the Chicken Run
the Great Depression – and Extending the Greater Depression
U.S. government's ever-increasing stranglehold on Americans' assets,
smart investors are now taking their wealth abroad. Doug Casey tells
you how to do it, and why you shouldn't put it off any longer.
the chicken run" is what Rhodesians used to say about neighbors
who packed up and got out during the '60s and '70s, before the place
became Zimbabwe. It was considered "unpatriotic" to leave
Rhodesia. But it was genuinely idiotic not to.
many times about the importance of internationalizing your assets,
your mode of living, and your way of thinking. I suspect most readers
have treated those articles as they might a travelogue to some distant
and exotic land: interesting fodder for cocktail party chatter,
but basically academic and of little immediate personal relevance.
these comments towards the U.S., mainly because that's where the
problem is most acute, but they're applicable to most countries.
2011, the U.S. is in real trouble. Not as bad as Rhodesia 40 years
ago, and definitely a different kind of trouble, but plenty serious.
For many years, it's been obvious that the country was eventually
going to hit the wall, and now the inevitable is rapidly becoming
What do I
mean by that? There's plenty of reason to be concerned about things
financial and economic. But I personally believe we haven't been
bearish enough on the eventual social and political fallout from
the Greater Depression. Nothing is certain, but the odds are high
that the U.S. is going into a time of troubles at least as bad as
any experienced in any advanced country in the last century.
I hate saying
things like that, if only because it sounds outrageous and inflammatory
and can create a credibility gap. It invites arguments with people,
and although I enjoy discussion, I dislike arguing.
most people as outrageous because the long-running post-WW2 boom
has been punctuated only by brief recessions. After 65 years, why
should it ever end? The thought of a nasty end certainly runs counter
to the experience of almost everyone now alive including
myself and our personal experience is what we tend to trust
most. But it seems to me we're very close to a tipping point. Ice
stays ice even while it's being warmed until the temperature
goes over 32 F, where it changes very quickly into something very
economic bankruptcy accompanied by financial chaos
is quickly approaching for the U.S. government. With deficits over
a trillion dollars per year for as far as the eye can see, the U.S.
Treasury will very soon be unable to roll over its maturing debt
at anything near current interest rates. The only reliable buyer
will be the Federal Reserve, which can buy only by creating new
next 24 months, the dollar is likely to start losing value rapidly
and noticeably. Foreigners, who own over 7.3 trillion of them (including
T-bills and other IOUs), will start panicking to dump them. So will
Americans. The dollar bond market, today worth $36 trillion, will
be devastated by much higher interest rates, a rapidly depreciating
dollar, and an epidemic of defaults.
And that will
be just the start of the trouble. Since the U.S. property market
floats on a sea of debt (and is easy to tax), it's also going to
be hit very hard again. This time by stifling mortgage rates.
Forget about property owners paying their existing mortgages; many
won't be able to pay their taxes and utilities, and maintenance
will be out of the question.
The pain will
spread. Insurance companies are invested mostly in bonds and real
estate; many will go bankrupt. The same is true of most pension
funds. If the stock market doesn't collapse, it will only be because
money is looking for a place to hide from inflation. The payout
for Social Security will drop significantly in real terms, if not
in dollars. The standard of living of most Americans will fall.
sequence of events has happened in many countries in recent decades,
and they've survived the tough times. But it has the potential,
at least in relative terms, to be more serious in the U.S. than
it was in Argentina, Brazil, Serbia, Russia, Mozambique or Zimbabwe,
for two main reasons.
people in those countries knew they couldn't trust their government
and acted accordingly, even in contravention of the law, by accumulating
assets elsewhere. So there was a significant pool of capital available
for rebuilding. Americans, on the other hand, tend to be much more
insular, law-abiding and trusting in their government. When they
lose their U.S. assets, they'll have lost everything.
societies were significantly more rural than the U.S. is today.
As in the America of 100 years ago, much of the population lived
quite close to the land and had practical skills and habits that
helped them get through the tough times. For 21st-century Americans,
it's a different story. Shortages and disorder are going to hit
commuters who live in suburbs, and urban dwellers who think milk
appears in cartons magically, like a ton of bricks.
you can absolutely count on is that everyone will look to the government
to "do something." Americans really do think governments control
the way the world works. Another certainty is that the U.S. government
will "step in" massively, because everyone will want them
to, and the politicians themselves believe they should. This will
greatly aggravate the crisis and make it last much longer than necessary.
It Gets Serious
just over the short run. The long run is much more serious, because
the next chapter of the Greater Depression has every chance of radically,
and at least semi-permanently, overturning the basic character of
American life. Ice turned to water suddenly and unexpectedly
in Russia in 1918, Germany in 1933, China in 1949, Vietnam
in 1954, Cambodia in 1975, and Rwanda in 1995. Those are just the
first examples that come to mind. There are scores more.
events I've outlined are going to mean serious hardship and unpleasantness
for many people. But that doesn't concern me nearly as much as the
social and political reaction.
gets hurt in a serious depression, but if you understand what's
going on and prepare for it, you can do well enough. Of course,
political and social change always follow economic and financial
upheaval, but I think it's going to be much more drastic this time,
because the U.S. has been on the road to becoming a police state
for quite a while. The trend was supercharged by the so-called War
on Terror, starting in 2001. And it's likely to go into hyper-drive
in the months to come as the economy emerges from the eye of the
storm. I know it seems asynchronous to think of a police state in
a suburban country dotted with shopping malls. But not really.
Think in terms
of science fiction, a genre that has far more predictive value than
the work of any futurist or think tank.
mimicking art. In 1932, Aldous Huxley described a highly controlled
utopia in Brave New World, where drugs made everybody think
(actually feel, because thinking could only make you unhappy) that
they were happy. The U.S. has pretty much done that drill, consuming
massive quantities of everything on credit, watching American
Idol and its clones in every spare moment, and using plenty
of Ritalin and Prozac along the way.
later, George Orwell described an even more tightly controlled dystopia
in 1984. Everybody knows that story, even if they haven't
read the book.
like good sci-fi writers, both authors were just a generation or
so ahead of events. What we're likely to see in the next few years
is elements of both their worlds.
we're seeing it right now, or at least a preview. Whenever I return
to the U.S., dealing with Immigration and Customs makes my skin
crawl. And they're no longer just at airports and the border; they
now range many miles inland and make random stops to see if your
papers are in order.
as objectionable as the TSA, which has developed a highly dangerous
corporate culture, even as it's grown in numbers and power, now
reaching into busses, trains, and soon the highways. The FBI, the
CIA, the DEA, the ATF, the Secret Service, the Federal Marshals,
FEMA, and literally scores of other national law enforcement agencies
are all expanding rapidly.
constituted a veritable Praetorian Guard but now truly have lives
of their own. Homeland Security is completing its new 400-acre campus
in Washington, DC. Police forces all over the country are increasingly
militarized in both equipment and attitude. And the military itself,
bloated on a budget of hundreds of billions a year, has come a long
way from the slapstick world of Beetle Bailey, full of steroid-pumped
Black Ops wannabes who've picked up plenty of bad habits in the
government's numerous undeclared wars. All these types endorse the
dozens of "fusion centers" that have been created across
the U.S. to collect and correlate information from every source
imaginable, for some purpose.
All these organizations
are bureaucracies. They serve themselves first. Their prime impulse
is to grow and increase their budgets. They tend to attract the
wrong kind of person and drive out people of good will. And it's
reached a stage where even if John Galt were elected president,
he'd find them not just impossible to uproot but dangerous to confront.
another prediction. Riding the economic and social disorder, these
new Praetorians, oriented as they are toward professional paranoia
and the "national security" state, are going to become
truly virulent. They're going to use the continuing economic crisis
to increase their power, like it or not. The American people will
demand it, since they are so degraded that they really do prefer
the appearance of security to the prospect of having to take personal
If I'm right
(and I feel as sure about this as I ever have about anything), then
it's not going to go well for libertarians, classical liberals,
old-line conservatives, individualists, free-thinkers, non-conformists,
people who subscribe to letters like this or who cruise suspicious
websites, or gamma-rats generally. It was a dangerous environment
for these types (not to mention those of Japanese or German descent
and members of various religious groups) during America's past crises.
When the chimpanzees are hooting and panting, you'd better join
them, or they'll start wondering why not.
I expect what
we're looking at is going to be much more serious than any past
crisis, partly because America has already evaporated, like the
morning haze on a hot summer's day. You're not in Kansas anymore.
Kansas isn't in Kansas anymore.
All very well,
you may say. But there are practical issues, you also say. A person
can't just pick up and leave and go where he wants and do what he
wants… can he? Get real, Casey. There are reasons a person
has to stay where he is, aren't there?
at some of those reasons.
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.
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
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.
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 U.S.) more than a sterile, dismal and overpriced old people's
home, where she's likely to wind up.
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.
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.
afraid I won't fit in." As I explained a little earlier,
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
don't speak the language." It's said that Sir Richard
Burton, the 19th-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.
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.
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.
don't want to give up my U.S. 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 U.S. 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 U.S. reinstitute
the draft or start a program of "national service"
which is not unlikely.
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
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 say
again, time is getting short. And the reasons for looking abroad
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 U.S.
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.
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.
I would like
to reemphasize that it's pure foolishness to have your loyalties
dictated by the lines on a map or the dictates of some ruler. The
nation-state itself is on its way out. The world will increasingly
be aligned with what we call phyles, groups of people who consider
themselves countrymen based on their interests and values, not on
which government's ID they share. I believe the sooner you start
thinking that way, the freer, the richer, and the more secure you
The most important
first step is to get out of the danger zone. Let's list the steps,
in order of importance.
a financial account in a second country and transfer assets to
a crib in a suitable third country, somewhere you might enjoy
whether in good times or bad.
- 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
- 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.
Where to go?
The personal conclusion I came to was Argentina (followed by Uruguay),
where I spend a good part of my year, and even more when my house
at La Estancia de Cafayate is completed.
I would suggest you look most seriously at countries whose governments
aren't overly cozy with the U.S. 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."
You may well
regret it for the rest of your life if you don't take appropriate
steps now to internationalize and thus protect your wealth. To find
out how to do it, what to watch out for, and which perfectly legal
tactics to employ, read our free report "Does
Your Bank Account Speak Spanish?"
Casey (send him mail)
a best-selling author and chairman of Casey
Research, LLC., publishers of Casey’s
© 2011 Casey
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