Economist touts radical idea for U.S. election rivals

When it comes to evaluating the economic and fiscal proposals of Democratic President Barack Obama and his Republican challenger, Mitt Romney, in the U.S. election battle, economist Richard Duncan takes a firm pox-on-both-their-houses view.

The Democrats “have no discernible ideas at all,” Mr. Duncan was saying the other day from his home in Bangkok. Which is not surprising coming from a bearish adviser and author of conservative bent who thinks the world went off the rails when it abandoned the gold standard. His latest book is called The New Depression. But he is even harder on the Republicans, who have been “kidnapped by this far-right fringe, the Tea Party. The Tea Party wants the government to cut the budget deficit right away. If they do that, we will immediately collapse into a new Great Depression.”

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But he isn’t wandering the streets of Bangkok carrying a sign reading: The end is nigh.

Quite the contrary. “If I thought the world were doomed, then I’m not really sure I would write these books. I would just depress myself,” he says, sounding somewhat tired after nearly three months travelling the globe to promote his new book. “But I believe that we’re repeating exactly the same process that we went through in the Great Depression. … This time, we’ve got to do better. We have to learn from our mistakes.”

He comes armed with what seems a politically impossible solution that involves governments taking full advantage of record-low long-term interest rates to borrow vast sums and then funnel the cash on a massive scale into new industries such as solar energy and other cutting-edge technologies. Such investments, he argues, have the potential to transform economies, rebalance global trade and produce a high enough return on capital to bring public budgets back into balance.

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Related book: The New Depression

Related previous posts:

Jeff Glor interviews Richard Duncan (video)

Interview with Richard Duncan

Related link: Richard Duncan on Capital Account