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Monday, September 28, 2009

Doug Casey on the Greater Depression

In the episode from 1929 to 1933, it didn’t go straight down. In 1930 and 1931, people thought they saw signs of recovery along the way. I think it’s going to be very much the same way this time.

One thing to remember is that while the depression that started in 1929 may have come to a bottom in 1933, it took a long time to recover. There was a cyclical recovery in 1937, and why was that? Roosevelt had the good luck to have been elected dead flat at the bottom. So it wasn’t his policies that cured the last depression, it was luck and good timing, combined with the fact that they were creating a lot of money after Roosevelt took the dollar off the gold standard. That resulted in a false recovery, from 1933 to 1937, and it went downhill again.

People say that World War II cured the depression, but in fact, it made it worse. As bad as things were in the ’30s, they were worse during the war in the ’40s. You couldn’t get shoes. You couldn’t get gasoline. You couldn’t get tires. You couldn’t get just about anything that was being used for the war. The war prolonged and deepened the depression. The thing that ended the depression was not the war but the fact that since people could not consume, they were forced to save. That delayed consumption resulted in a huge amount of savings, and that’s what caused the recovery in the late 1940s.

The point I’m making is this: You’ve heard the old saying that history doesn’t repeat, but it rhymes? I’m afraid that for many reasons, the government is doing just about everything possible to push the economy over the edge. First of all, the government is much more powerful than in the 1930s. People are much more used to thinking of the government as being the solution to the problem, instead of being the cause. They are going to make exactly the same mistakes – but bigger this time.

They are going to wind up destroying the currency.

It’s probable that American will end up in a war, for a number of reasons.

What we’re looking at is something that’s going to be long, dismal, and really unpleasant – much worse than what happened in the ’30s and ’40s.
--from "Doug Casey on the Greater Depression" (interview by Louis James, Editor, "International Speculator")

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