Krugman's big call... welcome to "a third depression" - at Lear Capital - we agree

Four days ago, the good folks at Agora Financial in their 5 Minute Forecast had a few things to say regarding economist Paul Krugman and his call in the NY Times – welcome to “a third depression”. Here’s what the “5” said:

“This is very disconcerting, fellow forecaster.

Paul Krugman is making sense… up to a point.

“We are now, I fear, in the early stages of a third depression,” the Nobel laureate wrote in a NY Times Op-Ed yesterday, dipping his toes into a pool we’ve been sloshing around in for some time.

“It will probably look more like the Long Depression [of the late 1800s],” the Krug continues, “than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense.”

We choke on our morning brew admitting it… but Krugman is onto something.

That is, until he follows his comments up with this piece of advice to G-20 meeting attendees: This depression will actually be “a failure of policy… governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending.”

Deflation now, inflation later. That much we can agree on. But how are we going to get over a spending binge with even more spending…? And borrowing and spending…? What of the deficits and debt we’re already drowning in?”

I agree – deflation now, inflation – even hyperinflation due to this onslaught of helicopter money in the future. At Lear Capital, we have been warning of this since our incorporation over thirteen years ago. That is thirteen years of Lear Capital’s advice to place solid, physical gold into your portfolio.