Justin’s note: Longtime readers know what Doug Casey thinks of nation states. He says they’ve mostly been an “inefficient, counterproductive, and expensive nuisance” and a “testimony to how thoughtless the average person is.”
He also says nation states are going out of business.
I recently called him up to get an update on where we are today… and what to expect going forward.
Today and tomorrow, I’m sharing our discussion. I think you’ll enjoy…
Justin: So, Doug. Are nation states really in decline?
Doug: They’re definitely in decline, and that’s a good thing—nothing to be concerned about. It’s cause for optimism. The question is why are they falling apart?
Some background. The concept of the nation state came about with the Treaty of Westphalia in 1648, something that everybody only vaguely remembers from a college history class. Actually, today’s students will probably never even hear of it. That class has likely been replaced with Gender Studies or Black History.
Why was it so important? It redirected the concept of “loyalty” away from an individual—a prince or a king—to the State itself. A geographical area now wasn’t so much the possession of a ruler, as a possession of a State. This really got the concept of nationalism going; nationalism is just tribalism writ large.
That’s how the concept was born. But the idea of a nation state is coming to an end. Now almost anybody can go almost anywhere thanks to jet travel; you’re no longer married to one place, like a medieval serf. And you can communicate with anybody anywhere on the planet thanks to the Internet; that makes it much harder to keep all the sheep thinking the same thing.
So, first, people realized that it’s completely ridiculous and dysfunctional to be loyal to some thug who, through an accident of birth or through military competence, set himself up as a prince. Now they’re discovering that it’s equally stupid to be loyal to a government that’s running a country.
Justin: What should be people be loyal to instead?
Doug: Your loyalty should be to people who share your values or philosophy on life. Whatever is important to you. That could be any of a thousand things, including your religion or occupation. Or maybe just a hobby.
The nation state is now an anachronism, and going out of business. It’s dysfunctional, destructive, and serves less and less of a useful purpose. All it does is tax, regulate, persecute, and conduct wars. People got a bit of a scare a couple weeks ago when it looked like the US might start a nuclear war with the North Koreans, or the Russians. Perhaps they’ll threaten China next. That’s all State-on-State action.
Every government on the planet wants to maintain its power, and fights against losing power. We saw that recently with Spain and Catalonia. We’re seeing that with Syria, which should be several different entities, probably based on religion. A few years ago in the Central African Republic, where the Christians and the Muslims were hacking each other up with machetes for control of the government. Incidentally, I was headed there from Paris just then, and it was simply impossible. It’s not even a real country. If even 1% of Americans—in fact anyone on the planet—has even heard of the place, I’d be surprised. But it’s a nation state, with equal voting rights with the US and China in the UN.
This will happen all over the Third World. Every one of these so-called countries are completely arbitrary and artificial constructs. And they’re all bankrupt. Including the US.
Justin: I agree that the idea of a nation state is completely obsolete. But, as you know, governments are becoming more intrusive and controlling. Doesn’t that support the idea that nation states are getting more powerful, not weaker?
Doug: Absolutely. In every country, citizens have much less freedom than they did 100 years ago. The number of laws and regulations has exploded. Equally bad, the income tax is everywhere—it didn’t exist almost anywhere before the 19th century. Even worse, money everywhere is now just a fiction. Before the early 20th century money was completely international. It was gold, which was accepted everywhere. And in those days you didn’t need a passport—just enough money to travel and maintain yourself.
The standard of living was lower in those days. But things have improved because of technology, despite government draining capital away from enterprises, and misallocating it for political purposes.
Technology has advanced tremendously over the last hundred years. But a lot of people conflate the increase in standards of living with the growth of governments. Governments have grown not because they created new wealth, but because they’ve confiscated wealth and used it against their subjects.
But now most of them are bankrupt—even though they’ve taken taxes from trivial levels to monstrous levels. Even with the huge additional amounts they’ve stolen by inflating their currencies, they’re still bankrupt. I suspect we’re reaching the end game—but that’s another story.
So, you’re right. Freedom has been in decline throughout the world. I mean you can’t even arm yourself today without getting permission from the State. And, historically, a major sign of a free man was his right to be armed. Snowflakes, cupcakes, and SJWs are afraid to be armed; they have a slave mentality.
It’s disturbing and the situation is getting worse; this is all going to come apart. We’re going to have a crisis that reconstitutes everything in a new form. The US peaked in the ’50s, has been in decline since the ’70s, and its descent is accelerating. Actually, Western Civilization peaked just before World War One, and it’s in even bigger trouble. That’s a real tragedy, since about 98% of everything of value in the world is a product of it.
Justin: What kind of crisis will be the final nail in the coffin for the nation state? A currency crisis? A debt implosion? Possibly a war?
Doug: The next major crisis will be monetary in nature, thanks to central banks. Again, only a few central banks even existed 100 years ago. They simply weren’t necessary, because everyone used commodity money.
And commercial banks operated on sound classical principles. It’s a different story these days. Central banks and commercial banks are essentially Ponzi schemes, and engines of inflation. It’s a major reason the rich are getting richer—which is OK, except that today it’s at the expense of the middle class.
This is all going to blow up. And the next crisis will be one for the record books. It will start as a monetary crisis, but will turn into an economic, political, social, and military crisis. You can be sure the US Government will be involved in everything, dragging its subjects with it, like it or not.
Justin: Who’s going to lose the most when this crisis hits?
Doug: Well, wealth has been funneled towards the people in control, the elite. So, the little guy is probably going to get hurt the most. His savings will evaporate because it’s mostly in paper currency.
But there could come a time when the government eats the rich, too. Those people profited from the system. And maybe they deserve it. At least the ones who ride the Metroliner between Washington and New York.
This is because the U.S. empire is in rapid decline. It’s similar to the fall of the Roman Empire. Although the Athenian Empire is probably an even better analogy. We’ll have to discuss that one of these days.
Justin: How might the United States react militarily?
Doug: Well, the declining U.S. Empire will likely confront the rising Chinese Empire. The US still has a very powerful military. The chances are it will use it while it’s still on top. Or a small war could break out anywhere in the world, and escalate. Things could get out of control very quickly. Remember, Black Swans aren’t things you don’t expect. They’re things that you don’t know even exist.
You’ve also got to remember that the U.S. also has a genuine demographic problem. This wasn’t an issue one hundred or even fifty years ago when most of the U.S. population was of European and Christian descent. Today, it’s very different. A huge portion of the population is Hispanic. And these recent migrants have much different traditions. They don’t have traditional American values.
That’s even more true of other migrants. The US is importing migrants from all around the world. These people have totally different philosophical, religious, and racial backgrounds. They just don’t fit in. It’s perhaps like Rome after Adrianople in 378; once the gates were open, within a generation—30 years—the barbarians had total control of the old empire.
Now, I’ll say that it’s fine when you add a few outsiders to a society. They add some spice to the stew. But it’s a formula for chaos when they arrive in massive numbers. And are doing so at the expense of the natives.
This is one reason I suspect that the U.S. won’t exist one hundred years from now. It will break up into different regions. The same thing will happen in Russia, Africa, and many South American countries. For example, there’s no reason why Brazil should be one country. Bolivia will break up into two, possibly three countries.
Justin’s note: Keep your eyes peeled for part 2 of our conversation tomorrow. In the meantime, I urge you to watch this brand new-video presentation Doug and his team just released. As you’ll see, right now, a new currency law is being discussed… And it could mean big changes for Americans.
In short, a new type of “smart” dollar is being considered. One that could easily let the government implement a national “soda tax”… even instantly set up a gun registry.
The scariest thing of all is this idea is quickly gaining traction in upper Washington circles. We’ve spent the last six months investigating this story, and you won’t believe what we’ve uncovered…
Today, readers respond to Strategic Investor editor E.B. Tucker’s recent essay: “Prepare for the Last Bull Market of Our Lifetimes”…
Fascinating article, if only the average Jane/Joe knew this, they might rethink their investment options!
E.B. might be correct, but private equity buyers typically don’t buy at the top of a market. They wait for the market to collapse and then step in and buy. Private equity will not run the DJIA to 30K with their purchases. Most private equity investors are old school, using price to sales, price to book, and price to cash ratios. This market threw those ratios out the car window miles ago.
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