Here at Casey
Research, we are trying not to be overly pessimistic, but there’s no
denying the mass of bad news coming to us from all fronts: the forces of
collectivism are using the cover of the crisis they largely created, aided
and abetted by capitalism’s quislings, to roll over the individual.
Even so, contained within the dire reportage is also some very good news for
The Bad News
anticipated, with its first budget plan, the Obama administration has fired a
salvo into the side of the productive classes. (For those of you who are not U.S. citizens, feel free to use Team Obama as a proxy for
what is likely to occur where you reside.)
Yes, we expected the $1.75 trillion budget deficit, which will, by the time
all is said and done, come in a lot closer to the $2.5 trillion number
anticipated some months ago by our Chief Economist Bud Conrad.
Yes, we expected the government to begin raising taxes, which they are
proposing to do with vigor – starting with an increase of $1.4 trillion
on the people who earn in excess of $250,000 a year. “Right on!”
shouts the mob, on the way out the door to burn Porsches (which, Bloomberg
reports, is now becoming something of a trend in Germany’s capital, Berlin).
For no other purpose than to keep the record straight, it’s worth
noting that thanks to the government’s steady dose of inflation,
$250,000 today will only buy you 77% of what it would have in 1998… and
56% of what it would have in 1988.
A decade from now, given the inflation rate we expect, the dollar’s
purchasing power will erode by another 50%, and probably a lot more than
that. In fact, at the current rate of money creation, by the time the dust
settles, $250,000 might be the annual wage commanded by burger flippers.
But, hey, look at the bright side, at that point everyone will be rich!
The further details of Obama’s budget plan are a hodgepodge of this and
that, some of which we even agree with (like cutting business subsidies). On
the whole, however, the overarching mandate appears to be to thrust the hand
of government, like some motion picture kung fu villain, deep into the heart
of American enterprise.
And government’s expansion is far from over. The news continues to pour
to get another $25 billion bailout from the U.S. Treasury.
officials work on bailout plan for auto parts manufacturers.
Obama exploring automatic workplace pensions and an expansion of unemployment
a government lap puppy, takes another big loss, and is again looking to its
master for another handout.
of lap puppies, Fannie Mae, has lost another $25 billion and is looking for
$15 billion more from the Treasury. The value of this zombie
institution’s net assets is now a negative $105 billion, and eroding. Great
investment of your tax dollars, eh?
there’s the new administration’s cap-and-trade green tax… a
stunning new initiative that will bring many U.S.
businesses to their knees.
There is more, so
much more, including a $638 billion reserve fund for healthcare reform in the
president’s budget that loudly broadcasts that, “Yes, we’re
going there.” There being nationalized health care.
However, there’s also some good news to be found in the way things will
The Good News
citizens of planet Earth, it is now abundantly clear that the trend toward
socialism in all its many disguises is about to, once again, shift into high
We’ve been here before, encouraged by the words of Karl Marx, a
distinctly unsuccessful individual (to read his life story is to read of
almost unending misery, poverty, and discontent) but a decidedly successful
phrase-coiner, knocking the world off its axis with his “From each according
to his ability, to each according to his need.”
While no one with any real sense of history, not to mention economics, can
take any overt joy at the prospect of the dark clouds of collectivism looming
high in the sky above us, there is, if you pay close attention, a very big
opportunity in all of this.
Namely, we are now presented with a relatively rare chance to see with some
clarity into the future.
Imagine if eight years from now you could step into a time machine and zip
right back to this very moment. How much money do you think you could make?
Well, just because the chattering masses have the blinders on as they march
forward to their collective penury doesn’t mean we need to join them. And,
if we are even a little bit careful, we won’t.
So, what is it about the future we can now see? Some broad strokes…
capitulation in real estate, with a collapse in commercial.
controls (now that Team Obama is raising your taxes, you don’t really
think they’re going to let you pick up your wealth and leave, do you? The
window for global diversification will soon be closing.)
return of mega-labor unions.
wars, shooting wars, and other forms of heightened geopolitical tension.
(This is a topic we
are discussing at greater length, backed up with specific recommendations, in
the March edition of The Casey Report, released on March 3. Among its
many highlights, Doug Casey has contributed an article titled “Street
Fighting Man” about the prospects for social unrest.)
Provided you keep your personal wealth profile low (there was a reason Sam
Walton, founder of Walmart, drove a beat-up pickup truck), your financial
powder dry, and, maybe most important of all, retain your sense of humor, the
opportunities in the unfolding crisis will be abundant.
Whatever you do, don’t be complacent about what’s coming.
We are long past the point where doing nothing is an option. Review your
personal finances, cut out unnecessary expenses, talk to your accountant
about tax planning, and, if you’re a U.S. citizen, consider moving at least some of your wealth
out of the country while you still can (but please, don’t try to hide
it… that’s a fool’s errand). If you own gold, only you and
your spouse, if you have one, should be aware of it.
Ask yourself, “If I just dropped in from eight years in the future,
what measures would I take?”
Now, take them.
Managing Editor, The Casey Report
David Galland is the managing
editor of The Casey Report, the flagship publication of Casey Research, for
over 28 years providing individual investors with unbiased research and
recommendations designed to help them navigate the ever-changing tides of
investment markets. Did your broker or favorite
investment commentator warn you of the current crash? Casey Research
“The banking system will have
trillions in mortgages, credit card balances and other consumer debt they
won't be able to collect. Millions of houses will hit the market in distress
sales. Local governments, which are relying on inflated property tax bills to
raise money to squander, will see rising expenses as an impoverished public
demands more services – at the very time their revenues almost cease to
exist. All of this adds up to a much more serious scenario than a stock
(Profit from the Collapse of Western Civilization, lead article, August
Check it out risk-free, via our
3-month trial with 100% money-back guarantee. As a thank-you for testing The Casey Report, you will also receive Doug
Casey’s special report “The Greater Depression, Part II”
– a glimpse at what exactly we’re headed for. Don’t miss
it… click here to learn more.