Dear Readers,
Happy New Year!
Today's edition of The Room will be, I suspect, something of a challenge to write.
That's because, other than continuing to lend whatever assistance I can to my partners Doug Casey and Olivier Garret, I have decided to henceforth studiously avoid anything resembling a hard deadline.
Which, in effect, makes this my last edition as editor of The Room.
Now, don't get me wrong: I love writing and I love my regular correspondence and interactions with so many of you dear readers. However, after 40 years of long hours and fixed deadlines, I came to the conclusion over the holidays I want to dedicate as much of the rest of my life as possible to enjoying my family and the wonderful lifestyle here at La Estancia de Cafayate.
This doesn't mean you're completely rid of me—I will still drop in now and again as a guest contributor, but only when passion moves me and not on a fixed schedule.
I will also remain involved in the production of various Casey Research conferences, video programs, and special events, the next one being here in Cafayate, Argentina March 25–30 in conjunction with the always popular Annual Harvest Celebration.
As I prepare to step away from the desk, I would like to leave with some musings on the world at this rather delicate point in history. As I write, I'm accompanied by the headbanging music of AC/DC, a band many consider to be the apex of the rock and roll genre, playing their hit song, Thunderstruck.
The World as I See It
Stating the obvious, each and every one of us views the world through a lens uniquely our own. That lens is forged by a combination of DNA and experience. Or, if you prefer, nature and nurturing (or lack thereof).
Thus, two people can observe the very same thing and yet have completely different points of view about it. I mention this because what follows are my own views of the world we share. Based on your own unique perspective, you might agree with my views, or disagree… perhaps even vehemently.
They are rather wide-ranging and follows no theme other than that they are a loose collection of observations based on the life I have lived to this point.
To begin, a look at what might be termed "The Big Picture."
The Big Picture
Socialism is on the rise. And it won't be turned back for a very long time, almost certainly not in our lifetime. This may be the single, most important trend now in motion. If you are a worker or an entrepreneur (i.e., a taxpayer), it puts you at serious risk.
The truth of this point becomes obvious when you consider there is no corner of the world where the principles of free markets aren't currently under assault. Likewise, concepts such as rugged self-reliance and working hard to get ahead are widely being replaced by an eager willingness to rely on government handouts and entitlements.
Anyone with even a modicum of awareness about economics will readily see the false promise of the socialist model by considering the number of governments running large deficits at this point.
The peak danger point for those on the productive side of the ledger will be reached when these governments run out of every rational way to keep the transfer payments coming. At that point, expect the demands for the government to "do more" to become aggressive, maybe even violent. Forced to respond, political policy makers will rush into the realm of devastating irrationality.
Political correctness is endemic and it is dangerous. I have never watched Duck Dynasty, but I have watched the media fast fry the patron of el familia pato over anti-gay comments he made. Do I personally care about someone's sexual preference? Not even a little. Likewise, I don't care in the slightest if a person's religious beliefs hold that homosexuality is abhorrent, unless those people flock together to insist the government coerce people into desisting in a personal behavior they find pleasurable.
Even so, that someone's personal views on such topics could ignite a firestorm of media outrage is a sure sign of the times we live in. That anyone could actually be surprised that someone from the Bible Belt, an avowed Christian based on all the evidence, is against homosexuality is beyond me.
But roasting ducks is only the tip of the very large iceberg of political correctness that threatens to sink individual liberties. That's because the heart and soul of the concept of political correctness is that individuals should take every care to conform to prevailing societal mores, with distinct punishments for failing to do so. And make no mistake, the notion of political correctness extends well beyond making comments about someone's race, gender, sexual preference, religion, height, girth, or any of a thousand other personal traits.
For instance, if the sages of politically correct society determine that it is not PC to explore and produce oil, or to provide base power with nuclear energy, then anyone involved in those activities are immediately cast by the willing media as pariahs. In fact, the entire environmental movement is blessed by the aura of political correctness, automatically making any business that actually manufactures something "bad."
Likewise, having money today is widely conflated with a non-PC level of greed. And every attempt to shirk paying your "fair share" in taxes is about as non-PC as it gets. When the government changes the rules to retroactively disallow currently legal methods of minimizing tax burdens, expect no sympathy… quite the opposite.
The media is, of course, not only complicit, but an active partner in identifying what is, and what is not, politically correct. For those of you who have had any interaction with members of the Fourth Estate, that should make you shake in your boots.
Or pull those boots on precedent heading out to less PC pastures. Here in Argentina it will be quite some time before the PC movement takes over. In support of that contention, nicknames are still widely used… and almost every nickname has to do with an observable or assigned physical trait. Thus, I count among my friends here Pelado (baldy), Grande Cabeza (big head), Gordo (fatty), Flaca (skinny), Rojo (carrot top), Negro (dark skinned), Turko (essentially "Arab"), and Puto (male prostitute, though he's not).
To understand the power of the political correctness movement in the more developed world, consider the recent case of a public relations functionary who tweeted some admittedly rather stupid comments about the statistical probability of a white person becoming infected with AIDS in Africa. Despite being pretty much a nobody, the woman's brief message dominated international news headlines causing her to be fired and, I suspect, ending her career in public relations. (Would it be politically incorrect to point out that she is a blonde?)
While things haven't quite reached the level where religious police wander around like they do in countries such as Saudi Arabia whipping anyone who fails to conform, the level of personal persecution for being on the wrong side of the PC movement is very much on the rise, with no end in sight.
The world is full of risk: diversify. When it comes to building your investment nest egg, concentration can often be the right approach, provided you have thoroughly done your homework. That said, the risks to your wealth today are as numerous as they are acute. This overconcentration can result in a complete wipeout.
That's because government meddling has resulted in historic levels of mal-investment, and that mal-investment is then multiplied exponentially by hundreds of trillions of dollars in derivatives. Fiscal and monetary policy are completely out of control, ultimately requiring the governments involved to twist and contort policies in an attempt to keep the train of state from flying off the tracks.
And that is just one of many threats. Another is the army of lawyers adept at bending the predatory legal system to their benefit. The US has the highest population of lawyers per capita (1:265), and in total (1.1 million)—more than any country in the world.
As a result, you can live your life and manage your finances in ways traditionally considered "prudent" and still lose everything. The only real solution is to spread that risk across as many asset classes, political borders, and financial institutions as possible.
Just because it is the right thing to do, doesn't make it the easy thing to do. Speaking from fairly deep personal experience, getting things established in a number of different jurisdictions takes some reasonably serious legwork. But once you have things properly set up (foreign trusts; international real estate; accounts in numerous political jurisdictions, spread across a number of brokerage and banking institutions—all fully disclosed to the appropriate taxing authorities, of course), you will sleep a lot better.
War is hell. And is it the life of the state. As those who have read my past articles in The Room will already know, of all the many forms of government meddling we have to put up with, none irks me more than the waging of war.
That is not to say I'm against a strong national defense; I am, as long as the emphasis falls entirely on the word "defense." For those who live in the United States, the ability to defend national borders is pretty straightforward. Provided neither Mexico nor Canada are amassing armies on our borders, then it's a relatively straightforward proposition. Just as soon as a foreign fleet with ill-intent gets about halfway across either the Atlantic or Pacific Oceans, we drop a couple of nukes and the war's over.
But what about the terrorists, some of you might ask. While there are those who would argue against it, my unshakeable view is that if the US government wasn't running around the world hitting hornets nests with drone-fired missiles, the terrorist threat level would fall to insignificance.
Were I in charge, I would pull all our troops back home and spend some small percentage of the (considerable) savings on computer network security, as there is a clear threat to critical utilities—not so much from other countries (especially if we stop meddling in their affairs) as much as from some smartass teenager with too much time on their hands.
Unfortunately, the military industrial complex remains so well entrenched in the halls of power that there is almost no chance the United States will reduce its military to the point where it is a credible threat to anyone considering attacking, but not much more than that.
Which begs the question: Now that the US military has again been bested by a bunch of 19th century warriors and is being forced to extricate itself from Iraq and Afghanistan, where will the war machine point its guns next? While I couldn't begin to anticipate the specifics of where and when the next flashpoint will occur, I'm pretty sure the chosen enemy will be Russia.
And the war may not take the form, at least initially, of firing missiles at each other… but rather kick off with a full-fledged currency war, morphing into a cyber war. No matter what form the conflict takes, given Uncle Sam's psychopath-like record of steady war-making, you can expect the United States to be right in the thick of things.
This becomes a real problem not just for the foreign opponents, but for the citizenry as well. All it will take is for one more serious blowback attack that targets the mainland United States for the massive machinery of the state security system to be fully deployed. At which point, pretty much everything changes.
We have already witnessed the wholesale collection of personal data by the NSA, and a great leap forward in the presence of Homeland Security in everyday life… all with nary a peep out of the populace. The stage is set for things to ratchet in entirely more unpleasant ways, it's just a matter of time… and maybe even the day after tomorrow.
Debt + Deficits = Disaster. People in today's world have come to the idea that governments can run up an unlimited amount of debt without serious consequence. This is simply not true. Eventually, the existing debt, which in the United States is increasing by approximately $3.7 billion per day, must trigger higher interest rates. And when it does, the currency—and the fabric of polite society—will begin to tear apart. For those paying attention, watching for significant upward movement in the 10-year Treasury rate is one of the best ways to know when the time has come to duck. On that front, as you can see in the chart here, while it's too soon to say, the trend is currently going in the wrong direction for the economy.
Funny money is not funny. It's actually just bad money getting worse. That the vast majority of people are asleep at the wheel is a major tragedy in the making. Especially because if they were actually paying attention, then a mass movement advocating for a return to something approaching sound money might have a chance of succeeding. Instead, probably 98.9% of the people in the world have pretty much exactly zero idea that governments are scrambling to cover their soaring expenses by creating currency units out of thin air.
While no one can predict when the current fiat currency system will collapse, the important point is that, in time, it must. At which point, the masses are going to be in for the surprise of their lives, and not a happy one. For what happens then, refer to my comments on the trend toward socialism above.
Technology to the rescue? While one doesn't like to be biased, I confess that Casey's Extraordinary Technology is among one of my favorites of the services we offer. That's because it tracks the progress of companies that are literally changing the world—and that are still fairly priced, so we can profit as they fulfill their promise.
I agree with Doug Casey's comment that, thanks to technology, the world of the not-so-distant future will not only be better, but it will be better than we can imagine. (Personally, because I hate to drive, I can't wait for driverless cars to be the norm).
Of course, one obvious consequence of governments trying to shift their social obligations onto the backs of companies is that managers will look for every new way to reduce their workforce, something the new technologies are very good at. Which mean that between here and World 2.0, society is going to have to deal with the very serious problem of the mass unemployed. No need to worry things will get out of control, however. As you read this, the best and brightest are competing to refine walking, jumping, diving, killing robots for the US military. We shall live through interesting times, no question.
On a More Personal Level
Negatives vs. Positives. I have come to recognize two basic personality types in this world: negatives and positives. Simply, there are people who manage to find the negative in every situation, and those who reflexively look for the positives.
In my experience, life is a greatly enhanced by hanging out with the positive types and actively avoiding the negatives. By extension, as much as possible, one should avoid exposing oneself to the mainstream media, with its institutionalized negativity and constant mantra of "if it bleeds, it leads."
People do better when they work together. While much of human progress can be attributed to innovative individuals with big ideas, and the energy and passion to turn those ideas into reality, the older I get the more I appreciate that we humans are herd animals.
That doesn't mean we should act like a bunch of sheep. Rather, it seems to me that being a part of a productive community, ideally made up of generally like-minded individuals with whom you can enjoy the good times—and be there for in the bad—seems a prerequisite for living a positive, fulfilled life.
Take care of your money and it will take care of you. One of the best things about life here in Argentina is that the cost of living is very low. As a consequence, once you have arranged for a house over your head (and mortgages are nearly nonexistent, so you have to save to buy a house), then the cost of living an extremely high-quality life is almost ridiculously inexpensive.
Case in point, on at least a couple of Friday nights each month, a group of us here at La Estancia get together down at Baco's, a local café, for pizzas and drinks. Recently, 12 of us spent about three hours at a long table on the sidewalk in front of Baco's eating and drinking our fill. When it came time for the bill, it worked out to about $10 a person. In the US, the tab would have easily been five times that amount.
In many parts of the world these days, people are still caught up in the notion that quality of life means "the latest electronic device" or the splashy new car that they can buy with 10% down. All that stuff is just stuff when you get right down to it. And when you approach your retirement years, if you are not careful you'll regret having wasted so much money on what are little more than useless bangles.
Given the economic outlook, with the very real potential for big troubles ahead, it's worth reflecting on what you actually need versus what you want. And if it works for you, consider setting up a bolt-hole in a peaceful and inexpensive country where, should push comes to shove, even a modest nest egg will allow you to live well for the rest of your days, very much not the case in the United States, Europe, and other developed nations at this point.
Of course, a place like Argentina is just one of any number of attractive options for you to choose from.
And finally, don't forget to enjoy your life. With even a little thought, each of us can come up with a list of things that make our lives more enjoyable. And we can identify things that make our lives unnecessarily difficult or unpleasant.
While admittedly simplistic, making time in your life for more of the former and less of the latter, can lead to a much happier existence.
And while things are likely to get fairly tough in the years ahead, we can all take comfort in the fact that we humans are a remarkably resilient species. Do what you need to get your affairs in order, then don't dwell on what might be.
I could go on, but it is a truly stunning day outside and the kids will soon be home from school for lunch, so I am going to move along by saying that writing this column—today, and for the last four years—has been highly energizing to me, and I have all of you dear readers to thank for that.
Yet, per above, I have come to the conclusion that the constant pressure of deadlines is keeping me from enjoying my life to the fullest, and so I must be true to myself by moving on to other pastures. I'll have a bit more to say at the end of this edition of The Room.
Casey's Club: Now Open for New Members
Not sure if you saw it, but Casey's Club is again accepting new members for the first time in 12 months.
As a member in Casey's Club you'll enjoy our highest level of service… receiving all our monthly newsletters, both of our premium Alert services, all special reports, plus invites to VIP events and more… for the rest of your life.
And all for one low fee (plus a modest annual maintenance fee to help offset inflation).
However, because we can only accept a very limited number of new members each year, the enrollment period closes again at midnight on Friday, January 17, after which it will remain closed to new members for at least another year.
It is a truly unbeatable value, and the single best way to assure that you get the best of the best of our research, year after year, for as long as you are an active investor—and beyond.
If you are interested in joining, then now's the time to learn more and to sign up.
Click here for more information and to join as a member in Casey's Club now, ahead of the January 17 deadline.
Friday Funnies
Too much truth in this.
An obituary printed in the London Times... Absolutely Dead Brilliant!!
Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as:
- Knowing when to come in out of the rain;
- Why the early bird gets the worm;
- Life isn't always fair;
- And maybe it was my fault.
Common Sense lived by simple, sound financial policies (don't spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.
It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student, but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses, and criminals received better treatment than their victims.
Common Sense took a beating when you couldn't defend yourself from a burglar in your own home and the burglar could sue you for assault.
Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
Common Sense was preceded in death:
- by his parents, Truth and Trust,
- by his wife, Discretion,
- by his daughter, Responsibility,
- and by his son, Reason.
He is survived by his 5 stepbrothers:
- I Know My Rights
- I Want It Now
- Someone Else Is To Blame
- I'm A Victim
- Pay me for Doing Nothing
Not many attended his funeral because so few realized he was gone.
The 2014 Harvest Event
As mentioned at the beginning of this missive, each year La Estancia de Cafayate holds a celebration in conjunction with the annual grape harvest in this up-and-coming wine region of Argentina.
The dates for this year's Harvest Celebration have been set for Tuesday March 25 through Sunday March 30, and you're invited.
It's a magical time of year here in the scenic northwest of Argentina. And especially in the quaint, wine-growing town of Cafayate, the crown jewel of the region, where the annual grape harvest will be in full swing.
This year's event promises to be extra special, not the least because of the brand new Grace Hotel & Villas just opened on the La Estancia property, but also because Casey Research will once again host an intimate investment seminar. Confirmed speakers, so far, are fellow Estancia owners Doug Casey, Bill Bonner, and EverBank's Frank Trotter, as well as star emerging markets investment manager Claudio Maulhart. I'll be acting as the moderator.
In addition to the conference, you'll have plenty of time to enjoy all the best the town has to offer, from private tastings at Cafayate's premium wine bodegas and al fresco dining on the plaza in the company of like-minded individuals… to La Estancia's many amenities, including a world-class spa and athletic club, Bob Cupp championship golf course, horseback riding, tennis, and much more (even polo, if you are so inclined).
As with past Harvest Celebrations, we expect a complete sellout, which is why we wanted to have the dates ASAP so you can begin making plans.
To learn more about the event, simply drop the folks at La Estancia an email at VIPConnect@LaEst.com letting them know you are interested in participating with us. By return email, they'll send you a schedule and useful information on travelling here.
A moment ago I mentioned that the Grace Hotel & Villas recently opened on the property. While there are a number of excellent hotels in town, if you are interested in staying at the boutique Grace Hotel, you'll need to sign up early as there are only a limited number of rooms available there and they'll sell out quickly.
Hope to see you here this March 25–30!
Before Signing Off… A Couple of Personal Favorites
Last night at a party here at La Estancia, I began reminiscing about my personal favorite of many editions of The Room I have written. In the event that you missed them, or might want to read them again, they are—in no particular order:
Letter from a Long-Lost Lover—About the problems that can flow from trying to cling to expectations as to how your life will unfold. On that topic, not so long ago, wandering about the golf course here, I asked my golf buddy Frank—who is a young 76—if, in his wildest imagination, could he have envisioned ten years before that he'd be living in a remote town in Argentina, playing golf with a wad of coca leaves in his cheek. With his signature hearty laugh, he replied something to the effect of "Not in a MILLION years!" In any event, here's a link to the article.
The New Stoics—A brief introduction to the stoic philosophy—something that, given the likely direction of the world over the next decade, could prove very useful. Here's the article.
And That's It for This Edition of The Room
As I sign off for the last time as editor of The Room, I want to assure you we'll make sure this column is well served by others from within, and from without, the Casey Research organization who we believe have something useful to share.
On that topic, we are always on the hunt for exceptional writers with interesting and useful points of view. If that describes you, we'd like to invite you to write a lively story about some aspect of the world we live in that you think others will find of interest. We'll gather all the stories together and, by February 15, decide which story is the best of the lot and award the author a one-ounce gold coin.
Life is full of crossroads… who knows? Submitting a story could lead you onto a new path, and maybe end up putting a shiny new gold coin in your pocket.
Because it seems somewhat appropriate, I'll close by sharing a recent photo of yours truly, taken by a friend as we rode up an empty riverbed on the way to an asado about an hour and a half across the valley from La Estancia.
And with that, I want to thank you from the bottom of my heart for reading, and for all your kind words over the years that I have been writing this missive.
Whether you attend the Harvest Celebration here at La Estancia this March, or someday find yourself passing through Cafayate on your own, look me up and the first glass of Argentine wine is on me.
Hasta la próxima!
David Galland
Managing Director
Casey Research
