PESSIMISM is back in fashion. Recently, several economists, political scientists and historians have begun to suggest that the world is headed towards a major disaster. They worry according to the demands of their expertise and discipline.

Niall Ferguson, one of the more important economic historians of our time, is projecting a fiscal disaster in the United States that will match the one Greece is facing at the moment. He says that, according to White House projections, gross public debt will exceed 100 per cent of gross domestic product (GDP). That worries him a great deal.

He has made his reputation by studying the decline and eventual fall of great empires and nations. Large debt overhang is almost always the cause. That is what brought down the Ottoman Empire in the early part of the 20th century and the British Empire 50 years later.

Is America headed the same way? Mr Ferguson believes that is indeed the case. What is causing large fiscal deficits is not only the US government decision to use public money to revive the economy; what is also contributing is the big burden being created by the ageing of the population and its claim on increasing amounts of resources by way of Medicare and Social Security payments....