Euro, Dollar, Democracy — Down the Pan?

Worried about the euro? Well it might be as well to broaden your concerns. We ought, says Doug Casey, to be even more worried about the dollar and democracy itself .


Douglas “Doug” Casey, a US TV radio and talk show personality and is a successful professional investor, author and publisher. He predicts that the modern economic slump is actually a Greater Depression – more serious than that of 1930s.

Casey believes  the economy could have, should have, and almost did go over the edge in the ’70s and especially in the recession of the early ’80s, but the government was able to prop up the house of cards and build it even higher. Insofar as there are any green shoots, they are weeds, Casey has said on-the-record. Everything the government is doing is not only the wrong thing; it is the exact opposite of the right thing. The way to solve the problems that have been exposed is for the government to not do anything; in fact, to entirely get out of the money game, to stop regulating, and vastly reduce taxes. Government inaction would be far more favourable than government action, he says.

Casey wrote Crisis Investing, the book on profiting from periods of economic turmoil a book which  spent multiple weeks as number 1 on the New York Times bestseller list and became the best-selling financial book of 1980 with 438,640 copies sold.

In this excerpt of a recent interview with Anthony Wile of the Daily Bell (a US wire service that advocates sound money policy) he said: “Governments all over the world have created trillions of currency units since 2007 in the mistaken idea that it would create prosperity. The Americans – but also the Europeans, the Chinese and others – have papered things over for the short run mainly by inflating the stock markets, artificially depressing interest rates, and slowing the fall of the real estate market. All that extra currency has made people think they’re richer than they are, and has encouraged extra consumption – which is a large part of the problem. Now they’re out of bullets. We are coming out of the eye of the hurricane and it’s going to be much, much more serious than it was in 2007, 2008 and 2009. That’s because all those currency units they created are causing tremendous price rises on the retail level. It’s going to be devastating for the average guy.  The Chinese – or at least their central bank – have more US dollars than anybody else, and they want to get rid of them. They are trying to offload those dollars, for instance in Africa, to get rid of them for real wealth. Nearly everybody in the world feels this way. The new deals that they cut, with the Iranians and the Argentines for instance, are almost like barter deals. Nobody wants to use the paper currency of an unreliable third party. The US dollar is like an Old Maid card; nobody wants to get stuck holding it.

“I think in five years the dollar will have lost its reserve status completely. It may be more like two or three years. I hate to put such a near-term time frame on something that’s so momentous in size. But I don’t see any way out… So, I think they have actually gone beyond the point of no return. There’s no way to avoid a genuine catastrophe, much worse than what happened in the 1930s. There are several ways this could end, but I suspect the government will choose the worst alternative. I suspect the destruction of the US dollar is in their minds. How are we going to get rid of all this debt? Well, destroying the US dollar is the only way. Their first priority is saving the US Government.

“But they’re not considering that the people who will be hurt the worst are the prudent people, people who have saved dollars. They will destroy the prudent parts of society that actually try to produce more than they consume and save the difference. Prudent middle class workers are going to be wiped out, and the people who borrow and are deeply in debt are going to be rewarded by having their debt wiped out. That’s perverse. It is going to wipe out the middle class in the US and all over the world … Perhaps even worse, it’s going to put the US government temporarily back on a manageable financial basis. That means they won’t have to fire all their employees or disband all these agencies and get rid of the military, which is what should be done. They’ll wind up destroying the productive parts of the economy to save the government; the parasite will kill the host. It’s a total disaster, with wide-ranging consequences, and it’s going to happen in this decade.
Wile: Recently, Alan Greenspan said on NBC that the US would never default because the Fed can always print more money. (See video below.) Isn’t that default by devaluation?
Yes, that’s exactly what they are going to do – print – and it’s going to devastate the middle classes, the people that save. That is in fact what they are going to do. As I said before, it would be far better if they defaulted overtly – that would punish those who lent the government money, it would ruin the government’s credit, it would force the government to cut back radically and would likely save the dollar. But they’ll do none of those things. Greenspan and Bernanke should both be hung by their heels from a lamp post as an example, although it probably wouldn’t do any good in that they’re both just stooges, caught up in a tide of events far beyond their control at this point.

“Bernanke is an utter fool, an academic with no experience in the real world, operating on totally fallacious and destructive theories. Holding rates to arbitrary and artificial low levels is exactly the opposite of what should be done. Interest rates have to go up to stop people from borrowing and get them to save. It’s one of the things that ensures they are going to destroy the dollar.

“…Gold is the only financial asset that’s not simultaneously somebody else’s liability, and nobody is going to want to hold dollars or any other currency. Gold is going to be driven much higher by fear, greed and prudence – a deadly combination. Gold will turn into a mania, a bubble.

Of course, everything else in the world has been driven to high levels. There are no bargains, anywhere in the world. The stock market’s not a bargain by any parameter I can think of. Real estate hasn’t reached a bottom in the US, and it’s just started collapsing in places like Australia, Canada and the UK. The bond market is a terminal short sale. What can you buy? There is virtually nothing you can buy other than some commodities and gold at this point. So, gold’s going higher, if only for a lack of reasonable alternatives … The name of the game now is to conserve assets.

“…Democracy is just mob rule, dressed up in a coat and tie. It’s too bad people conflate democracy, which is mob rule, with liberty and freedom. Democracy in most of the world is everybody voting for the person that promises him or her the most stolen goods from other people. Democracy is a political system, and all political systems rest on institutionalized coercion. I don’t care whether it’s a king, a president, a congress, or a mob of chimpanzees that tell me I have to pay 50% of my income over to them so they can fund wars, welfare programs, the police state, oligarchic corporations, or whatever. That’s what democracy is today. Regrettably, the average person has been programmed to think democracy is a high moral good, much as his ancestors were programmed to believe that monarchy was the way Yahweh, or whoever, wanted the world organized. The only kind of democracy that I support is the democracy of the free market. You vote with your dollars. Anything that you want or need can be gained by production and trade. The democracy we currently know is a fraud and a delusion … I suspect the Internet is the one thing that is most likely to bring down the nation state. I think it’s extraordinarly important, and will have the same effect on the ruling classes as gunpowder and the printing press did. That’s why in the future you are going to see lots of effort on the parts of governments to shut it down or regulate it so it can’t be used effectively… In the long run, this century is going to be the Chinese century. The cat’s out of the bag; the average Chinese has tasted some freedom, is hard working, and wants to be wealthy. He will succeed. The Communist Party is just a continuation of the mandarins ruling China for the past two millennia. Essentially, the Communist Party is just a scam allowing people who are members to steal 10% right off the top. I suspect the Internet will be the big factor to get rid of the Party…  I am a big fan of South America. I think the best place to be is the southern cone, which is to say Argentina, Chile and Uruguay, for all kinds of reasons. That’s where I live most of the year…”

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