What change does the U.S. need to make to avoid another serious economic downturn?
I think we really need to make, isn't so much financial engineering like -- dollar up, dollar down, print more money, print less money that's financial engineering. The real change we need to make is improve our productivity and that can't go quickly and it's always difficult and painful. Think of how much change it was to bring the car into our country, right? We had to build roads. We had to build new ways of manufacturing.
People had to be turned into robots, which no body liked, rather than artisans. People had to move off the farm into the cities, which had looser morals and this kind of issue. Any productivity change is hard. People are often hurt or changed or whatever. That's never easy to do. What we've been able to do with these bubbles, bubble economy bubbling up our assets and real estate and stocks, is sort of avoid that change and still have a certain amount of wealth. Now in reality, our per capita income hasn't grown all that much in the 90's and the 10's or even in the 80's, they did better in the 80's, but fundamentally what you've got to do is make those changes once you stop doing financial engineering, but stopping doing financial engineering means a big problem.
There's no way to avoid having problems from it, either you have a lot of problems now or a whole lot more problems later. Even once you get through that, then we've got to start making the changes to improve productivity, which we will do, but none of this is easy and that's why to move into the mode of just focusing on productivity rather than on financial engineering we're going to have to hit the wall in financial engineering and it's going to blow.
That financial engineering of printing money and borrowing mass amounts of money will have to stop and it will stop only because we're forced to, which yes, does imply a certain amount of crisis, which is unfortunate. That's kind of the choice we're making, which is easy to understand nobody wants to take pain early, but that also means a certain opportunity for a lot of people. Crisis does breed opportunity and one of those opportunities will be gold. There will be others, but one very good one will be gold.