Louis: Doug, after
conversations like the one we had last week, we often get letters from angry readers who
accuse you of hating America, disloyalty, and perhaps even treason. These
people don't know or understand what I do about you – that you love the
idea that was America. It's the United State it has become for which you have
nothing but contempt. Perhaps we should try to explain this to them?
Doug: I doubt it
would work; it's a tough row to hoe, trying to explain things to people who
are so set in their thinking that they truly and literally don't want to hear
anything that might threaten their notions. A person who feels threatened by
ideas and who responds with emotion is acting irrationally. How can we have a
discussion with someone whose emotion trumps their reason? How do we even
begin to untangle the thinking of people who will gather this week to give
thanks for the bounty produced by freedom and hard work – the famous
puritan work ethic – by eating a turkey bought with food stamps?
But we can outline the ideas, for the record.
Louis: I'll bring
a copy if they ever do put you on trial for thoughtcrime – which is
frighteningly close to being real these days and called treason to boot.
Doug: It's not
just close; it's here. Just try telling an unapproved joke in a security line
in an airport these days.
enough. Where to begin?
Doug: At the
beginning. America was founded as a confederation of independent countries
– that's what a state is. Or was, in our language. The original United
States of America was a confederation of countries that banded together for
protection against larger and more powerful countries they feared might be
hostile. This is not a disputed interpretation of history, but as solid a fact
as the study of history produces – and yet a largely neglected one.
Louis: We did
cover this ground briefly in our conversations on the Civil War and the Constitution.
Doug: So we
did... the short version being that the US Constitution was essentially a
coup; the delegates to what we now call the Constitutional Convention were
not empowered to replace the existing government – only to improve upon
the Articles of Confederation between the then-independent states. The
framers of the Constitution drafted it with the notion of a national
government already in place, but calmed fears of loss of state sovereignty by
calling the new government the "United States of America" – a
verbal sleight of hand that worked for over half a century. Then the southern
states decided to exercise what these words imply, their right to leave the
union. While slavery was and is a wholesale criminal activity I object to in
every way possible, the southern states did have the right to secede, both
legally and ethically. But the question was settled by force, not reason, and
the wrong side won.
Doug: More like
an exposure of the first one for the whole world to see. But by then it was
way too late. Despite this, the relative freedom of the US – because it
was for many years far freer than other countries – made it possible
for artists, engineers, inventors, and businesspeople to flourish and create
a society more wealthy and powerful than any the world had ever seen. This is
what I call the idea of America – the America That Was.
But the seeds of destruction were already sown at the
very beginning – with the Alien and Sedition Acts being perhaps the
first highly visible step in the wrong direction. Then came the forceful
assertion of one national government, with states reduced to administrative
regions via the War of Southern Secession, from 1861-'65. I'm no fan of state
governments, incidentally, but at least they're smaller and closer to their
subjects than the federal government. Another major step in the wrong
direction occurred with the Spanish-American War of 1898, where the US
acquired an overseas empire by force. The next major step downhill was the
creation of the Federal Reserve and the income tax, both in 1913, just in
time for World War I. It took time for these things to make the system crash,
because it was still a fairly free economy.
Louis: But crash
it did in 1929…
Doug: Yes. And it
led to the Great Depression of 1929-'46, which lasted so long entirely
because of the unmitigated disaster of the New Deal (which we discussed recently). The New Deal injected
socialist-fascist ideas into mainstream American thought like a poisonous
acid, corrupting the heart of the idea of America that once made the place
great. The process was completed with Lyndon Johnson's Great Society, which
really established the basis of the welfare-warfare state. It truly set the
stage for the total ethical, economic, social, political, and even military
disaster now unfolding before our eyes.
Still, the beating heart of the idea of America –
which is to say both social and economic freedom – took time to
corrupt. Like a strong man who doesn't know he's headed for a heart attack,
American culture didn't really peak until the 1950s. The bullet-finned 1959
Cadillac is a symbol of this peak, in my mind.
Louis: Then we had
Johnson and his "guns and butter" policy – War in Vietnam and
War on Poverty at the same time – followed by tricky Dick kicking the
last leg out of under the stool by taking the dollar off an even theoretical
Doug: Yes. Nixon
was arguably even a worse president than Johnson, with the devaluation of the
dollar in 1971 and his creation of the War on Drugs. Things have spiraled out
of control since then. In The Casey Report, we've written reams about
these last decades and how they led to and shaped what's happening now. But I
have to say, the focus has been largely financial.
Louis: Which is as
it should be, in a publication designed to help investors navigate these
Doug: Yes, but
the corruption goes way beyond that, beyond even the senseless wars and
idiotic foreign policy we discussed last week. America, once the land of the
brave and the home of the free, is well on its way to becoming a police state
– worse than any we've seen in the past, including the Soviet Union and
Louis: How could
it get worse than that?
Doug: Because Big Brother has better technology now, allowing possible
manipulation and control of the population that Stalin and Hitler never
dreamed of. And because the US used to be such a great place, a lot of people
have been tricked into believing it's the same as it was. But there's no more
resemblance between the America of old and the US of today than there was
between the Rome of the Republic and the Rome of the later emperors.
Furthermore, most Americans have conflated the government with society.
They're not only different things, but often antithetical.
Louis: I thought
you said you're an optimist!
Doug: I am. But
that's for the survivors who make it through the wringer the global economy
– and every person on this planet – is about to go through. I
keep telling you that the coming Greater Depression is going to be even worse
than I think it is. You may think I'm joking, but I'm not. I do think that,
primarily for reasons we discussed in our conversation
on technology, what comes next will not only be even better than I
imagine, it will be better than I can imagine… but first we have to go
through the wringer. I see no way around it. I truly don't.
Louis: Okay, I
know you believe that. Can you substantiate the police-state claim?
rather than give you anecdotal evidence – of which there are masses
more each day – let me refer to a rather perceptive blog post by a
George Washington law professor named Jonathan Turley, titled 10 Reasons Why the US Is No Longer the Land of the Free.
I'm sure I don't see everything the way the professor does, but the list
struck me as quite accurate and very important for people to understand.
Louis: I'm sure I
don't want to hear this, but okay, shoot.
Maybe you don't, but I know you value the truth. These points underline
something I've said for years: the Bill of Rights is a completely dead
letter. It's essentially meaningless and rarely even gets the benefit of lip
service. Quoting it will result in derision, if not arrest as a dangerous
Frankly, I didn't think the civil liberties situation
could get worse than it was under Cheney-Bush, but it has. Obama has repealed
none of what they did – and added more. So, let's go through the list.
of US citizens: "President
Obama has claimed, as President George W. Bush did before him, the right to order the killing of any citizen considered a
terrorist or an abettor of terrorism."
Of course the very concept of terrorism is highly
malleable, with over 100 definitions floating about – as we've discussed. But apart from that, it's now accepted
that the president and his minions have the right to kill almost anyone. This
conceit will get completely out of control after the next real or imagined
major terrorist incident.
reminds me of the extraordinary powers given to government agents to battle
the War On Some Drugs – like the RICO statutes – which have now
been turned against ordinary citizens who have nothing to do with the drug
Once you give the state a power – for whatever good reason you imagine
it needs it – it will use that power for whatever those in charge feel
is in their interests. And those in charge are never saints.
the law signed last month, terrorism suspects are to be held by the military;
the president also has the authority to indefinitely detain citizens accused
This was a precedent set by Guantánamo, where
scores of the accused continue to rot without even a kangaroo-court trial.
president now decides whether a person will receive a trial in the federal
courts or in a military tribunal, a system that has been ridiculed around the
world for lacking basic due process protections. Bush claimed this authority
in 2001, and Obama has continued the practice."
As the government becomes more powerful, it's
completely predictable that everything – including the justice system
– will become ever more politicized. And government very rarely
relinquishes a power it's gained. I particularly like the Supreme Court
ruling in April 2012 that allows anyone who's arrested for anything –
including littering or jaywalking – to be strip-searched.
Louis: Note to
readers: you can't hear Doug's voice, but I assure you that his use of the
word "like" is sarcastic.
Doug: Just so.
Moving right along:
searches: "The president
may now order warrantless surveillance, including a new capability to force
companies and organizations to turn over information on citizens' finances,
communications and associations. Bush acquired this sweeping power under the
Patriot Act in 2001, and in 2011, Obama extended the power, including searches of everything from
business documents to library records."
Privacy is now a completely dead concept, from both a
legal and a practical point of view. If you want to retain privacy, you now
have no alternative to relocating outside the US.
Louis: Or any
advanced Western country. I've read that there are more surveillance cameras
per square mile in London than anywhere else.
Doug: I've heard
that too. The opposite being true in rural Argentina is one of the things I
like about it. Back to the list:
government now routinely uses secret evidence to detain individuals and
employs secret evidence in federal and military courts. It also forces the
dismissal of cases against the United States by simply filing declarations that
the cases would make the government reveal classified information that would
harm national security…"
"National security" essentially amounts to
nothing more than government security, which amounts to cover for the
individuals in the government. Nazi Germany and the USSR were
national-security states. As I've tried to explain in the past, once a critical mass is
reached, it's impossible to reform a government. I believe we've reached that
state in the US.
War crimes: "The world clamored for prosecutions of those
responsible for waterboarding terrorism suspects during the Bush
administration, but the Obama administration said in 2009 that it would
not allow CIA employees to be investigated or prosecuted for such actions.
This gutted not just treaty obligations but the Nuremberg principles of
Torture by field operatives under the stress of combat
is one thing; torture as official policy is something else again. But torture
is now accepted in the US. Worse, there are far more serious war crimes than
torture being committed in the name of the US that are going unpunished.
Louis: This is,
after all, a far darker version of the same US government that deliberately infected black US citizens with syphilis
just to see what would happen, and sent US citizens of Japanese descent to concentration camps
The next point is:
"The government has increased
its use of the secret Foreign Intelligence Surveillance Court, which has
expanded its secret warrants to include individuals deemed to be aiding or
abetting hostile foreign governments or organizations. In 2011, Obama renewed
these powers, including allowing secret searches of individuals who are not
part of an identifiable terrorist group."
You no longer live in a free country when there's zero
privacy for citizens, but 100% secrecy for the government and those it
judicial review: "Like
the Bush administration, the Obama administration has successfully pushed for
immunity for companies that assist in warrantless surveillance of citizens,
blocking the ability of citizens to challenge the violation of privacy."
The government has outsourced some of its functions
– not least the use of contractors in war zones. Increasingly, being
associated with the government gives you a "get out of jail free" card.
In the USSR they called this a "krisha"
– a roof.
monitoring of citizens: "The
Obama administration has successfully defended its claim that it can use GPS devices to monitor every move of targeted
citizens without securing any court order or review."
Bad as this is, it's just one example. There's also the
use of domestic drones, and hundreds of thousands of cameras that take
pictures of everyone everywhere.
government now has the ability to transfer both citizens and noncitizens to
another country under a system known as extraordinary rendition, which has
been denounced as using other countries, such as Syria, Saudi Arabia, Egypt
and Pakistan, to torture suspects."
Yes, if someone is kidnapped, there's plausible
deniability if the torturing is done abroad by a third party. And they're
likely to have even fewer compunctions.
Louis: That's a
pretty depressing list, Doug.
Doug: And this is
just the beginning. As I've said before, I don't call the shots – just
try to tell the truth as I see it. The point is that you couldn't assemble a
list like this even 15 years ago. But now it's part of the firmament. Worse,
it's going to grow. As the economy turns down over the next few years, the
people – acting like scared chimpanzees – will ask the government
to "do something." And it will. The trend is going hyperbolic.
Louis: I can't
argue… and I agree it is not likely to be stopped. So if this is a sure
trend, are there investment implications?
Doug: This just
goes to reinforce what I've been saying for some time. As great as a US
citizen's risk is in the marketplace these days, the greatest single risk to
their wealth and health is the government. People simply must
internationalize to diversify their political risk. I can't stress that
Louis: Would you
go so far as to say that being a taxpayer in the US now is like being a Jew
in Germany in the mid-1930s?
Doug: That's a
good analogy. It's costly and upsetting to uproot, but the risk if you don't
is unimaginably worse. And I would warn people in other countries to take the
same precautions. All of these nation-states are dying dinosaurs that will
cause a lot of damage as they thrash about in their death throes. No place is
completely safe, but you improve your odds by not putting your eggs all in
Louis: Okay, I guess
we've covered that plenty of times. Is there a "police-state play"
– any investments one could make before the new Iron Curtain slams
down? Handcuff manufacturers?
Doug: Nah –
they have those plastic zip-binder things now; they're so cheap that I doubt
the manufacturer can even make big money in volume. But I do remember a
speech I attended in the '90s given by William Bennett, the ex-Drug Czar, who
recommended investing in prisons. I excoriated him as a sociopath at that
meeting – but he was right. However, that ship has sailed; it's hard to
believe the US can incarcerate more than the current 2.3 million people.
Besides, I find it morally offensive to capitalize on what I consider to be
criminal enterprises. No, for now the only absolutely crystal-clear
imperative is as above: You've got to have a Plan B ready in case you need to
get out of Dodge – and you need it pronto.
And to those who celebrate Thanksgiving, I urge you to
remember that it was hard work and the freedom to profit from it that created
the bounty the pilgrims celebrated. It was this enterprising spirit and the
liberty to exercise it that was the heart of the idea of the America That Was
– the idea that made America great. Those corrupt politicians who have
been undermining these values for so long and the willfully ignorant
ideologues who support them are responsible for turning this country into the
United (Police) State of America. They should be criticized and opposed at
Louis: Okay, Doug.
Thanks for another challenging but enlightening conversation.
–a renowned contrarian investor and speculator, and a highly respected
author and public speaker – has never been afraid to speak his mind.
His staunch free-market advocacy make his ideas a
welcome respite from the ongoing calls for more government interference for
many. Agree or disagree with Doug, he will give one something to think
about... and on subjects as diverse as the TSA; health and the state of
health care in the US; speculative fiction; capitalizing on corruption; war;
charity; and many more.
Right now you
can get a terrific deal on Doug Casey's ideas and insights: his first book in
15 years, aptly titled Totally Incorrect, is due out in early
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