‘October surprises’ still less bad than what’s right out in the open

 

So this weekend we have before us the spectacle of the group of political tribalists who support “family values” defending sex talk, and the tribalists who claim to support women preparing to defend the enabler of an alleged rapist. As a twitterer observed:

I just want you all to realise that this isn’t the straw that broke the camel’s back.
We’ve all just been staring at a dead Bactrian camel for months like something good was going to happen.

But it’s not, is it.

Did you ever think American democracy would get here, to this place? Or get here this soon?

It makes you think seriously about Gary Johnson’s unofficial slogan: Make American Sane Again.

But still, when what candidates say in public is so bad – promoting protectionism, boondoggles, foreign policy disasters & domestic expulsions -- does it truly matter what they say in private?

And how ironic, or revealing (of both her and how she views voters), that the candidate presently leading the polls thinks it only safe to say in private that she dreams of open markets and open borders – something she would never ever say in public.

So how on earth would you judge this sorry pair of charlatans?

Philosopher Stephen Hicks proposes a score sheet to help choose between the three leading candidates, which you may weight any way you wish, .

You may find yourself wondering for example whether or not it’s possible to give ‘minus’ marks. If so, you have my blessing – especially when it comes to character.

PS: I don’t know about you, but I see no value in watching the carny show this afternoon that they call a “debate.” It’s bad enough having to hear about it …

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Quote of the Day: On supporting Gary Johnson

 

“My support of Gary Johnson despite myriad flaws is not out of enthusiasm for Johnson but out of despair at the alternatives. In a decent country, Johnson would be easily and obviously disqualified. Alas, [I] live in America in 2016.”
~ Mark Kormes on Facebook

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Radical Islam: “I alone can solve.”

 

Trump has finally found a policy and a speechwriter and a teleprompter with which to try to sell it. It’s been sold as his first major policy speech on one of today’s most serious issues.

How does the very un-serious Orange Man do? Let’s go line by line looking for his answers.

Now, a … threat challenges our world: Radical Islamic Terrorism.

A fair start. How will you end that threat, sir?

We will defeat Radical Islamic Terrorism, just as we have defeated every threat we have faced in every age before.

How?

Just as we won the Cold War, in part, by exposing the evils of communism and the virtues of free markets, so too must we take on the ideology of Radical Islam.

How?

Anyone who cannot name our enemy, is not fit to lead this country.Anyone who cannot condemn the hatred, oppression and violence of Radical Islam lacks the moral clarity to serve as our President.

Fair enough, and a nice quote too. But for months he’s been attacking Islam per se, and now he’s condemning something he’s calling “Radical Islam.” So what is that specifically? Who exactly would you name as your opponents? (Compare it for example to the clarity of saying: “Our enemy in this war is: Islamic regimes that have in any way sponsored or supported attacks against the West, and jihadist groups that have planned or executed such attacks. The enemy regimes are primarily those in Iran and Saudi Arabia; and the jihadist groups include Hezbollah, Muslim Brotherhood, Al Qaeda, and Islamic State."

And this thing he calls Radical Islam.” How does that differ to Islam itself?

No answer. (Maajid Nawaz suggested a distinction and taxonomy many months ago. Why not use that?)

If I become President, the era of nation-building will be ended. Our new approach, which must be shared by both parties in America, by our allies overseas, and by our friends in the Middle East, must be to halt the spread of Radical Islam.

Halfway through the speech, and still the concrete question is: ‘How?’

As President, I will call for an international conference focused on this goal.

Wow. A conference.

We will work side-by-side with our friends in the Middle East, including our greatest ally, Israel. We will partner with King Abdullah of Jordan, and President Sisi of Egypt…

How is this different to today?

We will also work closely with NATO on this new mission…

Changed your mind, then?

I also believe that we could find common ground with Russia in the fight against ISIS…

Just on ISIS? (I think we should be told.) And, yes, you have new friends. But what exactly will you and your friends do? (We’re now two-thirds through the speech and still nothing concrete.)

My Administration will aggressively pursue joint and coalition military operations to crush and destroy ISIS …

A plan. Finally. But is that very much different to what’s already failing? And what’s your end-game if you did succeed? And shouldn’t you perhaps recognise that previous aggressive operations, whether failed or successful, is precisely what created the vacuum and delivered to ISIS the military materiel to hold it?

… international cooperation to cutoff their funding…

How?

… expanded intelligence sharing…

Which is already happening. What do you propose that’s different?

… and cyberwarfare to disrupt and disable their propaganda and recruiting.

Which is already happening. What do you propose that’s different?

No answer

So what else is proposed?

Our Administration will be a friend to all moderate Muslim reformers in the Middle East…

Who are they? No answer.

This includes speaking out against the horrible practice of honor killings … speak[ing] out forcefully against a hateful ideology

A lot of speaking out.

A new immigration policy is needed as well

Wouldn’t you know it.

    The common thread linking the major Islamic terrorist attacks that have recently occurred on our soil – 9/11, the Ft. Hood shooting, the Boston Bombing, the San Bernardino attack, the Orlando attack – is that they have involved immigrants or the children of immigrants.

Not exactly true, but the way of stating it glosses over the real truth. The major attacks on US soil included everybody from natural-born Americans to people on tourist or student visas to the children of immigrants. And that’s it. The former could conceivably be solved with some superior kind of screening, but since the latter have been here for a generation, it’s clear the answer there has to be something very different. Whatever it is (and I’ve suggested responses before), since these people were already there, it’s patently not a problem that can be solved simply by keeping them out. Even a moron could see that.

However …

The time is overdue to develop a new screening test for the threats we face today. I call it extreme vetting. I call it extreme, extreme vetting. Our country has enough problems. We don't need more and these are problems like we've never had before.

“Extreme, extreme vetting.” That’s a lot of vetting. What would that look like? And how would that stop the large number of home-grown attackers?

A Trump Administration will establish a clear principle that will govern all decisions pertaining to immigration: we should only admit into this country those who share our values and respect our people.

How would you do that? What would your “extreme vetting” look like?

In the Cold War, we had an ideological screening test.

Did we? So what would your “extreme vetting” actually look like?

The time is overdue to develop a new screening test for the threats we face today.

So what would your “extreme vetting” actually look like?

In addition to screening out all members or sympathizers of terrorist groups, we must also screen out any who have hostile attitudes towards our country or its principles – or who believe that Sharia law should supplant American law.

Easy to say. But what would your “extreme vetting” actually look like?

Those who do not believe in our Constitution, or who support bigotry and hatred, will not be admitted for immigration into the country.

So this would be a test that you yorself would not pass, sir. And what would your “extreme vetting” actually look like, that it would uncover these attitudes or beliefs?

No answer. This is the hook for the whole speech, really, and of detail there is and is likely to be none.

And the rest is trash-talk, Hillary bashing, and outright lies about suspicious terrorist behaviour not having been passed on for fear of being accused of “racial profiling” – the only actual concrete proposal being to “identify a list of regions where adequate screening cannot take place” and “stop processing visas from those areas until such time as it is deemed safe.” By whom, I wonder. And what would make them safe?

Well, there was this:

Political correctness has replaced common sense in our society.
    That is why one of my first acts as President will be to establish a Commission on Radical Islam – which will include reformist voices in the Muslim community who will hopefully work with us. We want to build bridges and erase divisions.
    The goal of the commission will be to identify and explain to the American public the core convictions and beliefs of Radical Islam, to identify the warning signs of radicalization, and to expose the networks in our society that support radicalization.

So that’s the best of the policy he promotes, and the only actual detail he delivers – perhaps because it’s a policy plucked from David Cameron, so that some details have already been developed.  No shame in that. It’s a good policy as I said at the time – although Cameron’s policy had much more to it.

Now, bear in mind this is Trump’s only detailed policy announcement so far, in what has been a very long campaign. And this is all the detail he has. And the only detailed announcement he’s ever likely to make on this important issue, and amounts tactically to saying “I’ll do what’s already being done, but me and my frends will do it so much better.”

Which has been pretty much along the lines his other less detailed policies have said.

But at least he’s stopped thinking Obama was born in Kenya and was ISIS’s original founder. So maybe his speechwriter should be thanked for something.

And, you know, we’re not seeking perfection, merely the best policy out of a bad bunch of candidates. One whose hand might seem safe near the nuclear football. (Would you trust this one?)

So what do the other candidates say that we may be able to take seriously?

We already see the fruits of Hillary’s policies in the world we have around us. We barely need to know more. And Jill Stein is just largely me-too. So in the absence of any real thought or concrete plans or policy here, I turned to Gary Johnson’s, detailed last year, which has the clarity the buffoon’s lacks.

Isis, he says, is today’s Nazi fascism. Johnson begins, as MacArthur did in post-war Japan*, by distinguishing between the religion and its links with state violence – in this case between Islam and Sharia:

It is time that we face the reality that, while Islam is a faith that must be granted the same freedoms of religion as all others, Sharia is a political ideology that cannot coexist with the constitutional and basic human rights on which the United States is founded…
   We need not and should not be Islamophobic, but all who are free and wish to be free should be Shariaphobic. In its determination to impose a “law” upon us  and to kill, maim and terrorize in the process – as seen most recently in Paris, ISIS must be stopped…
   Libertarians believe freedom and opportunity require limited government. Government costs too much because it does too much – and a government that does too much erodes liberty. But one responsibility of government is clear: To protect us from those who would do us harm and who would take away our fundamental freedoms. We believe liberty is the true American value, and that our government has a solemn obligation to preserve it.
    We cannot dance around the fact that destroying human liberty and doing us harm are what Sharia law dictates. Whether it be mass murder in Paris, downing a Russian airliner in the Sinai, gunning down innocents in a Kenyan shopping mall, beheading Christians, or flying airplanes into the World Trade Center towers, ISIS and other like-minded Shariaists are engaged in a decades-long campaign to eradicate freedom and replace it with a Sharia political system that is antithetical to everything for which America stands.
    In World War II, too many, including the U.S., stood by for too long as Hitler’s Nazi fascism spread across Europe, with horrendous consequences. Sharia and its ISIS fanatics are today’s Nazi fascism.
    Let’s be clear. Stopping ISIS and Sharia have nothing to do with religious freedom or the rights of Muslims – here or abroad. It has everything to do with protecting people who are free or wish to be free from murderous fanatics who will stop at nothing to establish a global caliphate under which no one would be free.
    Dealing with this threat is the most American thing we can do.

So how would you do that, sir?

Putting tens of thousands of American troops on the ground in Iraq or, especially, Syria, won’t work. We have learned that the hard way. Those realities, however, do not mean that we do nothing.
    First, even barbarians and fanatics need money. ISIS is collecting an estimated $1 million per day in profits from oil sales. That buys a lot of terror. Reducing or stopping that flow of money will do more to stop ISIS than bombing a training camp here or there, and the United States – along with our allies – must get serious about turning off the ISIS oil spigot. While ISIS is receiving support from sympathic individuals and organizations in the region, even the governments of Saudi Arabia and the United Arab Emirates are taking concrete steps to cut off ISIS’s daily oil windfall. The U.S. must do the same. The finances and transactions of ISIS and their brethren must be disrupted.
    ISIS’s recruitment and attacks are being executed largely via cyberspace. There will be no invasion that can be repelled with missiles or warships. Rather, they will enlist, plan, finance and coordinate with believers who are already here to conduct their murderous campaign. Paris was just the latest example. We must deploy our formidable technological might to join the battle in cyberspace – and win.
    And while invasions and doomed-to-fail attempts at imposing Western democratic values on unwilling peoples will not work, reviving and supporting strategic partnerships with those who are fighting ISIS in Syria and elsewhere just makes sense. The U.S. must assume a stronger, more committed role to galvanize and lead an alliance based on those partnerships that will first contain and ultimately neuter ISIS.
    Fighting and defeating ISIS wherever they are is not “intervention”. It is stopping violent jihadists whose stated objectives are to kill Americans, wipe Israel off the map and destroy the very freedoms – including religious ones – upon which our nation is founded. It is protecting us from those who would and are doing us harm.

In a short statement delivered many months ago, Johnson gives the details Trump doesn’t, and argues against further direct intervention of the type Trump favours.

Who would make the better president?

---

* “The basic principles of a rational policy towards Islamic Totalitarianism—with clear strategic implications—were revealed in a striking telegram sent by the U.S. Secretary of State James Byrnes to General Douglas MacArthur, the American commander in Japan, in October, 1945. The telegram established the basic U.S. policy goals towards Shintoism, and laid out, for MacArthur and his subordinates, the basic principles by which those goals were to be achieved:

“’Shintoism, insofar as it is a religion of individual Japanese, is not to be interfered with. Shintoism, however, insofar as it is directed by the Japanese government, and as a measure enforced from above by the government, is to be done away with. People would not be taxed to support National Shinto and there will be no place for Shintoism in the schools. Shintoism as a state religion—National Shinto, that is—will go . . . Our policy on this goes beyond Shinto . . . The dissemination of Japanese militaristic and ultra-nationalistic ideology in any form will be completely suppressed. And the Japanese Government will be required to cease financial and other support of Shinto establishments.

“The telegram is clear about the need for separation between religion and state—between an individual’s right to follow Shinto and the government’s power to enforce it. This requirement applies to Islam today (and to Christianity and Judaism) as strongly as it did to Shinto. In regard to Japan, the job involved breaking the link between Shinto and state; in regard to Islamic Totalitarianism the task involves breaking the link between Islam and state. This is the central political issue we face: the complete lack of any conceptual or institutional separation between church and state in Islam, both historically and in the totalitarian movement today.

“As for what we should do about this, the 1945 telegram is direct. Here is its opening, rewritten to substitute Islam for Shinto:

“’Islam, as it is a religion of individuals, is not to be interfered with. Islam, however, insofar as it is directed by governments, and as a measure enforced from above by any government, is to be done away with.

“There is no question here about religious freedom. Individual religious belief is to be left alone—as is all freedom to think and to speak by one’s own judgment—but state religion must be eliminated. It is vital that this principle be understood, stated clearly, and enforced—for this is a precondition of the thorough and permanent defeat of America’s current enemy.

“Totalitarian Islam, an ideology that merges state power with religious belief, must go.”

                                     ~ John David Lewis, from ‘“No Substitute for Victory”: The Defeat of Islamic Totalitarianism’

So who’s the American idiot here?

 

[Pic by Minarchyball. Hat tip Monica B.]

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End those freer-trade daydreams now

 

If anyone had any expectation about freer trade with the US, that was given the formal kiss of death overnight with Crooked Hillary’s declaration:

"I oppose it now, I'll oppose it after the election and I'll oppose it as President," the Democratic nominee told supporters at a factory in Michigan.

Mind you, she’s supported it before and probably will again on alternate Tuesdays, if she thinks there’s votes in it. But with  Duplicitous Donald now her keener on building trade walls around their continent than trade between continents, hopes for freer trade with the US are now genuinely dead.

That announcements like this happen almost casually is simply par for this pretty lumpy course. Face it folks, “it's all just a game to these two. It really doesn't matter which one wins, the outcome will be the same.” In this case, protectionism. By default.

We’d have to hope for Gary Johnson to gain the White House for anything promoting freer trade to be back on the table. Unikely, but not impossible.

..

Quote of the Day: Choosing in ‘The Year of the Low Bar’

 

“The [big] picture is that Clinton and Trump are two of the most flagrantly dishonest, corrupt, power-hungry, unprincipled cronyists ever to seek the Presidency. Thus, in 2016, the Year of the Low Bar, Gary Johnson does not have to be George Washington or even Ronald Reagan to earn my vote. He merely has to be not evil. And I am convinced he more than meets that test…
    “Of course, in this election, some see being a decent human being as a weakness…”
Mark Nitikman, in ‘My Morning with Gary Johnson’

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You know, there *are* better options than #ClintonTrump

 

This is two minutes worth sharing for any voters not happy with the Clinton/Trump option in 2016 (and who in the hell they would both make would be happy?):

 

 

But these Libertarian Party candidates have no chance, you say? But Johnson is polling between 12% - 16% in battleground states – and once polls show the ticket at15% then by law (yes, I know) Johnson must be included in all presidential debates. (And you know what a gamechanger that would be.)

But it’s still a wasted vote? The only wasted vote is one for something you don’t believe.

And you can hardly, seriously, say that you could believe in what either of the alternatives represent, can you. Come on, repeat after me:

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[Hat tips Monica B.]

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“I am finally done with voting for the lesser of two evils… I am not just for Johnson/Weld 2016. I am *enthusiastically* for Johnson/Weld 2016.”

 

No, New Zealanders can’t vote in the American presidential elections. (Can someone please inform the more rabid locals who hallucinate otherwise?)

One of the more sane Americans I know living in New Zealand can vote, however, and she’s enthusiastic about a third-party candidate with more experience than either of the big-party teams. Listen up:

I am finally done with voting for the lesser of two evils. I have reached my limit. Many of you who were much wiser than me reached this limit a long time ago.

I get the general fear factor over Trump. I’ve spent a lot of time, with equal parts horror and fascination, analyzing him. But I cannot in good conscience pull the lever for Hillary Clinton merely because she’d be more predictable with the nuclear launch codes, even though I've contemplated doing so. I think this deserves a brief diversion because my own FB wall has been a general avalanche of Trump articles for nearly a year now.

Hillary Clinton very likely had Vince Foster, and possibly a dozen other people connected to Whitewater, killed. Add to this all of the rest of her murderous and traitorous scandals of the past 20 years (PardonGate, SniperGate, FoundationGate, BenghaziGate, EmailGate).

None of this should ever, ever be forgotten in America's current range-of-the-moment, attention-span-of-a-gerbil, theater-of-the-absurd — in which otherwise decent people ponder casting a vote for a vile, predictable psychopathic killer in order to prevent a vile, unpredictable, vulgar, misogynistic, racist, would-be psychopathic killer from achieving the highest elected office in the world.

And while I have used the ‪#‎neverTrump‬ and ‪#‎neverHillary‬ hashtags in the past, I’m done with them now. My political views are not based on negatives and what I am against.

I am for the Constitution. I am for individual rights. I am for free markets. I am for liberty.

Gary Johnson fulfills most of the above. And here’s something even more important to me than a candidate’s ability to mouth the right platitudes: a clear record of course-correction on quite a few issues over the years. (I've watched him closely over the years, and I'd be happy to discuss those details in the comments for those who wonder what they are.) Johnson is not an inflexible person who cannot admit his mistakes or errors.

This ties into that matter of character. While Johnson might lack polish, he is a sane, compassionate, honest, decent, and accomplished man with mostly good ideas.

It doesn’t get much better than that.

Our individual votes matter little. Yet what we do to influence how others vote probably matters quite a lot.

This is why, like the porcupine in my avatar, I bristle when people go to great lengths to give endless disclaimers about Gary Johnson, as they admit they will maybe… probably... grudgingly… finally... vote for him.

With friends like that, who needs enemies?

I am not just for Johnson/Weld 2016. I am enthusiastically for Johnson/Weld 2016.

As if you couldn’t tell. :)

 

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Voting for "the lesser of two evils" is a total waste of your vote

 

For some reason, many New Zealanders are desperately interested in who votes what in America this year even though NZers themselves won’t vote.

Anway, Jeffrey Singer is an American who generally votes Republican. But not this year.

He reckons that voting for "the lesser of two evils," as so many Trumpeters propose, is a total waste of your vote –the principal practical argument being that the choice of HillaRump no real choice at all  -- and the principal moral argument being that to vote against what you actually believe is the biggest waste of a vote that could be imagined.

He offers his line of reasoning as “a guide to others who might be agonising over their decision this year.”

Athough my personal political philosophy is libertarian, like most people, over the years I have surrendered to the binary choice our two-party system gives us when casting my vote in presidential elections. I almost always find myself settling for a “lesser of two evils,” but the “evil” is not so great as to prevent me from rationalising what amounts to, by my vote, an endorsement or affirmation of the candidate.
    Because at least rhetorically, the Republican party candidate promises a greater commitment to limited, constitutional government, entitlement reform, tackling the national debt, and a belief in the benefits of free trade, I have voted for the Republican candidate for president ever since Ronald Reagan. The Republicans repeatedly disappoint on matters of foreign policy, seeing the US as world policeman. But the Democrats fare little better on foreign policy—sometimes even worse. So foreign policy as a vote-determining factor between the two major parties tended to be a wash for me. I often profoundly disagree with the Republicans on many of the “culture war” and so-called social issues, but I have had confidence that our Constitution and judiciary will defend against any overreach by Republicans in that area.
    So as a matter of practicality, I have tended to base my vote on the differences between the two major party candidates on matters of economic liberty and commitment to the principles of federalism and limited government. I recognise the politicians in both political parties have differing promises but similar results: bigger government, greater debt, less individual liberty. But I use the party platforms and the candidates’ rhetoric to help in my rationalization (some would say self-delusion) that I am voting for someone who will, at best, move things in a better direction or, at worst, be a lesser of two evils that I can live with.
    Not so this year.

No, not this year. This year may be the worst choice of big-two candidates at any time in American history. But some Americans, like Mr Singer, still like to vote.

Not voting certainly provides the satisfaction of knowing that I did not sanction or legitimise the offerings of the two major parties. But that satisfaction is only personal and private. I want to more actively make my views known. Using the following chain of logic, I have found a positive way to express myself through, what I believe, is the most effective allocation of my vote in November:

1) According to Professor Ilya Somin in Democracy and Political Ignorance, my vote has, on average, a roughly 1 in 60 million chance of being the decisive vote in the Presidential election. (It might be a great as 1 in 10 million in my relatively small state of Arizona. It would have a roughly 1 in a billion chance of being decisive if I lived in California.)
2) If I vote for the lesser of evils and hold my nose, my vote is blended in with millions of others—there is no way to register my dissatisfaction with the choices the two major parties have given me. There is no way to separate those who voted for a lesser of two evils from those who voted because they actually LIKED the candidate.
3) If I vote for the Libertarian party candidate, I am directly affecting the vote total of that candidate. Because that candidate will get fewer total votes than the major party candidates, when all votes are totalled up, I will have had a greater effect on raising the total percentage of votes for the Libertarian candidate. If the Libertarian candidate garners say, 5 percent of the vote as opposed to 1 percent, then my vote made a greater impact in making a statement than it would have if it was folded in with the 40 or 50 million voters who voted for a major party candidate.
4) If the Libertarian candidate gets say, 5 percent of the vote, then that clearly means that 5 percent of the voters chose a candidate that they KNEW had absolutely no chance of winning, rather than choosing the lesser of two evils. What’s more, they chose the candidate with the most pro-freedom, pro-Constitution, pro-Bill of Rights program. That sends a clear message.

Therefore:

5) By casting my vote for the Libertarian presidential candidate, my vote is actually more meaningful and makes more of a statement.

My conclusion: Voting for the lesser of two evils is statistically and strategically wasting my vote. I will vote Libertarian for president this year. This rationale does not necessarily apply to how I will vote in the down ballot races, where my vote has a greater numerical impact, I have a greater ability to directly communicate my views, and I might have less marked dissatisfaction with many of the candidates.
    I offer my line of reasoning as a guide to others who might be agonising over their decision this year.

And with the likely Libertarian Party candidate polling already in respectable numbers, and the likely Libertarian Party presidential ticket this election boasting more high-level political experience than the two big-party nominees combined – and that ticket being led by a Governor of a border-state with more first-hand knowledge of border issues than the noisy blowhard from New York -- the argument just grows more compelling.

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Who caused the global financial crisis? An inconvenient truth.

Guest post by Vinay Kolhatkar

Who caused the global financial crisis? You must surely have heard the wrong explanation, something that goes like this:

1. American banks knowingly sold unrepayable home loans to a gullible public;
2. Unregulated Wall Street greed resulted in poor investments being sold to retirement funds the world over;
3. Credit derivatives, collateralised debt obligations (CDOs), and credit default swaps, were evil toxic securities created by banks which led to a huge loss of wealth;
4. This house of cards collapsed, leading  to corporate insolvencies, stock market crashes, real estate value
   declines, and increased unemployment;
5. If governments had not stepped in to rescue the banks and insurance companies, we would have had a
   depression that could have lasted decades;
6. It proves once and for all, that in a system of unregulated capitalism, the greedy and the corrupt will take
   advantage of the simple and the virtuous;
7. So we must now regulate the financial system even more to prevent this from ever occurring again, and rescue us, the people, from the current malaise—via ‘economic stimulus’ that the government alone is an expert at
   providing.

There are almost no major media outlets anywhere—newspapers, television, radio, magazines, even Hollywood movies and television serials—that have not repeated a version of this mantra. Nevertheless, it is imperative that serious students of finance and economics maintain a critical perspective and look behind-the-scenes for what the true story may be.

For example, students of investment theory know that derivative contracts are zero-sum games in which wealth can neither be created nor destroyed. Explanations which merely lay the blame at  the feet of ‘financial instruments’ and ‘greed’ are either incorrect, or at least missing something crucial.

So what is the real story, and who has  been voicing it?

Doug Casey on the Fourth Estate

Guest interview with Doug Casey, interviewed by Louis James, Editor, “International Speculator.”

L: Hola Doug. What's on your mind this week?

Doug: The color yellow. As in "yellow journalism" - which seems almost the only kind we have these days. Of course, to be fair, inflammatory, shamelessly dishonest "man bites dog" journalism has always been the dominant kind, simply because it sells papers. But we'll see more than the usual amount in the next couple of months, simply because elections lend themselves to it; politics seems to stimulate the reptilian part of the brain, the most primitive part. Both politics and the reptilian brain relate well to the yellow press.
    Anyway, like many people, I watched snippets of the Republican National Convention in Tampa. Maybe, since I'm engaging in punditry, I should have watched the whole damn thing. But I simply couldn't force myself to watch even all the parts that were broadcast, because it was just too boring and degrading. I can't imagine how the people who were there for the whole four days were able to remain awake for the whole thing. Perhaps this is proof that zombies really do exist. What kind of people could take such a charade seriously? It was all canned speeches and scripted events that were basically dishonest. Politics has always been dishonest, of course, but at least it used to be unscripted and mildly entertaining...

L: Wait a minute - what about the now much-discussed Eastwood incident? By all accounts, that was unscripted and perhaps even unwelcome among the convention organizers.

Doug: I did watch Clint and enjoyed his speech, which appeared to be unscripted. He's a skilled actor and entertainer, so I've got to believe it was really off the cuff. I've read in the papers - which means I don't really know anything except some reporter's guess - but I've read that Clint was only supposed to give a five-minute, canned speech. Romney and the convention organizers were caught off guard when Eastwood asked for a chair to be brought on stage; it was thought he wanted to use it to sit down. But he then proceeded to have a very funny conversation with an invisible Obama. One reason I liked it is that he treated Obama with the respect he deserved. It's about time people stopped treating presidents as if they were Roman emperors.

L: I've watched that segment on YouTube and noticed that he used the word "libertarian," which I doubt the RNC would have approved in advance. So I can believe that "Dirty Harry" was shooting from the hip, as it were.

Doug: I agree - I'm sure they would not have approved of that. I expect the Republicans will do everything they can to discount, denigrate, and destroy the Libertarian Party candidacy of Gary Johnson for president. They know Johnson is likely to draw more votes from them than from the Democrats. And of course, Ron Paul was made a veritable nonperson. The only mention he got at the convention didn't include any acknowledgment of some of his most important propositions, like ending the drug war, ending foreign interventions and wars, and abolishing the Fed. These people are dishonest and manipulative through and through.
    The other thing Clint did, as I recall, was only to mention Romney twice, and not in way that was a particularly strong endorsement. It took courage on Clint's part in that forum.

L: I noticed that too; his focus was on the people, not the candidate. The biggest cheer he got was when he spoke of the people and said, "We own this country... politicians are employees of ours."

Doug: Yes. I'm sure that also rankled the suits running the show. But the fact that Clint's sincere, unscripted comments are so exceptional tells us a lot about the rest of the drivel at such events. It's like he came up with the idea shortly before he went on stage and was truly speaking extemporaneously. It wasn't approved by the Politburo, like absolutely everything else emanating from the convention was.
    The press coverage of the incident is a good example of the sort of thing that makes me despise reporters. In a way, it's a litmus test of the psychology of the average journalist, how they reacted to that thing... It says more about them than it does about Eastwood, how they reported on it and what they said about it. So many of them focused on how he hesitated, fumbled, repeated himself, and so forth, scoffing at his remarks as being just an old man's rant. The snide comments of Michael Moore, the Evil Party's answer to Jabba the Hutt, are fairly typical.
    It was clear to me that Clint spoke from the heart, mistakes and all. I believe that 300 million Americans out there are starving for straight talk from the heart of someone they like - and everyone loves Clint. My guess is that most everybody who isn't an ideologue of either the Stupid Party or the Evil Party really resonated with his sentiments. The only downside is they'll wind up helping the feckless Romney.
    It was night-and-day different from the slick speeches by the horrible politicians. They all sounded like they'd rehearsed their speeches dozens of times. Every one of them sounded phony - which they are. I preferred the old days when you never knew what the outcome of the convention would be, and the speeches could actually tell you something about the men giving them - or at least have entertainment value. When did all this change? My guess is in the '50s, with broadcast TV and the invention of the teleprompter. The whole convention was a flavorless, odorless, sanitized bore - except for Clint.

L: I was struck by those criticisms of Eastwood's delivery as well. Clint Eastwood was born in 1930 - give the guy a break! These critics will be lucky to be half as eloquent when they are in their 80s. But even that's beside the point; what should matter most is what he said, not how he said it. These same media hacks would never speak so disrespectfully of a venerable statesman they agreed with.

Doug: I have nothing but contempt for these blow-dried airheads on TV news shows. They pontificate and tell you what you're supposed to think - but they're really not journalists. They just read the establishment press releases, thereby helping to prop it up. Instead of being the Fourth Estate - a private-sector watchdog and counterbalance to state power - they just make themselves lapdogs of politicians.
    If you watch something like The Daily Show, Jon Stewart will often show clips of different so-called journalists in juxtaposition to each other - he did this regarding the Republican Convention - and you can see that the reporters all use the same words. It's like they are all reading the same script or keying off each other - it's a herd mentality. This is one reason print journalism has gone downhill, as well. In the era before the TV, a journalist had to witness things in person and draw an independent conclusion. It wasn't technically feasible to know what everybody else was group-thinking in real time. The noble, lone journalist in the mold of H. L. Mencken is completely gone from the scene today.

L: I know what you mean, but a TV news anchor isn't really a reporter. He or she is an attractive actor hired to read the news others research, because their faces increase ratings. Is it fair to criticize such people for not being investigative journalists?

Doug: No, I guess it's not. They are hired to look sincere and look good. I believe it's well established that people in general are prone to like and believe people they find attractive - that's the basis for hiring TV news anchors - that and having completely unremarkable, predictable, "mainstream" views. But it's still not a good thing. To have a system that relies on attractive but ignorant or misinformed people regurgitating reporting written by others is dangerous. The so-called Fourth Estate is dying.
    You know, that very term - Fourth Estate - is being used more now, at the very time that the institution itself is changing its essence. The idea of a Fourth Estate arose with the Industrial Revolution and the inception of capitalism - the first three basically being the church, the "nobles," and everyone else - the 99%. The Fourth Estate has historically been a bit outside all that, but certainly outside the church and the state. Their purpose was to tell it like it is, keep things in balance, and be impartial truth-tellers. Major cities each had dozens of papers. But now the Fourth Estate has truly been captured by the ruling classes.
    That's the bad news. The good news is that we have the Internet. The stuff people report there may not always be anymore accurate than the mass media, but at least it's independent - it's not a mouthpiece for the Establishment. As far as I'm concerned, the Fourth Estate has betrayed its basic raison d'être, and no longer serves much of a useful purpose.

L: Which brings us back to the people who write the stories or compose the video coverage - the kind of investigators who are supposed to make a show like 60 Minutes deliver hidden truth to a population that needs to know...

Doug: Unfortunately, they seem to be cut from pretty much the same cloth as the reporters who write for outfits like the New York Times or, God forbid, USA Today - something I feel sheepish about reading in public. They all went to the same universities, where they were taught the same ideas and values by the same teachers - who are all statists of one stripe or another. They are all so deeply inculcated in this worldview, they don't even know they are in it...

L: Which is why journalists who don't work for right-wing rags never admit that there is such a thing as "liberal media bias." Their colored glasses have been on for so long, they don't even realize they wear them.

Doug: Exactly. The 60 Minutes guys fell flat on their faces when they didn't call Ben Bernanke out for contradicting himself on their show, first saying the Fed was printing money, then saying it wasn't. If these guys are the toughest watchdogs we have, we're in big trouble. The best sources of news on TV are probably The Daily Show and The Colbert Report. As comedians, they serve the role of the court jester and can say things to the king that nobody else dares to. It's a sad testimony.

L: But there are exceptions, like John Stossel.

Doug: Of course, but again, it's the exception that tests the rule; the fact that Stossel is so extraordinary tells us a lot about what is ordinary. You can see this clearly when you get a bunch of reporters together on an impromptu talk show, like Meet the Press or whatever; what you see is a bunch of opinionated people, some somewhat to the left, some somewhat to the right of center, yelling at each other. It's never an intelligent discussion of ideas and principles at all. For instance, there's never a discussion of whether Social Security, Medicare, or Medicaid are correct areas for government involvement - that's completely accepted and a given. Even with Obamacare or Romneycare the discussion is only one of whether it's affordable or efficient, not whether it's ethically defensible. It's just glib one-liners and catch phrases.

L: Whoever has the best sound bite wins.

Doug: Just so. Political talk shows are frustrating and embarrassing to watch. I just want to wash my hands of the whole mess, but I guess I'll have to watch at least a little of the Democrat's Convention, just to see what kind of charade they put on. I expect it will be more enthusiastic than that of the Republicans, because at least the Democrats actually have some principles... even if they're completely bent, destructive, and statist principles. It should be some show, maybe like the Nuremburg rally.

L: Morbid curiosity?

Doug: Yes, and very unappealing. It's literally like watching something die. The capacity of the masses to sit on their sofas and watch endless hours of canned drivel on TV is increasingly convincing me that libertarians and other free-thinkers are actually genetic mutants. We can mate with Boobus americanus intellectually about as well as a human can mate physically with a chimpanzee.

L: Mutants... or at least an uncommon personality type.

Doug: Either way, we are so few - it's hard to have any hope of reason ever winning the day. My friend Jeff Berwick was caught in a spate of optimism the other day, which started with him guessing that maybe 10,000 new people become libertarians every day - a great-sounding number. Then he took out his calculator and realized that even if the population of earth was stable that, even at that rate, it would take something like 2,000 years before everyone stopped thinking like a criminal.
    Communication is critical, of course. But while that's become easier, in some ways, like the Internet, it may be increasingly difficult in others. The masses are addled by the mind-numbing rays from their TVs, and there are scores of millions more addled by psychiatric drugs, and hundreds of millions more by generations of government miseducation.
    On the bright side - you know I like to always look on the bright side - the Internet could be bigger than all those things. The big media corporations no longer have a stranglehold on the news. These days, anyone with a phone has audio- and video-recording capability and can be a reporter. With the Internet, any of these people can get word of what they see out to the entire world.

L: A new, 21^st century version of the Fourth Estate?

Doug: Yes; the truth is out there. But as with everything else, it's subject to Pareto's Law. So, 80% of what's out there is crap, and 80% of what's left is merely okay. But that remaining 4% of quality, uncensored, free information flow is extremely valuable. More good news: because people increasingly realize that 80% of everything is crap, they're becoming evermore discriminating - which is a very good thing. People used to slavishly believe everything in the newspapers just because it was written; now they're necessarily more skeptical, which means they're forced to be more thoughtful.
    But as great as this is, it's like Jesus of Nazareth said: "He who has ears, let him hear." For the distributed and free reporting we now have via the Internet to do much good, people need to question what they're told and look for the truth - that's not going to happen if they only use the 'Net for social media and porn. After generations of government schooling, where critical thinking is the last thing they want to teach, people willing to do this are few and far between.

L: You're an atheist quoting the Bible?

Doug: Why not? I can read. Everyone should read the Bible, along with Richard Dawkins, of course.

L: Indeed. Investment implications?

Doug: Nothing I haven't said before, but that doesn't make it any less true. The terminal corruption of the major news corporations and the lack of interest in seeking the truth among the general population augurs very poorly for the prospects of the US and the current world order. This creates speculative opportunities, which we work hard on uncovering in our publications, but prospects for mainstream investments are not good. Western civilization is truly in decline and far down the slippery slope.

L: You wrote an article some years ago on how to profit from the coming collapse of Western civilization...

Doug: Yes - which brings me back to the color yellow, but in a positive context this time: the yellow metal. Now the collapse is beginning, my advice is the same: accumulate gold - not as an investment, but for safety. For profit, speculate on the various bubbles and other trends government interventions in response to the unfolding crisis bring about. Rational investment is not an option in this context (remembering that investment is deploying capital to create more capital). Hopefully, investment will again be a viable option after the ongoing crisis bottoms; it depends in good degree how most people view the role of government. We all have to be speculators now, if we want to make money, and we have to be "gold bugs" if we want to come through the storm with minimal loss of wealth.

L: And for more on that, readers could hardly do better than to come to our conference on "Navigating the Politicized Economy" this week in southern California.

Doug: Or - while we're plugging our own products - they could read your newsletter for our best speculative guidance.

L: Okay, but enough with the crass commercial messages. More soon from California!

Doug: Looking forward to it.

Louis James concludes: The American economy has never been as centralized as it is today... and Doug's warning that this centralization has made mainstream investing everywhere a poor bet has never been more true….

(This interview first appeared at the Casey Daily Dispatch. It appears here by permission.)

Doug Casey: How to Prepare For When Money Dies

Guest post this morning courtesy of Casey Research: an eye-opening interview with renowned speculator Doug Casey, conducted by Karen Roche and JT Long of The Gold Report. Doug explains why fiat currencies around the world are destined for collapse, whether the US dollar or Euro might lead it … and what investors can, and should, do to protect themselves.  

The Gold Report: You've been talking about two ticking time bombs. One is the trillions of dollars owned outside the U.S. that investors could dump if they lose confidence. And the other is the trillions of dollars within the U.S. that were created to paper over the crisis that started in 2007. Are these really explosive circumstances that will bring catastrophic results? Or will it just result in a huge, but manageable, hangover?
Doug Casey: Both, but in sequence. One thing that's for sure is that although the epicenter of this crisis will be the U.S., it's going to have truly worldwide effects. The U.S. dollar is the de jure national currency of at least three other countries, and the de facto national currency of about 50 others. The main U.S. export for many years has been paper dollars; in exchange, the nice foreigners send us Mercedes cars, Sony electronics, cocaine, coffee—and about everything you see on Walmart shelves. It has been a one-way street for several decades, a free ride—but the party's over.
    Nobody knows the numbers for sure, but foreign central banks, and individuals outside the U.S., own U.S. dollars to the tune of something like $6 or $7 trillion. Especially during the recent crisis, the Fed created trillions more dollars to bail out the big financial institutions. At some point, foreign dollar holders will start dumping them; they are starting to realize this is like a game of Old Maid, with the dollar being the Old Maid card. I don't know what will set it off, but the markets are already very nervous about it. This nervousness is demonstrated in gold having hit $1,900 an ounce, copper at all-time highs, oil at $100 a barrel—the boom in commodity prices.
    Some countries are already trying to get out of dollars, but it could become a panic if the selling goes from a trickle to a flood. So, yes, it's a time bomb waiting to go off, or maybe a landmine waiting to be stepped on. If a theatre catches fire and one person runs out, soon everybody rushes toward the door and they all get trampled. It's a very serious situation.

TGR: If panic erupts on the U.S. dollar, would products manufactured in the U.S. become super-cheap or super-expensive?
DC: They would become super-cheap. Everybody says that devaluing the dollar will stimulate U.S. industry because the products will become cheaper and foreigners will buy them. This is a huge canard everybody repeats and nobody thinks about. Yes, it is true for a while, but if devaluation were the key to prosperity, Zimbabwe should be the most prosperous country in the world as it has already collapsed its currency.
    A strong currency is essential for a strong economy. Sure, a strong currency can hurt exporters for a while. But, a strong currency encourages manufacturers to invest in technology, and become more efficient. It rewards savings and results in the growth of capital that's critical for prosperity. A strong currency allows businessmen to buy foreign companies and technologies at bargain prices. It results in a high standard of living for the country, and yields social stability as a bonus. The idea that decreasing the value of currency to stimulate exports is a short-lived, stupid and counterproductive solution to the problem. People seem to forget that while the German currency was rising about sixfold from its level of 1971, and the Japanese yen about fourfold, those countries became the world's greatest export economies. It didn't happen despite a strong currency, but in large measure because of it.

TGR: Given that the U.S. is the world's biggest consuming nation, wouldn't fleeing the dollar create a big consumer vacuum in the international community? Doesn't the rest of the world want to keep up the high level of exports to these U.S. consumers?
DC: That's exactly why the U.S. is in such trouble; it's idiotically focused on consumption, while only production can create prosperity. The world doesn't need to stimulate consumption. This is another canard, because everybody has an infinite desire for goods and services. I know for myself, I'd like not just a car, but 10 Ferraris, a couple of Gulfstreams and 10 houses around the world. So, by myself, I have an infinite desire for goods and services. Multiply that by 7 billion other people. The only way to gratify those desires is by producing enough to trade with other people to give you what you want. When so-called "economists" think the problem is that we don't have enough consumption, that shows that the profession itself is bankrupt. It's actually quite embarrassing.

TGR: But other countries currently produce enough of what the U.S. wants. With U.S. dollars, that trade won't look good on their side eventually.
DC: The problem is the U.S. doesn't produce enough in return. The U.S. has been lucky to have a currency that has, so far, been accepted by everybody. But when everybody realizes that the dollar is an "IOU nothing" on the part of a bankrupt government and a society that doesn't really produce anything anymore, it's going to create a worldwide catastrophe. Those $7 trillion held by foreigners are going to become instant hot potatoes.

TGR: Considering what you said a moment ago, that the world doesn't need to stimulate consumption, you must find some irony in the Obama administration's plan to stimulate consumption again in the U.S. as a way to spur some economic growth.
DC: I'm afraid that after being counseled by the fools that surround him, Obama talking about economics is like the blind leading the doubly dismembered. They want to spend $450 billion trying to create new jobs—but these are government jobs, where you have people digging holes during the day and filling them up at night to create the appearance of employment. No government has any idea what the market really wants and needs. There should be zero government involvement in this. The government cannot and should not even try to create jobs. If Obama wants to stimulate the economy, he can decrease the size of the government. I would say a 90% reduction would be a good starting figure.

TGR: But that will create even more unemployment. That's one of the big concerns. States laying off employees could increase unemployment even more.
DC: It is wonderful that states are starting to lay off employees. Once they lose their state jobs, which suck wealth from taxpayers, maybe those people can find real, productive jobs providing goods and services that people actually want and will pay for voluntarily. So I'd argue that getting rid of state employees is essential to a sound recovery plan.

TGR: You warned early on in the 2008–2009 economic crisis that it would really be more of a hurricane. In the last year or so, we've been in the eye of the hurricane and there's more turmoil to come. Will the other side of the storm be worse than the first? And given the recent economic news, do you think we have moved out of that eye?
DC: Yes, I think we are moving out of the eye and going into the other side of the storm. This storm will be much more severe because we haven't solved any of the problems that caused the hurricane in the first place. The fact that governments all over the world have created trillions of currency units has only aggravated those problems. Now, I expect exploding prices to compound the problems that we saw back in 2007, 2008 and 2009. That will devastate the prudent people in society who saved money. They saved it in the form of currency, and wiping out their savings will be catastrophic.

TGR: Will this affect only North America and Europe?
DC: Mostly North America and Europe, but it's going to be very serious in Japan, too. It could be even more disastrous in China. The Chinese real estate market bubble is very inflated, driven by the lending of Chinese banks that won't be able to recover their loans. They will all go bankrupt, taking out the Chinese populace's savings with them. At the same time, those who own real estate will find it worth vastly less than what they paid for it. Those problems will create social disruptions in China, leading to riots, perhaps even revolution, and who-knows-what. The fallout is going to be terrible.

TGR: Many pundits and economists still project growth in China, albeit at a lower rate, and anticipate further expansion of the middle class.
DC: The 21st century will be the Chinese century, but the distortions and misallocations of capital that have occurred over the last 30 years—notwithstanding the truly phenomenal progress the country has made—are serious and have to be washed out. I am a huge bull on China for lots of reasons, but I am bullish for the long run. I think it is going to go through the meat grinder over the next 10 years. I don't know how it will come out; maybe China will break up into five or six different countries. Actually, that would be a good thing. Most of the world's nation-states are artificially constructed and too big to be manageable as political entities.

TGR: Your outlook on China fits right in with something you've been saying for years—about this being the "Greater Depression," which is also the topic of your upcoming presentation at the sold-out Casey Research/Sprott Inc. "When Money Dies" summit next month in Phoenix. Your opening general session talk is entitled, "The Greater Depression Is Now." We are now four years into it, based on your 2007 start date.
DC: Actually, depending on how long a historical scale you look at, you could say that, for the working class in the U.S. anyway, the depression started in the early 1970s. After inflation, after taxes, their take-home pay hasn't risen in real terms for 40 years. But the definition of a depression that I use is "a period of time during which most people's standard of living drops significantly."
    Net savings shows that you're living within your means and putting aside capital for the future. In the U.S., people have been living above their means for many years—that is what debt is all about. Debt means that you are borrowing against future production, which is exactly what the U.S. has been doing.

TGR: So, how long will this Greater Depression last?
DC: It doesn't have to last long at all. It could be quite brief if the U.S. government, which is basically the root cause, retrenches vastly in size and defaults on the national debt, which is essentially an enormous mortgage, an albatross around the neck of the next several generations of Americans. The debt will be defaulted on one way or another, almost certainly through inflation. I simply advocate an honest, overt default; that would serve to punish those who, by lending to the government, have financed its depredations. Distortions and misallocations of capital that have been cranked into the economy for many years need to be liquidated. It could be unpleasant but brief. The government is likely to do just the opposite, however. It will try to prop it up further and make it worse—compounding the problem by expanding the wars. So, it could last a very long time. In that sense, I'm not optimistic at all. I think there is little cause for optimism.
    On the other hand, I'm generally optimistic for the future. There are only two causes for optimism. First, smart individuals all over the world continue, as individuals, to produce more than they consume and try to save the difference. That will build capital, which is of critical importance. They should just save by holding paper currency. Second, expanding and compounding technology will increase the standard of living. Remember that there are more scientists and engineers alive today than have lived in all previous history combined. Those two factors countervail the government stupidity around us. Whether they will be overwhelmed and washed away by a tsunami of statism and collectivism, I don't know.

TGR: You say that the U.S. government is the root cause of this problem. Isn't that putting too much blame for a worldwide problem on one nation?
DC: The institution of government itself is the problem, and the problem is metastasizing like a cancer all over the world. But, sad to say, the U.S. is the most serious offender because it is currently both the most powerful and the most aggressive nation-state. It has been greatly abetted by the fact that the U.S. currency has been accepted globally. The U.S. dollar is, in effect, the reserve that backs all the other currencies in the world. That is why the U.S. government has been the most destructive from an economic point of view. Furthermore, military spending—which in the U.S. equals that of all the other militaries in the world combined—is purely destructive. It serves no useful economic purpose at all. The military is no longer "defending" anything—least of all liberty. It's actively creating enemies and provoking conflict. So, yes, I think the U.S. government is actually the most dangerous force roaming the world today.

TGR: Do you see that changing after the next election?
DC: No. I think the chances of Obama being reelected are high, simply because more than half of Americans are big net recipients of state largesse. The U.S. has turned into a larger version of Argentina politically, where the electorate is effectively bribed to vote for the biggest thief. It is likely to turn out much worse than Argentina, however. Unlike the Argentines, the U.S. government is fairly efficient. And, unlike Argentina, the U.S. is rapidly turning into a police state.
    Electing a Republican might be even worse, though. With the exception of Ron Paul and Gary Johnson, the potential Republican candidates absolutely make my skin crawl. So, no, there is no help on the horizon. The U.S. government is spending about $1.5 trillion more this year than it takes in, and it is not going to cut that. In fact, foolish spending to bail things out will increase. And, worse than that, the Fed has artificially suppressed interest rates for three years. Interest accounts for roughly 2% of $15 trillion official national debt, or $300 billion per year. As interest rates inevitably rise, that interest amount will grow. At 12%—and I'm afraid they'll have to go even higher than that—it would add another $1.5 trillion just in interest payments.
    I absolutely see no way out without a collapse of the U.S. currency and a total reordering of the U.S. economy.

TGR: When Money Dies, the title of your summit, implies some return to a gold standard. How do you see that playing out?
DC: Nothing is certain, but when the dollar disappears—and it's going to reach its intrinsic value soon—what are people going to use as money? Will we gin up another fiat currency like the euro? The euro is likely to fail before the dollar. My suspicion is that people will want to go back to gold. It's not because gold is anything magical, but simply the one of the 92 naturally occurring elements that—for the same reasons that make aluminum good for planes and iron good for steel girders—is most useful as money. In fact, the reason that gold has risen as high as it has is that the central banks of third-world countries—places that don't have large gold reserves, such as China, India, Korea, Russia, even Mexico—have been buying the stuff in size.

TGR: The concept of going to a gold standard seems impossible in the sense that there is only so much gold above ground—6 billion ounces? Maybe $11 trillion worth? But it's only a fraction of the U.S. GDP. Even with gold at $2,000 an ounce, that leaves an immense gap. In that scenario, how do you convert to a gold standard?
DC: In terms of today's dollars, gold should probably be a lot higher than it is. I don't know what the number will be, because a lot of those dollars will disappear in bankruptcies; they will dry up and blow away. It's like a real estate development that was worth $1 billion on somebody's books; when it fails, that's $1 billion destroyed. It's a question of the battle of inflation (with the government creating dollars to prop things up) against deflation (where businesses fail and wipe out dollars). But put it this way: the U.S. Government reports it owns about 265 million ounces. Its liabilities to foreigners alone are at least $6 trillion. If they were to be redeemed for a fixed amount, that would require roughly $22,000/oz. gold. And that doesn't count dollars in the U.S. itself.
    I'm a bargain hunter and a bottom fisher, and bought most of my gold at vastly lower prices. But I think gold is going much higher because most people still barely even know that the stuff exists. As inflation picks up, they are going to want to get rid of these dollars—but what other monetary commodity can they turn to? So, gold is going higher. I'm still accumulating gold.

TGR: You said that the storm as we emerge from the eye of the hurricane will be worse than it was on the other side. If they don't own gold, how do investors protect themselves?
DC: It's very hard to be an investor in today's world because an investor is someone who allocates capital in a way to create new wealth. That is not easy in today's highly taxed and regulated economy. It's late in the day, but not too late, to buy gold, silver and other commodities. Productive assets are good to own. Of course, the easiest way to buy most productive assets is through the shares of publicly traded companies, but the stock market is quite overvalued in my opinion, so that's not the best option right now.
    In addition to trying to build personal holdings of gold and, to a lesser degree, silver, I think people should learn to be speculators. This is not to be confused with gamblers, who rely on random chances. Speculators position themselves to take advantage of politically caused distortions in the marketplace. In a true free market society, you would see very few speculators because there would be few such distortions. But regulations, taxes and currency inflations are likely to keep markets very volatile. Good speculators will position themselves to take advantage of bubbles, and identify bubbles that have been blown to their maximum and are about to deflate.
Government actions are going to force people to become speculators, whether they like it or not. Most won't like it, and very few will be good at it.

TGR: What bubbles might speculators look to exploit?
DC: I'd say the world's biggest bubble is real estate in China, but real estate bubbles are just starting to deflate elsewhere, too—in Australia and Canada, for example. It's relatively hard to short real estate, of course. Shorting bank stocks is an indirect way to play it. I'd say bonds are the short sale of the century. They're going to be destroyed. Bonds pose a triple threat to capital because:

1. Interest rates are artificially low, and as interest rates rise—which they must—bonds will fall.
2. Bonds are denominated in currencies, and most currencies, let's say dollars, are going to lose a lot of value.
3. The credit risk of most bonds, certainly those issued by governments, is high.

On the long side, mining stocks are very cheap relative to the price of gold right now. I'd say there's an excellent chance of a bubble being ignited in gold mining stocks, especially the small ones; in fact, I'd put my finger on that as likely being the easiest way to make a killing.

TGR: Technology was one of the two areas of optimism you mentioned earlier. Do you see a bubble forming there?
DC: You have a point, but I'm not sure you can talk about technology stocks as a whole; technology is too variegated, too vast a field. Although, I've long been a huge believer in nanotech, which is likely to change the world as we know it. With gold stocks, however, you can jump into a discrete universe, that's likely to become a mania.

TGR: Thank you for the tips, Doug, and as always, for your thoughtful insights.

Doug Casey is an American-born free market economist, best-selling financial author, and international investor and entrepreneur. He is the founder and chairman of Casey Research, a provider of subscription financial analysis about specific market verticals that he has focused his investing career around, including natural resources/metals/mining, energy, commodities, and technology. Since 1979, he has written, and later co-written, the monthly metals and mining focused investment newsletter, The International Speculator. He also contributes to other newsletters, including The Casey Report.
    Casey graduated from Georgetown in 1968 where he was a classmate of Bill Clinton.
    His 1979 book Crisis Investing became the largest selling financial book in history, listing at #1 on the New York Times Best Seller list for a total of 12 non-consecutive weeks.