On GBTV Monday night, Glenn spent some time focused on the credit crisis and where the United States economy is headed. And while they both agreed America was headed for economic trouble, they had very different opinions about what could turn things around and lead to future prosperity.
He interviewed two experts who both agreed America was headed for trouble, but they had very different opinions on what the solutions were.
First he interviewed Richard Duncan, author "The New Depression."
Earlier in the week, Duncan warned that the current financial crisis was bad it ""so severe that I don’t think our civilization could survive it."
“In order to understand this crisis, it’s necessary to understand the role that credit has played in bringing it about,” he told CNBC.
“When we broke the link between money and gold, this removed all constraints on credit creation,” Duncan argued. “This explosion of credit created the world we live in, but it now seems that credit cannot expand any further because the private sector is incapable of repaying the debt it has already, and if credit begins to contract, there’s a very real danger that we will collapse into a new Great Depression.”
Duncan noted that policymakers believe that if they allow credit to contract, there will be a new depression.
“So they are going to do whatever it takes to keep credit expanding,” he added. “And that means more quantitative easing (QE), and when the Fed does QE3, everyone knows that stock prices are going to go higher," he said.
“If this credit bubble pops, the depression could be so severe that I don’t think our civilization could survive it,” Duncan noted.
On GBTV, Duncan told Glenn that economic collapse would likely lead to banks failing, lost savings, and a breakdown in global trade. Duncan also said that because the government would have no money, the military would have have to be called home which would weaken the United States as a global power. Crime would also skyrocket.
But what's the solution? Duncan said there were three ways forward. First would be to balance the budget today, but the result would be America spinning into depression. Second, we could continue on the path we are on now for another five years until reaching a crisis on the level of Greece. Duncan said this was better than option one as "it's better to die tomorrow than die today". The third option would be to continue borrowing but to invest heavily in renewable energy and new technology in order to lock in a future of prosperity.
You can watch the interview ON DEMAND on GBTV!
After Duncan's interview, Glenn brought on former Reagan economic advisor Art Laffer, who strongly disagreed with what he called Duncan's "big government solutions". While Laffer felt like America was in economic trouble, he said that a return to Reagan-era policies would help turn things around. He also said that Romney, who he thinks will win in 2012, would take America in the right direction and it will bring back American prosperity.
"The balance of what Romney will do along with a good Republic Congress will be spectacular and you will have a boom of incredible proportions," Laffer said. He added that the prosperity could be bigger than what Reagan and Clinton brought America.
Laffer said adopting Paul Ryan's plan would help balance the budget and bring the debt down over time and increase prosperity.
"It is fixable," he said. "In ten years you really will have incredible prosperity."