by Doug Casey
Inflation has recently hit its highest levels since the 1970s as governments worldwide are debasing their fiat currencies at breakneck speed. The cost of living is soaring, and it’s likely to worsen.
In this environment, it is typical for opportunists in government to implement price controls as a misguided solution.
Do you think we’ll see them soon?
Doug Casey: Government never controls itself. It only attempts to control its subjects. I expect the rest of this decade will resemble the 1970s as far as retail price rises are concerned, but it will be much more serious. As a result, the chances of wage and price controls are high.
We need to only look at the actions of Richard Nixon, who often put himself forward as being pro-business and pro-capital. In 1971, he put on very strict wage and price controls. But wage and price controls didn’t begin and they certainly won’t end with Nixon. The idea that government should control its subjects is part of the national DNA.
As the Baby Bush put it in 2008, “sometimes you have to abandon free-market principles to save the free-market system.” His statement reminds me of the famous quote from the Vietnam era: “We had to destroy the village in order to save it.”
The government’s share of the economy is much larger now than it was in Nixon’s day. And the people in government are much more left-wing than they were during the Nixon regime 50 years ago. If the Democrats are reelected in November—which I expect, despite Trump’s current lead—you can expect them to further centralize power towards Washington.
Government, as an institution, is congenitally incapable of learning anything. The first example of wage and price controls was under the emperor Diocletian in late Third Century Rome, when he attempted to regulate the price of every good and service, from the largest to the smallest. It turned the Empire into a veritable police state.
I expect the US government to again use price controls in an attempt to disguise the effects of its accelerating debasement of the currency. Trillions of dollars of new debt are being monetized by the Fed every year; the result will be escalating prices. It’s perverse because, in a free market economy, prices would be dropping every year with the growth of capital and improvements in technology.
In any event, as things start falling apart and the standard of living starts dropping, people will cry out for government to “do something.” And it will. They think the government is a cornucopia when it’s actually a predator. War, a unique specialty of government, will be another major impetus for imposing wage and price controls.
We had wage and price controls during World War I and very serious wage and price controls during World War II. They were selectively reimposed for the Korean conflict and, of course, when Nixon was in office during the Vietnam War. With World War III brewing, wage and price controls will definitely be part of the agenda.
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