UPDATED: Great Depression 2.0: An Interview With Vox Day (PART II)

Debt,Economy,Federal Reserve Bank,Inflation,libertarianism,Political Economy

The “infamous Internet Superintelligence,” Vox Day, author of “The Return Of The Great Depression,” needs no introduction. My WND colleague and fellow libertarian dishes it out on the impending depression, D.C. dummies (down to their position under The Bell Curve), the U.S.’ Marx-compliant financial system, and a dark future. As always, Vox makes this glum stuff fun.

The first part of my interview, “Great Depression 2.0: An Interview With Vox Day,” is available now on WND.Com. The interview continues. The sequel will be posted on Barely a Blog on Friday evening.

Be sure not to miss your double dose of Day.

UPDATED (July 2): AS PROMISED, YOUR DOUBLE DOSE OF DAY. You’ve read the first part of my Vox Day interview on WND. Now to the sequel, exclusive to Barely A Blog:

Ilana: To mention the Fed today as anything but a hedge against inflation is to qualify as “Worst Person in the World.” Early Americans were not nearly as baffled about what the Fed did. Comment with reference to the on-and-off attempts to eradicate this Federal Frankenstein. What good would an audit of the money mafia do?
Vox: Keith Olbermann should have stuck to sports. He has no idea what he’s talking about when it comes to economics. The Fed isn’t a hedge against inflation, it is the primary engine of inflation just as its three predecessors were. A genuine audit of the Fed will immediately end its political viability and probably its existence, which is why the Fed is fighting so desperately against the Ron Paul bill. But the end result is inevitable. The Fed can’t hide behind fictional statistics forever, as with the Soviet Union, people eventually begin to notice that they are not, in fact, wealthy and well fed.

Ilana: My second favorite line in your book: “… the only sense in which mainstream economic theory is worthy of serious study is the sense that a flight recorder demands intense examination after an airplane crash.” (One quibble with this analogy would be that the flight recorder contains retrievable immutable truths.) What hope is there for an awakening if “mainstream economic theory” is precisely what is being seriously studied and heeded by those among us who are not reading Dick Morris?
Vox: The only hope is for economic sensibility to be restored post-crash. There are some positive signs, such as the widespread mocking of Paul Krugman’s belated warning of a “third depression” after the failure of the second stimulus. Krugman said a $600 billion stimulus package was needed, Obama got a $787 billion package through the Congress, and it failed anyhow. But the fact that these Neo-Keynesian clowns are still taken seriously and their models dominate the political discourse is an indication that a serious theoretical retooling will not happen until after the Great Depression 2.0 is well underway.

Ilana: At first the pols conceded that what they had given us was a jobless recovery, which is a lot like a housewarming for the homeless. They’ve quit that Big Lie and are now touting all the jobs BHO has created. What’s going on? Tell us why official indices such as unemployment and GDP are not to be trusted.
Vox: Unemployment is dependent upon reducing the size of the labor force. So, if you’re out of work and aren’t jumping through the BLS hoops, you don’t count as unemployed. It’s a joke. GDP counts spending but doesn’t subtract debt, so it’s like saying that you’re rich because you maxed out your platinum Mastercard. Until the debt is paid back, you can’t properly count it as economic growth. And almost all of the GDP growth over the last 20 years has been nothing but debt growth. And now that the debt is shrinking as people and governments default, GDP will begin to contract oo.

Ilana: I know who the “Zulus” are; I’m from that part of the world. You lost me with “Whisky Zulu.” Explain.
Vox: It’s just my personal reference to Weimar and Zimbabwe, two famous cases of hyperinflation. The Whisky Zulu scenario I consider is the hyperinflationary one that many inflationists favor. It’s a credible scenario anticipated by many very smart people, but I believe events are demonstrating that the debt-deflation scenario is the one that is playing out instead.

Ilana: I agree with you that “the Great Depression 2.0 will be worse than its predecessor.” Debt. Consumption. Credit. Have at it (p. 211).
Vox: It’s pretty simple. I give 10 reasons in the book, but two should suffice for here. First, the amount of outstanding US debt to GDP is proportionately greater. It hit a peak of 287% in 1933, and 375% in 2009. Second, stimulus plans that extended and exacerbated the Great Depression were limited to the USA. This time around, Europe, Japan, and China have been actively engaged in their own stimulus packages as well, so the economic blowback is going to be much larger on a global level than it was in the Thirties. Except for Germany, which had its own particular issues related to losing WWI and the strictures imposed by the Treaty of Versailles, the problems faced by Europe did not rise to the level of a “Great Depression” because Europe’s leaders didn’t make it worse by listening to the Keynesians as Hoover and Roosevelt did.

Ilana: It’s befitting that we end with perhaps the most important right in a free society. My favorite line in your book: “… one should always be deeply skeptical of any economic theory which … serves as a justification to allow one man to dispose of the property of another.” Private property has become a dirty word in an increasingly collectivist America. Not even Rand Paul, in his valiant defense of “private businesses” vis-à-vis the Civil Rights Act, could bring himself to speak to the sanctity of private property. People are comfortable alluding to “freedom of association” but not to what a man owns. Your thoughts with a view to what lies ahead.
Vox: Government can’t fix what government has broken. All of the desperate attempts to “fix” the global economy according to Neo-Keynesian and Monetarist principles are going to fail, state, local, and even national governments are going to default on their debts, and it’s going to be a very difficult road ahead for the next two decades. There will probably be a major war or two as well, as usually happens in times of large-scale economic contraction. But it is a second Great Depression, it’s not the Ragnarok. This isn’t a Democratic problem or a Republican problem and although the politicians will do their best to take partisan advantage of the situation, it is a structural crisis that cannot end until the structure collapses and is replaced with a more economically realistic one. Needless to say ownership—self-ownership, property ownership—will not fare well.

10 thoughts on “UPDATED: Great Depression 2.0: An Interview With Vox Day (PART II)

  1. james huggins

    Read the full interview on WND. [That’s part I; part II tonight on BAB] Great stuff. I have always thought Vox was really sharp, as you are. That’s why it was such an informative and interesting discussion. I caught that cute reference to “dittoheads”. You’d better hope there are enough dittoheads around to keep this country out of the eastern bloc in the next few elections. I don’t think there are enought pencil-necked geek Libertarians to do the trick.

  2. Robert Rupard

    The saddest thing is that so few people really understand what VOX is saying here. Coupled with apathy, it doesn’t bode well for the American experiment at all. Keep ringing the bell Ilana.

  3. DENNIS

    In the Depression of the ’30s, my grandparents survived by employing, among other things, these three actions: 1. They rented-out a room in their home and had a 2 unit rental house as well. 2. They raised rabbits for personal food as well as for sale 3. They had a garden and picked / bought food from farmers. Today, I believe most people have lost what many knew when they were High School and College students: Live frugally. When will this situation pass? Who knows? Spend your time researching how to increase your employable skills, to sell-off items that are collecting dust instead of appreciation, to teach kids to cook and to do laundry, to work more jobs, and, in general, to toughen and to educate your family to survive. Remember…we are Americans…tell the government to get the hell out of the way and we will live long and prosper! ACQUIRE THE ATTITUDE TO SUCCEED.

  4. Eric Murray

    Thank you for exposing the madness that exists today. We are most definitely headed for extremely difficult times made possible through great ineptitude and greed!

  5. Vic Jones

    This interview is what media should be all about. Would anyone ever expect to hear or read an interview like this from the so-called “mainstream”? This is Austrian Economics brought to the public. Thanks Ilana and Vox.

  6. Barbara Grant

    I like your interviews, Ilana, including this one with Vox Day, and the previous interviews you’ve conducted with Paul Gottfried. You ask good questions which get straight to the point, and allow your interviewees to make their concepts clear in a format different from their usual columns/writings.

    That said, would you consider interviewing Pat Buchanan about the economy? His WND column today emphasizes China’s success (and our own failures) based on economic nationalism (an idea disliked by most libertarians, I believe.)

    […Sinophobia that is disliked by me as well. China is getting rich not b/c of protectionism, but b/c of capitalism. More of it. Capitalism and its human resource.]

  7. Vic Jones

    Ilana, can we post these links to your WND column on FB to introduce people to your ideas?

    [Of course hyperlinks should be sent far and wide. Why not?]

  8. Misha

    Another great thing about Vox Day’s book is that it is available on Kindle for $1.59.

  9. Mike Marks

    I have two quick comments 1) it’s good to hear people talk about economics who know a thing or two about economics and 2) Ilana thank you for using the word indicies instead of indexes. The second one is a real pet peeve of mine. After spending as much time as I did studying math, the sciences, and electrical engineering “indexes” sounds like the proverbial fingernail screeching across the blackboard.

  10. james huggins

    On interview part II. Great stuff again. I not only agreed with the opinions forwarded but learned plenty for myself.

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