(Interviewed by Louis James, Editor, International Speculator)

This interview was first published on March 10, 2016.

Editor's note: Today, Casey Research founder Doug Casey shares some frightening details on the coming “Greater Depression.” He says we could see the long-term economic decline become a true financial collapse…and the chances of it becoming obvious before the end of this calendar year are very high

Louis James: Doug, you say, “We are truly on the edge of a precipice.” Can you expand on that?

Doug: Sure. I first predicted what I call The Greater Depression in 1982. I like to look at things from a long-term point of view. If we look at the United States as a civilization, I’d say it reached its peak in the late 1950s. That was probably best characterized by the 1959 Cadillac, the most extravagant car ever made for the common man. That was our economic peak, relative to the rest of the world.

At that time, we had 75% of the world’s automobile production, 75% of the world’s airplane production, most of the world’s steel production, about 75% of the world’s stock market capitalization, and almost all of the world’s skyscrapers. Long before the rise of large German, Japanese, and now Brazilian and Indian companies, the only companies that had real clout in the world were based in the U.S. Almost everything of any worth being made or done was done in the U.S. The very idea of America was unique, and all the world loved it.

L: And it’s been downhill ever since?

Doug: Things started declining in earnest with the Vietnam War. Johnson took silver out of coinage in 1965, then Nixon devalued the dollar in 1971. Since then it’s been one economic crisis after another. We’ve amassed an incomprehensible amount of debt that can never be repaid without some sort of default. It’s not just the official $20 trillion of Federal debt, but another $200 trillion plus of contingent liabilities and future guarantees. If you understand economics, Austrian economic theory in particular, you recognize that since its peak around 1960, the U.S. has been increasingly living off of previously accumulated capital. It’s becoming more and more like Wile E. Coyote, who has run off a cliff, but hasn’t noticed it yet.

L: But he does, eventually, and then he falls…

Doug: It’s impossible to say exactly when all the government interventions into the economy, and the distortions and misallocations they’ve caused, will be unwound. But even by government statistics, the average person’s standard of living has been going down since the 1970s. If we accept the definition of a depression as being a period of time in which the average person’s standard of living declines significantly, then The Greater Depression started a long time ago. By this measure, my prediction of The Greater Depression was accurate then, and it’s accurate now. The effects have been disguised mainly by two things: advances in technology and debt. Debt means you’re either consuming other people’s past production, or mortgaging your future production.

L: I hadn’t thought of it that way. When I was a boy, back in the 1960s, the average family had a house, a car, a couple of children, a dog in the yard, and savings in the bank. This was usually paid for by one bread-winner, usually a man. Today, this kind of lifestyle takes two incomes. The average family has no savings and is just one paycheck away from going broke. We’ve got flat-screen TVs, computers, and smartphones today, but how many children actually have two parents? I’ve never idealized my childhood years—rarely think of them at all—but it’s clear to me that there has been a huge reduction in the average American’s standard of living.

Doug: That’s exactly right. It used to be that the wife was a backup system. A failsafe in case the man lost his job, or something else catastrophic happened. Now, both spouses have to work. If either one of them loses a job, they can’t keep their heads above water. That’s a prime indication of what I’m talking about.

But let’s go back to that 1959 Cadillac. If you bought one back then, you paid cash for it. Then they introduced two-year financing. Then three-year, then five-year, then seven-year financing. Now, people don’t even buy their cars anymore; they lease them and have to give them back at the end of the lease. Your car used to be a minor asset. Now it’s immediately a liability.

L: I watched that happening too, with some bemusement. I want to own my car. And I certainly don’t want to wreck a rental!

Doug: Yes. And the same thing has happened in housing. Before World War II, you had to put at least 20% down to get a mortgage, and the term would be five years, at most. Then the 30-year mortgage came in, and then zero-percent down mortgages and interest-payment-only mortgages. It all just adds to the mountain of debt the average family lives under. All that debt indentures them; they’re tied down like medieval serfs.

But it’s not just individuals and families. The whole global financial order is built on debt.

L: And that’s bad, because…

Doug: Because if you pile up debt, it means that you’re living above your means. If you accumulate savings, it means you’re living within your means. The problem with all this debt is that people appear to enjoy greater prosperity—and there is some truth to that, because of advances in science and technology, two mainsprings of civilization—but in real financial terms, they are worse off. They may be worse off in psychological and social terms as well, but that’s hard to measure.

There are, of course, a lot of people who still try to produce more than they consume, but there are fewer and fewer of them as time goes by. Today, roughly half of the U.S. population receives some kind of income or other welfare support from the government.

This is not sustainable because the U.S. government is way beyond bankrupt. Anything unsustainable will come to an end. When it does, it will result in what most people recognize as a depression. That’s as per a second definition of a depression, which is a time when economic distortions and misallocations of capital are liquidated. When that happens, you have widespread bank defaults, corporate collapses, and massive unemployment.

The economy itself will change, as people shift from providing goods and services for an artificially high standard of living to those needed for a much lower one. This can impact commodity prices—things like rice and beans can go up, because that’s all people can afford, while filet mignon goes down, because people can’t afford it anymore.

L: When would you expect that to happen?

Doug: My view of The Greater Depression is that it’s not an exact prediction of when everything comes unglued, it’s a view of a civilizational process—a secular process, not just a cyclical change in the markets.

L: I understand. But c’mon Doug, people expect Guru Vision from a guru…

Doug: Well, as I said, I do think that we’re on the edge of a genuine precipice. We could see the long-term economic decline become an acute financial collapse. It could have happened in the early 80’s, when even the U.S. government was paying 15% to borrow. It should have happened in 2008, but they were able to paper it over by creating trillions of new currency units—most of which haven’t yet entered the economy. The long-term depression trend has been, as I say, disguised by the benefits of technological advance, but the acute collapse will be obvious to everyone. The chances of it becoming obvious before the end of this calendar year are very high.

L: It’s not just technology that disguises the loss of standard of living, there’s also the phony numbers the government puts out. Inflation that excludes housing, jobless numbers that don’t include people who’ve given up looking for work, and so forth.

Doug: Indeed. The most dangerous thing is that this is an election year. I expect the U.S. economy will be going into full collapse by the time voters go to the polls in November. Unfortunately, people have become accustomed to looking for political solutions to economic problems—problems that are caused by the politicians in the first place.

L: Like asking thieves to protect us from crime.

Doug: That’s exactly what it is. There are no political solutions. The solution is to get politics completely out of the economy, just as we separate church and state. But that’s not going to happen. The average U.S. citizen’s mind has been totally corrupted by dependency on the state.

I don’t support Donald Trump, because he has too many idiotic economic notions, but I’ve got to say that he’s the least bad of the candidates. He’s the only Republican who isn’t a Christian equivalent of a Muslim Islamist. And, believe it or not, he has the most reasonable and least warlike foreign policy attitudes.

The Republican Party management hates him, and will try to derail him, regardless of what their rank and file want. The good news is that this will destroy the party, which now stands for nothing but warfare with a tinge of religious fanaticism. There’s a reason they’re known as the “stupid party”—they might even try to put up Romney again.

Romney and Hillary are Deep State candidates. But maybe, especially if Hillary is—hopefully—indicted, the Dems might find a general. Americans seem to love their military, and that would be a winning ticket, although a disaster for the country, during the next crisis.

L: Well, it’s hard to see anything good coming out of the political process. But is it any surprise that people who are products of government education should look to government for answers to all questions?

Doug: None whatsoever. I think the election is going to come down to Trump for what’s left of the Republican Party. Sanders represents the ethos of the Democrats; they really like what he stands for. Intellectually, I mean. On a personal level he’s just a hostile, mildly demented old man with insane ideas. Kind of that party’s answer to John McCain. So the average Dem, especially the kids who’ve been totally corrupted by many years of state schools, would really prefer to “Feel the Bern.” But he’s a loose cannon, so the Dem wing of the Deep State would prefer Hillary, or a general.

L: Hillary’s ahead, as of the latest polls…

Doug: I know. The average American is a much, much bigger danger to what’s left of our liberty than ISIS, the Chinese, and the Russians combined. None of which, incidentally, are real dangers. Come November, the choice will basically be between Hitler and Stalin.

L: I don’t think it would be different if Hillary beat Sanders.

Doug: Well, I don’t actually want to compare Trump to Hitler, because I think that he, individually, is probably not a bad human being. He’s not insane, not like Sanders. Both are outsiders, which people want. Both speak their minds, for better or for worse.

L: So, who wins?

Doug: People are going to want certainty. They are going to want real change. Trump is going to offer it to them. Say what you want about him, Trump projects great certainty. During a time of rising chaos, people are going to respond to Trump’s certainty. So, while I’m not a great political handicapper—I don’t groove with the capite censi—I’m going to bet on Trump. The people, as opposed to the Deep State, want a gigantic change—at least as much as a president can create.

L: And in the final reel…

Doug: Again, Trump. The Republican powerbrokers hate Trump because he’s not one of them, so they won’t give him much support. But the rank and file Democrats would rally behind Sanders, because he’s where the party’s heart is at. It’s going to get messy. But in the end, I think the economy will be in full retreat, and people will probably turn to the businessman who projects certainty. Trump.

Editor's note: As Doug showed today, we're on the edge of a genuine precipice. The economy is crumbling…and there's a good chance things will only get worse.

But nothing will be as destructive as what's coming…something Doug says “could trigger the worst Depression in the history of America.” And there's nothing the government and Feds can do to stop it…

Fortunately, there's a way to protect yourself and your family—and even make money—during this major economic crisis. You can learn more about this collapse—and the steps you should start taking immediately—right here.