1. Introduction: Fiscal Discipline is Sovereignty — A Geopolitical Wake-Up Call

Fiscal discipline is far more than just prudent financial management — it is an assertion of national sovereignty. A country’s ability to manage its finances independently determines its autonomy, geopolitical influence, and long-term economic resilience.

Nations that fail to enforce fiscal discipline become vulnerable to external pressures — forced into dependence on foreign creditors, international financial institutions, or even geopolitical adversaries. History has shown exactly what happens to countries that ignore this reality.

Yet, despite clear warning signs, critics continue to misunderstand the necessity of Indonesia’s austerity and Danantara initiatives. They focus on short-term narratives while ignoring historical precedents and long-term risks.

2. Ferguson’s Rule & Historical Lessons: The Collapse Formula

Historian Niall Ferguson provides one of the clearest warning indicators of fiscal collapse:

“When a country’s interest payments surpass its defense budget, it signals fiscal stress and potential decline in national power.”

This pattern has played out repeatedly throughout history — leading to the collapse of once-powerful nations.

The Ottoman Empire (19th–20th Century)

Interest payments to European creditors exceeded military spending.
The empire lost financial control, weakening its ability to defend itself and collapsing entirely by 1922.

The British Empire (Post-WWII)

Massive wartime debts resulted in interest payments surpassing defense spending.
The empire’s global influence collapsed, leading to rapid decolonization (around 105 newly minted countries emerged which was beling colonized by british)

The Soviet Union (1980s–1991)

High debt servicing costs + excessive defense spending drained the economy.
Fiscal unsustainability accelerated the rapid downfall of the USSR.

The Lesson from History

Interest payments exceeding defense spending is not just an economic red flag — it is a clear geopolitical warning that a nation is losing control over its own destiny.

3. The Alarming Reality: Indonesia Has Already Breached Ferguson’s Rule!

Indonesia has already been breached Ferguson’s Rule from last 25 years → Interest payments exceeded defense spending. Moreover, each year the gap between interest payment and defense budget is wider, where in year 2025 is projected to have a 553 trilion rupiah in interest payment or 3 times the defense budget (165.2 trilion rupiah).

The chart below illustrates the alarming trend from 2000–2025, showing how debt servicing costs have steadily overtaken defense spending:

This trend cannot continue indefinitely. If interest payments keep rising while defense spending stagnates, Indonesia risks a fiscal chokehold where debt repayments consume national priorities. This is exactly what happened before past empires and great nations declined.

The fact that Indonesia is still stable today does not mean it can sustain this imbalance forever.

This is why Austerity & Danantara are necessary — NOW.

4. How is Indonesia Still Surviving Despite This?

Ferguson’s Rule is a warning sign — but not an immediate death sentence.

Here’s why Indonesia has not yet collapsed despite breaching this metric:

Debt-to-GDP Ratio Still Under Control (For Now)

Indonesia’s public debt is ~40% of GDP, far lower than crisis-ridden countries (e.g., Argentina, Turkey).
Countries like Japan (~250% of GDP) or the U.S. (~125% of GDP) survive because they control their own currency.

Strong Foreign Exchange Reserves & Export Performance

Indonesia’s $140+ billion forex reserves provide a buffer against sudden shocks.
Commodity exports (coal, nickel, palm oil) bring in revenue, helping offset rising debt costs.

Debt Maturity is Spread Out

Unlike Argentina or Sri Lanka, Indonesia’s debt is not concentrated in a short-term repayment crisis.
Long-term maturities ease pressure on the annual budget.

But Here’s the Problem: This Will Not Last Forever

Indonesia can sustain this for now, but time is running out.

Interest rates are still high — meaning future debt costs will keep rising.
The debt service ratio is increasing, meaning more budget is locked for interest payments.
Any global downturn (commodity price drop, USD strengthening) could destabilize this fragile balance.

5. The Strategic Response: Why Austerity & Danantara Are Essential

President Prabowo certainly is not blind to these risks. The response is clear and necessary:

Austerity (Rp306.69 trillion budget cuts)

Immediate action to slow down the debt accumulation cycle.
Prevents excessive spending from worsening the interest payment burden.
Ensures fiscal discipline before external shocks force it upon us.

Danantara: Financing Growth Without More Debt

Shift from debt-financed growth to mobilizing domestic surplus capital.
Prevents Indonesia from becoming overdependent on foreign debt markets.
Secures long-term fiscal sovereignty — reducing reliance on external creditors.

6. U.S. Fiscal Collapse → Ferguson’s Rule Breached (2024)

Key Findings:

Interest payments will keep skyrocketing at an estimated 10% annual growth, while defense spending rises at only ~2% annually.
By 2028, interest payments will likely exceed $1.3 trillion, widening the gap even further.
The U.S. will remain in Ferguson’s Rule breach every year through at least 2028, meaning the nation’s global financial dominance is at risk.

For the first time in modern history, the United States now spends more on debt interest than on its military.

Why is this alarming?

Interest payments are now the second-largest federal expense, surpassing even Medicare & defense.
This is the same trend that signaled the fall of the Ottoman, British, and Soviet empires.
The U.S. is now financially dependent on borrowing just to service past debt — a cycle that historically leads to fiscal collapse.

What caused this?

The U.S. government has accumulated $34+ trillion in debt — and rising interest rates have made servicing this debt unsustainable.
The debt-to-GDP ratio is now 125% → historically, no country has sustained economic dominance at this level.
The Biden administration’s excessive spending policies have accelerated the problem, with no structural reforms in place.

The Superpower is Bleeding:

Unlike past crises (2008, COVID-19), this is not a temporary shock — it’s structural decline.
The U.S. no longer has the fiscal flexibility to respond to crises without printing money.
Ferguson’s Rule predicts that this will lead to a permanent reduction in U.S. global power.

The United States is no longer financially invincible. Ferguson’s Law has been breached, and history is now repeating itself.

7. Trump’s DOGE Strategy as a Countermeasure

“A nation cannot be strong if it is financially weak.” — Donald Trump

Faced with an unsustainable fiscal trajectory, Trump developed the DOGE strategy (Defense, Oil, Gold, Economy) to restore America’s economic and geopolitical dominance.

Why Was DOGE Necessary?

By 2016, the U.S. economy was already showing signs of financial decay:

Soaring national debt → Weakening long-term fiscal stability.
Dependency on foreign oil → Increasing vulnerability to global energy shocks.
Currency devaluation fears → Excessive money printing threatened the USD’s strength.
China’s economic rise → Undermining U.S. global influence.

Trump saw this coming — and DOGE was his strategic response.

The DOGE Breakdown: The 4 Pillars of Economic Sovereignty

DOGE’s core principle: National security and economic power must go hand-in-hand.

You cannot have military strength without economic strength.
You cannot have a stable economy without fiscal discipline.

How DOGE was Designed to Reverse U.S. Decline

Reduce foreign dependence (Oil & Gold strategy).
Limit reckless government spending (Economy strategy).
Ensure U.S. military remains the most powerful (Defense strategy).

8. Strategic Comparison: Indonesia vs. Trump’s DOGE

Key Insights from the Comparison:

Both leaders recognize that fiscal discipline is critical — Trump used targeted austerity, while President Prabowo is executing Rp306.69 trillion in budget cuts.
Energy independence is a core pillar for both — Trump focused on domestic oil & gas production, while President Prabowo is pushing for national resource control.
Debt management strategies differ — Trump used hard assets (gold, strong USD), while President Prabowo is relying on Danantara to fund growth internally instead of borrowing.
Defense spending remains a priority — Trump increased military spending to maintain U.S. global dominance, while President Prabowo is modernizing Indonesia’s defense capabilities.

9. Conclusion: A Defining Moment for Indonesia’s Economic Sovereignty

History has shown that great nations do not fall from external threats alone. They collapse from within, through financial mismanagement and unsustainable debt. Ferguson’s Rule has been breached in the United States, marking the beginning of its fiscal decline. Indonesia has also crossed the threshold, yet it still has time to course-correct before history repeats itself.

The key questions for Indonesia’s future:

Will we follow the U.S. into fiscal decline, driven by unchecked spending and debt reliance?
Or will we assert our financial independence, reinforcing sovereignty before it’s too late?

History does not wait for those who hesitate. The future of Indonesia’s fiscal power is being decided right NOW!.

This is not about politics.
This is not about ideology.
This is about survival.

The question is not whether Indonesia should act.

The REAL question is: Will we act fast enough?

Capital Over Compliance: Understanding the Architecture Behind Danantara