Doug Casey on the Continuance of the Greater Depression

09-05-2011 • LewRockwell.com

Doug Casey: Right now the US Government is spending over a trillion and a half dollars more than they are taking in – but that's as good as it's going to get. We're already in the best of all possible worlds, considering what's happened. It gets vastly worse from here. As unemployment and business failures start going up the government's deficit will rise to $2 trillion per year. They talked about cutting $2 or $3 or $4 trillion, but that's over 10 years and it's loaded towards the end of the 10 years; their supposed cuts are inconsequential, trivial, and meaningless. In addition, there's no reason to believe that spending won't skyrocket from here, because Congress is going to change next year, and again two years after that. They'll all have new cockamamie spending ideas. So this is all a complete charade. To answer the question, the only ultimate cure for this is that interest rates go back up to the 12 or 14% level, which would reward prudent savers and punish borrowers. But that's just a start. Military spending should be cut 90%, with the closure of all foreign bases, covert operations, and aid. Regulatory agencies like the SEC, the FDA, HUD, USDA, DOE, OHSA, FAA, EPA, etc., etc. should be abolished. The Fed should be abolished and gold reinstituted as money. The national debt should be overtly defaulted on for numerous reasons, but certainly because it acts as a mortgage on future generations. But none of that's going to happen, rather than the opposite. These prescriptions, while economically and morally correct, are a complete political pipe dream. A big part of the problem is that people have been consuming more than they have been producing. So the way to get the economy back on track is for people to produce more than they consume and save the difference. High interest rates encourage that. But the government is opposed to high interest rates, partly because it runs counter to Keynesian theory and partly because it would greatly accelerate the bankruptcy of the government.