Classic Niall Ferguson

Niall Ferguson talks so much that Glenn Beck can't get a word in edgewise.

Quotes: "If you look at the Congressional Budget Office data, the United States is never again going to run a balanced budget. Never. I mean, beyond our lifetimes, every year there's going to be a trillion dollars of new debt. Now that game can come to an end very quickly indeed when investors look at the math and they say, wait a second, a debt to GDP ratio of 100% in 2012? That can't be right. And we get the same treatment the PIIGS are getting now. So my message is: PIIGS R US. We're not that much better off than Portugal, Greece, Spain and Ireland.

Sure the Japanese got up to 200% before the markets took fright, but we're not going to get that far. I mean these numbers are in some ways rather arbitrary because what happens is all to do with the interest on your debt. If you are paying a 3.5% on the debt as the US is broadly speaking now, you can ratchet up quite a lot of debt. But if as happened to the Greeks, the markets say, now wait a minute, we would rather have 5.5 or 7.5% then very quickly your debt starts to kill you. And that's what I am most afraid of, Glenn. What worries me is that the cost of servicing this huge debt could suddenly spike upwards, and when that happens - it will! - it starts to consume a larger and larger share of the budget, it goes from maybe 9% of total revenue to 25%, and then you are in the kind of fiscal crisis that we are seeing in Europe right now. I think that could happen in the United States this year.

You either have to default on a large part of the debt or you have to inflate it away. There really aren't many other options open to a country that has debts this size. And neither of those processes is really much fun. So I don't think that we easily get to a, back to the ideal of a true free market republic.

I see a consensus in Congress between Republican tax cutters and Democratic spenders to run deficits for the rest of time. That is the political consensus that has emerged in Washington. And what is - it's doomed - completely lacking - it's doomed, right? - is a will to reform the US tax system, to cut income tax, to introduce some other tax on consumption that might actually help to balance the budget and simplify the whole system cause right now it is just a mass of poverty traps and distortions. And the other thing, the politicians just don't want to touch are the entitlements, which are bankrupting the country. Until those things are done, until there is a political leader that has the courage to spell out to Americans, "we need to do this, we need to reform our system root and branch", then I am afraid we are going to slide downhill in the direction not just of European economics, but of Latin American economics.

The lesson of the Russian experience I think is slightly different, Glenn. I think what it tells you is that a very well-intentioned leader who for some people appears to be the solution to the problems can completely wreck the system. Mikhail Gorbachev was the man who broke up the Soviet Union. And the collapse of the Soviet Union 20 years ago happened with incredible speed. Nobody was really expecting his reforms to completely destroy not only the Soviet empire in Eastern Europe but the Soviet Union itself. And I worry a little bit about our own situation today. I think we could collapse much more quickly than people assume. I hear debates all the time about the crisis of Social Security or the crisis of the national debt, but it all seems to play out decades away from now so we can kind of not worry about it now. But I think the lesson of what is going on in Europe today and what happened in Russia 20 years ago is that collapse can sneak up on you and strike very suddenly indeed, no matter how good your intentions are."