For those who haven't read Peter Schiff's CrashProof
, or Wiedemer, Wiedemer and Spitzer's Aftershock
, or Adam Ferguson's When Money Dies
, please read this article:
If you want hardcore reading to understand how we got ourselves into the mess, the best book I've found which I am presently reading is Webster Tarpley's Surviving the Cataclysm: Your Guide Through the Greatest Financial Crisis in Human History
I don't agree with his financial suggestions, but he does document the financial decline and how it happened.
Right. That Doug Casey article was published on Goldseek.com yesterday.
I was sufficiently impressed with Doug's views that after skimming the article online at work, I printed it out so I could devote the necessary time to reading it thoroughly at home.
Like you, after digesting his comments completely, I was left with a mixed reaction, but I am still, none-the-less in broad agreement with his position.
Without going into a point by point critique, here are some of my reactions, the ones that immediately come to mind:
1) His satisfaction over government employees losing their jobs is a bit misplaced as I do not agree that there are any "productive" jobs waiting for them in the private sector. And I'm not in favor of any particular individuals losing their livelihoods.
2) Like many analysts, he is a bit too preoccupied with the "inflation/deflation" debate. But he does hit upon an important point which is usually ignored which is; the value of a country's fiat currency is very much a byproduct of that country's economy's ability to create wealth. Look at it this way; if a country were a Fortune 500 company, then the value of its currency would be roughly analogous to the stock value. A company's stock value rises or falls based primarily upon that company's ability to create "value' or wealth. This is why, were Greece to leave the Euro and return to the Drachma, the value of the Drachma would be essentially zero for the simple reason that the Greek economy is dysfunctional and no longer capable of generating wealth. The Euro still has value because it is viewed internationally primarily as a surrogate for the old German Deutsch Mark.
Now, what does this all mean for us? Well, it's very simple, the economy of the U.S. has been steadily losing value now for ten straight years. This is because we have shipped too many jobs overseas and along with those jobs, our tax base. Additionally, the "innovations" we have created in finance, insurance and real estate have not in fact created any new wealth. Quite the contrary, they have actually DESTROYED wealth. This is what the gold price has been trying so hard to tell everyone for the past ten years.
Okay, so what's the long term trend? Is this situation on a glide path to reverse itself? Well, no. Doug Casey is correct about this. But then he recommends that people put their savings into cash. Now this makes no sense at all. If the value of the U.S. dollar is threatened by the combination of too much debt and too unproductive an economy, then it follows that dollar risk is real and is something that savers must manage. He doesn't directly say how one might do this (although publishing this interview on Goldseek.com is a slight hint
). He does go on to say that U.S. Treasuries pose risk. Obviously there is huge risk in anything that promises to pay in future dollars, such as the U.S equity market, etc.
That's about all that comes to mind right now.
Concur on the "cash" issue. What good is cash if the Federal Reserve keeps printing more and devalue the existing stock? Tangibles like precious metals or land is better. Land is very long term and you have to hold it until the recovery to make your money. Precious metals have the advantage of greater liquidity (you can buy land and other tangibles at depressed prices).
Here's a link to an interview with Casey: Link
He sounds like Ron Paul. 80% slash in military budget and closing of bases worldwide.
I do like his suggestion of arming merchant ships so that they may defend themselves.