Thursday, October 14, 2010

"Everything that the government has done is not just wrong; it's exactly the opposite of the right thing"

From an interview with Doug Casey. I remember at the time Bret "Ginx" Alan defended the ridiculously wasteful Cash for Clunkers program, but then, Bret's a hopeless believer in the magical powers of government.

The money they threw at the auto industry with the Cash for Clunkers program just stole sales from the future, and destroyed hundreds of thousands of serviceable vehicles. The tax rebates they offered to the people buying houses also stole sales from the future, but more importantly induced a bunch of people who couldn't really afford houses to buy, and get in debt – this as the market heads lower. Some of the 100s of billions of dollars that they created in these, and other stimuli, have filtered down into the economy – although most of it has just enriched the bankers and made some people feel richer than they really are. But that's exactly what's caused the problem; it's not a solution. These things only make people think they are richer than they really are, induce them to live above their means, and dig themselves into a bigger hole. Everything that the government has done is not just wrong; it's exactly the opposite of the right thing. So the economy will get worse based on what the government has done.

Asked if we're still headed for a depression, Casey replies:

There is no question about that as far as I am concerned. The Greater Depression has started in earnest. Let's define the term. A depression is a period of time when most people's standard of living drops significantly; that's actually happening in the United States. Another definition of a depression is a period of time when distortions and misallocations of capital in the economy are liquidated – that happens largely through bankruptcies and unemployment. Both of those things are already high, and are going to increase significantly. Regrettably, and unnecessarily, the Greater Depression is going to last a long time. It was caused by government intervention in the economy, and the government is ensuring it will go on much longer than need be. We can't talk about recovery in a matter of months or even in a couple of years. I'm afraid this is going to be quite dismal for a lot of people ...

-Doug Casey on the Violence of the Storm, the Destruction of the Middle Class and the Coming Gold Standard

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