New US Depression

As I have said before, possibly the best definition of a depression is a period when most people's standard of living drops significantly.

Youcan also define it as a period when distortions in the economy and misallocations of capital are liquidated. The distortions are almost always the result of government intervention in the economy, through things like taxes, regulation and currency inflation.

Those are the factors that caused the unpleasantness that began in 1929. Since the US government is exponentially more powerful and invasive today than it was in either the 1920s or the 1970s, I expect the consequences will be much worse this time around. Things could have come unglued,and almost did, back in the 1970s. I don't see how the US will dodge the bullet this time.

Although that's not really a good analogy, in that, for reasons we don't have time to explore in depth, a depression in the US is probably inevitable this time.

By Doug Casey for for The Daily Reckoning.

http://www.moneyweek.com/file/13928/how-to-prepare-for-a-new-us-depression.html

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