The Coming Economic Collapse

My friend S, a renowned Austrian economist, banking expert and financial ambassador (if there is such a title), insists that the U.S. is dashing toward economic disaster through overproduction and inflation. “How much longer,” he demands, “can we go on using up raw materials and raising wages and prices, in order to flood the market with goods that nobody needs—at least nobody who can afford to pay for them?” He quotes figures on the rise in the installment debt, on American per capita consumption of steel and rubber as against European and Far Eastern, etc., etc.

Without being an economist I find myself agreeing, rather automatically, with S’s prediction of a crash, although we have been in dispute for years about his program for preventing it. In fact, both of us have been taking it for granted for so long that the crash is on its way that I have begun to wonder what our prophecy means.

Suppose through the same irrational expansion of production, over saturation of the market, loose credit, American prosperity happens to last another decade? Or five? A whole lifetime? The passage of time would not, of course, make the breakdown any the less inevitable. The prosperity founded upo...