamed recalled Treasury Secretary Hank Paulson’s 2008 visit to Beijing, when Russia proposed dumping U.S. agency-debt holdings to China; the Chinese declined, averting a potential shock. He also cited British Prime Minister Liz Truss’s 2022 tax-cut plan financed by borrowing, which sparked a bond-market sell-off, a sharp rise in yields and a rapid pound depreciation before her resignation after 45 days.
Verbatim Quotes
- “Where we are today is frightening,” — Liaquat Ahamed, Historian and Author
- “Can you imagine, in the middle of a financial crisis, if one of our major foreign holders of our national debt decides, this is an opportune time to launch an attack on U.S. financial supremacy?” — Liaquat Ahamed
- “The world ended up dispensing with silver, purely because of a geopolitical accident — in the middle of the crisis, Germany decides to double down by attacking France’s hoard of silver, thinking this is the way, you know, we already beat them in a military fight, now we’ll get them in a financial fight. And it had the totally unintended effect of causing everyone to bail out of silver, causing silver prices to collapse.” — Liaquat Ahamed
- “The more depressing the history, the more optimistic I get,” — Liaquat Ahamed
What’s Next for Ahamed’s Work
*1873* was released on June 2 by Penguin Press. Ahamed is scheduled to discuss the book at the 92nd Street Y in New York on June 10.
