Nothing succeeds like predicting failure. No one knows this better than Raveendra (Ravi) N. Batra, an economist at Southern Methodist University. In 1987, he hit the best-seller lists with The Great Depression of 1990, which sold some 450,000 copies. He followed that up with Surviving the Great Depression of 1990 (1988) and The Stock Market Crashes of 1998 and 1999 (1998). Batra has just completed The Crash of the Millennium, which will be published by Harmony Books in August. In it, he argues that the American economy is going back to the 1970s. With wages failing to keep up with productivity, Batra predicts debt-burdened Americans will be unable to keep consuming at current levels. The ensuing stock market crash, he says, will usher in an "inflationary depression" characterized by negative economic growth and rising prices. Is the fourth time the charm? Washington Editor Michael W. Lynch spoke with Batra via telephone in May.
Q: You predicted a depression in 1990. So what happened?
A: I think it partially came true and partially did not. We stopped the depression by borrowing money from abroad. But we are now in worse shape.
Q: You predicted stock market crashes in 1998 and 1999, but the stock market is higher than ever. Why should we believe you about the millennium?
A: In my previous book, I mentioned August 1998 as a month in which there would be a crash, and it happened. I said [Federal Reserve head Alan] Greenspan would cut interest rates and that would take us into 1999. Greenspan brought interest rates down three times and the stock market recovered. The title of the book was crashes of 1998 and 1999. That forecast has been right on the money. 1999 is not over. The last year in each decade has produced a nightmare somewhere on Earth. The United States is the only oasis of prosperity left. The next nightmare will be in the United States, and I think it will start in September and October.
Q: What do you say to critics who say, "You're crazy. We're in the midst of a huge expansion driven by productivity increases, and we're looking at good times for at least 30 years"?
A: If markets were truly free, I would be the first person to say that prosperity would go on and on. But we don't have free markets. We have monopolies on one side and totally feeble unions and labor markets on the other side. Demand is not rising as fast as supply. We have artificial demand created by debt, and it cannot go on forever.
In my new book, I have a list of 33 forecasts I've made in my life. Two have been wrong–and only partially wrong. If someone can make 33 forecasts–fantastic forecasts–and only two are wrong, you have to ask, What happened in those two situations? The answer is that the calamity was postponed through massive borrowing. But when that calamity does come, it will be worse than before.