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L: I'm sitting in Doug Casey's living room, in Cafayate,
Argentina, far, far from Wall Street, which is being "occupied" by protesters
with a very clear message. Doug, as a prime cut of meat on the "eat
the rich" menu, would you like to
respond?
Doug: I assume you're being sarcastic about the clear message, but one can
never tell in today's world. Otherwise, I would have thought Paul Krugman was joking when he said that a pretend
alien invasion would be good for the economy. We increasingly live in an Alice in
Wonderland world.
L: Truth is often stranger than fiction. We'd have been laughed at if
we'd predicted that people in Spain would shine lights on solar cells at night, because the subsidies make it profitable to do so.
Doug: Indeed. But back to Wall Street. I have very mixed feelings about
the occupation movement, because these people are 100% correct to be angry
about these banks – from Goldman Sachs on down – that received
scores of billions of dollars of taxpayers' money after doing the opposite of
what banks are supposed to do (losing money instead of keeping it safe), and
then paying themselves bonuses for doing such a good job.
L: It's actually the largest bank heist in history.
Doug: You could say that. Was it Al Capone who said that one accountant
with a pen can steal more than 100 thugs with guns? A central banker like
Bernanke can facilitate the looting of an entire country, though. You might
also say it's the Chinese whose money they stole, because the Chinese will
never be able to redeem their long-term Treasuries for anything like the
value they put into them. You could also say it's the next generation's
money, because they're going to have to pay for it all. No wonder so many
young people are outraged – they have a right to be.
L: But…?
Doug: But on the other hand, a lot of these Occupy Wall Street (OWS)
people seem to be of the same sort who would have been loosely wrapped hippies
back in the '60s. I was also sympathetic with the hippies in many regards, by
the way, because I agreed with their anti-war and anti-drug-law stances. It's
hard, however, to see these people as allies when one of their most popular
slogans equates me to a beef cow. They seem to have a strong
collectivist/socialist animus. They seem to hate the 1% just because they have
money. They don't have the sense to make distinctions as to how different
people might have gotten that money.
I am, clearly, one of the 1%. So are you. In
fact, almost everyone who has worked hard, saved money, and not invested it
unwisely is at least in the top 10%. What the OWS people are angry about
– or should be angry about – are the people who made their money
through government contacts, or connections. They didn't produce anything;
they're really just sophisticated thieves. I have only contempt for those who
feed at the public trough.
But here we are in one of the nicest places in
the world, where I'm living high off the hog, smoking an expensive Cuban
cigar – that's probably a waterboarding
offense in the US these days – so I guess that puts me on the menu.
However, I haven't yet been to one of these
protests to speak with any of these people, so maybe I shouldn't presume too
much about what they think. It's likely their level of discourse would be no
more cogent than what you read in the New York Times, perhaps even less
cogent than USA Today. But I don't like to be around angry people
– although, to be honest, I'm angry myself because I hate to see what's
left of America, and Western civilization itself, on the skids…
L: I haven't talked to any of the OWS people either, but, not wanting
to rely solely on hearsay, I sent someone to the epicenter in Manhattan. We
asked people there: "What does Occupy Wall Street mean to you?" I
published the results in the current edition of the International
Speculator. Here are some of the
more comprehensible quotations:
"The 99% are getting
more distribution. Corruption in government. Peaceful overthrow."
"There are people who
have a lot of money and then people with nothing. I'm a student, and I don't
want my future to be the way it is now. Make the country equal again."
"If something is not
right, do something about it! Inspire unity. Everyone knows something is
wrong."
"Mad at bailouts.
Very little difference between political parties. [Everyone] knows Democrat =
Republican! Lockheed Martin makes money from taxpayer-funded wars. Gold
standard! Bitcoins! Disenfranchise the 1%
plutocracy. Root out corruption."
"I don't have my
clear answer for this."
One of the interesting things about this is
that there's a clear streak of very strong anti-government sentiment from
people who usually can't get enough government. Granted, they don't necessary
call for less government, but they do seem to want to throw the bums out. All
of them. Except maybe Ron Paul.
Doug: That is interesting, and I think it's also interesting to compare
the movement to the Tea Party. Both groups feel powerless, disenfranchised, and
betrayed. Both groups are under severe economic pressure – which, I
promise, is going to get much worse.
L: I hadn't thought of that, but in spite of the ideological
differences, I can see a similarity in that both are angry with the status
quo but not clear on what they propose to improve on it.
Doug: Exactly. It's a very inchoate kind of anger. Most of the people
involved, in both groups, seem to have zero understanding of real economics
and don't understand the way the world works. They just correctly perceive
that they're getting screwed. But I see little or no cultural or sociological
overlap between the groups.
L: Well, I haven't been to a Tea Party event, nor have I sent an
investigator to one, so I'm not in a position to compare them, but it is
interesting to me how diverse the OWS people are. There were people there in
favor of Ron Paul, as well as for typical New-England Democrats. One fellow
even mentioned the gold standard. On the other hand, one photo I didn't
publish – because the guy's face is clearly identifiable – is of
a young man sitting on a cinder block, smoking marijuana… so the
neo-hippie component does seem to be part of the mix.
Doug: In the photos I've seen, a good number of these protesters have
taken to wearing Guy Fawkes masks, which I find encouraging. And here we are
on the fifth of November: "Remember, remember, the fifth of November,
the gunpowder, treason and plot. I know of no reason it should ever be forgot."
My avatar on Facebook, Skype, and other such venues
is always a Guy Fawkes mask. I'd love to see everyone use one. That's how
things ended in the movie V for Vendetta.
L: But that's just the thing: To you and me, a Guy Fawkes mask is a
symbol for anarchy as a better organizing system for society than government
– any government. But for many, the mask is just a symbol for
resistance to tyranny. To some, it may not represent much at all, besides
appropriate attire to wear during a riot.
Doug: Yes, and regrettably, in real life Guy Fawkes was something of a
Catholic fanatic who apparently just wanted to replace a Protestant-dominated
government with a Catholic-dominated government. That's hardly a solution. It
overlooks the real problem, which is government itself, sticking its nose
into every aspect of human existence.
L: So, here we have a movement, composed of very different people from
different walks of life, that has gone viral, spreading all across the US,
even to smaller towns. It has spread overseas as well and has turned violent
in some cases, with mass arrests in Oakland being a recent example. This
could get pretty ugly. This is how revolutions start – we've seen this
sort of pattern in the Arab Spring, as well as in the fall of Eastern
European dictators, and more. But starting a revolution with no clearer goal
than "eat the rich" is… a dangerous thing to do.
Doug: It may sound rather extreme –
L: Not that that has ever stopped you…
Doug: [Chuckles] – but I don't think it's out of the question that
there could be a second American revolution ahead.
L: A third – the war between the states being a failed attempt at
a second one.
Doug: Right. Formal or informal, there could easily be a secession
movement as things come further and further unraveled. And yes, it could turn
into a shooting war. These things happen. A lot of Americans are getting to
the point where they feel they have little to lose. And things are just
starting to get bad; the Greater
Depression is still very young.
You know, the Obama administration is making
noises about a rising threat in Iran. They might just be tempted to attack
them, either as a great distraction from troubles at home or in the hope it
might unite America – which, incidentally, I think would be a bad thing
at this point. It would be like uniting lemmings as they plunge over a cliff
together. Being united amounts to groupthink; it caters to the lowest common
denominator. Uniting around a political leader is a symptom of moral
bankruptcy. What made America great was individuals thinking and acting as
individuals.
L: On the plus side, there was also an anti-war streak in the people we
surveyed occupying Wall Street.
Doug: That's true in the Tea Party too, although to a lesser degree. But
on the minus side, we have large numbers of people in uniform in the US
– lots of police and soldiers – who have been trained to obey
orders without hesitation. Just like everywhere else in the world, men in
uniform are extremely dangerous. They're loyal above all to their peers in
uniform, secondarily to the government that pays them, and last to the people
their supposed to "protect and serve." If Americans in uniform are
ordered to beat and imprison American citizens petitioning their government
for redress of grievances, they will obey. It could get very, very ugly.
L: If there's an insurrection with no goal other than to overthrow
those in charge now, it seems like an invitation to "the man on the
white horse" to come in and lead everyone boldly into a new slavery.
This bubbling cauldron of anger is like a lit stick of dynamite. Who knows
who's going to pick it up and where they're going to throw it?
Doug: It has to end badly. Every revolution I'm aware of, including the
American revolution, leads to a period of things getting worse before they
get better – if they get better. The French revolution is a classic
case, in which it was good they got rid of Louis XVI, but then they got
Robespierre, and then they got Napoleon, who was even worse. This is the
standard pattern; revolutions unleash the most violent and fanatical people
to rise to the top. So, if the trend continues, I don't expect it to have a
happy ending.
L: And do you expect it to continue?
Doug: Unfortunately, yes. The economy is going to continue getting worse.
People are going to become much more unhappy, and
they are going to feel like they have much less to lose. Trends in motion
tend to stay in motion until they reach a genuine crisis.
L: Whether OWS is the beginning of the violent end to this saga, or
whether this calms down and its
something else in the future, is there no way out for the US?
Doug: No. Partially because it's really no longer the US. The country has
already changed in character from being a unique beacon of individual liberty
to just another of 200 degraded nation-states. It's hopeless to wish for an
easy out, not just for the US, but for America, the West, and the current
economic order in general. Even though I'm an unabashed optimist about the
long-term future, I just don't see how things can avoid getting much, much
worse over the next decade or so. This is barely a beginning – we're
just at the leading edge of the storm, as we exit the eye of the global
crisis hurricane.
Here's a thought. With very few exceptions
– like Lyndon Johnson – most incumbent US presidents run for a
second term. But as unpopular as he has become, some recent recovery in the
polls notwithstanding, it may be that the Democrats will ask Obama not to
run. I suspect they might pick some left-wing general instead, because people
would have confidence that a general would know what to do about an
increasingly dangerous world. And with the Republicans seemingly determined
to nominate a hack who's devoid of any philosophical core – well, there
are Ron Paul and Gary Johnson, but they're getting a total media blackout
– such a Democrat might just win… and that would be very bad.
Then we'd really be in for it – a warmongering socialist who might try
to turn the country into an Army boot camp. At that point I'll be really glad
I have a crib outside the US.
L: Mr. Cheerful again, Doug.
Doug: You know I call 'em like I see 'em. I don't make the rules, except in my personal life.
L: Right. Investment implications?
Doug: Nothing new. We've been saying for some time to rig for stormy
weather; buy gold, buy silver. They are not at giveaway levels, but they're
going a lot higher. With the Fed creating trillions of new dollars –
which they have to do to finance these trillion-dollar and rising deficits –
there will be new bubbles. The most obvious one is going to be the bubble in
gold stocks we haven't seen yet this cycle. Gold stocks are actually quite
cheap now, relative to gold. I'm more enthusiastic about the potential for
gold stocks to go into a huge bubble than I ever have been.
L: That's a change in tune.
Doug: It is. These stocks didn't look cheap a year ago, when the market
was more driven by greed. Now, in a fear-driven market, there are actually
some good bargains out there – you cover many of them in the International
Speculator.
L: Thanks for the shameless plug. But then, I don't think I've ever
seen you ashamed of anything.
Doug: Shame is not an emotion I have a lot of experience with, it's true.
That's because I avoid doing things that would make me feel shame.
L: Anything else?
Doug: I like quality energy plays on the dips and productive agricultural
land a lot. Great new technological innovations, especially those that save
people money, should also do well in the deepening crisis.
L: Okay, Doug. Thanks for another thought-provoking conversation.
Doug: My pleasure, as always.
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