Doug Casey: "Now we have new economics – a house of cards built on quicksand, the whole corrupt system is doomed"

The Mania Phase Is Getting Closer

When we left our intrepid heroes last week, Doug was saying, "Now we have new economics – a house of cards built on quicksand. The whole corrupt system is doomed. But good riddance, actually…" We now return for another action-packed episode of Conversations With Casey…

L: Quicksand, if not lies. That Jon Stewart link I provided last time shows that Bernanke himself called quantitative easing "printing money" in his previous 60 Minutes interview, even though he denied the very same thing in this new one. Throughout the whole interview, aside from the quivering lip and the quavering voice, he seemed to be speaking out of both sides of his mouth, in terms of content. On one hand, he repeatedly sounded his warning that the economy is not out of the woods, and that's why printing more money was necessary; but on the other, he said the risk of a double-dip recession was very low.

Doug: I find it amazing that anyone pays any attention at all to what the man says. Except for a brief time waiting tables in school, he has zero experience in the real world. His whole life has been reading abstruse books written by people like himself, and doing complicated math formulas that are supposed to describe economic phenomena, but have absolutely nothing to do with the study of human action. He's a character who should appear in Alice in Wonderland, or Through the Looking Glass.

For instance, he claimed that another leg down for the economy was very unlikely because "cyclical" elements, like housing, were already very weak.

L: He actually said they couldn't get much weaker!

Doug: He's either a knave or a fool – possibly both. But the odds are he's just an educated fool, an archetypical, clinical example of one. Either way, it's bad news for the U.S. and global economies. Of course, there's really nothing that anyone could do, at this point, to avoid a huge amount of economic, political, and social turmoil. There are only two choices for a central bank: one is to keep printing money, and hope that magic happens; two is stop printing money, and let the existing structure collapse. Neither is a pleasant prospect, and there's no third alternative, in my view. It might have been possible to negotiate a relatively soft landing some years ago, but I believe that time has passed.

Of course, things will eventually bottom, and then get better. But in the meantime things can get worse, much worse – and, in fact, they are worse than the government is admitting. They don't admit it because they think confidence is important. It's not. If an economy rests on confidence, then you're in real trouble. A big reason things will deteriorate is because the people in power are under the illusion that all is well as long as people keep spending.

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Doug Casey: "Now we have new economics – a house of cards built on quicksand, the whole corrupt system is doomed"

Doug Casey: "Now we have new economics – a house of cards built on quicksand, the whole corrupt system is doomed"

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