Courtesy of Mish
Noted financial author Richard Duncan says Capitalism is Dead, Credit New King.
The world needs to clue in to changes to its economic system, including the death of capitalism, according to noted financial author Richard Duncan, who warns that attempts to turn back the clock on our credit-driven economies could be cataclysmic
Recognizing that the world operates on a different set of rules from the laissez-faire capitalism of the 19th century is among the key arguments in Duncan’s 2012 book, “The New Depression: The Breakdown of the Paper Money Economy.”
Stuck with ‘Creditism’
Duncan sees the global economy as having undergone a fundamental transformation during the past 43 years. Since changes in 1968 that freed the Federal Reserve from holding physical gold in reserve against dollars in circulation, total global credit has expanded 50 times, or from about $1 trillion to $50 trillion in 2007.
Over that period, credit creation and consumption, or what Duncan calls “creditism,” took hold as the growth dynamic behind the global economy, displacing capitalism, which he says relied upon sound money, hard work and capital accumulation.
Attempts to break the global economy’s reliance on credit creation as a driver and reboot back to earlier ways won’t work, said Duncan, who sees “sound money” policy recommendations as a recipe for disaster.
Duncan believes that true capitalism died in 1914, when nations across Europe abandoned gold-backed currencies, running up huge deficits in preparation for what would come to be known as the Great War.
“I’m recommending making use of this new economic system. Borrow money at the government level at very low interest rates and then invest that money and change our world for the better.” Duncan said.
Building a national solar-energy grid that could tap the arid landscapes of Nevada are among Duncan’s recommendations.
Duncan said he first outlined his thinking on government-led investment in a 2008 book. On speaking tours, he encountered the “greatest push-back” from free-market, libertarian thinkers who are skeptical of government involvement in the economy.
He says many libertarians “are with me along through the argument” on causes of the global crisis, but that they tend to be “very surprised” by his conclusion that part of the solution requires governments to spend more — not less.
Duncan is yet another author who predicted a financial crisis but whose solutions can only be described as monetary madness.
"Glutted with excess industrial capacity and a banking system laden with massive loans that will never be paid back, China faces difficult decisions much as Japan did" says Duncan.
Then like an economic madman, Duncan wants the US government to undertake massive infrastructure projects just like the ones that bankrupted Japan and China's State-Owned-Enterprises (SOEs).
Obama's Excursions Into Clean Energy
Look at Obama's backing of Green Energy companies Ener1, Solyndra Inc., and Beacon Power, all three now bankrupt as noted in Another Obama-Backed Green Energy Company Goes Bankrupt.
Solar Energy Madness in Europe
In an effort to spur solar energy in France, Germany, Spain and other European countries, bureaucratic dunces decided to pay as much as 10 times market rates for those supplying energy to the power grid.
In response, farmers in France have started building "barns" that serve no other purpose than a place to put solar panels. Supermarkets put solar panels on their roofs and unused sections of parking lots.
It has been a boom to solar panel makers (China), but it is costing the French power company Electricite de France SA more than a billion euros ($1.3 billion) a year to meet government mandated pledges to accept solar energy from those supplying the grid.
At the end of 2010, EDF received 3,000 applications a day to connect panels to the grid. In 2008, the number of applications was 7,100 for the entire year.
The results should have been easy to predict in advance, but you can never explain anything to economic illiterates interfering in the free markets hoping to make things better. They never do.
For more details, please consider EDF’s Solar ‘Time Bomb’ Will Tick On After France Pops Bubble
Is Capitalism Dead?
If capitalism is dead, it is because socialists, fascists, bureaucratic fools, and central-planner advocates like Duncan destroyed it via foolish proposals to improve on it.
The idea that governments can invest wisely in technology, at reasonable costs, and the free market cannot is downright absurd as the US, Japan, China, and Europe have proven in spades. In short, Duncan has lost his mind.
Mike "Mish" Shedlock