L: Doug, we talked previously about getting assets out of your home country, especially the US, where to take them, and what to do with them. In so doing, you touched on the inevitability of currency controls just ahead, especially for Americans. Can you tell us more about that?

Doug: Yes. I’m quite serious about what I said about “the grim reality of impending currency controls.” As the global economy continues to deteriorate, governments will have to appear to be “doing something.” It’s going to become very fashionable to institute some sort of foreign exchange control.

Why might that be? Because obviously, people who are taking their money out of the country are unpatriotic…

L: Those bastards.

Doug: That’s right. Jingoistic Americans naturally, but stupidly, see taking money out of the country as being unpatriotic. They don’t understand that it’s mainly those prudent people who will be able to supply the capital to rebuild a devastated economy later. Besides, getting money abroad is obviously something that only rich people would do… and of course, it’s time to eat the rich, as well. For those two reasons, there won’t be much resistance to controls. And the state gets to appear to be “doing something.”

And when they do, more people – at least those with any sense – will get scared and really try to get their money out, which will exacerbate the run to the exits. The bottom line is that if you want to get your money out, the time to do it is now. Beat the last-minute rush.

I don’t know what form the exchange controls are going to take, but there are two general possibilities: regulation and taxation.

The regulations might take the form of a rule prohibiting you from taking more than X thousands of dollars abroad per year without special permission. No expensive vacations, no foreign asset purchases without state approval.

As for the taxation, if you want to, say, buy foreign stocks or real estate, you might have to pay an “Interest Equalization Tax” or some such. So you could do it, but it’d cost you a lot of money to do it.

Something like either of these, or both, is definitely in the cards.

L: But aren’t FX controls something from the past? I mean, where do they exist today?

Doug: Well, FX controls have been used since the days of the Roman Empire. A country debases its currency, raises taxes beyond a certain level, and makes regulations too onerous – and productive people naturally react by getting their capital, and then themselves, out of Dodge. But the government can’t have that, so it puts on FX controls. They’re almost inevitable at this point.

Almost every country – except for the US, Canada, Switzerland, and a few others – had them until at least the ’70s. I remember leaving Britain once in the ’60s, and a border guy searched me to see if I had more than 50 pounds on me. In those days, currency violations in the Soviet bloc countries could get you the death penalty. Things liberalized around the world with Reagan and Thatcher, and then the collapse of the USSR. But you have to remember that that was in the context of the Long Boom. Now, during the Greater Depression, things will become much stricter again.

Right now, the US just has reporting requirements. But some places, like South Africa, make it very expensive and inconvenient to get money out. South Africa, perversely, may serve as a model for the US.

L: Okay, so we talked previously about Americans at least setting up a Canadian bank account and safe deposit box, and better yet going in person to Panama, Uruguay, Malaysia, or a similar place to do the same. And once there, you advised getting with a lawyer, either referred by someone you trust or found through an interview process, to set up a corporation that can handle your assets and investments for you. This all needs to be reported, but it’s wise to do it in advance of the higher costs or other limitations to come.

Doug: Yes. While US persons must report foreign bank and brokerage accounts, safe deposit boxes are not – at least not yet – reportable. This leads me to the biggest and best “loophole” when it comes to potential foreign exchange controls, and that’s foreign real estate.

I’m of the opinion that, broadly speaking, real estate as an asset class is going to be a poor performer for a long time to come – but that won’t be equally true across all countries. Real estate in countries that rely on mortgage debt to buy and sell will continue to be the worst hit.

People don’t understand that buying property with a mortgage is just the same as buying stocks on margin. It’s caused speculative bubbles and malinvestment. Until the malinvestment in those countries is entirely liquidated, you don’t want to invest in real estate in them. But a lot of countries, especially in the Third World, have no mortgage debt whatsoever. Zero mortgage debt. You want a piece of property, you pay for it in cash. That keeps prices down and the market much more stable. And it makes for more interesting speculations, because if a mortgage market develops in the future, it could light a fire under prices.

But, from the viewpoint of FX controls, the nice thing about real estate is that there is no way they can make you repatriate it. Other than owning a business abroad, real estate is the only sure way to legally keep your capital offshore.

L: I suppose it would be difficult for even Uncle Sam to seize your estancia in Argentina… not without starting a war.

Doug: Yes. Although I don’t doubt he’ll be starting more wars as well… [Laughs]

L: So, part of your thinking here isn’t just speculative. You’re talking about strategies for wealth preservation, not just in the face of foreign exchange controls, but more aggressive, predatory taxation and confiscation by the state – they can seize your assets, even real estate, in the US, but not abroad.

Doug: Exactly. Argentina is excellent from that point of view; rights to real property are, if anything, better than those in the US. In many ways, Argentina is culturally and demographically more like Europe than Europe. Uruguay is also excellent, although culturally it’s like a backward province of Argentina. Paraguay is quite secure – but a bit weird as a place to live.

I’m not currently up to date on the Chilean real estate market, but Chile is definitely now the richest and most advanced South American country, and an excellent choice. Brazil is fine. Colombia is improving greatly. Ecuador has a goofy president, but parts of it are very nice, and it’s about as cheap as Argentina. Eastern Bolivia is interesting, actually, despite Morales. Only Venezuela is out of the question in South America. It’s just a pity they have all that oil, which is always a corrupting influence.

L: Well, then, what about Central America? I know you prefer South America for speculative purposes, but what if someone wants to park a lot of wealth by buying a couple miles of beautiful beachfront property in Costa Rica, or some place like that?

Doug: I was a big fan of Costa Rica for many years… The first time I went down there was 35 years ago – but it’s a different place now. Then it was very cheap, and now it’s very expensive. And it’s totally overrun with gringos. So, Costa Rica is not of that much interest to me at this point; it’s pleasant, but there’s limited upside.

I think an excellent place to be in Central America is Belize. Although culturally and ethnically, it’s not really part of Central America; it’s part of the Caribbean.

L: And they speak English there.

Doug: They do indeed, though things are changing. The Guatemalan government has always regarded British Honduras, which is what Belize used to be called, as part of Guatemala. There have actually been confrontations between Britain and Guatemala over this. But that’s in the past; now there’s a different problem. Guatemalans are rolling over the border in much the same way that Mexicans are in Texas, New Mexico, Arizona, and California.

So, the character of Belize is changing, but for the foreseeable future, it’s still going to be Belize, and I rather like it. Aside from Panama, Belize would be my first choice in Central America.

The problem with Central America, however, is that it’s a bunch of small countries that have historically been very unstable. And culturally backward. Most are under the thumb of the United States… there’s a long history of US invasions, most recently in Panama with Noriega. There are “Frito banditos” running around these places…

The most culturally advanced country in Central America – not counting México, of course, since it’s in North America – is Guatemala. But Guatemala has had huge troubles with violence, which has only recently come to an end… I hate going through checkpoints at night, manned by jumpy, uneducated, heavily armed teenagers.

Nicaragua is the low-cost alternative, but it’s relatively backward. Panama is probably the best choice. It’s very international, very urban (in Panama City), and it’s very sophisticated, infrastructure-wise.

If I didn’t like Argentina and Uruguay so much, I would put Panama at the top of my shopping list.

L: Got it. Back to the exchange controls themselves. Do you think people will have any warning at all? It seems to me that this is the sort of thing the Powers that Be would want to spring on people.

Doug: I think it’s going to come out of left field. It always does, with at most an official denial just before it happens. In August 1971, Nixon devalued the dollar, which immediately dropped against gold and all foreign currencies. I think there’s a reasonable probability that the government will do that again. Gold may not be part of the equation, but they may decide to put in some sort of fixed exchange rate between the dollar and various foreign currencies.

The reason for thinking this is simple: with all the dollars outside the United States devalued by that much, that much of a liability just vanishes into thin air. And in the short term – it’s never a long-term fix – US exports would go up. This would “stimulate” the domestic economy. Imports to the US would go down, which would make for fewer dollars leaving the US.

L: I know you hate making predictions, but can you tell us if your guru sense is tingling on this so strongly that you think it could happen soon?

Doug: The timing on this is really unpredictable. These people don’t have a plan. They’re acting ad hoc to whatever seems most urgent. All the so-called economists around government today are really just political hacks. Their world views are totally unsound.

L: With all the problems the US has, do you think this could happen now? Could we be reading about new exchange controls on CNN.com this afternoon?

Doug: Sure. Although they typically pull these stunts over a weekend. I expect something of this nature to happen any time between tomorrow morning and two years from now. If some form of currency controls are not instituted within two years, I’m going to be genuinely surprised.

So if you’re going to take action, you should start heading for the exits now. Not next month, and certainly not next year.

L: For those who don’t take action until it’s too late, under the scenarios you mentioned, they’ll still be able to get money out. It’s just that it might be more difficult, time consuming, humiliating, and certainly more expensive to do. For every $100,000 they move, only $90,000, or $70,000, or whatever will get to where it’s supposed to go. Can you foresee a more Stalinesque alternative, where they simply can’t get anything out at all?

Doug: Hopefully not. Anything is possible, and things can change so rapidly… but I’d hate to think of what conditions would be like if they ever became that draconian. It’d be so bad on other fronts that there would be all sorts of even more urgent things on your mind – Americans would get a very quick and unpleasant education in the real meaning of Maslow’s hierarchy.

L: Like the Mad Max-style neobarbarians at the door with a battering ram.

Doug: Exactly – that’s when you’ll definitely want to be in more pleasant climes. I’d want to be watching it on my widescreen, in comfort, not out my front window.

L: We’re talking about extremes here…

Doug: You know, back in the 1970s there was a spate of books published on financial privacy. In those days, financial privacy was still possible. Now, it’s not only no longer truly possible, short of embracing a completely outlaw lifestyle, it’s very dangerous to write about it or even talk about it. I kid you not. These days, people who ask too many questions about privacy techniques may well be government stooges…

There’s lots of handwriting on the wall. All those books on financial privacy were published in the ’70s – if you look on Amazon, you can still find them. But there’s nothing really worth reading that’s been written on the subject in 20 years. It’s actively discouraged by the government. I could name – but I won’t – at least two authors who got themselves into a real jackpot this way. Forget about the First Amendment.

In fact, I even feel uncomfortable talking about it in this interview.

So let me once again emphasize that I advise everyone to stay fully within the bounds of the law.

That’s not for moral reasons, of course; there is no morality to the law. It’s strictly for reasons of practicality. Risk-reward ratio.

L: Understood. Loud and clear. Any more investment implications, besides foreign real estate, that you want to draw attention to here?

Doug: Yes – and it’s another reason for those so very clever boys in Washington to embrace currency controls. They will be disastrous for the US economy, but there’s a very good chance that, in the short run, they’ll be very good for the stock market. That’s partly for the reasons I already mentioned about it temporarily boosting US exports, and hence earnings of US exporters, but also because all that money that can’t leave the US will have to go into something.

Investors will probably want to put it into equity rather than debt while the dollar is depreciating. Again, it’s disastrous over the long term, but as a short-term play, buying the blue chips the day the exchange controls are instituted could be a good move.

L: You’d buy the Dow?

Doug: I might, if I couldn’t think of anything more intelligent or original to do. We’ll just have to see what the situation is like.

L: Thanks again, Doug – you’ve given us a lot to think about.

Doug: My pleasure.

You can learn more about expatriating your wealth from Doug Casey, as well as four other economic experts, at 2 p.m. EDT on Tuesday, April 30. Casey Research will premier a special web video, Internationalize Your Assets. This webinar is a must-see event for anyone interested in protecting at least some of their assets abroad. For details and to sign up, click here.

Tell a person that it’s a big beautiful world, full of fresh opportunities and a sense of freedom that is just not available by staying put and you will inevitably be treated to a litany of reasons why expanding your life into more than one country just isn’t practical.

Let’s consider some of those commonly stated reasons, and why they might be unjustified. While largely directed at Americans, these are also applicable to pretty much anyone from any country.

“America is the best country in the world. I’d be a fool to leave.”

That was absolutely true, not so very long ago. America certainly was the best – and it was unique. But it no longer exists, except as an ideal. The geography it occupied has been co-opted by the United States, which today is just another nation-state. And, most unfortunately, one that’s become especially predatory toward its citizens.

“My parents and grandparents were born here; I have roots in this country.”

An understandable emotion; everyone has an atavistic affinity for his place of birth, including your most distant relatives born long, long ago, and far, far away. I suppose if Lucy, apparently the first more-or-less human we know of, had been able to speak, she might have pled roots if you’d asked her to leave her valley in East Africa. If you buy this argument, then it’s clear your forefathers, who came from Europe, Asia, or Africa, were made of sterner stuff than you are.

“I’m not going to be unpatriotic.”

Patriotism is one of those things very few even question and even fewer examine closely. I’m a patriot, you’re a nationalist, he’s a jingoist. But let’s put such a tendentious and emotion-laden subject aside. Today a true patriot – an effective patriot–- would be accumulating capital elsewhere, to have assets he can repatriate and use for rebuilding when the time is right. And a real patriot understands that America is not a place; it’s an idea. It deserves to be spread.

“I can’t leave my aging mother behind.”

Not to sound callous, but your aging parent will soon leave you behind. Why not offer her the chance to come along, though? She might enjoy a good live-in maid in your own house (which I challenge you to get in the US) more than a sterile, dismal, and overpriced old people’s home, where she’s likely to wind up.

“I might not be able to earn a living.”

Spoken like a person with little imagination and even less self-confidence. And likely little experience or knowledge of economics. Everyone, everywhere, has to produce at least as much as he consumes – that won’t change whether you stay in your living room or go to Timbuktu. In point of fact, though, it tends to be easier to earn big money in a foreign country, because you will have knowledge, experience, skills, and connections the locals don’t.

“I don’t have enough capital to make a move.”

Well, that was one thing that kept serfs down on the farm. Capital gives you freedom. On the other hand, a certain amount of poverty can underwrite your freedom, since possessions act as chains for many.

“I’m afraid I won’t fit in.”

The real danger that’s headed your way is not fitting in at home. This objection is often proffered by people who’ve never traveled abroad. Here’s a suggestion. If you don’t have a valid passport, apply for one tomorrow morning. Then, at the next opportunity, book a trip to somewhere that seems interesting. Make an effort to meet people. Find out if you’re really as abject a wallflower as you fear.

“I don’t speak the language.”

It’s said that Sir Richard Burton, the 19^th-century explorer, spoke 10 languages fluently and 15 more “reasonably well.” I’ve always liked that distinction although, personally, I’m not a good linguist. And it gets harder to learn a language as you get older – although it’s also true that learning a new language actually keeps your brain limber. In point of fact, though, English is the world’s language. Almost anyone who is anyone, and the typical school kid, has some grasp of it.

“I’m too old to make such a big change.”

Yes, I guess it makes more sense to just take a seat and await the arrival of the Grim Reaper. Or perhaps, is your life already so exciting and wonderful that you can’t handle a little change? Better, I think, that you might adopt the attitude of the 85-year-old woman who has just transplanted herself to Argentina from the frozen north. Even after many years of adventure, she simply feels ready for a change and was getting tired of the same old people with the same old stories and habits.

“I’ve got to wait until the kids are out of school. It would disrupt their lives.”

This is actually one of the lamest excuses in the book. I’m sympathetic to the view that kids ought to live with wolves for a couple of years to get a proper grounding in life – although I’m not advocating anything that radical. It’s one of the greatest gifts you can give your kids: to live in another culture, learn a new language, and associate with a better class of people (as an expat, you’ll almost automatically move to the upper rungs – arguably a big plus). After a little whining, the kids will love it. When they’re grown, if they discover you passed up the opportunity, they won’t forgive you.

“I don’t want to give up my US citizenship.”

There’s no need to. Anyway, if you have a lot of deferred income and untaxed gains, it can be punitive to do so; the US government wants to keep you as a milk cow. But then, you may cotton to the idea of living free of any taxing government, while having the travel documents offered by several. And you may want to save your children from becoming cannon fodder or indentured servants, should the US re-institute the draft or start a program of “national service” – which is not unlikely.

But these arguments are unimportant. The real problem is one of psychology. In that regard, I like to point to my old friend Paul Terhorst, who 30 years ago was the youngest partner at a national accounting firm. He and his wife Vicki decided that “keeping up with the Joneses” for the rest of their lives just wasn’t for them. They sold everything – cars, house, clothes, artwork, the works – and decided to live around the world. Paul then had the time to read books, play chess, and generally enjoy himself. He wrote about it in Cashing In on the American Dream: How to Retire at 35. As a bonus, the advantages of not being a tax resident anywhere and having time to scope out proper investments has put Paul way ahead in the money game. He typically spends about half his year in Argentina; we usually have lunch every week when in residence.

I could go on. But perhaps it’s pointless to offer rational counters to irrational fears and preconceptions. As Gibbon noted with his signature brand of irony, “The power of instruction is seldom of much efficacy, except in those happy dispositions where it is almost superfluous.”

Let me be clear: in my view the time to internationally diversify your life is getting short. And the reasons for looking abroad are changing.

In the past, the best argument for expatriation was an automatic increase in one’s standard of living. In the ’50s and ’60s, a book called Europe on $5 a Day accurately reflected all-in costs for a tourist. In those days a middle-class American could live like a king in Europe; but those days are long gone. Now it’s the rare American who can afford to visit Europe except on a cheesy package tour. That situation may actually improve soon, if only because the standard of living in Europe is likely to fall even faster than in the US. But the improvement will be temporary. One thing you can plan your life around is that, for the average American, foreign travel is going to become much more expensive in the next few years as the dollar loses value at an accelerating rate.

Affordability is going to be a real problem for Americans, who’ve long been used to being the world’s “rich guys.” But an even bigger problem will be presented by foreign exchange controls of some nature, which the government will impose in its efforts to “do something.” FX controls – perhaps in the form of taxes on money that goes abroad, perhaps restrictions on amounts and reasons, perhaps the requirement of official approval, perhaps all of these things – are a natural progression during the next stage of the crisis. After all, only rich people can afford to send money abroad, and only the unpatriotic would think of doing so.

The most important first step is to get out of the danger zone.

Let’s list the steps, in order of importance.

1. Establish a financial account in a second country and transfer assets to it, immediately.
2. Purchase a crib in a suitable third country, somewhere you might enjoy whether in good times or bad.
3. Get moving toward an alternative citizenship in a fourth country; you don’t want to be stuck geographically, and you don’t want to live like a refugee.
4. Keep your eyes open for business and investment opportunities in those four countries, plus the other 225; you’ll greatly increase your perspective and your chances of success.
5. Where to go? In general, I would suggest you look most seriously at countries whose governments aren’t overly cozy with the US and whose people maintain an inbred suspicion of the police, the military, and the fiscal authorities. These criteria tilt the scales against past favorites like Australia, New Zealand, Canada, and the UK.

And one more piece of sage advice: stop thinking like your neighbors, which is to say stop thinking and acting like a serf. Most people – although they can be perfectly affable and even seem sensible – have the attitudes of medieval peasants that objected to going further than a day’s round-trip from their hut, for fear the stories of dragons that live over the hill might be true. We covered the modern versions of that objection a bit earlier.

I’m not saying that you’ll make your fortune and find happiness by venturing out. But you’ll greatly increase your odds of doing so, greatly increase your security, and, I suspect, have a much more interesting time.

Let me end by reminding you what Rick Blaine, Bogart’s character in Casablanca, had to say in only a slightly different context. Appropriately, Rick was an early but also an archetypical international man. Let’s just imagine he’s talking about what will happen if you don’t effectively internationalize yourself, now. He said: “You may not regret it now, but you’ll regret it soon. And for the rest of your life.”

Louis James: Doug, a lot of our readers have asked about getting a second passport. I realize this is a large and complex issue – several issues, actually – but would you care to go over the basics of where to go and what to do? And for those not already thinking about this, why?

Doug Casey: Sure. We’ve talked quite a bit about the increasing urgency of getting some of your assets out of your home country, especially if it’s the United States. We’ve talked about having stores of precious metals in safe places abroad, and setting up bank and brokerage accounts abroad as well. I’ve said that safest way to store wealth abroad is to buy property, which can’t be seized by your home country without an act of war. The purchase of real estate solves several issues all at once.

But that’s all about protecting assets; to protect yourself, getting a second passport is unfortunately very important.

LJ: Why unfortunately?

DC: Because you shouldn’t have to need government papers to live as you please. It used to be that a passport was a document that a ruler of one country would give to a traveler to ask the rulers of other countries to assist him in his travels. Now, instead of a convenience, it’s become a required permit for travel. It’s degrading and actually runs counter to the whole idea of the thing. The original purpose of a passport has been turned upside down.

LJ: Passports are becoming a world ID card – and they will be, once the governments all link up their databases.

DC: That’s exactly what they are, and I’m sure it’s going to get worse. It’s funny the way people treat these things like some sort of holy relic, or magical object – they are nothing but another government ID. But since they are necessary in today’s world, you ought to have several of them, for your own convenience. If nothing else, it prevents any one government from basically placing you under house arrest by taking your passport away from you.

LJ: Do you really think of it mostly in terms of convenience? Or do you sometimes think about the potential for physical danger, should you find yourself in an Achille Lauro-type situation in which violent people who hate Americans select US passport holders for abuse?

DC: That’s definitely a good reason for Americans to have a second passport, and increasingly for others, now that the war with Islam is under way. If you ever get caught in harm’s way, it helps that nobody starts by shooting all the people from countries they’ve never heard of.

LJ: Round up all the Uruguayans!

DC: Right – that just doesn’t happen. Another reason – certainly if you’re an American – is that nobody anywhere in the world wants to open a bank account or a brokerage account for you. It ranges from impossible to hard and inconvenient. It’s a subtle and indirect form of exchange control that the US has already imposed. I have no doubt controls will become much more formal and serious in the near future.

LJ: Are you saying that if I go to Switzerland, and I look and sound like an American, but have a Mexican passport, they’ll open a bank account for me?

DC: It depends. Here in Uruguay, where I’m still hanging out on the beach, I went with a friend from South Africa to open a bank account, using her South African passport. I didn’t say a word, so I could have been a South African too, for all they knew. Still, the bank officer asked her: “Are you also a US citizen?” and “Are you resident in the US?”

LJ: The long arm of Uncle Sam keeps getting longer.

DC: It really is getting harder and harder. Banks really don’t want the aggravations that come with dealing with “US persons” and their bullying government. Of course, it’s all going to eventually backfire on the US, but in the meantime it’s going to get worse.

LJ: Yes – I don’t like it when they ask for my passport at hotels, and I hate it when they say they have to keep it.

DC: As well you should, for all kinds of reasons. You never know how good the security at the hotel is, and the inconvenience of a lost or stolen passport is substantial. I’d say a second one is a good thing to have, just on principle. An alternative would be to get documents from some of those people trying to set up new countries, like Sealand, the WWII gun platform off the coast of England taken over by Roy Bates. I spent an afternoon with him once, but foolishly never signed up as a citizen. Oh well… Other outfits sell reproduction passports of defunct or renamed countries like Rhodesia and British Honduras.

LJ: I shudder to think of what “inconvenience” means to a man who finds it amusing to argue with immigration officials in back rooms in flyspeck countries… But at any rate, mentioning purveyors of passports from defunct countries underscores the importance of telling our readers that there are a lot of scams out there, and that it pays to be very skeptical of websites that claim to be able to set you up with documents, corporations, and bank accounts overseas. There are freelance thieves to worry about, and worse – governments trying to entrap so-called tax evaders and money launderers. There’s no need to take such risks when you can go to any of the many countries that encourage immigration and permanent residency, and acquire government-issued documents legally.

DC: Yes, these are indeed shark-infested waters. You really have to do things in a totally correct and proper way. For instance, there always seem to be people running around who have passports stolen from the issuing agency, and some fools buy them, not realizing they’ll not only lose their money, but might wind up in jail besides. But, even among perfectly legitimate documents, not all passports are created equal.

LJ: Why would that be?

DC: The defining characteristic of a “good” passport is how much visa-free travel it allows. And by that I really mean visas that have to be applied for, and approved, before the trip begins, as opposed to those issued at the border. Avoiding those is the real key value.

In spite of its reputation, a US passport is by no means the best one to have. First, if you have one, you’re a US taxpayer, which is very inconvenient, but it also means you need visas for a lot more countries than you would with some other passport. Argentina, Chile, and Brazil, for instance, all charge Americans about $150 to issue a visa. It’s a perverse form of reciprocity, as that’s what the US government charges their citizens. It’s the same kind of thinking that starts trade wars, and I expect more of it in the years to come – but that’s another subject.

Speaking of South America, two passports that are relatively quick and easy to get are those from Uruguay and Paraguay. Both countries are members of the Mercosur group of South American countries, which offers some additional advantages to their nationals.

One of the best, I’m given to understand – and this is constantly changing – is a Singapore passport. I also understand that Singapore has a number of ways to become a citizen in a relatively short period of time.

LJ: What are some of the shortcuts to second citizenship?

DC: One of the best is if you have parents or grandparents from a country that will give you citizenship on that basis. Ireland and Italy are known for this. It’s true, under some circumstances, for the UK as well. Saint Kitts is a relatively easy place to get a passport quite quickly, but it involves a significant investment that adds up to a couple hundred thousand dollars. Selling IDs is a significant source of income for the island.

And of course, in a number of countries you can obtain citizenship, and hence documents, relatively easily by marrying a national. Brazil is one, and a Brazilian passport is not a bad one to have.

There’s information on this out there, but there have been scam reports done on this subject and many other sources that are simply unreliable, so watch out. I don’t think there’s ever been a truly definitive study done on all the ways, in all the 200 or so countries in the world. I believe my bookThe International Man was the first to really explore the ground – but it’s long out of date. Even if there were a current book, it would have to be updated monthly to be of real value – governments are always changing their rules. And when it comes down to the particulars of a given situation, you’ll want to hire a tax attorney and maybe an immigration one as well, to make sure everything is done correctly.

It’s generally better not to try for shortcuts, but to move to a place you like living in, at least part of the year. Operating through the established, legally recognized channels, you can get a passport in two to five years.

LJ: Okay. And, to be clear, the US allows second citizenships?

DC: Yes. Many countries don’t, and are strict about it. Others don’t, but look the other way. You may feel you want to keep your US documents for various practical reasons, but remember that keeping your US citizenship means remaining a US taxpayer, which is most undesirable.

LJ: I read that if your income is less than $100,000 per year and you live abroad, it’s not taxed, so maybe the tax issue is less important to people who earn less than you?

DC: That’s true, but that exemption only applies only on income earned outside the US You still pay capital gains taxes, and taxes on US-sourced income. I also understand that under current law, until 2013, there’s a $5 million exemption on appreciated expatriated assets. That means there’s a window closing soon on some of the benefits of getting rid of your US citizenship.

LJ: Any reasons other than taxes you’d want to get rid of your US citizenship? If I were young enough, I’d worry about conscription, for example.

DC: That’s a very good reason. More generally, as long as you’re a citizen of a country, that country’s government is going to treat you like its property. So, if you are going to be a citizen of any place, which is unfortunately necessary, it’s better to be a citizen of a small and backward country, or one that just doesn’t have the ability or interest to monitor all of its citizens like prison inmates, as the US does.

LJ: I hear that. It’s such a pity that America the beautiful has turned into the United State and is rapidly marching down the road to serfdom… I really loved America.

DC: Nothing lasts forever, Lobo. It’s suicidal to let sentimentality blind you to reality. But, eternal optimist that I am, it’s always good to look at one of the major bright sides of the ongoing financial and economic collapse. Namely that the governments of most advanced nation-states are bankrupt. There’s a chance that some of them will be forced to cut back on their most noisome activities. There’s even a chance that one or two will be completely hollowed out and will exist mostly in theory, like Rome in the late 5^th century.

It’s very hard to predict what will happen, so it’s best to have a Plan B. And a Plan C. Unfortunately, most people have a medieval serf mentality – although they don’t know it, and probably wouldn’t admit it even if they did – and have no plan at all, because they think everything is fine.

LJ: I agree. And you know I’m diversifying out of the US as well. Any other essential points?

DC: Yes, remember that getting a second passport is just part of a larger “permanent traveler” strategy. The ideal is to live in one place, have your citizenship in another, your banks and brokers in other jurisdictions, and your business dealings in yet others. That makes it very inconvenient for any one government to control you. You don’t want all your eggs in one basket – that just makes it easier for them to grab them all. I understand it may not be easy for most people to structure their affairs that way. That’s exactly why most serfs stayed serfs; it was hard and scary to think of anything other than what they were told they should do.

LJ: Understood. Thanks for the guidance.

The more of your wealth you have in your home country, the greater the risks to your capital. That’s why it’s critical to start protecting your assets by moving them abroad as soon as possible. To help you do just that, Casey Research is hosting a web video event at 2 p.m. EDT on Tuesday, April 30.Internationalize Your Assets features investment experts Doug Casey, Peter Schiff, Mike Maloney, and more. This must-see webinar will reveal offshore strategies you can easily implement to protect what’s rightfully yours. Click here for details and to register.

L: Doug, the news of the week is the big meltdown in the gold market. Some people are saying the bear is here to stay, and it’s time to sell everything gold-related and look for greener pastures elsewhere. Others are saying the is the buying opportunity of the decade, and it’s time to go “all in.” What do you think?

Doug: I’d say it was neither. It could be that just as in 2008, when gold went down a lot at just the time you might think everyone would be panicking into it. But a lot of people had to sell their gold to meet their other obligations that were denominated in various paper currencies. That may be happening at this very moment in Cyprus. There are conflicting reports, but they may end up being forced to sell something on the order of half a billion euros’ worth of gold – and if that happens to them, it could happen to other much larger countries that are in trouble, like Greece, Italy, Spain… or France.

L: That is an interesting explanation. A lot of people have been pointing at the lower price target and guidance issued by Goldman Sachs – but why anybody would listen to those guys after all they’ve been wrong about, at taxpayers’ expense, is beyond me.

Doug: Yes. It makes no sense that anyone would listen to Wall Street analysts about gold. Insofar as these people have an education in economics, it’s invariably something they’ve gotten from a conventional university program, which is to say that their economics degrees are worth nothing, and their economic thinking is both totally askew and totally conventional. You can always rely on conventional thinking from the Establishment. The moment someone looks like he’s thinking independently, he’s seen as a danger and asked to go away. Which means getting off the gravy train. And who wants to both be ostracized and lose a fat income?

L: That’s what Walter Block said last week. Did you see my interview with him?

Doug: I did, and I liked it. That was a very good interview. How rare to have a conversation with a university economics professor and have it not only make sense, but be entertaining.

L: It was fun. But that’s exactly what he said: “My credentials are worthless.”

Doug: [Laughs] That’s one of the many reasons why I like Walter; he’s not only extremely smart, but very intellectually honest. He looks at reality and calls it the way he sees it, no matter how politically incorrect. That’s immediately obvious to anyone who reads his book Defending the Undefendable, which is a hoot; it’s like hitting someone between the eyes with a mental 2 x 4… one of my all-time favorites.

He recognizes that a Ph.D in economics from Columbia is a sham. I’m not sure if it’s worth more or less than a doctorate in political science, sociology, or education. Or a degree from a Bible college, for that matter. Actually, I’d assign a negative value to all of them. They only prove that the recipient was naïve enough to spend the time and money it takes to get them. There’s a lot more I could say. Those who are interested can read more in ourconversation on education.

L: Right. But back to the matter at hand. You’re saying that at least the proximal cause of the big selloff in gold was Europeans getting hit by the demands of their obligations and being forced to hit the bid on gold – or fear of this happening in a big way?

Doug: It’s hard to say. I think that’s part of the puzzle. Once a selloff starts pushing investors into panic mode, that negative momentum can seem to take on a life of its own, making the downturn longer and deeper than a rational response to the situation merits, or indeed than most people can imagine. In other words, it’s a normal – albeit radical – market fluctuation in abnormal times. The sellers are apparently treating gold as a speculation, which is a mistake. They should view it as a bedrock financial asset, something you buy and put away for the very long haul. It’s not a trading sardine.

There are, of course, plenty of theories that flood the Internet every time gold sells off when it seems like it should be advancing – mostly conspiracy theories. The proponents don’t like it when we call their theories conspiracy theories, but that’s what they are. They allege it’s all because of the bullion banks, or the Bilderbergers, or the Trilateral Commission, or the Council on Foreign Relations, or the Fed’s crash team, or some other nefarious agency. I have good friends who are otherwise quite knowledgeable and rational who sincerely believe that such groups are constantly knocking the price of gold down. I know they mean well, but I have to put these theories in the tinfoil hat category.

L: Some people are saying the Fed hit the market with 500 tons of naked gold shorts. I’m not sure how they could prove that, but the argument that the government wants to see the price of gold go down does have a certain appeal.

Doug: Of course governments want the price of gold lower. They want the prices of everything lower: silver, copper, iron ore, soybeans, corn…everything but housing, which for some reason they want higher. But gold is the least important commodity to these people. Not only don’t they understand its monetary role, they don’t believe in it or even really care about it.

It’s true that the US government tried to suppress the gold price back in the late ’60s, back when it was $35. But that was because the Treasury had to redeem its paper money for gold at that price; since 1971 it no longer does that. Actually, if anything, the US should want a much higher gold price now; with a reported 265 million ounces in national reserves, the US is by far the world’s largest gold owner.

But the price-suppression theories are quite ridiculous from a practical standpoint as well. The US couldn’t even suppress gold’s price 40 years ago – when there was only half as much gold in the world as there is now, and twice as much was owned by governments, and it was 1/40 of the price that it is now. And governments were far more solvent than they are today. Yet they are somehow supposed to be able to keep the price of gold down now. So, whatever else it might be, I do not attribute gold’s retreat to an official price-suppression conspiracy. The idea gives conspiracy theories a bad name…

L: They have successfully suppressed the price of gold from $250 an ounce all the way down to $1,600 or $1,800 an ounce… until recently.

Doug: [Chuckles] Yes, exactly. Nobody, not even the US government, is stupid enough to fight the biggest bull market in history for the last 12 years. Especially when it’s bankrupt; exactly how are the losses being accounted for? And especially when traders talk like high-school girls about who’s winning or losing in the markets. They don’t get paid bonuses for losing money. I wonder when the conspiracy guys suppose the government will stop trying to suppress the price… at $5,000? $10,000? I wonder why the US would be trying to help the Russians, the Chinese, and lots of other governments buy gold at lower prices? None of this makes any sense.

L: Okay, we may never sort out all the imponderables relating to why, but perhaps the more useful question now is what to do now as gold investors.

Doug: Well, this environment is full of buying opportunities. That said, I’d be careful about backing up the truck and going all in. It’s not as though gold has dropped all the way back to where it started its current bull run, back under $300 an ounce.

L: So what should people do?

Doug: They should stick with their plans, buying consistently and lowering their dollar cost average. The lower goes, the more gold at better prices they will own.

L: And that’s still a good thing?

Doug: Yes. All these governments around the world are still printing up trillions of dollars’ worth of new currency units. At this point, all that new paper money is basically just sitting in the financial system – not entirely, but most of it. At some point it’s going to get into the economy. It’s going to cause much higher prices for consumer goods. And it’s definitely going to create more asset bubbles. One of the most certain of those bubbles is gold. That in turn will create an even bigger bubble in its old friends the gold stocks, which, relative to the price of gold, are about as cheap as they have ever been in history.

As you know, the reason why I like junior mining stocks – well, mining stocks in general, but especially the juniors – is that they are the most volatile class of securities on the planet. It seems to me that everything is lining up right now for a perfect bear-market bottom in these stocks. That’s despite the fact that mining is a terrible industry that has gotten nothing but worse over the years.

L: More regulation, taxation, and confiscation.

Doug: That’s right. There are thousands of NGOs running around the world trying to put miners out of business, and lots of native tribes who see the recent mining boom as an opportunity to hop on the gravy train and perform a righteous shakedown. That’s in addition to the fact that young people see it as a 19^th-century choo-choo train business. You have to spend huge amounts up front on an Easter egg hunt to find deposits, then billions more to build a mine with no certainty you’ll ever get even a return of investment – forget about return on investment – many years later. Plus the fact that the world has been picked over for both large and high-grade deposits. It’s a horrible business. Despite these things – or in some ways because of them, actually – I think there’s going to be a super bubble in mining stocks. Which means a fantastic opportunity for those with the courage to buy now, because true market capitulation is shaping up in the sector, as we speak.

L: Is there a price below which you would advise throwing caution to the wind and going all in?

Doug: No. Almost no matter how low it goes, it can always go lower. If it dropped below $800 or $900 per ounce, that would be below the average cost of production today, and would rationally signal that gold would have to rise eventually. But the new supply of gold is unimportant to moving its price. About 80 million ounces are mined annually these days, but there are about six billion ounces estimated to remain above ground. So supply only increases about 1.3% per year – it’s fairly trivial, especially after industrial consumption. What determines the price is the desire of current owners to buy, hold, or sell it. It’s not like wheat, or even copper, where new supply is critical.

So, no; if the negative momentum were strong enough, it could fall well below the cost of production. I’m not saying I think it will go that low, just that the only point at which it can go no lower is zero. Now, I don’t expect it to drop much more, and I’d be very surprised at a drop below $1,000 an ounce, but there is no law of nature preventing it from doing so. All markets fluctuate. People who get panicked are overcommitted… or maybe they shouldn’t be in the market because they’re not psychologically suited for it. The problem is that government currency debasement practically forces everyone to be in the market, just to try to stay ahead of inflation.

You can’t time market bottoms, but you’ve got to play the odds. If I were going to sell anything now, I wouldn’t think of selling my gold or gold stocks – as we said already, I’m a buyer today – but I would absolutely sell any government bonds, if I hadn’t been paying attention and still owned any. I’d also get out of most common stocks, which are very overpriced, based on very unsound economic fundamentals.

L: On the other hand, you say that all these trillions of new currency units are flooding the market and have to go somewhere – clearly a lot of them are going into stocks. We just saw that in Japan, with the government announced it would be printing a lot more yen, and the same thing sure seems to be happening on Wall Street. This can be a new super-bubble forming in stocks; might a speculator not want to buy before that happens?

Doug: Well, that might work, at least if you buy the kind of stocks Warren Buffett buys, as they represent ownership in real productive assets. But that’s a bubble that could pop at any time, and I view it as extremely high risk. I want to re-emphasize that we’re just in the eye of the biggest financial and economic hurricane in history. The key in the Greater Depression is first and foremost to keep what you have. That’s not going to be easy.

L: All right, I understand – the precious metals remain my favorite investment as well. But last week Walter Block said that as much as he likes gold for similar reasons, he hesitates to recommend buying it because it’s subject to confiscation by desperate governments. It happened in the United States in the 1930s, by Executive Order 6201, issued by FDR.

Doug: That’s why I have always recommended internationalizing one’s assets. No place is perfect, no country on earth is completely safe, but you can mitigate political risk by distributing your assets across a variety of jurisdictions. Political diversification makes more sense than ever today.

Bluntly: all investments are dangerous these days. There are very few bargains anywhere, in any market, in any country. Governments around the globe are completely out of control – there is nothing so low that they will not stoop to it. They are predators, they are desperate, and they are hungry.

Oblivious people, mostly untraveled and unsophisticated US tax slaves, argue that one should not diversify internationally, believing that foreigners are more likely to steal from them. The amount of fear and antagonism that some quarters of the populace have toward libertarian ideas is actually quite disturbing. The people who think this way generally have the same attitude that medieval serfs had who could not be persuaded to go further than ten miles from their home towns, because they had heard that they were dragons over the hills. I pity the fools. They don’t realize that their main danger is from their own government, which believes it owns them.

This is true of all governments, but most governments are generally not aggressive towards tourists. Tourists are treated as honored guests who come and spend money – and can pick up and leave if offended. Citizens, on the other hand, are commonly regarded as milk cows, if not beef cows. And contrary to what most people in the US think, there are countries that are more stable than the US is today. These people are living in the past, thinking that the United States is no different from the America of 50 years ago.

L: I scratch my head about that too. Anybody who thinks that what happened in Cyprus, for example, could only happen in Cyprus, is just not paying attention. It was the European Central Bank’s idea to confiscate people’s savings, not that of the Cypriot politicians or central bankers. That’s First World politicians’ thinking these days: “the people’s money is our money to do with as we please.” People are being naïve beyond reason if they imagine that such a thing could never happen in America.

Doug: That’s right. It’s been said that officials in Canada and New Zealand have talked about seizing bank accounts, if necessary, just like in Cyprus – and those two have long been considered among the most stable countries in the world.

L: Okay, well, Cyprus was a banking destination until a few weeks ago, and obviously won’t be again for a very long time. Have your thoughts on where the best places in the world internationalize to changed any in recent times?

Doug: It really depends on who you are, what stage of life you’re in, what you want, how much money you have, and so forth. If I were just starting out, for example, I would definitely do Africa. It’s not a lifestyle destination, but a raw and rough place where people with courage, brains, and determination can seek and create their fortunes.

If a gracious and pleasant lifestyle were my goal, on the other hand, Europe is still a place to go – it’s just bloody expensive. And the culture has been totally corrupted by ingrained socialist ideas, high taxes, onerous regulation, and extravagant welfare programs. The politics there will likely become even worse in the future, until the place collapses economically or has another war. I’ve lived in several countries there, but it’s not for me.

I’m a big fan of the Orient, as you know, because that’s where the future lies. The problem with the Orient, however, is that unless you were born there you will always be an outsider, regardless of how welcome a guest you may be.

So I remain a fan of Latin America. I spent almost all of my time these days in Argentina and Uruguay. Both are quite similar to Europe culturally, but with much lower population density. Also, they won’t be on the front lines of the ongoing war with Islam. Of course, they both have completely insane governments – but that’s true of most everywhere today. I’m here for the lifestyle, not to do business. From that point of view, it’s impossible to beat them.

L: So, suppose you bumped into one of our readers who had just read our past interviews, and wanted some advice on the first steps to take to internationalize his or her life. What would you say?

Doug: The first and most important thing is to uproot and destroy any remnants of medieval serf thinking you may have lurking around in the crevices of your mind. Second is to open a bank account or a brokerage account in some country – any country that you like spending time in and has reasonable banking laws – where you are not a citizen/resident/ milk cow. This is both hard and getting harder for people carrying US passports, but it’s very important and well worth doing. Political diversification is even more important than investment diversification at this point.

Just start traveling. Explore the world. Look for countries you truly enjoy, that are friendly to foreigners, and are open to investors – especially as regards real estate.

L: Because buying a farm in the Congo isn’t likely to turn out well, unless you actually plan to live in the Congo and keep an eye on it? Better to build a house on the beach in Thailand or Costa Rica, if that sort of thing is your cup of tea.

Doug: Precisely. But today, it’s important to think as a speculator, not an investor. Personally, I probably wouldn’t pick Costa Rica these days, because it’s totally overrun with gringos and way too expensive. Thailand makes it quite hard for foreigners to buy real estate, but it’s one of the best choices in the world for lifestyle. But to each his own.

L: Would you say that Costa Rica is more expensive than Uruguay?

Doug: Nothing is more expensive than Uruguay, it seems… I think Uruguay is now about three times as expensive as Argentina, all in. It’s 50% more expensive than the US. Uruguay is no bargain, although it is pleasant.

L: Well, maybe Costa Rica is a good starter country for people new to internationalization; people might find it more comfortable and less frightening to be in a place where they hear English as much as Spanish. Sort of like San Diego, but just a bit farther south.

Doug: Maybe that’s not a bad idea; sometimes you have to start with baby steps. It’s not a bad place. Panama might be my suggestion, from that point of view.

L: Very well, then… anything else?

Doug: I guess I should tell our readers that we’re going to be moving these conversations to monthly editions of The Casey Report. I’m pretty busy practicing what I preach down here in Cafayate, and I’ve pretty much said the most important things I wanted to say, at least in this format.

I am, however, working with my friend Dr. John Hunt on a series of six novels, reforming six very politically incorrect – but unjustly besmirched – occupations. I’m not crazy about preaching to the choir anymore, but there are lots of things you can show and say in fiction that you don’t dare talk about in a format like this one. I expect they’ll be quite fun.

I also think we’ll have a second volume of our conversations, a sequel to Totally Incorrect, out in a while as well. I trust many of our readers liked our first volume.

As for our conversations going forward, I’ll keep on commenting on the passing parade in The Casey Report, so I encourage readers who really like them to sign up for TCR. But regardless of their choice on that, I urge them in all sincerity to think like contrarians, and implement our strategy: Liquidate, Consolidate, Speculate, and Create.

May we all live long, and prosper.

L: Thanks, Doug!

Doug: You’re very welcome.

In a wide-ranging interview with Casey Research editor Louis James, Doug Casey discusses why it’s imperative to start diversifying one’s assets today, and provides some guidance in considering countries to diversify into.

L: Doug, we’re getting a lot of questions from readers on how to follow your advice to diversify assets politically. I know it’s a prickly subject, but what can you tell us about getting our money out from behind the new iron curtain that seems to be descending?

Doug: First – and I can’t stress this enough – you’ve got to accept the grim reality of impending currency controls. The modern era of foreign exchange controls really started with the perversely Orwellian-named Bank Secrecy Act of 1970. For the first time, that made it obligatory for US citizens to report any foreign bank or brokerage accounts they had to the government.

But the threat is older than that, of course, going back to 1933, when Roosevelt confiscated Americans’ gold. Interestingly enough, only gold bullion held by Americans within the United States was confiscated. If you had gold outside the United States, you were insulated.

L: I didn’t know that – if history repeats itself, that could be a key tactical factor for our readers to consider.

Doug: Yes. There are no guarantees, of course. Those in government today think they can do absolutely anything they deem necessary and expedient. But at least if it’s out of their physical bailiwick, it improves your odds.

L: Why do you think they allowed that exemption last time? I doubt it was because they had any shred of respect for private property – maybe they just recognized that trying to seize gold overseas would be impractical.

Doug: Good question. Well, the 1930s were a different era. Communication, for one thing, was vastly slower and more expensive than it is now. And you have to remember that though we had an income tax in the 1930s, since 1913 actually, very few people were paying it – even among those allegedly legally obligated to pay it. It was hard for the government to find out who they were, and how much they were earning, and so on. Even though there were only 140 million people in the country then, the absence of computers and much less centralization made it very hard for Washington to keep tabs on them.

L: The income tax really was a voluntary tax back then!

Doug: [Laughs] Much more so than now – it really was a different era. At any rate, based on this history and that the juggernaut is building momentum towards the bottom of the ditch, I have to reiterate my advice on the most important investment decision you can make. And it isn’t one among the different classes of investment; it’s political and geographical diversification. Simply put, that’s because no matter where you live, your government is the greatest threat to your wealth today.

If you’re a high-income earner, the state basically takes 50% of what you earn, and then from what’s left, you have to pay your real estate taxes, sales taxes, and many, many other kinds of taxes. Government is without question the biggest danger to your financial health. You’ve got to diversify your assets so they are not all under any one government’s control.

L: You say that in almost every speech you give these days, and you said it in one of our interviews a couple of weeks ago.

Doug: Yes, and it bears repeating, constantly. It’s the elephant in the room that very, very few people pay any attention to, and it’s going to stomp most people to death, for just that reason.

L: Okay, so give us a primer. For those who want to avoid getting crushed by the elephant, where do they begin?

Doug: To start with, it makes all the sense in the world to have a foreign bank account. Not a hidden one – I’m not advising anyone to break any laws. You report it on your annual tax filings. So, the government will know about it, but if it’s a foreign bank account, they can’t just step in and lock down your assets in an instant.

L: Does Canada count as a foreign country for Americans?

Doug: I’ll probably get hate mail for saying so, but it’s important for investors to recognize that Canada is a sort of “USA Light.” When Washington says, “Jump!,” Ottawa says, “How high?” Nonetheless, if only for the sake of formalities and legal pleasantries, US citizens would have some degree of insulation with a Canadian bank account. And, as a general rule, Canadian banks are more solvent than US banks, so setting up a Canadian bank account is an easy first step for many US investors.

The second thing to do would be to set up a Canadian brokerage account. Unfortunately, the SEC has made it so that no Canadian broker will open an account with an American unless they have a US subsidiary. That, in effect, makes your Canadian brokerage account like a US brokerage account. That doesn’t help you much from an asset-protection point of view, but it does let you trade directly in many of the stocks we recommend in the International Speculator and the Casey Energy Report (not through a US market-maker via the pink sheets).

Third, I think that having a safe deposit box in Canada is vastly preferable to having one in the US. You probably do remember that when Roosevelt confiscated gold in 1933, he also sealed safe deposit boxes in all US banks. No American could visit a safe deposit box for some time without a government agent accompanying him. That could certainly happen again.

And all of this is true in other countries around the world.

But yes, as an easy place to start, Canada is a sort of plain-vanilla jurisdiction that’s worth giving a try.

L: So, what would be the French vanilla, or even the Bailey’s Irish Cream jurisdiction? Is there such a thing as a tax haven anywhere in the world anymore? Even the Swiss have caved… I just heard that they just started handing over new account info to US authorities.

Doug: Yes, apparently there were some 50,000 accounts UBS had, owned by US citizens. UBS, a multinational bank with a very substantial presence in the United States – and therefore exposure to extortion by US authorities – was going to hand them all over. The Swiss government stepped in, saying they would prosecute UBS officials if they violated Swiss law by doing that. But the Swiss worked out some sort of compromise with the US authorities, so only about 5,000 accounts are being handed over. On what basis they picked these 5,000 is uncertain.

So, the first tax-haven rule is to never go to a place that’s obviously a tax haven. If I were interested in bank privacy, I’d forget about places like the Bahamas or the Caymans. It makes no sense at all today. All those little island republics are totally under the thumb of the US at this point. And they’ve always been infiltrated with stooges. They may have bank secrecy laws, but they don’t have a tradition of privacy like Switzerland has – although that’s no longer what it was.

You’ll recall how the German government bribed a Liechtenstein banker to steal account names and information. The Germans then turned over relevant data to the UK, US, and other governments, who were quite happy to receive stolen goods. And there was about zero protest over the appalling theft. It’s a testimony to how thoughtless and ethically complacent most people are; when a state commits a crime, they just overlook it.

L: Are you saying that all of the little havens are unreliable?

Doug: Well, I don’t know of any that are reliable.

Instead, I would recommend places that are geographically distant from the US – and culturally distant as well. To me, the best places to be are in the Orient. That’s partially because the Chinese and other Oriental civilizations are much less prone to roll over and do what they are told. National pride ensures that, if nothing else.

But if you go this route, with, say, an account in Hong Kong, you certainly would not want to use a bank like HSBC. It’s got branches all over the world, prominently in the US – so, like UBS, they’ll do what they are told.

Actually, there are still Swiss banks that will open an account for a “US person,” if you can convince them to do it. But you definitely do not want a Swiss or Liechtenstein bank that has any presence in the US. The same would be true in the Orient – so forget about HSBC. You want a real Chinese bank. That way, when the US government calls, the phone will be answered in Chinese and no one will speak English with them.

The best places are the least obvious places. Malaysia is interesting. Thailand. These are completely non-tax-haven types of places – and that might make them suitable.

L: What about step two, getting a brokerage account?

Doug: Well, it’s tough these days. If you want to trade in US and Canadian stocks, you pretty much have to have an American or Canadian broker. But one thing that can be done that is completely legal (and reportable) is to open up a foreign company. Then the company can open up a brokerage account. That way, you do have a level of insulation I think is very valuable, both from a practical and a legal point of view.

L: I gather you’re not talking about the banana republic IBCs I see peddled on the Internet?

Doug: Right. Most of what you see on the Internet offering to open up an IBC – which is just an offshore company – are just scams, if not stings. The fees are too high. The people are usually sleazy. They often come up with all sorts of cockamamie tax-avoidance schemes. You may be encouraged to do things that are illegal. They are just disasters waiting for you to walk into. I strongly encourage people not to even consider such offerings.

If you want an offshore company for the purpose of convenience or a measure of privacy, completely reportable and within the law, the best thing to do is to go to the jurisdiction you’ve picked and see a lawyer who deals in that sort of business. Cut out the middleman. Ideally, the jurisdiction would be one that meets the criteria I outlined above, but is also a place you’d actually enjoy spending time in.

L: So, you hop on a plane to, say, Panama, and… how do you go about finding a reliable attorney to set up your corporation?

Doug: That’s the intelligent way to do it. There’s nothing illegal, nor particularly tricky about it; you just find a lawyer who specializes in it, pay the fees, and off you go.

How do you find a good lawyer? Same way you do at home; you go and start interviewing lawyers until you find one that impresses you as being sound.

Panama, by the way, is probably the best place to do this at this moment. The British Virgin Islands may be another. And, of course, if you’re an Australian or a New Zealander, you should think about Vanuatu – it’s only a two-hour plane ride from Sydney or Auckland.

Back in the Western Hemisphere, the only other reasonable alternative I see is Uruguay. It’s always been promoted as the “Switzerland of South America” – and there’s a lot of truth to that. Uruguay is a small country, about the same size and with the same size population as Switzerland, and a very big part of its national income is foreign banking. It has no tax on foreign-earned income – though, unfortunately, it recently instituted a tax on domestic-earned income. Too bad.

Another unfortunate thing about Uruguay is that when you import gold there – such as by carrying Krugerrands in your briefcase – their customs form asks you to report it. It’s not against the law, but for some ridiculous reason, they want to know.

L: That’s really all it takes? Find a lawyer and pay the fees?

Doug: Yes, though there can be nuances worth paying attention to. For example, there are various jurisdictions with different tax treaties that can be used to your advantage. The Dutch Antilles being a famous example, as far as dividends treatment goes. This is a specialist area that, well, you should discuss with a specialist. But you should definitely give it some thought.

Oddly enough, you can import gold into Argentina with no problems nor reporting requirements, and you can buy and sell gold in Argentina just as easily. It’s much easier than in Uruguay, but I wouldn’t dream of doing any significant banking in Argentina – and neither do Argentines. The government is just completely untrustworthy when it comes to things like bank accounts.

So, it’s rather perverse; you can deal easily in gold in Argentina, but not bank accounts, and you can’t deal in gold easily in Uruguay, but bank accounts are easy.

Frankly, the best place to look for one-stop financial services shopping is Panama. Banking is easy, and there’s no gold reporting.

And yes, you can still take gold in and out of the US without reporting it. It’s like stamps or rare coins. The exception would be, if you had enough of them, to remember that Double Eagles have a face value of $20, and the new Eagles have a face value of $50.

L: What about your cash, once you have your offshore bank account set up? You have to declare it if you take more than $10,000 on your person, but can you wire whatever you want?

Doug: Yes, you can send any amount of money you want, currently. It gets reported, but it’s basically unregulated. And by the way, the $10,000 limit doesn’t cover gold, but it does cover stock certificates and other financial instruments – but you can still send those by Federal Express.

L: I wonder how long that will last…

Doug: I’m sure they’ll get ’round to closing all the loopholes. So, the time to act is now. We’ll keep monitoring the situation, but when this happens, the Powers that Be won’t want anyone to see it coming, so it will zing in from left field. Your only chance to protect your wealth is to start diversifying its exposure to any one particular predatory state as soon as possible.

I have to stress again the urgency of diversifying the political risk your assets are exposed to: do it now.

L: Okay, Doug – thanks!

Doug: You’re welcome.

Your first step toward internationally diversifying your wealth is to tune in to a Casey Research webinar on the subject.Internationalizing Your Assets premiers at 2 p.m. Eastern Time on Tuesday, April 30. Doug Casey – Casey Research chairman and a New York Times best-selling author – highlights a blue-ribbon cast of financial experts who will reveal their favorite strategies for protecting your wealth abroad.  Get more information and register now.

In a wide-ranging interview with Casey Research editor Louis James, Doug Casey discusses why it’s imperative to start diversifying one’s assets today, and provides some guidance in considering countries to diversify into.

L: Doug, we’re getting a lot of questions from readers on how to follow your advice to diversify assets politically. I know it’s a prickly subject, but what can you tell us about getting our money out from behind the new iron curtain that seems to be descending?

Doug: First — and I can’t stress this enough — you’ve got to accept the grim reality of impending currency controls. The modern era of foreign exchange controls really started with the perversely Orwellian-named Bank Secrecy Act of 1970. For the first time, that made it obligatory for US citizens to report any foreign bank or brokerage accounts they had to the government.

But the threat is older than that, of course, going back to 1933, when Roosevelt confiscated Americans’ gold. Interestingly enough, only gold bullion held by Americans within the United States was confiscated. If you had gold outside the United States, you were insulated.

L: I didn’t know that — if history repeats itself, that could be a key tactical factor for our readers to consider.

Doug: Yes. There are no guarantees, of course. Those in government today think they can do absolutely anything they deem necessary and expedient. But at least if it’s out of their physical bailiwick, it improves your odds.

L: Why do you think they allowed that exemption last time? I doubt it was because they had any shred of respect for private property — maybe they just recognized that trying to seize gold overseas would be impractical.

Doug: Good question. Well, the 1930s were a different era. Communication, for one thing, was vastly slower and more expensive than it is now. And you have to remember that though we had an income tax in the 1930s, since 1913 actually, very few people were paying it — even among those allegedly legally obligated to pay it. It was hard for the government to find out who they were, and how much they were earning, and so on. Even though there were only 140 million people in the country then, the absence of computers and much less centralization made it very hard for Washington to keep tabs on them.

L: The income tax really was a voluntary tax back then!

Doug: [Laughs] Much more so than now — it really was a different era. At any rate, based on this history and that the juggernaut is building momentum towards the bottom of the ditch, I have to reiterate my advice on the most important investment decision you can make. And it isn’t one among the different classes of investment; it’s political and geographical diversification. Simply put, that’s because no matter where you live, your government is the greatest threat to your wealth today.

If you’re a high-income earner, the state basically takes 50% of what you earn, and then from what’s left, you have to pay your real estate taxes, sales taxes, and many, many other kinds of taxes. Government is without question the biggest danger to your financial health. You’ve got to diversify your assets so they are not all under any one government’s control.

L: You say that in almost every speech you give these days, and you said it in one of our interviews a couple of weeks ago.

Doug: Yes, and it bears repeating, constantly. It’s the elephant in the room that very, very few people pay any attention to, and it’s going to stomp most people to death, for just that reason.

L: Okay, so give us a primer. For those who want to avoid getting crushed by the elephant, where do they begin?

Doug: To start with, it makes all the sense in the world to have a foreign bank account. Not a hidden one — I’m not advising anyone to break any laws. You report it on your annual tax filings. So, the government will know about it, but if it’s a foreign bank account, they can’t just step in and lock down your assets in an instant.

L: Does Canada count as a foreign country for Americans?

Doug: I’ll probably get hate mail for saying so, but it’s important for investors to recognize that Canada is a sort of “USA Light.” When Washington says, “Jump!,” Ottawa says, “How high?” Nonetheless, if only for the sake of formalities and legal pleasantries, US citizens would have some degree of insulation with a Canadian bank account. And, as a general rule, Canadian banks are more solvent than US banks, so setting up a Canadian bank account is an easy first step for many US investors.

The second thing to do would be to set up a Canadian brokerage account. Unfortunately, the SEC has made it so that no Canadian broker will open an account with an American unless they have a US subsidiary. That, in effect, makes your Canadian brokerage account like a US brokerage account. That doesn’t help you much from an asset-protection point of view, but it does let you trade directly in many of the stocks we recommend in the International Speculator and the Casey Energy Report (not through a US market-maker via the pink sheets).

Third, I think that having a safe deposit box in Canada is vastly preferable to having one in the US. You probably do remember that when Roosevelt confiscated gold in 1933, he also sealed safe deposit boxes in all US banks. No American could visit a safe deposit box for some time without a government agent accompanying him. That could certainly happen again.

And all of this is true in other countries around the world.

But yes, as an easy place to start, Canada is a sort of plain-vanilla jurisdiction that’s worth giving a try.

L: So, what would be the French vanilla, or even the Bailey’s Irish Cream jurisdiction? Is there such a thing as a tax haven anywhere in the world anymore? Even the Swiss have caved… I just heard that they just started handing over new account info to US authorities.

Doug: Yes, apparently there were some 50,000 accounts UBS had, owned by US citizens. UBS, a multinational bank with a very substantial presence in the United States — and therefore exposure to extortion by US authorities — was going to hand them all over. The Swiss government stepped in, saying they would prosecute UBS officials if they violated Swiss law by doing that. But the Swiss worked out some sort of compromise with the US authorities, so only about 5,000 accounts are being handed over. On what basis they picked these 5,000 is uncertain.

So, the first tax-haven rule is to never go to a place that’s obviously a tax haven. If I were interested in bank privacy, I’d forget about places like the Bahamas or the Caymans. It makes no sense at all today. All those little island republics are totally under the thumb of the US at this point. And they’ve always been infiltrated with stooges. They may have bank secrecy laws, but they don’t have a tradition of privacy like Switzerland has — although that’s no longer what it was.

You’ll recall how the German government bribed a Liechtenstein banker to steal account names and information. The Germans then turned over relevant data to the UK, US, and other governments, who were quite happy to receive stolen goods. And there was about zero protest over the appalling theft. It’s a testimony to how thoughtless and ethically complacent most people are; when a state commits a crime, they just overlook it.

L: Are you saying that all of the little havens are unreliable?

Doug: Well, I don’t know of any that are reliable.

Instead, I would recommend places that are geographically distant from the US — and culturally distant as well. To me, the best places to be are in the Orient. That’s partially because the Chinese and other Oriental civilizations are much less prone to roll over and do what they are told. National pride ensures that, if nothing else.

But if you go this route, with, say, an account in Hong Kong, you certainly would not want to use a bank like HSBC. It’s got branches all over the world, prominently in the US — so, like UBS, they’ll do what they are told.

Actually, there are still Swiss banks that will open an account for a “US person,” if you can convince them to do it. But you definitely do not want a Swiss or Liechtenstein bank that has any presence in the US. The same would be true in the Orient — so forget about HSBC. You want a real Chinese bank. That way, when the US government calls, the phone will be answered in Chinese and no one will speak English with them.

The best places are the least obvious places. Malaysia is interesting. Thailand. These are completely non-tax-haven types of places — and that might make them suitable.

L: What about step two, getting a brokerage account?

Doug: Well, it’s tough these days. If you want to trade in US and Canadian stocks, you pretty much have to have an American or Canadian broker. But one thing that can be done that is completely legal (and reportable) is to open up a foreign company. Then the company can open up a brokerage account. That way, you do have a level of insulation I think is very valuable, both from a practical and a legal point of view.

L: I gather you’re not talking about the banana republic IBCs I see peddled on the Internet?

Doug: Right. Most of what you see on the Internet offering to open up an IBC — which is just an offshore company — are just scams, if not stings. The fees are too high. The people are usually sleazy. They often come up with all sorts of cockamamie tax-avoidance schemes. You may be encouraged to do things that are illegal. They are just disasters waiting for you to walk into. I strongly encourage people not to even consider such offerings.

If you want an offshore company for the purpose of convenience or a measure of privacy, completely reportable and within the law, the best thing to do is to go to the jurisdiction you’ve picked and see a lawyer who deals in that sort of business. Cut out the middleman. Ideally, the jurisdiction would be one that meets the criteria I outlined above, but is also a place you’d actually enjoy spending time in.

L: So, you hop on a plane to, say, Panama, and… how do you go about finding a reliable attorney to set up your corporation?

Doug: That’s the intelligent way to do it. There’s nothing illegal, nor particularly tricky about it; you just find a lawyer who specializes in it, pay the fees, and off you go.

How do you find a good lawyer? Same way you do at home; you go and start interviewing lawyers until you find one that impresses you as being sound.

Panama, by the way, is probably the best place to do this at this moment. The British Virgin Islands may be another. And, of course, if you’re an Australian or a New Zealander, you should think about Vanuatu — it’s only a two-hour plane ride from Sydney or Auckland.

Back in the Western Hemisphere, the only other reasonable alternative I see is Uruguay. It’s always been promoted as the “Switzerland of South America” — and there’s a lot of truth to that. Uruguay is a small country, about the same size and with the same size population as Switzerland, and a very big part of its national income is foreign banking. It has no tax on foreign-earned income — though, unfortunately, it recently instituted a tax on domestic-earned income. Too bad.

Another unfortunate thing about Uruguay is that when you import gold there — such as by carrying Krugerrands in your briefcase — their customs form asks you to report it. It’s not against the law, but for some ridiculous reason, they want to know.

L: That’s really all it takes? Find a lawyer and pay the fees?

Doug: Yes, though there can be nuances worth paying attention to. For example, there are various jurisdictions with different tax treaties that can be used to your advantage. The Dutch Antilles being a famous example, as far as dividends treatment goes. This is a specialist area that, well, you should discuss with a specialist. But you should definitely give it some thought.

Oddly enough, you can import gold into Argentina with no problems nor reporting requirements, and you can buy and sell gold in Argentina just as easily. It’s much easier than in Uruguay, but I wouldn’t dream of doing any significant banking in Argentina — and neither do Argentines. The government is just completely untrustworthy when it comes to things like bank accounts.

So, it’s rather perverse; you can deal easily in gold in Argentina, but not bank accounts, and you can’t deal in gold easily in Uruguay, but bank accounts are easy.

Frankly, the best place to look for one-stop financial services shopping is Panama. Banking is easy, and there’s no gold reporting.

And yes, you can still take gold in and out of the US without reporting it. It’s like stamps or rare coins. The exception would be, if you had enough of them, to remember that Double Eagles have a face value of $20, and the new Eagles have a face value of $50.

L: What about your cash, once you have your offshore bank account set up? You have to declare it if you take more than $10,000 on your person, but can you wire whatever you want?

Doug: Yes, you can send any amount of money you want, currently. It gets reported, but it’s basically unregulated. And by the way, the $10,000 limit doesn’t cover gold, but it does cover stock certificates and other financial instruments — but you can still send those by Federal Express.

L: I wonder how long that will last…

Doug: I’m sure they’ll get ’round to closing all the loopholes. So, the time to act is now. We’ll keep monitoring the situation, but when this happens, the Powers that Be won’t want anyone to see it coming, so it will zing in from left field. Your only chance to protect your wealth is to start diversifying its exposure to any one particular predatory state as soon as possible.

I have to stress again the urgency of diversifying the political risk your assets are exposed to: do it now.

L: Okay, Doug — thanks!

Doug: You’re welcome.

Your first step toward internationally diversifying your wealth is to tune in to a Casey Research webinar on the subject. Internationalizing Your Assets premiers at 2 p.m. Eastern Time on Tuesday, April 30. Doug Casey — Casey Research chairman and a New York Times best-selling author — highlights a blue-ribbon cast of financial experts who will reveal their favorite strategies for protecting your wealth abroad.  Get more information and register now.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, there is considerable disagreement over the significance of the Cyprus crisis. A lot of people are saying that it’s just a flash in the pan; Cyprus is a small country, far off, and doesn’t really matter. Other people are saying it’s very significant. The European Central Bank took unprecedented steps. What do you think?

Doug: I think this could be the spark that ignites the keg of dynamite under the current financial system. All banks, all around the world, are bankrupt, and have been for years. That’s because all the world’s banks run on a fractional reserve basis.

L: I know what you mean, but we should spell that out: by law and backed with government guarantees, banks only have to keep a tiny fraction of the money people deposit on hand. They lend out the vast bulk of it, and in even in good times, they could not return all depositors’ money at once, since loans cannot be called in instantaneously, and most would be defaulted on if they were. In bad times, the charade is even more hollow, since many loans that banks are currently owed will never ever get paid.

Doug: Yes, and they are all in that position. It was more serious in Cyprus because that economy is very leveraged to finance. In other words Cyprus was a banking epicenter for Europe. It was easier to make deposits – there were fewer questions asked – making banking the major business of the country. But I think the trouble will spread from there. It could spread to Luxembourg or Malta next; both are at least as leveraged to the financial sector as Cyprus. And from there… who knows?

Anyone with any sense should withdraw whatever cash they have in European banks, whether in euros or any other currency, immediately. Cyprus demonstrated that governments are quite willing and able to confiscate money sitting in a bank account in order to preserve the banking system. We live in Bizarro World.

L: Why would it spread? Cyprus was said to be particularly vulnerable because of its strong Greek connections; Cypriot banks had bought of lot Greek debt. Would people in Luxembourg be as exposed?

Doug: All banks are in effect creatures of the state at this point. They all own a lot of government bonds, which are considered the most secure form of capital. Of course, that’s the opposite of the truth; all these governments are bankrupt as well. The Greek government is just more overtly bankrupt than most.

Actually, we should take a minute here to discuss what a properly run banking system looks like. Historically, banks offered two types of accounts: demand deposits and time deposits. Demand deposits are what we call checking accounts today, but the original idea was that you’d pay your bank to store your money securely, and you had the right to “demand” your deposit back immediately, and to transfer funds via check.

The idea of time deposits, which became savings accounts, was that the bank would pay you interest when you deposited your money with them for a specific period of time. That’s why it’s called a “time” deposit; you lent the bank your money for a given time, as did other depositors, and the banks would always know how much money they could lend out – at higher interest rates. Furthermore, loans made against time deposits were always short term, and also self-liquidating, against receivables, or excess inventory, for instance.

There were no government guarantees for deposits back then; bankers needed to capitalize their businesses with their own funds, and if they miscalculated, they were personally liable – and often did go bankrupt themselves if they made too many bad loans. Depositors naturally avoided banks known to make risky or illiquid loans. Banks competed to be known as the most prudent and solvent.

Both lenders and depositors were cautious. Before the early 20^th century, people might well have laughed at today’s depositors of Cypriot banks. If they were foolish enough to put their money in banks that made such stupid loans, they only get what they deserve.

L: Our friend Rick Rule likes to say that the idea that the state can guarantee everyone’s deposits is just another unaffordable, unbacked social promise of the 20^th century. Just another example of living beyond our means.

Doug: Yes. I don’t think people understand this. People don’t have a clue, do they? People read editorials by Paul Krugman and neither laugh nor roll their eyes. It’s like they’re all on Prozac.

L: The nature of real banking is not something they teach in school anymore, that’s for sure.

Doug: Then it’s worth repeating. The distinction between time and demand deposits is critical. They are completely different, actually unrelated businesses. Today the distinction has been totally lost. But it’s much worse, since central banks have allowed the problem to compound to the n^thdegree.

Sound banks never made what we call consumer loans today, because there is no guarantee, no collateral. Banks in the past made only short-term commercial loans that were fully covered by the value of the assets being financed. You never had to rely on the good faith of the borrower. You simply facilitated short-term – short-term – liquidity. The idea of a 30-year, a 20-year, or even a 10- or 5-year mortgage was anathema to sound bankers. A building and loan society might grant a five-year mortgage to one of its members, with a very significant down payment; that’s because even though it’s an asset class with value, real estate is illiquid. Forget about credit cards. Forget about car loans; if you want a car, save up for one. It’s funny, actually. Car loans started out with a one-year term and a big down stroke. Then they went to two years. Now they’re five or more, when people don’t just lease. So even the family car has gone from a minor asset to a long-term liability. Subprime loans would have been completely unthinkable in the past.

L: Many people might say that credit that tight would be impractical today.

Doug: Many people don’t like the idea of having to live within their means. They feel they have a right to have whatever they want, now. That’s why the average American has essentially zero net assets. If everyone had to pay cash for everything, our whole society – from individuals on the lower rungs to big corporations to the state itself – would be much, much wealthier. We would not be, individually and as a society, one paycheck from being forced to live in a cardboard box under an overpass.

L: Perhaps so, but again, many people think modern high finance is not just normal, but necessary for civilization today. Big Business requires Big Credit.

Doug: Nonsense. The way you become wealthy is by producing more than you consume, and saving the difference. We don’t need a fractional reserve banking system, we don’t need government guarantees, and we certainly don’t need to use government IOUs backed by nothing masquerading as money.

I understand something like 20% of the US economy is financial in nature. It’s ludicrous; millions of people spending billions of dollars bundling, swapping, and repackaging imaginary assets. I’d guess that in a free-market economy, banking and related industries would amount to about 2%, a tenth as much. Money is essentially just a medium of exchange and a store of value; it’s problematic when it becomes a gigantic industry. All these people who spend their days gambling with ledger entries would have to go out and find something productive to do.

L: Get real jobs.

Doug: Exactly. The whole banking business is corrupt from top to bottom today. Part of the problem is that banks are no longer financed by the individuals who start them, putting their personal net worth on the line. Now, they are all publicly traded entities – just like all brokerages – playing with Other People’s Money. Management has no incentive to do anything but pad their wallets, so they pay themselves gigantic salaries and bonuses, and give themselves options. These people aren’t shepherding their money and that of clients they know personally. They’ve got zero skin in the game.

This is true all over the world, not just in the US and Europe. All these banks are going to blow up, and not just in far-off, little countries.

L: It’s interesting that a part of the basis for your negative prognosis for the global financial network is rooted in human psychology – the perverse incentives of playing with Other People’s Money, exacerbated by government guarantees and banks mistakenly viewing government bonds as safe investments.

Doug: Imagine you’re a smart, young trader working for Goldman, Deutsche Bank, or one of these big financial institutions. It’s actually in your interest to make incredibly crazy bets. You can win billions of dollars if red comes up on the financial roulette wheel. If that happens, you get a multimillion-dollar bonus. You win. But if your bet doesn’t work out, what then? The bank loses a few billion dollars, and you just go work for another bank, with more experience on your résumé. And you do the same thing over again.

L: So what does one do with hundreds of trillions of dollars in derivatives?

Doug: I don’t know, and neither does anyone else. Not even Warren Buffett. Nobody can possibly keep track of quadrillions of dollars of derivatives. It’s a daisy chain in which nobody can really know who is creditworthy. It’s impossible to assess the real counterparty risk. All these thousands of traders sitting at computer banks, second-guessing markets; it’s actually quite insane. I can hear them on the phone: “Hello, New York? Buy! Hello, Tokyo? Buy! Hello, London? New York and Tokyo are buying. Sell.” It’s an immense waste of productive manpower, them and the divisions of highly paid lawyers, accountants, and administrators behind them. Little of this would exist in a free-market world without central banks spewing trillions of currency units out every year to support governments. Of course, a gigantic financial industry arose to deal with it.

In any event, the people who today imagine they run the show may have put a finger in a dike, but it’s all going to come to very bad end.

One of the interesting things about this Cyprus thing is that, according to the numbers I hear bandied around, the Russians are supposed to have had somewhere in between $30 and $60 billion in Cyprus. Who knows what the real facts are, because you can’t trust what’s reported in the press… but I’ve been to Cyprus – both Northern Cyprus and the Republic of Cyprus. It’s true that the place is overrun with Russians and Russian money.

Now, you’ve got to figure that if you’re a Russian oligarch with a lot more than 100,000 euros in a bank and the bank tells you you’re not getting it back – are you going to just sit on your hands and do nothing? I hate to say what I would do if I were a crony capitalist… but if I were, I might just send several very burly men with cold steel strapped under their arms to talk to the banker in question and make it very clear to him that I will get my money back.

L: I sure wouldn’t want to sell life insurance to Cypriot bankers right now – nor ECB bureaucrats, for that matter.

Doug: I’ve read that just before this crisis hit the papers, billions and billions of Russian money found its way out of Cyprus. That’s supposed to be why the Russians were raising hell at one point, and now they’ve gone quiet. My guess is that the Cypriots heard from their oligarch depositors or prudently gave them advance warning, and decided that the most important thing was getting that money back to them. But everyone else – people who don’t have squads of hit men – gets screwed.

So much for Cyprus. I guess they’ll go back to shepherding, growing olives, serving ouzo to the occasional hippie tourist, or whatever subsistence-level activities they did before becoming a banking haven, because no one anywhere in the world is going to deposit any money in Cyprus for a very long time. Cypriot businesses can’t even get money out of the bank to pay their bills – they’ve just been hit with the financial equivalent of a nuclear bomb.

On the other hand, Cyprus has a little stock market that’s probably at a washout bottom. Five years ago, at the top of the bubble, its Index peaked at around 3,300. Now it’s about 100. That’s one of the worst crashes in history, anywhere. I suspect that there are some very viable businesses available – companies selling for a tiny fraction of book. A smart speculator would be on a plane to start sorting through the wreckage. I think fortunes could be made there, especially since it now has capital controls. Which, incidentally, will become common everywhere.

The more important take-away from all this is that no bank in the world is safe at this point. They are all in exactly the position as Cypriot banks were before their crash.

L: In today’s world, you almost have to have some money in the bank, if only to pay bills with.

Doug: Just keep enough cash for a few months’ expenses. A bigger crash is coming, there’s absolutely no question about that in my mind. The only question is whether it happens later this week, or next week, or next month, or a few months from now. I don’t know, but it won’t be long before it all starts unraveling.

I cannot stress strongly enough that I think anyone who chooses to keep a significant amount of money in any bank is patently stupid. I mean that in the technical sense of stupidity – being an unwitting tendency towards self-destruction. And I don’t just mean European banks, though they are certainly closer to the edge – but it’s true of Japanese banks, it’s true of American banks, Chinese banks: it’s true of all of them.

L: So where do you keep your money?

Doug: There is only one answer, as far as I’m concerned: buy gold. One of the most important financial truths I know is that gold is the only financial asset that is not simultaneously somebody else’s liability. This is not an academic distinction. It never was, but the urgency of it is much more pressing today.

L: Do you really think the Cyprus crisis could spark the unwinding of the bankruptcy of the rest of the global financial system? Is this the first domino?

Doug: Well, it could be. But I have to tell you, I’m here in Punta del Este in Uruguay, and I just had lunch with some Spanish real estate developers. They have quite substantial assets, actually, and they didn’t seem worried at all. I was surprised; these are rich, sophisticated people. But they seemed like most US tax slaves, who think Bernanke cares about them and can kiss everything and make it better. These guys see problems, but they think Christine Lagarde and her fellow bureaucrats are going to sort everything out. They see that real estate prices are off 50% in Spain, and are thinking that this is the time to buy. I think it’s way too early, of course. Better to wait for massive riots. A lot of that property is going to catch fire from Molotov cocktails.

L: That’s pretty striking. Of all Europeans, it’s the Spanish and Italians you might expect to be most worried, and these Spanish guys didn’t seem worried at all?

Doug: They were pretty sanguine. If I were in Europe, I’d run to my bank first thing. But I haven’t heard of any bank runs in Europe. When it does happen, however, government printing presses will be running at even higher capacities than now, and people will have the problem of what to do with all that cash. A lot – like my Spanish friends I had lunch with today – are viewing real estate as a place to park wealth that can’t just dry up and blow away. That’s true, of course. But property has significant carrying costs, and prices can plummet if there are no buyers; there’s a huge liquidity risk associated with getting overweight in real estate. That brings me back to gold again.

L: Some people are saying that increased distrust of banks in Europe might actually be bearish for gold prices. Europeans needing to move large amounts of cash will buy dollars, and many people are still programmed to sell gold when the dollar rises.

Doug: That’s plausible, but I just don’t see gold going down in a big way at this point. I really don’t.

I just met a fellow in Cafayate last week – a very interesting guy who runs a gold exploration project in south Kivu province in the DRC. He says that there are Chinese all over Kivu, buying gold from the artisanal miners, on the order of 40-50,000 ounces per month – and they’re paying London spot prices. Apparently this is under the auspices of the Chinese government itself, as it allows them to dump dollars off the market and cart home the gold. The Chinese are stuck with far more dollars than they can get rid of without provoking a panic, so this makes perfect sense. It’s quite clever of them, actually.

And this is just one story, from one place. So no, I don’t see gold going down.

L: Okay. We already know that you say to buy gold for prudence; are there any other investment implications?

Doug: Well, I mentioned the Cyprus stock market. That’s the sort of thing I might do if I were younger – hop on a plane tomorrow and go check out the opportunities for crisis investing at a time when there are almost no other buyers.

More generally, I just have to say again that the trailing half of the storm is coming, and it’s going to be much worse than 2008. Investors who don’t rig for stormy weather will go down with their ships.

You know, another thing my Spanish friends said was that more and more people they know are thinking of moving to South America. It’s much cheaper, there’s less crime, less regulation, less taxation, and more opportunity. I think other Europeans – all Europeans – should think of following suit.

L: And folks in the US?

Doug: Them too. Things look calmer in the US right now, but the government in the land that was once America is now much more powerful, aggressive, arrogant, grasping, and ruthless than the governments in Europe.

I’d say to all people, all around the world, that the failure of Cyprus is like the failure of the Credit-Anstalt Bank in Austria that failed in 1931 and set off the banking crisis that followed the stock market crash of 1929, and then the Great Depression. You need to plan for further crisis and the deepening of the Greater Depression that has already started – and start taking concrete steps now to implement that plan.

I can’t say exactly when the next big step down is coming, but it is.

L: Okay Doug. Well… another cheerful conversation – but an important one, I think.

Doug: You’re all very welcome.

While Doug Casey isn’t rummaging through the wreckage of the Cypriot stock market in search of bargains, he is implementing a plan to create new wealth. It’s a strategy that he, fellow contrarian investing legend Rick Rule, and others have used to make multiple fortunes over the years. On April 8 you can hear them reveal exactly how they do it… and how you can too.

L: Doug, there is considerable disagreement over the significance of the Cyprus crisis. A lot of people are saying that it’s just a flash in the pan; Cyprus is a small country, far off, and doesn’t really matter. Other people are saying it’s very significant. The European Central Bank took unprecedented steps. What do you think?

Doug: I think this could be the spark that ignites the keg of dynamite under the current financial system. All banks, all around the world, are bankrupt, and have been for years. That’s because all the world’s banks run on a fractional reserve basis.

L: I know what you mean, but we should spell that out: by law and backed with government guarantees, banks only have to keep a tiny fraction of the money people deposit on hand. They lend out the vast bulk of it, and in even in good times, they could not return all depositors’ money at once, since loans cannot be called in instantaneously, and most would be defaulted on if they were. In bad times, the charade is even more hollow, since many loans that banks are currently owed will never ever get paid.

Doug: Yes, and they are all in that position. It was more serious in Cyprus because that economy is very leveraged to finance. In other words Cyprus was a banking epicenter for Europe. It was easier to make deposits — there were fewer questions asked — making banking the major business of the country. But I think the trouble will spread from there. It could spread to Luxembourg or Malta next; both are at least as leveraged to the financial sector as Cyprus. And from there… who knows?

Anyone with any sense should withdraw whatever cash they have in European banks, whether in euros or any other currency, immediately. Cyprus demonstrated that governments are quite willing and able to confiscate money sitting in a bank account in order to preserve the banking system. We live in Bizarro World.

L: Why would it spread? Cyprus was said to be particularly vulnerable because of its strong Greek connections; Cypriot banks had bought of lot Greek debt. Would people in Luxembourg be as exposed?

Doug: All banks are in effect creatures of the state at this point. They all own a lot of government bonds, which are considered the most secure form of capital. Of course, that’s the opposite of the truth; all these governments are bankrupt as well. The Greek government is just more overtly bankrupt than most.

Actually, we should take a minute here to discuss what a properly run banking system looks like. Historically, banks offered two types of accounts: demand deposits and time deposits. Demand deposits are what we call checking accounts today, but the original idea was that you’d pay your bank to store your money securely, and you had the right to “demand” your deposit back immediately, and to transfer funds via check.

The idea of time deposits, which became savings accounts, was that the bank would pay you interest when you deposited your money with them for a specific period of time. That’s why it’s called a “time” deposit; you lent the bank your money for a given time, as did other depositors, and the banks would always know how much money they could lend out — at higher interest rates. Furthermore, loans made against time deposits were always short term, and also self-liquidating, against receivables, or excess inventory, for instance.

There were no government guarantees for deposits back then; bankers needed to capitalize their businesses with their own funds, and if they miscalculated, they were personally liable — and often did go bankrupt themselves if they made too many bad loans. Depositors naturally avoided banks known to make risky or illiquid loans. Banks competed to be known as the most prudent and solvent.

Both lenders and depositors were cautious. Before the early 20th century, people might well have laughed at today’s depositors of Cypriot banks. If they were foolish enough to put their money in banks that made such stupid loans, they only get what they deserve.

L: Our friend Rick Rule likes to say that the idea that the state can guarantee everyone’s deposits is just another unaffordable, unbacked social promise of the 20th century. Just another example of living beyond our means.

Doug: Yes. I don’t think people understand this. People don’t have a clue, do they? People read editorials by Paul Krugman and neither laugh nor roll their eyes. It’s like they’re all on Prozac.

L: The nature of real banking is not something they teach in school anymore, that’s for sure.

Doug: Then it’s worth repeating. The distinction between time and demand deposits is critical. They are completely different, actually unrelated businesses. Today the distinction has been totally lost. But it’s much worse, since central banks have allowed the problem to compound to the nth degree.

Sound banks never made what we call consumer loans today, because there is no guarantee, no collateral. Banks in the past made only short-term commercial loans that were fully covered by the value of the assets being financed. You never had to rely on the good faith of the borrower. You simply facilitated short-term — short-term — liquidity. The idea of a 30-year, a 20-year, or even a 10- or 5-year mortgage was anathema to sound bankers. A building and loan society might grant a five-year mortgage to one of its members, with a very significant down payment; that’s because even though it’s an asset class with value, real estate is illiquid. Forget about credit cards. Forget about car loans; if you want a car, save up for one. It’s funny, actually. Car loans started out with a one-year term and a big down stroke. Then they went to two years. Now they’re five or more, when people don’t just lease. So even the family car has gone from a minor asset to a long-term liability. Subprime loans would have been completely unthinkable in the past.

L: Many people might say that credit that tight would be impractical today.

Doug: Many people don’t like the idea of having to live within their means. They feel they have a right to have whatever they want, now. That’s why the average American has essentially zero net assets. If everyone had to pay cash for everything, our whole society — from individuals on the lower rungs to big corporations to the state itself — would be much, much wealthier. We would not be, individually and as a society, one paycheck from being forced to live in a cardboard box under an overpass.

L: Perhaps so, but again, many people think modern high finance is not just normal, but necessary for civilization today. Big Business requires Big Credit.

Doug: Nonsense. The way you become wealthy is by producing more than you consume, and saving the difference. We don’t need a fractional reserve banking system, we don’t need government guarantees, and we certainly don’t need to use government IOUs backed by nothing masquerading as money.

I understand something like 20% of the US economy is financial in nature. It’s ludicrous; millions of people spending billions of dollars bundling, swapping, and repackaging imaginary assets. I’d guess that in a free-market economy, banking and related industries would amount to about 2%, a tenth as much. Money is essentially just a medium of exchange and a store of value; it’s problematic when it becomes a gigantic industry. All these people who spend their days gambling with ledger entries would have to go out and find something productive to do.

L: Get real jobs.

Doug: Exactly. The whole banking business is corrupt from top to bottom today. Part of the problem is that banks are no longer financed by the individuals who start them, putting their personal net worth on the line. Now, they are all publicly traded entities — just like all brokerages — playing with Other People’s Money. Management has no incentive to do anything but pad their wallets, so they pay themselves gigantic salaries and bonuses, and give themselves options. These people aren’t shepherding their money and that of clients they know personally. They’ve got zero skin in the game.

This is true all over the world, not just in the US and Europe. All these banks are going to blow up, and not just in far-off, little countries.

L: It’s interesting that a part of the basis for your negative prognosis for the global financial network is rooted in human psychology — the perverse incentives of playing with Other People’s Money, exacerbated by government guarantees and banks mistakenly viewing government bonds as safe investments.

Doug: Imagine you’re a smart, young trader working for Goldman, Deutsche Bank, or one of these big financial institutions. It’s actually in your interest to make incredibly crazy bets. You can win billions of dollars if red comes up on the financial roulette wheel. If that happens, you get a multimillion-dollar bonus. You win. But if your bet doesn’t work out, what then? The bank loses a few billion dollars, and you just go work for another bank, with more experience on your rsum. And you do the same thing over again.

L: So what does one do with hundreds of trillions of dollars in derivatives?

Doug: I don’t know, and neither does anyone else. Not even Warren Buffett. Nobody can possibly keep track of quadrillions of dollars of derivatives. It’s a daisy chain in which nobody can really know who is creditworthy. It’s impossible to assess the real counterparty risk. All these thousands of traders sitting at computer banks, second-guessing markets; it’s actually quite insane. I can hear them on the phone: “Hello, New York? Buy! Hello, Tokyo? Buy! Hello, London? New York and Tokyo are buying. Sell.” It’s an immense waste of productive manpower, them and the divisions of highly paid lawyers, accountants, and administrators behind them. Little of this would exist in a free-market world without central banks spewing trillions of currency units out every year to support governments. Of course, a gigantic financial industry arose to deal with it.

In any event, the people who today imagine they run the show may have put a finger in a dike, but it’s all going to come to very bad end.

One of the interesting things about this Cyprus thing is that, according to the numbers I hear bandied around, the Russians are supposed to have had somewhere in between $30 and $60 billion in Cyprus. Who knows what the real facts are, because you can’t trust what’s reported in the press… but I’ve been to Cyprus — both Northern Cyprus and the Republic of Cyprus. It’s true that the place is overrun with Russians and Russian money.

Now, you’ve got to figure that if you’re a Russian oligarch with a lot more than 100,000 euros in a bank and the bank tells you you’re not getting it back — are you going to just sit on your hands and do nothing? I hate to say what I would do if I were a crony capitalist… but if I were, I might just send several very burly men with cold steel strapped under their arms to talk to the banker in question and make it very clear to him that I will get my money back.

L: I sure wouldn’t want to sell life insurance to Cypriot bankers right now — nor ECB bureaucrats, for that matter.

Doug: I’ve read that just before this crisis hit the papers, billions and billions of Russian money found its way out of Cyprus. That’s supposed to be why the Russians were raising hell at one point, and now they’ve gone quiet. My guess is that the Cypriots heard from their oligarch depositors or prudently gave them advance warning, and decided that the most important thing was getting that money back to them. But everyone else — people who don’t have squads of hit men — gets screwed.

So much for Cyprus. I guess they’ll go back to shepherding, growing olives, serving ouzo to the occasional hippie tourist, or whatever subsistence-level activities they did before becoming a banking haven, because no one anywhere in the world is going to deposit any money in Cyprus for a very long time. Cypriot businesses can’t even get money out of the bank to pay their bills — they’ve just been hit with the financial equivalent of a nuclear bomb.

On the other hand, Cyprus has a little stock market that’s probably at a washout bottom. Five years ago, at the top of the bubble, its Index peaked at around 3,300. Now it’s about 100. That’s one of the worst crashes in history, anywhere. I suspect that there are some very viable businesses available — companies selling for a tiny fraction of book. A smart speculator would be on a plane to start sorting through the wreckage. I think fortunes could be made there, especially since it now has capital controls. Which, incidentally, will become common everywhere.

The more important take-away from all this is that no bank in the world is safe at this point. They are all in exactly the position as Cypriot banks were before their crash.

L: In today’s world, you almost have to have some money in the bank, if only to pay bills with.

Doug: Just keep enough cash for a few months’ expenses. A bigger crash is coming, there’s absolutely no question about that in my mind. The only question is whether it happens later this week, or next week, or next month, or a few months from now. I don’t know, but it won’t be long before it all starts unraveling.

I cannot stress strongly enough that I think anyone who chooses to keep a significant amount of money in any bank is patently stupid. I mean that in the technical sense of stupidity — being an unwitting tendency towards self-destruction. And I don’t just mean European banks, though they are certainly closer to the edge — but it’s true of Japanese banks, it’s true of American banks, Chinese banks: it’s true of all of them.

L: So where do you keep your money?

Doug: There is only one answer, as far as I’m concerned: buy gold. One of the most important financial truths I know is that gold is the only financial asset that is not simultaneously somebody else’s liability. This is not an academic distinction. It never was, but the urgency of it is much more pressing today.

L: Do you really think the Cyprus crisis could spark the unwinding of the bankruptcy of the rest of the global financial system? Is this the first domino?

Doug: Well, it could be. But I have to tell you, I’m here in Punta del Este in Uruguay, and I just had lunch with some Spanish real estate developers. They have quite substantial assets, actually, and they didn’t seem worried at all. I was surprised; these are rich, sophisticated people. But they seemed like most US tax slaves, who think Bernanke cares about them and can kiss everything and make it better. These guys see problems, but they think Christine Lagarde and her fellow bureaucrats are going to sort everything out. They see that real estate prices are off 50% in Spain, and are thinking that this is the time to buy. I think it’s way too early, of course. Better to wait for massive riots. A lot of that property is going to catch fire from Molotov cocktails.

L: That’s pretty striking. Of all Europeans, it’s the Spanish and Italians you might expect to be most worried, and these Spanish guys didn’t seem worried at all?

Doug: They were pretty sanguine. If I were in Europe, I’d run to my bank first thing. But I haven’t heard of any bank runs in Europe. When it does happen, however, government printing presses will be running at even higher capacities than now, and people will have the problem of what to do with all that cash. A lot — like my Spanish friends I had lunch with today — are viewing real estate as a place to park wealth that can’t just dry up and blow away. That’s true, of course. But property has significant carrying costs, and prices can plummet if there are no buyers; there’s a huge liquidity risk associated with getting overweight in real estate. That brings me back to gold again.

L: Some people are saying that increased distrust of banks in Europe might actually be bearish for gold prices. Europeans needing to move large amounts of cash will buy dollars, and many people are still programmed to sell gold when the dollar rises.

Doug: That’s plausible, but I just don’t see gold going down in a big way at this point. I really don’t.

I just met a fellow in Cafayate last week — a very interesting guy who runs a gold exploration project in south Kivu province in the DRC. He says that there are Chinese all over Kivu, buying gold from the artisanal miners, on the order of 40-50,000 ounces per month — and they’re paying London spot prices. Apparently this is under the auspices of the Chinese government itself, as it allows them to dump dollars off the market and cart home the gold. The Chinese are stuck with far more dollars than they can get rid of without provoking a panic, so this makes perfect sense. It’s quite clever of them, actually.

And this is just one story, from one place. So no, I don’t see gold going down.

L: Okay. We already know that you say to buy gold for prudence; are there any other investment implications?

Doug: Well, I mentioned the Cyprus stock market. That’s the sort of thing I might do if I were younger — hop on a plane tomorrow and go check out the opportunities for crisis investing at a time when there are almost no other buyers.

More generally, I just have to say again that the trailing half of the storm is coming, and it’s going to be much worse than 2008. Investors who don’t rig for stormy weather will go down with their ships.

You know, another thing my Spanish friends said was that more and more people they know are thinking of moving to South America. It’s much cheaper, there’s less crime, less regulation, less taxation, and more opportunity. I think other Europeans — all Europeans — should think of following suit.

L: And folks in the US?

Doug: Them too. Things look calmer in the US right now, but the government in the land that was once America is now much more powerful, aggressive, arrogant, grasping, and ruthless than the governments in Europe.

I’d say to all people, all around the world, that the failure of Cyprus is like the failure of the Credit-Anstalt Bank in Austria that failed in 1931 and set off the banking crisis that followed the stock market crash of 1929, and then the Great Depression. You need to plan for further crisis and the deepening of the Greater Depression that has already started — and start taking concrete steps now to implement that plan.

I can’t say exactly when the next big step down is coming, but it is.

L: Okay Doug. Well… another cheerful conversation — but an important one, I think.

Doug: You’re all very welcome.

While Doug Casey isn’t rummaging through the wreckage of the Cypriot stock market in search of bargains, he is implementing a plan to create new wealth. It’s a strategy that he, fellow contrarian investing legend Rick Rule, and others have used to make multiple fortunes over the years. On April 8 you can hear them reveal exactly how they do it… and how you can too.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Hola Doug; what’s on your mind this week?

Doug: Well, it occurs to me that for all the times we’ve criticized the counterproductive, foolish, or just plain wrong ideas of others and have sometimes offered sounder alternatives, I’ve never fleshed out a picture of what I would do if I could call the shots.

L: “If I were president”… But you’re an anarchist!

Doug: Yes, but that doesn’t mean that I don’t have any ideas on what should be done, if there were anyone with the strength and courage to do it.

L: And a very good bulletproof vest.

Doug: Just so. I’m certainly not interested in taking up residence in the White House – wouldn’t want the job if offered. But say some other occupant of that government housing project got hit on the head and woke up honest, industrious, and willing to do what was right come hell or high water.

L: Okay, I’m game. What would she do?

Doug: Are you referencing that Heinlein story in which the crooked president dies and his honest VP takes over – and she’s a lady?

L: Good catch. Heinlein wrote that since men had held the office for 200 years, a law was passed limiting it to women for the next 200 years. He thought they would be less likely send young men off to die in wars for stupid reasons, and would generally be more sensible than men on many subjects. But anyway, as you were saying…

Doug: First, I would declare to the public that the problems we face today as a society have been generated by our own governments, particularly in the US, where it’s pretty much 100% government induced.

L: “Government is a disease masquerading as its own cure.” Bob LeFevre.

Doug: Exactly. And it should be admitted, stopped, and apologized for – just as should have been, but was not done when the writing on the wall regarding the Vietnam War was clear to all.

L: Okay, I’ll buy that; calling a spade a spade is very important in this day of spin and misdirection. But how would you go about the “stopping it” part?

Doug: The first thing to do is to cut the budget. Almost all of the harm the government does would be reduced or eliminated if it weren’t able to steal so much money to pay for its harmful activities.

L: Taxation is theft – just try not paying the “voluntary” income tax to the IRS – okay, but they also borrow and print money.

Doug: That’s just indirect theft. Borrowing money forces future tax slaves to hand over money against their wishes, and printing it steals wealth from everyone by making the money in their pockets worth less and less with every new dollar, euro, yen, or whatever printed.

But it’s not just the act of stealing that is so harmful, but the things the government spends it on. They are almost always directly against the best interests of those from whom the money was taken.

We need to starve the beast; so all these marginal, so-called budget cuts the politicians are wailing about are just smoke and mirrors – not a real, meaningful scaling back of the government. It’s too late for half measures. I’d cut the budgets of the federal, state, and local governments by 98%. For starters.

L: You’re joking – 98% – that’ll never happen!

Doug: Yes, it will. It’s just a question of whether it happens in a somewhat controlled, voluntary way, or whether it comes about as a result of a totally out-of-control collapse. What’s going on today is completely unsustainable, so I’m convinced this sort of change is coming – it’ll just be that much more destructive if we let it come as an involuntary crash. It’s like when you have an old, unstable building that will collapse sooner or later; it’s wiser and safer to bring it down at a time and in a way you control than to let it collapse on its own, with no warning to those around.

L: A controlled demolition of the US and global economies. US voters would probably love that just as much as Greek voters love austerity programs.

Doug: Probably so, but it’s still the right thing to do. The whole current structure is rotten through and through, corrupt and counterproductive. It needs to be replaced, not fixed.

L: Replaced with what?

Doug: Economic freedom, of course. Let the future build itself, based on the voluntary actions of all market participants, acting in free exchange.

L: You know I’m on the same page, but many of our readers may be skeptical.

Doug: It’s good to question everything. But this is not just a theory – look at Iceland, which didn’t bail all the idiotic bankers out, but let them crash. It has recovered much faster than most people expected. And that’s without embracing real, thorough economic freedom; it’s simply as a result of letting stupidity reap its natural reward.

It remains to be seen how well things work out for Iceland – it still has way too much government in my view – but there’s an earlier, well-documented example in the history of Chile. When Pinochet overthrew Allende, he enacted deep and far-reaching reforms of the Chilean economy. He didn’t go as far as I would have, but he did enough, and in such a way that it stuck and has had greatly beneficial economic consequences long after his departure. Chile is now the most prosperous country in Latin America, and may well be the most prosperous country in the western hemisphere.

L: I’ve been there many times and have noted the modern buildings and clean streets of downtown Santiago. The middle class in that city exercises on mountain bikes on weekends and enjoys excellent restaurants evenings. They dress fashionably and stroll along sipping Starbucks lattes… downtown could be a city in California. But there are hovels in the poor districts and dirt streets in the countryside. Are you saying Chile is more prosperous than the US or Canada?

Doug: Yes. Parts of the place may still look third world, but Chileans are not loaded with debt the way North Americans are. My understanding is that the average Chilean has greater net worth than the average US tax slave.

One important contributing factor to this is that Pinochet privatized the social security program, and Chileans pay into individual retirement accounts that they own and control. There are restrictions, but they can fire their managers and move them to those who deliver results – this is good use of a vital market mechanism. These are real assets that can be liquidated and reinvested – not like US Social Security, which is nothing but a vague promise backed by nothing but an impossibly debt-ridden government with financial problems that are about to get much worse.

Taking this single step in the US would enable a huge reduction in budget and unfunded future spending. There is absolutely no need for government involvement; people’s retirement should be their own individual responsibility, and their employers’ contributions to their retirement accounts should be negotiated between the people and their employers.

L: Just to be clear, you’re not condoning Pinochet’s death squads and such – just commenting on the results of his economic reforms.

Doug: The facts are the facts. Pinochet was a rare bird. And yes, it seems certain that he had several thousand people killed – but how many people did Baby Bush kill in Iraq over so-called weapons of mass destruction that weren’t even there? Many of the world’s big governments are guilty of far greater atrocities and numbers of deaths that are orders of magnitude larger.

The US has supported – and continues supporting – far more barbaric and destructive dictators around the world. It seems to me that Pinochet is demonized because he instituted many free-market reforms – that was his truly unforgivable sin, particularly among leftist intellectuals.

L: The sort of people he had killed…

Doug: Yes. Two wrongs don’t make a right, but the fact is that Chile has many advantages today because of Pinochet. It’s not as cheap as Argentina, but it’s cheaper than Uruguay. It’s the least corrupt of Latin American countries, and one of the least corrupt in the world. You picked a good analogy; it has a fantastic California climate. It has a low population density. It has one of the freer economies in the world – And it’s growing rapidly. Plus, they grow some world-class wines in Chile. It has many advantages.

What I don’t like about Chile is that it’s the most conservative country in Latin America – probably in the western hemisphere. It’s the most religious, and that’s saying a lot in Latin America. They love their police. They love their army. And it’s isolated. It’s like an island, with the Andes to the east, the South Pacific and Antarctic oceans to the west and south, and a desert to the north. That makes the culture more provincial than I prefer – but that is a personal preference. I find Argentina more welcoming to bon vivants, even with all the problems it has – those problems really don’t affect foreigners living there who have income from abroad.

L: So noted. I can’t say I wish we had a Pinochet takeover in America – the US version would almost certainly be hawkish and have the world’s biggest military budget to play with. Scary. But suppose a Ron Paul type made it and was following your plan, cutting the budget 98%, privatizing Social Security. What would be next?

Doug: Default on the national debt. That would punish the people foolish enough or unethical enough to lend the US government money. It would reduce the budget and greatly reduce the ability of the government to spend beyond its means. But most important of all, it wouldn’t make indentured servants out of future generations of US taxpayers.

Look, I know this seems unthinkable to most people, but it’s going to be defaulted on anyway. There is simply no way it can be repaid, and an uncontrolled default would be catastrophic – probably in the form of total destruction of the US dollar as we know it today.

It has to be emphasized that default on the national debt is default on the government’s debt, not the people’s. Most of the real wealth in the world will still be there after the dust settles – it’ll just be in different hands. The feds might even be forced to sell off their assets – a sort of gigantic “going out of business” sale that would put those assets into more capable and productive private hands. NASA, for example, as we’ve discussed already.

L: I understand, but that would still hurt a lot of people who have their savings in Treasury Bills.

Doug: Those savings will be lost anyway, if they leave them in Treasuries. The people it would hurt the worst are the fat cats in bed with the government – the kind who got their pals in Washington DC to bail them out. It’d be poetic justice.

L: Okay. What’s next?

Doug: Eliminate the Federal Reserve. Get the government out of the money business entirely, so it can’t inflate it to pay for things people would not willingly, knowingly pay for.

L: Why stop there – why not go for complete separation of economy and state? The same logic applies as with the separation of church and state, which once seemed unthinkable and now is the norm in much of the world – in the West, at least.

Doug: All in good time, Lobo. Next, I would take whatever gold is left in Fort Knox and use it to back the US dollar. After defaulting on the debt and the ensuing collapse, trillions and trillions of dollars would cease to exist. Assuming the gold is still there – the government doesn’t allow any independent audits of Fort Knox – I would use it to put what dollars were left on a solid, inflation-proof footing, at whatever price of gold that could be accomplished at the time.

L: Right. What next?

Doug: Eliminate unnecessary, counterproductive, and unconstitutional government programs. Cutting spending is only a beginning; you have to abolish the programs if you don’t want the spending to come back. We’ve already talked about getting the government out of Social Security. This and other social spending is the biggest chunk of government spending and liabilities – something on the order of $220 trillion, last I heard. So, Social Security, Medicare, and Medicaid have to go.

Unfortunately, people over 50 have come to rely on it too heavily to take it away from them, so their payments and benefits would have to continue. But people under 50 don’t get anything, and the payroll taxes that support the programs would be ended immediately.

L: Who pays for the older ones who keep getting the benefits? They were deceived into thinking they were making savings deposits of a sort, but it’s not true; the government has already spent every dime they put away for the future.

Doug: I know. A large portion of whatever income the government could honestly generate from core services like running the courts and military would have to be directed to this expense until it went away naturally.

L: That won’t win any popularity contests, but I suppose it would be an extension of the default you’ve already recommended. Bankruptcy is never pretty. It’s also unavoidable, when the money just isn’t there. What next?

Doug: De-fund, eliminate, and abolish every single alphabet agency the government currently lavishes money on. If any provide services people value, the market will step in to provide those services – at a fraction of the cost and without the ability to ride roughshod over citizens who dissent. For starters, every agency and government action not expressly listed in the Constitution should be uprooted entirely and the ground where it stood sown with salt. Enforce the 10^th Amendment. Then we can see if there’s anything left that we really don’t need anymore.

It’s important to understand that the budgetary savings are really the lesser issue here. What’s really important is getting the government off the peoples’ collective back. The state is sand and glue in the gears of the economy, and it needs to be completely cleaned away to allow it to function freely to create greater prosperity for all.

L: That wouldn’t leave much… the military.

Doug: Yes. Unfortunately, most people in the US are under the delusion that the military is the one part of the government that is honest and works – that it protects them from dangers foreign and domestic. The truth is that even if many soldiers are honorable, the politicians who control them are not, and their missions around the world are creating more enemies and stirring up more hatred almost everywhere they go. This is making the world a more dangerous place, not a safer one.

Further, the “military-industrial complex” Eisenhower warned us of is still in place, more entrenched, and greedier than ever. Remember the $600 toilet seats?

But more important than this financial debacle is that the military now exists to protect the government, not the people. Veterans are being increasingly indoctrinated to view civilians as potentially hostile enemies, rather than the very thing that justifies the military’s existence. And when they muster out and go to work for law enforcement agencies (not people protection agencies), their training and attitudes become extremely dangerous to average citizens.

L: That’ll be a hard pill for most people to swallow. They still want to think of most cops as being like Andy Griffith, even though the evidence is strong that many, if not most cops see civilians as potential threats and object to control. Your whole list is going to be hard for most people to believe, let alone accept.

Doug: No doubt. But once the avalanche has started, it’s too late for the pebbles to vote. This is all going to happen. The only questions are how, and whether the damage and chaos can be limited along the way.

Unfortunately, I have to say that I see absolutely no way that these steps will be taken voluntarily. As we discussed when we talked about Ron Paul, the kind of person who could do these things would never get elected – and if by some cosmic accident such a person were elected, he or she would almost certainly be assassinated in short order. Remember Kennedy – and don’t say it can’t happen in the place that was once America. It’s going to be like France after 1789.

Chaos is coming.

L: Our regular readers should know what you recommend doing about it…

Doug: Yes. I am doing exactly what I’ve been saying for some time now: I’m building cash to deploy buying great assets during the crash, I’m putting my savings in gold and silver, and the businesses I’m building are in productive agriculture. As a speculator, I remain convinced that these junior mining stocks that you follow have explosive upside – as much now as at any point I’ve ever seen.

L: Okay then. Enough said. Not a happy vision of the future, but our aim is to offer the best guidance we can, not to sweet-talk people into smiling. And – speaking of offering guidance – our own chief economist, Bud Conrad, will be speaking at the upcoming Global Currency Expo, held April 5-7 in San Diego. He’ll share his big-picture views of the American economy over the near future, as well as making some specific investment recommendations.

Doug: Yes, I enjoyed your conversation with Bud last week, and encourage those able to attend to do so – it should be a great event.

L: Very well. Thanks for your thoughts, Doug.

Doug: You’re very welcome.

Doug Casey writes every month for The Casey Report, which focuses on leveraging emerging trends to outstanding gains. These are the same tactics that have made Doug and other legendary investors like Rick Rule and Peter Schiff fortunes. Learn more about The Casey Report.

L: Hola Doug; what’s on your mind this week?

Doug: Well, it occurs to me that for all the times we’ve criticized the counterproductive, foolish, or just plain wrong ideas of others and have sometimes offered sounder alternatives, I’ve never fleshed out a picture of what I would do if I could call the shots.

L: “If I were president”… But you’re an anarchist!

Doug: Yes, but that doesn’t mean that I don’t have any ideas on what should be done, if there were anyone with the strength and courage to do it.

L: And a very good bulletproof vest.

Doug: Just so. I’m certainly not interested in taking up residence in the White House — wouldn’t want the job if offered. But say some other occupant of that government housing project got hit on the head and woke up honest, industrious, and willing to do what was right come hell or high water.

L: Okay, I’m game. What would she do?

Doug: Are you referencing that Heinlein story in which the crooked president dies and his honest VP takes over — and she’s a lady?

L: Good catch. Heinlein wrote that since men had held the office for 200 years, a law was passed limiting it to women for the next 200 years. He thought they would be less likely send young men off to die in wars for stupid reasons, and would generally be more sensible than men on many subjects. But anyway, as you were saying…

Doug: First, I would declare to the public that the problems we face today as a society have been generated by our own governments, particularly in the US, where it’s pretty much 100% government induced.

L: “Government is a disease masquerading as its own cure.” Bob LeFevre.

Doug: Exactly. And it should be admitted, stopped, and apologized for — just as should have been, but was not done when the writing on the wall regarding the Vietnam War was clear to all.

L: Okay, I’ll buy that; calling a spade a spade is very important in this day of spin and misdirection. But how would you go about the “stopping it” part?

Doug: The first thing to do is to cut the budget. Almost all of the harm the government does would be reduced or eliminated if it weren’t able to steal so much money to pay for its harmful activities.

L: Taxation is theft — just try not paying the “voluntary” income tax to the IRS — okay, but they also borrow and print money.

Doug: That’s just indirect theft. Borrowing money forces future tax slaves to hand over money against their wishes, and printing it steals wealth from everyone by making the money in their pockets worth less and less with every new dollar, euro, yen, or whatever printed.

But it’s not just the act of stealing that is so harmful, but the things the government spends it on. They are almost always directly against the best interests of those from whom the money was taken.

We need to starve the beast; so all these marginal, so-called budget cuts the politicians are wailing about are just smoke and mirrors — not a real, meaningful scaling back of the government. It’s too late for half measures. I’d cut the budgets of the federal, state, and local governments by 98%. For starters.

L: You’re joking — 98% — that’ll never happen!

Doug: Yes, it will. It’s just a question of whether it happens in a somewhat controlled, voluntary way, or whether it comes about as a result of a totally out-of-control collapse. What’s going on today is completely unsustainable, so I’m convinced this sort of change is coming — it’ll just be that much more destructive if we let it come as an involuntary crash. It’s like when you have an old, unstable building that will collapse sooner or later; it’s wiser and safer to bring it down at a time and in a way you control than to let it collapse on its own, with no warning to those around.

L: A controlled demolition of the US and global economies. US voters would probably love that just as much as Greek voters love austerity programs.

Doug: Probably so, but it’s still the right thing to do. The whole current structure is rotten through and through, corrupt and counterproductive. It needs to be replaced, not fixed.

L: Replaced with what?

Doug: Economic freedom, of course. Let the future build itself, based on the voluntary actions of all market participants, acting in free exchange.

L: You know I’m on the same page, but many of our readers may be skeptical.

Doug: It’s good to question everything. But this is not just a theory — look at Iceland, which didn’t bail all the idiotic bankers out, but let them crash. It has recovered much faster than most people expected. And that’s without embracing real, thorough economic freedom; it's simply as a result of letting stupidity reap its natural reward.

It remains to be seen how well things work out for Iceland — it still has way too much government in my view — but there’s an earlier, well-documented example in the history of Chile. When Pinochet overthrew Allende, he enacted deep and far-reaching reforms of the Chilean economy. He didn’t go as far as I would have, but he did enough, and in such a way that it stuck and has had greatly beneficial economic consequences long after his departure. Chile is now the most prosperous country in Latin America, and may well be the most prosperous country in the western hemisphere.

L: I’ve been there many times and have noted the modern buildings and clean streets of downtown Santiago. The middle class in that city exercises on mountain bikes on weekends and enjoys excellent restaurants evenings. They dress fashionably and stroll along sipping Starbucks lattes… downtown could be a city in California. But there are hovels in the poor districts and dirt streets in the countryside. Are you saying Chile is more prosperous than the US or Canada?

Doug: Yes. Parts of the place may still look third world, but Chileans are not loaded with debt the way North Americans are. My understanding is that the average Chilean has greater net worth than the average US tax slave.

One important contributing factor to this is that Pinochet privatized the social security program, and Chileans pay into individual retirement accounts that they own and control. There are restrictions, but they can fire their managers and move them to those who deliver results — this is good use of a vital market mechanism. These are real assets that can be liquidated and reinvested — not like US Social Security, which is nothing but a vague promise backed by nothing but an impossibly debt-ridden government with financial problems that are about to get much worse.

Taking this single step in the US would enable a huge reduction in budget and unfunded future spending. There is absolutely no need for government involvement; people’s retirement should be their own individual responsibility, and their employers’ contributions to their retirement accounts should be negotiated between the people and their employers.

L: Just to be clear, you’re not condoning Pinochet’s death squads and such — just commenting on the results of his economic reforms.

Doug: The facts are the facts. Pinochet was a rare bird. And yes, it seems certain that he had several thousand people killed — but how many people did Baby Bush kill in Iraq over so-called weapons of mass destruction that weren’t even there? Many of the world’s big governments are guilty of far greater atrocities and numbers of deaths that are orders of magnitude larger.

The US has supported — and continues supporting — far more barbaric and destructive dictators around the world. It seems to me that Pinochet is demonized because he instituted many free-market reforms — that was his truly unforgivable sin, particularly among leftist intellectuals.

L: The sort of people he had killed…

Doug: Yes. Two wrongs don’t make a right, but the fact is that Chile has many advantages today because of Pinochet. It’s not as cheap as Argentina, but it’s cheaper than Uruguay. It’s the least corrupt of Latin American countries, and one of the least corrupt in the world. You picked a good analogy; it has a fantastic California climate. It has a low population density. It has one of the freer economies in the world — And it's growing rapidly. Plus, they grow some world-class wines in Chile. It has many advantages.

What I don’t like about Chile is that it’s the most conservative country in Latin America — probably in the western hemisphere. It’s the most religious, and that’s saying a lot in Latin America. They love their police. They love their army. And it’s isolated. It’s like an island, with the Andes to the east, the South Pacific and Antarctic oceans to the west and south, and a desert to the north. That makes the culture more provincial than I prefer — but that is a personal preference. I find Argentina more welcoming to bon vivants, even with all the problems it has — those problems really don’t affect foreigners living there who have income from abroad.

L: So noted. I can’t say I wish we had a Pinochet takeover in America — the US version would almost certainly be hawkish and have the world’s biggest military budget to play with. Scary. But suppose a Ron Paul type made it and was following your plan, cutting the budget 98%, privatizing Social Security. What would be next?

Doug: Default on the national debt. That would punish the people foolish enough or unethical enough to lend the US government money. It would reduce the budget and greatly reduce the ability of the government to spend beyond its means. But most important of all, it wouldn’t make indentured servants out of future generations of US taxpayers.

Look, I know this seems unthinkable to most people, but it’s going to be defaulted on anyway. There is simply no way it can be repaid, and an uncontrolled default would be catastrophic — probably in the form of total destruction of the US dollar as we know it today.

It has to be emphasized that default on the national debt is default on the government’s debt, not the people’s. Most of the real wealth in the world will still be there after the dust settles — it’ll just be in different hands. The feds might even be forced to sell off their assets — a sort of gigantic “going out of business” sale that would put those assets into more capable and productive private hands. NASA, for example, as we’ve discussed already.

L: I understand, but that would still hurt a lot of people who have their savings in Treasury Bills.

Doug: Those savings will be lost anyway, if they leave them in Treasuries. The people it would hurt the worst are the fat cats in bed with the government — the kind who got their pals in Washington DC to bail them out. It’d be poetic justice.

L: Okay. What’s next?

Doug: Eliminate the Federal Reserve. Get the government out of the money business entirely, so it can’t inflate it to pay for things people would not willingly, knowingly pay for.

L: Why stop there — why not go for complete separation of economy and state? The same logic applies as with the separation of church and state, which once seemed unthinkable and now is the norm in much of the world — in the West, at least.

Doug: All in good time, Lobo. Next, I would take whatever gold is left in Fort Knox and use it to back the US dollar. After defaulting on the debt and the ensuing collapse, trillions and trillions of dollars would cease to exist. Assuming the gold is still there — the government doesn’t allow any independent audits of Fort Knox — I would use it to put what dollars were left on a solid, inflation-proof footing, at whatever price of gold that could be accomplished at the time.

L: Right. What next?

Doug: Eliminate unnecessary, counterproductive, and unconstitutional government programs. Cutting spending is only a beginning; you have to abolish the programs if you don't want the spending to come back. We’ve already talked about getting the government out of Social Security. This and other social spending is the biggest chunk of government spending and liabilities — something on the order of $220 trillion, last I heard. So, Social Security, Medicare, and Medicaid have to go.

Unfortunately, people over 50 have come to rely on it too heavily to take it away from them, so their payments and benefits would have to continue. But people under 50 don’t get anything, and the payroll taxes that support the programs would be ended immediately.

L: Who pays for the older ones who keep getting the benefits? They were deceived into thinking they were making savings deposits of a sort, but it’s not true; the government has already spent every dime they put away for the future.

Doug: I know. A large portion of whatever income the government could honestly generate from core services like running the courts and military would have to be directed to this expense until it went away naturally.

L: That won’t win any popularity contests, but I suppose it would be an extension of the default you've already recommended. Bankruptcy is never pretty. It’s also unavoidable, when the money just isn’t there. What next?

Doug: De-fund, eliminate, and abolish every single alphabet agency the government currently lavishes money on. If any provide services people value, the market will step in to provide those services — at a fraction of the cost and without the ability to ride roughshod over citizens who dissent. For starters, every agency and government action not expressly listed in the Constitution should be uprooted entirely and the ground where it stood sown with salt. Enforce the 10th Amendment. Then we can see if there’s anything left that we really don’t need anymore.

It’s important to understand that the budgetary savings are really the lesser issue here. What’s really important is getting the government off the peoples’ collective back. The state is sand and glue in the gears of the economy, and it needs to be completely cleaned away to allow it to function freely to create greater prosperity for all.

L: That wouldn’t leave much… the military.

Doug: Yes. Unfortunately, most people in the US are under the delusion that the military is the one part of the government that is honest and works — that it protects them from dangers foreign and domestic. The truth is that even if many soldiers are honorable, the politicians who control them are not, and their missions around the world are creating more enemies and stirring up more hatred almost everywhere they go. This is making the world a more dangerous place, not a safer one.

Further, the “military-industrial complex” Eisenhower warned us of is still in place, more entrenched, and greedier than ever. Remember the $600 toilet seats?

But more important than this financial debacle is that the military now exists to protect the government, not the people. Veterans are being increasingly indoctrinated to view civilians as potentially hostile enemies, rather than the very thing that justifies the military’s existence. And when they muster out and go to work for law enforcement agencies (not people protection agencies), their training and attitudes become extremely dangerous to average citizens.

L: That’ll be a hard pill for most people to swallow. They still want to think of most cops as being like Andy Griffith, even though the evidence is strong that many, if not most cops see civilians as potential threats and object to control. Your whole list is going to be hard for most people to believe, let alone accept.

Doug: No doubt. But once the avalanche has started, it’s too late for the pebbles to vote. This is all going to happen. The only questions are how, and whether the damage and chaos can be limited along the way.

Unfortunately, I have to say that I see absolutely no way that these steps will be taken voluntarily. As we discussed when we talked about Ron Paul, the kind of person who could do these things would never get elected — and if by some cosmic accident such a person were elected, he or she would almost certainly be assassinated in short order. Remember Kennedy — and don’t say it can’t happen in the place that was once America. It’s going to be like France after 1789.

Chaos is coming.

L: Our regular readers should know what you recommend doing about it…

Doug: Yes. I am doing exactly what I’ve been saying for some time now: I’m building cash to deploy buying great assets during the crash, I’m putting my savings in gold and silver, and the businesses I’m building are in productive agriculture. As a speculator, I remain convinced that these junior mining stocks that you follow have explosive upside — as much now as at any point I’ve ever seen.

L: Okay then. Enough said. Not a happy vision of the future, but our aim is to offer the best guidance we can, not to sweet-talk people into smiling. And — speaking of offering guidance — our own chief economist, Bud Conrad, will be speaking at the upcoming Global Currency Expo, held April 5-7 in San Diego. He’ll share his big-picture views of the American economy over the near future, as well as making some specific investment recommendations.

Doug: Yes, I enjoyed your conversation with Bud last week, and encourage those able to attend to do so — it should be a great event.

L: Very well. Thanks for your thoughts, Doug.

Doug: You’re very welcome.

Doug Casey writes every month for The Casey Report, which focuses on leveraging emerging trends to outstanding gains. These are the same tactics that have made Doug and other legendary investors like Rick Rule and Peter Schiff fortunes. Learn more about The Casey Report.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: So Doug, the G20 declared that there will be no currency war. Other than a belly laugh, any reactions?

Doug: First, we should define what a currency war is. I’d say it’s a competition between governments to devalue their respective currencies, accomplished by creating lots more new dollars, euros, yen, or what have you. The idea is to increase exports and decrease imports, with the supposed bonus of stimulating the economy. It’s an idiotic idea, proof that the people struggling for control of the world’s economy are both knaves and fools. The worst part is that people apparently think somebody actually can and should try to control the economy. The world is imitating Argentina.

I believe that Argentina is still a member of the G20, although hanging on by its fingernails. It would be interesting to see the transcript of the meeting and see what the Argentine representative said, because they’re inflating the currency down here at a rate of about 30% per year, even while they’re trying to maintain an artificial exchange rate. My suspicion is that the general level of economic knowledge, competence, and ethics among the participants of that conference is not much above that of Argentina.

L: That may be, but it strikes me as being… just so ridiculous. I mean, the US is printing money by the helicopter load and sending much of it abroad, which prompts other countries to try to do the same. Bernanke says it isn’t so, but everyone can see it is. How can they say there’s no currency war? Is this an attempt at a Big Lie?

Doug: The new Japanese prime minister has come out and said that the Bank of Japan needs to redouble its efforts to create new yen. The Chinese are creating yuan in hyperdrive. The Europeans are doing the same with the euro. In the US, they’re printing new dollars at a rate of about 100 billion per month. And that’s just among the four big players. It’s as though they believe their own lies and think that the driving force of an economy really is public opinion. Believing that, they have no problem admonishing people to pay no attention to the man behind the curtain; everything will be fine as long as people believe it will be.

This reminds me of the story of the guy who jumps off a 100-story building and yells as he passes the 50th floor, “So far, so good!”

L: Does anyone even know if it’s possible for the G20 economies to grow at a rate that would make their deficit/debt levels manageable?

Doug: I understand that it would take growth on the order of what made China famous in the previous decade, but if anything their growth rates are going down. I think they are heading toward collapse. That’s in part because of the ongoing currency debasement, but also in part because the inevitable response of these governments to the harmful effects of that debasement is to impose more rules, regulations, and controls.

Consider again the example of Argentina. The government here recently made it illegal for newspapers to publish advertisements that include prices for things like food. Since Argentina now has price controls for food, they say it’s unnecessary and will only excite the public. This is the kind of thinking that permeates the economic establishment today. Everywhere.

I should pause and emphasize, however, that as difficult as Argentina is for doing business, it’s a fantastic place to live. I doubt that will be true of the US in a few years.

L: Sounds pretty crazy, and this is a place that already prosecutes journalists for publishing inflation statistics that contradict those of the government. It does seem par for the course worldwide, however, for governments to intervene in the marketplace, cause disruptions, and then use those disruptions as mandates for establishing new regulations and laws.

But Doug, let me push back a little here. You’ve been saying for some time now that we are on the verge of exiting the eye of the storm. I look at the data, I look at the logic, and I can’t disagree with you, but this has lasted several years now… Why should anyone think it’s going to happen now?

Doug: Fair question. I could point out that the recent negative GDP numbers from Germany — and all of Europe — are extremely bearish: the endgame for the EU can’t be too far off. A number of large US retailers are closing scores, even hundreds, of stores. The earnings of fast-food outlets are falling as people find they can’t afford to eat out. But still, even if the natives are restless, they’re still not out in the streets with their torches and pitchforks. Perhaps this summer…

But really, this is an almost philosophic question. The economy consists of the values and actions of seven billion people, all doing different things for a million different reasons. It’s hard enough to make any prediction about such a complex system; it’s extremely difficult to get both the prediction and the timing of the events right. That said, I admit to sometimes conflating the imminent with the inevitable.

L: It’s like a sort of Heisenberg’s uncertainty principle for economics.

Doug: That’s a good analogy. People may be growing tired of hearing me predict the same gloomy near-term economic outcome, but that doesn’t make me wrong. Here at Casey Research, we have an economic model of the way the world works. It’s not our model exclusively (people who would like to know more should do a search for “Austrian economics“). This model has been shown to be correct and to have excellent predictive power time and time again over the last century. It’s been shown to be totally correct in the recent past as well. But knowing you’re right doesn’t necessarily give you the power to know when you will be proven right. It’s just not possible to be absolutely certain when something inevitable like this has in fact become imminent. We’re talking about predictions that are far more complicated than predicting at 11 o’clock that the hands on the clock will point at the number 12 in an hour.

Despite the difficulty, it’s very important to have a model that has predictive power; seeing where things are going is extremely valuable, even if you can’t be sure exactly when things will happen.

L: It’s certainly got to be better than a model predicated on assumptions that are defined by the whims of politicians.

Doug: Quite right. I’m sorry if some people are perturbed by our inability to make things happen on a certain time schedule, but I think they should look at our track record and give us some credit for being right about how things are happening. We predicted the debt crisis, the currency crisis, the housing crisis, and the direction of precious metals — accurately and years before others. I think we will soon be shown to be absolutely correct about the direction of the bond market, which is now peaking. It may sound brash, but I feel quite certain that will be shown to be right on all the major trends we are now predicting.

L: Back to the G20: as ridiculous as their denial of the currency war currently under way is, the conclusion they drew is no laughing matter. Just as you said, despite their denials, they claim the situation requires new currency controls. The noose tightens.

Doug: Yes. Despite what they say, these people clearly feel an urgent need to gain control of the situation. They’ve caused immense chaos, and at some level they probably know it. Of course, they would never dream of accepting responsibility and rolling back any of their economically suicidal policies. Their only response — always and ever — has to be new rules and regulations. They are clamping the lid on the pressure cooker even tighter. These people are truly stupid, in the clinical sense of that word. No matter how badly their meddling backfires, their answer is always more meddling. I’m sorry I can’t tell you the day and the hour this thing will blow, but I’m absolutely certain it will.

L: How can they be so blind?

Doug: Bastiat explained it 200 years ago. They see only the immediate and direct consequences of their actions and pay no attention to — or deny — the delayed and indirect consequences of their actions. If the United States, say, devalues its currency by 20%, an immediate effect inside the United States is that everything is 20% cheaper for foreigners. Labor and products are cheaper for foreigners, so exports may increase and make it seem like the economy is getting a great boost.

But this is typical fallacious economic thinking. There are extremely important delayed and indirect effects that are ignored in such a case. Among them is that people don’t want to save a weak currency. If people don’t save, you can’t build capital, and without capital it’s impossible to have investment, and progress is diminished. Another ignored consequence is that domestic businesses face increased import costs. Politicians may shrug that off, saying people can buy American cars instead of German or Japanese cars, but many businesses rely on equipment, technologies, and raw materials from abroad. Moreover, all businesses, families, and individuals consume energy, much of which is imported from abroad. Further, if the currency is devalued 20%, it means Americans can buy that much less of foreign businesses, and foreigners can buy that much more of US businesses. Frankly, I couldn’t care less what the nationality of buyers and sellers might be. But Americans will be hurt by a weak US dollar as surely as Zimbabweans were hurt by a weak Zim dollar.

People forget that in 1971, when Nixon devalued the dollar, the Swiss franc was $0.23, and the German mark was $0.25; today they’re $1.08 and $1.31, respectively. The Japanese yen was 300 to the dollar; today it’s about 90. The success of these countries was partly because of strong currencies. A strong currency helped them become rich and prosperous. Of course, most governments are now deeply in debt, and that’s a powerful incentive to destroy their currencies.

L: The very currency war the G20 is denying.

Doug: Yes, and the result is that you don’t just get one currency devaluing, but all currencies devaluing against real assets, commodities, goods, and services. I do believe that within the foreseeable future all these paper currencies are going to be devalued to zero — in other words, they will reach their actual intrinsic values.

This is extremely serious, because the productive people of the world — the ones who actually consume less than they produce and save the difference, which is what all economic growth and progress depends upon — will be wiped out. When their savings vanish, it’s going to create a social and political earthquake right off the Richter scale.

L: Okay, but I’m not going to let you off the hook here. Tune in to your guru sense please, and tell us: Do you still see 2013 as the year when the global economic house of cards starts visibly falling apart?

Doug: Well, never say never. Almost anything is possible. I don’t think it will happen, but I can’t say it’s impossible that government efforts around the world to paper over the crisis won’t succeed for a while longer. But even if that were to happen, it would only make the ultimate crisis that much worse.

Here’s what it boils down to: if you see a tidal wave coming at you and you’re not exactly sure when it will hit, it doesn’t actually matter. You’ve got to get out of its way. You’ve got to get to high ground. Period. This is the bottom line for me. Stating this as loudly and clearly as possible is my role in today’s economic discourse.

L: When it comes to a house of cards like this, it’s better to be a year early than a day late.

Doug: It’s like Rick says in Casablanca: “If that plane leaves the ground and you’re not with him, you’ll regret it. Maybe not today, maybe not tomorrow, but soon and for the rest of your life.”

I hate to sound like a broken record, but the investment implications remain very clear: sell bonds; general equities are overpriced; real estate is dangerous. Gold and silver aren’t cheap, but they’re the only safe havens available right now. Well, I could add productive farmland to that short list, but it takes a lot of management — owning precious metals is much simpler.

L: Okay Doug, I appreciate your candid responses. We’ll talk again soon.

Doug: My pleasure, as always.

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Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, we’ve been hearing a lot about this image of the president shooting a shotgun circulating on the Internet. In the wake of the Connecticut massacre and multiple other shootings that have occupied the headlines of late, it’s quite striking. There have been so many murders involving guns in the news lately, it’s starting to look like a bloody wave of copycat activity. Or maybe, as the Greater Depression deepens, more and more people are just going to go nuts, making this a taste of things to come… What do you think?

Doug: Either of those things could be true. Both may well be; but the elephant in the room no one wants to talk about is that so many of these murderers — the vast majority, actually — turn out to be under some form of psychiatric care and on meds. What’s really needed is a deep and thorough review of psychological and psychiatric practices in the US, with strict examination of the correlation between various medications and subsequent violent behavior.

Popular drugs like Prozac, Zoloft, Paxil, Ritalin, and literally hundreds of others have very serious side effects. Shrinks are in the custom of prescribing them as an answer to the moral problems that everyone has to confront. These drugs don’t resolve moral dilemmas; they disguise them and confuse the issue. I find it interesting that random mass murders were never an issue up until the last 20 years or so — roughly coincidental with a substantial portion of the US population, especially kids, being put on meds for all kinds of imaginary psychological disorders… things that used to be considered just part of life. I suggest readers look into the views of Peter Breggin, M.D., an old friend of mine who’s done an immense amount of work in the area for years.

L: We need more laws regulating shrinks, not guns?

Doug: I’m not in favor of laws regulating either, but yes, people are confusing the means of violence with the cause of violence. We need to have an honest and unbiased look at what makes people turn murderous. If we don’t, the massacres will continue, just using different weapons.

L: I agree, of course. Gun-Free Zones are really Vulnerable Victim Zones. But it’s very hard to even discuss this issue with people rationally these days. Pro-gun people don’t need convincing, and anti-gun people are beyond convincing. In the wake of so many little children being shot, just making the attempt makes it seem like I should be sporting horns and carrying a pitchfork — a deadly assault pitchfork, of course.

Doug: Yes, public discourse on the topic has become quite degraded and irrational; it no longer seems possible to have a polite and rational discussion about why these things happen. Now it’s nothing more than an argument about how drastic various types of gun controls and other people controls should be. It’s another sign of the unraveling social fabric of the United State that was once America. I was reading something Michael Moore said — I hate to quote Moore, because absolutely everything he says on every subject except one is dead wrong –

L: Wait — stop the presses! Doug Casey agrees with Michael Moore on something?

Doug: I don’t want to be against anything just because Moore is for it. Words speak for themselves; to discredit them because you don’t like the speaker is a variation of the classic ad hominem fallacy. I happen to agree with his anti-foreign-war stance; he could be channeling me on that subject, from what I’ve read. But that’s the only thing I agree with him about, as far as I know.

If I cared what the public thought, I wouldn’t even mention that, however, since the public seems to react robotically when you push certain hot buttons. One guy accused me of being a raving socialist because I mentioned that I agreed with the sentiment of the title of the book All I Really Need to Know I Learned in Kindergarten — after saying I hadn’t read the book, just liked its title. He illogically jumped several conclusions, upon hearing the mention of a book he didn’t think he liked, but probably never read. Randites do that when they hear the philosopher Kant mentioned. It’s odd how reactive people are. The public doesn’t reason; it emotes and reacts. It makes me quite sympathetic to Cornelius Vanderbilt when he said “The public be damned.” That’s certainly true when it comes to gun control.

At any rate, in an article he wrote called Celebrating the Prince of Peace in the Land of Guns, Moore dismisses the entire case for guns as being: “… because too many white people are afraid of black people. Period.” In this article he asserts that people — white people — want to have guns because they are racists.

L: The mind boggles. How could anyone say such a thing with a straight face? Black people own guns. I’ve seen stats that show more gun ownership among white people in the US, but a lot of black people own them, and that’s after many decades of Jim Crow laws and other discrimination discouraged, or prohibited, them from owning guns. It’s easier to keep folks down if they can’t defend themselves.

Doug: It’s an incredibly stupid statement — and completely wrong. He’s a knave as well as a fool. Guns have been called “the great equalizer” precisely because they give the little guy, the weak guy, the poor guy, the means to resist crime and oppression by those who happen to be stronger or more trained in the art of war.

It’s disgusting how the argument is now just about ridiculous details, like how many rounds a magazine can hold. The argument should be about principle: either a man has a right to defend himself or he doesn’t. Historically, only slaves are denied weapons.

L: Only a gun can give a 100-pound female the ability to stop a 200-pound male attacker.

Doug: Exactly. So predictably, the Obama administration’s move to limit gun ownership is not just the wrong thing to do, but the opposite of the right thing. Blaming the tool instead of looking into the causes of violence only ensures more violence.

L: And disarming the people only ensures more tyranny.

Doug: Well, it sure makes the tyrant’s job easier. Stalin, Hitler, Mao — they all pushed for what people call gun-control legislation today. It was a prelude to gun confiscation, and we all know where that led. It will happen here too — not that I expect armed resistance from US citizens should a genuine tyranny arise. To start with, probably only 15% of the households in the country even own a gun — at least beyond a .22, a shotgun, or a little pocket pistol. Gun owners are a tiny minority. And they’re very law abiding, so they’ll do as they’re told. No way is someone going to defend his right to self-defense when a SWAT team has his family in its crosshairs.

A good part of the problem is that Americans seem to think the right to be armed depends on the Second Amendment. It doesn’t. Laws and constitutions are changed and/or disregarded all the time. The right to be armed is part of being a free human being. People who want others to defend them are worms. Unfortunately that includes about 98% of the people on this sorry planet.

But it’s worse than that. Boobus americanus thinks the police and the army both can and will protect him. They can’t and won’t. It’s critical to remember that military and paramilitary organizations are loyal first to their comrades and then to their employers. You are really just an afterthought. And worse yet, most of these guys have an extra Y chromosome. They’re basically the last ones I want to see with guns — much less a legal monopoly on them.

But back to the photo of Obama firing the shotgun; it looks completely staged and phony to me. I think it’ll backfire on him.

L: You think that was PR? Why would he bother? His constituency doesn’t want to see him with guns, and his opposition will never vote for him, no matter what he says or does. What good could it possibly do him?

Doug: It’s pure politics, like that famously idiotic picture of Michael Dukakis in a tank. He’s trying to position himself as being reasonable; guns are okay for sporting purposes like shooting clay pigeons, but tighter controls are necessary to keep them out of the hands of criminals and lunatics. But look at the photo — his stance is all wrong. The gun is too high on his shoulder, and he’s leaning back. He looks like he’s never touched a gun in his life, let alone fired one with hefty recoil. It’s a completely ridiculous and insincere PR stunt.

L: Let’s hope the photo will come back to haunt him.

Doug: [Chuckles] Indeed. On a related note, the news just came out of this record-holding sniper Chris Kyle being shot to death in Texas. He was apparently killed by a friend of his who is a Marine suffering from post-traumatic stress disorder. If that’s true, it’s almost certain that the killer was on some kind of psychiatric drug.

L: The point about psychiatric treatment that you started with.

Doug: Yes. But to be honest, I have to say that I don’t have a lot of sympathy for Kyle. His record reportedly documents about 160 official kills, but I’ve heard he claims the number was really around 250.

L: “Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror…”

Doug: Kill hundreds, while wearing a uniform, and you’re a hero. Yes. It’s beyond belief to think that every single one of those people he killed was an enemy soldier — let alone always his intended target and with no collateral deaths. How can you even tell who someone is when his face is obscured by a turban — especially at such distances as a world-class sniper shoots?

L: If he’s wearing a headscarf, he must be bad?

Doug: Evidently, to some. The guy was clearly an obedient, programmed, and thoughtless servant of the state, trained to kill on command. He liked to say he was “defending his country,” but that is shamefully disingenuous. It’s a lie, actually. In fact, he was killing people in their own country, people who were trying to defeat alien invaders and their collaborators. I’m sorry his kids won’t have their father around, but the world is probably better off without him.

L: Do you think this whole gun thing is coming to a head?

D: It’s interesting how recent events have galvanized the pro-gun movement, even though it’s quite small. It’s not like it was when I was a kid, and everybody had a gun or at least wanted one. Nobody thought anything about using guns. Now they’re on everyone’s minds. The Second Amendment seems to be the last shred of the Constitution that serious people are actually willing to fight for — even though the rest of the Constitution is a dead letter. People have given up their right to due process, to refuse search and seizure, to trial by a jury of their peers — even free speech is only allowed in so-called free-speech zones if a powerful enough politician is in town.

L: Ah, you heard about the Utah Sheriffs’ Association’s refusal to comply with unconstitutional gun laws? Seems to me that the Second Amendment being the last bastion of freedom is no accident; it is, by its nature, the one right you can’t trample on without meeting armed resistance.

Doug: Well, they say the Second Amendment is the one needed to defend the rest. But the rest are all gone now, so maybe it doesn’t matter. It’s both ironic and perverse. How can you defend America if it no longer exists? But there seem to be a few million people who say they are willing to fight this one and are equipped to do so. But if serious laws are passed, local sheriffs will roll over like tired old dogs, and the state will crush anyone who resists like a bug. Everyone is being preprogrammed to believe there are home-grown terrorists everywhere — “see something, say something.” The outcome is preordained to be ugly.

The smartest thing someone can do is bury a few favorites and a whole bunch of ammo someplace where it can’t be found. You don’t want to be defenseless if things degenerate to the world of The Road Warrior. That’s like a 50-to-1 longshot, but being caught unprepared would be very bad. Almost anything, both good and bad, is possible in today’s world.

L: Hm. It’s easy to talk tough about prying guns from cold, dead fingers, but how many people would actually man the barricades?

Doug: Almost zero. The average US tax slave is too well fed, to content with what’s on reality TV. They are unfree but don’t even know it. Pretty much like the cattle on my ranch. Les Misrables they are not.

L: Not yet, anyway.

Doug: Yes. It’s coming. But I’ll go ahead and go on record saying that the proper amount of gun control laws is zero.

L: Proper gun control is being able to hit your intended target.

Doug: For sure. That’s why automatic weapons aren’t good for much other than suppressive fire in a military operation or providing unrealistic action in movies. Yet 99% of Americans think they should be illegal, which has essentially been the case since 1934. They’ll cave in on everything else like they did then. Like people all over the world have done. I think absolutely everything should be legal. If you treat people like irresponsible children, that’s the way they’ll tend to act. They get the idea of “safety first,” not freedom, and that the authorities should protect them, ingrained in their psyches from very early on.

L: Well, as you said at the start, none of this actually contradicts the two possibilities I started with. I’m sure you’re right that there’s a problem with the way psychological problems are treated, especially the medicalization of counterproductive thought patterns. But that doesn’t mean the instant infamy of recent mass murderers hasn’t propelled people on the edge to engage in copycat grabs at fame, even if it’s negative fame. And the deeper we get into the Greater Depression, the more desperate acts I suspect we’ll see.

Doug: Right; all the more reason to take steps to defend yourself — starting with removing yourself from harm’s way.

L: As Mr. Miagi said, “Best way block punch, Daniel-San, is no be there.”

Doug: Exactly. For me, that means spending most of my time in rural Argentina, where the weather is nice, you can ride your horse 100 miles in any direction, and the wine is fantastic. In fact, we’re having a big party in about a month, so I invite everyone reading this to come and see for themselves what I’m building in Cafayate. But different strokes for different folks. No one needs to do what I’m doing, but they definitely need to something to spread their political risk beyond a single jurisdiction, if they have not yet done so. It’s the single most important thing I can recommend today.

L: Very well then. Words to the wise.

Doug: Let’s just hope people listen and decide to stop thinking like medieval serfs.

L: Indeed. On that note, I understand the book version of our past conversations published by Laissez Faire Books is selling well.

Doug: Yes, I’m very pleased with the book and look forward to the next volume, which will be more financially oriented. By the way, I think that publishing Socratic dialogues, especially unblinking and uncensored ones like ours, is very important. The world of ideas has become stale and in desperate need for innovation, even upheaval. That’s why I’m excited about the Laissez Faire Club. It is infusing a great body of radical ideas with the energy of a commercial service. The model is new, creative, and astonishingly productive. I’m a member of the Club, and I encourage our readers to join as well. It’s the place to find the future of serious ideas in the grand liberal/libertarian tradition. Everyone should join it — now, before they forget.

L: Noted. Okay, thanks for another interesting conversation.

Doug: My pleasure, as always.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Doug Casey’s latest book, Totally Incorrect, gathers his iconoclastic views in a tidy package to stimulate and possibly dismay readers. In an interview with The Gold Report, Doug elaborates on some of his most radical ideas and offers his view of where the markets are likely to head in 2013.

The Gold Report: Doug, you have a new book out called Totally Incorrect: Conversations with Doug Casey. In one of those incorrect conversations with Louis James you said, “It’s not the US economy that’s facing a fiscal cliff, it’s the US government. People equate government with the economy. They are entirely two different things. The only way to revitalize the US economy is through both vast reductions in taxes and vast reductions in government spending. Instead, these idiots are arguing over how much to raise taxes and how little they can cut spending.” Now that we have avoided parts of the fiscal cliff and delayed addressing other parts, what are your observations?

Doug Casey: Nothing has changed. I am amazed to read about what is called a trillion-dollar platinum plan to get around Congress having to raise the debt ceiling. It’s actually quite comical that some people are talking about it as a solution; it’s Three Stooges economics. My only question is: Why not make it a $10 trillion coin? That would solve the problem for several years and release the government from even the fictional restraints on spending it now has. Actually, let’s do $100 trillion; why deal in half measures? It’s all a ridiculous charade at this point, the precisely scripted Kabuki theater between the left and right wings of the Demopublican Party. The ending of the ridiculous drama is totally predictable.

The point is that the government is spending more than $1 trillion a year more than it is taking in. And that’s using cash accounting, which is improper. If the government used accrual accounting, which takes into account future obligations, mandates, and liabilities, the number is more like $3-4 trillion.

Already the Chinese and the Japanese really don’t want to buy any more Treasuries to finance the deficit. So the Federal Reserve is buying most of it and crediting the accounts of the US government with the money it creates. Maybe it should ask the Chinese if it would like the trillion-dollar coin? At least it would have a cute collectible. The Chinese should insist on a 10-ounce-size coin, so it doesn’t get lost too easily.

But all kidding aside, the Fed may as well issue a $1-trillion coin. As the economy really goes off a cliff over the next couple of years, government outlays will almost necessarily go up and tax revenue will absolutely decline as the economy slows down.

TGR: You often make a distinction between the government and the country, and the economy. But if the government and the economy are two different things and the government is the one facing the fiscal cliff, why should the economy go downhill as well?

DC: Because the government is such a massive actor in the economy today. Whenever a massive economic actor is bankrupt, there will be repercussions. There are around 2.7 million people directly employed by the federal government, by all the hundreds of agencies, bureaus, commissions, and whatnot; that’s been fairly stable for a long time. They say there are around 22 million employed by all levels of government, and that’s actually been dropping — non-federal governments can’t borrow any more, and they can’t print money. A few have declared bankruptcy.

But those numbers don’t include things like the Post Office and Amtrak. They don’t include 1.5 million active-duty troops. And all branches of government have increasingly gone to using outside contractors, as the military famously does.

Some 25 million people, more or less, employed by government is one thing. That’s a lot. But of course, many are doing things that would otherwise be done privately. The real problem is so many major corporations have the state as their major customer — military and aerospace contractors, construction firms, computer outfits — everything you can imagine. Having your major customer bankrupt is a big problem.

But there’s much more. The US government has 50 million people dependent on food stamps, 7 million on disability, and scores of millions more on Medicaid, Medicare, and other programs.

In my ideal world, government would exist for two reasons: as a police force to protect the citizens, and as a court system to allow citizens to adjudicate disputes. The economy is far too important to be left to the government and the kind of people who are drawn to work in it.

The fiscal cliff and the bankruptcy of the government are important because so many people depend on the government for their livelihoods. Most major corporations are customers of the US government. It’s said fully 37% of Americans derive their income from the government. That is a gigantic distortion that has been put into the economy over many decades, and it has to be unwound.

TGR: Can it be unwound slowly over many decades or do we have to go over a cliff?

DC: It could be unwound slowly over many decades, but that would require a complete change in the way the American people think. Right now, the people who run for president or for Congress, for state legislature seats, and even local offices, actually think that government is a magic cornucopia.

This problem will not be solved unless that attitude changes, and I do not see how that will happen at this point. In fact, there’s every reason to believe it’s going to get worse.

TGR: Some European countries have implemented severe austerity programs. Will that help Europe turn around or are these programs just a slow, painful edging toward the same cliff?

DC: Europe is in much worse shape than the US. Socialism is totally ingrained in the psyche of the average European. The European idea of austerity is cutting back some government programs around the edges, making a few cosmetic changes. Maybe an occasional headline upbraiding a particularly egregious example of corruption. It’s all public relations and generalities. But the idea of pulling the plant out by its roots is totally anathema. That’s because they really believe socialism, welfarism, and all kinds of state intervention is morally correct. Most Europeans actually want a stronger state, all paid for with money stolen from a diminishing pool of productive taxpayers.

Most Europeans believe the state owes them a living and that the rich should be eaten to finance that. That attitude will not be changed without real tumult. There is no impetus for gradual change or reversal in Europe.

TGR: In the conversation titled On 2013, you say 2013 will be ugly, but merely a warm-up for 2014. Yet the economic trends appear to be positive: the end of quantitative easing by year-end, increased domestic oil and gas production resulting in inexpensive energy for decades to come, more manufacturing jobs, and less unemployment. Is this slow-growing economic recovery masking the effects of the deficit and unfunded liabilities, thus allowing politicians to kick the can further down the road? Why do you think 2013 and 2014 will be so bad?

DC: Most of the information that people get about what is going on comes from the popular press and, at this point, the popular press is almost the fifth branch of government — after all the agencies, which have become the fourth branch of government.

As for things improving, yes, things seem better because we’re not actually in the middle of chaos. Well, actually we are, but only because it’s the eye of the hurricane. Those trillions of currency units that have been and still are being created make people feel more prosperous than would otherwise be the case.

I have no trust in the unemployment figure. If it were still calculated as it was before 1980, unemployment would be between 13% and 19% today. I have no more confidence in the inflation figures issued by the US government than I have in the inflation figures published by the Argentinean government.

It is in the government’s interest to keep those reported numbers as low as possible, in part because payments on things like Social Security are adjusted to inflation. In addition, people in government think the economy depends more on psychology than reality, and no one wants to set off a panic. I suggest people panic now and beat the last minute rush. [laughs]

As far as oil is concerned, I believe in the peak oil theory, which basically says that the cheap, easy, light sweet crude has all been found. Crude is extremely hard to find. At the same time I believe technology will solve all energy problems — oil is a very simple compound made out of hydrogen and carbon, essentially. Technology allows us to create almost anything, so there’s no reason why we’d ever run out of oil. Fracking and horizontal drilling will make lots of hydrocarbons available. The question is, at what price?

TGR: But why 2013?

DC: In 2007, we started into the leading edge of a financial hurricane. In 2010 through 2012, governments around the world printed trillions of new currency. That did not solve the financial problems of the banks, brokers, hedge funds, or large corporations — much the way giving a million dollars to a wino will temporarily solve a lot of his problems — but at some point those dollars, which are currently sequestered, will start coming into circulation. That will result in huge price rises of everything.

You can’t solve problems just by printing pieces of paper. You become prosperous by producing more than you consume and by saving the difference. However, the US, Western Europe, and many other parts of the world consume more than they produce. They have been living on borrowed money and mortgaging our future with debt. That holds true for governments and for individuals.

TGR: That leads me to another conversation in the book, called The Morality of Money. In that conversation, you argue that accumulating wealth is an important social as well as personal good. You say, “The good to the individuals of accumulating wealth is obvious, but the social good often goes unrecognized. Put simply, progress requires capital. Major new undertakings, from hydropower dams to spaceships, require huge amounts of capital. You need the wealth to accumulate in private hands to pay for these things. If the world is going to improve, we need huge pools of capital, intelligently invested.”

You said earlier that the goal of government should be to provide police and to adjudicate disputes. But if world improvement requires huge amounts of capital, who is better placed to make those intelligent investments: self-serving wealthy individuals or self-serving governments?

DC: Let me say something many people will consider shocking: I do not believe government entities should exist at all, or are even necessary. Government is based on force and coercion. Essentially, the power of government comes out of the barrel of a gun, as Mao Zedong noted. I do not think that is the proper way for a civilized society to function. By its nature, government never has and never will be a producer. It is a consumer. It acquires income by theft.

I am an anarchist. Contrary to popular opinion, anarchy has nothing to do with a guy dressed in black holding a little round bomb with a lit fuse. Anarchy is a system of self-rule; you do not have someone telling you what to do and not do.

TGR: But if civilization needs huge amounts of capital to progress, can we expect the wealthy to employ their capital wisely and for the social good?

DC: You cannot expect anybody to do anything, but the fact that the wealthy have a lot of money shows they are good at making money — which is to say, creating and conserving wealth. Governments aren’t noted for production — their history is largely one of wars, persecutions, confiscations, and general repression. And the people who are attracted to government are problematical for that reason.

Most rich people, for example Warren Buffett today and Sam Walton a generation ago, are not interested in consumption. They are more interested in creating more capital. It is better to trust the people who are creating more capital than to trust those in government who do things for political, not economic reasons.

TGR: In the On 2013 conversation, you talk about the bond market, saying, “We are approaching the absolute peak of the bond bubble. Interest rates in the developed economies around the world are two percent, one percent, or even negative. This is fueling a bond bubble of truly catastrophic proportions. When it bursts, it will be an order of magnitude worse than the tech stock-market crash of 2001 or the real-estate crash of 2008.”

DC: This is another reason why I think 2013 and 2014 will be so turbulent. At this point, it appears interest rates are at an all-time low. Bonds are in a bubble. And low rates encourage people to borrow — not save. But saving is absolutely critical — and as much as possible — because it’s proof that an individual or a society is producing more than it’s consuming. When interest rates start going back up, the face value of the bonds will collapse. A lot of individuals and a lot of governments cannot crack their monthly interest nut at low interest rates. How will they cope with high interest rates?

This bond bubble will be much more serious than the stock market bubble, especially because absolutely everyone is buying all kinds of complete junk today that offers a 2% yield. This will be much more serious than the tech-stock or real-estate crashes. The money markets are much bigger.

I pity those who are reaching for yield now. Instead of risk-free return, they’re getting return-free risk.

TGR: Do you see ancillary economies crashing along with the bond market, or do you agree with the notion that rising interest rates will prompt governments to print more money, creating hyperinflation?

DC: A catastrophic deflation is always a possibility — and it’s better than the alternative, a catastrophic inflation. Either way, a depression is inevitable — we’re in it now, actually. I think at this point the authorities will go with creating lots more money.

The government gets revenue three ways. The first is by confiscating the wealth of citizens through taxes. There are hundreds of different taxes, and they all are quite high right now. The second way is by borrowing. Governments are incredibly overindebted and uncreditworthy now, and those debts will never be repaid. The third way is by printing money.

They will continue to print money because number one, it is now the only way out. Number two, the politicians masquerading as economists actually think printing is a good way to stimulate the economy.

TGR: Will that create a bond crash or hyperinflation, or are they one and the same thing?

DC: Perhaps both in sequence. The thing to remember here is that bonds are a triple threat to your capital: interest rate risk, inflation risk, and the risk of default. Anyone who holds old bonds today is holding an asset that is reward-free risk. The risks have never ever been greater in the bond market, and the returns have never been lower. We are at the peak of one of the biggest bubbles in history.

TGR: If we are at the peak, what is the best way to preserve wealth and ride out the next two or three years?

DC: Agriculture and arable land have become quite popular recently. I like them. But I am not crazy about investing in grains and soybeans because they are very political commodities, and the price of agricultural real estate has gone up hugely to reflect higher grain prices. There are no bargains anywhere in the world.

I am a big fan of cattle because cattle herds are at generational lows today. They have been in liquidation because it has been an unprofitable business for years. For most people, however, cattle are not a practical investment.

The most practical thing the average person can do is have a significant position in precious metals. They should own the metal. In years to come, when governments have blown up their currencies, gold and silver will be reinstituted as money.

TGR: How large a portion of one’s portfolio should be in precious metals?

DC: Apart from my house, my business, and expensive consumer goods, I would not be afraid to have most of my financial assets in precious metals.

I am not very interested in the stock market today. The bond market, as I said, is a fantastic short-sell at this point. Real estate is certainly a lot cheaper than it was, but it floats on a sea of debt. That’s not good. It’s also the easiest thing for governments to tax.

Now people ask what about owning cash? The dollar is an unsecured asset of a bankrupt government, and it will be a hot potato in the years to come. For cash you definitely want to own precious metals — even at current prices. The other thing to look for is speculations in the marketplace. As inflation heats up and markets become more chaotic in the years to come, people will be forced to speculate. It’s a pity, really…

TGR: And what would those be?

DC: Speculation is capitalizing on politically caused distortions in the marketplace. In effect, it’s betting against the government. It is not gambling in the market.

The best speculation — the most beat-up market — right now is mining exploration companies, junior resource stocks. There are several thousand of them trading around the world. Most are not “investments,” most are “burning matches,” but relative to the price of the metals, they are close to the lowest levels in history. We have not had a truly good bull market for them in years, so they are an excellent place to put a portion of your capital with potentially large returns.

TGR: To what extent do investors need to be selective in that category?

DC: There is an old saying in the mining-stock business: When the wind blows, even the turkeys will fly. That is true. When the public gets the bit in its teeth and gold and silver are running, all kinds of junk will be promoted. A lot of money will be spent on promotion instead of exploration work out in the field.

TGR: If the bond bubble bursts this year or next, should investors wait for that before buying into the gold and silver junior mining stocks? Might they not be at even lower prices once the bubble busts?

DC: That is a real possibility. If you want to speculate and ride the futures market, sell long-term bonds short. That will offer a bit of a hedge.

You have to get the timing right in the market, of course. In the past, decent companies have sold for half of their cash in the bank and you end up with all of their properties for free, along with half the cash in the bank.

There is no telling how cheap the market can get. Anything can happen with these little stocks, but I think now is the time to start accumulating quality issues.

TGR: Both Totally Incorrect and the earlier Conversations with Casey are thought-provoking and entertaining. What motivated you to have these conversations and publish them?

DC: No one in the mass media and no politician today is willing to say that the king does not have any clothes on. That is why I am doing this. I say a lot of things I suspect you do not hear among friends at cocktail parties.

TGR: True. Cocktail party chatter tends to be about weather, sports, maybe entertainment, but nobody talks about government or religion. Why is that?

DC: I blame the educational system in part. In the last century, people learned Latin and Greek and read the classics. The object was to see what people thousands of years ago thought and said and to be able to comment on whether they were correct and how those thoughts might apply today. Education today is sound bites. Nobody reads a classical book in school anymore, only PC stuff that has been passed by a school board. They have a half an hour of geography where they’re lectured by some teacher who probably has not traveled outside his or her home country, maybe never out of the state or province. Education has been transformed into political indoctrination in many ways.

TGR: Will greater access to the Internet, where you can Google just about anything and delve into specific topics and areas, change people’s appetite for more meaningful conversations?

DC: The Internet is the best thing since the invention of moveable type. Rather than misallocating years of time and huge amounts of money to go off to college where they will just chase the opposite sex and drink, and where the quality of the professors is uncertain and the courses are in subjects that will clutter up their minds — gender studies, political science, English, and the like — people who really want to can get an education from the Internet.

The fact that you cannot believe everything on the Internet is equally true for what you read in books or newspapers.

TGR: That is a perfect example of why the book is called Totally Incorrect. Thank you for this conversation.

Ever wonder how famous investors and self-made millionaires think – what it is that makes them so successful?  Then you should let Doug Casey give you a piece of his mind.  His new book, Totally Incorrect, is a showcase of radical libertarian thinking and unwavering free-market advocacy that will open your eyes to a new world view… not to mention investment opportunities flying under Wall Street's radar.  To learn more about this provocative work, click here now.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: So you're saying that money is a positive moral good in society because the pursuit of it motivates the creation of value. It's the bridge between selfishness and social good, and it's the basis for voluntary cooperation, rather than coerced interaction. Anything else?

Doug: Yes, but first, let me say one more thing about the issue of selfishness – the virtue of selfishness – and the vice of altruism. Ayn Rand might never forgive me for saying this, but if you take the two concepts – ethical self-interest and concern for others – to their logical conclusions, they are actually the same.

It's in your selfish best interest to provide the maximum amount of value to the maximum number of people – that's how Apple became the giant company it is. Conversely, it is not altruistic to help other people. I want all the people around me to be strong and successful. It makes life better and easier for me if they're all doing well. So it's selfish, not altruistic, when I help them.

To weaken others, to degrade them by making them dependent upon generosity, is not doing those people any good. If you really care about others, the best thing you can do for them is to push for totally freeing all markets. That makes it both necessary and rewarding for them to learn valuable skills and to become creators of value and not burdens on society. It's a win-win all around.

L: That'll bend some people's minds… So, what was the other thing?

Doug: Well the accumulation of wealth is in and of itself an important social, as well as personal, good. The good to individuals of accumulating wealth is obvious, but the social good often goes unrecognized. Put simply, progress requires capital. Major new undertakings, from hydropower dams to spaceships, to new medical devices and treatments, require huge amounts of capital. If you're not willing to extract that capital from the population via the coercion of taxes, i.e., steal it, you need wealth to accumulate in private hands to pay for these things. In other words, if the world is going to improve, we need huge pools of capital, intelligently invested. We need as many u201Cobscenelyu201D rich people as possible.

L: Right then… so, money is all good – nothing bad about it at all?

Doug: Unfortunately, many of the rich people in the world today didn't get their money by real production. They got it by using political connections and slopping at the trough of the state. That's bad. When I look at how some people have gotten their money – Clinton, Pelosi, and all the politically connected bankers and brokers, just for a start – I can understand why the poor want to eat the rich.

But money itself isn't the problem. Money is just a store of value and a means of exchange. What is bad about that? Gold, as we've discussed many times, happens to be the best form of money the market has ever produced: It's convenient, consistent, durable, divisible, has intrinsic value (it's the second-most reflective and conductive metal, the most nonreactive, the most ductile, and the most malleable of all metals), and can't be created out of thin air.

Those are gold's attributes. People attribute all sorts of other silly things to gold, and poetic critics talk about the evils of the lust for gold. But it's not the gold itself that's evil – it's the psychological aberrations and weaknesses of unethical people that are the problem. The critics are fixating on what is merely a tool, rather than the ethical merits or failures of the people who use the tool and are responsible for the consequences of their actions.

L: OK, so even if you cared only for money, that could be seen as a good thing. But you do care for more – like what?

Doug: Well, money is a tool – the means to achieve various goals. For me, those goals include fine art, wine, cars, homes, horses, cigars, and many other physical things. But it also gives me the ability to do things I enjoy or value – like spend time with friends, go to the gym, lie in the sun, read books, and do pretty much what I want when I want. Let's just call it as philosophers do: u201Cthe good life.u201D It's why my partners and I built La Estancia de Cafayate [in Argentina]. We have regular events down there I welcome readers to attend.

But I don't take money too seriously. It's just something you have. It's much less important than what you do, and trivial in comparison to what you are. I could be happy being a hobo. There have been times when I felt my life was just as good and I was just as happy without much money at all. That said, you can't be too rich or too thin.

L: Very good. Investment implications?

Doug: This may all seem rather philosophical, but it's actually extremely important to investors. What is the purpose of investing or speculating? To make money. How can anyone hope to do that well if they feel that there is something immoral or distasteful about making money?

Someone who pinches his or her nose and tries anyway because making money is a necessary evil will never do as well as those who throw themselves into the fray with gusto and delight in doing something valuable – and doing it well.

L: The law of attraction.

Doug: Yes, but I don't view the law of attraction as a metaphysical force – rather as a psychological reality. If you have a negative attitude about something, you're unlikely to attract it… even if you try to talk yourself into thinking the opposite. If you think money is evil, don't bother trying to accumulate wealth. On the other hand, if you want to become wealthy, you'd better think long and hard about your attitudes about money… Cultivate a positive attitude about money, which is right up there with language as one of the most valuable tools man has ever invented. Think about it, and give yourself permission to become rich. It's a good thing.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Louis: Doug, let's talk about money. Is it all you care about?

Doug: No…just because I see the high moral value of money doesn't mean it's all-important to me. In fact, I find money less and less important as time goes by, the older I get. Perhaps that's a function of Maslow's hierarchy: If you're hungry, food is all you really care about; if you're freezing, then it's warmth; and so forth. If you have enough money, these basics aren't likely to be problems.

My most enjoyable times have had absolutely nothing to do with money. Like a couple times in the past when I hopped freight trains with a friend, once to Portland and once to Sacramento. Each trip took three days and nights, each was full of adventure and weird experiences, and each cost about zero. It was liberating to be out of the money world for a few days. But it was an illusion. Somebody had to get the money to buy the food we ate at missions. Still, it's nice to live in a dream world for a while.

Sure, I'd like more money, if only for the same genetic reason a squirrel wants more nuts to store for the winter. The one common denominator of all living creatures is one word: Survive! And, as a medium of exchange and store of value, money represents survival… it's much more practical than nuts.

L: Some people might say that if money were your highest value, you might become a thief or murderer to get it.

Doug: Not likely. I have personal ethics, and there are things I won't do.

Besides, crime – real crime, taking from or harming others, not law-breaking, which is an entirely different thing – is for the lazy, short-sighted, and incompetent. In point of fact, I believe crime doesn't pay, notwithstanding the fact that Jon Corzine of MF Global is still at large. Criminals are self-destructive.

Anyway, what's the most someone could take, robbing their local bank? Perhaps $10,000? That's only enough to make a wager with Mitt Romney. But that leads me to think about the subject. In the old days, when Jesse James or other thieves robbed a bank, all the citizens would turn out to engage them in a gun battle in the streets. Why? Because it was actually their money being stored in the bank, not the bankers' money.

A robbed bank had immense personal consequences for everyone in town. Today, nobody gives a damn if a bank is robbed. They'll get their money back from a US government agency. The bank has become impersonal; most aren't locally owned. And your deposit has been packaged up into some unfathomable security nobody is responsible for.

The whole system has become corrupt. It degrades the very concept of money. This relates to why kids don't save coins in piggy banks anymore – it's because they're no longer coins with value; they're just tokens that are constantly depreciating and essentially worthless. All of US society is about as sound as the dollar now.

Actually, it can be argued that robbing a bank isn't nearly as serious a crime today as robbing a candy store of $5. Why? Nobody in particular loses in the robbery of today's socialized banks. But the candy merchant has to absorb the $5 loss personally. Anyway, if you want to rob a bank today, you don't use a gun. You become part of management and loot the shareholders through outrageous salaries, stock options, and bonuses, among other things. I truly dislike the empty suits that fill most boardrooms today.

But most people are mostly honest – it's the 80/20 rule again. So, no, I think this argument is a straw man. The best way to make money is to create value.

If I personally owned Apple as a private company, I'd be making more money – completely honestly – than many governments… and they are the biggest thieves in the world.

L: No argument.

Doug: Notice one more thing: making money honestly means creating something other people value, not necessarily what you value. The more money I want, the more I have to think about what other people want, and find better, faster, cheaper ways of delivering it to them. The reason someone is poor – and, yes, I know all the excuses for poverty – is that the poor do not produce more than they consume. Or if they do, they don't save the surplus.

L: The productive make things other people want: Adam Smith's invisible hand.

Doug: Exactly. Selfishness, in the form of the profit motive, guides people to serve the needs of others far more reliably, effectively, and efficiently than any amount of haranguing from priests, poets, or politicians. Those people tend to be profoundly anti-human, actually.

L: People say money makes the world go around, and they are right. Or as I tell my students, there are two basic ways to motivate and coordinate human behavior on a large scale: coercion and persuasion. Government is the human institution based on coercion. The market is the one based on persuasion. Individuals can sometimes persuade others to do things for love, charity, or other reasons, but to coordinate voluntary cooperation society-wide, you need the price system of a profit-driven market economy.

Doug: And that's why it doesn't matter how smart or well-intended politicians may be. Political solutions are always detrimental to society over the long run, because they are based on coercion. If governments lacked the power to compel obedience, they would cease to be governments. No matter how liberal, there's always a point at which it comes down to force – especially if anyone tries to opt out and live by their own rules.

Even if people try that in the most peaceful and harmonious way with regard to their neighbors, the state cannot allow separatists to secede. The moment the state grants that right, every different religious, political, social, or even artistic group might move to form its own enclave, and the state disintegrates. That's wonderful – for everybody but the parasites who rely on the state (which is why secession movements always become violent).

I'm actually mystified at why most people not only just tolerate the state, but seem to love it. They're enthusiastic about it. Sometimes that makes me pessimistic about the future…

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

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Recently: Doug Casey on Orwell’s Nightmare — the Darker Side of Modern Technology

EUROPE

From at least the 1600s, Europe could claim to be the center of world civilization on all fronts. The colonies of the Portuguese, Spanish, English, French, and Russian empires (with the Dutch, Germans, Italians, and Americans as bit players) covered almost the entire planet. In its early days, an empire is both fun and profitable. You get to loot and pillage at will, and an empire provides lots of room to relocate the disenchanted, the overly adventurous, and the criminals. But the natives pick up the imported technology and customs, and they start to resent the intrusion of foreigners on their turf. At that point, an empire becomes a liability and a gigantic cost, since it needs to be defended. The Romans discovered that, and their descendants are rediscovering it. Once an empire starts falling apart, trying to stop it is like trying to stop a tree from falling once its roots have rotted. It can’t be done, and it’s best not to be around when it happens.

The way I see it, Western Europe is living off its accumulated capital, and it can take a while to burn through assets accumulated over hundreds of years. But they’re doing that quickly, as enamored as the continent has been with socialism. The other thing that’s kept its head above water is “black money.” The convenience of having lots of other countries nearby has helped make Europeans skilled and successful tax evaders; this has given them a lot more capital than they would have otherwise had, to use productively. But the rise of the EU, the U.S./EU drive for “tax harmonization” and against money laundering, and the lust to regulate coming out of Brussels will quash most of the continent’s remaining productivity. The place is on a very slippery economic slope.

Will the EU last, and will the euro continue to exist? I would bet against it. A simple free-trade pact (no restrictions on the movement of goods, capital, and labor) in Europe would have been a huge boon to everyone. But, no. That would have been way too simple. They had to try to make it into a one-size-fits-all burnoose that fits no one. Here’s what will happen. The EU will fall apart, with bad feelings all around, recriminations for subsidies and loans, and a rebirth of nationalism. The euro will cease to exist, with more bad feelings and a lot of money lost, by what’s left of the middle class. And then it will be back to business as usual, which for Europe tends to mean war.

There are two big complicating factors here: Demography and Islam.

Every country in Europe is in serious demographic decline; this is to be expected as any society becomes more educated and more urban. It’s aggravated, I think, by the continent’s pervasive socialism. When the state acts as your parent, you tend to never grow up, leave home, and have a family. The state wants to take care of your kids, and your kids don’t need to take care of you. So the decline of Europe’s native population is likely to continue, if not accelerate.

This relates to Islam. It’s well known that, due to heavy immigration from their old colonies (North Africa for France, Pakistan and India for Britain, Indonesia for Holland) and other reasons in the case of Germany and Switzerland (mostly Turkish immigration), the population of Europe has changed radically over the last 30 years. Furthermore, the trend is accelerating, because the Muslims, for whatever reasons, tend to have large families. So, it’s said, in another 30 years most of the countries in Europe will have Muslim majorities or significant pluralities.

Frankly, I don’t care where people come from, what color they are, or what superstitions they may hold (as long as they don’t try to impose them on me). But it seems predictable that this demographic revolution, especially coming at a time of rising nationalism, is going to lead to some serious conflict. Could Europe turn into a large-scale Bosnia? I’m not predicting it will, but it’s not out of the question.

Bottom line: Europe is fine for vacations (even though it’s way too constipated and way too expensive to suit my taste). But for an expat looking for a permanent base, you would be asking for trouble.

THE ISLAMIC WORLD

We’ve been talking about Muslims in Europe. Does it make any sense to look to reverse the flow? I have to say, regrettably, no. One reason is that Muslims tend to take their religion much more seriously than Christians, Buddhists, Hindus, or any other group I can think of. Islam is more than a religion, it’s an all-encompassing world view, with serious economic, political, and social implications. It’s one thing being a tourist or a visiting businessman in one of the 40-something Islamic countries, but I think it’s something else entirely to focus your life there.

All these countries were ex-European colonies, which has left lingering resentment in some quarters. And practically all of these countries were created – Iraq, Jordan, Pakistan, Libya, Somalia, Afghanistan, Fuhgedabouditstan – by fiat in a European boardroom, with zero regard to existing ethnic, linguistic, and cultural distinctions. That means they’re all intrinsically unstable, and most of these “countries” will fall apart sooner rather than later.

The situation is aggravated by the ongoing and growing War on Islam – called by the more politically correct, but ridiculous and dishonest moniker, the War on Terror. This is really just a continuation of what’s been going on, sporadically, since the Crusades. I think it’s going to get much more serious before it goes into remission again.

If you want to see the pyramids, rent a villa in Marrakesh, or speculate on property in Dubai (or Cairo, as a friend of mine is currently doing), that’s one thing. As a focus, I think it’s a mistake.

AFRICA

The whole continent is a nearly unmitigated disaster and tragedy. There are some who say that Africa would have been forever grateful to Europe, if Da Gama had just thrown a wheel ashore as he was rounding the Cape. But he would have also had to throw out an instruction book. And nobody on the continent knew how to read.

My own view is that European colonization was the worst thing that could have happened to Africa. It’s true that the Africans were living in primitive conditions; but that would have changed organically, through trade, if Europeans had arrived as merchants instead of conquerors. What happened is that every country on the continent (with the exceptions of Egypt and Ethiopia) is a totally artificial figment of some European bureaucrat’s imagination.

Every government on the continent is a kleptocracy. If you’re an ambitious African who wants to make money, you try to take control of the state and then cement your position by filling every important position with friends and tribal relations. The state can then serve as your personal piggy bank. Pre-conquest Africa was no model of libertarian equity, but the thousands of tribes at least had societies and economies that had worked over many generations.

Military conquest allowed the overnight infusion of advanced technologies, and a political structure that submerged the natives and their cultures. Worse, the ones that got a Western education were indoctrinated with the totally alien philosophy of Marxism and the alien religion of Christianity. This guaranteed long-term conflict with the equally alien religion of Islam. The poor African, who previously lived in about the most traditional of all societies, was uprooted and set adrift in every way possible.

As far as I’m concerned, Africa (with a few exceptions – Ghana, Namibia, perhaps Mozambique – and I would have picked Ivory Coast, as well, before the place blew up ten years ago) is going nowhere, until the present nation-states are restructured or disappear.

Before 1960, Africa was a safe and mellow place. Since then, it’s been turbulent and dangerous, but with opportunities mainly for the daring Uhuru jumper. At this point, the average black in business has some sophistication, some money, and a good measure of residual resentment against the whites. I think South Africa will continue on its downward trajectory. Zimbabwe, I believe, has turned the corner and is going to recover, until it gets another Mugabe look-alike. Which it will. That’s the way post-colonial Africa is structured. I don’t see Africa as anything but a prospect for the occasional speculation.

I don’t see long-term investment as an even remotely realistic possibility. Except for perhaps the Chinese, who might recolonize the place in an even less mellow way than the Europeans.

THE ORIENT

This is where the future lies. I’m a long-time fan of the Orient, including as a place to live. True, the whole area was colonized by the Europeans (with the prominent exceptions of Thailand and Japan), but the culture of the region is so old and deep, and the population so large, that it’s retained its character.

But how is it for expatriation? My second most favorite country on the planet is Thailand, for many reasons I won’t even attempt to touch on here. Singapore has replaced Hong Kong as the hub for entrepreneurs and rich expats in the region. The Philippines, the perennial poor man who should have become rich, is worth a serious look; the 400 years of Spanish influence, with an American overlay, gives it a nice ambiance, from my viewpoint. Burma is the country I’d most likely spend serious time in if I really wanted to make a huge amount of money – given a long-term view.

A key thing to remember in the Orient is that, although it’s a fantastic place to live, if you’re not a native, you’ll never really become part of the local culture. This is a double-edged sword, though. It can be a huge advantage to always be viewed as a tourist, a foreign ghost. It can allow significant freedoms and leeway.

The big question is China. My view is that although the 21st will be China’s century, they’re in for some very serious problems. The business cycle runs there, too. And it’s been immensely aggravated by the giant influx of U.S. dollars and the building of a manufacturing infrastructure catering to overextended Americans. I’ll be really surprised if the property market doesn’t collapse almost as badly as that in, in these pages.

NORTH AMERICA

Canada presents an excellent, and nearby, opportunity for Americans. It’s America light. It has less in the way of financial problems than the U.S. and, with numerous new taxes on the way in the U.S., it will be a lower-tax jurisdiction, as well. But since Canadians (like almost everybody in the world except Americans) aren’t subject to tax if they don’t live in Canada, it’s a mystery to me why anyone with capital doesn’t expatriate. The answer, of course, is that serf mentality, keeping you close to what you know. Canadians suffer from it to a greater degree than Americans; it’s a generally a more socially conservative country. It’s a good time to leave Canada, though, since its property is quite overpriced by almost any standard – especially in Vancouver, BC.

But I’m fond of Canada, as are Asians. They are, for instance, now more than 50% of the British Columbia population.

The U.S., even though it’s perhaps the major epicenter of the Greater Depression, still may be the best place for an immigrant to come to make his fortune. This will change, of course, as the general standard of living in the U.S. drops. As recently as a generation ago, the U.S. would have gotten the nod as the best country for someone to make the most of his personal freedom and financial opportunity; but that’s definitely no longer the case.

OCEANIA

You’ve got to like Australia and New Zealand. Consider them being like Canada, but with good weather. My choice is New Zealand, perhaps the most benign place on the globe, where nothing will hurt you except perhaps a visiting Australian stock promoter.

The problem is that it’s quiet and insular, with as many cattle and 20 times as many sheep as people. But it has some good universities, and I consider Christchurch one of the world’s nicest cities (although I’m in Auckland a couple months of the year, for reasons of convenience and polo). When people ask me what I’m doing in New Zealand, I usually answer, “I came for the kangaroos.”

Australia is (surprisingly) perhaps the most urbanized country in the world, Crocodile Dundee myths notwithstanding. Maybe that’s because in the outback everything will kill you, from the heat to the snakes. Sydney and Melbourne are great cities. This country is uniquely blessed in a lot of ways.

Nothing wrong with it but the government, which seems consistently dominated by people with a peculiarly British lower-middle-class view of the world. Property is in a debt-driven bubble here that will be ugly when it bursts – the country has always imitated, but been a bit behind, the US.

LATIN AMERICA

I’d forget the Caribbean countries. Too insular (obviously), unsophisticated, viciously expensive, and racially charged.

Mexico is heading for trouble, in that almost half the government’s revenue comes from the Cantarell oilfield, which is well into terminal decline. That means that not only will the government be madly scrambling for cash, but the place will shortly go from a major oil exporter (mainly to the US) to a major importer. The drug wars along the border were long overdue and aren’t going away unless drugs are legalized in the US – which isn’t likely to happen for any number of reasons, not least of which is the entrenched bureaucracy in the DEA would never permit it.

In Central America, Nicaragua is cheap. Costa Rica is overbuilt, discovered, and expensive. Guatemala is sophisticated, but I suspect the long guerrilla war – which in some ways was a war between the rich European immigrants and the poor Indian natives – could be a simmering problem. Forget overpopulated El Salvador.

Most interesting in Central America, by far, is Panama; I think you should put it on your list. And Belize, which is demographically more part of the Caribbean.

The problem with Central America is that it just lacks class; the place has always attracted expats who are down on their luck, looking for a place with warm weather, cheap beer, and available young girls.

Forget Venezuela. It’s not just Chavez, it’s that the oil has completely corrupted the society for a long time to come. Colombia is getting much better, especially around Cartagena, which is almost a different country. Ecuador, like Bolivia and Peru, suffers from a divide between the Indians and the immigrants. The eastern part of Bolivia could be nice if the country breaks in two, which is not unlikely.

They say that Brazil has always been the Country of Tomorrow – and always will be. That may be changing. Even the real, their latest currency (they’ve destroyed more currencies than Argentina) has been quite strong. This may be giving them delusions of grandeur – or not. But the place is now too expensive to get my attention.

Chile is the Latin country where everything works; the average Chilean has a higher net worth now than the average American. And Santiago is one of the safest large cities in the world.

Uruguay is basically a quiet, sleepy province of Argentina, but with serious fiscal advantages; it has an excellent future.

Which brings us to Argentina, my personal favorite.

It’s a rich country down on its luck because of decades of destructive government mismanagement. I like it because of Buenos Aires’ class and style. Its low population and wide-open spaces. Its low costs. At this point it’s more European than Europe, but without most of that continent’s risks and aggravations.

And if the government simply stops being actively stupid, the place should regain its previous place as one of the world’s richest countries. If it does, it will present a great speculative opportunity, which is the way I see it. If it doesn’t, it will remain a great place to be. In the meantime, it’s pretty much out of harm’s way, relative to most of the world’s serious problems.

So that’s where I’m placing a few bets personally, since you can’t be everywhere at the same time.

I don’t, incidentally, view expatriation as a panacea of any type. Notwithstanding the fact you don’t ever want to get caught in a place like Germany in the ’30s, or Rwanda in the ’80s, most people’s problems begin in their own heads. A counselor often provides a better solution than a travel agent.

In conclusion, I think time is growing short, as the economy emerges from the eye of the current hurricane. After which it will encounter several more even bigger ones. There you have it. But don’t look at this as idle information. I suggest you allocate some time, call your travel agent, and get going.

Inside the Mind of a Multimillionaire

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Reprinted from International Man with permission.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, that article you emailed about — the one on California cops being able to apply advanced facial recognition technology to everyone in public — is pretty scary. They’re planning the same in Iowa. Shades of Orwell’s 1984. But you’ve said you’re a techno-optimist — are you still?

Doug: Well, I’m an optimist on the future of technology. But the way a lot of it is going to be applied by people in government is a different question. The current developments are quite disturbing, especially the emerging capability of police to use cameras and computers to scan millions and millions of people and identify individuals in seconds. They say it’s to track sex offenders or catch terrorists, but what’s clearly at stake here is the universal monitoring of everyone all the time — just like in 1984. The bad news is that it’s here now, and spreading around the world.

L: Is there good news?

Doug: The good news is that simply using dark glasses, wearing a hat, growing a beard — or cutting one off — may throw the software running these systems off. At least for now, the countermeasures look cheaper than the dangerous technology.

But it could easily get worse. For decades now, they’ve been implanting RFID chips in animals to help their owners track them. There are people who have volunteered to have such chips implanted in themselves or their children, ostensibly to help in case of a kidnapping or similar life-threatening issue. I think it’s just a matter of time, however, before governments get the idea that every citizen should have such a chip implanted — and has to use it for almost everything.

L: It would just be to fight crime, of course. “Honest people should have nothing to hide.” I’m sure there are people in Washington now who would say it’s everyone’s patriotic duty to submit to the government’s brand, like cattle in a rancher’s herd.

Doug: Yes, our patriotic duty. Patriotism is one of the lowest forms of groupthink, and the first refuge of a scoundrel. If someone says it’s for patriotism, then no one dares argue, for fear of being branded a traitor.

Privacy no longer exists — certainly not in North America or Europe. Mobile phones track location. Every time you fly, you show up on government radars. There are cameras everywhere in all major cities. In places like London, there are many thousands of them, watching and recording everything — if a car goes in one side of the city and out the other side faster than it should have been able to, there can be consequences. And that’s not to mention the swarms of drones governments plan to release to watch us from above…

L: Or kill — the military has armed drones, too. It’s as though those in power were actually trying to assemble the component pieces of Skynet — maybe Terminator robots are next.

Doug: That’s true. There’s not much question that, applying Moore’s Law, we’ll have something approaching the Terminator in another 10 years. Unfortunately. Just for instance, look at the BigDog and the Cheetah. These things are going to advance much faster than did aircraft.

But you know I like to look at the bright side of things, and fortunately, the world seems to be headed for a major financial collapse. This may limit the ability — even while it may compound the desire — of bankrupt governments to deploy expensive, high-tech systems, and may well lead to social upheaval of the sort that could overturn states that go the totalitarian route. Maybe a “V” will arise and sabotage and subvert the systems of Orwellian people control.

L: You are an optimist!

Doug: I am, but not in the near term; as I’ve said many times, I see no way our civilization can avoid going through the wringer it’s already caught in. The current trend downhill is not just in motion — it’s rapidly accelerating. These things take on lives of their own and get completely out of control.

The Internet is the best thing that’s happened to communication since Gutenberg. But there’s a complete lack of privacy on the Internet — I’ve heard that every Skype conversation is recorded…

L: I thought Skype encrypted everything?

Doug: I understand that it does, but it’s not military-grade encryption, and if the busybodies record everything, they can concentrate on cracking your privacy later, if they decide you are of interest. They are planning to record everything, and save it permanently — every email, every Facebook post, every tweet. I understand that the giant facility the government is building in Utah is intended to collect all data available on all people everywhere, decipher it, organize and catalog it, and store it permanently for perpetual use by state snoops.

It really is becoming an Orwellian nightmare. There’s no financial privacy, no personal privacy, no privacy of any kind, really.

L: Some authors have argued that the end of privacy is a good thing. Only criminals need darkness in which to hide while they formulate and implement their plans. If we all lived in glass houses, no one would throw stones. If all our quirks and kinks were open to public scrutiny, everyone would be more tolerant of other people’s oddities, because we all have oddities. It’s a sort of “mutually assured destruction” policy vision applied to all individuals in society.

Doug: An interesting possibility. If that happens, the hi-tech future would closely resemble life in a Neolithic tribe, where everyone knew absolutely everything about everyone else. Perhaps it will encourage people to live in enclaves with trusted, like-minded people, so that they can avoid electronic communications to a degree. Perhaps it will provide traction for the Radical Honesty movement put forward by my friend Brad Blanton. After all, if everybody knows everything about you, perhaps you might as well be radically honest. The social implications of total surveillance are huge.

I’ll even agree that the technology would be useful for its stated purposes: more purse-snatchers, murderers, and burglars would probably get caught.

But it’s nave in the extreme to imagine that the people running things would allow the same standards of transparency to apply to themselves. The Soviet Union was supposed to end the power of the tyrants and free the masses, but it just tossed out the tsars and enthroned a new class of overlords who gave Marxist egalitarian excuses for their depredations. Those in power would use universal surveillance to control the masses, and the masses would be utterly powerless to oppose them. I think Orwell’s vision is more accurate than David Brin’s on this question.

But the average Joe doesn’t seem to know or care about the disappearance of privacy. He thinks that because he casts a meaningless vote, he controls the government.

L: Maybe we’re just being paranoid?

Doug: [Chuckles] Well, just because you’re paranoid, that doesn’t prove they aren’t after you. We hear these rumors, like the one about the US Department of Homeland Security having a stockpile of more than two billion rounds of ammunition — that’s about six bullets for every man, woman, and child in the country. Very disturbing, to say the least. And I speak as someone who is a big fan of firearms.

Other than hoping V arrives and turns the tables on the tyrants, I’m not sure that there’s anything that can be done to stop — let alone reverse — this tide in the developed world. Even if V appears, I’m not too optimistic that the average guy or gal will have enough spine to follow him. This is one of the main reasons why I like living in beautiful, peaceful, backward parts of the world, where they don’t have the ability to implement such police-state technology, nor the money to pay for it. I can access the technology I want, but the state is too poor and too disorganized to use it to my disadvantage.

I’m partial to Argentina, as you know, and I’m building a world-class resort and community of freedom-minded people there. In fact, I’m throwing a party there in March, and I invite everyone down to come check it out. The new spa is absolutely five-star.

But it doesn’t have to be Argentina; pick wherever you enjoy living that offers you the most freedom to live as you wish.

L: I love Cafayate too, Doug, but if the strategy is to seek technologically backward countries, will not those countries themselves be unable to resist the will of the richer countries that embrace the power of the latest technologies — and are unafraid to use it aggressively? History shows that when a more technologically advanced civilization meets a less technologically advanced one, it’s very bad news for the more backward one.

Doug: That’s true. Joe Lewis was right when he said, “You can run, but you can’t hide.” On the other hand, staying in the ghetto as ordered until it’s time to get on the cattle cars is an even worse idea. And you’d best not confront them directly. You don’t stand a chance as an individual, if you try to meet government violence with violence of your own.

It’s simply not true that atrocities can’t happen in the US, which is no longer America. The fact that you’re an American living in the US is no advantage, either. Remember that men in uniform are primarily loyal to each other, then to their employers, and scarcely at all to the people they are supposed to serve and protect. They will follow their orders, no matter how despicable those might become. Men who join the military and police often have issues to start with, often including an extra Y chromosome. They’re not your friends or allies, notwithstanding the presence of some stand-up individuals in their ranks.

However, if I’m right about the global crisis coming, the techno-tyrannies of the world will have their hands full at home. Even if they eventually do turn toward subjugation of other countries — in the name of fighting terrorism, or drugs, or some other politically correct excuse, of course — that will take time. At the very least, international living gives people some insulation from the coming turmoil in the developed world and a buffer of time before any spreading waves of violence reach them — time they can use to formulate new strategies.

L: Why don’t more people see this threat? I mean, how much more obvious can it be that there is reason for serious concern?

Doug: I think it’s the high standard of living most still enjoy in the West. I tell people we’re living in an incipient police state and they look at me funny. Where are the military parades with masses of soldiers goose-stepping? Where are the dawn raids by storm troopers? Where are the cattle cars taking the usual suspects off to camps?

We don’t have the massed parades yet, but there are thousands of SWAT raids by both federal agencies and local police every year. No longer does a cop politely knock on your door if there’s a perceived problem. The US has something like 2.3 million people in prisons and jails, and many millions more “in the system.” But the average guy is propagandized into believing whatever the authorities and the media tell him. It reminds me of the movie The Running Man.

As long as people can still go to the mall and get their super-sized fast food, as long as there are lots of stores selling lots of consumer goods on credit, as long as there are sports and sitcoms to watch, life seems good. Far from a police state, people believe they’re protected by all these aggressive and heavily armed minions of the state. Everything seems normal and fine — just as it did to the average German, Russian, and Chinese in recent years.

Plus, there’s the Martin Niemller thing — “First they came for the communists…”

L: On the other hand, any technology can be hacked. Teenagers around the world have cracked security codes and changed the music industry forever. It’s hard to imagine government bureaucrats keeping up with millions of teenage hackers around the globe. Maybe the more those in power think they know everything about everyone, the easier it will be to fool them into leaving you alone, with data camouflage.

Doug: There’s some hope in that. I suspect — or at least fantasize — that all these giant government computer systems around the world have secret back doors, cheat codes, and maybe even self-destruct routines built into them. Computer programmers, on average, tend to be the most libertarian-leaning of all professionals. It defies belief that among all the thousands of programmers governments have hired, they didn’t let in any who didn’t do what I would have. Sadly for impatient people like me, there’s no evidence of this yet.

But I am an optimist, and hope such folks are just laying low and waiting for the right time to come. Because, as soon as anything like WikiLeaks — which we’ve talked about — or any group that fights state power shows up, the stage brings all of its power to bear on crushing it. They devoted huge force toward activists like Anonymous and whistleblowers like Bradley Manning. Better to be long gone before taking any action. We’re dealing with a huge dinosaur in its early death throes; it’s extremely dangerous as it thrashes around. It’s best not to confront it. Instead, hide in the undergrowth until it collapses and its corpse rots.

Until then, or in case it doesn’t happen, it’s best to internationalize, keep your head down, and do whatever you can to avoid the gaze of the eye of Mordor — until the coming financial collapse shuts it down. That’s one of the good things about the collapse; perhaps it will make it economically impractical for the state to keep adding to its surveillance and enforcement abilities. But although that’s possible — and a fond hope — I’m afraid it’s most unlikely. Instead, the state will redouble its expenditures in that area. The prime directive of any organism, including governments, is to survive. With that at stake, we can count on the US government to redouble its focus on surveillance, enforcement, and the like.

L: Grim. Okay… Investment implications?

Doug: As part of this dark tech war against privacy, governments are starting to move toward eliminating cash. I think the natural backlash will be for people to quietly start transacting everyday business in gold and silver coins. All the more reason to buy precious metals, as we’ve advocated many times — but again, that’s for prudence. To speculate on this trend, you can’t beat the explosive upside in the right mining stocks.

L: Until governments make gold bullion illegal to own again and seize it, as FDR did in the 1930s.

Doug: Yes, but given how many US coins from that era and before are still in circulation as collector’s items, I’d have to guess that many Americans of the day had the spine to ignore FDR’s executive order. Today, this possibility makes it imperative that people buying gold internationalize their holdings and secure a meaningful amount of physical gold with cash and no paper trail — this is still perfectly legal today.

L: Very well — words to the wise. Thanks, Doug.

Doug: My pleasure.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: So Doug, the world didn’t end in 2012, so it’s onward into another new year. It’s time to tune in to your guru-vision and tell us what trends you see shaping up and what actions they imply taking.

Doug: Yes, it looks like the Mayans missed this one; perhaps they’ll get another kick at the cat a few millennia from now when it’s once more time to turn the page on their calendar. Better luck next time, Mayan astrologers! But although nothing seems to be happening on that front, it’s appropriate that I’m speaking to you from Punta del Este in Uruguay, which is one of the most happening places in the world at this time of year — North American and European winter, South American summer. I went to a New Year’s Eve party last night with some rather interesting temporary denizens of the place, and of course this was the subject of much conversation. None of them happened to be American, incidentally, and all but one — who is very involved in local politics — is extremely bearish on 2013.

L: Do you mean bearish on the global economy? Bearish on geopolitics? Or bearish on civilization itself?

Doug: All of the above. A “Mad Max” type outcome is definitely a possibility, as much as I hate to anticipate something really serious — as opposed to just a financial/economic meltdown. But the West has a huge amount of accumulated capital that it can still dissipate — a task the politicians are working on diligently. I expect the US will get a VAT, and/or an asset tax. Perhaps they’ll take a page from Cristina Kirchner’s book and nationalize everyone’s pension — for the good of the government, as well as the safety of the pensioners, of course. In the near term, we’re looking at increased tensions of every kind around the globe, and greater market volatility.

By the way, we enjoyed a professional-grade fireworks display put on by our host in his back yard. It struck me that I was witnessing exactly the kind of freedom that makes me like living down here so much, and makes me dislike returning to the US. In the US, you’d have to be a city to put on that kind of fireworks show, or go through God-know-what sort of licensing to get the explosives involved. The smell of gunpowder at midnight is most invigorating, especially mixed with the smoke of Cuban cigars.

I’m not saying Uruguay is totally free, especially not economically — the president is actually a communist. But he’s a surprisingly mellow communist, and not at all corrupt. Most unusual, actually. He lives on a small farm and drives an old car. Of course the things he’s doing — raising welfare benefits, eliminating financial privacy, initiating an income tax, and letting petty thieves run wild, among many other things — are making the place much less desirable to hang out.

L: So, aside from economically stupid laws, they let people do pretty much as they will with their personal lives?

Doug: That’s the good news. It’s a quiet, unambitious, backward, bureaucratic little country. But they still pretty much leave you alone. And strange things can happen. At the party I mentioned, a friend who mostly lives in Argentina told me about what was in Sunday’s El Pais, the national paper. It turns out that a top local politician — most of whom are socialists or ex-communists — just discovered Frederic Bastiat’s book, The Law. He was so taken with the free-market ideas in it, he had the entirety of the book published as an insert in the paper, at his own expense. I don’t know how many people will actually read it, and I doubt it will have much effect, but as a possible straw in the wind, it’s pretty interesting. Shocking, actually.

L: A hundred years ago you might have seen a copy of The Communist Manifesto, so perhaps the pendulum will swing back in our direction in the next hundred years. A good reminder that it’s important to internationalize both one’s assets and one’s lifestyle. It’s hard to predict what will happen in any given country, although the trend is going from bad to worse just about everywhere.

Doug: Yes; as the Greater Depression deepens, governments all around the world are going to get increasingly desperate, take increasingly stupid measures, and the people on the bottom rungs of the ladder — the very ones the governments will claim to be helping — are going to get pushed off in greater and greater numbers. That’s going to make for more social unrest, vandalism, and violence all around the world. It’s wise to find a crib away from likely epicenters of turmoil. You still have to look at the world objectively, and prepare to be, or move to wherever there’s the least trouble on the ground, among the places you actually enjoy being in. This is especially so for Europeans and their cousins in the US, where things are deteriorating fast.

L: So, what are your own reasons for bearishness?

Doug: I’m exceptionally bearish because we’ve been in the eye of this hurricane for going on three years. It seems to me that the bigger the eye of the storm, the bigger the storm must be. We are definitely heading for the trailing side of the hurricane soon. And it will be vastly bigger, and last much longer, and be much different than the leading edge.

I can’t emphasize enough that all these trillions of currency units that governments all around the world are printing up by the truckload…

L: Or helicopter load.

Doug: [Chuckles] Yes, well, bank-wire load, as it were, these days. They no longer need to bother with the printing press; they can just create more out of nothing with the stroke of a key. All that cash in the US, the EU, Japan, and elsewhere is going to come out of the banks where it’s sitting at some point, and the inflation that’s been masked so far will kick into a much higher gear.

Take Uruguay, for instance, which is actually a very expensive country — to go out to dinner here in Punta del Este costs considerably more than in the US. When I first came here, things were very cheap. I’ve seen the same thing in New Zealand, Hong Kong, Spain, and other markets in which I’ve made a lot of money in real estate, based on the same trend. This is happening all over the world. The US has been so successful at exporting its inflation — abusing the reserve currency status of the US dollar — that it’s become a relatively cheap place to live, at least among the more developed nations.

The local symptom of this global sickness is that here in Punta, very expensive condominium buildings are popping up all along the coast, spreading faster than dandelions in springtime. Nobody lives in most of them, though some are occupied for a month or two in the summer, and yet, year-round you have to pay maintenance and security costs of at least $2,000, and sometimes $3,000 or $4,000 per month. The only reason people would pay that kind of money to maintain empty condos, as far as I can see, is to hide money.

L: Why do they need to hide it?

Doug: Each will have his own reasons. Sadly, Uruguay is no longer the Switzerland of South America it once was. There was once no income tax here and financial privacy — which no longer exists anywhere. A government run by ex-communists destroyed all that. That was shooting themselves in the foot, of course. But real property rights are still pretty strong here, so people are building all these condos as a place to stash money in the form of bricks and mortar. Unfortunately, I don’t think it will work out for them, because as the global Greater Depression deepens, people are going to have to start liquidating them, and the local market is going to crash. The monthly maintenance costs plus a need to retrieve the invested capital is going to result in a wave of selling. A lot of people are going to get burned. Not just here — almost everywhere. As my friend Richard Russell has said, in a depression everybody loses. The winner is the one who loses the least.

L: Maybe you can let us know when that happens — sounds like it will be a great contrarian buying opportunity at that time.

Doug: Sure. Most people will be too nervous to act, but I keep an eye on several real-estate markets for just that sort of contrarian opportunity. Meanwhile, I may just head for the exits now myself, not wanting to be unable to liquidate the real estate I’ve got in Uruguay later.

At any rate, I view this developing situation as an example of what’s brewing in many markets all around the world.

L: Can you give us more specifics?

Doug: I think the most important thing to bear in mind is that we are approaching the absolute peak of the bond bubble, which has gotten vastly bigger than I ever imagined it could. Interest rates in the developed economies around the world are two percent, one percent, or even negative. This is fueling a bond bubble of truly catastrophic proportions. When it bursts, it will be an order of magnitude worse than the tech stock-market crash of 2001 or the real-estate bubble that burst in 2008.

When this one goes, it won’t just wipe out the people who thought they were being prudent savers. Because it’s a financial market, it will also hit stocks and real estate again, at least in Europe and the US. Here in Uruguay and places like Argentina, real estate is largely a pure cash market. But in the so-called more developed economies, real estate still floats on a sea of debt.

It amazes me that people in the US are elated because the real-estate market is supposed to be up 4.3%, as of the latest figures. Well, of course it is; you can borrow money for effectively zero, given where interest rates and inflation are.

L: Is that a sign of the bulging piles of money banks have been sitting starting to leak out into the economy?

Doug: Looks that way. And when interest rates start rising steeply, as they’ll have to do once inflation sets in, rising to double digits as they were in the 1980s, it will crush real estate further and deeper than we’ve seen so far. It will do so all around the world, but the US will be hardest hit, I think.

There’s no question in my mind: the bond bubble is by far the largest distortion we’re facing in the economy today. Bonds are incredibly dangerous, insanely risky speculations today. They’re reward-free risk. Bond owners are facing huge default risk, huge interest rate risk, and huge inflation risk. But nobody seems to see it or talk about it.

L: I understand. But honestly, Doug, you’ve been saying that for a while. What makes you think this will be the year the bond balloon finds the pin it’s been searching for?

Doug: You’re right — that particular bubble should have found its pin two or three years ago. I admit I thought it’d pop last year. It’s like watching a clown over-inflate a balloon; the longer he inflates it, the more you wince, because you know it’s going to blow up in his face. And the longer it takes, the closer the inevitable comes to being imminent — and the bigger the explosion becomes.

It would have been so much better if the idiots who run the US government had allowed the market to fully liquidate past mistakes and distortions back in 2008. If they’d let all the big banks, brokers, hedge funds, and corporate welfare junkies fail, it would have been very unpleasant, but the country could have survived it, and come out stronger and with a healthier balance sheet as a result. The real wealth — buildings, farms, technologies, the skills of workers — would still be there. And the financial elite would have been wiped out — which would have been a good thing. But instead, they’ve ensured that the rich have gotten even richer, guaranteed by the government. They tried to drown a fire with a flood of gasoline, and it’s going to burn the country down.

You know the old saw about not predicting both an event and its timing, but I don’t see how this thing can go beyond 2013.

L: Well, you were right about the politicians in Washington preferring to compromise than to allow the fiscal cliff to hit the fan, so maybe you’re right about this one too.

So, we should beware of the bond bubble bursting. Beware of real estate getting crushed when interest rates go up. What about stocks? Wouldn’t a lot of money fleeing falling bonds go into the stock market?

Doug: Yes, a lot would, but a lot of companies would be failing as well, so I’m ambivalent about equities in general. Earnings could collapse. Companies with many millions — or even billions — in cash on their balance sheets could still get hit fast and furious by high inflation. P/E ratios are not low these days; Wall Street is not a bargain. So I’m generally neutral to bearish and therefore out of the stock market. That’s the best policy when you can make an equally compelling case for something going up or down.

L: That’s exactly how I see copper and the other base metals these days. But gold is another matter.

Doug: Of course. And even though gold has hit new highs in nominal dollar prices, gold has still not matched its previous peak in inflation-adjusted dollars. Really, in practical terms, nobody knows or cares about gold yet. The average guy doesn’t even know it exists — and the average guy on Wall Street thinks it’s only good for paperweights, of which the world already has a surplus.

L: Gold is cheap at $1,670?

Doug: No. But it’s got to go higher. The fact is that precious metals are the only financial assets that are not simultaneously somebody else’s liability. The huge counterparty liability in today’s markets has yet to make itself evident, but it will — it’s in the hundreds of trillions. That’s what the derivatives that Buffett has been talking about for a decade are all about.

That makes the best single speculation I can think of today gold and silver mining stocks. For the last two years, gold stocks have been getting cheaper, even though gold has continued rising, year-on-year. That makes these stocks a better deal than they’ve been for many years.

And it’s such a tiny little market, the upside when the larger world catches on will be breathtaking. My sense, based on watching these markets for 40 years, is that we’re coming up on an explosion of resource stock prices of historic proportions. The kind of stocks you and Jeff cover are absolutely the place to be.

[Ed. Note: Doug is talking about the BIG GOLD and Casey International Speculator portfolios.]

L: The data support you on that. If you adjust for inflation by looking at the price of gold stocks in terms of gold, they are selling for less than they have for years — almost as low as during the crash of 2008, or even back in 2001, before this bull cycle for metals got going.

Doug: They are now extremely high-potential and relatively low-risk speculations — despite mining being a crappy, 19th-century choo-choo-train industry.

L: [Laughs] I used that phrase of yours in the International Speculator coming out Thursday and make the same point.

Doug: You provide a shopping list?

L: Of course. Jeff’s got one in BG too.

Doug: Good. This may be the last chance for people late to this bull market to get in at prices similar to what they could have paid before it got going. And as a matter of fact, gold was cheaper in real terms back in 2001 than it was at $35 per ounce back in 1971. People seem to have forgotten that these are the most volatile stocks on the planet. There have been a half-dozen markets I’ve personally seen over the years where junior miners and explorers went up 1,000% as a group.

Perversely, people are afraid to buy these stocks now –

L: The very reason they should; you have to be a contrarian to buy low and sell high.

Doug: — at precisely the time when they should. I promise you, when the Mania Phase of this gold market kicks in, everyone will be piling in, and it will drive share prices not just through the roof, but to the moon. Then they’ll collapse 95% later, of course, the way they always do. But now is the time to buy them. However, since there are several thousand of them, it’s critical to be highly selective.

L: Well, if speculating when others dare not were easy, everyone would do it, and there would be no speculative opportunity, so of course I agree.

But back to 2013 — if you don’t think the global economy will collapse this year, can you say when?

Doug: As I said last time, 2013 is going to be ugly, but it will just be a warmup for 2014. Back at the New Year’s party I went to here in Punta del Este, I asked my best friend down here the same question. He’s very rich and very shrewd. He’s of the opinion that the world will see catastrophic events of historic proportions — not just one, but several — over the next ten years.

I think he’s right, and that brings us back to another point we started with: I cannot stress strongly enough that anyone who hopes to survive financially, and perhaps even physically, needs to internationalize.

L: There’s the Mr. Cheerful we all know and love.

Doug: Hey, I’m looking at the bright side…

L: Okay then. Thanks, and we’ll talk again next week — and soon in person, in Vancouver.

If you’ve never heard Doug Casey speak in person, now’s your chance — he’ll join a star-studded cast of natural resource and financial experts who will be presenting at the Vancouver Resource Investment Conference January 20-21 — it’s the world’s largest investor-focused, resource-exploration conference. Doug will also be signing copies of his new book, Totally Incorrect. Other Casey Research presenters are Chief Mining and Investment Strategist Louis James; Chief Energy Investment Strategist Marin Katusa; Senior Precious Metals Analyst Jeff Clark; and CEO Olivier Garret.

On the evening of January 21, there will be a VIP event for Casey’s Club members and our NextTen and Explorer’s League honorees (details to come).

This is one event you don’t want to miss — you’re guaranteed to walk away with actionable investment strategies that will put you in perfect position to profit from the coming boom in natural resources. Click here for registration information.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: So Doug, the talk of the day is the horrific mass murder of little children in Connecticut last week. I’m sure you join me in extending sympathies to the families of the victims — I hope they can survive being survivors.

But we’ve already talked about such attacks, and this event doesn’t really change the path we’re on; it only accelerates the disarmament of more future victims. It’s another sign of the accelerating decay of US society, which we’ve talked about at length.

Doug: Yes, I suppose our readers could probably predict most of what we’d say about the murders in Connecticut. Not much to add, but I predict that they’ll find that the 20-year-old killer, Lanza, was on Ritalin, Zoloft, Prozac, or some similar psychiatric drug. Most mass murders are proven to have been on these drugs, and the medical records are sealed for many other killers, so we can’t find out. As usual, the chattering classes and their political buddies will focus on the tools used by the killer, rather than on what made him a killer in the first place. It’s that and the ethically degraded state of society that I blame — not the availability of some guns, knives, rocks, or whatever.

L: The killer at the Colorado movie theater, the Columbine killers… there certainly seems to be a pattern of young men on prescribed medications turning into mass murderers.

Doug: It was also true of many of the postal workers who gave rise to the phrase “going postal.” It appears a substantial part of the US is on some type of psych meds. This massacre is so extreme in its emotional power, pandering politicians will absolutely have to “do something.” That means catering to some of people’s basest emotions: fear and anger. And giving them what they think they want: vengeance and the appearance of safety. They’ll call it “justice” and “reasonable” gun control, but it will be neither. And it won’t stop the violence; it will get worse because of the deterioration of US society. New laws will just give the average American more of a false sense of security, and make him even more of a serf.

But that’s par for the course, these days. As you say, we’ve already covered this ground. Anyway, you can’t convince people of a viewpoint regarding this subject. What people believe is a question of their psychology, not the intellectual merits of the argument. Let’s talk about something else that’s looming, and that people can do something about: the so-called “fiscal cliff.”

L: There’s something people can do about that? You can’t be thinking that writing a letter to whatever slimy creature in Congress claims to represent us will do any good…

Doug: Of course not. But the fiscal cliff will have economic consequences. Those who see them coming can and should profit from them.

L: Okay; let’s start with a definition, as usual. What is the fiscal cliff anyway?

Doug: Well, of course, fiscal cliff is really a misnomer. Part of it’s good, and part is bad for the economy. The term refers to the simultaneous expiration of the Bush tax cuts and automatic spending cuts mandated by the Budget Control Act of 2011 that go into effect next year. Many pundits say this will cause the US to go into a recession. Well, we’re already in the Greater Depression. But here’s what would happen. The higher taxes would suck more capital out of the productive economy and divert it to the government — that’s very bad. And lower government spending would help unravel distortions and misallocations of capital that spending was causing — which is good. In the process, some people would have to find new jobs, and some businesses dealing with government handouts would go bust. Painful, but necessary, and we need to see lots more of both.

However, it’s not the US economy that’s facing this alleged cliff; it’s the US government. It just goes to show how hopeless the situation is, when people equate the government with the economy. They’re two entirely different things. The only way to revitalize the US economy is a vast reduction in taxes and a vast reduction in government spending. Instead, these idiots are arguing over how much to raise taxes and how little they can cut spending. Of course it will be a disaster.

L: Fair enough, but raising taxes and cutting spending is exactly the kind of “austerity” the Germans are saying the rest of Europe should embrace — why is that seen as a good thing over there but a looming disaster over here?

Doug: It is curious, isn’t it? The Europeans are hooked on government spending — look at all the riots and protests. That’s why their grandchildren will all be houseboys and maids for the Chinese. The difference is just that the Europeans know they have their backs against a debt wall and have no choice, whereas in the US, people still imagine they can borrow and spend their way into prosperity. Americans stupidly think that because they could get away with acting like the profligate grasshopper 50 years ago, they can still do so today.

L: But Congress passed its budget law back in 2011 to force themselves to do what was seen as necessary. They didn’t do what was necessary voluntarily in the time they gave themselves, so now are being forced to do what they themselves saw as necessary back when they passed the law. How is it that politicians of both parties could agree such a measure was necessary less than two years ago, and now say it’s an impending disaster?

Doug: How is it they can say any of the insane things they do? The fact of the matter is that Congresscritters back in 2011 just wanted to kick the can down the road and keep the gravy train rolling. They didn’t think they would have a new solution today — they only wanted to escape certain doom then… and hoped magic would happen. They have no solution, not then, not now. They’ll just try to put off judgment day once again. They’ll do it by selling hundreds of billions more in debt to the Federal Reserve — they’ll have to because the Chinese and Japanese aren’t buying anymore. They want to get rid of what they have.

L: So, you think they will find a compromise and enact new legislation before the end-of-the-year deadline? Are you having a “guru moment?”

Doug: Yes. 2013 is likely to be a nasty year. I hate to be a permabear, but there’s no alternative. The two parties that run the US claim to be different, but it’s more accurate to see them as the tax-and-spend party and the tax-and-spend-more party. One thing they both agree on — and they’re dead wrong, but they agree — is that the economy rests on confidence, and that if they can only restore confidence, the economy will grow.

L: As if the coyote could keep running on air, as long as he didn’t look down?

Doug: Exactly. The economy would be just fine if the government disappeared. The problem is the US dollar, which has no intrinsic value and is backed by nothing but confidence. The dollar is a complete fiat currency, and its accelerating debasement has the potential to destroy the economy. The economy itself is the aggregate of all the people, businesses, inventory, manufacturing plants, mines, farms, transportation networks, research facilities, and accumulated capital of all the participants.

The economy grows when people produce more than they consume, and save the difference. They then have capital to put into new ventures, create new jobs, develop new technologies, and so forth. No government is needed to make this happen — rather the opposite.

But the average American, who is completely ignorant of economics, thinks the government is a magic cornucopia. As proof of that statement, I offer the fact that Obama is president, Romney was offered as an alternative, and dingbats like Boehner, Pelosi, and Ried control the Congress.

L: So, what does get the economy going?

Doug: People can’t just sit at home because they lack confidence; they’d starve. They have to work, create, build, invest — deploy their capital, whether that be financial, intellectual, or the simple time they can sell to employers. The alternative is dissipation and eventually death.

If the economy isn’t growing, it’s not because the government isn’t spending enough to “stimulate” it. Government spending comes from: taxation, which is a burden on the economy; borrowing, which is a future burden on the economy; or printing money — inflation — which is an especially dishonest, hidden form of taxation makes people think they’re richer while they’re being impoverished.

No. If the economy isn’t growing, it’s because the government has burdened it with heavy taxation, smothered it with excessive regulation, distorted it with false information (the Fed’s manipulation of interest rates), and replaced real money — gold — with paper.

L: What you’ve just explained in a few simple paragraphs was such a great mystery to me back in school. I remember being taught that unrestrained capitalism caused the Great Depression, and that without government to smooth out the “business cycle,” the economy would grow too fast and investors would go too far, creating a crash, destroying confidence, and leading to recession and depression.

What I didn’t get then was how a recession or depression could ever end. If it was all about confidence, and confidence was destroyed, no one in their right mind would risk spending anything, building anything, employing anyone, etc., until they saw signs of recovery — but with everyone waiting for those signs, they would never come.

I guess many people are still stuck in this economic error. That’s why so many think you need a government to stimulate growth — to trick people, essentially, into seeing clear signs of recovery, and therefore unleashing a real recovery.

Doug: Perhaps so — but stimulated, or let’s say “simulated” — signs of recovery aren’t needed if people have savings, accumulated capital, that can be deployed.

Instead, today they mostly have debt. Government stimulation won’t work if capital doesn’t exist or is punished for being used. If you’ve destroyed people’s jobs, taxed them more for investing wisely, piled on so many regulations that you can’t sell lemonade without decades of permitting and clinical trials, all the stimulus in the world won’t create a vibrant economy.

L: You won’t get an argument from me — and in this context it makes sense for the EU to hit the wall before the US; it has a lot more regulations, higher taxation, and more omnipresent government over there.

But back to the US fiscal cliff: if it does indeed represent a sort of forced austerity for the US government, might that not be at least partially a good thing? If the government is forced to live more within its means, maybe it won’t be able to do as much harm?

Doug: Look, the tax increases they’re proposing are significant and immediate; they’re hoping to increase tax revenue by almost 20% in 2013. Well, they’ll greatly increase tax rates anyway — for instance, capital gains are set to go from 15% to 20%, and the top income tax rate to 39.6%, including dividend income. But the spending cuts are modest, and mostly for the future — only a 0.25% decrease in actual outlays by the government in 2013. That’s a rounding error. In short, it’ll be harder to earn an honest living and there will be less incentive to invest wisely, but bloated government will continue running the printing presses as fast as they’ll go. I think we’ll see at least a trillion dollar deficit next year. Maybe more like $1.5 trillion.

The US Government is on tilt.

L: We’re stuck with QE4-ever?

Doug: They have no alternative — unless they default on the national debt, abolish Social Security, Medicare, Medicaid, and cut back the military about 90%. Now they’ve announced $40 billion more a month, on top of the $45 billion a month they announced just before the election — and it’s not just the US. The new Japanese government says it has a mandate to print and spend unlimited amounts, whatever it takes to stimulate its economy. The Europeans are at it too.

L: So, why do you suppose gold actually sold off when they announced the new QE last week? One would expect the announcement of such massive new money-printing to send gold upward.

Doug: Actually, the initial reaction on the day the Fed made its announcement was a spike in the gold price, but that lasted only minutes. It’s hard to say exactly why it didn’t stay up; and guru jokes aside, I truly have no crystal ball. Nor does anybody else. I’d guess that some investors have been suckered by the recent appearance of improvement in the US employment and housing markets. Most people still don’t even know gold exists — they’re idiotically buying long bonds for a couple percent of yield.

Be that as it may, the one thing we know for sure is that the world is being flooded with new funny money. Economic contraction is masking the effect, and that money is just sitting in banks now, but you can’t print trillions and trillions of new currency units indefinitely without inflation showing up. Timing is always the hard part — confusing what’s inevitable with what’s imminent — but this is as sure a thing as I can see in today’s market.

L: So, how do investors best speculate on that?

Doug: Well, first, there are the things to avoid. Government bonds are my leading example of this — a triple threat to your wealth, as we’ve said before. They’re the world’s biggest bubble. You also have to understand that as governments get more desperate, they will become more dangerous, so you have to diversify your assets and your lifestyle internationally. That’s not new either, but I know from past experience that few people will take action; and it’s a shame, because while you may survive your government treating you like a milk cow, things change considerably when it decides to treat you like a beef cow.

L: Is there an anti-government bond play you would recommend? Maybe an ETF that goes up when bonds go down?

Doug: I don’t recommend one at present, because there’s no telling exactly when the tide with shift; and until it does, investors in such vehicles run the risk of losing their patience and giving up too early. I think there will be time to invest in that when the tide shifts, but has not yet gained momentum — then shorting government bonds will be the trade of the decade.

L: What else — gold, I assume?

Doug: Absolutely. All of this currency creation is going to ignite a real bubble in gold — and silver. Gold is certainly not cheap compared to its lows a decade ago, but it is the only safe haven we have against the destruction of the US dollar and other paper money. Remember, I don’t buy gold to speculate on its price rising, I do it for prudence.

L: For speculation, you buy the gold stocks.

Doug: Exactly. And we happen to be in a buyer’s market. Even though gold has traded roughly sideways for the past year, market sentiment and the gold sector has turned so bearish, most of the gold stocks are selling for much less than they were a year ago. They’re a fantastic, high-potential speculation.

L: I’m reminded of the old saying about being careful what you wish for. It wasn’t so long ago that you were complaining about the metaphysical impossibility of everything being expensive at the same time…

Doug: Yes, well, those late to the gold table can be thankful for the spectacular opportunities there are to buy good, profitable companies today at much more attractive prices than last year — such as the ones we recommend in our BIG GOLD newsletter, and earlier-stage companies with the potential to return extraordinary near-term gains such as you recommend in the International Speculator.

L: Thanks for the plug.

Doug: [Chuckles] My pleasure.

L: Anything else?

Doug: 2013 is going to be ugly. But just a warmup for 2014.

L: Ouch. Okay then, until next week.

Doug: Next week.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, I’ve heard from several readers that they are looking forward to our talk about books — books in addition to those on Speculative Fiction which we’ve already discussed. So, have you perused your library and are you ready? Or did you decide not to bother, since the world will end the day our next conversation is to be published?

Doug: Ah, the Mayan Calendar. Nobody except for a few highly specialized archaeologists would know anything about it if it weren’t for books. But the people who take it seriously don’t read books. They almost certainly read about it only in those tabloids you buy at grocery checkout stands — or perhaps from watching TV, where the presenter is encapsulating a tabloid article. Further proof that it’s not what people know that’s the problem, it’s what they think they know that just ain’t so. Anyway, the world is supposed to end on the winter solstice, not December 12, the way I heard it. I’ll be celebrating the winter solstice — actually, the summer solstice down here in Argentina — while that particular class of morons is awaiting the end of the world.

As for books, we can talk about that, but I have to say, much to my shame, that I hardly read books anymore — not since I got a computer. I feel terrible about this — even guilty.

L: I didn’t think you were capable of feeling guilty. Regret, perhaps, but guilt seems most un-Doug-like.

Doug: Well, my dictionary says guilt is a feeling of responsibility or remorse for some offense or wrong, whether real or imagined. And not using my time in the best way possible to gain more understanding of the way the world works does feel like a wrong against myself. So, although I like to avoid acts of either commission or omission that will make me feel guilty, I think I may stand somewhat guilty here.

But there are significant mitigating circumstances. I’ve gone to reading articles — anything you want is available on the Internet. Although reading books is part of my mental self-image, what I wind up reading most of the time these days is a wide variety of articles online. I read articles about books mostly from dreadfully left-wing magazines like the New York Review of Books, The New Yorker, The Atlantic, and such. But by the time you finish all these articles, you don’t have time to actually sit down and read a book. Talk about perverse… although, at this moment on my bed stand, there’s a book on the Dowager Empress, and I’m reading that for about a half-hour every night.

L: I can see why you might feel distraught; it’s like going to class after reading the Cliff’s Notes instead of the assigned classics. You might retain the gist, no one might even be able to tell, but you would know, and still feel like you’re cheating. On the other paw, you get the gist of many more books this way, and feed that guru-machine in your head with more ideas. That can’t be all bad. And the fact that you make this choice says you’re getting greater value this way — or you wouldn’t do it.

I also don't read as much as I used to, but it’s not because I read magazine articles about books. It’s because I can get WiFi on airplanes these days and so many other places, that I can now work during times that I was previously forced to pull out a book in order to avoid boredom. I used to read several books a week, and now I’m lucky to get through one a month.

But it’s not just work; you can play chess online with your wife while you’re in the tub and she’s out in the garden. We’ve got instant access, not just to books, movies, and games, but to other people, 24/7. It’s not all crap, as some critics like to say; it’s not even all entertainment. A lot of it is useful, valuable, and even profitable. Still, the quiet times that we used to use to read simply don’t exist anymore — not unless we make a real, conscious effort to carve such time out of our busy days.

Doug: You’re absolutely correct about that. Pareto’s Law operates online, as everywhere: 80% of everything is crap, and the other 20% breaks down ad infinitum with a repetition of the 80-20 rule. As with so many other things, it means that you have to have self-discipline if you want to control the shape of your future self. Anyone can grow in a reliable and coherent way, as opposed to ending up an accidental sum of the random things that happen to them, but it’s hard work. So few people bother.

On the whole, these new connectivity technologies are a mixed bag; the plusses are obvious, but the minuses are serious. I’m not on Twitter, and though I do have a Facebook account, I never ever use it. Generally, these things consume huge amounts of time, usually only to transmit trivial information; it just serves to clutter your mind. The Kindle revolution, on the other hand, offers huge advantages — you can read almost any book you want, anywhere, and never have to remember to take the right one with you. David Galland is a big Kindle fan. But I still don’t cotton to Kindles, as much as I appreciate the concept. Maybe I’m just a dinosaur, but I prefer reading words printed on paper.

L: Well, I’m younger than both of you, and I still prefer physical books. I own thousands of them, lining my shelves, gathering dust … but I just like them. I like the way it feels to hold one in my hands. I like the way they smell. I like the sound and feel of turning a page, all alone, deep in the night.

Doug: Me too. And the books in my library won’t disappear when the power goes out. Electronic forms of data storage seem like an unstable way to try to ensure the survival of civilization in the face of EMPs and cyberweapons that target data itself. This is one reason why, as we finish up building the infrastructure at La Estancia de Cafayate, we’re putting in a significant library of physical books. But it’s also for the same reasons you give; I just want to sit in a comfortable leather chair, smoking a fine Cuban cigar, sipping my wine, and reading a great book in a great library. Just as I insisted we put in a world-class gymnasium and a world-class health spa, I insisted that we’d have a large and well-selected library.

L: Which brings us to the heart of the question: what does Doug Casey’s ideal library look like? I’m sure there’ll be a humidor…

Doug: No question about that! I probably own well over 5,000 books. Enough that there isn’t a snowball’s chance I’ll ever get to read but a fraction of them.

L: [Chuckles] And maybe over in the corner, a chair by an outlet for David’s Kindle. But the real question is: what would the selection of books look like? I guess you’d start with the classics, and maybe the first book on the list would be Edward Gibbon’s History of the Decline and Fall of the Roman Empire.

Doug: Yes, definitely. Gibbon’s book is not only fantastic literature, a great read, and very educational, but it’s also a laugh riot; the man had a real sense of humor. Who says ancient history has to be dry? It’s a perfect example of my favorite sort of reading — despite our conversation on speculative fiction, I actually prefer nonfiction to fiction. Good fantasies can be thought-provoking — my favorite certainly being The Lord of the Rings, which I read straight through in one weekend because I simply couldn’t put it down — but understanding what real people have done and are doing in the real world in more valuable and interesting to me. This is one reason why I’m such an avid student of Roman history. But Greek and medieval history too.

L: So what else, besides Gibbon?

Doug: Well, Gibbon was not an ancient himself, but I’d make sure we have annotated volumes of all the ancients we can get hold of, from Homer to Aristotle to Cato the Younger. Every educated person should read the Iliad and Odyssey. They’re rather long, about 15,000 and 12,000 lines respectively, but I find it quite… cosmic… to relate to minds from roughly 2,700 years in the past. And everyone should read Caesar’s De Bello Gallico. It’s simple enough that second-year Latin students read it in the original. And there are many books that have come out in recent years that take advantage of archaeological discoveries to better reconstruct the classical era.

L: I confess I have not read many of those; I think I’ll have to expand my own library.

Doug: Fewer things count as money more well spent. But I don’t read only ancient literature; more recent classics are an important cornerstone in the foundation of a good education. I’d start with a complete set of the works of Shakespeare and move forward from there. It sometimes seems to me you can almost absorb things from a book by osmosis, without even reading it — just by handling the volume.

L: I have an enormous and abiding respect for The Bard — it never ceases to amaze me how he could see human nature so clearly, write about it so powerfully, and do it all in rhyme. But I confess I’ve always found it hard work to actually sit down and read Shakespeare. And Chaucer I couldn’t read at all. I also tried reading Cervantes in the original Spanish, Don Quixote being such a hero of mine, but found it quite impenetrable.

Doug: Well, different strokes for different folks. I know you’re fluent — my Spanish is just a grade above what’s needed to deal with waiters and taxi drivers. But that’s a good point about classic works in other languages and translations into English… including Chaucer, which is slow going in the original. We’d want them all.

We’ll have a history section with all the greats, like Gibbon. Speaking of the value of books, I was just looking at compendium of quotes by Gibbon — his master work was originally published in eight fat volumes — and came across this: “The Germans, in the age of Tacitus, were unacquainted with the use of letters; and the use of letters is the principal circumstance that distinguishes a civilized people from a herd of savages incapable of knowledge or reflection. Without that artificial help, the human memory soon dissipates or corrupts the ideas entrusted to her charge; and the nobler faculties of the mind, no longer supplied with models or with materials, gradually forget their powers; the judgment becomes feeble and lethargic, the imagination languid or irregular.”

He was, incidentally, notwithstanding their illiteracy, a big fan of the Germans of that era. I suspect, however, that he’d compare today’s Germans to the Romans of the late empire — not nearly as admirable as their ancestors. Giants walked the earth in those days… but people have always believed that about the past.

L: Okay… I guess there’d be a pre-history section as well, though I’ve no idea what the most authoritative and respected works of paleoanthropology would be.

Doug: Yes, but I’m at a loss to name names. My library is scattered around the world — in Aspen, Auckland, and Buenos Aires — and I'm currently in a hotel room in Sao Paulo, which I’d describe as a super-sized version of LA, but without the charm. Hmmm… a Kindle would actually look pretty good at the moment.

But that brings us to the science section — or sections. There will be a comprehensive set of the best books on all the hard sciences, from basics to advanced study material, and cutting=edge research, as well as popular treatments like Erik Drexler’s seminal book on nanotechnology and Richard Dawkins’ books on genetics and reason. There are hundreds in that class.

L: Subscriptions to Scientific American and peer-reviewed journals?

Doug: Maybe some, but magazines pile up pretty quickly — that might be the sort of thing best left for the one computer we will allow in the corner. We’ll need one so people can browse a complete selection of The Teaching Company’s offerings. They are fantastic. I wish I’d bought shares in that company when I first discovered it… even though it’s private and has no need for capital, I’m sure. They’ve found the very best professors in the world in their respective subjects, and recorded command performances of their best lectures. These courses are so good, they by themselves are a major reason why going to college these days is such a waste of money. After all, the point of going to college is supposed to be to learn something, not just get a piece of paper that says you sat — or slept — through a bunch of typically second-rate classes. Being able to take these courses on your own, whenever you’re wide awake and rested, sitting in a perfect environment that suits your own needs, is just about the best way to educate yourself there is today.

L: You’re going to have a computer in your library? I think I’m shocked…

Doug: Well, there are such things as earphones. And we’ll have a wide selection of Teaching Company courses in the media theater for viewing or listening, along with hundreds of well-selected movies. A really good movie can actually outdo the book it’s scripted from. A lot of data is subtly presented on the silver screen. It’s quite true that one picture can be worth a thousand words. Movies are underrated as a means of transmitting culture.

L: Well, I’m glad the media theater won’t be in the library. Even with headphones, some people turn those things up so loud, you can hear their brains frying halfway down a packed 747. As for the one computer you allow in the library, maybe we could put it under one of those “cones of silence” like in the old Get Smart TV show.

Anyway, what about the so-called social sciences? Do you include only Austrian economists, maybe some Chicago School, and others you agree with? Or do you include works of the enemy, so you can better know him? Where others might hide sexually explicit material in a back room, does your “adult” section have Keynes and Marx?

Doug: We’ll have them all. It’s very dangerous to oppose something reflexively, if you’re not personally familiar with it. That’s one reason I subscribe to the magazines I mentioned earlier. It may entertain many people to actually try to read Das Kapital and see what all the fuss is about. Although I’ve only met one person who even claims to have made it through all three volumes…

L: You’re one up on me, then; I’ve never met such a person. Most seem content to point at it on the shelf, and assert that all is proven. Hm. We’re focusing on nonfiction, but your library will have all our favorite Speculative Fiction as well, won’t it?

Doug: Absolutely. What I’m really after, primarily, is to create a comfortable place where I can relax with a good book on any subject that might interest a renaissance man. Or maybe play a game of chess, or go, to mellow out with a friend. I may not solve any of the cosmic problems that have puzzled thinkers for thousands of years, but I’ll have fun passing the time until technology and magic become indistinguishable. Life consists, after all, of basically two things: thinking and doing. You have to keep a balance between them.

L: Perhaps you won’t resolve any ancient paradoxes, but you’ve said many times that as broad and deep an education as possible is an essential part of the education of a speculator. I think this is what distinguishes Casey Research from other market-analysis shops. Many people see patterns and build models that seem to have enough predictive power to make it worth betting on them — and I don’t just mean chartists — without reference to a deeper understanding of what’s going on in the world. The problem is that those patterns do seem to work, but only work as long as nothing changes. They can’t warn you when they are about to become obsolete. If you don’t have a really sound grasp of what’s going on in genetics, nanotech, communications tech, as well as global geopolitics, and current trends in psychology and social phenomena, you really open yourself up to being blindsided.

Doug: That’s exactly right. It’s much as we discussed on education in general. The more knowledge you have in your head, the better the chances that you’ll be able to transform that knowledge from a random accumulation of facts into wisdom and good judgment that can enable you to act profitably — and I don’t mean only in a financial sense. This is why I try to continue building up my knowledge and forging connections between the many things I learn about. For one thing, it makes life more interesting. For another, knowledge is a key to simple survival. You never know when you might be walking along a road and meet a sphinx who asks you three life-or-death questions.

L: [Chuckles] This is another way of looking at what we’ve been saying is the essence of successful speculation: turning intellectual capital into financial capital. The greater the intellectual capital, the greater the capacity to deploy it generating financial capital. Period.

Doug: Yes, intellectual capital can definitely be transformed into financial capital. And financial capital is helpful in gaining intellectual capital. Oddly enough, I don’t tend to read books on finance and investment. Almost everything you really need to know about these fields was summed up by Benjamin Graham in his classic masterpiece, The Intelligent Investor, over 60 years ago. Almost everything since has been a morass of contradictory and mostly worthless opinion. It’s better to grasp the fundamentals, study the world, draw your own conclusions, and seek to deploy your knowledge — far better than chasing after whatever the latest fashion in trading is. I’m not saying there aren’t excellent investment books — simply that you have to budget your time. Even a serious reader would be lucky to get through a thousand books in his life.

L: That’s interesting about not reading investment books. People often ask me if I read books to learn my trade — if there’s a book that can teach them to evaluate mineral-exploration companies as I do. There are some relevant titles out there, but there really isn’t anything that fully sums up what’s most important, in my view. Maybe I’ll write one someday, but right now, I’m too busy doing it to write about it.

Doug: Actually, you could take the past editions of the International Speculator, arrange them by subject, edit them, expand on them where necessary, and you’d have an excellent book on investing in mining. I’m twisting Marin Katusa’s arm to get him to do the same thing on energy. And actually, this constitutes a defense for not reading as many books as I once did. Reading well-done articles is like reading books on the installment plan. Articles tend to be tighter and more to the point than books. It’s arguable that you can acquire more knowledge reading 1,000 articles than you can reading 100 books of the same length, for that reason. Too many books tend to be padded articles.

L: Okay then. Thanks for a fun conversation — a bit less grim than usual.

Doug: You’re welcome.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Read part 1 here.

Doug: Let's take these in order. First:

Assassination of US citizens: u201CPresident Obama has claimed, as President George W. Bush did before him, the right to order the killing of any citizen considered a terrorist or an abettor of terrorism.u201D

Of course the very concept of terrorism is highly malleable, with over 100 definitions floating about – as we've discussed. But apart from that, it's now accepted that the president and his minions have the right to kill almost anyone. This conceit will get completely out of control after the next real or imagined major terrorist incident.

Louis: This reminds me of the extraordinary powers given to government agents to battle the War On Some Drugs – like the RICO statutes – which have now been turned against ordinary citizens who have nothing to do with the drug trade.

Doug: Exactly. Once you give the state a power – for whatever good reason you imagine it needs it – it will use that power for whatever those in charge feel is in their interests. And those in charge are never saints.

Next:

Indefinite detention: u201CUnder the law signed last month, terrorism suspects are to be held by the military; the president also has the authority to indefinitely detain citizens accused of terrorism.u201D

This was a precedent set by Guantnamo, where scores of the accused continue to rot without even a kangaroo-court trial.

Arbitrary justice: u201CThe president now decides whether a person will receive a trial in the federal courts or in a military tribunal, a system that has been ridiculed around the world for lacking basic due process protections. Bush claimed this authority in 2001, and Obama has continued the practice.u201D

As the government becomes more powerful, it's completely predictable that everything – including the justice system – will become ever more politicized. And government very rarely relinquishes a power it's gained. I particularly like the Supreme Court ruling in April 2012 that allows anyone who's arrested for anything – including littering or jaywalking – to be strip-searched.

Louis: Note to readers: you can't hear Doug's voice, but I assure you that his use of the word u201Clikeu201D is sarcastic.

Doug: Just so. Moving right along:

Warrantless searches: u201CThe president may now order warrantless surveillance, including a new capability to force companies and organizations to turn over information on citizens' finances, communications and associations. Bush acquired this sweeping power under the Patriot Act in 2001, and in 2011, Obama extended the power, including searches of everything from business documents to library records.u201D

Privacy is now a completely dead concept, from both a legal and a practical point of view. If you want to retain privacy, you now have no alternative to relocating outside the US.

Louis: Or any advanced Western country. I've read that there are more surveillance cameras per square mile in London than anywhere else.

Doug: I've heard that too. The opposite being true in rural Argentina is one of the things I like about it. Back to the list:

Secret evidence: u201CThe government now routinely uses secret evidence to detain individuals and employs secret evidence in federal and military courts. It also forces the dismissal of cases against the United States by simply filing declarations that the cases would make the government reveal classified information that would harm national security…u201D

u201CNational securityu201D essentially amounts to nothing more than government security, which amounts to cover for the individuals in the government. Nazi Germany and the USSR were national-security states. As I've tried to explain in the past, once a critical mass is reached, it's impossible to reform a government. I believe we've reached that state in the US.

War crimes: u201CThe world clamored for prosecutions of those responsible for waterboarding terrorism suspects during the Bush administration, but the Obama administration said in 2009 that it would not allow CIA employees to be investigated or prosecuted for such actions. This gutted not just treaty obligations but the Nuremberg principles of international law.u201D

Torture by field operatives under the stress of combat is one thing; torture as official policy is something else again. But torture is now accepted in the US. Worse, there are far more serious war crimes than torture being committed in the name of the US that are going unpunished.

Louis: This is, after all, a far darker version of the same US government that deliberately infected black US citizens with syphilis just to see what would happen, and sent US citizens of Japanese descent to concentration camps during WWII.

Doug: Exactly. The next point is:

Secret court: u201CThe government has increased its use of the secret Foreign Intelligence Surveillance Court, which has expanded its secret warrants to include individuals deemed to be aiding or abetting hostile foreign governments or organizations. In 2011, Obama renewed these powers, including allowing secret searches of individuals who are not part of an identifiable terrorist group.u201D

You no longer live in a free country when there's zero privacy for citizens, but 100% secrecy for the government and those it employs.

Immunity from judicial review: u201CLike the Bush administration, the Obama administration has successfully pushed for immunity for companies that assist in warrantless surveillance of citizens, blocking the ability of citizens to challenge the violation of privacy.u201D

The government has outsourced some of its functions – not least the use of contractors in war zones. Increasingly, being associated with the government gives you a u201Cget out of jail freeu201D card. In the USSR they called this a u201Ckrishau201D – a roof.

Continual monitoring of citizens: u201CThe Obama administration has successfully defended its claim that it can use GPS devices to monitor every move of targeted citizens without securing any court order or review.u201D

Bad as this is, it's just one example. There's also the use of domestic drones, and hundreds of thousands of cameras that take pictures of everyone everywhere.

Extraordinary renditions: u201CThe government now has the ability to transfer both citizens and noncitizens to another country under a system known as extraordinary rendition, which has been denounced as using other countries, such as Syria, Saudi Arabia, Egypt and Pakistan, to torture suspects.u201D

Yes, if someone is kidnapped, there's plausible deniability if the torturing is done abroad by a third party. And they're likely to have even fewer compunctions.

Louis: That's a pretty depressing list, Doug.

Doug: And this is just the beginning. As I've said before, I don't call the shots – just try to tell the truth as I see it. The point is that you couldn't assemble a list like this even 15 years ago. But now it's part of the firmament. Worse, it's going to grow. As the economy turns down over the next few years, the people – acting like scared chimpanzees – will ask the government to u201Cdo something.u201D And it will. The trend is going hyperbolic.

Louis: I can't argue… and I agree it is not likely to be stopped. So if this is a sure trend, are there investment implications?

Doug: This just goes to reinforce what I've been saying for some time. As great as a US citizen's risk is in the marketplace these days, the greatest single risk to their wealth and health is the government. People simply must internationalize to diversify their political risk. I can't stress that strongly enough.

Louis: Would you go so far as to say that being a taxpayer in the US now is like being a Jew in Germany in the mid-1930s?

Doug: That's a good analogy. It's costly and upsetting to uproot, but the risk if you don't is unimaginably worse. And I would warn people in other countries to take the same precautions. All of these nation-states are dying dinosaurs that will cause a lot of damage as they thrash about in their death throes. No place is completely safe, but you improve your odds by not putting your eggs all in one basket.

Louis: Okay, I guess we've covered that plenty of times. Is there a u201Cpolice-state playu201D – any investments one could make before the new Iron Curtain slams down? Handcuff manufacturers?

Doug: Nah – they have those plastic zip-binder things now; they're so cheap that I doubt the manufacturer can even make big money in volume. But I do remember a speech I attended in the '90s given by William Bennett, the ex-Drug Czar, who recommended investing in prisons. I excoriated him as a sociopath at that meeting – but he was right. However, that ship has sailed; it's hard to believe the US can incarcerate more than the current 2.3 million people. Besides, I find it morally offensive to capitalize on what I consider to be criminal enterprises. No, for now the only absolutely crystal-clear imperative is as above: You've got to have a Plan B ready in case you need to get out of Dodge – and you need it pronto.

And to those who celebrate Thanksgiving, I urge you to remember that it was hard work and the freedom to profit from it that created the bounty the pilgrims celebrated. It was this enterprising spirit and the liberty to exercise it that was the heart of the idea of the America That Was – the idea that made America great. Those corrupt politicians who have been undermining these values for so long and the willfully ignorant ideologues who support them are responsible for turning this country into the United (Police) State of America. They should be criticized and opposed at every opportunity.

Louis: Okay, Doug. Thanks for another challenging but enlightening conversation.

Doug: My pleasure.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, I hear that a friend of yours, Indian activist Russell Means, has passed away. He was an unusual and interesting character. Are you up to talking about it?

Doug: Yes. You know, I’ve gotten into the habit of doing obituaries in recent years in The Casey Report — but generally of people I don’t like. I know that’s considered improper, because you’re not supposed to speak ill of the dead, but –

L: It’s Totally Incorrect.

Doug: [Laughs] Totally. But that’s perhaps the best reason to do it. I hate to see sepulchers whitened, especially when their contents are morally rotten. But Russell, whom I got to know to some degree, is worthy of praise. We hung out together a couple of weekends in past years.

L: I caught that Heart of Darkness reference. We really should talk about books again, with a broader context than our conversation on speculative fiction. We’ve had requests.

Doug: I’d like that — maybe next week. Anyway, I have a lot of respect for Russell. So I think I can say what I really think and not violate accepted mores.

L: Okay. Perhaps we should start with who he was and how you came to know him?

Doug: Sure. Russell rose to fame because he was involved in what’s sometimes called the Second Battle of Wounded Knee, back in 1973. About 200 Oglala Lakota occupied the town of Wounded Knee for over two months, and were surrounded by a small army of federal marshals and FBI agents, buttressed by a bunch of armored personnel carriers. There was a lot of shooting, resulting in several deaths. If it had happened today, it might have wound up like Waco. Means and others were put on trial, but the charges were dropped on based on prosecutorial misconduct. But Russell was very involved, and you can bet that he was on the line, pulling the trigger. He was that kind of guy. A couple of years later two FBI agents were killed there, and Leonard Peltier — a friend of Russell’s — was found guilty. That became a cause clbre as well, since there’s some real question of whether he did it. He’s still in jail.

I’m on the side of the Indians. Sure, they may have broken some laws, but most laws today are artificial, unnecessary, and corrupt constructs. They’re very unlikely to be changed from within the system. And, apart from that, the Indians are a special case in many ways.

Russell was an outspoken sort of guy and a good self-promoter. So, subsequent to Wounded Knee II, he got into the movie business. As an actor he may be best known for playing Chingachgook in The Last of the Mohicans. He also had a role in Oliver Stone’s Natural Born Killers, and a voice appearance in Disney’s Pocahontas. He was actually a good actor, I thought. Maybe that’s because he basically played himself: a grizzled old Indian. He was a character actor: someone with a great persona that people just like to watch. There’s nothing wrong with that — John Wayne was famous for doing the same thing, as was Steve McQueen.

L: Really? I had no idea… I knew of him as a libertarian activist — somehow, it never came up that he was in the movies.

Doug: He was an activist, that’s for sure. That’s what brought him to the Eris Society meetings I hosted for 30 years, where I met him. Russell was always interesting company, but not always easy to get along with. He had what you might call an evenly balanced personality — a chip on both his shoulders. He seemed to be constantly looking for a confrontation, if not an actual fight. And he demanded to be treated with respect. I had no problem with that, because I found him worthy of respect.

L: A shining example?

Doug: He had strong points. He was definitely a guy you’d like at your side when the time came to fix bayonets. But like all of us, he had faults. The thing about Russell is that he was what I’d call a professional Indian. And I mean that with all due respect. I just think that he made too big a deal out of being part of his people. We’re all individuals, and we should be judged on our own achievements and faults, not those of whatever groups we belong to. The same goes for professional Irishmen, professional Jews, professional blacks, or what have you. Your ethnicity and racial background is definitely part of who you are, but it shouldn’t take over your personality. Making an accident of birth the centerpiece of your life makes no sense to me; I view it as a psychological failing. But it’s a common enough error, and one that’s encouraged by today’s politically correct society. Russell certainly wasn’t the only one to make it, nor the worst.

L: It seems to have worked for him. If only for the movie roles, he must have made a lot of money almost literally by being a professional Indian.

Doug: True enough. There is, however, a different sort of professional Indian that Russell despised. One of his favorite phrases for such people was: “hang around the fort Indians.” [Chuckles] I thought that was a great description.

L: Sorry — what does that mean?

Doug: Welfare Indians and Indians turned white — hanging around the fort, making supplications to their conquerors, seeking to game the system and gain advantage from the treaties and deals with the US, rather than living on their own terms. Like so many things in the political world, it’s perverse. The US government basically stole most of the Indians’ lands and destroyed their way of life. It broke absolutely every treaty it made with them. Then it turned them into welfare junkies as compensation. Some compensation…

L: It has seemed to me that many Indians, or First Nations peoples, as they call them in Canada, are caught on the horns of a real dilemma. On one hand, they want to adhere to their traditional ways. Fair enough. But on the other, their traditional ways are a Stone-Age culture with no modern medicine and absolutely no way to fight a modern aggressor. To live like that, they would have to trust in the benevolence of the more powerful cultures around them — that’s clearly no good. But they can’t attain technological, economic, and perhaps even military parity with the Western culture that surrounds them while hunting and fishing.

Doug: Yes, they’ve had a tough break. They can’t just exist as a living anthropological exhibit. It seems to me the best solution would have been for the tribes to maintain their own independent countries. At that point, individuals could take what they wanted from the Europeans’ culture or become totally part of it. But throughout history, cultures with superior technologies or numbers have always crushed their competitors. It’s bad karma — with all that implies — but that seems to be how people are wired.

There is, however, mounting evidence that there were actually many more Indians when the Europeans arrived in the Americas than was previously believed. I remember learning in history classes that North America had a native population of maybe a couple million, max. Their hunter-gatherer civilization was not thought to be able to feed more than that. New research is coming out that suggests that there were easily ten times as many natives, maybe even more. The Cahokia Mounds in Illinois, for example, is now thought to have been the site of a city larger than London in 1250 AD.

But their populations were wiped out and their civilizations destroyed — not with bullets, but with smallpox and other Old World diseases. The same thing allowed Cortez to subdue a much larger Aztec population in Mexico, and Pizarro the Incas in South America. The Indians had no immunological defense against such diseases at all, and 95 percent of the population died. There’s very interesting archeological work proceeding on this front, and I suspect we’ll know much more in just a few years.

L: I’ve heard they’re finding Mayan cities no one knew about with satellite imaging now, looking for circles of altered vegetation that still surround old Mayan population centers even now, centuries later. This is interesting… But back to Russell Means. I never met him, and I wish I had. I always wanted to ask him what it was about him, what experiences he might have had, that enabled him to grasp the basics of libertarian thinking, and why so few other native leaders have done the same. Do you know?

Doug: Well, I’d say that Russell was a gut libertarian. He wasn’t good at articulating economic theory, but he was by nature a strong individualist. Actually, I’d say he was pretty conflicted. On one hand he was a staunch individualist, but on the other, he would never admit to the fact that he was allowing himself to be defined by his ethnic group. Maybe this is more evidence in favor of a premise I’ve long suspected is true: libertarianism is actually a genetic mutation.

L: It certainly feels that way. Frequently.

Doug: It does, doesn’t it? Even when people recognize and intellectually understand the philosophy of personal freedom and responsibility, most just can’t integrate it into themselves emotionally. And others simply refuse to grasp it intellectually. I’m afraid libertarianism is fated to appeal to only a small minority.

L: Marshall Fritz used to administer Myers-Briggs tests to people at Advocates for Self-Government meetings. I remember him saying that 90% of the time, they’d come up INTJ. And I don’t think people are distributed evenly among the 16 Myers-Briggs personality types — INTJs are rare, so 90% is quite extraordinary.

Doug: David Galland is a fan of Myers-Briggs tests. He had me take it once, but I don’t remember what it said I was… Do you know what you are?

L: Well, I object to the idea that human beings all come in one of 16 personality types, but as a sort of shorthand, the system is useful. I tested as an INTJ — Introverted, Intuitive, Thinking, Judging — though I was borderline between introverted and extroverted.

Many people think I’m extroverted, because they see me on stage, teaching, lecturing, or on TV. I’m not afraid of such performances, but I find them draining. I think real extroverts get a charge out of that sort of attention. I’m usually happier alone with a good book, or with my close friends and loved ones.

Doug: That sounds like me too — I totally agree with you, and frequently prefer my own company. I’ve often thought that if I were the last person left alive on the planet, I’d probably get along just fine. But that’s getting way off topic.

L: Yes. It’s too late now, but for years I’ve had a fond fantasy that Russell Means would persuade some band or tribe somewhere to exercise the sovereign independence they truly and legally have, and tell the US government to go get stuffed. The US can keep its welfare checks and other “help.” Instead, once acting independently, they could set up a free-trade zone and invite businesses to lease land for a dollar for 99 years — sort of like the original Hong Kong setup — and levy no taxes. Businesses would gladly move to South Dakota — or wherever — to enjoy a real tax haven without having to leave the continental US. Even without the taxes, the businesses would create countless jobs and benefits for the tribes –work with dignity. If there were also fewer regulations than in the US, technological progress and innovation could happen faster. Instead of being romanticized welfare projects, such reservations could become shining beacons of liberty, prosperity, and progress…

I’m sure he must have tried — a pity the idea never caught on.

Doug: Absolutely. It worked for China; it should work even better for Indians, who are not burdened with the legacies of Maoism. But I guess INTJs are just as rare among American Indians as among Americans of European descent. Perhaps even more so.

Worse, native culture has been all but destroyed, not just by the wars and decimation of their population, but by the welfare mentality foisted upon natives by the Bureau of Indian Affairs. The BIA since its founding has been the most notoriously corrupt of all government agencies, which is saying something. It still spends billions per year, largely keeping Indians dependent and on their reservations — hanging around the fort, as Russell said. The BIA is one agency that should be abolished tomorrow morning, and then a thorough criminal investigation launched for malfeasance and misfeasance among both its current and retired employees. It’s time Indians controlled the property they own and are stopped being treated like wayward children.

But to answer your question, going back to something I said earlier, as much as I respected Russell, his greatest failing may have been that he did not educate himself deeply on the philosophical matters that concerned him. He never read enough of the classics and current literature to gain a thorough theoretical understanding to back his gut libertarianism. He could argue from the heart, but not as effectively from the head — he was quite capable of it, very intelligent, but he just didn’t bother. This may be why, as passionate and impressive as he was, he couldn’t talk any of the tribes into doing as you say.

L: Reminds me of the king telling Mozart in Amadeus: “Herr Mozart, you are passionate, but you do not persuade.”

Doug: [Laughs] Exactly.

The last thing Russell got involved in some was project in the Dakotas — I wrote about it in the International Speculator at the time; it had to do with setting up a free country, just as you described. I meant to get in touch with him about it, but urgent things got in the way of important things. Anyway, he had some health problems at the time, and I didn’t think he was the sort of guy who’d want to go out with a bunch of tubes stuck up his nose in a white man’s hospital. I thought he might look to pick a fight with the Federales and go out in a blaze of glory. It didn’t end up that way, and that may just be the greatest tragedy of Russell’s life.

Anyway, he was a stand-up guy, and I’m sorry that he’s gone… but nobody gets out of here alive.

L: Okay then. Hm. This doesn’t seem to lend itself to any investment insights, but it was interesting.

Doug: Perhaps not. I will point out that Indians have done well opening up casinos on their reservations. They ought to do much, much more. But that’s a question of political entrepreneurship as much as economic entrepreneurship.

Let’s talk about books next week — perhaps we can give our readers some ideas of more practical use.

L: A look inside Doug Casey’s library. I look forward to it. But — speaking of Native People at this time of year — I can’t help but remember my son Orion’s favorite holiday song: Stuck in the Smoke Hole of Our Tipi. It’s sung by Shoshoni Elder Oldhands.

Also and by way of nothing in particular, I’d like to mention that I’ve heard we have a new Casey Phyle starting up in Santiago de Chile. Anyone interested in joining should write to phyles@caseyresearch.com for more information.

Doug: I’ll check out the song. Have a good week.

Inside the Mind of a Multimillionaire

Did you ever wonder how famous investors and self-made multimillionaires think — what it is that makes them so successful? Then you should let Doug Casey give you a piece of his mind.

Doug’s new book, TOTALLY INCORRECT, showcases radical libertarian thinking and unwavering free-market advocacy… not to mention his irreverent and hugely entertaining personality.

“There is no other modern American critic who is half as brilliant. Doug is the only person on the scene today who could rightfully claim Mencken’s mantle. What’s in this book will show you the world in a new light. It will allow you to see the world as it really is… which is a gift everyone should enjoy.”

– Porter Stansberry, founder and CEO of Stansberry & Associates Investment Research

Special, limited-time offer: Pre-order a paperback copy of TOTALLY INCORRECT today and save 45% off the bookstore price. Click here for details.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

      Dear Readers,

Before we get to this week’s discussion, I am very pleased to announce that Doug Casey has just published a new book, featuring some of our best conversations: priceless takes on a wide variety of subjects, including the TSA, war, corruption, Cuba, and your health. Many of the subjects covered in this publication and the book, like the one Doug and I discuss below, are the result of questions from readers like you – maybe even one of your own. The book, Doug’s first in many years, is called Totally Incorrect, and is a convenient way to share Doug’s singly unique and insightful perspective with others.

Whether for yourself or as gift to indoctrinate your friends to a different way of viewing the world, you can pre-order a copy of Doug Casey’s new book today at a substantial discount – they will ship to you and to bookstores on December 12.

Thanks for reading and contributing. You – our audience – very much help shape the course of these conversations.

Best regards,

Louis James Senior Metals Investment Strategist Casey Research

L: Hola Doug, what’s on your mind this week?

Doug: I got a letter from a reader in India — Shanmuganathan — asking some very interesting questions regarding my views on karma — feel like talking philosophy? It will make us feel like we’re back in a college dorm room, enveloped in a haze of alcohol and smoke — at least in my case.

L: I didn’t smoke even back then, but I did my fair share of drinking in college. There are stories… At any rate, sure, I’m game. You often say you’re a solipsist, but never go into it — and that has to be related. Now is as good a time as any to get metaphysical.

Doug: It is. But let’s start with a definition, as always. My Webster’s Dictionary says:

Karma: The force generated by a person’s actions held in Hinduism and Buddhism to perpetuate transmigration and in its ethical consequences to determine the nature of the person’s next existence.

L: Clear as mud.

Doug: Must be written by a professor. My translation into English would be: In Buddhism and Hinduism, the ethics of one’s actions are believed to shape one’s next life, after you are reincarnated.

But I like to look at it in a less religion-specific way. I see it as a general “what goes around comes around” principle. Put simply: causes have effects. You reap what you sow. If you do things that harm other people, there will tend to be a certain kind of reaction, and you probably won’t like it. In this sense, yes, I do believe in karma. But that leads to a bigger question: whether we are reincarnated. Which is to say, what is the nature of reality itself? Are you just a biomechanical body? Does that body have a “soul,” as the Christians believe? Or are you actually a spiritual entity that is just temporarily inhabiting a body — which is different.

L: Okay, but before we tease that apart, can you tell those among our readers who may not know what a solipsist is?

Doug: There are many versions — just as there are many notions of karma — but the basic idea is that you create your own reality. The most extreme version of this is that all of reality is just a figment of your imagination. It’s all in your head.

L: If it’s all in your head, where is your head? It must exist, and therefore there must be a reality of some kind in which it exists, or even the illusion you may be imagining doesn’t happen.

Doug: I wouldn’t go quite that far. If pushed, I would say that reality is like a common construct of almost everyone’s imagination. I control my own reality, as you control yours. Outside there are seven billion other humans; I’m not about to deny their existence.

L: Aw, you’re spoiling the fun, Doug! If our world is not all just a figment of your imagination, I can’t blame Obama, Bush, the Clintons, and all the horrors around the world on your perverse imagination.

Doug: [Laughs] Well, that relates to why I’m currently working on a sextet of novels — a series, each stranger than the last, which will explore the nature of reality on this obscure little ball of rock by reforming the reputations of six unjustly besmirched, politically incorrect occupations. As Will Rogers correctly said, “It’s not what people don’t know that’s the problem. It’s what people think they know that just ain’t so.”

L: But seriously, this doesn’t help me, Doug. Reality must still have external existence to the collective imagination — exist for the same reason an individual head must exist for the mind it contains to imagine anything.

Doug: If you’re actually a spiritual entity, then “you” don’t need your brain or your body — they’re just tools for dealing with the world of matter, energy, space, and time. This is what people mean when they say they get out of their bodies. As you know, I’ll entertain almost any concept about almost anything. I’ve talked with a number of people personally — who seemed absolutely sane and sincere — who claim to have done that. And, like most of us, I’ve read third-party accounts of OBEs (Out of Body Experiences). Regrettably, I haven’t had one. Nor have I seen a real Indian rope trick. The whole area is overrun with charlatans and psychos. So I’m highly skeptical. But I do cotton to the concept of mind over matter. Therefore I keep an open mind on the nature of reality.

It’s a paradox to me that religionists of all stripes believe in the magic recounted in their holy books (virgin births, transubstantiation, teleportation, miracles of a thousand kinds) and they aren’t willing to discuss these things as other than dogma. At a minimum, I find it makes for an entertaining conversation.

Seriously, though, the nature of reality is very uncertain even among — or especially among — theoretical physicists. As anyone familiar with modern physics knows, what feels like solid matter to us is really mostly clouds of electrons surrounding nuclear particles that are themselves clouds of quarks and other smaller particles… At heart, quantum mechanics seems to suggest these things may or may not even exist until we look for them.

L: At heart, everything is a distribution of probabilities — the universe is math?

Doug: Something like that. It’s been said that any sufficiently advanced technology is indistinguishable from magic. So for all we know, we could be living in The Matrix. I’m urgently looking for the red pill.

L: [Chuckles] Have you read Neal Stephenson’s Anathem? It’s his best book, in my opinion. In it, he looks into these issues in a most clear, insightful, and humorous way.

Doug: No, I’m sorry to say. Stephenson’s a genius, and I like all his stuff that I have read.

But let’s not get distracted. The point is that the many-worlds interpretation of quantum mechanics — and the possibility of communication between alternative realities — gives us a plausible explanation for many things some people might regard as supernatural.

Who knows, it might even be possible that Napoleon Hill was literally right, and that our thoughts affect the world around us. We can think positively about wealth and grow richer. Some people believe that if they want something they only need “manifest” it. Personally, I’m all for keeping a positive, happy thought, but since we live in the material world, it’s also very helpful to employ things like diligence, persistence, intelligence, and a whole bunch of other virtues to make sure the manifestation occurs.

L: And we can’t afford the luxury of a negative thought. I do agree with Hill, but Doug, I always understood that to be a psychological phenomenon. When you’re depressed and anxious, it shows; people can see it, and most don’t want to be around such people. The negativity becomes a self-fulfilling prophecy, a very vicious cycle. Conversely, when people project optimism, strength, and ability, most people respond to that positively — even if it isn’t true, as politicians illustrate every day. This is quite different from our thoughts operating on a quantum level and somehow altering reality from the subatomic level on up…

Doug: Yes and no. When I imagine a red cat in my mind and have him move around as I wish, does he exist? I’d say yes, on some level, even though he has no mass, and I can locate him anywhere in space I wish. I lift a book with my hand, I move all the atoms in it, all the particles and waves that comprise it, and it interacts differently with the universe, via light, gravity, and no one knows how many more ways.

L: Okay, but when I drop that very heavy book of medieval metaphysics on my foot, cause has effect, and I feel the unpleasant effect shortly. That’s quite different from wishing I’d get a million dollars in the mail and the thoughts in my mind somehow reorganizing the particles and waves that make up the world around me so that the mail man arrives with a dishwasher-sized box full of $100 bills.

Doug: Is it? I’m not denying the laws of physics. The clouds of almost-emptiness that we think of as our bodies interact with the equally almost-empty space around us in ways that no one fully understands. When you drop that book, you create the future moment in which it hits your foot. We all create reality as we go — and who can really say how deep that process reaches?

But we don’t have to argue about that; we agree wishing is not a very effective way to influence the world around us. Taking action tends to be much more effective. Whether that’s in the apparently solid world of the proteins and other chemicals that make up your body and mind or something deeper, the outcome is the same. And the idea of karma encourages people to take responsible and constructive actions. I’m all for things that encourage people to take responsibility for their actions.

L: I suppose…

Doug: This reminds me of something my old man once said. I’ve said it before, but it strikes me as being profound enough to bear repetition. I was about 20 years old, and I’d asked him some sort of cosmic question. His answer was: “It’s all a matter of economics.” Some months later, I asked him another cosmic question, and he said: “It’s all a matter of psychology.” I’ve thought about these answers often over the years, and it seems to me that they are absolutely correct. Almost everything in the material universe boils down to economics, and almost everything in the non-material world — what you might call the spiritual universe — is a matter of psychology.

L: Hmmm…

Doug: Think about it. It’ll grow on you. The essential point for now is that I do believe in cause and effect — more specifically, that actions have consequences. If you look at that from an ethical perspective, that’s really what karma is all about. In point of fact, all causes have effects, all actions have consequences, and no one can ever escape those consequences — not for long.

L: Karma is cosmic payback, via psychology and economics?

Doug: Yes. Simply put, karma means things can and will come back to bite you, so you’re well advised to anticipate the consequences and be prepared to accept them.

L: I would agree with that… and I’m not a solipsist. This is why I’m not afraid that real freedom will lead to chaos in society. Success in a free society requires responsibility. This is an inescapable fact that manifests itself in the myriad self-regulating features of the market — and a “market” is really nothing more than a kind of mass psychology. Your father’s second, and perhaps deeper, answer.

Doug: Okay then, let’s look at Shanmuganathan’s questions. He asks:

“How do we explain the crooks and evil guys having a jolly good life on the planet? Why does karma not do its… karma?”

Well, I suspect that if we could explore and understand the inner psychology of such people, we’d find that they are not actually having a very good life, even if they appear to be. A good case can be made that criminals, even if they have genius IQs, are actually stupid — if we use my preferred definition of the word: showing an unwitting tendency to self-destruction.

When people look at the apparent success of criminals, they only look at their material possessions. But that’s very shortsighted, even though possessions are important. They fall into the realm of “have.” Things you have aren’t part of you; they can be lost or taken away. More important is the realm of “do.” Things that you do are indicators of who you really are. But most important is the realm of “be.” Things that you are represent your essence.

My view is that a wise and ethical person concentrates on “beingness.” If you get that right, you’re capable of doing. And the doing results in having. The reality of the average person you see at Walmart in those Black Friday videos seems to begin and end with “having.”

Criminals tend to focus largely on having, less on doing, and not at all on being. Especially as life goes on, I believe that takes a toll on them. Their being starts to resemble The Picture of Dorian Gray.

L: I don’t doubt that a guy like Muammar Gaddafi was far from being a truly happy man, long before he came to his grisly death.

Doug: Right — and he’s by no means alone, and certainly far from the worst. It’s a sign of how degraded the average human is that they apotheosize criminals — people like Mao and Stalin still have gigantic fan clubs. Almost all professional politicians are of that type — although very rarely on their scale.

L: Do you suppose Gaddafi had an official food-taster?

Doug: I’m sure all those guys do, including the president of the US; they know that many, many people want them dead. Of course there are a few real bad apples out there who are enjoying a very good life at the present. It’s just a matter of statistics. There’s nothing about karma that says everyone gets their just deserts immediately. As in economics, the immediate and direct effects are easy to see; the indirect and delayed effects are often both more subtle and more important. It certainly appeals to many people’s sense of justice, including my own, to think that people always get what they deserve. If you actually are a spiritual entity, you can’t escape your fate by dropping your current body. The Hindus who originated the idea of karma definitely believe in reincarnation.

As we’ve touched on many times, I don’t believe in any of the doctrines of the world’s major religions — gods, goddesses, heaven, hell, etc. — but I am inclined to believe that living beings inhabit physical bodies for a time but have a separate existence. I have absolutely no proof for that. It’s based on intuition, not hard data.

L: That’s unusually candid for a believer, Doug. But come on, you never believe anything just because you’d like it to be so — you scorn investors who make that mistake. You must have had some experiences that convince you this is possible…

Doug: I hate to be characterized as a believer, since I’m a professional skeptic. That said, I’ve had several relevant experiences, actually, that are completely inexplicable but very real. But they occurred in my mind, as opposed to the material world. Many, many other people have as well. I’m not talking about experiences induced by drugs, alcohol, or the like.

L: Sure, but I’ve never heard a story that couldn’t be logically explained — head trauma, anoxia, hypothermia… simple inebriation.

Doug: Understood. The mind is very good at tricking a person; David Copperfield, Penn and Teller, Chris Angel, and others are masters at it. Sure, so it’s likely pointless to debate what happens after death. Although, as you know, I don’t like to argue or debate anything — it’s much more productive, as well as pleasant, to have an open-minded discussion, to see if one can learn something — at least about one’s self or others, if not about physical reality.

For now, I’ll add that just because, waaaay out on the edge of the bell curve, there are some people who do bad things and “get away” with it, that doesn’t change the fact that for most people, most of the time, the consequences of truly evil actions are real, serious, and usually not long delayed. It’s why ethics is so important, however underrated.

L: Cosmic just deserts with a quantum cherry on top. Whether as a matter of economics or psychology, the odds are the same; being nice beats being naughty, and being creative beats being destructive. Spiritualism optional.

Doug: Well said. One thing I like about this perspective is that karma isn’t a god, and doesn’t require any consciousness — godly or otherwise — to operate. It’s just the way the universe works. The laws of physics, economics, and karma have a life of their own. And that gets to Shanmuganathan’s second question:

“How does karma affect the well-meaning but idiotic economists? The best example is India’s Prime Minister, Dr. Manmohan Singh — an economist by profession. Very honest and simple guy, but completely idiotic when it comes to economic policies wherein a nation of a billion people are forced into poverty because of his ideas. How should karma treat such people?”

Other people may have different views, but in my view, karma is not a conscious process; it’s an aspect of the nature of our universe. Statistically, there are outliers that seem to flaunt karma, but that doesn’t mean karma isn’t working — it’s just the law of large numbers. If you do a lot of bad things, you increase the number of shots people take at you. Sure, it’s possible to dodge all the bullets, but that’s not a great business plan. The Bible was quite incorrect to say that the bread goes not to the wise, nor the race to the swift, nor the battle to the strong. Damon Runyon had a much better grip on reality and karma when he pointed out, “Maybe — but that’s not the way to bet.”

L: Ah — Ecclesiastes. It’s the way to play the odds.

Doug: The universe itself is based on probabilities. So there is no sense saying karma “should” do something. As a speculator, as an investor, and as a gambler — I wear each hat at different times — I base my life on assessing odds. My perception and belief is that acting responsibly — acting as though payback is coming, one way or another — leads to a better life in this life. And it’s the only thing that can help the next one, if there is one, after you discard this body.

This is why I believe in what you might call basic virtues: productivity, prudence, patience, persistence — we’re big on the letter P around here, like the 8 Ps [laughs] — plus a bunch of others like fortitude, honesty, gratitude, courage. Not so big on faith, hope, and charity — which are typically vices. I believe these virtues are their own rewards. Maybe that’s what karma is: the aspect of the universe that rewards virtues and punishes vices.

L: I thought you didn’t believe in vice…

Doug: [Chuckles] Well, as always, we have to be careful to use words accurately, to forestall misunderstanding. As I just pointed out, conventional religious virtues are typically vices, but most things people think are vices (like smoking, gambling, drinking, swearing — all things fun) are usually no more than diverting foibles. But there certainly are some anti-virtues: larceny, brutality, dissipation of wealth, willful stupidity, cruelty. At any rate, karma is just another way of saying that these things have negative consequences, just as virtues are their own reward.

I’m still thinking about all of this — just as people before me have for thousands of years. It’s easier to ask these questions than to answer them, as you know. What do you think?

L: Me? These are “Conversations with Casey,” not “Conversations with Wolf” — people want to know what you think.

Doug: Maybe, maybe not. After all, in Plato’s dialogues, I thought that what Glaucon had to say was just as interesting as what Socrates had to say — Socrates just had a better PR agent in the form of Plato.

L: [Laughs] Well… I’ve always been more in the Aristotelian camp — I’ve no use for Plato’s world of ideal forms. Like Bud Conrad, I’m an empiricist; I want to know what the data show. And in 47 years of life, I have never experienced or seen any data that makes me believe in anything supernatural.

Now, you might say that your individual life force, your essence, your soul, or whatever you want to call it, inhabiting a particular body for a given time is not supernatural, but just a non-matter aspect of nature. Fine, but I’ve never seen any evidence of that, either.

All the evidence I have seen tells me that life is nothing more than a self-sustaining chemical process. So is sentience and even sapience. Like a fire, my life will last as long as I can find fuel, not get clogged up with ash and soot, etc. And when I go out, nothing will be left but decay and a little fading heat. That and my intellectual legacy, which too will likely fade, though I hope it lasts longer than it takes my body to cool to ambient temperature.

Mind you, I don’t declare that what you believe is untrue — only that I see no evidence for it.

So, not wanting to count on evil deeds being punished in the next life, I’m very keen on just deserts in this life. This is part of why I’m so keen on self-defense and resisting crime — especially crimes by those in uniform. If I had Bruce Wayne’s net worth, I would definitely have the same vigilante streak in me. Don Quixote is my hero.

Doug: [Laughs] A rational analysis, as I’d expect from a guy who makes his living digging the truth out of corporate executives, and sometimes the ground itself. I can’t argue with what you say — apart from the fact I don’t argue — if only because you’re quite correct: there is no hard proof for these things. But even though I do believe karma generally gets things done, it certainly doesn’t mean you have to rely on it. I’m reminded of the famous poster with two buzzards sitting on a tree in the desert. The one says to the other: “Patience, my ass. I’m going to kill something.”

But back to Shanmuganathan’s second question. If it’s true that we construct and control our own realities, I doubt that most supposedly well-intentioned idiots really are that well intentioned. There are no accidents. That’s why I tend to be rather suspicious of people who are accident-prone.

L: [Laughs]

Doug: I’m serious. People who create “accidental” train wrecks via misguided public policy are not in the same class as people who routinely stub their toes and drop glasses, but in both cases, their actions tell you something about them. Didn’t Jesus say: “By their fruit shall you know them”?

L: I agree about political apparatchiks. The entire class of people in public policy who are sincerely well intentioned may be limited to one man: Ron Paul. But even if it’s a bit larger, I’m sure most political entrepreneurs are at the very least manipulators who want to try to force others to do as they think best. But I suspect most are outright criminals — sociopaths, as you say — using the most leverage they can get for their predations. The existence of Santa Claus seems more probable to me than the existence of a misguided plunderer or economy-smasher.

Doug: I agree, of course. And, regarding the “well intentioned,” even — or indeed, especially — the worst criminals don’t think they’re doing anything wrong. Hitler really thought he was a hero for trying to eradicate the Jews. Hitler, Stalin, Pol Pot, Mao, Caesar, Alexander — all of history’s most famous mass murderers — all sincerely believed they were doing good. It’s one sign of a sociopath. There’s a lot of truth to the saying that the road to hell is paved with good intentions.

And like you, I’m all in favor of “helping” those who commit misdeeds meet the consequences of their actions sooner, rather than later. But I do believe that even if we don’t, karma will catch up with them sooner or later. Either way, if you act in ways that draw “bad karma” to you, you face increased odds of both immediate and direct retribution as well as long-term settling of the books.

So whether you believe you are a spiritual being clothed in your current human form only temporarily or a complex piece of meat that will go out of existence like your fire, cultivating good karma is a great guide for personal ethics.

L: It fits perfectly with what you’ve said should be the only law needed: do as thou wilt, but be prepared to face the consequences.

Doug: That’s not an accident either.

L: But if the odds dictate the same behavior, whether or not karma exists, what use is the concept?

Doug: Well, I believe karma exists, whether you believe it or not. [Chuckles] Or whether you exist or not. Let’s just say that it’s a way of thinking about these things that can help people live better lives and enjoy them more.

L: Fair enough. I don’t see any direct investment implications.

Doug: No; I’d say there are life implications.

L: Okay, then — thanks for an unusual and stimulating conversation.

Doug: My pleasure, as always.

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The Best of Doug Casey

L: Doug, after conversations like the one we had last week, we often get letters from angry readers who accuse you of hating America, disloyalty, and perhaps even treason. These people don’t know or understand what I do about you — that you love the idea that was America. It’s the United State it has become for which you have nothing but contempt. Perhaps we should try to explain this to them?

Doug: I doubt it would work; it’s a tough row to hoe, trying to explain things to people who are so set in their thinking that they truly and literally don’t want to hear anything that might threaten their notions. A person who feels threatened by ideas and who responds with emotion is acting irrationally. How can we have a discussion with someone whose emotion trumps their reason? How do we even begin to untangle the thinking of people who will gather this week to give thanks for the bounty produced by freedom and hard work — the famous puritan work ethic — by eating a turkey bought with food stamps?

But we can outline the ideas, for the record.

L: I’ll bring a copy if they ever do put you on trial for thoughtcrime — which is frighteningly close to being real these days and called treason to boot.

Doug: It’s not just close; it’s here. Just try telling an unapproved joke in a security line in an airport these days.

L: True enough. Where to begin?

Doug: At the beginning. America was founded as a confederation of independent countries — that’s what a state is. Or was, in our language. The original United States of America was a confederation of countries that banded together for protection against larger and more powerful countries they feared might be hostile. This is not a disputed interpretation of history, but as solid a fact as the study of history produces — and yet a largely neglected one.

L: We did cover this ground briefly in our conversations on the Civil War and the Constitution.

Doug: So we did… the short version being that the US Constitution was essentially a coup; the delegates to what we now call the Constitutional Convention were not empowered to replace the existing government — only to improve upon the Articles of Confederation between the then-independent states. The framers of the Constitution drafted it with the notion of a national government already in place, but calmed fears of loss of state sovereignty by calling the new government the “United States of America” — a verbal sleight of hand that worked for over half a century. Then the southern states decided to exercise what these words imply; their right to leave the union. While slavery was and is a wholesale criminal activity I object to in every way possible, the southern states did have the right to secede, both legally and ethically. But the question was settled by force, not reason, and the wrong side won.

L: Another coup?

Doug: More like an exposure of the first one for the whole world to see. But by then it was way too late. Despite this, the relative freedom of the US — because it was for many years far freer than other countries — made it possible for artists, engineers, inventors, and businesspeople to flourish and create a society more wealthy and powerful than any the world had ever seen. This is what I call the idea of America — the America That Was.

But the seeds of destruction were already sown at the very beginning — with the Alien and Sedition Acts being perhaps the first highly visible step in the wrong direction. Then came the forceful assertion of one national government, with states reduced to administrative regions via the War of Southern Secession, from 1861-’65. I’m no fan of state governments, incidentally, but at least they’re smaller and closer to their subjects than the federal government. Another major step in the wrong direction occurred with the Spanish-American War of 1898, where the US acquired an overseas empire by force. The next major step downhill was the creation of the Federal Reserve and the income tax, both in 1913, just in time for World War I. It took time for these things to make the system crash, because it was still a fairly free economy.

L: But crash it did in 1929…

Doug: Yes. And it led to the Great Depression of 1929-’46, which lasted so long entirely because of the unmitigated disaster of the New Deal (which we discussed recently). The New Deal injected socialist-fascist ideas into mainstream American thought like a poisonous acid, corrupting the heart of the idea of America that once made the place great. The process was completed with Lyndon Johnson’s Great Society, which really established the basis of the welfare-warfare state. It truly set the stage for the total ethical, economic, social, political, and even military disaster now unfolding before our eyes.

Still, the beating heart of the idea of America — which is to say both social and economic freedom — took time to corrupt. Like a strong man who doesn’t know he’s headed for a heart attack, American culture didn’t really peak until the 1950s. The bullet-finned 1959 Cadillac is a symbol of this peak, in my mind.

L: Then we had Johnson and his “guns and butter” policy — War in Vietnam and War on Poverty at the same time — followed by tricky Dick kicking the last leg out of under the stool by taking the dollar off an even theoretical gold standard.

Doug: Yes. Nixon was arguably even a worse President than Johnson, with the devaluation of the dollar in 1971 and his creation of the War on Drugs. Things have spiraled out of control since then. In The Casey Report, we’ve written reams about these last decades and how they led to and shaped what’s happening now. But I have to say, the focus has been largely financial.

L: Which is as it should be, in a publication designed to help investors navigate these turbulent times.

Doug: Yes, but the corruption goes way beyond that, beyond even the senseless wars and idiotic foreign policy we discussed last week. America, once the land of the brave and the home of the free, is well on its way to becoming a police state — worse than any we’ve seen in the past, including the Soviet Union and Nazi Germany.

L: How could it get worse than that?

Doug: Because Big Brother has better technology now, allowing possible manipulation and control of the population that Stalin and Hitler never dreamed of. And because the US used to be such a great place, a lot of people have been tricked into believing it’s the same as it was. But there’s no more resemblance between the America of old and the US of today than there was between the Rome of the Republic and the Rome of the later emperors. Furthermore, most Americans have conflated the government with society. They’re not only different things, but often antithetical.

L: I thought you said you’re an optimist!

Doug: I am. But that’s for the survivors who make it through the wringer the global economy — and every person on this planet — is about to go through. I keep telling you that the coming Greater Depression is going to be even worse than I think it is. You may think I’m joking, but I’m not. I do think that, primarily for reasons we discussed in our conversation on technology, what comes next will not only be even better than I imagine, it will be better than I can imagine… but first we have to go through the wringer. I see no way around it. I truly don’t.

L: Okay, I know you believe that. Can you substantiate the police-state claim?

Doug: Well, rather than give you anecdotal evidence — of which there are masses more each day — let me refer to a rather perceptive blog post by a George Washington law professor named Jonathan Turley, titled 10 Reasons Why the US Is No Longer the Land of the Free. I’m sure I don’t see everything the way the professor does, but the list struck me as quite accurate and very important for people to understand.

L: I’m sure I don’t want to hear this, but okay, shoot.

Doug: [Chuckles] Maybe you don’t, but I know you value the truth. These points underline something I’ve said for years: the Bill of Rights is a completely dead letter. It’s essentially meaningless and rarely even gets the benefit of lip service. Quoting it will result in derision, if not arrest as a dangerous radical.

Frankly, I didn’t think the civil liberties situation could get worse than it was under Cheney-Bush, but it has. Obama has repealed none of what they did — and added more. So, let’s go through the list. First:

Assassination of U.S. citizens: “President Obama has claimed, as President George W. Bush did before him, the right to order the killing of any citizen considered a terrorist or an abettor of terrorism.”

Of course the very concept of terrorism is highly malleable, with over 100 definitions floating about — as we’ve discussed. But apart from that, it’s now accepted that the president and his minions have the right to kill almost anyone. This conceit will get completely out of control after the next real or imagined major terrorist incident.

L: This reminds me of the extraordinary powers given to government agents to battle the War On Some Drugs — like the RICO statutes — which have now been turned against ordinary citizens who have nothing to do with the drug trade.

Doug: Exactly. Once you give the state a power — for whatever good reason you imagine it needs it — it will use that power for whatever those in charge feel is in their interests. And those in charge are never saints.

Next:

Indefinite detention: “Under the law signed last month, terrorism suspects are to be held by the military; the president also has the authority to indefinitely detain citizens accused of terrorism.”

This was a precedent set by Guantnamo, where scores of the accused continue to rot without even a kangaroo-court trial.

Arbitrary justice: “The president now decides whether a person will receive a trial in the federal courts or in a military tribunal, a system that has been ridiculed around the world for lacking basic due process protections. Bush claimed this authority in 2001, and Obama has continued the practice.”

As the government becomes more powerful, it’s completely predictable that everything — including the justice system — will become ever more politicized. And government very rarely relinquishes a power it’s gained. I particularly like the Supreme Court ruling in April 2012 that allows anyone who’s arrested for anything — including littering or jaywalking — to be strip-searched.

L: Note to readers: you can’t hear Doug’s voice, but I assure you that his use of the word “like” is sarcastic.

Doug: Just so. Moving right along:

Warrantless searches: “The president may now order warrantless surveillance, including a new capability to force companies and organizations to turn over information on citizens’ finances, communications and associations. Bush acquired this sweeping power under the Patriot Act in 2001, and in 2011, Obama extended the power, including searches of everything from business documents to library records.”

Privacy is now a completely dead concept, from both a legal and a practical point of view. If you want to retain privacy, you now have no alternative to relocating outside the US.

L: Or any advanced Western country. I’ve read that there are more surveillance cameras per square mile in London than anywhere else.

Doug: I’ve heard that too. The opposite being true in rural Argentina is one of the things I like about it. Back to the list:

Secret evidence: “The government now routinely uses secret evidence to detain individuals and employs secret evidence in federal and military courts. It also forces the dismissal of cases against the United States by simply filing declarations that the cases would make the government reveal classified information that would harm national security…”

“National security” essentially amounts to nothing more than government security, which amounts to cover for the individuals in the government. Nazi Germany and the USSR were national-security states. As I’ve tried to explain in the past, once a critical mass is reached, it’s impossible to reform a government. I believe we’ve reached that state in the US.

War crimes: “The world clamored for prosecutions of those responsible for waterboarding terrorism suspects during the Bush administration, but the Obama administration said in 2009 that it would not allow CIA employees to be investigated or prosecuted for such actions. This gutted not just treaty obligations but the Nuremberg principles of international law.”

Torture by field operatives under the stress of combat is one thing; torture as official policy is something else again. But torture is now accepted in the US. Worse, there are far more serious war crimes than torture being committed in the name of the US that are going unpunished.

L: This is, after all, a far darker version of the same US government that deliberately infected black US citizens with syphilis just to see what would happen, and sent US citizens of Japanese descent to concentration camps during WWII.

Doug: Exactly. The next point is:

Secret court: “The government has increased its use of the secret Foreign Intelligence Surveillance Court, which has expanded its secret warrants to include individuals deemed to be aiding or abetting hostile foreign governments or organizations. In 2011, Obama renewed these powers, including allowing secret searches of individuals who are not part of an identifiable terrorist group.”

You no longer live in a free country when there’s zero privacy for citizens, but 100% secrecy for the government and those it employs.

Immunity from judicial review: “Like the Bush administration, the Obama administration has successfully pushed for immunity for companies that assist in warrantless surveillance of citizens, blocking the ability of citizens to challenge the violation of privacy.”

The government has outsourced some of its functions — not least the use of contractors in war zones. Increasingly, being associated with the government gives you a “get out of jail free” card. In the USSR they called this a “krisha” — a roof.

Continual monitoring of citizens: “The Obama administration has successfully defended its claim that it can use GPS devices to monitor every move of targeted citizens without securing any court order or review.”

Bad as this is, it’s just one example. There’s also the use of domestic drones, and hundreds of thousands of cameras that take pictures of everyone everywhere.

Extraordinary renditions: “The government now has the ability to transfer both citizens and noncitizens to another country under a system known as extraordinary rendition, which has been denounced as using other countries, such as Syria, Saudi Arabia, Egypt and Pakistan, to torture suspects.”

Yes, if someone is kidnapped, there’s plausible deniability if the torturing is done abroad by a third party. And they’re likely to have even fewer compunctions.

L: That’s a pretty depressing list, Doug.

Doug: And this is just the beginning. As I’ve said before, I don’t call the shots — just try to tell the truth as I see it. The point is that you couldn’t assemble a list like this even 15 years ago. But now it’s part of the firmament. Worse, it’s going to grow. As the economy turns down over the next few years, the people — acting like scared chimpanzees — will ask the government to “do something.” And it will. The trend is going hyperbolic.

L: I can’t argue… and I agree it is not likely to be stopped. So if this is a sure trend, are there investment implications?

Doug: This just goes to reinforce what I’ve been saying for some time. As great as a US citizen’s risk is in the marketplace these days, the greatest single risk to their wealth and health is the government. People simply must internationalize to diversify their political risk. I can’t stress that strongly enough.

L: Would you go so far as to say that being a taxpayer in the US now is like being a Jew in Germany in the mid-1930s?

Doug: That’s a good analogy. It’s costly and upsetting to uproot, but the risk if you don’t is unimaginably worse. And I would warn people in other countries to take the same precautions. All of these nation-states are dying dinosaurs that will cause a lot of damage as they thrash about in their death throes. No place is completely safe, but you improve your odds by not putting your eggs all in one basket.

L: Okay, I guess we’ve covered that plenty of times. Is there a “police-state play” — any investments one could make before the new Iron Curtain slams down? Handcuff manufacturers?

Doug: Nah — they have those plastic zip-binder things now; they’re so cheap that I doubt the manufacturer can even make big money in volume. But I do remember a speech I attended in the ’90s given by William Bennett, the ex-Drug Czar, who recommended investing in prisons. I excoriated him as a sociopath at that meeting — but he was right. However, that ship has sailed; it’s hard to believe the US can incarcerate more than the current 2.3 million people. Besides, I find it morally offensive to capitalize what I consider to be criminal enterprises. No, for now the only absolutely crystal-clear imperative is as above: You’ve got t have a Plan B ready in case you need to get out of Dodge — and you need it pronto.

And to those who will be celebrating Thanksgiving this week, I urge you to remind those you carve the turkey with that it was hard work and the freedom to profit from it that created the bounty the pilgrims celebrated. It was this enterprising spirit and the liberty to exercise it that was the heart of the idea of the America That Was — the idea that made America great. Those corrupt politicians who have been undermining these values for so long, and the willfully ignorant ideologues who support them, are responsible for turning this country into the United (Police) State of America. They should be criticized and opposed at every opportunity.

L: Okay, Doug. Thanks for another challenging but enlightening conversation.

Doug: My pleasure.

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Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Hola, Doug. Congrats on calling the election correctly. You got your wish: the global economy should exit the eye of the storm on Obama’s watch. Hopefully, leftist ideas will get the blame they deserve this time.

Doug: Well, that’s only the second time I’ve ever called a US presidential election accurately, so I won’t let it go to my head. However, although I know most readers were rooting for Romney because he appeared to be the lesser of two evils, it’s quite arguable that we’re better off — for the long run — with the disastrous Obama.

Let’s look at the bright side: first, as you mentioned, Obama will get blamed for the Greater Depression. But also, Romney appeared even more warlike than Obama, and war is the health of the state. Despite the US’s huge, unsustainable deficits, he actually promised to increase military spending — presumably using money borrowed from the Chinese. Plus, he promised not to cut medical and welfare spending. But those are consequences we’ll never see now.

The actual reason Obama won, in addition to his promises of a free lunch for everyone, is that people are much more socially liberal than in the past. They don’t want the state putting its nose into their bedrooms with bans on gay marriage, abortion, and the like. Romney was a throwback to the ’50s — even down to that phony, condescending smile that was always painted on his face. So let’s batten down the hatches for four more years, recognizing there were no good choices.

But what’s really on my mind this week are things military, starting with the expanding sex scandal involving top military brass and the newly deposed head of the CIA, General Petraeus. Then we can get into the 19 reasons why the continuing war in Afghanistan is a total disaster.

L: You’ve always said that once you get above the staff-sergeant level of the military, it’s hopelessly corrupt, and that generals above two stars are necessarily political operatives. The top spot of any government agency is always a political appointment anyway, and we all know that your regard for politicians couldn’t get any lower — so this can’t be a surprise.

Doug: No, it’s no surprise — just more evidence for those who care to open their eyes as to just how dysfunctional things are at the top.

L: But is this really a sign of corruption? A famous — or infamous — bon vivant like you can’t possibly care whom generals screw, as long as it’s not taxpayers?

Doug: True. I couldn’t care less who’s sleeping with whom; it’s just that these people are typically such self-righteous hypocrites. But for all we know, Petraeus had an open relationship with his wife and wasn’t even cheating. Given that what we read in the papers doesn’t count as knowledge, only selective reporting of facts released by the government, buttressed by hearsay, conjecture, and lawyered-up statements, we really know almost nothing. As Mark Twain said, if you don’t read the papers, you’re uninformed; if you do read them, you’re misinformed.

But as a matter of principle, it’s always an excellent thing to see the mighty in these praetorian agencies fall into disgrace. Almost by definition, only bad apples can make it to the top in them, and they deserve to fall. I can only hope this scandal will grow and expose the CIA for being the corrupt, incompetent agency it is, and the entire thing will be abolished.

L: You’re an optimist. But I should have known that if you had an opinion about Petraeus, it wouldn’t be based on unverified information, but on principle. And as a matter of principle, I’d have to say that a guy who’s supposed to be the country’s top spy and can’t even keep a romantic liaison private doesn’t seem fit for the job.

Doug: Yes, although the very foundation of the CIA — its whole raison d’tre, its essential modus operandi — is based on lies, cheating, and deception. You’ve got to expect the worst from these people, even while they sanctimoniously blather on about things like loyalty, truth, and honor. Such concepts are as alien to them as they were to the KGB and the Stasi.

The whole rotten mess of lies, failures, and cover-ups turns my attention to an interesting article I read in the Washington Post a few months ago. It was a list of 19 things Afghanistan veterans agree are true, but that generals don’t dare say in public. I’m no fan of the Washington Post, but one can’t disregard a message simply because one doesn’t like the messenger. The list of unacknowledged facts “everyone knows” but can’t speak out loud is not just interesting, but impresses me as extremely accurate. It details what a disaster the US misadventure in Afghanistan has been and continues to be.

L: For example?

Doug: It starts with this assertion: “Pakistan is now an enemy of the United States.” This impresses me as being a completely accurate allegation. The place is not really a country at all, but an agglomeration of dozens of Islamic tribes — most of which are at odds with each other — cobbled together by the British in the process of granting India’s independence. It will eventually fall apart into any number of satrapies, principalities, and warlord fiefdoms. That might not matter to people who live on the far side of the planet, except that the current country is said to possess about 100 nuclear weapons, some of which are bound to fall into the hands of some real Bad Boys when the place inevitably implodes.

L: Makes sense. Also, though I don’t claim to have much in the way of real facts at my disposal, it’s hard for me to believe that Osama bin Laden was able to set up an extensive household — we’re supposed to call it a “compound” if we don’t like the people inside — right under the noses of Pakistani security without anyone in power there knowing what was going on. And whatever else may be said, harboring an enemy is hardly the act of a friend.

Doug: That’s right. The next point, referring to Afghanistan, is: “We don’t know why we are here, what we are fighting for, or how to know if we are winning.”

This seems absolutely true to me. The US went to Afghanistan because a group almost entirely composed of Saudis supposedly flew a couple of airliners into buildings in the United States. It was alleged that the Taliban in Afghanistan was sympathetic to them and gave them succor. That’s no reason to invade a country, but they did, and the Taliban government was toppled — but the US is still there more than a decade later. So, it’s true. No one really knows why our troops are still there, making enemies while bankrupting the US. It’s a complete boondoggle and disaster.

L: The government was toppled, but the enemy merely dispersed. An expensive failure.

Doug: Exactly; the Taliban itself had absolutely nothing to do with the events of 9/11, and even offered to cooperate in extraditing those responsible upon presentation of proof.

The next item is: “The strategy is to fight, talk, and build. But we’re withdrawing the fighters, the Taliban won’t talk, and the builders are corrupt.”

This is true as well. Almost everyone there hates the foreign invaders as much as Americans would hate an army of Muslim teenagers in the US. Fighting is just making more enemies, so of course the troops are being withdrawn. And why should the locals talk with the invaders? They know they’ll go away eventually, as the Soviets did, and others before them. The builders, of course, get overpaid to build schools, hospitals, and other future targets for bombing; their only concern is to steal as much as possible while they can. The whole thing would be a comedy of errors if it weren’t such a tragedy.

L: We’ve filled a lot of holes in the sand and made a lot of new ones. Krugman must think it’s a great stimulus to the economy.

Doug: War also sends a lot of unskilled labor off to the slaughtering fields, so maybe the politicians view this as a good way to reduce unemployment. But to continue, the next point is: “Karzai’s family is especially corrupt.”

Well, that goes without saying. The whole point of getting elected — especially in these backward, tribal countries — is to steal as much as you possibly can. It’s not just an assumption; it’s axiomatic all over Africa, Asia, and South America — and for that matter in the US as well. How else could a man from a white-trash family like Bill Clinton start with nothing, get elected and end up worth a hundred million dollars? Of course now in the US, you wait until you’re out of office to get a delayed payoff in the form of huge speakers’ fees, corporate directorates, consulting contracts, book advances, and sweetheart deals. Lyndon Johnson was a more classic example, in that he made it while he was still in office. But it’s worse in these backward countries, where the plunderers can operate with much more brazenness and impunity.

L: Nolo contendere. Next?

Doug: “We want President Karzai gone but we don’t have a Pushtun successor handy.”

This speaks again to the fact that Afghanistan is a totally artificial country, assembled from a bunch of mutually antagonistic tribes. Of course we don’t have stooges from each possible faction warring for control. We’re outsiders. Does Washington really think the locals will accept any quisling we put in charge of them?

The next point is more interesting: “The problem isn’t corruption, it is which corrupt people are getting the dollars. We have to help corruption be more fair.”

As we’ve pointed out in a previous conversation, corruption can actually be a good and necessary thing. That’s the case whenever irrational, counterproductive laws slow the economy and stifle society — then you need a way around them, just to survive. This absolutely applies in Afghanistan. The US is the major cause of corruption today, even as it talks about eliminating corruption. The locals think we’re not only stupid, but hypocrites as well.

L: The exact opposite of “winning hearts and minds…”

Doug: The next one is a good one: “Another thing we’ll never stop here is the drug traffic, so the counter-narcotics mission is probably a waste of time and resources that just alienates a swath of Afghans.”

That’s absolutely true. I understand that opium is essentially Afghanistan’s only export product. So when Americans or anyone else invades and destroys their only cash crop, it only makes the Afghans hate them more. It makes no dent at all in the trade, because destroying a crop drives up the price. And that encourages farmers to plant more next season, and be more clever about it.

It’s completely idiotic to fight and kill poor farmers around the world who grow plants just because a few uptight puritans in the West don’t like them. If the monumentally stupid War On Some Drugs were ended and recreational drugs were legalized, almost all the ills associated with drug use would go away.

L: Did you see that in the recent US elections, referendums legalizing marijuana were passed in two states? Not just medical marijuana, but recreational use as well.

Doug: Yes — Washington and Colorado. It’ll be interesting to see if that catches on. I think the majority of Americans today favor ending marijuana prohibition, but the politicians don’t realize it yet. This may at last be the boy shouting out that the emperor has no clothes.

L: You really are in an optimistic mood today… So, next?

Doug: “Making this a NATO mission hurt, not helped. Most NATO countries are just going through the motions in Afghanistan as the price necessary to keep the US in Europe.”

This is interesting and probably true. One has to wonder why anyone should want US troops in Europe today, now that the Cold War has ended. My guess is that it’s because US troops are relatively highly paid, and US bases contribute huge amounts to local economies. Losing them would be like wiping a bunch of cities with big import industries off the map. US soldiers in Europe serve absolutely no useful purpose — except to pad the income statements of defense contractors and stimulate the local economy. Although they spend their money mostly in the bars and cathouses.

But the next point is more interesting: “Yes, the exit deadline is killing us.”

Well, of course! If the people you’re fighting know exactly when you have to leave, they know when you will have to demobilize and become vulnerable. And they know they can just wait you out. This just underscores how pointless the whole charade is.

Then: “Even if you got a deal with the Taliban, it wouldn’t end the fighting.”

Again, of course: there are many tribes and warlords there with their own agendas. Focusing on one group — the Taliban, which is just a coalition anyway — seems to me to be more of a public-relations exercise than anything to do with reality on the ground. Fighting has been the national pastime in this part of the world for many centuries.

L: When it comes down to it, isn’t the basic reality that the US is not fighting a government or other organization that can be decapitated and neutralized? They won’t admit it, but they are fighting a culture, a way of life — an idea. It’s like a hydra: you cut off one head, and two more grow back to replace it. As long as there’s a single person left alive who believes it, the fight will never end.

Doug: Yes; cloud-sourced warfare. This relates to the next point, which really is the bottom line: “The Taliban may be willing to fight forever. We are not.”

This is so obvious, but so important. Of course the locals don’t want these blue-eyed invaders and infidels to tell them how they should do things in their land. And most US taxpayers can’t even find Afghanistan on a map — and yet they’re being told it’s vital to their interests to send their sons there to die. This is completely unethical and counterproductive.

L: Next?

Doug: “Yes, we are funding the Taliban, but hey, there’s no way to stop it, because the truck companies bringing goods from Pakistan and up the highway across Afghanistan have to pay off the Taliban. So yeah, your tax dollars are helping Mullah Omar and his buddies. Welcome to the neighborhood.”

This just goes to show how smart bin Laden’s strategy of provoking the US into bankrupting itself was. Getting back to Petraeus, who was running the show in Afghanistan for many years: if he had any gumption or sense of strategy, he would have recommended pulling out or resigned for this very reason. He would have admitted the untenable logistics and pulled out. Instead, he endorsed the troop surge and so forth. He’s just a slick bureaucrat.

Next up: “Even non-Taliban Afghans don’t much like us.”

That’s laughably obvious, but the author is right that people just won’t talk about it. Many fools think that invading Afghanistan is like liberating France or Belgium during WW2 — but it’s just the opposite. You knock down people’s doors in the middle of the night, you bomb people’s wedding parties, and send in drones to strafe them… You kill tens of thousands of people: of course they won’t all be Taliban, and of course the rest of the locals won’t like you.

The reality here is that the US is making ten enemies for every real or imagined enemy killed — almost all of whom are of no possible threat to the US today.

L: Perpetuating the forever war. If it’s true that war is the health of the state, maybe this is not an accident, and maybe those at the top are evil, not stupid?

Doug: That would fit some of the data, but not all of it. As a rule, I’m not prone to believing in conspiracy theories. Although, at this stage of the US Empire, sociopaths have pretty well captured the apparatus of the state.

The next point is: “Afghans didn’t get the memo about all our successes, so they are positioning themselves for the post-American civil war.”

Well, that’s certainly true. As we said before, it’s not a real country — it should be at least a half a dozen, based on languages and tribal groupings. Of course they’ll have a civil war as soon as the foreign power holding the place together is gone, and they all fight for the right to exploit each other.

L: Okay, no need to belabor that one… Next?

Doug: “And they’re not the only ones getting ready. The future of Afghanistan is probably evolving up north now as the Indians, Russians and Pakistanis jockey with old Northern Alliance types. Interestingly, we’re paying more and getting less than any other player.”

This is absolutely true. And I’d add China to the list of interested parties. Any country within reach and with an interest in plundering some part of Afghanistan’s resources will be jockeying for position with the various local factions to gain their support for future economic looting.

Next: “Speaking of positioning for the post-American civil war, why would the Pakistanis sell out their best proxy shock troops now?”

Well, if the first point is true — that Pakistan is an enemy of the US — then it’s in their interest for the US to use up its weapons and bankrupt itself blowing up sand and rocks in Afghanistan. Covert Pakistani support for the Taliban only makes sense.

And: “The ANA and ANP could break the day after we leave the country.”

That’s the Afghanistan National Army and Police, organizations set up by the US — members of which are already opening fire on US troops. The enemy has already infiltrated these organizations. Given all that we’ve said about all the mutually hostile groups in Afghanistan, of course they won't last. It’s completely hopeless and nave to think they won’t disintegrate and use their weapons to fight each other.

L: Agreed. Next?

Doug: “We are ignoring the advisory effort and fighting the ‘big war’ with American troops, just as we did in Vietnam. And the US military won’t act any differently and work with the Afghan forces seriously until when American politicians significantly draw down U.S. forces in country — when it may be too damn late.”

This seems true and gets back to the question of why the US has troops there in the first place. Assuming the cover story of attacking the Taliban because they supported the 9/11 terrorists even made sense to begin with, that was over and done with long ago. The whole thing is a nonsensical fiasco. It’s just like in Vietnam, where US troops did all the fighting to support a puppet government. Then the whole artificial structure collapsed when they left.

L: This reminds me of what you’ve said about the military always fighting the last war. But these guys aren’t just fighting the last war, they’re fighting the previous one, which was also a disastrous failure.

Doug: Yes, and to top things off, I believe the locals and other Muslims around the world are really beginning to see US foreign policy as a War On Islam, under cover of a War On Terrorism. Well, there are more Muslims than Christians in the world, and more of them have little to lose and not much better to do than to join the fight. It’s a no-win scenario.

The last one is: “The situation America faces in Afghanistan is similar to the one it faced in Vietnam during the Nixon presidency: A desire a leave and turn over the war to our local allies, combined with the realization that our allies may still lose, and the loss will be viewed as a U.S. defeat anyway.”

Well, our only allies are people who are collaborators, swilling at the trough created by the US military and various US Government agencies. The people in and around the Karzai government are only our allies so long as that enables them to steal as much as possible. I’m sure Karzai has already salted away a couple billion dollars in various places around the world and has a jet ready to whisk him out of the country as soon as he loses his grip. When the fundamentalists win, the collaborators will be hung — just like the French hung the Nazi collaborators at the end of WWII. So, yes, it’s just like Vietnam, propping up a totally corrupt and dysfunctional puppet government, until the mobs tear it apart.

L: Okay, I get that… But the impending failure of the US military in Afghanistan is both beyond my control and far from my direct concerns — except for possible investment implications. What do you see?

Doug: It’s all more evidence of the intractable nature of the problems facing the world today, when those supposedly in charge cannot allow themselves to admit even the most obvious truths that strike anyone with open eyes right away. The US is as corrupt as the governments it’s supporting. It’s going to bankrupt itself in the process. It’s going to destroy the dollar. It’s destroying freedom in the US. And the average American is going along with all of it — just like the average German did in WWII.

This underscores what we’ve been saying about rigging for stormy weather, investing in gold, speculating in “crisis investing” type stocks, and diversifying internationally to mitigate your own political risk.

L: [Sighs] And this was looking on the bright side? Okay Doug, thanks for your thoughts.

Doug: You’re welcome.

Now that the US has re-elected President Obama and kept a split Congress, we could be in real trouble. This is the same cast of characters that failed to address the critical issues of massive debt and reckless government spending.

There is nothing to suggest they will tackle these problems now.

What happens if they don’t stop us from plummeting off the fiscal cliff? Would a compromise solution be better for the country?

And what about QE-Infinity? What happens to the purchasing power of our savings if the Fed keeps its easy-money policies? Will our economy make it if Washington, DC can’t come together?

To help you answer questions like these, the folks at Mauldin Economics are putting together a free online event featuring some of the world’s leading economists and investing experts.

They include John Mauldin of Mauldin Economics… Mohamed El-Erian of PIMCO… James Bianco, president of Bianco Research, LLC… Barry Habib, vice president and chief market strategist of Residential Finance Corporation… Barry Ritholtz, CEO of Fusion IQ… Richard Yamarone, senior economist, Bloomberg Brief… and Gary Shilling, president of A. Gary Shilling & Co., Inc.

They will discuss such critical issues as the fiscal cliff, ballooning deficits and debt, entitlements, the Fed’s easy money polices, and the world economy. More important, they’ll offer solutions — including solutions to help you protect what’s yours from new risks in the post-election economy.

This event will be held online at 2 p.m. Eastern time on Tuesday, November 20. Learn more and register here.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Editor’s Note: Your editor caught up with Doug Casey backstage at the New Orleans Investment Conference, where we both had just given talks.

L: Doug, I know you’re no fan of either presidential candidate — a pox on both their houses — but we got more questions today about what would happen to our investments if one or the other would win than just about anything else. So, what do you think — does it matter? Should we play things differently, depending on which one wins?

Doug: Well, I have to first say that I’m the worst US political handicapper ever. I don’t have my finger on the pulse of hoi polloi in the barrios, ghettos, and trailer parks. Nor do I claim to know what Gen-Xers in the city are thinking, nor what passes for the white middle class in the suburbs, nor the oldsters in their retirement homes. I’m not a political animal. The only US presidential election I ever called right was the last one; I thought Obama would win. But then, in New Orleans, I was chatting with James Carville — who definitely is a political animal — and he doesn’t know either.

That said, my gut feeling is that Obama is going to win again. That’s partly because the incumbent always has the advantage, and partly because the mainstream media — which is where most people both get their information about what’s happening in the world and how to interpret it — seem to overwhelmingly favor Obama.

L: I thought you didn’t like making predictions…

Doug: I don’t, but purely for entertainment purposes, I’ll stick my neck out and predict an Obama win. Perhaps a deeper reason for this is that the electorate itself has become corrupted — even more than they were four years ago.

L: When more than half of voters receive some kind of government subsidy or another, they can always be counted upon to vote for more government largess, and the game is essentially over?

Doug: It’s a serious problem of mass psychology. Most people today think that whenever there’s a problem, it’s the government’s job to “do something” about it. Obama is — at least as far as his rhetoric goes — much more activist about “doing things” than Romney. On the other hand, all politicians are enthusiastic and skilled liars. So Romney might go wild with social programs, all the while saying something idiotic about trying to save capitalism.

L: People are afraid and one paycheck away from being evicted, and Obama’s the one promising two chickens in every pot.

Doug: Exactly. The election of 1932 is noteworthy in that context: a time of economic crisis, depression, and politicians promising “bold measures.” The key is that the Depression unfolded on Hoover’s watch, so he gets the blame. But he actually does deserve a lot of blame. If he’d cut taxes and spending radically and deregulated, it would have been a short readjustment, like the 1921 depression after World War I. He did the opposite. In point of fact, Hoover started many socialist programs along the lines of the New Deal programs FDR later became famous for. The Hoover Dam, for instance, was a major public-works project such as the Public Works Administration would later undertake, meant to create jobs. He also increased the top income-tax bracket from 25% to 63%.

Most people don’t know this, but Roosevelt …

L: …campaigned against such measures.

Doug: Yes, he campaigned on a free-market platform that seemed to offer hope that he would do the right things; and then, once in office, he turned around and did the exact opposite. He raised the top tax rate even further, first to 79%, then 81%, then 88% — and with that last one, in the middle of World War II, he dropped the income level it applied to from $5 million to $200,000. Contrary to popular belief, this did not get the US out of the Great Depression, but made things worse. The only reason he’s regarded as a hero today is that he had the singular good luck to enter office in 1933 — when the worst part of the Depression was over. But he did make it worse, and people still think Roosevelt’s programs helped, and most people believe it was the war that ended the Depression. In fact, real recovery didn’t begin until after the war.

L: Flash forward to today. If things are similar, that would make Obama the incumbent with the socialist track record, and Romney today’s FDR. Romney’s the one people see as a businessman who knows how to do things to help the economy — even though as governor, he implemented a socialized medicine program before Obama tried to.

Doug: The problem is that the US hasn’t really had a liquidation of malinvestment as it did from 1929 to 1933. So I think whoever is elected now is going to get blamed. Romney is an empty suit. He’s said that he doesn’t plan to cut welfare, wants to spend much more on the military, and he has other spending proposals that make him nothing more than Obama-light. This is actually what Republicans have almost always done, because most have no principles — certainly none in modern times.

L: So what happens if Romney wins? A lot of people seem to believe it will make a huge difference.

Doug: Well, he might be better for taxpayers in the short term; but, for the long run, it would be very unfortunate if Romney wins. That’s because he would be associated with free-market economics, as Republicans almost always are. A real pity. The social and economic disaster that’s looming over the next four years would incorrectly be blamed on capitalism.

I’m convinced the Greater Depression has started. We’ve gone through the leading half of the storm. Obama got the eye of the storm, and now we’re headed into the trailing edge of the storm, which is going to be even worse than what we saw in 2008-2009.

L: It’d be just as the Great Depression, which resulted from government interference in the economy, is usually blamed on the “unrestrained laissez-faire capitalism” of the 19th and early 20th centuries.

Doug: Exactly. And if two Great Depressions were seen to be caused by free enterprise, that would deeply entrench a highly destructive error and have long-lasting consequences. From a long-term point of view — if you care about posterity — it’s actually better if Obama wins. Then socialist-style ideas might get more of the blame for the train wreck.

On the other hand, the continuing global economic crisis (and much worse to come) would be a great excuse for Obama to open the floodgates on all kinds of really, really stupid ideas.

L: As a second-term president with no possibility of re-election to worry about, he could go wild, no holds barred.

Doug: Yes. He’d have time and a free hand to firmly entrench many seriously bad ideas in Washington. And once a new program gets its own bureaucracy, with its own buildings, it’s impossible to get rid of. Lenin was right when he said, “The worse it gets, the better it gets.”

L: So we’re damned either way?

Doug: I’m afraid so. I’ve said it before: there’s no way out but through the wringer. We get a deepening of the Greater Depression regardless of who wins. If Romney wins, it gets blamed on capitalism, which would be a long-term disaster. But if Obama wins, we’ll get a Krugman-Stiglitz wet-dream of a government. That would be a complete near-term disaster.

L: So if I had terminal cancer and I voted, Romney would be my man?

Doug: Maybe, if you didn’t think you’d last more than a year or so. You’d likely get to keep more of your money while you lived. But there’s another important difference: the federal bureaucracy is now thoroughly populated with Obama’s apparatchiks. Romney couldn’t save the US from the Greater Depression, even if he were a real free-marketeer — which he most assuredly isn’t. But he could expunge a lot of those poisonous parasites, replacing them with his own crew. We’d still have just as many parasites, but perhaps of a slightly less toxic variety. And even if they were just as bad, they’d still take a while to get going, so there’d be a reprieve for that time, at least.

L: You’re absolutely sure there’s no way Romney could save the day — even if he revealed himself to be a Ron Paul clone, once he got into the White House?

Doug: No. The state itself has too much momentum in the wrong direction now. As I’ve pointed out before, any serious changes would result in a talking-to by the heads of the various Praetorian agencies. If he survived that, the Supreme Court would strike down most of what he did, and the Congress would legislate against it. And the people would riot, as if they were Greeks. As you pointed out, when the people realize that they can vote themselves free lunches rather than work for them, a democracy is doomed.

L: Who was it who called democracy “an advance auction on stolen goods?”

Doug: H. L. Mencken, a genius — one of my favorites. But what he actually said was that “every election in a democracy is an advance auction on stolen goods.” We covered the futility of trying to get the “right” person elected in our conversation on Ron Paul. The state is corrupt, the politicians are corrupt, and the final straw, the electorate is corrupt. There’s no way out but through the storm.

L: Famous last words.

Doug: I know, but that’s the way I see it. It’s as with Wile E. Coyote. He runs off a cliff, and you logically think he’s going to fall right away. But he doesn’t — his feet keep windmilling in the air, and the law of gravity doesn’t kick in until long after he should have dropped. The US now resembles nothing more than a hapless cartoon character.

In essence, the things we think must happen usually take much longer than we imagine possible. But once they start, they usually happen much faster than we imagine possible.

But I’ll go out on a limb again and say that I’m reasonably certain the economic house of cards that the US and other governments have been propping up since 2007 will collapse not just within the next four years, but likely in 2013 and 2014. It’s happening in Europe now — they really have reached the end of their rope. It’ll happen shortly in Japan as well, the most indebted society in the world. It’'s going to happen in China. And that’s going to bring down the resource-oriented countries — Brazil, Australia, South Africa, Canada, Russia. It’s going to be a worldwide cataclysm.

This whole debt issue, by the way, is critical. As I’ve said numerous times, you get wealthy by producing more than you consume and saving the difference. The opposite, consuming more than you produce, results in the depletion of wealth, either as savings are drawn down or debt is accumulated. You’re either destroying the productive capacity of past accumulations of capital or mortgaging the productive capacity of future accumulations of capital. Either is bad economics, whether for a household or a country; and we’re seeing both — and will continue to see both, regardless of who wins the next US election.

With the idiots who run the world’s central banks doing their best to keep interest rates at near zero — actually severely negative in real terms — they’re discouraging saving and encouraging even more debt.

There are no political solutions. The economic problems are bigger than any politician. There’s no way out. I pity the poor fool who wins this election.

L: Let’s look at the short term again. If Romney wins and lots of investors think he’ll “fix” the economy, there could be a surge in the stock market based on nothing more than expectations. On the other hand, if Obama wins and investors expect higher taxes, they could sell in advance of that happening — people are talking about “tax-gain selling” this year in addition to tax-loss selling.

Doug: I really don’t think any of that matters. People think the economy rests on a base of psychology, but they are wrong. What makes an economy work is not confidence and not consumption, but production. What makes an economy grow is savings — accumulation of production in excess of consumption that can be invested in new things.

If Romney wins, people start spending on consumption again because they’re confident, but that’s not a good thing. What needs to happen is for past mistakes to be fully and truly liquidated, and the economy needs to be freed so that people can produce more, consume less, and save. Then we can build a real solid foundation for future growth. All the conventional hack economists, however, believe that the banks should lend more to enable people to consume more, and that will stimulate production. That’s going to make things worse. It will be production catering to unsustainable patterns of consumption — further exacerbating the problem, which is that the US and many countries have been living way above their means for a long time.

L: I agree, but economic fundamentals are subject to transient headwinds and tailwinds. A lot of investors — including many gold bugs — think that if Romney wins, he’ll be good for the economy, and that will make people less fearful, and that will reduce gold’s luster as a safe haven. The driving reality is the trillions of currency units that governments around the world have created — an interesting side note is the recent all-time-high that gold reached in euros — but prices are fixed at the margins. Very near term, even incorrect expectations could impact prices, could they not?

Doug: I think it’s a mistake to try to predict mass psychology on a short-term basis like this. Too volatile. A bad day on American Idol could change things drastically.

But here’s how I read it. Romney is a not particularly thoughtful pragmatist with no real principles. If he wins, he’ll probably implement just as many wrong-headed socialist ideas as Obama would, varying only in their details and pet interests, not in their essential nature. Just like Obama, he’s going to try to use the government to fix the economy, and that’s the exact opposite of what needs to be done; the government needs to get out of the way and let economic activity go where it will. He’ll “do something.” He’ll just tart up his actions with different rhetoric.

So things are going to get much worse whoever wins, and if it’s Romney, it’s more likely that he’ll resort to military adventurism to “wag the dog” more quickly. Obama has continued the war in Afghanistan and likes to take credit for the extrajudicial killing of Osama Bin Laden — he’s so drone-happy, I almost wonder if he’s the president who’ll activate Skynet — but Romney is clearly the more hawkish of the two, and that’s one of the worst things about him.

L: So, don’t vote… But we’ve already said that.

Doug: Well, if you insist on voting, consider pulling the lever for Gary Johnson, the ex-governor of New Mexico, on the Libertarian ticket. The die is cast for the next few years. The US deficit will continue ballooning and the Fed will keep printing up dollars, regardless of who wins. But if you care about the consequences of this election, the main consequence to consider is the impact on the next round in 2016 — assuming the US still has elections by then.

Things will be so bad in the next few years, people will be looking for something different. They’ll have no hope, and they’ll want serious, radical change. If Romney wins, the Democrats will take the White House in 2016 for sure, and that will likely mean Hillary. She’s perhaps the most dangerous Democrat possible, a real-life version of Dickens’ Madame LaFarge, or perhaps a reincarnation of Evita Peron. About the worst person I could think of to ever become president. She would totally wipe out whatever little is left of America by then.

On the other hand, if Obama wins, the Republicans will probably win in 2016. By then, things will be such a mess, so chaotic, it will be time for a general to step into the ring. People in the US love their military now — a strange thing to see for someone who remembers how hated the military was during the Viet Nam war. No one would have dreamed of voting for a general back then. But now, a right-wing general who’s perceived as being decisive and incorruptible could play the role of the “man on a tall white horse” who can lead the nation forward. And that would not only increase the chances of more stupid, wasteful wars, it could really turn the US into a true police state. He’d treat the country like a military camp.

L: If we’re damned if we do and damned if we don’t, what’s a person to do?

Doug: The only thing to do is to stop thinking politically. Stop looking for political solutions to socioeconomic problems; political solutions are poisonous, certainly at this point. The political system is terminally corrupt — it needs to be flushed.

Look to take care of yourself first. If you’re not in a strong, stable position, you won’t be able to help your family, friends, and others you care about. As cold-hearted as it may sound, the right thing to do in a period of social disintegration and economic collapse is to look out for #1. Make sure you’re not a liability to yourself and others. Charity begins at home — that’s the first order of business.

Second, after you’re secure, look out for your friends and family — at least the ones who will listen and you can move to take action in a sensible direction. This is the best thing you can do for them, but it’s also a selfish thing to do for yourself; you’ll need all the allies you can get, going forward into turbulent times.

If you have time and energy left from that, you can start looking into what influence you can have on the larger world. Which is to say, only at that point can you afford to think politically. But that’s pretty far down on the hierarchy of importance these days.

L: Investment implications. Is there no “Obama play” or Romney play” — some trade you might rush out and implement depending on who wins?

Doug: No. The only certainty I see is increased financial chaos. An argument can be made for catastrophic deflation, but I believe we’ll see the opposite. The Fed has promised a minimum of $40 billion a month in new liquidity. And at some point the banks, which are generally not lending much, will start doing so. When all the cash they are sitting on starts flooding into the economy, we’ll see inflation in earnest and interest rates of 10%, 20%, even 30%, just like in a banana republic. That’s going to trash the US dollar. And since most savers save in dollars, that’s going to wipe out the productive class, worldwide.

Furthermore, as we’ve pointed out before, there’s a super-bubble in government bonds. I call them a triple threat to your wealth: interest rate risk, credit risk, and currency risk. Rick Rule has taken to calling them “reward-free risk.” Just as the tech bubble burst in 2000, and then the real-estate bubble burst, the next one is the bond bubble, with immense destruction of capital.

I continue to say that, as impossible as it sounds, that all markets are overpriced. There is simply nothing in the whole world — not stocks, not bonds, not real estate — nothing that I can say without qualifications is cheap. So, with everything riding high, you’ve got to continue accumulating gold and silver to protect yourself from financial chaos, and you’ve got to diversify yourself internationally to protect yourself from government chaos. To speculate, of course, there are the gold stocks. They’re a leveraged bet on government continuing to do the wrong things.

I’ve said it before and I’ll say it again: the governments of the world consider people to be their property. Right now, they see their subjects as milk cows, but when things get really rough, they might see them as beef cows.

L: The end is nigh. Good thing you’re an optimist.

Doug: [Chuckles] We should make sure new readers understand that you’re not just being sarcastic. I do think things will get even worse than I think they will, but I also believe they will subsequently get even better than I can imagine them being, thanks to the longest trend of them all, the Ascent of Man.

L: Indeed. Thanks, Doug.

Doug: My pleasure.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Editor’s note: Dear Readers, every two years — for about the last 30 years — Doug has run a variation of this article somewhere, including 2010, when Doug and Louis discussed voting… as a matter of principle, not the particulars of the candidates of the day. Well, it’s a different day, and once again the pundits are trying their best to persuade everyone of how crucial this election is, and how important it is to vote, if only for the lesser of two evils. So here it is. Although it will infuriate some, we consider it a Public Service Announcement.

P.S. If you want to discuss anything from matters of principle down to specific investment ideas with Doug, one of the best places to do so is at La Estancia de Cafayate, in Salta, Argentina, where Doug will be watching the elections on the super-wide plasma screen in the clubhouse. When the rioting starts, he figures that will be both safer and a lot more comfortable. You’re welcome to join him.

L: Doug, we’ve spoken about presidents. We have a presidential election coming up in the US — an election that could have significant consequences on our investments. But given the views you’ve already expressed on the Tea Party movement and anarchy, I’m sure you have different ideas. What do you make of the impending circus, and what should a rational man do?

Doug: Well, a rational man, which is to say, an ethical man, would almost certainly not vote in this election, or in any other — at least above a local level, where you personally know most of both your neighbors and the candidates.

L: Why? Might not an ethical person want to vote the bums out?

Doug: He might feel that way, but he’d get his emotions under control. I’ve thought about this. So let me give you at least five reasons why no one should vote.

The first reason is that voting is an unethical act, in and of itself. That’s because the state is pure, institutionalized coercion. If you believe that coercion is an improper way for people to relate to one another, then you shouldn’t engage in a process that formalizes and guarantees the use of coercion.

L: It’s probably worth defining coercion in this context. I know you agree with me that force is ethical in self-defense. A murderer I shoot might feel coerced into accepting a certain amount of hot lead that he did not consent to, but he intended the same, or worse, for me, so the scales are balanced. What you are talking about is forcing innocent, non-consenting others to do things against their wills, like paying taxes that go to pay for military adventures they believe are wrong, etc.

Doug: Right. The modern state not only routinely coerces people into doing all sorts of things they don’t want to do — often very clearly against their own interests — but it necessarily does so, by its nature. People who want to know more about that should read our conversation on anarchy. This distinction is very important in a society with a government that is no longer limited by a constitution that restrains it from violating individual rights. And when you vote, you participate in, and endorse, this unethical system.

L: It’s probably also worth clarifying that you’re not talking about all voting here. When you are a member of a golfing club and vote on how to use the fees, you and everyone else have consented to the process, so it’s not unethical. It’s participating in the management of the coercive machinery of the state you object to, not voting in and of itself.

Doug: Exactly. As Mao correctly said, “The power of the State comes out of the barrel of a gun.” It’s not like voting for the leadership of a social club. Unlike a golfing club, or something of that nature, the state won’t let you opt out.

L: Even if you’re not harming anyone and just want to be left alone.

Doug: Which relates to the second reason: privacy. It compromises your privacy to vote. It gets your name added to a list government busybodies can make use of, like court clerks putting together lists of conscripts for jury duty. Unfortunately, this is not as important a reason as it used to be, because of the great proliferation of lists people are on anyway. Still, while it’s true there’s less privacy in our world today, in general, the less any government knows about you, the better off you are. This is, of course, why I’ve successfully refused to complete a census form for the last 40 years.

L: [Chuckles] We’ve talked about the census. Good for you.

Doug: It’s wise to be a non-person, as far as the state is concerned, as far as possible.

L: Not to digress too much, but some people might react by saying that juries are important.

Doug: They are, but it would be a waste of my time to sign up for jury duty, because I would certainly be kicked off any jury. No attorney would ever let me stay on the jury once we got to voir dire, because I would not agree to being a robot that simply voted on the facts and the law as instructed by the judge — I’d want to vote on the morality of the law in question too. I’d be interested in justice, and very few laws today, except for the basic ones on things like murder and theft, have anything to do with justice. If the case related to drug laws, or tax laws, I would almost certainly automatically vote to acquit, regardless of the facts of the case.

L: I’ve thought about it too, because it is important, and I might be willing to serve on a jury. And of course I’d vote my conscience too. But I’d want to be asked, not ordered to do it. I’m not a slave.

Doug: My feelings exactly.

L: But we should probably get to your third reason for not voting.

Doug: That would be because it’s a degrading experience. The reason I say that is because registering to vote, and voting itself, usually involves taking productive time out of your day to go stand around in lines in government offices. You have to fill out forms and deal with petty bureaucrats. I know I can find much more enjoyable and productive things to do with my time, and I’m sure anyone reading this can as well.

L: And the pettier the bureaucrat, the more unpleasant the interaction tends to be.

Doug: I have increasing evidence of that every time I fly. The TSA goons are really coming into their own now, as our own home-grown Gestapo wannabes.

L: It’s a sad thing… Reason number four?

Doug: As P.J. O’Rourke says in his new book, and as I’ve always said, voting just encourages them.

I’m convinced that most people don’t vote for candidates they believe in, but against candidates they fear. But that’s not how the guy who wins sees it; the more votes he gets, the more he thinks he’s got a mandate to rule — even if all his votes are really just votes against his opponent. Some people justify this, saying it minimizes harm to vote for the lesser of two evils. That’s nonsense, because it still leaves you voting for evil. The lesser of two evils is still evil.

Incidentally, I got as far as this point in 1980, when I was on the Phil Donahue show. I had the whole hour on national TV all to myself, and I felt in top form. It was actually the day before the national election, when Jimmy Carter was the incumbent, running against Ronald Reagan. After I made some economic observations, Donahue accused me of intending to vote for Reagan. I said that I was not, and as sharp as Donahue was, he said, “Well, you’re not voting for Carter, so you must be voting Libertarian…”

I said no, and had to explain why not. I believed then just as I do now. And it was at about this point when the audience, which had been getting restive, started getting really upset with me. I never made it to point five.

Perhaps I shouldn’t have been surprised. That same audience, when I pointed out that their taxes were high and were being wasted, contained an individual who asked, “Why do we have to pay for things with our taxes? Why doesn’t the government pay for it?” I swear that’s what he said; it’s on tape. If you could go back and watch the show, you’d see that the audience clapped after that brilliant question. Which was when I first realized that while the situation is actually hopeless, it’s also quite comic…

L: [Laughs]

Doug: And things have only gotten worse since then, with decades more public education behind us.

L: I bet that guy works in the Obama administration now, where they seem to think exactly as he did; the government will just pay for everything everyone wants with money it doesn’t have.

Doug: [Chuckles] Maybe so. He’d now be of an age where he’s collecting Social Security and Medicare, plus food stamps, and likely gaming the system for a bunch of other freebies. Maybe he’s so discontent with his miserable life that he goes to both Tea Party and Green Party rallies to kill time. I do believe we’re getting close to the endgame. The system is on the verge of falling apart. And the closer we get to the edge, the more catastrophic the collapse it appears we’re going to have.

Which leads me to point number five: Your vote doesn’t count. If I’d gotten to say that to the Donahue audience, they probably would have stoned me. People really like to believe that their individual votes count. Politicians like to say that every vote counts, because it gets everyone into busybody mode, makes voters complicit in their crimes. But statistically, any person’s vote makes no more difference than a single grain of sand on a beach. Thinking their vote counts seems to give people who need it an inflated sense of self-worth.

That’s completely apart from the fact, as voters in Chicago in 1960 and Florida in 2000 can tell you, when it actually does get close, things can be, and often are, rigged. As Stalin famously said, it’s not who votes that counts, it’s who counts the votes.

Anyway, officials manifestly do what they want, not what you want them to do, once they are in office. They neither know, nor care, what you want. You’re just another mark, a mooch, a source of funds.

L: The idea of political representation is a myth, and a logical absurdity. One person can only represent his own opinions — if he’s even thought them out. If someone dedicated his life to studying another person, he might be able to represent that individual reasonably accurately. But given that no two people are completely — or even mostly — alike, it’s completely impossible to represent the interests of any group of people.

Doug: The whole constellation of concepts is ridiculous. This leads us to the subject of democracy. People say that if you live in a democracy, you should vote. But that begs the question of whether democracy itself is any good. And I would say that, no, it's not. Especially a democracy unconstrained by a constitution. That, sadly, is the case in the U.S., where the Constitution is 100% a dead letter. Democracy is nothing more than mob rule dressed up in a suit and tie. It’s no way for a civilized society to be run. At this point, it’s a democracy consisting of two wolves and a sheep, voting about what to eat for dinner.

L: Okay, but in our firmly United State of America today, we don’t live in your ideal society. It is what it is, and if you don’t vote the bums out, they remain in office. What do you say to the people who say that if you don’t vote, if you don’t raise a hand, then you have no right to complain about the results of the political process?

Doug: But I do raise a hand, constantly. I try to change things by influencing the way people think. I’d just rather not waste my time or degrade myself on unethical and futile efforts like voting. Anyway, that argument is more than fallacious, it’s ridiculous and spurious. Actually, only the non-voter does have a right to complain — it’s the opposite of what they say. Voters are assenting to whatever the government does; a non-voter can best be compared to someone who refuses to join a mob. Only he really has the right to complain about what they do.

L: Okay then, if the ethical man shouldn’t vote in the national elections coming up, what should he do?

Doug: I think it’s like they said during the war with Viet Nam: Suppose they gave a war, and nobody came? I also like to say: Suppose they levied a tax, and nobody paid? And at this time of year: Suppose they gave an election, and nobody voted?

The only way to truly de-legitimize a corrupt system is by not voting. When tin-plated dictators around the world have their rigged elections, and people stay home in droves, even today’s “we love governments of all sorts” international community won’t recognize the results of the election.

L: De-legitimizing evil… and without coercion, or even force. That’s a beautiful thing, Doug. I’d love to see the whole crooked, festering, parasitical mass in Washington — and similar places — get a total vote of no-confidence.

Doug: Indeed. Now, I realize that my not voting won’t make that happen. My not voting doesn’t matter any more than some nave person’s voting does. But at least I’ll know that what I did was ethical. You have to live with yourself. That’s only possible if you try to do the right thing.

L: At least you won’t have blood on your hands.

Doug: That’s exactly the point.

L: A friendly amendment: you do staunchly support voting with your feet.

Doug: Ah, that’s true. Unfortunately, the idea of the state has spread over the face of the earth like an ugly skin disease. All of the governments of the world are, at this point, growing in extent and power — and rights violations — like cancers. But still, that is one way I am dealing with the problem; I’m voting with my feet. When the going gets tough, the tough get going. It’s idiotic to sit around like a peasant and wait to see what they do to you.

To me, it makes much more sense to live as a perpetual tourist, staying no more than six months of the year in any one place. Tourists are courted and valued, whereas residents and citizens are viewed as milk cows. And before this crisis is over, they may wind up looking more like beef cows. Entirely apart from that, it keeps you from getting into the habit of thinking like a medieval serf. And I like being warm in the winter, and cool in the summer.

L: And, as people say: “What if everyone did that?” Well, you’d see people migrating towards the least predatory states where they could enjoy the most freedom, and create the most wealth for themselves and their posterity. That sort of voting with your feet could force governments to compete for citizens, which would lead to more places where people can live as they want. It could become a worldwide revolution fought and won without guns.

Doug: That sounds pretty idealistic, but I do believe this whole sick notion of the nation-state will come to an end within the next couple generations. It makes me empathize with Lenin when he said, “The worse it gets, the better it gets.” Between jet travel, the Internet, and the bankruptcy of governments around the world, the nation-state is a dead duck. As we’ve discussed before, people will organize into voluntary communities we call phyles.

L: That’s the name given to such communities by science fiction author Neal Stephenson in his book The Diamond Age, which we discussed in our conversation on Speculator's Fiction. Well, we’ve talked quite a bit — what about investment implications?

Doug: First, don’t expect anything that results from this U.S. election to do any real, lasting good. And if, by some miracle, it did, the short-term implications would be very hard economic times. What to do in either case is what we write about in our big-picture newsletter, The Casey Report.

More important, however, is to have a healthy and useful psychological attitude. For that, you need to stop thinking politically, stop wasting time on elections, entitlements, and such nonsense. You’ve got to use all of your time and brain power to think economically. That’s to say, thinking about how to allocate your various intellectual, personal, and capital assets, to survive the storm — and even thrive, if you play your cards right.

L: Very good. I like that: think economically, not politically. Thanks, Doug!

Doug: My pleasure.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

Shortly after the conclusion of the Casey Research/Sprott, Inc. Navigating the Politicized Economy investor summit, Louis James sat down with Doug Casey to assess the conference and provide insights on how investors can win in today’s distorted marketplace.

Even if you didn’t attend the Navigating the Politicized Economy Summit, you can still profit from the plethora of actionable investment advice given there with the Summit Audio Collection.

TRANSCRIPT

Interviewed by Louis James, Chief Metal & Mining Investment Strategist, Casey Research

Louis James: Ladies and gentlemen, thanks for tuning in. We’re in Carlsbad, California, with Doug Casey at our recently concluded Summit on Navigating the Politicized Economy.

So Doug, did you come out with any new ideas, or did your guru sense tune in on any new trends as a result of the input you had?

Doug Casey: It was one of our more interesting conferences, actually, though there was nothing that I didn’t know and haven’t thought about, to tell the truth. But putting these big arrows on a map with the people flowing and so forth, it kind of reminded me of the maps that they had in classrooms when I was in high school, showing the waves of Goths invading this way and Huns invading that way into Europe. These movements have been going on for thousands of years, and they will continue to go on, and the colors of the map on the wall are going to continue flowing.

L: That was Thomas Barnett’s presentation, which I also found very interesting. But I wonder about it. On the one hand, his argument seemed to rely heavily on demographics, which I know you look at. So I thought of similarities between your thoughts and his in that way. On the other hand, he was making all these rather specific projections — decades out — and I wonder how much credence one can put on such projections.

Doug: Well, yes, and there were two things that were quite interesting but wrong in his presentation. He didn’t take any consideration of economics. It was like when he talked about US military power — of which he’s a great fan — that would continue. I wonder if, 25 years ago, he was thinking that Soviet military power would continue. But the US is heading for a brick wall economically, just as the Soviet Union did. All of these F-22s and B-2s and aircraft carrier groups and so forth, they are really just unaffordable. He never mentioned the fact that the US is running — even if you use cash accounting; forget about accrual accounting, which is much worse — a $1.5-trillion deficit per year. And it’s going up, not down. And there’s no way it can go down at this point, because Americans are not going to cut their military. In fact, Romney wants to spend more on military.

Americans love their military. It seems to be the only part of the government that at least has the faade of being competent and honest. Of course, it’s actually not that competent — it’s about as competent as a heavily armed version of the post office. And is it honest? Well, maybe the average soldier is, but once you get up to the supply-sergeant level, not very much; and once you get up to the Pentagon level, not at all.

So he missed that part entirely, and the other part that he missed was he assumed that the nation-state would continue to exist. He did point out — which is a point I always like to make — that all of these countries in Africa and in Asia, certainly in the Middle East, are just arbitrary lines drawn on maps in boardrooms in Europe. They’re going to come apart.

L: I did notice that. I remembered our conversation on Africa, when he was pointing out how the lines on the map don’t match the ethnic lines and so on.

Doug: Well, did he steal if from me, or is he going to accuse me of stealing it from him? [Chuckles] I don’t know, but it’s just a fact. But I think that what he missed there is that the nation-state as an entity is actually on its way out. It doesn’t serve a useful purpose.

L: Okay, that stimulates lots of thoughts. Any other key highlights that you want to zoom in on? Who really wowed you at the podium?

Doug: Well, there was nobody that I disagreed with at the podium that I can think of. Can you think of anybody that was really unsound other than –

L: I wouldn’t say unsound.

Doug: — who has obviously spent just a wee bit too much time circulating around the Washington beltway talking to those types.

L: Karl Denninger has a different way of looking at things. I thought his take was very interesting. He focused on problems that we would agree with are problems, but his way of looking at them was quite different — much more mainstream — than ours.

Doug: What are you thinking?

L: His focus on medical expenses and how that’s bankrupting the country, and on the housing situation not having been really cleared out yet. I would probably agree with both of those, but I would look more fundamentally, at things like the government running the printing press — why did the Fed cause the housing bubble? — and such, rather than the more mainstream view that these things happen.

Doug: That’s right. I hate to make such a sweeping, seemingly overreaching statement, but almost all of the problems that we have in society are caused by the government. In the case of medical expenses, which he brought up, it seems pretty clear to me that absent government intervention, medical technology would be like computer technology — or for that matter almost any kind of technology — and costs would be going down.

L: Moore’s Law.

Doug: Yes, Moore’s Law would apply.

L: And he would agree with that. He says it’s government law that is preventing that from happening.

Doug: He pointed out that there was something called EMTALA passed in 1986, that made it a law that anybody anywhere that’s put in an ambulance has to be taken to the closest place and has to be treated, regardless of cost or consequences. That’s a kind of free medical care that’s reflected in costs. I remember there were times when I had to visit the emergency room during the ’70s. I had a skydiving accident once… It wasn’t the kind of skydiving accident where, well, it’s usually more serious than an accident, but I hurt myself.

L: You’re right here, so it can’t have been the usual skydiving accident.

Doug: No. [Chuckles] But I went to the emergency room just outside of D.C. I was the only person there. You do that today, you’ve got an eight-hour wait, and you’ve got to cut your way through people that are using it. That’s because of that law. Most people are unaware of it. They think it’s just the way things are.

L: So Doug Casey’s telling us the government is the problem. Big surprise. But it’s good to hear that other people are seeing these things too. Now, how do we navigate through this, though? The theme of the conference was “navigating the politicized economy.” How do we survive? How do we invest?

Doug: Well, at the next conference we have, I’m going to put together a new speech. Since I’m an amateur student of classical antiquity in general and the Roman Empire in particular, my speech will ask how much like Rome is the US? Which is to say, does what we are going through now resemble what Rome went through when it declined and fell?

L: How close to Nero are we?

Doug: [Laughs] Oh, I think we’re past Nero at this point. And it does amuse me that Americans are — well, I don’t think any Americans are really enthusiastic about this election. How can you enthusiastically support Obama or Romney? They’re both empty suits. It’s embarrassing, but it’s pretty much like I always say about the Romans. They were so happy when Tiberius died; they figured things couldn’t get worse, but then they got Caligula. And it kept going downhill more or less from there on. Well, there were a few upticks along the way, but that’s where we’re at today. It’s a question of “choose your poison” as far as I’m concerned, from this point forward.

L: Okay, so again, having realized that we live in a politicized economy, it’s not a free market, how does one navigate, how does one stay afloat?

Doug: Well, the way I see it, you’ve got to take advantage of the fact that it’s a politicized economy. It’s a very bad thing to have a politicized economy, because it’s destructive of capital. It generally reduces the standard of living. It’s a horrible thing. But you always have to look at the bright side; the government is going to create tremendous distortions and misallocations of capital by the very fact that it’s involved, and that does present opportunities. It’s not a time to be an investor, because an investor is somebody who allocates capital to create more capital, to grow wealth. That’s what investing is all about. Speculation doesn’t imply that at all. It’s very different; speculation implies capitalizing on politically caused distortions in the marketplace.

And one giant one that we have right now — though a bit tricky to capitalize on — is the current bond bubble. First the Fed created a stock-market bubble in the late ’90s, which collapsed in 2000. Then they blew up a real-estate bubble, which is still collapsing. I think both the stock market and the real-estate market are still overpriced, even though they’ve come down a lot. But the biggest bubble of all, and the most dangerous one, is the current bond bubble.

They’ve driven interest rates to basically zero levels — actually negative levels in some European countries, which is pretty unbelievable. I learn something new every day; I thought that negative interest rates were almost cosmically impossible, but I’ve learned different in recent months. This is creating huge distortions in the way people react and so forth. And of course, the biggest one of all is the bond market, which is going to collapse at some point. The time to have bought bonds was in the early ’80s, when they were yielding 12, even 15%. Now they are yielding 0%, and everybody’s buying them. It’s unbelievable.

L: But that’s really a sign of fear, which leads to the next bubble, the probable gold bubble. Or certain gold bubble?

Doug: I’d say it’s a certain gold bubble. Looking at the bright side of the government doing all these stupid things, they will create other bubbles. It seems inevitable to me that gold and silver are going to be among them, because they are the only financial assets — and that’s what they are, financial assets — that are not simultaneously somebody else’s liability.

This is totally untrue of bonds. Bonds are a triple threat to your welfare. You’ve got the interest-rate threat. Interest rates could only go up at this point since they’re at zero. You’ve got the credit-risk threat. Will they be able to pay back the dollars, or euros, or yen, or whatever that they are in? And you’ve got the currency threat. Will the yen or dollars or euros or whatever be worth anything, even if they pay them back to you? I don’t see why, but everybody’s buying bonds. Institutions are buying them, the average guy is buying them — trying to reach for 2% in yield when real inflation is probably running 5-6% per year. Who knows what it really is — the US is becoming like Argentina, where they disguise these numbers and don’t admit the reality.

L: These are examples of the speculator’s principle we’ve described to people. Speculators think about Ben Bernanke and his helicopters — government distortions. The idea is to figure out where the helicopter is going to go, where the wind is going to blow. The speculator asks: “Where is the money going to go as a result of government stupidity?”, and stands there with a big net.

Doug: That’s right, and I’ve got to put my finger on the precious metals. I’ve got to also put my finger on gold and silver stocks. I’m not very interested in base metals at this point, because I don’t see the economies doing very well, and that’s not going to help base metals. I wouldn’t touch an iron-ore stock, for instance, at this point. But the gold and silver stocks are another thing, and they are actually quite cheap as we speak. It’s very hard to find bargains in the investment world today. Everything’s been inflated, but the gold and silver mining stocks are, I think, bouncing along the bottom.

L: Okay, well, words to the wise. Thank you very much, Doug.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Hola Doug. What’s on your mind this week?

Doug: The color yellow. As in “yellow journalism” — which seems almost the only kind we have these days. Of course, to be fair, inflammatory, shamelessly dishonest “man bites dog” journalism has always been the dominant kind, simply because it sells papers. But we’ll see more than the usual amount in the next couple of months, simply because elections lend themselves to it; politics seems to stimulate the reptilian part of the brain, the most primitive part. Both politics and the reptilian brain relate well to the yellow press.

Anyway, like many people, I watched snippets of the Republican National Convention in Tampa. Maybe, since I’m engaging in punditry, I should have watched the whole damn thing. But I simply couldn’t force myself to watch even all the parts that were broadcast, because it was just too boring and degrading. I can’t imagine how the people who were there for the whole four days were able to remain awake for the whole thing. Perhaps this is proof that zombies really do exist. What kind of people could take such a charade seriously? It was all canned speeches and scripted events that were basically dishonest. Politics has always been dishonest, of course, but at least it used to be unscripted and mildly entertaining…

L: Wait a minute — what about the now much-discussed Eastwood incident? By all accounts, that was unscripted and perhaps even unwelcome among the convention organizers.

Doug: I did watch Clint and enjoyed his speech, which appeared to be unscripted. He’s a skilled actor and entertainer, so I’ve got to believe it was really off the cuff. I’ve read in the papers — which means I don’t really know anything except some reporter’s guess — but I’ve read that Clint was only supposed to give a five-minute, canned speech. Romney and the convention organizers were caught off guard when Eastwood asked for a chair to be brought on stage; it was thought he wanted to use it to sit down. But he then proceeded to have a very funny conversation with an invisible Obama. One reason I liked it is that he treated Obama with the respect he deserved. It’s about time people stopped treating presidents as if they were Roman emperors.

L: I’ve watched that segment on YouTube and noticed that he used the word “libertarian,” which I doubt the RNC would have approved in advance. So I can believe that “Dirty Harry” was shooting from the hip, as it were.

Doug: I agree — I’m sure they would not have approved of that. I expect the Republicans will do everything they can to discount, denigrate, and destroy the Libertarian Party candidacy of Gary Johnson for president. They know Johnson is likely to draw more votes from them than from the Democrats. And of course, Ron Paul was made a veritable nonperson. The only mention he got at the convention didn’t include any acknowledgment of some of his most important propositions, like ending the drug war, ending foreign interventions and wars, and abolishing the Fed. These people are dishonest and manipulative through and through.

The other thing Clint did, as I recall, was only to mention Romney twice, and not in way that was a particularly strong endorsement. It took courage on Clint’s part in that forum.

L: I noticed that too; his focus was on the people, not the candidate. The biggest cheer he got was when he spoke of the people and said, “We own this country… politicians are employees of ours.”

Doug: Yes. I’m sure that also rankled the suits running the show. But the fact that Clint’s sincere, unscripted comments are so exceptional tells us a lot about the rest of the drivel at such events. It’s like he came up with the idea shortly before he went on stage and was truly speaking extemporaneously. It wasn’t approved by the Politburo, like absolutely everything else emanating from the convention was.

The press coverage of the incident is a good example of the sort of thing that makes me despise reporters. In a way, it’s a litmus test of the psychology of the average journalist, how they reacted to that thing… It says more about them than it does about Eastwood, how they reported on it and what they said about it. So many of them focused on how he hesitated, fumbled, repeated himself, and so forth, scoffing at his remarks as being just an old man’s rant. The snide comments of Michael Moore, the Evil Party’s answer to Jabba the Hutt, are fairly typical.

It was clear to me that Clint spoke from the heart, mistakes and all. I believe that 300 million Americans out there are starving for straight talk from the heart of someone they like — and everyone loves Clint. My guess is that most everybody who isn’t an ideologue of either the Stupid Party or the Evil Party really resonated with his sentiments. The only downside is they’ll wind up helping the feckless Romney.

It was night-and-day different from the slick speeches by the horrible politicians. They all sounded like they’d rehearsed their speeches dozens of times. Every one of them sounded phony — which they are. I preferred the old days when you never knew what the outcome of the convention would be, and the speeches could actually tell you something about the men giving them — or at least have entertainment value. When did all this change? My guess is in the ’50s, with broadcast TV and the invention of the teleprompter. The whole convention was a flavorless, odorless, sanitized bore — except for Clint.

L: I was struck by those criticisms of Eastwood’s delivery as well. Clint Eastwood was born in 1930 — give the guy a break! These critics will be lucky to be half as eloquent when they are in their 80s. But even that’s beside the point; what should matter most is what he said, not how he said it. These same media hacks would never speak so disrespectfully of a venerable statesman they agreed with.

Doug: I have nothing but contempt for these blow-dried airheads on TV news shows. They pontificate and tell you what you’re supposed to think — but they’re really not journalists. They just read the establishment press releases, thereby helping to prop it up. Instead of being the Fourth Estate — a private-sector watchdog and counterbalance to state power — they just make themselves lapdogs of politicians.

If you watch something like The Daily Show, Jon Stewart will often show clips of different so-called journalists in juxtaposition to each other — he did this regarding the Republican Convention — and you can see that the reporters all use the same words. It’s like they are all reading the same script or keying off each other — it’s a herd mentality. This is one reason print journalism has gone downhill, as well. In the era before the TV, a journalist had to witness things in person and draw an independent conclusion. It wasn’t technically feasible to know what everybody else was groupthinking in real time. The noble, lone journalist in the mold of H. L. Mencken is completely gone from the scene today.

L: I know what you mean, but a TV news anchor isn’t really a reporter. He or she is an attractive actor hired to read the news others research, because their faces increase ratings. Is it fair to criticize such people for not being investigative journalists?

Doug: No, I guess it’s not. They are hired to look sincere and look good. I believe it’s well established that people in general are prone to like and believe people they find attractive — that’s the basis for hiring TV news anchors — that and having completely unremarkable, predictable, “mainstream” views. But it’s still not a good thing. To have a system that relies on attractive but ignorant or misinformed people regurgitating reporting written by others is dangerous. The so-called Fourth Estate is dying.

You know, that very term — Fourth Estate — is being used more now, at the very time that the institution itself is changing its essence. The idea of a Fourth Estate arose with the Industrial Revolution and the inception of capitalism — the first three basically being the church, the “nobles,” and everyone else — the 99%. The Fourth Estate has historically been a bit outside all that, but certainly outside the church and the state. Their purpose was to tell it like it is, keep things in balance, and be impartial truth-tellers. Major cities each had dozens of papers. But now the Fourth Estate has truly been captured by the ruling classes.

That’s the bad news. The good news is that we have the Internet. The stuff people report there may not always be any more accurate than the mass media, but at least it’s independent — it’s not a mouthpiece for the Establishment. As far as I’m concerned, the Fourth Estate has betrayed its basic raison d'tre, and no longer serves much of a useful purpose.

L: Which brings us back to the people who write the stories or compose the video coverage — the kind of investigators who are supposed to make a show like 60 Minutes deliver hidden truth to a population that needs to know…

Doug: Unfortunately, they seem to be cut from pretty much the same cloth as the reporters who write for outfits like the New York Times or, God forbid, USA Today — something I feel sheepish about reading in public. They all went to the same universities, where they were taught the same ideas and values by the same teachers — who are all statists of one stripe or another. They are all so deeply inculcated in this worldview, they don’t even know they are in it…

L: Which is why journalists who don’t work for right-wing rags never admit that there is such a thing as “liberal media bias.” Their colored glasses have been on for so long, they don’t even realize they wear them.

Doug: Exactly. The 60 Minutes guys fell flat on their faces when they didn’t call Ben Bernanke out for contradicting himself on their show, first saying the Fed was printing money, then saying it wasn’t. If these guys are the toughest watchdogs we have, we’re in big trouble. The best sources of news on TV are probably The Daily Show and The Colbert Report. As comedians, they serve the role of the court jester and can say things to the king that nobody else dares to. It’s a sad testimony.

L: But there are exceptions, like John Stossel.

Doug: Of course, but again, it’s the exception that tests the rule; the fact that Stossel is so extraordinary tells us a lot about what is ordinary. You can see this clearly when you get a bunch of reporters together on an impromptu talk show, like Meet the Press or whatever; what you see is a bunch of opinionated people, some somewhat to the left, some somewhat to the right of center, yelling at each other. It’s never an intelligent discussion of ideas and principles at all. For instance, there’s never a discussion of whether Social Security, Medicare, or Medicaid are correct areas for government involvement — that’s completely accepted and a given. Even with Obamacare or Romneycare the discussion is only one of whether it’s affordable or efficient, not whether it’s ethically defensible. It’s just glib one-liners and catch phrases.

L: Whoever has the best sound bite wins.

Doug: Just so. Political talk shows are frustrating and embarrassing to watch. I just want to wash my hands of the whole mess, but I guess I’ll have to watch at least a little of the Democrats’ Convention, just to see what kind of charade they put on. I expect it will be more enthusiastic than that of the Republicans, because at least the Democrats actually have some principles… even if they’re completely bent, destructive, and statist principles. It should be some show, maybe like the Nuremburg rally.

L: Morbid curiosity?

Doug: Yes, and very unappealing. It’s literally like watching something die. The capacity of the masses to sit on their sofas and watch endless hours of canned drivel on TV is increasingly convincing me that libertarians and other free-thinkers are actually genetic mutants. We can mate with Boobus americanus intellectually about as well as a human can mate physically with a chimpanzee.

L: Mutants… or at least an uncommon personality type.

Doug: Either way, we are so few — it’s hard to have any hope of reason ever winning the day. My friend Jeff Berwick was caught in a spate of optimism the other day, which started with him guessing that maybe 10,000 new people become libertarians every day — a great-sounding number. Then he took out his calculator and realized that even if the population of earth was stable that, even at that rate, it would take something like 2,000 years before everyone stopped thinking like a criminal.

Communication is critical, of course. But while that’s become easier, in some ways, like the Internet, it may be increasingly difficult in others. The masses are addled by the mind-numbing rays from their TVs, and there are scores of millions more addled by psychiatric drugs, and hundreds of millions more by generations of government miseducation.

On the bright side — you know I like to always look on the bright side — the Internet could be bigger than all those things. The big media corporations no longer have a stranglehold on the news. These days, anyone with a phone has audio- and video-recording capability and can be a reporter. With the Internet, any of these people can get word of what they see out to the entire world.

L: A new, 21st century version of the Fourth Estate?

Doug: Yes; the truth is out there. But as with everything else, it’s subject to Pareto’s Law. So, 80% of what’s out there is crap, and 80% of what’s left is merely okay. But that remaining 4% of quality, uncensored, free information flow is extremely valuable. More good news: because people increasingly realize that 80% of everything is crap, they’re becoming evermore discriminating — which is a very good thing. People used to slavishly believe everything in the newspapers just because it was written; now they’re necessarily more skeptical, which means they’re forced to be more thoughtful.

But as great as this is, it’s like Jesus of Nazareth said: “He who has ears, let him hear.” For the distributed and free reporting we now have via the Internet to do much good, people need to question what they’re told and look for the truth — that’s not going to happen if they only use the ‘Net for social media and porn. After generations of government schooling, where critical thinking is the last thing they want to teach, people willing to do this are few and far between.

L: You’re an atheist quoting the Bible?

Doug: Why not? I can read. Everyone should read the Bible, along with Richard Dawkins, of course.

L: Indeed. Investment implications?

Doug: Nothing I haven’t said before, but that doesn’t make it any less true. The terminal corruption of the major news corporations and the lack of interest in seeking the truth among the general population augurs very poorly for the prospects of the US and the current world order. This creates speculative opportunities, which we work hard on uncovering in our publications, but prospects for mainstream investments are not good. Western civilization is truly in decline and far down the slippery slope.

L: You wrote an article some years ago on how to profit from the coming collapse of Western civilization…

Doug: Yes — which brings me back to the color yellow, but in a positive context this time: the yellow metal. Now the collapse is beginning, my advice is the same: accumulate gold — not as an investment, but for safety. For profit, speculate on the various bubbles and other trends government interventions in response to the unfolding crisis bring about. Rational investment is not an option in this context (remembering that investment is deploying capital to create more capital). Hopefully, investment will again be a viable option after the ongoing crisis bottoms; it depends in good degree how most people view the role of government. We all have to be speculators now, if we want to make money, and we have to be “gold bugs” if we want to come through the storm with minimal loss of wealth.

L: And for more on that, readers could hardly do better than to come to our conference on “Navigating the Politicized Economy” this week in southern California.

Doug: Or — while we’re plugging our own products — they could read your newsletter for our best speculative guidance.

L: Okay, but enough with the crass commercial messages. More soon from California!

Doug: Looking forward to it.

The American economy has never been as centralized as it is today… and Doug’s warning that this centralization has made mainstream investing a poor bet has never been more true.

That’s why we’ve teamed up with Sprott, Inc. to host Navigating the Politicized Economy, a critical investors’ summit in Carlsbad, California held September 7-9. It will feature 28 financial luminaries — including Doug Casey, Rick Rule, and Eric Sprott — who will reveal how they plan to leverage today’s centralized economy to create new wealth.

If you’re not attending, you can still profit from every recorded presentation and every piece of actionable investment advice attendees will hear with the Summit Audio Collection. Order before the Summit ends on September 9 and you will save $100.

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey

L: Doug, in our conversation last week about Syria, we talked about implications for the oil business, and you mentioned Peak Oil. That’s a controversial subject to some, and we’ve had questions about it. Care to comment?

Doug: There shouldn’t be any controversy, as the facts are clear — and there wouldn’t be any, if so many people weren’t so obstinate about misunderstanding plain English. For instance, I was just reading an article the other day, entitled Whatever Happened to Peak Oil?, in which the writer comes across as if not an idiot, then at least intellectually dishonest. He does so first by his reference to an apocalyptic religious prediction, where he implies that those who credit M. King Hubbert’s Peak Oil theory are like foolish religious fanatics, as opposed to analysts of a possible geological reality, and second — and more important — by showing a complete failure to grasp the very simple essence of the Peak Oil argument.

L: Which is?

Doug: In essence, that there is a finite amount of conventional light, sweet crude in the earth’s crust. That statement may not seem like a cosmic breakthrough, on its face. After all, if you have a 42-gallon barrel of oil and you consume 21 barrels, it’s simple arithmetic that 21 barrels remain. On the other hand, wealth is something men create, not something that they simply find. That philosophical fact, however, doesn’t really have much to do with Peak Oil theory.

This theory is widely misunderstood, even by economically literate people, oddly enough. Such people rightly point out that the world will basically never run out of anything, as long as the market is free to set prices. Decreased supply increases prices, which simultaneously causes people to economize, and incentivizes new producers and new alternatives to enter the field. That’s absolutely true, but irrelevant to Hubbert’s point, which was strictly a geological one: The number of conventional deposits of light, sweet crude in the US are finite, and the search for them has been more thorough than anywhere else in the world, and a documented decline in discoveries had to lead to a documented decline in production — of this particular kind of oil.

Peak Oil is a major reason why, in spite of a rapidly cooling global economy, oil prices are still near historic highs, at over $95 a barrel. In part, this is due to so-called “quantitative easing” — i.e., money-printing — but it’s also clearly evidence of the essential correctness of Hubbert’s theory, which accurately predicted the peaking of light, sweet crude-oil production in the US circa 1970. It was not only technically daring, but occupationally and politically dangerous in the ’50s for Hubbert to forecast that the US, and then world production, would go into decline. And he was right.

L: Oil sands were not part of his consideration.

Doug: Right. To my knowledge, he never said anything about oil sands, shale oil, oil from coal, heavy oil from Venezuela, or deep ocean drilling off the coast of Brazil or other places. He did not say, and Peak Oil does not mean, that the world is going to run out of oil. All he said was that the lowest-hanging fruit was picked — the production of that particular kind would go into permanent decline. Technology is constantly pushing both production costs lower and expanding economic supply. But the simple fact that the low-hanging fruit is being depleted at an accelerating rate worldwide is simultaneously pushing costs up. In fact, for many years — especially the ’0s and ’60s — people discovered a lot more oil than the world produced. But since 1980, the world has produced more oil than people discovered. Petroleum geos believe there are about two trillion barrels of recoverable conventional oil, and we now appear to have produced a bit over half of it.

Unconventional oil supplies of all types could easily be ten times as great as the light, sweet crude supplies we’re depleting — but that’s simply not relevant to Hubbert’s theory, which was a geological statement, not an economic one.

L: There’s no real argument on this point, right? US light, sweet crude production did peak, just as he foresaw.

Doug: That’s correct. And he also predicted that in about 2005-2010, light, sweet crude production would peak globally — and it has.

A lot of people pooh-pooh Peak Oil saying, quite correctly, that we’ll never run out of oil. That’s true partly because of the huge amounts of unconventional oil available, partly because of constant improvements in technology, and because of the basic economic arguments I mentioned earlier. But again, these things are irrelevant to Hubbert’s point and its documented correctness.

The take-away point from all this is that the cost of oil production has likely found a new floor. Peak Oil doesn’t mean we run out of oil — only that the cost of production, which now often runs about $40 per conventional barrel and up to $80 per unconventional barrel, all-in, is never going back down to where it was. Prices can never go back to where they were either, because if they drop — or are forced by law — below the cost of production, there won’t be any production.

Even considering the current economic downturn, which is in fact the Greater Depression beginning, the developing world, especially the Chinese and Indians, is going to be using a lot more oil. It’s just going to have to come more and more from higher-cost, unconventional sources. It’s worth noting that oil consumption in the developed world — North America, Europe, and Japan — is flat and has been for years. The growth in consumption — and there will be growth — is coming from China, India, and the rest of the world, where 80% of the people are.

L: Is there really no chance of ever running out? Even the unconventional stuff must be finite…

Doug: No — or rather, it’s an academic point. As a matter of basic science, oil is really a simple chemical. It’s just carbon, hydrogen, and oxygen, all of which are common and abundant on our planet. We can make oil in the lab now; and at high-enough prices, it would be economic to make oil products in chemical plants, out of these three basic elements. If we’re right about nanotechnology, the cost of synthesizing gasoline and almost any molecules you can think of will drop to trivial levels — with no waste or byproducts.

L: If we ever get cheap, programmable assemblers…

Doug: Even without that, they — in particular Craig Venter, who is also responsible for huge breakthroughs in sequencing the human genome — are already working on algae that make oil. There are lots of technological fixes for this. It simply makes no sense to worry about running out of oil in particular or fuel in general. It’s not going to happen.

L: That doesn’t stop the Mad Max wannabes from citing Peak Oil as scientific proof that The End is nigh.

Doug: [Chuckles] Yes, there seem to be two schools of thought relating to Hubbert’s theory. Both are basically reflections of the psychology of the people in question and have nothing to do with Peak Oil. One group says the world is running out of oil completely — the “Mad Max” group you referenced. The other says Hubbert was wrong, and we’ll never run out of oil. Of course, they are right that we’ll never run out, but Hubbert was right about conventional light, sweet oil — which is basically what the world has run on for the last century.

L: Investment implications? People wonder if these more-expensive-to-produce, alternative oil supplies are viable, and the answer is…

Doug: Yes. The answer is yes. But even that’s no big deal, over the long haul. Oil is the most compact, dense store of easily transportable energy we have, making it ideal for vehicles today. Fifty years from now, however, there will be a dozen cheaper and better technologies.

The chattering classes have an innate and most regrettable tendency to become hysterical over any possible problem — most of them temporary, illusory, artificial, or imaginary. Global warming, overpopulation, immigration, food shortages, nuclear power, drugs, genetically modified organisms — they’re all blown up out of all proportion, just like the so-called energy crisis. That’s because hysteria leads to calls for political action, and political action feeds power to the state and its minions.

The fact of the matter is that most things are nonproblems… or absolutely would be if the market was allowed to solve them.

L: Sure — just look at how far electric cars have come. Nobody wanted them before, because something like a golf cart is simply not practical for driving the kids to school, bringing home a cord of wood, or driving across the country. Enter the Tesla Roadster — the thing can accelerate faster than my Corvette. If it could go both as far and fast as my ‘Vette, I might just buy one. But that design is already several years old, and batteries and electric motors keep getting lighter and more powerful. As they get better, there won’t be any point in governments forcing people to buy electric cars — they’ll want them because they are better cars. I’ve already seen free electric-charging stations at rest areas between my house and Vancouver — this could work for me.

Doug: Exactly. Moore’s Law applies here too, though maybe at a different rate. As I like to point out, there are more scientists and engineers alive today than during all the rest of history combined — and they are busy doing things.

L: So would you buy stock in Tesla Motors (Nasdaq: TSLA)?

Doug: I might, but I don’t know the company well enough. And the stock market doesn’t impress me as a bargain, either. Anyway, a great idea doesn’t always make for a great company. It’s a pioneer, and pioneers often wind up full of arrows. I leave that sort of thing to Alex Daley and the Casey Extraordinary Technology team.

L: Other investment implications?

Doug: Well, as I was just saying, oil prices have probably reached a new plateau, based on the cost of production, which is driven by the Peak Oil factor. Prices of raw materials cannot fall below the cost of production, even with government price controls — not for longer than stockpiles last, anyway.

I think the same argument applies for gold and silver — and many other elements and minerals, by the way.

L: So are you buying oil stocks now, or are you looking for lower prices, given your bearish view of the global economy in the near term?

Doug: As with Alex and the technology stocks and you with mining stocks, when it comes to particular oil companies, I follow whatever Marin Katusa says in our energy letters very carefully.

But I have to say that the oil business is different from mining. Mining is a tough and, in today’s world, basically a crappy business. It’s unwanted, expensive, high risk, and has a myriad other problems. They can be addressed, but they never go away. At least on technical grounds, oil is a much easier business; you can see what you’re usually looking for with 3D seismic surveys and one drill hole can both make your discovery and put it into production. Some of those holes can deliver thousands of barrels of oil per day for years. So, as far as the economics, science, and engineering goes, it’s a much better business than mining — but for the same reasons, it’s become much more politicized. That makes government risk even greater than mining.

At any rate, my gut sense is that just like the junior mining stocks, junior oil stacks are bouncing around near a bottom. And oil juniors are almost as volatile as junior mining stocks.

L: Well, whether it’s in oil, technology, or metals exploration, when you go from having nothing but an idea to having a discovery with measurable value, the results for shareholders can be spectacular. The change in value from nothing to something — whatever that “something” is — can make for three- and four-digit percentage gains in days. That’s why we like these “most volatile stocks on earth,” as you call them.

Doug: That’s right. Speculating on a discovery in any of these fields takes nerves of steel and a true contrarian mindset, but for those who have the discipline, the results can be life-changing.

There are literally thousands of these little venture companies you could bet on. You have to be diligent — ruthless, actually — about narrowing the field, which is what makes our “8 Ps” approach to separating the wheat from the chaff so important.

L: The 8 Ps — my mantra and my marching orders. Okay then, thanks for the clarification on Peak Oil.

Doug: My pleasure. See you next week at our upcoming Carlsbad Summit. I look forward to spending time with many of our readers there.

L: Me too — always fun. And for those who can’t make it, we’ll both be at this year’s New Orleans conference.

Doug: Well, speaking of other gatherings, there are efforts to start new Casey phyles in Thailand and Tennessee. If any of our readers live in those areas and are looking for like minds — or if they live somewhere else and would like to find or start a Casey group, they can find out more by emailing phyle@caseyresearch.com.

L: Very good. See you soon!

Doug Casey (send him mail) is a best-selling author and chairman of Casey Research, LLC., publishers of Casey's International Speculator.

The Best of Doug Casey