‘Where we are today is frightening’: a Pulitzer-winning historian sees a doomsday scenario involving China and the national debt

Liaquat Ahamed has spent his career studying the moments when the world’s financial system breaks down — the bad bets, the collective delusions, and the geopolitical accidents that tip economies into catastrophe. Right now, he says, he doesn’t like what he sees. “Where we are today is frightening,” Ahamed, the Pulitzer Prize-winning author of Lords of Finance: The Bankers Who Broke the World, told Fortune in an interview. The historian, whose landmark 2009 book chronicled how four central bankers helped cause the Great Depression, was speaking about America’s national debt — now hovering around $39 trillion — and the mounting risks he sees in the global financial system. His new book, 1873: The Rothschilds, the First Great Depression, and the Making of the Modern World, examines a forgotten financial crisis that swept the United States, Central Europe, and the emerging markets of the Ottoman Empire and Egypt simultaneously — a global contagion that most people have never heard of. The parallels to the present, he says, are hard to ignore. A clear similarity, he said, is the “craziness that markets develop when they’re in bubbles,” citing a quote from Cornelius Vanderbilt that, essentially, “building railroads from nowhere to nowhere is not a viable business.” You can sort of feel, he added, that one day “we will discover that building data centers, you know, willy nilly spending a trillion dollars a year on data centers for the next three years is bound to end in tears in the same way as the dotcom bubble ended in tears.” But that’s not what really alarms Ahamed, he clarified. The doomsday scenario The scenario that worries Ahamed most isn’t abstract. It has a precedent — and it nearly happened once before in living memory. In 2008, at the height of the global financial crisis, then-Treasury Secretary Hank Paulson was in Beijing when he learned that Russia had approached China with a