Rachel’s note: Regular readers know our founder, Doug Casey, believes we’re in store for the Greater Depression…
And he says the hardcore leftists, Marxists, and socialists running the government are only making things worse.
In today’s Conversations With Casey, Doug shares why America will no longer be a place of refuge from the madness.
And he gives us exclusive insights into his plans to publish a brand-new, totally updated version of his New York Times best seller, Crisis Investing, to help us prepare for what’s coming…
Rachel Bodden, managing editor, Casey Research: Doug, last week we talked about where to put money for the grim and tumultuous decade ahead. What other investment implications do you see for a collapse?
For example, right now a lot of people are really, really interested in small, sexy biotech stocks and stuff like that.
What industries are going to be hit the hardest? Which ones should people start steering away from?
Doug Casey, founder, Casey Research: Science has always been one of my major interests, and I’m a huge technophile. As I’ve pointed out many times in the past, over the next 20 years we’re likely to arrive at Ray Kurzweil’s Singularity. Biotech, genetic engineering, artificial intelligence, robotics, nanotechnology, and space exploration will continue developing. Perhaps outpacing Moore’s Law.
But at this point there’s so much focus, so much enthusiasm – a buying panic, actually – in the technology stocks in general, and the biotech stocks in particular. I think you’re going to be able to get them much cheaper in the future. Market prices and actual results don’t move in lockstep. Prices are going up at this rate because of money-printing, not technological reality.
So I don’t want to get involved in them when the whole stock market, with a few exceptions like the gold stocks and the oil stocks, is in a bubble.
All this money being created by the U.S. government and the Fed has created huge distortions and misallocations of capital. It’s created a mammoth business cycle, one that will likely result in what’s known as a “crack-up boom” followed by a clifflike sell-off.
Let me give you an example of how this works. In a more stable economy, let’s suppose that most people eat rice and beans because they’re cheap, but they want to eat beef because it’s tastier. If the government puts $10,000 in everybody’s bank accounts on a Sunday night, on Monday morning they’re all going to think they’re much wealthier than they really are. But there’s no more real wealth in the world – there’s just more purchasing media.
So one of the things that will happen – among many, many others – is that people will stop eating poor people’s food, rice and beans, and they’ll go out and buy beef.
What happens? Price of beef goes way up, price of rice and beans collapses. Even though there’s an inflation going on, some things are going to go down. This is a distortion in the economy.
Then later, after everybody’s spent their $10,000, it turns out that cattlemen are producing lots more beef to cater to a demand that they thought was going to stay there. And the rice and bean farmers are producing a lot less. There’s now a shortage of rice and beans, but a surplus of beef. This type of thing happens across all areas of society. It’s why the business cycle – something caused by political intervention, and inflation of the money supply – is so devastating for the economy in general. The only bright side is that it creates great opportunities for speculators.
Rachel: Basic supply and demand.
Doug: Yes. Or, more exactly, distortions in normal supply and demand. These distortions caused misallocations of capital. Everyone loses, except for speculators.
Rachel: And government officials in position to profit from money-printing.
Doug: Absolutely. One of the worst problems we’re facing now is that hardcore leftists, Marxists, and socialists are running the government. They want to actively change the actual nature of the U.S. society. This is serious, not just for America, but for the world at large. Because America has always been the final refuge, the place where if things got bad elsewhere, a freedom seeker could always go to the United States. But now the U.S. is becoming like all the other countries in the world. Under people like Kamala, AOC, Beto, and the rest, there’s actually no place to run anymore.
So as far as investment implications of a collapse, yes, there are ways you can capitalize on it. But we’re going to be facing problems much more serious than fluctuations in the market in the years to come.
Rachel: Well, fortunately for those of us who want help preparing for a collapse, I’ve heard you are planning to revamp your bestseller Crisis Investing. Can you tell us any of your plans?
Doug: Well, Nick Giambruno and I are working on the book now. It’ll be a 50-50 effort, and Nick is a competent thinker and writer.
The brand new and totally updated version of Crisis Investing should be out in the next few months. The situation now is much different and much more serious than it was in 1980, when that book first came out. There are a whole new set of both dangers and opportunities to be considered.
Rachel: Fantastic. I’m very much looking forward to it. Thanks for talking with me today, Doug.