International Man: Earlier this year, it became apparent a socialist would win Argentina’s presidential election.
The Argentine peso lost 30% of its value in a single day. The same day, in US dollar terms, the value of the Argentine stock market was cut in half.
Doug, you spend a lot of time in Argentina and the Southern Cone. What’s your take on the situation? Is Argentina headed for another currency collapse?
Doug Casey: Cristina Fernández de Kirchner was elected vice president and Alberto Fernández was elected president in the October 27 election. They basically destroyed the incumbent Mauricio Macri.
It’s a real pity because Macri is a decent human being whose heart was is in the right place politically and economically. But he was too timid. He did too little too late. Typical of “conservatives” everywhere, he didn’t make a moral argument to the populace. He made no effort to pull the corrupt fascist welfare state out by its roots, explaining why it’s destructive and why the state is the cause, not the cure, of the country’s problems. Instead, he just made some marginal improvements around the edges, and made things more comfortable for the Peronists now that they’re back in office.
And—since he’s associated with the free market—he actually discredited the free market.
In any event, Argentina is going back into the toilet. Who knows what kind of new stupidities, in addition to the usual old stupidities, the two Fernándezes are going to impose upon the country?
On the bright side—but only for tourists—Argentina is one of the cheapest countries in the world right now. That’s because the currency has collapsed. Good news for tourists and foreign speculators but a disaster for Argentines, most of whom have all their savings and earn their salaries in the increasingly worthless peso.
If you’re a long-term believer in Argentina or if you want to enjoy a great lifestyle, now’s the time to go shopping there. Real estate is at bargain levels again. There’s really no bid for a lot of properties. In Buenos Aires an apartment costs 5–10% of its equivalent in New York or London.
Things are definitely in crisis in Argentina. But the fact is that just about every other country in the world is heading in the wrong direction—at a faster or slower rate—certainly including the United States, Canada, and countries in western Europe. The socialists, the fascists, and the jingoists are in the ascendant all over the world.
There are many reasons for this. One is that Marxist-oriented professors have been indoctrinating the younger generation in high school and college for decades. The left has totally taken over educational systems everywhere. The average person has been inculcated with perverse and destructive ideas about economics, politics, philosophy, and ethics from roughly age 6 to age 22. It’s hard to get these things out of their heads once they’ve learned them in their youth.
Also, remember that, especially since the end of the 19th century, “democracy”—really just a polite form of mob rule—has been the world’s ruling ideology. It’s resulted in the politicization of all areas of society. When every parliament or legislature in the world meets, they believe it’s not just their right but their duty to pass new laws. And that’s idiotically applauded as a good thing by the hoi polloi. Those laws tell you what you must do and what you must not do and designate penalties if you don’t obey. And all that legislation, which accrues like barnacles on a ship’s hull, has to be paid for with taxes.
Fortunately, science and technology are still advancing at the rate of Moore’s Law. Unfortunately, the world is degenerating politically at about the same rate. Argentina is not an aberration from that point of view. It’s just a generation or so “ahead” of the United States in sliding down the slippery slope.
That said, it’s more important than ever that you have a crib in a second country, no matter where you live—because anything can happen anywhere. If you can afford it and are able to do so, you should have a backup plan someplace else in the world.
International Man: As you said, Argentina isn’t the only country headed down a path toward economic hardship. Governments around the world are printing dollars, pounds, euros, pesos, and what have you by the trillions, and the trend seems to be accelerating. How do you see this playing out in the next few years?
Doug Casey: We’re going into what I’ve styled the Greater Depression. We entered the leading edge of a gigantic financial and economic hurricane in 2007 and went through it in 2008 and 2009, and now we’re in the eye of the storm.
It’s a very big hurricane, and the storm has a very big “eye,” but we’re now approaching the trailing edge. When we go into the storm’s trailing edge, it’s going to be much longer lasting, much different, and much worse than what we experienced in 2008—if anybody remembers how scary that was.
It’s going to be accompanied by social, cultural, and probably military upsets as well. Now’s the time to prepare. It’s going to be one for the record books, and not just in the United States. It’s going to happen all over the world, because all the world’s central banks and governments think the same way. They’re all bankrupt and trying to solve the problems they’ve created by printing up more currency and passing more laws. It’s bad news.
International Man: Americans are growing increasingly sympathetic to socialist ideas and politicians that promise “free stuff.” How does this trend translate into a situation like what’s happening in Argentina?
Doug Casey: The world’s governments—prominently including the US’s—are creating massive new amounts of fiat money as we speak. So far, most of this money has gone into the financial markets, creating gigantic bubbles in stocks, bonds, and real estate. A lot of people are relying on these artificially high values. They’re going to get hurt.
Over the coming decade, governments and their central banks are going to destroy their national currencies. The average guy—if he’s able to save at all—saves in dollars, euros, or yen, etc. He’s going to be wiped out.
The rich will continue to get richer, because they stand next to the fire hose of money being created. The middle and lower classes resent the politically favoured classes getting more. The middle and bottom levels of society could see real social upset, with catastrophic political ramifications.
It’s one of the reasons the odds favor Trump losing in 2020. I say that as someone who bet that he’d win in 2016. If the economy gets ugly, you’re going to get one of these absolutely crazy socialists or welfare statists that we see lined up on the Democratic debate stage. The best case is that somebody like Bloomberg—basically kind of a mellower Trump—steps in for the Democrats.
On the off chance that Trump wins in 2020, then the storm is going to definitely break during his next administration. That guarantees that the crazy Democrats—which is to say the socialists, radical welfarites, and cultural Marxists—are going to win in the next election. The conflict in basic belief systems between the Red and Blue counties is so acrid and radical—it’s the kind atmosphere you see before a civil war.
Who knows what either the Red or Blue people will do? They’re capable of absolutely anything. None of it good. I don’t see a way out.
But let’s go back to Argentina for a minute. As I said, the US is only about a generation behind the Argentines, and the Argentine electorate has been totally corrupted. The place is a blueprint for where the United States is going.
The US’s size, accumulated capital, and the productivity of its people have insulated it from a lot of the stupid things its government and the Fed have done. But if the US destroys its currency—and it’s well on the way to doing so—it will be much worse than when the Argentines destroy their currency.
Argentines have hundreds of billions of dollars stored abroad in foreign banks. When the Argentine peso collapses, that money can be brought into Argentina to pick up the bargains and bring capital into the country to get things going again.
If the US dollar is destroyed, however, it will be completely different.
First, the dollar is the major asset of most banks all around the world. It’s actually the world’s currency. If the dollar goes, it’s going to destroy their balance sheets.
Second, people all over the world who have foreign bank accounts generally save in dollars. They’re going to be devastated.
Third, Americans don’t have a lot of money abroad to bring back into the country to get things going again. In fact, the US government has made it quite hard for the average American to diversify internationally.
Fourth, the major US export for decades hasn’t been wheat or Boeings. It’s been dollars. The foreign trade deficit of $600 billion per year has given Americans an artificially high standard of living for many years. Nice foreigners give us real goods in exchange for fiat dollars. When confidence in the dollar collapses, Americans will feel it.
So, it’s going to be extremely serious when the chickens come home to roost this time. It’s a consequence of what the Federal Reserve is doing to the dollar. They’re inflating it—but they call that “Quantitative Easing.”
The Chinese symbol for the word crisis is a combination of the symbols for danger and opportunity. I’ve been pointing out the danger part, but I also want to point out the opportunity part of the equation.
The good news is that precious metals should go on a really wild run up in price. If you own a lot of gold and silver, you should not only be insulated from many of these financial and economic problems, but you should gain in relative terms.
The cheapest part of the market right now is gold and silver mining stocks. There’s going to be a panic into these stocks; they’re the only part of the stock market that offers real upside.
It’s a good-news/bad-news type of thing. The good news being that if you position yourself now, you should be able to profit from what’s going to happen. The bad news is that in a real depression everybody loses; the winners are merely the ones who lose the least.
The important thing to remember is that most of the real wealth in the world will still exist no matter how bad the Greater Depression is, and your share of it can grow if you allocate capital properly now.
International Man: The 2020 presidential election is just around the corner. Whether Donald Trump gets reelected or a Democratic candidate wins, how do you think it will affect the overall economic situation in the US?
An avalanche of money printing to finance deficit spending seems certain no matter who wins.
Doug Casey: As I said before, if Trump is reelected because the economy holds together until November 2020—which I doubt—it’s definitely going to collapse on his next term in office.
Trump is incorrectly associated with the free market and capitalism. Trump is basically a statist who thinks the government really ought to control the economy—but in the way he thinks best. Once again capitalism—what’s left of it—will be blamed in the next crisis, and in the following election the socialists will grab the economy in a stranglehold and choke it to death.
In a way, it doesn’t matter if the socialists win this time or the next time. The trend is in motion, and a real crisis seems inevitable.
I think the United States is going to be hard to recognize in five years. That’s not even counting the fact that the US government might have a serious war with the Iranians, the Chinese, or the Russians. None of this is necessary, but it’s probable.
International Man: What can people do to protect themselves and prevent the crisis from wiping them out?
Doug Casey: Buy physical gold and silver. Speculate in mining stocks. Be aware that commodities in general— and especially agricultural commodities like corn, soybeans, cattle, hogs, coffee, orange juice—are all very, very cheap.
It’s likely that we’re going to see an explosion in some or all of these things over the next few years. Last but not least, start getting into some—or all—of the second- and third-generation cryptocurrencies. My colleague Marco Wutzer, who knows about ten times more than anyone else in the field, makes an excellent case that some of them have 1,000-to-one potential from current levels.