(Interviewed by Louis James, Editor, International Speculator)
This interview was first published on March 7, 2012
Editor’s Note: In yesterday’s Weekend Edition, Casey Research founder Doug Casey told readers why paper money will soon be extinct.
Today, Doug reveals why he will continue to use cash as long as he can…
Louis James: What about the hope that if people get pushed too far, they may rebel? Everyone has things they don’t want made public, even those with absolutely nothing nefarious about them. A total lack of privacy would seem intolerable, after some, probably short, period of time. As Princess Leia told Governor Tarkin in the original Star Wars movie: The tighter they squeeze their fist, the more people will slip through their fingers. Or maybe not. It is, frankly, very dismaying to me that the Big Brother concept has been turned into a “reality” TV show.
Doug: People may think it’s funny now, or even an egalitarian ideal to live in a society in which no one has any secrets, but that won’t last. If only in relation to currency controls – what we started out talking about – I think there’s something to your Star Wars quote. The more total the monitoring and control the state achieves over the legal economy, the more it will push people into the black market. We saw that in Soviet times. Stringent and very intrusive state monitoring, compulsion, and punishment only made the informal market flourish all the more. I’m sure this will happen. Even North Korea has an active black market. But I don’t like that term. What’s called “the black market” is really the free market; it’s heroic. The legal market – with all its taxes and regulations – is actually the one in need of either radical reform or abolition.
L: But the monitoring beyond finance – your drone swarms – might make noncompliance too risky for most people to try.
Doug: True. And maybe the U.S. will get not just 10% of the population hooked on stuff like Prozac, but 20% or 50%. As Aldous Huxley pointed out in Brave New World, it’s much easier to control zombies. That’s another reason why I think that hope for the future rests in what are today derided as corrupt Third World countries. If you’re going to have a ridiculous number of impossible laws, corruption is a good thing. Increasingly, what matters is not the number or even nature of laws on the books in the place you live, but the amount of actual control the state has over private individuals. Corruption subverts idiotic laws; it’s the next best thing to abolishing them.
L: I’ve often said, that on paper, the U.S. is freer than Mexico, but in fact, Mexico has become much freer than the U.S., in spite of its legally powerful socialist government. The average Mexican considers tax evasion to be a universal given, but U.S. taxpayers fear their government – a letter from the IRS can cause instant weight loss.
Doug: It’s certainly true that in Argentina, where I’m building a new home, people don’t fear their government. Well, not in the police state sense, anyway; they see it as more of a nuisance. It’s probably more accurate to say they are resigned to their government destroying the economy periodically than to say they actively fear it. If I get pulled over for speeding in Argentina – which itself would be highly unusual – I feel that I have nothing to fear at all, whereas back in the U.S., I could end up getting Tased, have my car taken, and do jail time for saying or doing the wrong thing, even without harming anyone. Any contact with the police in the U.S. brings an increasing risk of a lethal outcome these days.
I understand that there are about 40,000 SWAT raids on real and imagined targets every year, and the number is growing fast. Another contrast: In Argentina, most people despise the police and military, whereas in the U.S., they are apotheosized. This tells you a lot about the psychological states of these populations – it’s a very bad trend in the U.S.
L: On the subject of Argentina, perhaps we should mention that readers who’d like to meet you could head down there for the upcoming harvest celebration.
Doug: Well, I’m in the middle of one right now, but another is coming up next week, and there’s still time to sign up for that one. Sure, we have a lot of readers, and I’ve enjoyed meeting many, but it would be nice to get to know more of them. And it’s a nice time to get away from the dying days of winter in the northern hemisphere and come to a place where the weather is pleasant and the wines are fantastic. And I’m really tickled with our world-class gym, spa, and all the rest of it.
L: Very well. Investment implications?
Doug: Well, this highlights the importance of owning gold, but not for investment purposes or even for the financial prudence we’ve spoken of before, but for a different kind of prudence: Privacy – and even freedom.
One thing that has changed since we started having these conversations – back when gold was trading at about $600 per ounce – is that having approached $2,000 per ounce, and being likely to surpass that level soon, governments are going to start clamping down on gold more and more. Back when gold was under $300 an ounce, it wasn’t convenient to carry large nominal sums in gold – it was too bulky, too heavy. A roll of hundred dollar bills was less trouble. But now, you can hide $20,000 in one hand using gold. This has not gone unnoticed by the bad guys, and customs and immigrations forms of several countries have started asking not only if you are carrying more than $10,000 in cash, but specifically gold. Incidentally, to keep up with this type of thing, I urge readers to sign up at International Man, which has a great, free daily letter.
L: I agree; it’s an excellent publication. That’s an interesting admission for Big Brother to make, asking people to declare cash and gold; in effect, it admits gold’s value as money… But okay, if the state achieves total monitoring and control of the legal economy, and the informal economy becomes much larger, would that not greatly increase the demand for gold? The black market is, as you say, a free, if somewhat chaotic, market, so, according to you and Aristotle, would not gold emerge as the money of choice in that market? And would that not add to the speculative reason for owning gold in addition to the reasons of prudence?
Doug: Yes, and yes. Other sub-trends speculators might look for, within the overall trend of digitalization of our world, would lie in various new technologies this will make possible. Many of them would be very positive and profitable for those who deploy them commercially first. This is the sort of thing Chris Wood keeps tabs on in our Casey Extraordinary Technology.
L: That reminds me of what you said about our phones becoming our wallets. You already don’t really need a physical card to make most revolving credit purchases, just the information on the account. Not only do we buy all sort of thing online these days with this information, but there are chips that transmit gas card info to gas pumps so we don’t even need to get our wallets out to fill up our tanks. Who knows where that will end up, but I can imagine that as phones and computers (and what used to be TVs) all merge into one technology, which already includes payment systems, money will get folded into this technology as well.
Doug: I fully expect that, even though I still don’t own a cell phone and really loathe the things. As an individual human being, I’m going to keep on paying for things in cash for as long as I can – and to me, gold is the real cash of the world. But as a speculator, I think there’s a lot of money to be made investing in the developers of these technological innovations.
L: Good luck with that fight. As Locutus of Borg said, “Resistance is futile. You will be assimilated.” There are computer chips in clothing, in cars – heck, it won’t be long before they’re in our food and in the drinking water… Only to help doctors monitor our health, of course.
Doug: I know, I know. The prison planet we live on could get pretty ugly before it frees up again. I fear that before things get better, they will have to get much worse, and our world will soon come to resemble a cross between Huxley’s Brave New World and Orwell’s 1984 – or maybe Soylent Green if it gets really bad.
L: Another cheerful thought, Doug.
Doug: You know I call ‘em like I see ‘em. I hope many of our current readers will look into The Casey Report as well, if only because this month has part two of a long article that I’m rather fond of, titled Evil, Stupidity, and the Decline of America, which examines the root causes of the pickle the West is now in.
But the greater the invasion of privacy, the greater the need for privacy there will be – and the market will respond. I doubt you’ll need stolen eyeballs for retina scans, as in the movie Minority Report, but technologies that identify you to the monitors as a Boy Scout from Iowa (with a perfect grade point average, totally clean driving record, and no arrests or interrogations) will certainly become available. Clean digital identities should become highly lucrative commodities, all the more so for being illegal. But, with any luck, when the revolution comes – and it will, even though it will be most unpleasant, inconvenient, and dangerous – I hope it turns out more like the revolutions in V for Vendetta or the American Revolution than the one in France under Robespierre. In any event, there’s no doubt in my mind that things will get much worse before the world reboots and gets better again.
L: Well, that’s marginally better. As has been observed before, as in the times of chattel slavery, for example, when laws become unjust, just people must become outlaws.
Doug: Just so. Maybe we’ll all have our chance to play Robin Hood against an evil king.
L: Right then. Thanks for your thoughts… I’ll have to take a closer look at our technology picks for my own investment portfolio.
Doug: You should. And you’re welcome. Talk to you soon. In the meantime, live, and be well
L: Until next time.
Doug Casey is a multimillionaire speculator and the founder of Casey Research. He literally wrote the book on profiting during economic turmoil. Doug’s book, Crisis Investing, spent multiple weeks as number one on the New York Times bestsellers list and was the best-selling financial book of 1980. Doug has been a regular guest on national television, including spots on CNN, Merv Griffin, Charlie Rose, Regis Philbin, Phil Donahue, and NBC News.
Doug and his team of analysts write The Casey Report, one of the world’s most respected investment advisories. Each month, The Casey Report provides specific, actionable ideas to help subscribers make money in stocks, bonds, currencies, real estate, and commodities. You can try out The Casey Report risk-free by clicking here.