"Wasn't he the one they used to say couldn't chew gum and walk at the same time?" asked a French friend.

The markets were closed yesterday for New Year's Day. Today, many will be closed in honor of Gerald Ford, who is to be laid to rest after a state funeral.

Gerald Ford seemed like a good egg, as presidents go. And yes, there were a lot of jokes about him. He stumbled coming down stairs occasionally. He had gone to Yale and had been a star football player, which led Richard Nixon to remark that he thought Ford must have played too often without his helmet on.

But Ford was no dope. In his Inauguration in 1974 he said:

"I must say to you that the state of the Union is not good: Millions of Americans are out of work. Recession and inflation are eroding the money of millions more. Prices are too high, and sales are too slow. This year's Federal deficit will be about $30 billion; next year's probably $45 billion. The national debt will rise to over $500 billion. Our plant capacity and productivity are not increasing fast enough. We depend on others for essential energy."

You have to give the man credit. In this brief paragraph, he identified the two of the key things that would eventually undermine the empire. The early '70s were a critical turning point. Until then, the average man in America had made steady financial progress. The dollar had real value; foreign governments could trade their surplus dollars for gold. The U.S. government tended to balance its books. And until then, the nation could count on its own oil wells for the energy it needed.

The two world wars of the 20th century were won largely because America had cheap, good oil...and the losers didn't. Germany had to bend its military strategy in Russia in order to try to secure the oil fields of the Ukraine. As a result, its drive to Moscow stalled. Japan's war effort was doomed too when the island nation ran out of oil. Its ships could offer no effective resistance to the U.S. fleet, because they had no fuel.

It is of no concern to us whether our gasoline comes from Texas or from Venezuela. In our private lives, we are as happy to add to the profits of Gazprom as of Exxon. But if you want to play the role of a butt-kicking empire in the modern world, you need two things: money and energy. Ford noted that the United States was running out of both.

President Ford sounded the alarm over a $30 billion budget deficit and a $500 billion national debt. The numbers sound almost quaint to us today...like a $15,000 mortgage or a wood stove. It reminds us of an earlier era...before there we ever heard of derivatives...before the financial operators took over Greenwich, CT...before the celebrities forgot to put on their underwear.

Ah yes, dear reader, we are becoming sentimental. It happens this time of year...after the holidays. Yesterday, we sat in our office, alone...thinking about the years gone by...sniff, sniff...

We remembered those days...yes, 30 years ago...when you could buy a gallon of gasoline for less than 50 cents and smoke a cigarette without risking a jail term. We remember, we bought an English sports car - an MGA - for only $200. And we sold a house for $23,000! Those were the days...when we were young and foolish. Now, alas, we are old and foolish.

If only hair were as steadfast as foolishness! Through the years, our hair has deserted us...but our foolishness hangs around like a loyal sidekick.

Meanwhile, circumstances change. In one era, we are young and restless. Thirty years later, we are careful and reflective. In one era, stocks are cheap and credit is dear. In another, even household pets can get mortgages...while stocks have never been more expensive. In one era, a nation is on top of the world...30 years later; it is slipping and sliding, desperate to hold onto its position.

Of course, there were plenty of jackasses back in the '60s and '70s too. In '74, the United States was trying to figure out how to withdraw from another absurd military adventure - in Vietnam. The Vietnam War, like the war in Iraq, had proved good for military contractors and artificial limb makers, but bad for the nation. Scarcely a year after Gerald Ford moved into the White House, the last American troops were coming home. This report from the North Country Times:

"His were the last American boots to leave the ground that day, the last pair of military feet to scramble aboard the last American helicopter out of Saigon on April 30, 1975.

"And as the mechanical bird finally headed out of war-ravaged Vietnam, John Valdez looked down at the place he had just left, the U.S. embassy at Saigon. Some people were looting the building. Others just sat, talking. A few raised their heads to watch the American military fly away."

Sic transit gloria belli.

But for all the foolishness of the Vietnam War, the war in Iraq surpasses it in grand style. The Iraq War is far more expensive...it stirs up new enemies, rather than wrestling with old ones...and it comes at a time when the empire is no longer in control of its finances or its energy. The United States now imports vast quantities of oil...the revenues from which flow to enemies and potential enemies - Russia, Venezuela, or one of the Bedouin kingdoms. And it must also import the money to pay for the war! The cost is $8 billion per month. Let's see, that's $96 billion a year. Whoa...that's only a fraction of the $750 billion current account deficit. And it's only a fraction of the estimated 2007 federal deficit of $400 billion. In other words, the foreigners lend us money for the war - and a lot more!

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.