By Doug Casey in The Casey Report:

Long-term readers know I’ve been calling for the Greater Depression for many years. The reasons are simple although – perversely – not widely understood. But being inevitable isn’t the same as being imminent. Although any of the crises since the ‘60s could have deteriorated into a genuine depression, the government dodged the bullet again and again – though at the cost of making the eventual reckoning that much worse.

With enough government twisting of the economy – taxes, subsidies, prohibitions, regulations, and money printing – a depression becomes both unavoidable and useful. It becomes unavoidable because it can only be postponed by ever more ambitious exercises in government tinkering. Again raising taxes. Again borrowing money. Printing up still more new dollars. Imposing regulations that reach even further. A depression becomes useful because it’s needed to wash out the wasteful patterns of production and consumption that the government policies have encouraged.

But that sort of thinking is far out of the mainstream. It would be fair to call it taboo. Since the days of Roosevelt’s New Deal, most people have believed that government not only should but can “fine tune” and control the economy. It’s thought “politically impossible” for a president to allow a depression to occur on his watch.

But it’s happening anyway. There will not be a serious recovery from this “recession” for a long time. The reason is that the government – which is far more powerful than ever before – isn’t just doing the wrong things. It’s doing precisely the opposite of the right things. They couldn’t possibly make things worse if they tried.

So is it going to be significantly different this time? Is the crisis that started in 2007 “it”?

My answer is that what’s underway now is going to be a lot different from any recession since World War II. And very probably, yes, this is the Greater Depression.

I’ve never been comfortable predicting the Greater Depression. For one thing, it easily invites comparison with the biblical types who are forced repeatedly to reschedule the arrival of the apocalypse, or the Marxists who are still looking for a correctly managed workers’ paradise or, more recently, the Greens who hail global warming as righteous nature punishing evil humanity.

In my defense, I can only say that although I suspect the depression will be worse than even I think it will be, I’m even more confident it will be followed by times even better than anyone can imagine. I’m an optimist, albeit one increasingly informed by cynicism. Economic depressions, political upheavals, wars, and the like, though the human condition makes them inevitable, are merely interruptions in human progress. Marshalling reasons why a folly is about to repeat itself is altogether different from a religious dogma that everything is going to change radically. So the world is not coming to an end, notwithstanding the theme of the new blockbuster 2012.

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