Capitalism In Crisis

BFM talks to Richard Duncan, an economist and author of books including The Dollar Crisis: Causes, Consequences, Cures and The New Depression: The Breakdown Of The Paper Money Economy. Points covered include: - Not possible to go back to the gold standard - Credit has expanded 50x since 1968 in the US - Globalisation and economic prosperity resulted - But further credit expansion has the risk of spiralling into another depression - Should have stuck to the Bretton Woods system that would require exchange of dollars for gold - Occasional recessions could have avoided huge gold drawdown but would have resulted more subdued global growth - Tough spending choices should have been made eg. not spending of wars - Not easy for governments to make spending decisions given competing agendas - Things went well until the "creditism"of the late 2000s - Is capitalism a solution to the world's dire problems?- The handling of the bubble is very important and a reversal of that to a pre-bubble equilibrium as suggested by the Austrian school will result in a great depression that we would not live to see the recovery of. - Investment into trasformative technologies and not consumption would be a way to deal with the credit bubble - Policy responses for the global crisis has been largely correct but Fed still largely to blame for encouraging asset speculation - Recently tapering didn't happen because the market overshot on interest rate rises that threatened the weak recovering economy - Fed's challenge is to create enough money to support economic growth and some asset price inflation but not too much paper money that it causes the bubble to grow bigger - Governments should invest in technologies that support very long term causes like energy independence - Currency manipulation by China results in their version of a quantitative easing that dwarfs the Fed's QE - This played a key role in the economic bubble of the 2000s - Credit expansion over the last 4-5 decades has had enormous effects on poverty reduction but continued mismanagement of credit would reverse these benefits and cause a collapse into a new great depression - Difficult to preserve wealth at this pointSee omnystudio.com/listener for privacy information.