02/19/2017 - The Roundtable Insight: Doug Casey On The Economic State Of The World

FRA is joined by best-selling author and world-renowned speculator Doug Casey in discussing current economic state of the world, from India’s demonetization to Trump.

 

Doug literally wrote the book on profiting from periods of economic turmoil: his book Crisis Investing spent multiple weeks as #1 on the New York Times bestseller list and became the best-selling financial book of 1980 with 438,640 copies sold. Then Doug broke the record with his next book, Strategic Investing, by receiving the largest advance ever paid for a financial book at the time. Interestingly enough, Doug’s book The International Man was the most sold book in the history of Rhodesia. And his most recent releases Totally Incorrect (2012) and Right on the Money (2013) continue the tradition of challenging statism and advocating liberty and free markets.

He has been a featured guest on hundreds of radio and TV shows, including David Letterman, Merv Griffin, Charlie Rose, Phil Donahue, Regis Philbin, Maury Povich, NBC News, and CNN; has been the topic of numerous features in periodicals such as Time, Forbes, People, and the Washington Post; and is a regular keynote speaker at FreedomFest, the world’s largest gathering of free minds.

Doug has lived in 10 countries and visited over 175. Today you’re most likely to find him at La Estancia de Cafayate (Casey’s Gulch), an oasis tucked away in the high red mountains outside Salta, Argentina.

 

CURRENT WRITINGS

Speculator is the first of a series of six novels following our hero, Charles Knight, going to Africa to look at a gold mining project he got lucky on. It’s an adventure novel about a bush war in Africa and how he made a couple hundred million dollars, and it’s actually an excellent novel. The second in the series explains the drug business the same way we explain the mining business.

THOUGHTS ON THE CURRENT STATE OF THE WORLD

We entered the hurricane in 2007. The governments of the world papered it over by printing scores of trillions of new currency. It’s surprising that we haven’t gone out of the eye of the hurricane and into the trailing edge, but we’re entering the trailing edge as we speak. It’s going to be much different and much longer lasting, and much worse than the unpleasantness of 2008-2009.This is going to be the biggest deal since the Industrial Revolution 200 years ago, and not in a good way.

The Euro has always been an Esperanto currency. If the US Dollar is an “I owe you nothing” on the part of the bankrupt US government, the Euro is a “who owes you nothing”. It’s a disaster waiting to happen. The European Union itself is likely to break up, and that’s a good thing because most people are unaware of the fact that Brussels has gone from a sleepy little town to one that holds 50000 employees of the EU who serve no useful purpose. If the Europeans want a free trade zone, all they have to do is drop duties. You don’t need a gigantic bureaucracy in Brussels to do that.

We’re going into a time of real chaos. One of the big things we’re going to see is migration from Africa, especially Africa south of the Sahara. There’s a 1-1.5M migrants that came to Europe this year, but in the future there’s going to be scores of millions. Most people are unaware that 42% of the world’s population will be African by the year 2100. It’s going to be an invasion of Europe by Africans; that’s going to continue and compound. At the same time, the Chinese are taking over the continent. It’s going to be a race war. A lot of Europeans are going to be coming to South America. That’s the big picture.

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DEMONETIZATION AND DEBT

It’s incredibly stupid on the part of Modi; half the people in India are earning 1-2 dollars a day. Unfortunately, this is something that’s happening to one degree or another around the world. Governments are trying to get rid of cash, and this is catastrophic from an economic point of view and a personal freedom point of view. Without cash, everything you do goes through a bank and is monitored. There is absolutely no privacy at that point, especially in India which is technologically backward.  It’s a complete disaster.

It’s definitely going to happen in the US and Canada as well. All these government officials talk to each other and seem to share a common philosophy.

When you look at US government spending, we’re going to be running trillion dollar deficits as far as the eye can see. As the world goes into the next stage of the greater depression, it’s going to go well above a trillion dollars. The US government is going to be manifestly bankrupt. They can only get the money by selling the debt to the Fed, and when debt is sold to the Fed they pay for it by printing money. We’re going to be seeing much higher levels of inflation, and the Dollar is eventually going to turn into a hot potato.

TRUMP’S PROTECTIONIST POLICIES

It’s going to be worse than stagflation. If these countries stop putting up tariffs, people can’t sell to you at the same time; they don’t have the ability to buy from you. What’s going on in the US with the Trump administration is an excellent chance and the same thing will be going on in Holland and France and all through Europe.

Every four years, there’s about 2% more of the kind of people who voted for Hilary. Trump is a one term president at best, and the next president is going to be in the middle of an economic catastrophe. Americans are likely to vote for somebody that’s going to promise the government’s a cornucopia.

INVESTING IN A TRUMP WORLD

One of the good things about Trump is that he’s moving to gut the EPA. It means that mining is going to have a resurgence in the US. That’s the best place to be because the stock market is grossly overpriced by any reasonable parameter. That’s an accident waiting to happen at this point, and the bond market’s even worse. We’re at the bubble end of a 35 year bull market in bonds. Bonds are the biggest bubble in world history, at this point.

Commodities are very cheap right now. In the inflationary environment we’re going to have in the future prices are going to go way up. Food commodities are the place to be.

You should go where your money and yourself are treated best, and that’s no longer in the US.

Abstract by: Annie Zhou <a2zhou@ryerson.ca>

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