Doug Casey, the founder of Casey Research, and Rick Rule, the President and CEO of Sprott Holdings US, recently spoke with Kitco News on a wide range of topics including the economy, the coronavirus pandemic and the future of our great nation.
Casey was asked about how the US economy has withstood the coronavirus and his outlook. For this, he says he is most worried about what he is calling the “Greater Depression.”
An Inevitable Reset
“The (US) economy has been a bubble in search of a pin for years. But instead of meeting a pin, it’s met a sledgehammer. Look, 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 humanely imaginable. The greater depression, as a result, is going to be even worse than I thought it was going to be.”
Rule agreed with Casey, believing that a reset was the inevitable consequence of the decade-long economic recovery. He believes this was needed, even without the coronavirus pandemic wreaking economic havoc.
“My belief is that we were coming into a reset, as a consequence of a 10-year long economic recovery post-2008. A 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. Which is to say that we were due for an economic setback at any rate. We might have got through 2020 without having one, or 2021, but COVID was in fact merely a catalyst.”
Rule added that everything the government and the Fed have thrown at the recovery will likely be a waste.
“I suspect that everything that we are doing now, all the fiscal and political actions, are merely an attempt, eventually a vain attempt, to forestall a reckoning.”
He says there is only reason the stock market has recovered so quickly. This reason is that there’s no alternative to equity markets right now.
“The consequence of extraordinarily low interest rates is that people are being forced to spend and speculate rather than save. Is that a good thing? Probably not.”
Casey adds that all the government stimulus is simply more debt that needs to be paid back one day.
“It’s well known that none of these governments can pay back all of the debt they’ve taken on. And the problem with all this debt is that it’s encouraged people to which has been accelerated by these low interest rates, it’s caused people to live above their means. If I borrowed a million dollars today, I can live really high on the hog for the next year. Except when I’ve got to pay it back I’ve got to pay it back with interest. And that’s exactly what has been going on.”
Casey and Rule’s Outlook
Rule was asked about his outlook for the country. For this, he says that we will collectively go through a rough patch in the coming years. However, he remarks that country always manages to emerge stronger than it was before.
“The level of debts and deficits are unsustainable and there’s going to have to be a reset. And that reset will be very, very, very painful for some. But I do believe that a reset will occur, and I believe we’ll come out of this 5 years or 6 years from now in a way stronger than we are today.”
He compares the damage inflicted on Americans and the economy to that of a boxer’s punch.
“The truth is thus far in my lifetime our individual creativity and initiative has managed to fund our collective stupidity. I remember George Foreman’s punch being described as severe, but survivable. And I think this round of our collective stupidity will be regarded historically as severe, but survivable.”
We will survive, Casey says, because we are like cockroaches.
“People are like cockroaches if nothing else, I mean look at the disasters they’ve stumbled from in Zimbabwe, one disaster to another, for the last 40 years, and they’re still alive. And in Venezuela, how could things get any worse? But people still survive.”