Doug Casey: How You Can Survive the Upcoming Financial Apocalypse

Here's an excerpt from the latest issue of Conversations with Casey - an absolutely must read that Doug Casey and his team publish every Wednesday. If you're not yet a subscriber, I'd highly recommend it - it's a free pub, so you can't beat the price, and Doug definitely doesn't pull any punches!

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(Conversations with Casey: Interviewed by Louis James, Editor, International Speculator)

L: Doug, last time we spoke, you said quite a bit about debt, in the context of your expectation that the euro is on its way out. At the end of that conversation, you mentioned, of course, that the problem is not limited to Greece, nor the eurozone. America as a country has become a world-class debtor, and many Americans seem to think a maxed-out credit card is a reason to get a higher credit limit, not to economize. It’s like a global epidemic. Let’s talk about debt.

Doug: Sure. This is a story that’s going to end very badly for a lot of people. I’ve said this before, in many different ways, but I think it’s worth saying again, because most people just don’t grok it…

L: Grok. From the Martian word for “drink” and “understand.” In Heinlein’s novels, water was a critical element of Martian culture – makes sense, for a desert planet. When you grok knowledge, as when you drink water, you don’t just hold it in your mouth and spit it out. You take it into yourself, it goes into your blood, and eventually into every cell in your body; it becomes part of you. This is heavy-duty understanding… Sorry for jumping in with the spontaneous lecture. I just suspect many readers will not know the term.

Doug: Or put another way, in the negative case, most people just don’t get what money really is – and what it isn’t. They take it as a given, as part of the cosmic firmament. But it’s not. A prime example of this is the mistaking of debt for money, a phenomenon David Galland pointed out in a Casey’s Daily Dispatch a few weeks ago. This is why the entire world’s monetary system today is headed for a disastrous failure. And this is absolutely inevitable. There’s no way around it.

L: Why?

Doug: Because you can’t use debt as money. As I’ve pointed out before, Aristotle, in the fourth century BC, was the first person to define what money is. And what is it? It’s a store of value and a medium of exchange.

The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it’s not a good store of value. And it’s rapidly and radically becoming less of a store of value. What we use as money today is actually not money; it’s currency. Technically, that’s simply a word that indicates a government substitute for money.

What does make for good money? Again, Aristotle gives us the answer. It’s something that has five characteristics: it’s durable and divisible, consistent and convenient, and has value in itself.

L: Some of our readers who’ve studied Austrian economics challenged us on that last bit, last time we talked about gold, because, as the Austrians pointed out, value is subjective. But you don’t mean some sort of value that’s independent of people making value judgments. You mean that people value something that makes for good money, because of its innate qualities – not something “valued” because of government threats of force.

Doug: Right. And for these reasons, gold is almost certainly the best thing to use for money. Not because I say so, nor because Aristotle said so, but because, over time, people have found it to be the most durable, divisible, consistent, convenient, and inherently valuable thing to use. Silver is also good, but it’s less durable because it corrodes. And less convenient, in that it takes about 60 times more of it – at the moment – to offer the same value as gold. Copper is the next traditional step down the ladder.

L: That, plus one reason that’s pertinent today but was not a problem in Aristotle’s world: gold can’t just be printed up on the arbitrary whims of those in power.

Doug: That’s the big one. Using metals as money takes the whole matter out of the hands of the government and its bureaucrats.

L: But we don’t use gold today…

Doug: No, as per David’s example, it’s as though a bunch of friends without any real money started exchanging IOUs for money, and then after a while forgot that the IOUs were supposed to represent, and be redeemed in, real money.

The problem with this is that, in the case of the IOUs between friends, paper is based solely on hope and trust. One can move away, or die, or turn dishonest, or become insolvent – many other things could happen. A guy stuck with a dead man’s IOU has nothing.

With government IOUs, or currencies, it’s worse, because they can increase the number of IOUs in circulation without telling anyone – that’s what inflation is. Since the government creates the IOUs, it gets the benefit of spending them before the inflation they create raises prices, which is basically stealing from the people. And, of course, sometimes governments do “die,” leaving the holders stuck with nothing, just as with the IOUs between friends. In fact, it’s arguably far more likely that such problems will arise from trusting a government to print IOUs than from trusting a friend.

[To read the full 8-page interview with Doug Casey and what he thinks will happen to the American middle class, sign up here.]

Doug Casey Gives Baby Bush A Proper Send Off

Here's a great guest essay I'm pleased to be able to share, from none other than Doug Casey. Nobody can rip into someone quite like Doug in my book. Please read on as Doug gives Baby Bush a belated, but not gentle, bon voyage essay.

If you're offended by this one - you can take some solace in the fact that Doug is an equal opportunity offender when it comes to politicians. In fact, I can't recall hearing him speak decently of any one of them, save perhaps Ron Paul.

With that - George...we hardly knew ye. Enjoy!

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Baby Bush: The Worst President in History?

By Doug Casey of The Casey Report

I recognize that I’ve antagonized many subscribers over the years with “Bush Bashing.” In January, just after OBAMA!’s election, I said I wouldn’t mention Bush again, his departure having made him irrelevant. I only feel bad that he and his minions will apparently get away scot-free with their crimes; better they had all been brought up before a tribunal and tried for crimes against humanity in general and the U.S. Constitution in particular. But that is objectively true of almost all presidents since at least Lincoln.

Most of our subscribers to The Casey Report appear to be libertarians or classical liberals – i.e., people who believe in a maximum of both social and economic freedom for the individual. The next largest group are “conservatives.” It’s a bit harder to define a conservative. Is it someone who atavistically just wants to conserve the existing order of things (either now, or perhaps as they perceived them 50, or 100, or 200, or however many years ago)? Or is a conservative someone who believes in limiting social freedoms (generally that means suppressing things like sex, drugs, outré clothing and customs, and bad-mouthing the government) while claiming to support economic freedoms (although with considerable caveats and exceptions)? It’s unclear to me what, if any, philosophical foundation conservatism, by whatever definition, rests on.

Which leads me to the question: Why do conservatives seem to have this warm and fuzzy feeling for George W. Bush? I can only speculate it’s because Bush liked to talk a lot about freedom and traditional American values, and did so in such an ungrammatical way that it made him seem sincere. Bush’s tendency to fumble words and concepts contrasted to Clinton’s eloquence, which made him look “slick.”

I’m forced to the conclusion that what “conservatives” like about Bush is his style, such as it was. Because the only good thing I can recall that Bush ever did was to shepherd through some tax cuts. But even these were targeted and piecemeal, tossing bones to favored interests, rather than any principled abolition of any levies or a wholesale cut in rates.

Is it possible that Bush was actually the worst president ever? I’d say he’s a strong contender. He started out with a gigantic lie -- that he would cut the size of government, reduce taxes, and stay out of foreign wars -- and things got much worse from there. Let’s look at just some of the highpoints in the catalog of disasters the Bush regime created.

• No Child Left Behind. Forget about abolishing the Department of Education. Bush made the federal government a much more intrusive and costly part of local schools.

• Project Safe Neighborhoods. A draconian law that further guts the 2nd Amendment, like 20,000 other unconstitutional gun laws before it.

• Medicare Prescription Drug Benefit. This the largest expansion of the welfare state since LBJ and will cost the already bankrupt Medicare system trillions more.

• Sarbanes-Oxley Act. Possibly the most expensive and restrictive change to the securities laws since the ‘30s. A major reason why companies will either stay private or go public outside the U.S.

• Katrina. A total disaster of bureaucratic mismanagement, featuring martial law.

• Ownership Society. The immediate root of the current financial crisis lies in Bush’s encouragement of easy credit to everybody and inflating the housing market.

• Nationalizations and Bailouts. In response to the crisis he created, he nationalized Fannie Mae and Freddie Mac and passed by far the largest bailouts in U.S. history (until OBAMA!).

• Free-Speech Zones. Originally a device for keeping war protesters away when Bush appeared on camera, they’re now used to herd.

• The Patriot Act. This 132-page bill, presented for passage only 45 days after 9/11 (how is it possible to write something of that size and complexity in only 45 days?) basically allows the government to do whatever it wishes with its subjects. Warrantless searches. All kinds of communications monitoring. Greatly expanded asset forfeiture provisions.

• The War on Terror. The scope of the War on Drugs (which Bush also expanded) is exceeded only by the war on nobody in particular but on a tactic. It’s become a cause of mass hysteria and an excuse for the government doing anything.

• Invasions of Afghanistan and Iraq. Bush started two completely pointless, counterproductive, and immensely expensive wars, neither of which has any prospect of ending anytime soon.

• Dept. of Homeland Security. This is the largest and most dangerous of all agencies, now with its own gigantic campus in Washington, DC. It will never go away and centralizes the functions of a police state.

• Guantanamo. Hundreds of individuals, most of them (like the Uighurs recently in the news) guilty only of being in the wrong place at the wrong time, are incarcerated for years. A precedent is set for anyone who is accused of being an “enemy combatant” to be completely deprived of any rights at all.

• Abu Ghraib and Torture. After imprisoning scores of thousands of foreign nationals, Bush made it a U.S. policy to use torture to extract information, based on a suspicion or nothing but a guard’s whim. This is certainly one of the most damaging things to the reputation of the U.S. ever. It says to the world, “We stand for nothing.”

• The No-Fly List. His administration has placed the names of over a million people on this list, and it’s still growing at about 20,000 a month. I promise it will be used for other purposes in the future…

• The TSA. Somehow the Bush cabal found 50,000 middle-aged people who were willing to go through their fellow citizens’ dirty laundry and take themselves quite seriously. God forbid you’re not polite to them…

• Farm Subsidies. Farm subsidies are the antithesis of the free market. Rather than trying to abolish or cut them back, Bush signed a record $190 billion farm bill.

• Legislative Free Ride. And he vetoed less of what Congress did than any other president in history.

The only reason I can imagine why a person who is not “evil” (to use a word he favored), completely uninformed, or thoughtless would favor Bush is because he wasn’t a Democrat. Not that there’s any real difference between the two parties anymore…

As disastrous as he was, I rather hate to put him in competition for “worst president” in the company of Lincoln, McKinley, Wilson, the two Roosevelts, Truman, Johnson, and Nixon. He is simply too small a character – psychologically aberrant, ignorant, unintelligent, shallow, duplicitous, small-minded – to merit inclusion in any list. On second thought, looking over that list of his personal characteristics, he’s probably most like FDR, except he lacked FDR’s polish and rhetorical skills. I suspect he’ll just fade away as a non-entity, recognized as an embarrassment. Not even worth the trouble of hanging by his heels from a lamp post, although Americans aren’t (yet) accustomed to doing that to their leaders. Those who once supported him will, at least if they have any circumspection and intellectual honesty, feel shame at how dim they were to have been duped by a nobody.

The worst shame of Bush – worse than the spending, the new agencies, the torture, or the wars – is that he used so much pro-liberty and pro-free-market rhetoric in the very process of destroying those institutions. That makes his actions ten times worse than if an avowed socialist had done the same thing. People will blame the full suite of disasters Bush caused on the free market simply because Bush constantly said he believed in it.

And he’s left OBAMA! with a fantastic starting point for what I expect to be even greater intrusions into your life and finances. Eventually, the Bush era will look like The Good Old Days. But only in the way that the Romans looked back with nostalgia on Tiberius and Claudius after they got Caligula. And then Nero. And then the first of many imperial coups and civil wars.


Only by looking at the past can we make sure that history won’t repeat itself. But most of the time, Doug and his co-editors of The Casey Report look at the future. They analyze budding trends for potential money-making opportunities and share that research with their subscribers… usually for two- or three-digit gains. One of their favorite investments of 2009 is a play on an economic inevitability that is almost guaranteed to bring early birds big returns. Read more here.

Doug Casey Rips the Supreme Court - Says They "Don't Matter"

Ah, another classic from Doug Casey this week, as he rips into the Supreme Court...and that's just for starters!

His opinions are polarizing for sure - either you love him or hate him, and I personally can't get enough of Doug's stuff...I always laugh out loud at least a few times.

Enjoy this week's guest piece...

July 22, 2009 | Visit Online Version | www.CaseyResearch.com

Doug Casey on Judging Justices (Interviewed by Louis James, International Speculator) L:Doug, you wrote in an email that you've been shaking your head over the latest antics of Supreme Court nomination and appointment. Care to tell us why? Doug: Well, the whole thing is a pointless circus. The whole uproar over the "wise Latina" remark is irrelevant, and all the hours of intense scrutiny people are devoting to examining the alleged thoughts of Sotomayor are a waste of time. It serves absolutely no useful purpose whatsoever. L: None whatsoever? Wouldn't it matter if a justice got in who might be more harmful than another to the economy or civil liberties? Doug: No, not at all. The kind of justice who might do some good could never make it through our highly politicized appointment process, so it's a choice between Tweedle Dumb and Tweedle Dumber. It just doesn't matter. But, for what it's worth, Sotomayor seems to have all the wrong instincts. Besides, the Supreme Court has drifted so far from what it's supposed to do that the court itself doesn't matter. The Supreme Court has a very simple mission; it's supposed to safeguard the Constitution. The U.S. Constitution and its first ten amendments (the Bill of Rights) were adopted and ratified simultaneously. Though imperfect, it's actually a pretty clear and easy-to-understand document. All a Supreme Court justice should have to do is read the Constitution to see if the law in question is constitutional, in other words, falls within the authority spelled out in the Constitution. It's that simple, and it doesn't take a lawyer - in fact, a lawyer's training, with all its emphasis on precedent and interpretation, is the exact opposite of what you want in a Supreme Court justice. So the weight of precedent and so-called law that has built up over the years is basically junk. Most decisions reflect not what the Constitution says, or even what's equitable, but the political views of the judges - who are all political appointees. The vast majority of the Supreme Court's precedent should be scrapped. They should start from scratch, and with a copy of the Constitution in hand, and strike down any law that the Constitution does not specifically authorize. Article One, Section 8, makes it absolutely clear that any powers not given to the government in the Constitution are reserved to the states and to the people. Amendments 9 and 10 of the Bill of Rights reinforce that. But they're completely disregarded, like everything else in that document, which was made to shield the individual against the state. L: That would eliminate most of the federal government - the SEC, the FDA, HEW, HUD, DOA, DOT, IRS, BATF, FBI, CIA, and who knows how many other agencies - leaving little besides the military and the post office. Doug: Yes, and I would go further and say that it's not just the Supreme Court but the entire U.S. government that no longer serves any useful purpose. Although the U.S. Constitution is perhaps the best in the world, because a) it's very brief, and b) other than spelling out some technicalities like the number of senators per state, or that the president must be born in the U.S., it mostly describes what the government can't do, not what it can - and certainly not what it should. But it's not perfect by any means. Why, for instance, does it designate the Post Office as a function of government? In point of fact, anything that needs doing in a free society will be done by entrepreneurs, for a profit. If nobody can make a profit doing something, it's proof the good or service isn't wanted or needed. The minimalist government described in the Constitution would be a vast improvement over the one we have now, which is completely counterproductive. It does the exact opposite of what is needed economically and meddles all over the world creating enemies we wouldn't otherwise have. But getting back to the law, the state of the law in the U.S. is ridiculous in the extreme. We have so many laws and regulations implementing them, their volumes fill entire libraries. Nobody can even read the amount churned out every day, let alone what's been accumulated at an accelerating pace over the years. Forget about understanding the law thoroughly and being able to administer it with justice. The whole system is a farce. The saying "Ignorance of the law is no excuse" is fatuous in today's world. And that's only on a practical level. More fundamentally, one must ask: What is justice? I've always liked to think about it as getting what you deserve. And what do you deserve? Only what you've earned. All these people who think they deserve free health care, or a job, or a plasma screen TV, simply because they radiate heat at 98.6 degrees, or because they were born in a certain place, or because they have a certain skin color - it's all bunk. There's no such thing as a "just" wage. There's only what you earn. L: I agree with you about the entitlement mentality, of course, but that's not really a matter of justice, it's just another politically created cancer eating out the heart of what was once the most creative and prosperous society on earth. On the other hand, your idea of relating justice to earnings is new to me - and it maps very well, because, for a company, earnings can be negative. So, if you do something wrong in life, that is to say, you aggress upon others and harm them or their property, you owe them some sort of restitution in order to set things right again (or as right as can be). So, as an individual, you can deserve to pay for your crimes - it's a negative earning on your personal income statement. Doug: Right. Yes. Putting someone in prison does nothing to make the victim whole. Most people are in prison for victimless crimes anyway. And what happens if a company really screws up? It goes bankrupt. L: And can ultimately be liquidated... which is what happens to people who do too much harm to others. Or it's what should happen, in a just society. Doug: Yes, exactly. Listen, all of this is much simpler than people make it out to be. All you really need to know about justice, you learned in kindergarten: Keep your hands to yourself and keep your promises. Those are the only two laws we really need in society: Don't harm other people or their property, and do what you say you're going to do. But perhaps it's possible to simplify things even further. Following the example of physicists, who are always trying to simplify their laws and boil them down to fewer, more all-encompassing principles, I've simplified these two basic laws that make profitable social interaction possible, into one. The whole of the law should be: Do What Thou Wilt... But Be Prepared to Accept the Consequences. That's all you really need to understand. Everyone, even a child or a dog, can understand it. So all this hoopla over Supreme Court nominations is all a fantastic waste of time. You'd be better off watching paint dry - who knows, you might think of some valuable new idea during that quiet time. L: I won't disagree. But this isn't very encouraging to investors; you're basically saying that the U.S. is hosed, and nothing and no one can save it. Doug: Theoretically, yes, it can be saved. But practically... I'm saying that there's no politically feasible way to appoint a Supreme Court that would put the U.S. back on a constitutional basis of operation. That would indeed be exactly what the economy needs; it would get the government completely out of the way, allowing the market to liquidate all the accumulated mistakes of decades of mismanagement, and thus clearing the way for solid, healthy, and even sustainable growth, to use a word that's popular today. But that's not going to happen. The good news, however, is that the government creates an excellent environment for speculators. The whole Supreme Court side show tells me that the trends we're betting on are solid. And that means that the kinds of investments we recommend in The Casey Report remain on track. We're expecting the actions of the U.S. and other government to be highly inflationary, but that won't show up until after price destruction from the downturn slows. Bets on rising interest rates, a weakening U.S. dollar, etc. may stress our intestinal fortitude pretty severely in the short term. That makes the futility of expecting anything useful from the U.S. Supreme Court an encouraging sign; many will suffer as the economy worsens, but smart investors who identify the underlying causes correctly need not be among them. L: So... are you an optimist or a pessimist? Doug: I'm a pessimistic optimist, of course. L: Okay then - thanks for your time. Doug: Till next week. Recognizing, analyzing, and betting on budding trends in the economy and markets is what The Casey Report does... and what has made its subscribers handsome returns in the past. For example, in 2007, way before "subprime meltdown" was a household term, we saw trouble brewing on the horizon. We advised our subscribers to short bond insurer MBIA, a company that seemed to stand squarely in the way of the avalanche thundering downhill - and we were right, bagging a total return of 1,166%. While that deal is done, there's always another one... and right now we've found another potential mega-winner. Let Casey Chief Economist Bud Conrad tell you about his favorite investment of 2009 - just click here. Forward today's conversation with Doug to a friend

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