Global Affairs Session 95 17 September 2026

WEST IS CRUSHED

Limits of Western Power

The West is entering a geopolitical squeeze. Wars, defence commitments, energy insecurity and industrial competition demand more public money just as borrowing becomes costlier. Advanced-economy debt is near 110% of GDP, while NATO is moving toward much higher defence spending. The US is also funding a trillion-dollar national defence request amid rising Treasury yields. The danger is not simply default. It is strategic compression: less fiscal room for deterrence, alliances, technology, energy security and the next crisis or war.

Summary

The West is entering a geopolitical squeeze.

Wars, defence commitments, energy insecurity and industrial competition demand more public money just as borrowing becomes costlier.

Advanced-economy debt is near 110% of GDP, while NATO is moving toward much higher defence spending. The US is also funding a trillion-dollar national defence request amid rising Treasury yields. The danger is not simply default.

It is strategic compression: less fiscal room for deterrence, alliances, technology, energy security and the next crisis or war.

West's next shock from debt

1. Military power rests on fiscal power: wars, deterrence, alliances and industrial strategy all require sustainable financing.
2. Advanced-economy public debt is near 110% of GDP, versus roughly 70% in the early 2000s. That may be unsustainable.
3. NATO allies now target 5% of GDP for defence and security spending by 2035.
4. That rearmament arrives while governments refinance debts accumulated during the era of cheap money. So old debt to be refinanced at higher rates!
5. Higher interest bills directly narrow room for defence, technology, energy security and crisis response.
6. The geopolitical shock is reduced strategic freedom, not necessarily sovereign default.

Expensive money weakens strategic capacity

1. Median rich-world ten-year yields are near 4%, roughly five times their 2015 to 2021 average.
2. The US ten-year Treasury yield reached 5.01% on September 16, 2026. (U.S. Department of the Treasury)
3. OECD interest payments exceed 3% of GDP, while America's burden approaches 5%. Interest will eat up large part of annual budgets.
4. Cheap legacy debt is maturing and must increasingly be refinanced at higher rates.
5. Rich governments now issue more than twice 2007's debt volume relative to GDP.
6. Interest costs compete with all else - missiles, infrastructure, semiconductors, energy resilience and social spending.

Who will finance ‘Western power’

1. Central banks and pension funds are becoming less dominant buyers of long-term government debt.
2. Investors now demand greater compensation for inflation, duration and fiscal uncertainty.
3. Governments also compete with AI, energy, semiconductor and defence investment for global capital.
4. Long-dated sovereign issuance has fallen to its lowest share since 2009.
5. Roughly one-third of OECD fixed-rate debt matures by 2028, and nearly half by 2030.
6. Shorter maturities expose governments faster to wars, oil shocks and future rate increases.

War costs extend beyond battlefields

1. Post-9/11 US wars are estimated near $8 trillion, including future veterans' obligations. Yet, Trump launched absolutely unnecessary new wars!
2. More than $1 trillion has already gone to interest linked to post-9/11 war borrowing.
3. The 2026 Iran conflict cost the Pentagon about $38 billion by August 1.
4. Iran-related energy disruptions raised inflation pressures and contributed to higher Treasury rates. And the Red Sea trouble has arrived now.
5. Missile-defence inventories were depleted, potentially constraining another missile-intensive contingency.
6. The feedback loop is costly: war spending, energy shock, inflation, higher rates, then costlier debt.
7. CBO specifically notes that reduced interceptor inventories could matter in a conflict involving China's missile arsenal and Taiwan.

Trillion-dollar military meets expensive debt

1. The Trump administration's FY2026 national defence request totals $1.0119 trillion, including assumed reconciliation funding.
2. DoD accounts for about $961.6 billion of the national defence request.
3. The 2025 reconciliation law provided $156.2 billion in mandatory defence funding through September 2029.
4. Funding supports shipbuilding, missile defence, munitions, supply chains and other military capabilities.
5. This military expansion arrives while Treasury yields and federal interest costs are rising.
6. Higher defence spending and debt-service costs are increasing pressure on federal fiscal tradeoffs.

Debt will reshape Western geopolitics

1. NATO's 2035 target raises defence and security spending to 5% of GDP. (NATO)
2. European allies and Canada increased real defence spending nearly 20% during 2025. (NATO)
3. Britain, France and Italy simultaneously face difficult debt-stabilisation requirements at current borrowing costs.
4. Higher debt costs can constrain simultaneous commitments across Europe, the Middle East and Indo-Pacific.
5. Alliance burden-sharing increasingly depends on fiscal capacity, not only political willingness or military ambition.
6. Implication: more theatres and larger commitments leave less fiscal room for unexpected crises.

Global elites' conspiracy?

1. Is there a global elite actively conspiring financial and population collapse?
2. Refinery disruptions across major regions at the same time create a common pressure point around diesel, transport and food.
3. Diesel scarcity could disrupt farming, trucking, fertilizer distribution and food supply chains simultaneously.
4. Multiple crises arriving together fuel suspicion that economic disruption may be coordinated rather than accidental.
5. Debt-system collapse could destroy savings, destabilise banks and prepare the ground for monetary restructuring.
6. Programmable digital money and stablecoins could enable far greater control over how citizens hold and spend money.
7. The darkest scenario combines automation, asset destruction, population decline and unprecedented concentration of economic control.

Conclusion

Western power has long depended on the ability to mobilise money quickly during crises.

That advantage is becoming more expensive.

The United States and Europe now face war costs, NATO rearmament, energy insecurity, ageing societies and technology competition while debt service absorbs more resources.

The central danger is strategic compression: fewer painless choices, harder alliance burden-sharing, greater sensitivity to energy shocks, and less capacity to absorb simultaneous crises. Debt is becoming not just an economic burden, but a constraint.

Value addition

Glossary and related terms

Western world

The broad political, economic and security grouping discussed in the session, centred on North America and Europe together with closely aligned partners.

NATO

The North Atlantic Treaty Organization, a collective-defence alliance whose members and partners are central to the session's discussion of defence spending and burden-sharing.

OECD

The Organisation for Economic Co-operation and Development, referenced in the session for cross-country debt, maturity and interest-cost comparisons.

CBO

The U.S. Congressional Budget Office, referenced in the session's discussion of defence inventories and possible future military contingencies.

Advanced-economy public debt

Government debt accumulated by high-income economies, commonly compared with the size of the economy through a debt-to-GDP ratio.

Debt-to-GDP ratio

Public debt expressed as a percentage of annual gross domestic product, used to compare the scale of government debt with the economy supporting it.

Strategic compression

The session's term for a narrowing of fiscal room that makes it harder to fund several strategic priorities and absorb new crises at the same time.

Sovereign default

A failure by a government to meet debt-payment obligations according to the agreed terms.

Debt refinancing

Replacing maturing government debt with newly issued debt, potentially at a different interest rate.

Bond yield

The return demanded by investors for holding a bond; higher government-bond yields generally increase the cost of new borrowing and refinancing.

Term premium

The extra compensation investors may demand for holding longer-dated bonds rather than repeatedly investing in shorter-dated securities.

Ten-year Treasury yield

The market yield on a U.S. Treasury security with roughly ten years to maturity, widely used as a benchmark for longer-term borrowing conditions.

Debt service

Payments required on outstanding debt, especially interest payments and principal repayments as debt matures.

Legacy debt

Debt issued in earlier periods; the session uses the term for older low-rate borrowing that eventually has to be refinanced.

Long-dated sovereign issuance

Government borrowing through bonds with relatively long maturities, which can lock in financing costs for longer periods.

Fixed-rate debt

Debt whose stated interest rate is fixed for its contractual life, although refinancing after maturity can occur at new market rates.

Debt maturity

The date when borrowed principal becomes due for repayment or refinancing.

Rollover risk

The risk that maturing debt must be refinanced at materially higher rates or under less favourable market conditions.

Fiscal tradeoff

A budget choice in which more spending or debt service in one area reduces the room available for other priorities unless revenue or borrowing rises.

National defence request

The amount of defence-related funding requested by an administration for a fiscal year; it is a budget request rather than, by itself, final enacted spending.

Reconciliation funding

Funding associated with the U.S. congressional budget-reconciliation process referenced in the session's discussion of defence resources.

Alliance burden-sharing

The distribution of defence, security and related financial commitments among members or partners of an alliance.

Debt stabilisation

Policies or fiscal outcomes intended to stop the debt burden from rising persistently relative to the economy.

Programmable digital money

Digital money whose permitted uses or transaction conditions could, in principle, be governed by software rules.

Stablecoin

A digital token designed to maintain a relatively stable value by reference to another asset, commonly a sovereign currency.

Monetary restructuring

A broad term for substantial changes to how a monetary or financial system is organised, governed or operated.