Doug Casey: Top 5 Reasons Not to Vote

I will be out for the entire week to flee from the drama and hysteria of the coming Philippine national elections where the results will most likely be what Savoyard philosopher, writer and diplomat Joseph de Maistre once sardonically described as "In a democracy, people get the leaders they deserve" or might I say "be careful of what you wish for"

But before doing so, let me share of the splendid top 5 reasons not to vote as propounded by one of my favorite libertarian philosophers, author and investment guru, Doug Casey. 

While Mr Casey addresses this to US voters, I think this applicable universally.

From Doug Casey (thanks to the International Man) [bold mine]

Democracy is vastly overrated.

It's not like the consensus of a bunch of friends agreeing to see the same movie. Most often, it boils down to a kinder and gentler variety of mob rule, dressed in a coat and tie. The essence of positive values like personal liberty, wealth, opportunity, fraternity, and equality lies not in democracy, but in free minds and free markets where government becomes trivial. Democracy focuses people's thoughts on politics, not production; on the collective, not on their own lives.

Although democracy is just one way to structure a state, the concept has reached cult status; unassailable as political dogma. It is, as economist Joseph Schumpeter observed, "a surrogate faith for intellectuals deprived of religion." Most of the founders of America were more concerned with liberty than democracy. Tocqueville saw democracy and liberty as almost polar opposites.

Democracy can work when everyone concerned knows one another, shares the same values and goals, and abhors any form of coercion. It is the natural way of accomplishing things among small groups.

But once belief in democracy becomes a political ideology, it's necessarily transformed into majority rule. And, at that point, the majority (or even a plurality, a minority, or an individual) can enforce their will on everyone else by claiming to represent the will of the people.

The only form of democracy that suits a free society is economic democracy in the laissez-faire form, where each person votes with his money for what he wants in the marketplace. Only then can every individual obtain what he wants without compromising the interests of any other person. That's the polar opposite of the "economic democracy" of socialist pundits who have twisted the term to mean the political allocation of wealth.

But many terms in politics wind up with inverted meanings. "Liberal" is certainly one of them.

The Spectrum of Politics

The terms liberal (left) and conservative (right) define the conventional political spectrum; the terms are floating abstractions with meanings that change with every politician.

In the 19th century, a liberal was someone who believed in free speech, social mobility, limited government, and strict property rights. The term has since been appropriated by those who, although sometimes still believing in limited free speech, always support strong government and weak property rights, and who see everyone as a member of a class or group.

Conservatives have always tended to believe in strong government and nation­alism. Bismarck and Metternich were archetypes. Today's conservatives are some­times seen as defenders of economic liberty and free markets, although that is mostly true only when those concepts are perceived to coincide with the interests of big business and economic nationalism.

Bracketing political beliefs on an illogical scale, running only from left to right, results in constrained thinking. It is as if science were still attempting to define the elements with air, earth, water, and fire.

Politics is the theory and practice of government. It concerns itself with how force should be applied in controlling people, which is to say, in restricting their freedom. It should be analyzed on that basis. Since freedom is indivisible, it makes little sense to compartmentalize it; but there are two basic types of freedom: social and economic.

According to the current usage, liberals tend to allow social freedom, but restrict economic freedom, while conservatives tend to restrict social freedom and allow economic freedom. An authoritarian (they now sometimes class them­selves as "middle-of-the-roaders") is one who believes both types of freedom should be restricted.

But what do you call someone who believes in both types of freedom? Unfortunately, something without a name may get overlooked or, if the name is only known to a few, it may be ignored as unimportant. That may explain why so few people know they are libertarians.

A useful chart of the political spectrum would look like this:

A libertarian believes that individuals have a right to do anything that doesn't impinge on the common-law rights of others, namely force or fraud. Libertarians are the human equivalent of the Gamma rat, which bears a little explanation.

Some years ago, scientists experimenting with rats categorized the vast major­ity of their subjects as Beta rats. These are basically followers who get the Alpha rats' leftovers. The Alpha rats establish territories, claim the choicest mates, and generally lord it over the Betas. This pretty well-corresponded with the way the researchers thought the world worked.

But they were surprised to find a third type of rat as well: the Gamma. This creature staked out a territory and chose the pick of the litter for a mate, like the Alpha, but didn't attempt to dominate the Betas. A go-along-get-along rat. A libertarian rat, if you will.

My guess, mixed with a dollop of hope, is that as society becomes more repressive, more Gamma people will tune in to the problem and drop out as a solution. No, they won't turn into middle-aged hippies practicing basket weaving and bead stringing in remote communes. Rather, they will structure their lives so that the government—which is to say taxes, regulations, and inflation—is a non-factor. Suppose they gave a war and nobody came? Suppose they gave an election and nobody voted, gave a tax and nobody paid, or imposed a regulation and nobody obeyed it?

Libertarian beliefs have a strong following among Americans, but the Liber­tarian Party has never gained much prominence, possibly because the type of people who might support it have better things to do with their time than vote. And if they believe in voting, they tend to feel they are "wasting" their vote on someone who can't win. But voting is itself another part of the problem.

None of the Above

Until 1992, when many decided not to run, at least 98% of incumbents typically retained office. That is a higher proportion than in the Su­preme Soviet of the defunct USSR, and a lower turnover rate than in Britain's hereditary House of Lords where people lose their seats only by dying.

The political system in the United States has, like all systems which grow old and large, become moribund and corrupt.

The conventional wisdom holds a decline in voter turnout is a sign of apathy. But it may also be a sign of a renaissance in personal responsibility. It could be people saying, "I won't be fooled again, and I won't lend power to them."

Politics has always been a way of redistributing wealth from those who produce to those who are politically favored. As H.L. Mencken observed, every election amounts to no more than an advance auction on stolen goods, a process few would support if they saw its true nature.

Protesters in the 1960s had their flaws, but they were quite correct when they said, "If you're not part of the solution, you're part of the problem." If politics is the problem, what is the solution? I have an answer that may appeal to you.

The first step in solving the problem is to stop actively encouraging it.

Many Americans have intuitively recognized that government is the problem and have stopped voting. There are at least five reasons many people do not vote:

1 Voting in a political election is unethical. The political process is one of institutionalized coercion and force. If you disapprove of those things, then you shouldn't participate in them, even indirectly.

2 Voting compromises your privacy. It gets your name in another government computer database.

3 Voting, as well as registering, entails hanging around government offices and dealing with petty bureaucrats. Most people can find something more enjoyable or productive to do with their time.

4 Voting encourages politicians. A vote against one candidate—a major, and quite understandable, reason why many people vote—is always interpreted as a vote for his opponent. And even though you may be voting for the lesser of two evils, the lesser of two evils is still evil. It amounts to giving the candidate a tacit mandate to impose his will on society.

5 Your vote doesn't count. Politicians like to say it counts because it is to their advantage to get everyone into a busybody mode. But, statistically, one vote in scores of millions makes no more difference than a single grain of sand on a beach. That's entirely apart from the fact that officials manifestly do what they want, not what you want, once they are in office.

Some of these thoughts may impress you as vaguely "unpatriotic"; that is certainly not my intention. But, unfortunately, America isn't the place it once was, either. The United States has evolved from the land of the free and the home of the brave to something more closely resembling the land of entitlements and the home of whining lawsuit filers.

The founding ideas of the country, which were highly libertarian, have been thoroughly distorted. What passes for tradition today is something against which the Founding Fathers would have led a second revolution.

This sorry, scary state of affairs is one reason some people emphasize the importance of joining the process, "working within the system" and "making your voice heard," to ensure that "the bad guys" don't get in. They seem to think that increasing the number of voters will improve the quality of their choices.

This argument compels many sincere people, who otherwise wouldn't dream of coercing their neighbors, to take part in the political process. But it only feeds power to people in politics and government, validating their existence and making them more powerful in the process.

Of course, everybody involved gets something out of it, psychologically if not monetarily. Politics gives people a sense of belonging to something bigger than themselves and so has special appeal for those who cannot find satisfaction within themselves.

We cluck in amazement at the enthusiasm shown at Hitler's giant rallies but figure what goes on here, today, is different. Well, it's never quite the same. But the mindless sloganeering, the cult of the personality, and a certainty of the masses that "their" candidate will kiss their personal lives and make them better are identical.

And even if the favored candidate doesn't help them, then at least he'll keep others from getting too much. Politics is the institutionalization of envy, a vice which proclaims "You've got something I want, and if I can't get one, I'll take yours. And if I can't have yours, I'll destroy it so you can't have it either." Participating in politics is an act of ethical bankruptcy.

The key to getting "rubes" (i.e., voters) to vote and "marks" (i.e., contribu­tors) to give is to talk in generalities while sounding specific and looking sincere and thoughtful, yet decisive. Vapid, venal party hacks can be shaped, like Silly Putty, into salable candidates. People like to kid themselves that they are voting for either "the man" or "the ideas." But few "ideas" are more than slogans artfully packaged to push the right buttons. Voting for "the man" doesn't help much either since these guys are more diligently programmed, posed, and rehearsed than any actor.

This is probably more true today than it's ever been since elections are now won on television, and television is not a forum for expressing complex ideas and philosophies. It lends itself to slogans and glib people who look and talk like game show hosts. People with really "new ideas" wouldn't dream of introducing them to politics because they know ideas can't be explained in 60 seconds.

I'm not intimating, incidentally, that people disinvolve themselves from their communities, social groups, or other voluntary organizations; just the opposite since those relationships are the lifeblood of society. But the political process, or government, is not synonymous with society or even complementary to it. Government is a dead hand on society.

Quote of the Day: The Real Problem is Government

Libertarian, anarcho capitalist and savvy investor Doug Casey at the International Man expounds on the roots of society's malaise: the government (bold mine)

The essence of something is what makes the thing what it is. But surprisingly little study of government has been done by ontologists (who study the first principles of things) or epistemologists (those who study the nature of human knowledge). The study of government almost never concerns itself with whether government should be, but only with how and what it should be. The existence of government is accepted without question.

What is the essence of government? After you cut through the rhetoric, the doublethink, and the smokescreen of altruism that surround the subject, you find that the essence of government is force…and the belief it has the right to initiate the use of force whenever expedient. Government is an organization with a monopoly, albeit with some fringe competition, on the use of force within a given territory. As Mao Zedong said, "The power of government comes out of the barrel of a gun." There is no voluntarism about obeying laws. The consent of a majority of the governed may help a government put a nice face on things, but it is not essential and is, in fact, seldom given with any enthusiasm.

A person's attitude about government offers an excellent insight into his character. Political beliefs reflect how a person thinks men should relate to one another; they offer a practical insight into how he views humanity at large and himself in particular.

There are only two ways people can relate in any given situation: voluntarily or coercively. Almost everyone, except overt sociopaths, pays at least lip service to the idea of voluntarism, but government is viewed as somehow exempt. It's widely believed that a group has prerogatives and rights unavailable to individuals. But if that is true, then the Ku Klux Klan (KKK), the Irish Republican Army (IRA), the Palestine Liberation Organization (PLO) – or, for that matter, any group from a lynch mob to a government – all have rights that individuals do not. In fact, all these groups believe they have a right to initiate the use of force when they find it expedient. To the extent that they can get away with it, they all act like governments.

You might object that the important difference between the KKK, IRA, PLO, a simple mob and a government is that they aren't "official" or "legal."

Apart from common law concepts, legality is arbitrary. Once you leave the ken of common law, the only distinction between "laws" of governments and the "ad hoc" proceedings of an informal assemblage such as a mob, or of a more formal group like the KKK, boils down to the force the group can muster to impose its will on others. The laws of Nazi Germany and the U.S.S.R. are now widely recognized as criminal fantasies that gained reality on a grand scale. But at the time those regimes had power, they were treated with the respect granted to any legal system. Governments become legal or official by gaining power. The fact that every government was founded on gross illegalities – war or revolt – against its predecessor is rarely an issue.

Force is the essence of government. But the possession of a monopoly on force almost inevitably requires a territory, and maintaining control of territory is considered the test of a "successful" government. Would any "terrorist" organization be more "legitimate" if it had its own country? Absolutely. Would it be any less vicious or predatory by that fact? No, just as most governments today (the ex-communist countries and the kleptocracies of the Third World being the best examples) demonstrate. Governments can be much more dangerous than the mobs that give them birth. The Jacobin regime of the French Revolution is a prime example.

Quote of the Day: The Euro, the EU and the European Central Bank are Doomed

From the legendary investor, author, libertarian philosopher, anarcho capitalist Doug Casey at the International Man:

The economy of the European Union is a constipated, sclerotic, malfunctioning entity that only registered real economic growth of 0.2% in the recent quarter—assuming you can credit their numbers at all. The continent is a giant monument to socialism, where everyone believes they can live at the expense of everyone else. As a result, the average European sees his government as a magic cornucopia, a source of unlimited wealth. When something goes wrong, Europeans look to their governments to “do something.” With this in mind, European Central Bank President Mario Draghi made the front pages by saying he is “ready to act” with a “whole menu of monetary policy instruments.”

This is central banker speak for “I’m willing to print an incredible amount of money in my attempt to keep my job and stimulate the economy by making people think they’re richer than they really are.”

Draghi’s money printing is a disastrously misguided attempt at creating prosperity. It will create bubbles, and cause people and companies to do all manner of things they’d never consider without the false economic signals he will send. If printing money were the path to prosperity, Zimbabwe and Venezuela would be the richest countries on earth instead of economic basket cases.

Traders who take positions based on the words of a central banker are naïve, and just asking for losses. Not only does the ECB believe printing money is a good thing, but they’re forced to do more, to keep the system from collapsing. This will send the value of the euro much lower; the currency will accelerate its descent toward its intrinsic value, namely zero.

The euro is a sure bet to join the ranks of many hundreds of defunct paper currencies. Not one currency in today’s world is backed by a commodity (like gold); they’re backed only by confidence (which can vanish like a pile of feathers in a hurricane). And, of course, the ability of governments to steal from the people. But the euro doesn’t even have that going for it. The European Union doesn’t have the power to tax. Right now, the Eurocrats in Brussels really only have the power to regulate. I’ve long said, “While the U.S. dollar is an ‘IOU nothing,’ the euro is a ‘who owes you nothing.’”

The EU itself is a completely artificial and dysfunctional union. The Swedes are very different from the Sicilians, and the Portuguese very different from the Austrians. These people have little in common besides a history of fighting with each other. Force them together into a phony union and they’ll become mutually resentful, the way the Germans and the Greeks now are. The EU was put together partly to avoid future wars, but it may turn out to be a war incubator.

The European Union itself makes no real sense. Its sole good aspect, the abolition of internal barriers to the free passage of goods and people, could have been had simply by dropping barriers. Setting up another huge, costly bureaucracy in Brussels was idiocy.

Incidentally, people think of these countries—Italy, France, Germany and so on—as though they are fixtures in the cosmos. But they aren’t. In their current forms, they’re all newcomers on the stage of history.

The average person doesn’t realize that the country we know as Italy today was only created in 1861, a consolidation of many completely independent and very different entities that had been separate states since the collapse of the Roman Empire. Germany was only unified in 1871, out of scores of principalities, dukedoms, baronies and whatnot. Both unifications were very bad ideas; World Wars I and II are just at the head of a long list of reasons why that’s true. Even today, there are separatist movements in big Western European countries, like the Basques and Catalans in Spain, and the Scots in the United Kingdom, who wish it weren’t quite so united. There are many others.

Centripetal force will eventually tear it apart, with the EU as a whole disintegrating long before its individual parts—France, Italy, Germany the U.K., etc.—fall apart. The colors of the map are always running.

The European continent reminds me of that poorly managed cruise ship that sank off the coast of Italy in 2012. It is dying financially, with all the debt bankrupting governments, businesses and individuals. It is sinking economically, weighted down with stifling regulations and taxes. It is being strangled demographically, with birth rates far below replacement. Except among African and Muslim immigrants, who are not integrating. And now, millions of migrants, who seem to expect free food, shelter, clothing and money to hang around coffee houses all day to complain. Europe has long been a hotbed of religious, ethnic and race wars—quite frankly, I see the next one building up right now.

So, I think the euro will reach its intrinsic value long before the dollar does. The euro, in anything like its present form, will likely cease to exist within a decade, and probably far sooner. If I had a lot of my wealth in euros, I would get it out ASAP.

Doug Casey on US government debt

Some juicy excerpts from the legendary investor Doug Casey at his International Man website: (bold mine)

The only way a society (or an individual) can grow in wealth is by producing more than it consumes; the difference is called “saving.” It creates capital, making possible future investments or future consumption. Conversely, “borrowing” involves consuming more than is produced; it’s the process of living out of capital or mortgaging future production. Saving increases one’s future standard of living; debt reduces it.

If you were to borrow a million dollars today, you could artificially enhance your standard of living for the next decade. But, when you have to repay that money, you will sustain a very real decline in your standard of living. Even worse, since the interest clock continues ticking, the decline will be greater than the earlier gain. If you don’t repay your debt, your creditor (and possibly his creditors, and theirs in turn) will suffer a similar drop. Until that moment comes, debt can look like the key to prosperity, even though it’s more commonly the forerunner of disaster.

Of course, debt is not in itself necessarily a bad thing. Not all debt is for consumption; it can be used to finance capital goods, intended to produce further wealth. But most US debt today finances consumption—home mortgages, car loans, student loans, and credit card debt among other things.

Government Debt

It took the US government from 1791 to 1916 (125 years) to accumulate $1 billion in debt. World War I took it to $24 billion in 1920; World War II raised it to $270 billion in 1946. Another 24 years were needed to add another $100 billion, for a total of $370 billion in 1970. The debt almost tripled in the following decade, with debt crossing the trillion-dollar mark in October 1981. Only four and half years later the debt had doubled to $2 trillion in April 1986; four years more added another trillion by 1990; and then in only 34 months it reached $4.2 trillion in February 1993. The exponential growth continued unabated. US government debt stood at $18 trillion in early 2015. Off-balance-sheet borrowing and the buildup of massive contingent liabilities aren’t included. That may add another $50 trillion or so.

In 1964—the year Lyndon Johnson was elected—US federal debt stood at $316 billion, and interest on it was $10.7 billion, which was equal to 14.8% of personal and corporate tax revenues. When Reagan left office in 1989, the debt stood at $3.2 trillion, and interest was $214 billion, taking 43% of tax revenues. When Bush left office in 1993, the debt stood at $4.2 trillion and interest at $293 billion, consuming 52% of personal and corporate income taxes.

As of fiscal-year 2013, there was $16.8 trillion in federal debt and $416 billion in interest payments, which consumed about 15% of tax revenues. When interest rates rise again, even to their historical average, the US government will find most of its tax revenue is going just to pay interest. There will be little left over for the military and domestic transfer payments.

When the government borrows just to pay interest, a tipping point will be reached. It will have no flexibility at all, and that will be the end of the game.

In principle, an unsustainable amount of government debt should be a matter of concern only to the government (which is not at all the same thing as society at large) and to those who foolishly lent them money. But the government is in a position to extract tax revenues from its subjects, or to inflate the currency to keep the ball rolling. Its debt indirectly, therefore, becomes everyone’s burden.

The consequences of all this are grim, but the timing is hard to predict. Perhaps the government can somehow borrow amounts that no one previously thought possible. But its creditors will look for repayment. Either the creditors are going to walk away unhappy (in the case of default), or the holders of all dollars are going to be stuck with worthless paper (in the case of hyperinflation), or the taxpayers’ pockets will be looted (the longer things muddle along), or most likely a combination of all three will happen. This will not be a happy story for all but a few of us.

Quote of the Day: The Whole Banking Business is Corrupt

The whole banking business is corrupt from top to bottom today. Part of the problem is that banks are no longer financed by the individuals who start them, putting their personal net worth on the line. Now, they are all publicly traded entities – just like all brokerages – playing with Other People's Money. Management has no incentive to do anything but pad their wallets, so they pay themselves gigantic salaries and bonuses, and give themselves options. These people aren't shepherding their money and that of clients they know personally. They've got zero skin in the game. 

This is true all over the world, not just in the US and Europe. All these banks are going to blow up, and not just in far-off, little countries.

This quote is from investing guru and philosopher Doug Casey at his eponymous website Casey Research 

Quote of the Day: Selfishness, via Profits, Guides People to Serve the Need of Others More Effectively

making money honestly means creating something other people value, not necessarily what you value. The more money I want, the more I have to think about what other people want, and find better, faster, cheaper ways of delivering it to them. The reason someone is poor – and, yes, I know all the excuses for poverty – is that the poor do not produce more than they consume. Or if they do, they don’t save the surplus…

Selfishness, in the form of the profit motive, guides people to serve the needs of others far more reliably, effectively, and efficiently than any amount of haranguing from priests, poets, or politicians. Those people tend to be profoundly anti-human, actually.

This is from investing guru and philosopher Doug Casey at the Casey Research on the morality of money.

Video: Doug Casey: We are Living in the Middle of the Biggest Bubble in History

In the following video, Goldmoney’s Andy Duncan interviews, one of my favorite investing savant, Doug Casey. 

At the final minutes, Doug Casey predicts that “There will be many bubbles created in the years to come especially bubbles that has been created by trillions of dollars”, which will filter over or permeate to different parts in the economy and to the world.

Importantly Mr. Casey notes (28: 04) "Right now, we are living in the middle of the biggest bubble in history and when this bubble burst it’s going to be a catastrophe for most people"  

[Yes, I agree, all one needs to is to see how bubbles have morphed into a mental pandemic as the public's addiction to artificial booms have seemingly become deeply entrenched. Hardly any thoughts have been given to possible adverse consequences or myriad risks from all the cumulative inflationism and interventionism implemented by global central banks and their respective political authorities, including the BSP and the Philippine government]  

Mr. Casey point outs that bonds are right now at the peak of the bubble cycle (a view which I have been saying) and further predicts a coming bubble on gold stocks, particularly Gold exploration stock. 

Watch the interview.

Doug Casey: Five Reasons Not to Vote

In Doug Casey’s weekly interview with Louis James (meant for the  consumption of regular readers and subscribers of Casey Research), the philosopher, anarchist and investing guru cites five reasons not to vote

First reason: Unethical Act

voting is an unethical act, in and of itself. That's because the state is pure, institutionalized coercion. If you believe that coercion is an improper way for people to relate to one another, then you shouldn't engage in a process that formalizes and guarantees the use of coercion.

Second reason: Compromised Privacy

Privacy. It compromises your privacy to vote. It gets your name added to a list government busybodies can make use of, like court clerks putting together lists of conscripts for jury duty. Unfortunately, this is not as important a reason as it used to be, because of the great proliferation of lists people are on anyway. Still, while it's true there's less privacy in our world today, in general, the less any government knows about you, the better off you are. This is, of course, why I've successfully refused to complete a census form for the last 40 years…

Third reason: Degrading Experience, lost productive time  

That would be because it's a degrading experience. The reason I say that is because registering to vote, and voting itself, usually involves taking productive time out of your day to go stand around in lines in government offices. You have to fill out forms and deal with petty bureaucrats. I know I can find much more enjoyable and productive things to do with my time, and I'm sure anyone reading this can as well.

Fourth reason: Voting Against Fear, two wrongs don't make a right

I'm convinced that most people don't vote for candidates they believe in, but against candidates they fear. But that's not how the guy who wins sees it; the more votes he gets, the more he thinks he's got a mandate to rule – even if all his votes are really just votes against his opponent. Some people justify this, saying it minimizes harm to vote for the lesser of two evils. That's nonsense, because it still leaves you voting for evil. The lesser of two evils is still evil.

Fifth reason: Your vote doesn’t count, the delusion of self worth

Your vote doesn't count. If I'd gotten to say that to the Donahue audience, they probably would have stoned me. People really like to believe that their individual votes count. Politicians like to say that every vote counts, because it gets everyone into busybody mode, makes voters complicit in their crimes. But statistically, any person's vote makes no more difference than a single grain of sand on a beach. Thinking their vote counts seems to give people who need it an inflated sense of self-worth.

Read the rest of the interview here

Video: Doug Casey on Speculation and the US Dollar

There are three investors whom I like to emulate, they are Dr. Marc Faber, Jim Rogers and Doug Casey. Their common denominator are that they are staunchly free market advocates and are global citizens.

The two videos below are interviews with Doug Casey which had been recently held in Canada.

10 Tips on Speculation and Life



Some notes of the interview

-The importance of clear definition of terms
-Understand counterparty risks
-Understand and take contrarian position
-Expanding one’s knowledge horizon by investigating beyond the topic interests by reading further. In short take a comprehensive research on areas of interests
-Doug says “I’d rather be lucky than smart”, he also says “make your own luck” (I’d say this resembles Nassim Taleb’s black swan theory)
-Diversify internationally
-He likes Thailand but sees the country as not friendly to immigrants
-Doug says "You don’t want be a resident anywhere", which means we should be responsive to political risks

Why the Dam is Finally Breaking on the US Dollar


Some notes of the interview:
-Doug is a long term bear of Europe largely due to the popular destructive ideas of statism
-Despite the rhetoric, in the political spectrum both the leftist and rightist camp disdain social and economic freedom
-The US international reserve status is crumbling: Dam is breaking
-Blocking or cutting Iran out of the SWIFT system (using the US dollar for its oil trades) only gives the incentive for nations to shift out of the US dollar trade.
-The world will go back to gold.
-Monetary reforms could mean gold will be used as currency for international trading but domestic economies will remain fiat based
-Gold is not an investment, gold is money
-US elections: No discernible difference between two candidates, both are statist
-Major asset of Canada’s central bank is the US dollar, thus, what happens to the US dollar will affect the Canadian dollar. Doug says “The best thing about Canada is that Canada is not the US”
-Doug encourages people anew to be flexible in terms of living. He says that we should not adapt the "medieval peasant attitude" of being a "vegetable" (sticking to a single place), as the “vegetable" outlook is not a good survival strategy
-Doug says he likes to be paid for a high standard of living.
-Doug is ambivalent on commodities over the long term, because longest bearmarket in history is in commodities. This is largely due to the advancement in technology.
-Mining is a risky business. Legal, environmental and industrial costs are as expensive as mining engineers
-Government and environmentalists sees mining as a cow to milk
-Everybody hates mining
-Gold stocks are speculative
-Though bearish long term he endorses buying on gold and silver
-He says that there will be bubbles in different markets around the world (I agree, ASEAN is one)
-Gold might become a bubble
-Mining stocks could also become a bubble
-Doug believes in the cattle (and agricultural) business
-Doug thinks that the over expanded financial industry is bound for a collapse
-Like Jim Rogers, he thinks that farmers will become millionaires while financial executives will become paupers.

Quote of the Day: Artificially Constructed Countries to Fall Apart

Syria – like almost all of the countries in Africa, the Middle East, and Asia – is an artificial construct put together, completely arbitrarily, by politicians in the boardrooms of Europe. In the case of Syria, it was assembled from some of the remnants of the Ottoman Empire by the Europeans after World War I. As in neighboring Lebanon and Iraq, it's got at least a dozen major religious/tribal/ethnic groups that are loyal mainly to themselves. The idea of a Syrian nation is a fantasy. It was inevitable that eventually Syria would fall apart – just as it was and is inevitable for most of the other artificially constructed countries to fall apart. This applies to the EU now as well, for similar reasons.

This is from investing guru and philosopher Doug Casey on Syria and US foreign policies.

I think such unfolding political dynamic fits the global trend towards decentralization. Yet the transition process will hardly be smooth considering that many entrenched power blocs benefit from the current order and will resist giving up on these privileges. However, change is not only inevitable but imminent.

Understanding Political Terminologies 2: Social Justice, Greece, Austerity and Insurance

Political language have been deliberately mangled to suit and promote the interests of political agents and their followers. I have given a few examples earlier.

More examples:

1. SOCIAL JUSTICE

Once again here is the brilliant Thomas Sowell on “Social Justice”

If there were a Hall of Fame for political rhetoric, the phrase "social justice" would deserve a prominent place there. It has the prime virtue of political catchwords: It means many different things to many different people.

In other words, if you are a politician, you can get lots of people, with different concrete ideas, to agree with you when you come out boldly for the vague generality of "social justice."

Justice Oliver Wendell Holmes said that a good catchword can stop thought for 50 years. The phrase "social justice" has stopped many people from thinking, for at least a century -- and counting.

If someone told you that Country A had more "social justice" than Country B, and you had all the statistics in the world available to you, how would you go about determining whether Country A or Country B had more "social justice"? In short, what does the phrase mean in practice -- if it has any concrete meaning?

In political and ideological discussions, the issue is usually whether there is some social injustice. Even if we can agree that there is some injustice, what makes it social?

Surely most of us are repelled by the thought that some people are born into dire poverty, while others are born into extravagant luxury -- each through no fault of their own and no virtue of their own. If this is an injustice, does that make it social?

The baby born into dire poverty might belong to a family in Bangladesh, and the one born to extravagant luxury might belong to a family in America. Whose fault is this disparity or injustice? Is there some specific society that caused this? Or is it just one of those things in the world that we wish was very different?

If it is an injustice, it is unjust from some cosmic perspective, an unjust fate, rather than necessarily an unjust policy, institution or society.

Investing guru Doug Casey also shares more verbal twisting (Greece and Austerity)…

2. GREECE

it's not "Greece" we're talking about, but the Greek government. It's the Greek government that's made the laws that got people used to pensions for retirement at age 55. It's the Greek government that's built up a giant and highly paid bureaucracy that just sits around when it's not actively gumming up the economy. It's the Greek government that's saddled the country with onerous taxes and regulations that make most business more trouble than it's worth. It's the Greek government that borrowed billions that the citizens are arguably responsible for. It's the Greek government that's set the legal and moral tone for the pickle the place is in.

3. AUSTERITY

the term "austerity" is used very loosely by the talking heads on TV. It sounds bad, even though it just means living within one's means… or, for Europeans, not too insanely above them. But who knows what's actually included or excluded from what the EU leaders think of as austerity? Take the Greek pension funds, for example: exactly how are they funded? I'd expect that private companies make payments to a state fund, as Americans do via the Social Security program. I suspect there's no money in the coffers; it's all been frittered on high living and socialist boondoggles. Tough luck for pensioners. Maybe they can convince the Chinese to give them money to keep living high off the hog…

4. I would add INSURANCE as camouflage for the Welfare State

From Murray N. Rothbard,

The answer is the very existence of health-care insurance, which was established or subsidized or promoted by the government to help ease the previous burden of medical care. Medicare, Blue Cross, etc., are also very peculiar forms of "insurance."

If your house burns down and you have fire insurance, you receive (if you can pry the money loose from your friendly insurance company) a compensating fixed money benefit. For this privilege, you pay in advance a fixed annual premium. Only in our system of medical insurance, does the government or Blue Cross pay, not a fixed sum, but whatever the doctor or hospital chooses to charge.

In economic terms, this means that the demand curve for physicians and hospitals can rise without limit. In short, in a form grotesquely different from Say's Law, the suppliers can literally create their own demand through unlimited third-party payments to pick up the tab. If demand curves rise virtually without limit, so too do the prices of the service.

In order to stanch the flow of taxes or subsidies, in recent years the government and other third party insurers have felt obliged to restrict somewhat the flow of goodies: by increasing deductibles, or by putting caps on Medicare payments. All this has been met by howls of anguish from medical customers who have come to think of unlimited third-party payments as some sort of divine right, and from physicians and hospitals who charge the government with "socialistic price controls" — for trying to stem its own largesse to the health-care industry!

In addition to artificial raising of the demand curve, there is another deep flaw in the medical insurance concept. Theft is theft, and fire is fire, so that fire or theft insurance is fairly clear-cut the only problem being the "moral hazard" of insurees succumbing to the temptation of burning down their own unprofitable store or apartment house, or staging a fake theft, in order to collect the insurance.

In the world of politics,lies, distortions and equivocations are the norm.

Don't fall for them

Quote of the Day: Euro Crisis is the Tip of the Iceberg

Those governments are all bankrupt. But much more serious than financial bankruptcy is their total moral and intellectual bankruptcy. At this point the Europeans are so craven and degraded they deserve to be indentured servants of the Chinese, which they will be. The debt they are using to finance their bulging bureaucracies, bloated welfare rolls, giant pensions, and so forth is largely coming from the banks. But the banks are all bankrupt too, partly because they've lent so much capital to bankrupt governments. So you've got two sets of bankrupt institutions trading debt back and forth between themselves. It doesn't help to say that it's the PIIGS that are in the worst shape, because it's the banks in the supposedly wealthier countries that own the PIIGS's debt. They are all tied together.

It's much worse, on a global scale, because Europe is China's largest trading partner. When the EU really goes into reverse and suffers a major economic collapse, the Chinese are going to lose their main customers – and end up owning a lot of chateaux. That also means the Chinese will stop buying the raw materials – commodities – they use to make what they sell to the Europeans. That will hammer the Australian, Brazilian, Canadian, and other resource-driven economies.

And the problems with Japan are even worse, though somewhat different, than the ones in Europe. Chronically corrupt and now depopulating Russia is headed for a fall; its economy produces nothing but raw materials and weapons. The problem is truly global. The headlines keep pointing at Europe right now, but the EU is just the tip of the iceberg the global economy is aimed at.

This is from investing guru and philosopher Doug Casey on the coming Eurocrash.

Doug Casey: The Human Species will Evolve to Other Species

The visionary Doug Casey believes that people will continue to evolve in line not only with the changes in the environment, but also along with the changes in technology or through adaption to technology

Once humans get established in space, evolution will take over – and take off. Before then, however, and likely even before we leave the planet, I'll bet there's going to be a lot of intentional, as opposed to natural, genetic alteration. It will start with efforts to eliminate undesirable genes that predispose one to heart disease, cancer, or genetic disorders. But while we're at it, why not also select for blue eyes, taller, more muscular frame, greater intelligence, and anything else people might want their children to have? Some people won't want to go that route, preferring to leave things to nature, but their children will be at a disadvantage to those whose parents have selected superior genes. That could lead to speciation along several lines.

Read the rest here.

I encountered this article earlier.

But having been immersed in too many readings, it took Bob Wenzel’s post to remind me to share with you this, what I think is a, significant outlook.

If I am not mistaken, Mr. Casey may have been reading futurist Ray Kurzweil’s Singularity is Near.

Doug Casey: End of the Nation State

Investing guru, and anarchist philosopher Doug Casey believes that today’s nation states is on path to the dinosaur age

Mr. Casey writes at the Casey Research, (bold highlights mine)

Mankind has, so far, gone through three main stages of political organization since Day One, say 200,000 years ago, when anatomically modern men started appearing. We can call them Tribes, Kingdoms, and Nation-States.

Karl Marx had a lot of things wrong, especially his moral philosophy. But one of the acute observations he made was that the means of production are perhaps the most important determinant of how a society is structured. Based on that, so far in history, only two really important things have happened: the Agricultural Revolution and the Industrial Revolution. Everything else is just a footnote.

Let's see how these things relate.

The Agricultural Revolution and the End of Tribes

In prehistoric times, the largest political/economic group was the tribe. In that man is a social creature, it was natural enough to be loyal to the tribe. It made sense. Almost everyone in the tribe was genetically related, and the group was essential for mutual survival in the wilderness. That made them the totality of people that counted in a person's life – except for "others" from alien tribes, who were in competition for scarce resources and might want to kill you for good measure.

Tribes tend to be natural meritocracies, with the smartest and the strongest assuming leadership. But they're also natural democracies, small enough that everyone can have a say on important issues. Tribes are small enough that everybody knows everyone else, and knows what their weak and strong points are. Everyone falls into a niche of marginal advantage, doing what they do best, simply because that's necessary to survive. Bad actors are ostracized or fail to wake up, in a pool of their own blood, some morning. Tribes are socially constraining but, considering the many faults of human nature, a natural and useful form of organization in a society with primitive technology.

As people built their pool of capital and technology over many generations, however, populations grew. At the end of the last Ice Age, around 12,000 years ago, all over the world, there was a population explosion. People started living in towns and relying on agriculture as opposed to hunting and gathering. Large groups of people living together formed hierarchies, with a king of some description on top of the heap.

Those who adapted to the new agricultural technology and the new political structure accumulated the excess resources necessary for waging extended warfare against tribes still living at a subsistence level. The more evolved societies had the numbers and the weapons to completely triumph over the laggards. If you wanted to stay tribal, you'd better live in the middle of nowhere, someplace devoid of the resources others might want. Otherwise it was a sure thing that a nearby kingdom would enslave you and steal your property.

The Industrial Revolution and the End of Kingdoms

From around 12,000 B.C. to roughly the mid-1600s, the world's cultures were organized under strong men, ranging from petty lords to kings, pharaohs, or emperors.

It's odd, to me at least, how much the human animal seems to like the idea of monarchy. It's mythologized, especially in a medieval context, as a system with noble kings, fair princesses, and brave knights riding out of castles on a hill to right injustices. As my friend Rick Maybury likes to point out, quite accurately, the reality differs quite a bit from the myth. The king is rarely more than a successful thug, a Tony Soprano at best, or perhaps a little Stalin. The princess was an unbathed hag in a chastity belt, the knight a hired killer, and the shining castle on the hill the headquarters of a concentration camp, with plenty of dungeons for the politically incorrect.

With kingdoms, loyalties weren't so much to the "country" – a nebulous and arbitrary concept – but to the ruler. You were the subject of a king, first and foremost. Your linguistic, ethnic, religious, and other affiliations were secondary. It's strange how, when people think of the kingdom period of history, they think only in terms of what the ruling classes did and had. Even though, if you were born then, the chances were 98% you'd be a simple peasant who owned nothing, knew nothing beyond what his betters told him, and sent most of his surplus production to his rulers. But, again, the gradual accumulation of capital and knowledge made the next step possible: the Industrial Revolution.

The Industrial Revolution and the End of the Nation-State

As the means of production changed, with the substitution of machines for muscle, the amount of wealth took a huge leap forward. The average man still might not have had much, but the possibility to do something other than beat the earth with a stick for his whole life opened up, largely as a result of the Renaissance.

Then the game changed totally with the American and French Revolutions. People no longer felt they were owned by some ruler; instead they now gave their loyalty to a new institution, the nation-state. Some innate atavism, probably dating back to before humans branched from the chimpanzees about 3 million years ago, seems to dictate the Naked Ape to give his loyalty to something bigger than himself. Which has delivered us to today's prevailing norm, the nation-state, a group of people who tend to share language, religion, and ethnicity. The idea of the nation-state is especially effective when it's organized as a "democracy," where the average person is given the illusion he has some measure of control over where the leviathan is headed.

On the plus side, by the end of the 18th century, the Industrial Revolution had provided the common man with the personal freedom, as well as the capital and technology, to improve things at a rapidly accelerating pace.

What caused the sea change?

I'll speculate it was largely due to an intellectual factor, the invention of the printing press; and a physical factor, the widespread use of gunpowder. The printing press destroyed the monopoly the elites had on knowledge; the average man could now see that they were no smarter or "better" than he was. If he was going to fight them (conflict is, after all, what politics is all about), it didn't have to be just because he was told to, but because he was motivated by an idea. And now, with gunpowder, he was on an equal footing with the ruler's knights and professional soldiers.

Right now I believe we're at the cusp of another change, at least as important as the ones that took place around 12,000 years ago and several hundred years ago. Even though things are starting to look truly grim for the individual, with collapsing economic structures and increasingly virulent governments, I suspect help is on the way from historical evolution. Just as the agricultural revolution put an end to tribalism and the industrial revolution killed the kingdom, I think we're heading for another multipronged revolution that's going to make the nation-state an anachronism. It won't happen next month, or next year. But I'll bet the pattern will start becoming clear within the lifetime of many now reading this.

What pattern am I talking about? Once again, a reference to the evil (I hate to use that word too, in that it's been so corrupted by Bush and religionists) genius Karl Marx, with his concept of the "withering away of the State." By the end of this century, I suspect the U.S. and most other nation-states will have, for all practical purposes, ceased to exist.

The Problem with the State – and Your Nation-State

Of course, while I suspect that many of you are sympathetic to that sentiment, you also think the concept is too far out, and that I'm guilty of wishful thinking. People believe the state is necessary and – generally – good. They never even question whether the institution is permanent.

My view is that the institution of the state itself is a bad thing. It's not a question of getting the right people into the government; the institution itself is hopelessly flawed and necessarily corrupts the people that compose it, as well as the people it rules. This statement invariably shocks people, who believe that government is both a necessary and permanent part of the cosmic firmament.

The problem is that government is based on coercion, and it is, at a minimum, suboptimal to base a social structure on institutionalized coercion. I'm not going to go into the details here; I've covered this ground from a number of directions in previous editions of this letter, as well as in Crisis Investing (Chap.16), Strategic Investing (Chap. 32), and, most particularly Crisis Investing for the Rest of the '90s (Chap. 34). Again, let me urge you to read the Tannehills' superb The Market for Liberty, which is available for download free here.

One of the huge changes brought by the printing press and advanced exponentially by the Internet is that people are able to readily pursue different interests and points of view. As a result, they have less and less in common: living within the same political borders is no longer enough to make them countrymen. That's a big change from pre-agricultural times when members of the same tribe had quite a bit – almost everything – in common. But this has been increasingly diluted in the times of the kingdom and the nation-state. If you're honest, you may find you have very little in common with most of your countrymen besides superficialities and trivialities.

Ponder that point for a minute. What do you have in common with your fellow countrymen? A mode of living, (perhaps) a common language, possibly some shared experiences and myths, and a common ruler. But very little of any real meaning or importance. To start with, they're more likely to be an active danger to you than the citizens of a presumed "enemy" country, say, like Iran. If you earn a good living, certainly if you own a business and have assets, your fellow Americans are the ones who actually present the clear and present danger. The average American (about 50% of them now) pays no income tax. Even if he's not actually a direct or indirect employee of the government, he's a net recipient of its largesse, which is to say your wealth, through Social Security and other welfare programs.

Over the years, I've found I have much more in common with people of my own social or economic station or occupation in France, Argentina, or Hong Kong, than with an American union worker in Detroit or a resident of the LA barrios. I suspect many of you would agree with that observation. What's actually important in relationships is shared values, principles, interests, and philosophy. Geographical proximity, and a common nationality, is meaningless – no more than an accident of birth. I have much more loyalty to a friend in the Congo – although we're different colors, have different cultures, different native languages, and different life experiences – than I do to the Americans who live down the highway in the trailer park. I see the world the same way my Congolese friend does; he's an asset to my life. I'm necessarily at odds with many of "my fellow Americans"; they're an active and growing liability.

Read the rest here.

When we follow the money, we will come to realize that the evolution of political economic dynamics have already been indicative of the impending degeneracy and forthcoming obsolescence of the incumbent nation (welfare-warfare) states.

The foundations of the industrial age political system, which operates on a modern day industrial age (top-down) platform based on modified parasitical relationship via “democracy”, is apparently being gnawed by internal structural incoherence, systemic flaws and its rigidity or failure to adjust or adopt with changes of technology, market trends, environment and time.

The manifestations of which has been today’s self perpetuating financial crisis. Eventually self-fulfilling debt based collapse will likely culminate the end of the nation (welfare-warfare) state.

The deterioration of nation state will be compounded by rapid advances in technology where the information age will continue to usher in dramatic and radical changes in commerce and social lifestyles.

Where the printing press destroyed the “monopoly” of knowledge held by the elite, the advent of the internet connectivity, which has paved way for the emergence of geographically noncontiguous communication (information not limited by space or vicinity of one’s physical reach), has been neutralizing the top-down flow of communications emanating from the current construct of political institutions. That’s why centralized government have frantically been waging war with the web, desperately trying to censor and regulate the flow of information

Horizontally flow of communications has been democratizing information which should lead to the Hayekean knowledge revolution. And consequently, the knowledge revolution will provide the ideological underpinning for the transition towards decentralized societies.

The transformation may not be smooth nor peaceful, as there are multitudes of entrenched interest groups living off or benefiting from the current system. But again, unsustainable systems simply won’t last.

Along with visionary author Alvin Toffler, Professor Gary North, Professor Butler Shaffer and guru Doug Casey, I do share the view that decentralization’s ball has began rolling.

Quote of the Day: Moral Bankruptcy Leads to Economic Decadence

In essence, we're headed towards economic and financial bankruptcy. But that's mostly because society has been largely intellectually and morally bankrupt for some time. I don't believe a society can rise to real prosperity without a sound intellectual and moral foundation – that's why the US was so uniquely prosperous for so long, because it had such a foundation. And it's also why societies like Saudi Arabia will collapse as soon as the exogenous things that support them are pulled away. It's why the USSR collapsed. It's the reason why countries everywhere across time reach a peak (if they ever do), then stagnate and decline.

This isn't a matter of academic contemplation, for the same reason that it doesn't matter much if you're in a first-class cabin when the ship it's in is taking on water…

In any event, it's rare that anyone goes bankrupt because of a single bad decision. It takes many missteps, and consistently bad decisions aren't accidents. Consistently bad decisions are the product of a flawed moral philosophy. Moral philosophy guides you as to what is right or wrong.

That’s from investment guru and philosopher Doug Casey. You can read the rest of the trenchant article here.

Quote of the Day: The Essence of Tax Day

Investment guru and the maverick Doug Casey talks about the ethics of taxation (emphasis mine)

The first thing is to get a grip on who owns the moral high ground. The state, the media, teachers, pundits, corporations – the entire establishment, really – all emphasize the moral correctness of paying taxes. They call someone who doesn't do so a "tax cheat." As usual, they have things upside down.

Let's start with a definition of "theft," something I hold is immoral and destructive. Theft is to take someone's property against his will, i.e., by force or fraud. There isn't a clause in the definition that says, "unless the king or the state takes the property; then it's no longer theft." You have a right to defend yourself from theft, regardless of who the thief is or why he is stealing.

It's much as if a mugger grabs you on the street. You have no moral obligation to give him your money. On the contrary, you have a moral obligation to deny him that money. Does it matter if the thief says he's going to use it to feed himself? No. Does it matter if he says he's going to feed a starving person he knows? No. Does it matter if he's talked to other people in the neighborhood, and 51% of them think he should rob you to feed the starving guy? No. Does it matter if the thief sets himself up as the government? No. Now of course, this gets us into a discussion of the nature of government as an institution, which we've talked about before.

But my point here is that you can't give the tax authorities the moral high ground. That's important because decent people want to do the morally right thing. This is why sociopaths try to convince people that the wrong thing is the right thing.

If an armed mugger or a gang of muggers wanted my wallet on the street, would I give it to them? Yes, most likely, because I can't stop them from taking it, and I don't want them to kill me. But do they have a right to it? No. And every taxpayer should keep that analogy at the top of his mind.

More..

Taxation is force alloyed with fraud – a nasty combination. It's theft, pure and simple. Most people basically admit this when they call taxation a "necessary evil," somehow mentally evading confrontation with the fact that they are giving sanction to evil. But I question whether there can be such a thing as a "necessary evil." Can anything evil really be necessary? Can anything necessary really be evil?

Entirely apart from that, if people really wanted anything the state uses its taxes for, they would, should, and could pay for it in the marketplace. Services the state now provides would be offered by entrepreneurs making a profit. I understand, and am somewhat sympathetic, to the argument that a "night-watchman" state is acceptable; but since the state always has a monopoly of force, it inevitably grows like a cancer, to the extent that the parasite overwhelms and kills the host. That's where we are today.

I think a spade should be called a spade, theft should be recognized for what it is, and evil should be opposed, regardless of the excuses and justifications given for it. Ends do not justify means – and evil means lead to evil ends, as we see in the bloated, corrupt, dangerous governments we have all over the world.

Read the rest here