International Man: In recent months, “rent strikes” have emerged in many cities. There has also been an increasing number of politicians suggesting they’ll pass laws to force landlords to “cancel rent.”
What is your take on this?
Doug Casey: Property rights are basic to human rights. In fact, it doesn’t make any sense to talk about human rights unless you talk about property rights.
Your primary form of property is your own body. But things outside of your body are equally as important. You can’t survive without possessions, things that belong to you alone, and that you are responsible for. “Rent strikers”—who are philosophically aligned with socialists, communists, Antifa, Black Lives Matter, and similar groups— don’t see it that way, however. They believe their problems are your problems. They’re completely irresponsible.
They seem to think that saying something, no matter how irrational, can make it so. And saying that you shouldn’t have to pay rent makes it possible to roll back the laws of economic reality. The Problem with Socia... Best Price: $9.49 Buy New $11.93 (as of 06:45 UTC - Details)
Of course, the whole world has pretty much gone on tilt over the last six months. Not paying agreed-upon rents and mortgages is economically destructive. But that’s exactly the result these people want. It’s a step to completely overturning what’s left of capitalism. That’s bad enough. But saying you don’t have to meet your obligations is simply dishonorable. These people shouldn’t be taken seriously but treated with contempt.
International Man: In New York, the government instituted an eviction freeze. Without fear of eviction, many tenants felt they didn’t need to pay rent.
Without rent money, landlords won’t be able to pay their mortgages, their ever-increasing property taxes, and will be unable to meet their other obligations.
How do you see the daisy chain effects playing out?
Doug Casey: It’s predictable, actually. People seem to have forgotten what a dump most of New York City was turning into during the ’70s. Many—perhaps most—apartments were rent-controlled. As a result, landlords were both unwilling and unable to maintain their properties. Nobody was building new ones. The city was crime-ridden and on the edge of bankruptcy. Those days may return.
But it all starts with education.
The last several generations of Americans have grown up in a school system which basically teaches Marxist values. The average American no longer sees any problem with that. People have been completely indoctrinated with perverse views of ethics, economics, politics, and how the world works.
It’s going to end badly. And I’m not just talking about the average man in the street. The executives running major corporations support all of this nonsense and run commercials promoting it. The colleges, and even high schools and grade schools, promote it to students. The news and entertainment industries are totally PC.
The battle has really been lost. Things are likely to keep degenerating because trends in motion tend to stay in motion until they reach a crisis, at which point anything can happen.
So what are the practical effects of this? The Anti-Rent Era in N... Best Price: $21.49 Buy New $41.13 (as of 05:14 UTC - Details)
Well, one of them is that landlords will stop building because they can see that the rental return on their capital is uncertain. Building is risky enough, but if the sanctity of contracts is broken, it becomes extremely risky.
Even if an entrepreneur wants to build, banks will be very loath to lend on projects for exactly the same reason: they may not get their money back.
The government has painted itself into a corner with all of the debt that it’s encouraged in society over many years.
We might have 20 million families who can’t pay their mortgage or their rent. This is a real possibility if unemployment doesn’t turn around radically and quickly. If they’re evicted, where are they going to go?
Are they going to live under bridges or on sidewalks? Or will they stay where they are, rent-free? Of course the answer is that the government will “step in.” Both renters and landlords will beg them to. And it’s not just a question of paying the rent; there are utilities to be paid as well. There are thousands of electric, gas, and water utility companies who will lobby for it.
So who’s going to eat the cost of all this—the vast numbers of people that were living just on the edge and have now gone over the edge? I suspect this is the next stage of the Greater Depression—one that nobody wants to confront because it’s too scary.
The way to solve the problem, of course, is by deregulating everything. Let the market restructure; let bankruptcies happen; let evictions occur. That should have happened in past crises—but every time, they’re papered over instead. Now the problem is so huge as to be insoluble, short of a real conflagration. Governments are actually cementing the distortions in place, however. It’s perverse since they caused these problems to start with.
I’m not sure how it’s going to end. We had overtures of a socialist revolution in the ’30s. It was even more serious in the late ’60s and early ’70s. This time, things might truly go over the edge for the reasons I touched on and many more.
International Man: What does the growing popularity of rent strikes mean for American society and culture?
Doug Casey: As I said before, the entire society has been corrupted over the last several generations with Marxist and socialist values. Environmental Markets:... Best Price: $22.88 Buy New $31.40 (as of 05:14 UTC - Details)
One consequence of that is a breakdown of trust.
Unless you know another person well, you really don’t know if you can trust them. What happens if government steps in and says, “The fact that they made a contract with you means nothing. They don’t have to pay their rent or their mortgage. Not only won’t we help you, we’ll work with them, since they have more votes”?
When you don’t have trust in society, titles become insecure. You can’t believe anything, even if it’s written down on a piece of paper. You find you may not really own what you thought was yours.
In the years to come, a whole new class of Americans could, in effect, become squatters.
In other words, the many thousands of people who are living on the streets in major cities are squatting on public property. Millions who can’t pay the rent or the mortgage might also become squatters, not just on public property but on private property.
This is one of the reasons why Africa and Latin America never go anywhere. It’s why Haiti is going in reverse. When property rights aren’t observed, it becomes impossible to plan.
You can’t have a sophisticated industrial, technological society if you can’t make plans. If you can’t rely on institutions, on laws, on other people’s words, or rely on traditional social bonds, then society itself can break down.
This is how a country degenerates into a place like Haiti. I’ve been there numerous times over—believe it or not—the last 50 years. It was always poor, but now it’s a genuine hellhole for exactly the causes we now see in the US.
International Man: Tenants and landlords have both called for government bailouts. How do you think that will play out?
Doug Casey: It really is funny. Everybody wants to be bailed out, absolutely everybody.
Speculator (High Groun... Best Price: $6.35 Buy New $18.00 (as of 10:10 UTC - Details) In a way, I can understand it. Everybody would like to not work, sit around in Starbucks all day, and play games on their iPhones. For years, I’ve said that societal values are eroding, and Western civilization is degrading and collapsing. But the process has gone into hyperdrive.
I’ll give you an example.
In 1980, the day before the national elections, when Reagan was elected, I did an hour interview on the Phil Donahue Show.
The most interesting part of that very entertaining show occurred when I was explaining exactly the kind of problems that we’re now talking about to the audience. A guy in the audience stood up and asked, “Well, wait a minute, why do we have to pay for this stuff? Why can’t the government pay for it all?”
The question was stupid enough, but the really shocking thing was that the audience all clapped and cheered for him. A completely insane comment that showed no understanding of anything and the crowd went wild.
Here’s another odd thing. That tape of the Donahue Show is excellent, but for some reason, the guy’s comment and the crowd’s reaction was edited out—I’m not sure why, or by who. But the point I’m trying to make is that, even then, the public had no understanding of economics.
Since then, their understanding has degraded much more—to the point people are actually talking seriously about things like Modern Monetary Theory and Guaranteed Basic Income. Actually, we’re seeing the overture to both now, with the multi-trillion Everything Bailout and the $600 per week Unemployment Boost program.
The American public actually believes that the government is a magic cornucopia.
Although most politicians also believe that, they’re cynical and duplicitous enough to realize that the main purpose of government is to enrich themselves. So, of course, they want to turn socialist theories into law. It’s a real free lunch for them, and it seems like a free lunch to the boobs voting for them. This is actually how a civilization collapses. The situation is much more serious than the riots and inconveniences we’re now experiencing.
Let me go off on a slight tangent here—but one that’s basic and critical. It’s important to emphasize that government is pure force by its nature. A civilized society, however, wants to limit force as much as possible.
If that’s true—and it is—then government should do only three things: Until We Reckon: Viole... Best Price: $28.86 Buy New $16.07 (as of 05:14 UTC - Details)
First, protect you from force and violence within the country—which implies a police force.
Second, it should allow you to adjudicate disputes with each other without resorting to force—which implies a court system.
Third, it should protect you from force outside of the country—which implies an army.
The government should do absolutely nothing else.
But in today’s world, it actually does everything but those things. That’s an important part of the problems we’re seeing. Government isn’t viewed as a tool to maintain a civil society, but a weapon to destroy it.
International Man: Given the trends playing out with the rent strike, what are the investment implications?
Doug Casey: The first thing is, don’t pay any attention to the stock market. It’s been totally corrupted by all the money that’s spewing out of Washington DC.
The price of stocks and bonds today, the level of interest rates—these things no longer have anything to do with reality. Honest markets have ceased to exist. It’s going to be a really painful comeuppance for those who think we’re still in a bull market.
But, to return to our original topic, why stop with rent? Why stop with mortgages and utilities? 40 million US residents are getting free food. Why not everyone? Rioters say everyone has a “human right” to free food, housing, medical care, and a college diploma. They never ask “At whose expense?”. In fact, the only sane “human right” is to be left alone.
Drug Lord (High Ground... Best Price: $16.00 Buy New $18.08 (as of 05:55 UTC - Details) Automobiles today cost as much as houses not long ago. There’s a giant amount of automobile debt, apart from the fact most people today lease their cars. Cars have gone from a small asset on the average guy’s balance sheet to a major liability. If Joe Average can’t make his car payment, he likely can’t get to work—assuming he still has a job. In any event, car payments are now so large; they’re tantamount to mortgages. They run for seven years in many cases, with next to nothing for a down payment. Few people realize that when banks first started granting mortgages on houses, they were only for five-year terms, with at least 20% down…but that’s now ancient history.
Maybe the government should pay for car loans as well. And, certainly, student loans.
If you can’t pay your credit card debt, maybe it ought to be forgiven in some type of a jubilee. Anything is now possible in Bizarro World, where personal responsibility is an alien concept.
From an economic perspective, it brings us back to the question of what the next stage of the Greater Depression will look like. Will there be a credit collapse—where trillions of dollars of debts are defaulted on, and prices drop? Or are we going to have hyperinflation if the government succeeds in bailing everybody out?
Or will these things happen simultaneously in different parts of the economy? Or in sequence?
Whatever it is, we’re looking at chaos.
I have little confidence in a meaningful near term recovery of the economy and zero confidence in the current recovery of the stock market.
Reprinted with permission from International Man.