Doug Casey Revisits the Greater Depression and Explains the Realities of Investing in the 21st Century
The Daily Bell is pleased to present an exclusive interview with Doug Casey.
Introduction: Doug Casey has appeared on hundreds of radio and TV shows, and has been the subject of articles in People, US, Time, Forbes, The Washington Post, and numerous other publications. For nearly three decades, Doug Casey and his team have been correctly predicting major budding trends in the overall economy and commodity markets.
Daily Bell: We asked you a number of questions nearly a year ago about fiscal and monetary issues – as well as the state of the world. You weren't especially optimistic then. We can't imagine your mood has improved much, has it?
Doug Casey: Well, my personal mood is fine. But the economy's mood is likely to go from merely grumpy to psychotic. The Greater Depression began, I believe, in 2007, and will get much worse because not just the US government, but every major government in the world, has been doing not just the wrong things but exactly the opposite of the right things.
The right thing would be for these governments to get totally out of the picture. What they are doing instead is inserting themselves further into the economy. But I suppose this is what the average person wants them to do because, idiotically, the average person thinks that the government is some kind of a magic cornucopia and is the solution to their problems – when actually government is the basic cause of all these problems. Its only products are taxes, regulations, and inflation – along with wars, pogroms, persecutions and the like. Government produces nothing. So I guess I'm not overly sympathetic to them; they are pretty much going to get what they deserve in the years to come.
The Greater Depression is on a temporary hiatus at the moment because the stimulus measures and extra debt these governments have created to deal with the crisis have given the appearance of a recovery; but in the months to come, things are going to devolve back to the financial chaos of a year or two ago and actually get much, much worse. I hate to make such a gloomy forecast, if only because people that draw wacky conclusions from sources like Nostradamus, the Bible, and the Mayan calendar are so prone to do so. But I'm not talking about the end of the world, just a bit of a social and economic upheaval – and we've had plenty of those over the centuries.
So, in brief, we're kind of in the eye of the storm at the moment, but I expect this thing is going to be much worse on the other side of the hurricane. And it's not going to be brief; this could linger on for years with a lot of consequences, not just the obvious economic and financial ones.
Daily Bell: You thought the euro and the dollar were both on their way out last time we spoke – though you gave no timeline. Can you give us your thoughts on where we are with these currencies – euro first and then the dollar? Is the bailout going to work for the euro?
Doug Casey: Absolutely every currency in the world is going to reach its intrinsic value in the next few years, and basically every currency is nothing but toilet paper. Basically all the governments are going to wind up destroying their national currencies. That won't be just an academic thing; it will have the consequence of destroying a lot of the middle classes around the world. That will likely create ugly political and sociological fallout.
In particular the Euro, which is a totally artificial construct, is a dead duck. As I said last year, if the dollar is an "IOU nothing," then the Euro is a "who owes you nothing." The bailouts are completely insane, counterproductive, and the opposite of what should be done. It's not just Greece. The EU is going to have to bailout Spain, Italy... in fact the whole structure is rotten. The EU will try to bail itself out, which is rather absurd.
Daily Bell: Let's follow up on Europe. We've spoken about the euro but now give us your thoughts about Europe itself. Can the EU stand – why or why not? Will there perhaps be a smaller EU?
Doug Casey: I think the EU is almost certainly going to break apart. It's Frankenstein's monster, cobbled together. You have countries with very different cultures. Europe is famous for having had thousands of wars with each other since before the days of the Roman Empire; a history of Europe is a history of warfare. I see no reason why that will change. Of course the EU is something that is supposed to keep them from going at each other's throats again but the EU will actually cause more conflict, resentment, and hatred – not less.
The way to improve matters would have simply been to taken down barriers to travel and trade, which would have been fine. In other words, get rid of regulations and taxes, and make the states less powerful. But what they have done, idiotically, is centralize power in Brussels, and add yet another layer of bureaucracy. This has created more resentment, not less, between different national groups.
Daily Bell: You can see it happening right now. The Germans hate the Greeks for causing them loss of capital and the Greeks hate the Germans for not subsidizing them anymore.
Doug Casey: You don't need a gigantic, and necessarily corrupt and inefficient bureaucracy – with an arcane rule-book the size of the London phone directory – to enable free trade and free travel. What you need is simply to abolish the existing restrictions. But the prevailing philosophy and psychology in Europe is deeply socialistic, so of course they took the wrong approach. It's why in a couple of generations Europe will be fit for nothing but to be a source of maids and houseboys for the Chinese.
Another reason the EU is going to break up is because the tendency all over the world is towards smaller political units, not bigger ones. Before this is over I wouldn't doubt that Canada breaks up into a number of different enclaves, and I don't mean just Quebec. I think over the next 50 years, the US itself will start to fall apart; no way is a young Hispanic in California going to submit to paying 25% of his income to subsidize an old Anglo woman in Massachusetts. That is true of most countries in the world; they are artificial constructs. Every country in Africa was created out of whole cloth by European invaders, and that is one of the main reasons why Africa is such a Hell-hole. It was divided up with no regard whatsoever to cultural and linguistic and tribal boundaries.
The good news is that you don't have to worry about a world government, which a lot of people think they need to worry about. One favorable consequence of the Greater Depression will be the bankruptcy of most of the world's governments. As a result, they'll become less powerful. The nation-state, which has been around since the middle of the 17th century, is actually going to start disappearing in the years to come. I see that as a good thing. The EU is going to be the first to go.
Daily Bell: What's your take on Britain and the pound? Is Britain also subject to sovereign risk?
Doug Casey: Britain used to be somewhat different from other countries in Europe, because of its Common Law tradition. But now it seems well on its way to devolving into a society very much like that portrayed in the movie "V for Vendetta." Fantastic flick, incidentally; I recommend it. But, as far as sovereign risk goes, their debt is junk. Pity the poor fool who owns it, especially with interest rates as low as they are.
Daily Bell: How about America? How are America's finances?
Doug Casey: The era of one trillion dollar plus annual deficits is definitely here. And those are just the official deficits, which are going to be running a trillion or a trillion and a half dollars per year for the indefinite future. And on top of that you've got $100 trillion of unfunded liabilities of Social Security, the Medicare, the Medicaid. In a few years, you are going to have Obama-care, which is going to make the problem considerably worse. Then add on the probable federal bailouts of numerous bankrupt states like New York and California. And then hundreds of billions more for the FDIC, which is also totally bankrupt. Just like Fannie and Freddie. Then the Pension Benefit Guarantee Corp., will be hundreds of billions more – that hasn't hit the front pages yet. General Electric is just like a gigantic, 30-1 leveraged hedge fund; that's going to be bailed out too! Amtrak, which despite its outrageously high fares, continues to loose a couple billion dollars a year; of course that's just chicken feed in today's context. And of course these wars – and supporting military bases in over 100 countries.
Furthermore the ethical fiber of the country has eroded. You've got 40 million Americans getting food stamps; that number is going much higher. People feel no shame in living on extended unemployment benefits. No shame in living in a house for a year or more after defaulting on the mortgage. No shame in gaming the system – which is encouraged by a plethora of laws. America was once a great idea – in fact America IS an idea, much more than a place. But now it's just another corrupt nation state.
So, I don't see any way out, I just think it's going to get worse for the United States.
Daily Bell: Where does China and its yuan stand in all this?
Doug Casey: I have always been a big bull on China. Instead of thinking of the "rise and fall," as with the Roman Empire, you have to think of the "fall and rise" of China, because for many centuries they were way ahead of the West. Western culture overtook them, but now they are regaining their historic prominence. That is the long term view.
But in the short term, the business cycle exists, and it exists in China too, despite the fact it's supposed to be a centrally planned economy. Since the collapse of communism, China has, in fact, become more economically free than the US. Communism was nothing but a gigantic swindle perpetrated upon the Chinese people, but it only lasted thirty-some years. That is a blip on the screen of China's history, almost meaningless! Mao was just the founder of a different, short-lived dynasty of corrupt emperors, of which they've had many.
So the good news is that Maoism and communism have collapsed totally, but the bad news is that one of their leading imports has been stupid ideas from the West – first Marxism, then Keynesianism in more recent years. They have ignited a gigantic real estate bubble in that country which is going to bust with the consequences of bankrupting most of their banks and bringing down real estate speculators, which are widespread in China. The size of their bailouts, in response to this crisis has been even bigger proportionate to the size of their economy than in western countries, so I think it's got the potential to be very ugly in China. But in the long run, after they get through this misadventure over the next ten or fifteen years, China is going to be resurgent again.
Look at it this way, you have the average Chinese making $1 per hour for what the average American is making maybe $10 or $20 per hour. The fact is that the Chinese guy has better work habits, he's just as smart or smarter, and the company he works for doesn't have any legacy costs in the form of medical benefits and pensions, and there are a lot less regulations and taxes. So eventually Chinese wages and western wages are going to meet in the middle. Chinese incomes are going much higher, and western incomes are going to be much lower. This is tough luck for the average person in the west, whose standard of living is going to drop. And of course, if they start blaming the Chinese foolishly, which they probably will, this is potentially another cause for conflict in the future.
Daily Bell: Let's turn to China's archrival. Is Barack Obama doing a good job?
Doug Casey: No, he's doing a horrible job. But I have to put that in the context of what's come before him. You have to look at this much the way you would have looked at the Roman Empire. When Tiberius died, the Romans were thrilled because Tiberius was such a degraded being; they foolishly thought it couldn't get any worse. He was replaced with Claudius, who was an embarrassment. After Claudius was assassinated they thought perhaps it would get better – but they got Caligula. Then after Caligula they thought how can it get any worse?? And they got Nero... I think the US is at a stage now where we can expect that our emperors will pretty much follow the pattern of the Romans. In other words, one is not better than the other; they're just different.
But one of the problems with Obama is that he is a sincere believer in all these destructive actions that he is taking. At least Bush, who was a numbskull – at once thoughtless, unintelligent, arrogant, and certain – at least kind of talked the free market talk. At least he probably didn't really believe in all the stupid domestic economic policies he implemented – like the Medicare Drug Benefit, No Child Left Behind, TARP, and so many more. But that was probably only because he had no core beliefs. But Obama apparently does – and all his appear bad. Look at the $400 million he wants to give the Palestinians. Actually, we shouldn't care, since the money is borrowed from the Chinese. It's really their problem I guess. Obama, unlike Bush, has a high IQ, but he has the instincts of a Chicago ward healer, or small-time community organizer. He's a statist, through and through.
We will see who comes after him; I believe he will be a one-term president. I am sure the next guy will even be scarier than he is, since we'll then be in the throes of a real crisis. God forbid Americans then opt for a strong leader, in the mold of leaders in the 1930s and 40s
US presidents like, Clinton and Bush and Obama... they are nothing-nobodies, that came out of nowhere. I wonder how can this be? Is it now impossible for person of substance be elected to the office of president? People with the character of Washington, Madison or Jefferson or Adams? Probably. What manner of person would be willing to do what is necessary to be elected? So now we get non-entities. No one has even heard of these people before, because they've accomplished nothing with their lives, except for politicking. I mean I don't believe in conspiracy theories, but these people are characters at once so trivial and misdirected it makes you want to believe it's a cosmic joke of some kind.
Daily Bell: Where is a good place to be investment wise – stocks, bonds, gold? What kind of stocks?
Doug Casey: We are in a very strange twilight zone in the investment world right now. In fact, it seems to me that everything is overpriced... and of course that's metaphysically impossible, everything can't be overpriced. What I'm saying is that there's very little "value" to be had anywhere. There are, however, some places that I definitely don't want to be at this point, because we are looking right now at what I expect is going to be the biggest economic upset, not just since the last depression but since the industrial revolution.
I don't like the stock market, because when the stock market's cheap, dividend yields are typically in the 6-8% range. Not so terribly long ago, in the mid-80's, markets like Spain, Belgium and Hong Kong were all yielding 15% in current dividends, selling to half to one times book value, and 2, 3 or 4 times earnings. I think things can get much worse than they were in the 80s, so I don't think stocks are the place to be.
Bonds are even worse. Bonds are a triple threat to your capital. You have the currency risk, and I talked about currencies earlier. You've got the interest rate risk; interest rates are going to go much, much higher and bonds fluctuate inversely with interest rates. And then you've got the credit risk, whether or not the person you lent the money to will ever pay it back. Bonds are now the worst possible place for your capital.
Real estate is a disaster that's not nearly over yet. You've still got real estate bubbles in China, Australia, and Canada – although I think they're popping even as we speak. Real estate is going to get hurt much worse. Property has been driven to absurd levels by government policies making borrowed money easily available. It will be an object of taxes from bankrupt governments, it will be crushed by higher interest rates.
I guess gold is the least bad thing to be in. I say that because gold is no longer where it was even 10 years ago, $250-$300 an ounce, it's up 4 or 5 times in price. Not withstanding that, it's still probably the best place to be because it's the only financial asset that's not simultaneously somebody else's liability. But you know what they say about a depression? Everybody loses, the winner is just the person who loses the least.
From the speculator's point of view, the nice thing about these governments printing up trillions of new units of their currencies is it will ignite bubbles in other places in the investment world, and it is possible that they are going to ignite a bubble in the world of precious metals, and perhaps a bubble in the precious metals stocks. And it's possible to get 20, 50, or 100 to 1 return on your money in these volatile small – actually micro cap or nano cap – stocks.
One of the consequences of high rates of inflation is that it almost forces everyone to try to speculate, just to survive. There's an excellent chance they'll ignite a bubble in mining exploration stocks, as well as gold and commodities.
Daily Bell: Geopolitical tensions often ratchet up during a bad economic time. Is the West headed into a war with Iran?
Doug Casey: That's entirely possible. But, unfortunately it's not just Iran. The thing is that bad economic times usually lead to war for all kinds of reasons. One reason is because people tend to blame other people for their problems and that leads to war. Another reason is that, idiotically, a lot of people believe that war can cure economic problems. They actually think that WWII brought the west out of the depression, which is not true at all; it actually extended the depression, by destroying immense amounts of wealth. Remember, the best general definition of a depression is: a period of time where most people's standard of living drops significantly.
Anyway, something resembling WWIII has already started; you might describe it as a continuation of the Crusades. The war with Islam has been going on since the Muslims invaded Spain. They were turned back at the Battle of Tours in 732, then Europeans invaded the Middle East in 1095, then the Muslims reinvaded Europe, and were stopped at Vienna in 1683, then the Europeans colonized the Muslim world throughout the 19th century – so this has been going on between Islam and the west for 1300 years now. And I expect it is heating up again. Although it's camouflaged as the War on Terror – which is ridiculous, because terror is a tactic, not an enemy. The US has stuck its nose into the tar baby of Iraq and Afghanistan, maybe Iran, or even Pakistan, is next on the dance card. These are all Muslim countries.
You have a billion and a half Muslims in the world, maybe 15% of them are radical fundamentalists. That's a lot of people, and they resent western soldiers running around in their countries, as much or more as we would resent Islamic armies here in the United States, breaking down doors at 3 o'clock in the morning.
Daily Bell: What about Afghanistan – is the West winning? Why is America in Afghanistan anyway?
Doug Casey: The only reason that America is in Afghanistan has got to be the most perverse type of stupidity that I can imagine. It serves no useful purpose at all to be in Afghanistan, it does nothing but creates a whole new class of enemies among these people for the reasons I just said. It solves absolutely nothing. And to expect that America is going to be anymore successful having invaded Afghanistan than the Russians were, boggles my mind. I mean, there's a good chance that the United States is going to leave Afghanistan is pretty much the way they left Saigon at the end of the equally pointless Vietnam war – with the helicopters evacuating the last people from the top of the Embassy. But it is doing absolutely no good at all and it's going to end badly. It's going to go a long way towards bankrupting the US financially, as well as morally.
It's quite pathetic, spending a million dollars a missile to kill some poor peasant in his own country. Meanwhile, his buddies spend maybe a couple hundred dollars to blow up a million dollar US vehicle. The US is spending trillions to build junk weapons good only for fighting the USSR, which no longer exists, while peasants in sandals are bankrupting it. If these wars escalate, you can count on a bunch of US carriers being converted into artificial reefs. But that's another story, not germane to this discussion.
Daily Bell: Was the Iraq war a success?
Doug Casey: No and once again, I don't understand why Iraq was invaded. You had a criminal thug running the country. So what? Criminal thugs run a quarter of the countries on the face of the globe right now, so why take out that particular thug? Actually, he used to be one of the US's best buddies in the Middle East. Not so long before the first invasion, he and Rumsfeld were literally wrapping their arms around each other and the US was supporting Saddam in his war against Iran. It's all completely insane. The people who are running Iraq today, just like the ones running Afghanistan are nothing but stooges, puppets, of the US. And the people that live in those countries recognize that and resent it. The US presence does nothing but breed hatred for America. Which is too bad because it's the US government which is responsible, not America, which is a good and unique idea,
Daily Bell: Absent wars, will the American economy now recover? Economists say that the US economy is starting to look "healthy" again.
Doug Casey: That's a delusion. Maybe it's more than a delusion; maybe it's an outright lie, although I suppose it's possible they just don't know any better. I suppose it's possible the people running the show in Washington are just fools, not knaves – but the odds are they are both.
Look, the whole US economy has been directed and oriented toward consumption, not production, for generations. Artificially high levels of consumption, financed by debt. This is coming to an end, and there are a lot of people in economically unsustainable occupations that will have to become unemployed, and find new jobs at much lower wages. They're competition isn't other Americans and Europeans; it's billions of smart and motivated Chinese and Indians, among others. The same is true for a lot of companies, as well.
The "recovery" is mostly PR because, for some reason, the political apologists who masquerade as economists think this is all a matter of psychology, not reality. They believe if you think everything's going to be all right, everything will be all right. So, they put out happy PR. This is basically Wile E. Coyote economics, where after he runs off the edge of the cliff, he doesn't start falling until realizes he's walking on thin air.
Daily Bell: What do you think of the new currencies floating around? The IMF has one and we just read recently read about the WOCU, located conveniently in the "city" of London.
Doug Casey: These are ridiculous fantasies and they will have the fate of all paper currencies. I mean, these are what you might call 'Faith' based currencies, but there is no reason to have any faith in them. So I wouldn't clutter my mind up with imagining these things are going to last long at all. What you should be doing is buying gold and to a lesser degree silver. Forget about these currencies. The fact that they are even discussed without laughter is an indication of how degraded economics has become. But in a world where political hacks like Krugman and Stiglitz can get Nobel Prizes for Economics, I suppose absolutely anything is possible.
Daily Bell: Have you ever seen this much international chaos economically and otherwise?
Doug Casey: As I said earlier, this is going to develop into the biggest thing since the industrial revolution. What you've seen so far is just the overture to the main opera which is yet to come and we're a long way from the fat lady singing.
Daily Bell: Where does it end? A new political order? A new currency? What or who is behind it? Is it just the "way of the world," or are there certain forces driving it?
Doug Casey: I have to say one thing. You shouldn't talk about a new currency because a currency is a creature of the state. You don't need currencies. Money is just a medium of exchange and a store of value; there's no reason why it should be an instrument of the state, issued by some type of a national government. A commodity makes the best money, not debt, or a promise of some kind. And gold is a particularly well-suited commodity for use as money.
But let me go further than that. I would say that most of the nation-states of the world are on their way out; they're anachronistic at this point. Just as nation-states replaced kingdoms, and kingdom's replaced tribal forms of organization. I think that nation-states – where you give your loyalty to some government because you were born in a certain geographical area – are going to lose the loyalty of their subjects in the years to come. They'll prove unable to provide needed services, and will mostly be disliked for burdensome taxes and regulations.
The Internet has changed the game. Your real countryman will likely be people that you find that you share values with, no matter where in the world he might be. That's who you are going to be loyal to. Not some guy whom you have little in common with but the same passport. Most of your fellow citizens today are basically liabilities to you, recipients of your tax money. I expect the Greater Depression is going to last quite a while, and it's going to turn a lot of what you see today completely upside down, things are going to be very different. I think the world is going to re-organize itself in ways that are going to impress people in the future as very different than what we have today.
Daily Bell: What is your best advice to savers and investors now?
Doug Casey: Most important, produce more than you consume, and save the difference. That is #1. The question is how, in what form, do you save it. And I think the answer is precious metals. A good bit of which should be in your personal possession and the safest place you can think of. And that would certainly be outside the political bailiwick of your government, because your government will increasingly treat you as a milk cow in the future, simply because they are all bankrupt. Their first interest is to maintain themselves. The government is an entity onto itself, like a corporation, like General Motors. It's not "the people"; it's a thing which puts it's own interests first. So you have to insulate your wealth from where they can get at it because they think that your wealth is their wealth. So the gold and silver you save should mostly be outside your native country.
As far as other investments are concerned I think that agricultural commodities are in a good buying area right now. If you are able to buy productive farmland in the right location, that's also something that's likely to treat you well in the future from an economic point of view. As I said earlier, we're in a kind of a twilight zone and I don't see any screaming bargains anywhere in the world today. If you're a competent investor, you really only want to buy when you see screaming bargains someplace. And although I try to look everywhere, every country in the world, in every market, and every type of investment, there's nothing yelling out "buy me" at the moment. So stay liquid, mainly in gold. And wait for the bubbles that will get ignited.
Daily Bell: Where are silver and gold headed – up? How high?
Doug Casey: I think they are going a lot higher, if only on a speculative basis, because fear is going to drive people into them wholesale in the future. After that starts happening, greed is going to drive people into them too. And of course prudence on the part of people who know what's going on is what's taking them higher right now. So these are three very powerful factors, emotional factors, which will underpin gold and silver in the future. I don't know how high they are going to go, and I don't know when I'm going to sell them. Perhaps when I see a picture on the front cover of Newsweek magazine, if it's still exists (I hope not), with a golden bear tearing apart the New York Stock Exchange. That will probably mean, among other things, that the time has come for me to sell all my gold and buy Dow Jones stocks. But we're a long way from that now.
Daily Bell: Will we see a silver and gold as money as a result of the financial turmoil?
Doug Casey: I would like to see money once again become nothing but a medium of exchange and a store of value and that means it going to be a commodity. And gold historically has always been the best commodity to use because it has unique characteristics that make for good money, just like steel has unique characteristics that make it good for building cars and skyscrapers, and copper for electrical wiring. Gold is uniquely well suited for money. You don't need a government currency. Or central banks.
Daily Bell: We're very hopeful that the Internet will trigger a freer – not less free world – in the 21st century. Do you still agree with this statement? How long will it take? What would a freer world look like?
Doug Casey: Oh I totally agree with that statement. The Internet is one of the most important things that's ever happened. Certainly when it comes to communication, it's the most important thing since Gutenberg invented moveable type – more important actually. This is exactly why government's all over the world are looking to regulate it, control it, and tax it. The Internet lets people relate to each other purely as individuals, instead of viewing themselves as American or French or Brazilian, seeing themselves as citizens of some nation-state. I think in the future people are likely to see each other as citizens of informal organizations – not countries – and will seek each other out on the Internet and join together on that basis. The nation-state is going to be replaced by groupings of people that find each other on the Internet.
Doug Casey: Now, let me say something that may be a bit shocking. I think that Somalia is kind of a straw in the wind for the future. They supposedly have a national government, and it's a UN member, but the place actually no longer exists as a real nation-state. The government is a fiction. It's been hollowed out, and I think this is going to happen to a number of countries around the world. People will no more look to their current national governments for various services than the Somalis do; they'll give their loyalty to different groupings and organizations – and I don't mean warlords, although there will also be some of that. This trend will include Europe and the US. I hope that in this evolution they don't have to go through a chaotic stage like that of Somalia right now. But I actually think that, although individual freedom is rapidly diminishing all over the world right now, as governments go bankrupt, and nation-states fail, things will get better. There could be a renaissance of individual liberty. This is why the bankruptcy of governments in the years to come doesn't concern me – at least from a historical point of view.
Daily Bell: Give us an update on your projects. Any other books or business ventures?
Doug Casey: I'm supposed to write several books. But I've become a bit lazy, so I think they'll each have a co-author who will do the heavy lifting. Including one on gold and one on gold mining, where I'm teamed up with a young PhD Geologist who's really quite a phenomenon. And I'm also supposed to re-do The International Man, because since I first wrote and published that book 30 years ago, not only have I learned an immense amount but the world has changed an immense amount. And of course, the time is right again for another Crisis Investing book alike. I guess the main thing that keeps me busy is my weekly blog, Conversations with Casey, and writing an article every month for The Casey Report.
That 's more than enough to do. But my biggest business venture is in Argentina. Over the last several years, we've developed a 1600 acre community down there, which I believe is superior to any other resort community in the world. We have amazing amenities – golf, polo, a fantastic gym and spa, and about every sports facility you can think of. On a more contemplative note, we have a cigar bar, a great library, a billiards room, and lots of other things making for a perfect retreat in the heart of Argentine wine country – including 200 acres of vines. It's just a short horse ride from the very civilized little town of Cafayate, which has a couple dozen neat restaurants. It's called Estancia de Cafayate, and you should check it out at estanciadecafayate.com. Once people visit, they don't want to leave. I've been to 175 countries, and lived in 12, and, for me, this is the place. You'll have to pardon my enthusiasm.
Daily Bell: Any particular investments or investment strategies you want to recommend that you're high on?
Doug Casey: I don't think there's anything else I can say on that other than the most important diversification you can have is not about investments, it's political and geographical diversification that are even more important today. I don't know if I can emphasize that enough.
Daily Bell: Thanks for sitting down with us again. It is always a pleasure to hear your insightful opinions.
There are so many wonderful insights in this interview (a re-interview) that we recommend reading it several times. Much is more apparent the second-time round. The most subtle and powerful point from our perspective is the insight regarding the devolution of nation states. Like other power-elite dominant social themes, nation-states wriggle their way into our consciousness when we are very young and by the time we are all grown up we can't likely envision an alternative.
Of course human beings are tribal creatures that apparently relate to no more than about 100 others at a time, often an extended family of some sort. But, nonetheless, the nation-state has laid claim to humanity's perspective of how individuals interrelate as groups. The nation-state promotion asks us to believe that the geography of our birth is a perpetual claim on the way we think about our life and how we support our sociopolitical environment. It is also a promotion that binds us directly to our governments – right or wrong.
Once one believes that "patriotism" is a personal or community virtue, then one is apt to go along with government pronouncements much more easily. Fidelity to one's nation-state is then a cornerstone of the building block of the modern power-elite environment.
One upon a time there was a reason to have fealty to one's geography. This was back when most human beings lived in sheltered communities defended either communally or by one's liege or lord. In the case of a chief or liege, it was this authority – and those warriors gathered around him – that kept one's family and farm as safe as possible from natural disasters and marauders. If there were a drought or other natural calamity, the community would share what it would or the liege would offer supplies from his own stock. Thus there was a reason for regional loyalty – no one would care for an individual and his or her own family as carefully and consistently as the community that one grew up in.
It is absolutely fascinating to consider how this human attachment has been exploited and hollowed out (like so many others) until only the emotion itself bears any relationship to reality. Today, in Western countries, and in America in particular, both citizenship and patriotism involve acknowledging and supporting aggressively high taxes, fiat-money inflation (and deflation), and an exploitative regulatory democracy. Individual emergency food and shelter, when necessary, are likely to be provided by large and impersonal government agencies, that have little regard for local communities.
In the modern nation-state, after at least a century-and-a-half of aggressive fear-based promotions, most every part of an individual's belief structure has been hollowed out from the inside. Money is mercantilist central bank paper or mere electrons. Wars initially waged for defense are now fought around the world as "pre-emptive strikes against terrorists." Human communal urges have been played upon to produce such dominant social themes as global warming, environmentalism and over-population.
But Doug Casey's well-taken point is that the Internet itself, and the chaos of the generally collapsing Western fiat-money, mercantilist banking system, are eroding fidelity to the nation-state. This is perfectly predictable, though it is a deep insight indeed. As other power-elite promotions are being questioned and cast aside, the nation-state itself will likely become a victim of these serial apostasies.
The power-elite, in fact, has only to blame itself as, via the EU, and other supra-national environments, the elite has sought to reduce the impact of nations and national boundaries in order to emphasize global governance. But like so many of the elite's current promotions, this one may soon look to backfire as people, begin to create their own more homogenous and sympathetic living environments, either regionally or technologically.
We do believe that the 21st century will be one of great change, as we remember Fabian-society literature threatening in the 20th century. But who could predict that so much of the painstakingly prepared groundwork for world government would go so thoroughly awry in the 21st century? People all over the world are experiencing a political awakening that is making it increasingly difficult for the elite to steer the humanity in a common direction toward more authoritarianism and power-concentration.
The 21st century and the Internet may usher in a time, not of darkness as predicted so brutally by British spy-master George Orwell, but one of greater freedom, a kind of Renaissance and Reformation rolled into one. It won't happen easily of course, or even quickly (if it does happen), but the trends that support this sort of perspective are far more evident today than even a decade ago. As these trends perhaps become even clearer and nationalism and nation-states continue to come under attack, the questioning will further undermine other elite memes – which in turn with reinforce questions about the nation-state itself.
Of course all this will have a great impact on investing, saving and, generally, on the way Western economies operate and banking systems replicate and expand. The war between the elite, which has promoted and solidified the current sociopolitical, economic and military environments in the West, and those citizens – an increasing number – that have reeducated themselves via the Internet's information and alternative history, will likely grow more intense. The Bell, in predicting this, has offered a disciplined approach toward analyzing and investing in the success or failure of elite dominant social themes and sub-themes. It is one we believe will become ever more relevant as the 21st century continues and the predictions of Doug Casey become more recognizable and credible.
Posted by Arthur Yandow on 02/11/11 11:10 AM
The Federal Reserve is simply a creation of Global Banking CARTELS milking our wealth until and are depending on them as others now are.WORLD GOVERNMENT?? The goal of international money and power brokers. Read "The creature From Jekyll Island" written decades ago.a third of its content are historical docs and records.
"FOLLOW THE MONEY"!! WISE PERSONS CERTAINLY CANNOT BE SO NAIVE TO BELIEVE THAT SUCH CENTURIES LONG CONSISTENT ACHIEVING OF INCREMENTAL GOALS ARE NOT THE RESULT OF CAREFUL PLANNING & COORDINATION. PLANNING ...
Posted by Thejdog on 07/05/10 02:25 AM
Thanks for the interview. Mr Casey is definately top shelf ...I suspect though that his Achilles Tendon may be the willingness to dismiss the extremely powerful forces behind the concept of World Gov't.
Posted by Emma Okeefe on 06/29/10 06:53 PM
Deep thinking is my hobby. Thank you for your thoughts and the time to post them somehow.
Posted by Erich Kronberger on 06/29/10 01:02 AM
Life is priceless ...gold and silver will not save us nor will technology....nor will laws save us...all that we are is between our ears .....we must save each other... forgive and love one another...let us build a better world together....thanks
Posted by Harry DuPraw on 06/18/10 09:42 PM
What a clear, sharp-thinking, interviewee! I've learned much from Mr. Casey. Thanks. I only have one qualm. Mr. Casey says: "I don't believe in conspiracy theories." Well, on that score he is totally mistaken. See for instance, two articles that have just happened to appear days after his statement:
Click to view link
Click to view link
I guess the problem, even with people like Mr. Casey, is that we know much about some things but not enough about others.
Posted by Josh Lanzara on 06/16/10 01:23 PM
He got the sequence of Roman emperors wrong. A mild chink in the armor of the conversation.
Posted by Terry Crossman on 06/16/10 06:48 AM
Another wonderful interview with Casey and I this is the 2nd time I have come across this site and I like what I see here including the intelligence of most of the commentators. I have no quibbles with what he has said.
One speculative argument for Argentina is that when the proverbial "s-it hits the fan" having a nice piece of property with like minded individuals in a relatively sparsely settled area of the word might make a lot of sense. Support that with a little militia and you might be ok. After 15 years here in Beijing I have been looking at our northern neighbor Mongolia rather fondly in that regard... blue skies, grasslands, horses, fly fishing.. just gotta learn a bit about shepherding ;)
Posted by Facundo on 06/15/10 10:23 PM
Sorry, I forget to tell DB that it will really be helpful to have a podcast. I could listen to it in the bus!! fantastic!! :)
One more thing, I was wondering if Doug have some connections with the goverment of Argentina, maybe with those politics in Salta... someone could ask Doug to tell the story of his investments in Argentina, I have always thinked that he necessarily has some Argentineans friends, who are they?! :)
Reply from The Daily Bell
it seems to us obvious that Doug Casey has some fairly deep connections in Argentina. At least we hope so!
Posted by Facundo on 06/15/10 10:14 PM
No much time to write.
@Avenist: Do you know Argentina in deep?
I think this people: Arrrbaby, Jones, George Sign, and GaryT showed disagreement about Doug's proyect in Argentina. Probably every one of this folks are a sort of libertarian as I am.
I, born and raised in Argentina, living in Rosario, Santa Fe and I as follower of Conversations with Casey, tell you that investing in Argentina is a nonsense for libertarians.
Maybe in the short run could work, but that, as Doug define it, is speculation, not investment.
I think Doug is wrong this time. And it is not coherent with his own anarchystic views.
As GaryT, if I could choose, I would go to America and join the Free State Proyect in New Hampshire.
Again, if you are interested in Argentina do your homework, it is extremely difficult to "time out" (hitting the right time) for the ups and downs when you invest in the pampas.
(sorry for my english)
Posted by Huemaurice1 on 06/15/10 03:12 PM
Finally! Finally someone who think like me!
This is true when I see heads of State which would not even able to keep a grocery store and want to lead a large surface...! Whooo... right!
Who manufactures wars?
Who does the deficit for weed management?
Which impoverished bosses who elected them?
Who does not comply with the laws of the bosses?
Who will ever in prison?
These are all the same! Right/left/Democrat/Republican/labour/conservative/etc
Enfin ! Enfin quelqu'un qui pense comme moi !
C'est vrai que quand je vois des chefs d'Etats qui ne seraient meme pas capable de tenir une epicerie et qui veulent diriger une grande surface ...! Whooo-right !
Qui fabrique les guerres ?
Qui fait des deficit pour mauvaises gestions ?
Qui appauvrit les patrons qui les ont elu ?
Qui ne respecte pas les lois des patrons ?
Qui ne va jamais en prison ?
Ce sont tous les memes ! Droite/gauche/democrate/republicain/travailliste/conservateur/etc
Posted by Jerry on 06/15/10 10:09 AM
I have read Casey for many years and find his analysis fascinating. The post by D.C., however, sent me on a search for a Doug Casey/Scientology connection, and I indeed found one.
Here's a couple links.
Click to view link~lippard/casey.html
Click to view link
I like to know who I'm dealing with and as Ben T. noted, Casey seems to blow off "conspiracies" when he's enmeshed in one himself. Just what IS Casey's agenda?
Reply from The Daily Bell
Doug Casey is the author of numerous hard-money/free-market best-sellers and has established himself as a reliable and prominent libertarian-oriented commentator over years and years.
He may or may not have Scientology connections (we have no idea) but unlike DC we don't see any overt or even covert evidence of specific dogma infecting his commentary - which is concise, to-the-point and in-line with the free-market message that he's been purveying for decades.
Scientology is alleged to be a "bad church." But modern Western governments inflate economies to ruination, cost tens of millions pensions and savings, freely wiretap, prosecute and imprison millions, foment endless authoritarian regulations and illogical laws, mandate poisonous vaccines, engage in punitive taxation and serial warfare, etc. ...
We think we would be more concerned if Casey were an apologist for modern Western regulatory democracy rather than a courageous and principled opponent of it. We are grateful for his voice and message, especially during the 20th century when very few spoke out.
Again, we have no knowledge of any affiliation of his with Scientology, but we do know what we can read on the printed page. We believe that Casey has contributed greatly to an understanding of free-markets, especially in the 20th century when he emerged courageously as a prominent spokesperson at a time when there were very others.
But let us reverse the issue. What is the agenda of those who are bringing up a Scientology link? Casey doesn't mention it. His arguments are the same as they have always been - lucid, elegant and inspiring.
In fact, it seems to us a despicable canard - and an obscene red-herring - to read an honest interview freely given and then drag someone's alleged religion into it. It is like questioning one's veracity simply because he or she is Jewish or Roman Catholic.
Please respond to what is on the page, not to some malicious or false gossip about someone's supposed religious affiliation with a church that is alleged by some to do bad things - with many accusations coming from Western governments such as France, Germany or the United States.
Posted by Dovh49 on 06/15/10 09:44 AM
Are you guys going to start offering podcasts? It would be much easier to listen to these interviews vs read them.
Reply from The Daily Bell
Under consideration, thanks.
Posted by D. C. on 06/15/10 01:00 AM
"Tiberius was such a degraded being"
Degraded Being? I haven't heard that phrase in years, ever since I left Scientology. What is this guy's background exactly?
Posted by Ben T. on 06/14/10 11:02 PM
I found it very surprising that Doug doesnt believe in conspiracies. An anarcho-capitalist who doesn't believe in conspiracies?
Reply from The Daily Bell
Is it necessary to believe in government conspiracies to believe in free markets?
Posted by Me on 06/14/10 09:23 PM
Daily Bell, my point being that Mr. Casey got his history wrong when he used the succession of Julio-Claudian emperors to illustrate his point about Obama and his predecessors. He made Claudius the successor of Tiberius and Caligula the successor of Claudius. Oops. The Romans actually thought Claudius an improvement over his insane nephew Caligula. The wrong history confuses Mr. Casey's point. An editor who had read Suetonius would have spotted the error and fixed it.
Reply from The Daily Bell
We have written on this subject, actually, Suetonius aside.
Click to view link
Posted by Bob on 06/14/10 01:24 PM
Doug mentioned that he couldn't understand why we were in Iraq?
Saddam was writing oil contracts in Euro Dollars to Russia, France, North Korea,Etc. We went in to cancel those contracts. Consequently pushing down the road the implosion of the US dollar.
Pure and simple " Bloody and expensive " but preferable to domestic breadlines and chaos at home.
Posted by Bruce C. on 06/14/10 09:54 AM
Excellent interview and I tend to very much agree with Doug's basic philosophy and outlook. I do disagree with a few points however.
I'm not so sure the impending chaos will not be as cataclysmic as portended by the Bible, etc. Granted that such adjectives are subjective and probably apocryphal, I say this for several reasons. For one thing the size of the the affected population will be unprecedented, and it will be a population who will be the least able to cope, having less practical knowledge and skills than previous generations. The social infrastructure is a house of cards and when certain parts stop working it'll be katy-bar-the-door. Furthermore, I happen to believe that human emotions greatly affect and help form large-scale mass geological and meteorological events and the anger, rage, panic, desperation, etc. may manifest as the kind of events predicted. Large-scale disruptive events have been occurring more frequently and with greater intensity of late. For example, Iceland's financial crisis/volcanic eruption, Haiti's social desperation/earthquake, and I suspect the Gulf oil spill is the manifestation of many things that have yet to become clear. This is all fairly academic though. Whatever happens will pass and life will move on.
I also disagree that the US government will be able to do nearly as much as he, almost cynically, predicts. The social/political resistance will be too great, along with an unwilling bond market to finance it, and direct monetization would create more chaos than, say, forcing pay-cuts on union workers. Not that I think most people will oppose the bailouts, they'll just want "theirs" too, and everyone will know that's not possible or workable. It will be the lack of bailouts that will cause society to come unhinged.
The important point about China that Doug sort of skirted is that BECAUSE China's economy is centrally planned it will fail, and not just because it's Keynesian. Central planning of an economy is like having one's conscious mind control the autonomic system of one's body. TILT!
I agree with Doug about Obama (a one-termer and statist, etc.) and presidential candidates. My hope is that we can elect someone who reinstates Constitutional government and is able to dismantle the leviathan we have now.
I agree that gold/silver are the least bad places to convert dollars, but I want to know what happens next. I can't see selling gold/silver if their dollar price skyrockets because that would just be jumping in to the fire, unless there's an irrational panic. Trouble is, there could be both a panic out of fiat currencies AND a damn good reason to be out of them. Then what? Direct use as money?
Agree with Doug about Afghanistan, but, again, I think things will collapse before any wars start. There just isn't any money to do it.
Bingo on the reminder that the US government is the problem, not America, which is the manifestation of an ideal.
Speaking of which, the modern nation-state of America evolved simply because "the people" allowed the Federal government to grow beyond it's Constitutional constraints. That may sound trite, but it's true. The Constitution was a distillation of centuries of hard-won historical lessons. Too many people lost sight of that vision. Once you go too far off the reservation in terms of property rights and individual liberty everything eventually breaks down because it's not sustainable.
Posted by Larry on 06/14/10 07:52 AM
I assume from your use of the term Power Elite and discussion of what they do, that you disagree with Doug about the existence of conspiracies. If you don't believe in them please give me a rational explanation of how Building 7 fell down so quickly on 911.
Secondly, all this talk about the Greater Depression or whatever you want to call it (Bill Bonner " Great Correction), the bottomline truth here, which few want to admit, is that a lot of people are going to die, in a bad way, like Somalia.
Reply from The Daily Bell
Click to view link
Posted by Steve Cooper on 06/14/10 02:37 AM
Excellent, thought-provoking article, but as someone who is "under-employed" and thus poor, I take offence at the comment "People feel no shame in living on extended unemployment benefits."
Unemployment is high because, amongst other reasons:
There is no effective competition amongst firms.
The workforce is regulated so tightly that a lazy, politically-correct sycophant has the same performance as someone who wants to get ahead and work hard. There is no competition for jobs other than lying on a resume
Wages are kept high by unions and corporations, and profit, rent and banking takes a high proportion of national income. This leaves little to share amongst wage earners.
The unemployed are victims of an immoral regime, and see no future, or way out of poverty. While governments are forcing them into poverty they should not feel shame, they should feel anger.
Posted by Eric on 06/14/10 02:09 AM
While it's true what Casey says about our economic systems, our technological systems fortunately are still advancing geometrically giving one some cause for hope.
I'm hoping that our technology improves so fast that we can still survive even as we are being slowly suffocated by the political classes. Living today under heavy taxation is still better than living 100 years ago under very low taxation. At least we don't have a lot of horse poop to worry about.
Anyway, that's what I like to dream about when I'm trying to be optimistic. When I see entrepreneurs like Craig Venter who if successful might find a cheap way to remove CO2 from the skies, so that even if this turns out to have been a total waste of time, it'll not bankrupt us for the attempt.
If we can create a new auto that runs on cheaper than gas electricity (or whatever) we might still be able to enjoy driving around in an economically depressed world.
But I don't hold much hope that the aftermath of statism will be an improvement. It's not likely that we'll see a Rothbardian libertarian anarcho-capitalism from the remains of a few billion socialists.