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Hello everybody I'm Gerri Willis the national debt -- ticking closer to sixteen trillion dollars.
By the time the show is over we will have 133.
Million dollars deeper in the hole.
Now some economists are saying the best way to dig ourselves out is more stimulus joining me now Richard -- author of the new book the new depression the breakdown of the paper money economy.
And Stephen Moore senior economics writer for the Wall Street Journal welcome -- both Richard I'm gonna start with you.
You say a new Great Depression is on the horizon why are we at the brink again.
Well I think we've never been -- the brink.
My theme of the book is that when we broke the link between dollars in gold in 1968.
This removed all the constraints on credit creation.
And credit absolutely exploded it grew from one trillion dollars and 1964.
To fifty trillion dollars in 2007.
-- explosion of credit created a great deal of prosperity.
But in 2008 -- couldn't be -- and now have credit begins to contract there's a very real danger we will collapse into -- -- depression.
Stephen what do you say that -- you agree is there too much credit is it causing a problem for the economy.
While there certainly was in 2008 a -- totally agree with out but I think most of it's been drained out of the system and in fact.
Right now the problem is just the opposite there's not enough credit Jerry and it's really difficult for small business and they get.
Loans to expand their businesses or start businesses but -- look I'm actually not a pessimist I actually think.
Were on the were I think we're very close to big boom and the economy -- I think it depends a little bit on what happens -- in this election.
But if you get you know if you do tax reform next year -- -- some entitlement reform stop and you get this account you can get the economy growing at.
45% as well capable of doing you know -- when -- Any reduction DR.
Two totally different views here of the economy where we're going Richard -- you used say that if we stop spending say austerity brings collapse tell us what you mean.
-- we have a sixteen trillion dollar economy roughly the budget deficit is about one point three trillion.
So if you balance the budget immediately our economy shrinks to fourteen point seven trillion.
And the government spends a million a -- trillion less.
Then millions of Americans will lose their jobs consumption will collapse business investment will collapse we will spiral into new depression.
It's only the government life support these trillion dollar budget deficits that are keeping us from collapse what do you -- -- I think just the -- I think the trillion dollar deficits or something that's really.
Holding me back the economy in fact.
But we had a huge experiment.
Jerry over the last three years maybe the most expensive -- experiment in the history of the world.
And keynesian economics the idea that government spending and debt stimulates the economy and it's certainly didn't work very well in 2009 -- So I I just think it's the wrong approach.
I actually think it by the way nobody's talking about -- a balancing the budget and -- one year to year of three or four years it's gonna take a long time to undo the damage we've done.
But the -- where I think you're wrong on the arithmetic is look if we get this economy growing like I'm talking about 45%.
You're gonna got a lot of new revenues and this is what happened in the eighty's and ninety's the way we balance the budget -- -- so much growth we created our tidal wave.
-- tax receipts or Richard what do you think -- -- but what happened in the eighty's and ninety's we should follow the example of President Reagan.
President Reagan radically increased military spending that -- the US country's debt to increase by 188%.
And he invested very aggressively in the military.
And that successful government investment in the military now gives us global military dominance so it's time to apply this very successful government investment strategy.
And apply -- to American industry and American power generation.
And if we -- will have dominance in those areas as well.
Well you didn't know you've talked before about solar energy in the importance of that Obama has been an office he's spent some hundred billion dollars on solar energy was sort of mixed results you've got to admit that's -- the best case scenario.
See anyways it spending the government spending that we needed there really keynesian nice push.
You know on that some kind of big federal scheme whether it's solar energy your.
Maybe more spending on on military would this do -- when this pull us out of about recession and a big way.
-- -- you what happened in the 1980s don't forget we had a big tax cut we would cut the top tax rate in the 1980s.
From 70% although way down to 20% so was a huge private sector supply side expansion that really.
Explain what happened in the 1980s now it is true the big military buildup was.
Finance but -- dot.
But you know what it was a -- probably a pretty good investment in the long term not because it led to new technologies but because that it -- eliminated this enormous run over the US economy.
Called the Soviet Union.
Well you know let's look at national debt under President Obama.
It's -- grown dramatically already.
There's some kind of five trillion dollars worth of stimulus baked into this economy already and it hasn't had any of the kind of consequences that you're describing.
Why would more money make it better.
Well had we not had that stimulus than we would have collapsed into a 1930s style depression so yes has been extremely effective.
The problem is is I'm not talking about stimulus I'm talking about very aggressive investment.
We have a one -- history opportunity.
For our government to borrow trillions of dollars at one point 8% interest.
If we borrow this and invest in transformative 21 century technologies like solar nano -- genetic engineering and Biotech.
In the United States we'll have an absolutely unassailable lead in 21 century industries and we can lock and another American century.
Are you -- that the kind of investment that president Obama's done worries pick winners and losers are talking about the Manhattan Project where the government took all the geniuses that could find.
Put him in New Mexico together and through limitless amounts of money at them until they created -- miracle weapon that won the war in the Pacific -- last word.
If -- works very well I don't think there's never been an example where this kind of industrial policy of bringing the great greatest minds together in Washington.
And creating a booming economy very works very well back that I want the greatest minds in America always far away from watching -- As popularity -- if they are they are my friends I because I -- you open up and and here in Oklahoma City and that's it.
And Richard's right here beside me out with -- -- thanks so much for helping me out tonight really appreciate it time to sit -- well.