The United States and other industrialized nations are on track to a “colossal mess” due to their inability to pay down their growing debt burdens, said Marc Faber, author of the Gloom, Boom & Doom report.
In the United States alone, tax breaks are scheduled to expire at the end of this year at the very same time automatic cuts to government spending kick in, a combination known as a fiscal cliff that could send the country into a recession next year if left unchecked by Congress, according to calculations from the nonpartisan Congressional Budget Office.
Congress could strike a deal to avert the country away from disaster next year, but should a deal fail to seriously lower long-term debt burdens and narrow gaping fiscal deficits, disaster will strike.
Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible
“History kind of repeats itself. In democracies, you start with good intentions and then power becomes polarized among a few people. And eventually you have either huge changes in a peaceful fashion through reforms or usually through revolutions,” Faber told CNBC.
A revolution is not brewing in the United States, yet.
“We’re getting closer. We’re moving into that direction. And the same in Europe. I think the regimes will try to keep the system alive as it is for as long as possible, which means there is no fiscal cliff — there’s a fiscal grand canyon, never-ending deficits because you have to feed the population with all kinds of handouts whether you are a Republican or you are a Democrat. And so the debt burden will continue to go up and one day the system breaks.”
“I think the timeframe would be within five to 10 years you have a colossal mess … everywhere in the Western world,” Faber said.
To avoid such a mess, the United States needs to start cutting spending now.
“My medicine for the U.S. is: reduce government by minimum 50 percent,” he told the network.
“The impact would be immediately an improvement in the economy.”
Business executives are urging policymakers to work together and restore the country to fiscal health.
“I think the American people care about the future of their country, and they understand there’s going to have to be a compromise,” Business Roundtable President John Engler, a former Republican governor of Michigan, said recently, according to Reuters.
“Our present course is unsustainable and unfair to future generations.”
Editor's Note: Economist Warns: 50% Unemployment, 100% Inflation Possible
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