This year, the global economy has contracted at a pace previously unseen. However, the crisis this year was only the trigger for what would otherwise have been an inevitable collapse in our economy.
Doug Casey, founder of Casey Research, and Rick Rule, president of Sprott U.S., discussed with Kitco News the underlying fundamental problems with not just our economy, but society at large, that have been brewing for years.
“All of the economic problems that we have are basically caused by government interference in the economy and in people’s lives, and COVID has given them an ideal opportunity to interfere as much as humanly imaginable. So, the greater depression, is going to be, as a result, worse than even I thought it was going to be,” Casey said.
Even though these economic problems have been present for several years, stock markets have not reflected them. Prior to 2020, U.S. equities saw the longest bull market in history.
Rule said that this rally was unlikely to persist even without COVID-19.
“My belief is that we were coming into a reset as a consequence of the 10-year long economic recovery post-2008. Recovery that had more to do with artificially low interest rates and excess levels of state-sponsored liquidity than it did to increases in productivity or increases in trade or increases in private wealth,” Rule said.
Looking ahead, Rule said that unusual monetary and fiscal policies may become the new norm.
“The consequences and example of extraordinarily low interest rates are that people are being forced to spend and speculate rather than save. Is that a good thing, probably not, but we’re going to continue to see these inconsistencies in the economy as long as we have popular political responses from government,” he said