CNBC’s European Squawk Box had an interesting interview session with author and economist, Richard Duncan. Looking back over the last 40 prosperous years, ever since the last remaining link between the US dollar and gold was removed, the world has evolved into a form of financial creditism. Duncan notes that the central banks of the world have been able to provide easy credit and the world has greatly benefited. However, there comes a point where borrowers are unable to take on more debt. If the government does not step in and provide QE or some other kind of spending programs, there will be another Great Depression. Duncan even goes on to say that, in fact, a depression is unavoidable and inevitable, but it can be delayed if the government decides to benefit society further by spending on 21st century technologies in the nano science and medical fields, for example.
Another interesting part of this segment that should be noted is where the panel brings up the comparison of the present situation with the past, where central banking policy was to raise interest rates rather abruptly in order to curb reckless borrowing. “When you throw money into the system ….. the good guys out there won’t borrow and spend because they’re too cautious. It’s the bad guys who come in and borrow and spend. … There’s lots of bad guys around, we can see them all over the place – we know they’re there!“ Touché.
