Richard Duncan: The Real Risk Of A Coming Multi-Decade Global Depression

Richard Duncan, author of The Dollar Crisis and The New Depression: The Breakdown Of The Paper Money Economy, isn't mincing words about the risks he sees ahead for the world economy.

Essentially, he sees the past 50 years of economic prosperity fueled by globalization and easy credit in serious danger of being unwound, as the doomed monetary policies currently being pursued by the word's central banks result in a massive multi-decade depression that spans the globe.

The first version of The Dollar Crisis, the hardback, came out in 2003, so I wrote it in 2002. And at that time, the dollar against gold was $300. So the dollar has lost more than 75% of its value since The Dollar Crisis was written, and I don’t think it’s going to stop here. I expect it to continue to lose value over the years and decades ahead.

But what we’re seeing is that the real theme of The Dollar Crisis was that the post-Bretton Woods international monetary system was fundamentally flawed because it couldn’t prevent trade imbalances between countries. And the US had developed an enormous trade deficit with the rest of the world and this blew the trade surplus countries like Japan and China into bubbles. And then, the dollars boomeranged back into the United States and blew it into a bubble, as well. I didn’t know when the housing bubble was going to pop in the US but I knew it would. And I wrote in The Dollar Crisis that when it did, we would have a severe global economic recession/depression that would involve a systemic banking sector crisis in the United States and necessitate trillion-dollar budget deficits and unorthodox monetary policy to prevent a Great Depression from occurring.

And so that’s what we’ve seen. The crisis arrived in 2008 and the government responded with trillion-dollar budget deficits and quantitative easing on a multi-trillion-dollar scale. So they have managed to keep this immense global economic bubble inflated through unprecedented fiscal and monetary stimulus in combination. And so that’s where we are now. We still have a massive global economic bubble that the policymakers have continued to keep inflated. And that’s what they intend to continue to do because they believe – rightly so, I think – that if they allow it to melt down, then it’s going to result in a depression at least as bad as that of the 1930s and 1940s. And they’re going to do everything in their power to prevent that from happening for as long as possible.

I think it’s horribly regrettable that we find ourselves in a position where we are on government life support. We should’ve stayed on the gold standard in 1968. The global economy would be much smaller today than it is, but we wouldn’t now be in this position where we have to rely on money creation on a trillion-dollar scale to keep our global economy from collapsing. But now that we are here, I’m not sure that there are other alternatives other than 1) keeping the thing inflated or 2) allowing a new Great Depression to wipe away globalization. And not just the savings of the American public, but a huge part of the global economy altogether.

This is not going to be a 1921-style two-year recession that we bounce back from after a little bit of pain and unpleasantness. After a 50-year global economic boon involving what is now a $59 trillion expansion of credit in 50 years, this isn’t going to be a one or two-year hard recession. This is going to be a multi-decade global depression and I’m not sure that anyone alive today would live long enough to see the recovery. I mean, it’s like Rome: when Rome fell, there was a recovery, but it was 1,000 years later. This is the kind of depression we're looking at if we allow this $59 trillion credit bubble of ours to implode.

It's hard for Duncan not to see this great economic unwinding as inevitable, but he does hold out some hope that if central banks are going to continue to print (as they very likely will), funneling that new capital into investment in new technologies and infrastructure is our best hope of potentially creating solutions that may enable us to extricate us from this mess. An exposition on this thinking can be read here.

Click the play button below to listen to Chris' interview with Richard Duncan (58m:17s)

This is a companion discussion topic for the original entry at

I'm dumbfounded.  By all accounts he seems like a smart guy.  I read his second book.  But to me it seems like he has the mother of all blind spots when it comes to understanding resources and depletion.  Even if we spent trillions to somehow find a way to generate limitless energy that doesn't solve any of the other problems that, when viewed holistically, point to the fact that this entire economic model simply isn't sustainable.  
If we did find these technological unicorns doesn't he think that surplus would result in increases in population not a peak and slow decline?  Did he really say that all will be well if we print all the that money assuming we can still get cheap labor off the backs of the third world?

Chris did an awesome and gentle job attempting to steer his line of thinking into that blind spot but he simply wouldn't go there.  It reminded me of the discussion with Keen, where Keen pointed out that people making these policy decisions really will not allow themselves to think outside of the mental model they have trained in academically.  

There is a parable floating around the web on many many sites.  It apparently strikes a chord with many many people.  It is conversation between a village fisherman and a vacationing businessman.  Here one version. 

One day a fisherman was lying on a beautiful beach, with his fishing pole propped up in the sand and his solitary line cast out into the sparkling blue surf. He was enjoying the warmth of the afternoon sun and the prospect of catching a fish.

About that time, a businessman came walking down the beach trying to relieve some of the stress of his workday. He noticed the fisherman sitting on the beach and decided to find out why this fisherman was fishing instead of working harder to make a living for himself and his family. “You aren’t going to catch many fish that way,” said the businessman. “You should be working rather than lying on the beach!”

The fisherman looked up at the businessman, smiled and replied, “And what will my reward be?”

“Well, you can get bigger nets and catch more fish!” was the businessman’s answer.

“And then what will my reward be?” asked the fisherman, still smiling.

The businessman replied, “You will make money and you’ll be able to buy a boat, which will then result in larger catches of fish!”

“And then what will my reward be?” asked the fisherman again.

The businessman was beginning to get a little irritated with the fisherman’s questions. “You can buy a bigger boat, and hire some people to work for you!” he said.

“And then what will my reward be?” repeated the fisherman.

The businessman was getting angry. “Don’t you understand? You can build up a fleet of fishing boats, sail all over the world, and let all your employees catch fish for you!”

Once again the fisherman asked, “And then what will my reward be?”

The businessman was red with rage and shouted at the fisherman, “Don’t you understand that you can become so rich that you will never have to work for your living again! You can spend all the rest of your days sitting on this beach, looking at the sunset. You won’t have a care in the world!”

The fisherman, still smiling, looked up and said, “And what do you think I’m doing right now?”

The "99%" would be happy to live a simple life connected to local friends and family.  On the other hand Adam Smith describes the "1%" when he wrote:

All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.
According to the article at this link:
"The Chinese government is pushing forward with a plan that will move 250 million Chinese people from rural communities into newly constructed towns and cities over the next 12 years. . . Those who live in rural communities in China are largely self-sufficient, living off of the land and requiring very little in terms of infrastructure and transportation."
Those 250 million poor, rural, but landed peasants are living much happier healthier cooperative lives than they will after they are driven from their land and villages into the cities where the plutocrats will buy their labor cheap and sell them life's necessities high.  So the "1%", in their pursuit of all for themselves, never stop in their drive to monopolize everything, including even peoples lives.

Simple, minimalist, local living is our only hope and if there is any truth in the businessman and the fisherman parable our real desire. 


It seems to my poorly trained eyes that Mr. Duncan expects continued exponential growth of, well, everything including population.  He did not touch on how resource limitations might affect his vision.  How we might find the infinite growth in energy that such a scenario would require.  Nor did he discuss how, with the failure of the infinite growth paradigm, we might be able to conserve our finite resources or limit our way of life to adapt to increasingly limited resources.
I also have to say that this notion of borrowing trillions, even at very low interest rates, sounds a lot like an economic perpetual motion machine.  We know they don't work in the real world.  Is it possible that continually expanded borrowing could work that way?

What happens when the Fed sits on trillions and trillions in gov't bonds?  Even if they recycle interest payments to the gov't there must be some end point.  A possible problem with that scenario is that the gov't gets to decide where that money goes.  They could invest wisely as both Chris and Mr. Duncan dream, they could hand it out to people as Chris suggests, they could just blow it on new war toys or they could spend other countries into bankruptcy trying to keep up, like Reagan did.  And, of course, there was no mention of what the infinite growth machine is doing to the environment.  To me, when all other questions are answered, that is the stopper.  We simply can't continue doing what we're doing to the earth, even with whiz bang new inventions.

Coming right after the excellent interview with Steve Keen, this Duncan character sounds exactly like a voice of the economic establishment that Steve rebelled against. I don't know if Chris actively looked for such a stark contrast of ideas in two consecutive podcasts, but the result has been remarkable.
Duncan tries to blow some life into the old tired (by now) theoretical nonsense that "we can grow our way out" of this predicament if only the FED would agree to spend more money in some carefully "targeted" fields. It's nothing new than the old Krugmanian argument of spending "more" in order to create demand. It's appalling (to me at least) to see how many economists choose to cling from a theory which has been totally discredited over the last 10 years. The total lack of imagination of the people in charge of our economy, as well as their dogmatic dedication to such a faulty theoretical contraption, does not bode well for our future. This is like listening to a new religion of "growth" preaching economic absolution to a crowd which sees its daily life being slowly but surely shredded to pieces.

Yet, despite the almost endless argumentation pro or against the "easy money which will eventually cause growth" solution of the current crisis, I failed to find some convincing answers to a few very simple (and I believe common sense) questions:

  1. If increasing debt is of no real consequence for a government, why choose to borrow instead of just issuing new currency ?

  2. If this debt is to be paid back (to ensure the stability of the currency), how exactly is this supposed to happen ? Is it even possible ? If so, what's the mechanism used to ensure a debt reduction and how it would affect our lives ?

  3. How is this continuously increasing debt supposed to solve the deflation problem caused mainly by the payback obligations inflicted by same debt ? I see some serious logic "slippage" in this entire argument, at the very least…

  4. Finally, how is this perpetual growth going to allow for an increased population AND increased (or at least constant) standard of living in a world with finite resources (our planet) ? I could see some reason to debate the issue if we would plan to expand our civilization within our Solar system (for now) in the next few decades, however nobody mentions this possibility even remotely, while the current so-called space program has became a sad joke.

If some modern economist could come up with some reasonable answers to the above questions, he would do a tremendous service to the science he professes for a living. Until then, don't expect people to take modern economics (and its brainwashed scribes) too seriously. And yes, it is terrifying to face an existential crises of such dimensions with no theoretical tool able to explain it, much less to help solving it…

Mr. Duncan mentioned, recommended investing in genetic engineering to help our economy grow.  How can that create thousands of jobs for the masses?  And with no oversight for big business or government what kind of abomination would result from fast tracked genetic engineering?
AK GrannyWGrit

I had trouble listening to this podcast.
First, it's difficult to see how accumulating more global debt can have a positive impact, regardless of how it is spent.  Just because we have lucked out so far by avoiding hyper inflation and high interest rates, doesn't guarantee that we can count on continuing to dodge that bullet indefinitely.

Second, I have a hard time believing that the world governments are going to suddenly start spending newly printed money wisely.  They've never done that in the past.

Third, as Chris pointed out, there is the resource issue.  Even if we spend billions or trillions on new battery technology, or any other new tech, what is the likelihood that the technology will require resources that are still readily available in large quantities.  I remember reading that there is not enough lithium available to supply resources to all the lithium battery plants currently under construction to supply electric car batteries.

Finally, everything I see tells us we are already seriously into population overshoot with our current world population of 7,235,070,408 and climbing.  I won't bother to lists the proofs.  Virtually everyone on this site has them memorized.

I simply can't see even a miniscule probability that we can find a way out of this that doesn't include a day of reckoning.  I wish I could. 

Having said that, I truly hope I am wrong and Richard Duncan is right.

I think I'm a luddite.  I was with Richard up until he talked about continued deficit spending directed to technology.  Like cancer vaccine etc.  
First off, who's going to pay for the new wonder technology to generate the fantastic return on investment?  The people are already flat out broke (except for the top 5% or so).   The governments financing this investment have to be tapped out after the spending orgy.   Even if the gov't still thought it could continue spending even more and paid for the treatment, it becomes the shareholder and the consumer.  How does that work?

Now the moral outrage: As humans literally chew our way through our planet, do we really need more technology to make us collectively live longer?  It smacks of the same 'me, me, me' mindset of the past 30 years that has mortgaged (stolen) our children's future in order to keep the party going even longer.  Really?!?

Goodness, but I a boring. And frustrated.  
Here I stand before the wailing wall watching economists ply their trade with thimbles and peas.

Please Mr really important and serious Economist,  forget the mind games. We need results. 

Professor Hagelstein and his friends could do with a few pennies, a few crumbs from your august table, to try and save your ungrateful derriere.

Or not.

Yes I know that solving the energy crisis wont guarantee our happiness any more than money will make the destitute happy in the long run. But it will sure help in the short run.

After we have excess energy, I will tell you what our next problem is and how we are going to solve it.

But you already know, don't you? God but I am boring.

Back to the wall.

Mr. Duncan has a hope for a better future based on continued returns similar to past returns.  He even stated that his plan has a short term window -20 years or so I think he said. (Even a stock prospectus is required by law to state that such an assumption is guarded-past performance is no guarantee…etc.) Anyway after 20 years or so we reach the end of our window of opportunity and that is assuming  omniscient investment by the governments of the western world.  If the new technologies are not in place by then our civilization is doomed.  The people of the future may well not speak English.
China just got through with a similar plan and ended up over investing in a bunch of stuff that will be crumbling into dust and out of date technologically when it is actually needed—if the world demand were to continue to grow–which it probably won't much longer if at all. Their family restriction plan is a real blind spot in that thinking.

As I said at the beginning, Mr Duncan has a hope.  This hope is based on a hysteria of sorts stemming from terror of a different and bleak future. I have come from such a place myself. It is hard to accept a distinctly different future. It takes time.

So, Chris's conversation reminded me of some I have had with friends about the limits of growth… only Chris is much more patient than I and so it went on longer than my talks have done.  Maybe, Chris should have asked if Mr Duncan had read his book yet.  I hope Mr Duncan has or will read or listen to  the Crash Course.  It is possible that this conversation planted enough doubt in his mind that he will change his views.  Unlike Mr Duncan I have never published my views, nor been interviewed so I have very little prestige on the line if I were to have a 'flip-flop' event in my thinking.

I don't plan to invest even $250 in hearing his views, but it would be interesting to hear what he thinks when we reach April 2016.  Maybe he will have awakened to a different hope by then.  His very long term view seemed very similar to most of those on this site, but he's still banking on his plan for the next 20 years to enable us to escape or catapult over the limitations of energy and environment. There is still a failure to engage with the facts.

Like the realization of any of us who have disassembled the household of a deceased relative; "The time has come to down size our stuff and clutter". Joy is not dependent on using more fuel.  My hope is for the awakening of Mr Duncan.

Please leave no wake.

Our bodies are not pristine, they are a riotous swamp of sexual excess. Genes are jumping in your gut as you read this. Shame and scandal in the family.
Besides, the chromosomes are not the "blueprint of life". They are the blueprint of amino acids, which may or may not fold correctly to form micro machines depending on their habits (Morphic fields).Genetic Engineering is a tool, but it has it's limitations.

Again, inaction will have consequences. We have nominated ourselves as the stewards of this planet, so we had better get good at it.

animation of human cell world:

Wow, this podcast was surreal.

We have a global economy and in this global economy of ours, there are two billion people who live on less than three dollars a day. So we are never going to get to capacity constraints in labor leading to wage push inflation for decades. And that means that we can step on the stimulus accelerator – a combination of fiscal and aggressive monetary stimulus – without worrying about getting to high rates of inflation in the United States.
So...let's take advantage of the two billion people living on less than three dollars a day so the US can dominate energy and technology (and yes, ehem, the military of course)? Wow, what a concept...such a new and creative idea.
The government could act as a giant venture capital company. It could raise the money and then allocate this money to the most promising 1,000 American entrepreneurs across all fields and establish joint venture companies with them. And when one of these joint venture companies invents a cancer vaccine, they could list that on NASDAQ for five trillion dollars. And it would not only prevent cancer but it would be enormously profitable and pay for itself many times over.
My plan is to take up smoking when I'm 80 if I make it that long...that way my daughter won't have to give up all her income to take care of me into 90s and 100s. Of course, she might be one of those living on three dollars a day, so all bets may be off.

The first thing that came to mind when he started talking about the government funding technology research is Dr. Stadler and his State Science Institute in Atlas Shrugged.  It is a recipe for disaster.  More and more I am seeing the brilliance of Ayn Rand.
My second thought was of Hayek in the The Road To Serfdom. 

"While it is true, of course, that inventions have given us tremendous power, it is absurd to suggest that we must use this power to destroy our most precious inheritance: liberty.  It does mean, however, that if we want to preserve it, we must guard it more jealously than ever and that we must be prepared to make sacrifices for it. While there is nothing in modern technological developments which forces us toward comprehensive economic planning, there is a great deal in them which makes infinitely more dangerous the power a planning authority would possess."

I won't be bothering to go to Mr Duncan's website, his story was at best totally incoherent.
These "Republican" business as usualers years ago denounced "Keynesian stimulus", are now embracing it as their own as they did with Reaganism which was no more than spending money you don't have on stuff that's not needed.

There is no such thing as "Keynesian stimulus", spending printed money is always spending printed money, spending borrowed money is always spending borrowed money. 

The problem with grand Government directed "Apollo" schemes (coming from people that oppose big Government schemes like "Star Wars") is the money ends up being directed into political pet projects like "genetic engineering", "carbon capture"and "drill baby drill". It's about the People running governments buying political popularity to keep themselves office by a promise that tomorrow will be the same as today only better, their vision only extends to the next election. We no longer have "leaders" we have followers.

At first sight of Mr Duncan wanting to spend bucket loads of printed cash on "genetic engineering", one immediately get the drift of a wannabe politician.

If we are going to enter the fantasy world of money pulled from thin air and thrown out windows it doesn't matter if the recipients are bankers or genetic engineers. Attempting sell it as being as good as earning real money by hard work in creating something of value is simply fraud.

Money only ever represents the goods/assets in the economy, if the volume of money created is not matched by the value of goods/assets in existence then the value of money must fall. Whilst it is true that the size of the global economy and the deflationary trend with globalized labor costs and the decline of interest rates to near zero are to an extent masking the problems with economies and are allowing short term money printing to occur without "hyper inflation". It can't last forever, the day of failure can't be predicted it's like quantum mechanics. There are no survival strategies other than not needing very much. Gold is only worth something if people are prepared to exchange it for something else. I have the view that day the collapse comes gold won't be worth much, a good pair of boots, a sack of wheat or a gallon of gas might be a lot better.

Ponzi schemes look like super investments until the day they fail, then everybody's broke.

What Governments have to be doing is working out how to structure managed decline, the banks must fail interest payments are not mathematically possible in either a steady state or a declining economy. The whole "borrowing and lending" structures will have to be altered with consumer finance largely curtailled.

Thank you for inviting me to be your guest and for conducting such a great interview.

One of the things we discussed is "QE Is Debt Cancelation".  The central  banks don't want the public to understand this, but it is true.  When a central bank prints money and buys a government bond, it effectively cancels that  government debt.

I have recently made a Macro Watch video that explains how this works in considerable detail.  This is an enormously important subject.  It is impossible to understand the true state of the global economy, central bank strategy or the policy options available to us until this fact is understood.

I would like to share this video with the Peak Prosperity community.  Please click on the following link to watch "QE Is Debt Cancelation":

Richard Duncan

I for one appreciated you effort to explain how debts are canceled with that thimble and pea trick. (My imprimatur is probably the kiss of death).
Your views are in line with the ideas of Nichole Foss who says that there are too many claims on underlying assets, and that these will have to be annulled by some mechanism.  Are you implying that there will be losers in this current arrangement? 

Is my assumption correct that the big losers will be the buyers of bonds ? (Code for pension funds).

I am all for a bit of planning. Look where laissez faire has got us to.

If we followed the script laid out by either The Club of Rome and diverted our capital from industry to agriculture (and some other medicine) by 1982 we would have stabilized the economy to a level enjoyed in 1890. Not very good, but a lot better than what we have coming down the turnpike. 

Gerard K O'Neil's pleas also fell on deaf ears. 

Well here we are now, looking at each other.


Mr Duncan has a good grasp of how a lot of the pieces fit together.  A lot of what he said was right.  But there were some flaws in his thinking that I feel are important to mention:
"QE is debt cancellation - the more we do, the better"

QE is temporary debt neutralization, but at a price.  What's the price?  Injection of vast quantities of base money into the economy.  This depresses rates, as base money rushes around looking for yield, a hot-potato that is transferred from asset-holder to asset-holder, and once rates are depressed, capital allocation stops working properly, a whole bunch of capital misallocations occur, and savers are punished as a side effect.

As long as huge amounts of base money is floating around, short rates will not normalize.  Unlike forgiven debt, "temporarily neutralized debt" carries with it an ongoing price - it also neutralizes our centuries-old capital allocation mechanism.  Every investment opportunity looks good when short rates are at 0%.

Is there a limit to how much base money we can have floating around out there before an unfortunate and surprising new effect appears?  That I don't know.  It worries me, but I have no specific evidence on that score.

"We don't have inflation" - and the implication is, we won't get inflation because we're in such a special time because globalization inoculates us from such things.

My observations:

QE injects money into the asset markets.

Government deficit spending injects new money into the real economy.  Massive government research projects will be classically inflationary.  Last time we ran multi-trillion-dollar deficits, we definitely did have inflation.  Anyone remember the inflationary spike from 2010-2012?  It followed the 2.5 trillion dollar deficit spending binge from the US government.  That's what the evidence shows.

Since short rates (probably?) cannot rise given all that base money out there chasing yield, then the safety-valve will probably be the currency.  Namely, money will flee the USD as a result of the inflation, adding commodity inflation to government-spending inflation.  Long rates would probably rise.  We might even get a bond market correction as foreigners decide to bail out of some of their USD treasury holdings.  That correction could get out of hand.  Or not.

If the Fed ramped up buying in response, they would end up owning the bond market.  The amount of base money out there would be immense.  The dollar would likely suffer.

For the Fed to slow the situation down via raising short rates, it would need to pay interest on Excess Reserves.  Likely, those Excess Reserves (where base money goes to rest that isn't needed for economic liquidity) would be growing at right around the rate of monetization - more than a trillion or so per year.  It would be progressively more expensive for the Fed to actually raise rates as time passed.

I'm not sure there would be an easy way out for the Fed.

Good news is, it would likely be good for gold.

"No capacity constraints in labor" / globalization

This implies poor garment workers in Bangladesh are functionally equivalent to a class of MIT graduates.  This is a research project.  Can we just farm out our massive crash-project research effort to India and China?  Do we even want to?

There will be wage-push inflation, it will just be focused in narrower areas where we will have labor shortages - the gang necessary to do the R&D, along with the communities that support them.

So let's not kid ourselves.  We're signing up for continued capital mis-allocation, more base money dumped into the economy, and based on our recent historical experience with government deficit spending, we will definitely get inflation.  Its not free.

The only question I have - is it better than another dose of "something that didn't work" - standard QE?  I think we'd end up with more at the end of the day, so there's that.

If we got those fancy new batteries, it probably would be worth the price, in the long run.

But it certainly wouldn't be free.

This is the first Chris Martenson podcast I have ever had to turn off. I simply couldn't listen to the status quo financialization lies this guest was spewing out of his pie hole.


Sure, the government should add another few trillion dollars on top of the heap and "invest". The words "government" and "investing" when spoken together are an oxymoron. The 787 billion dollars (TARP) the feds handed over to Hank and his buddies when they were blackmailed demonstrates this perfectly.



Chris, I know you are extraordinarily tolerant and broad-minded however you should really have reconsidered this guys interview and perhaps tossed it in the trash bin before publishing it. The podcast can be misconstrued as an endorsement of your guests ideas - which I strongly believe is NOT your intention in this case.

From reading the comments we're all singing from the same hymn sheet more or less. Earth - finite. Net fossil energy - peaking.  Growth - heading negative.  Population - increasing .  Economists - clueless.  Politicians - paid off.  Msm - looking the other way.  People - eating.  Outcome - very very bad.   Have I missed anything?   Got to keep the Ponzi scheme going.  17 more years, please.  (I'll be 70 then) Anything more will be a bonus.

I really don't get that. Please explain. What happens to pension funds etc that held those bonds?