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?
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.
who feels threatened by ideas and who responds with emotion is acting
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
I'll bring a copy if they ever do put you on trial for
thought-crime - which is frighteningly close to being real these days
and called treason to boot.
It's not just close; it's here. Just try telling an unapproved joke in a
security line in an airport these days.
True enough. Where to begin?
At the beginning. America was founded as a confederation of independent
countries - that's what a state is. Or was, in our language.
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.
We did cover this ground briefly in our conversations on
the Civil War and
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
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
But the question was settled by force, not reason, and the
wrong side won.
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.
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
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.
But crash it did in 1929…
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
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.
bullet-finned 1959 Cadillac is a symbol of this peak, in my mind.
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 gold standard.
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
Which is as it should be, in a publication designed to help investors
navigate these turbulent times.
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 Nazi
How could it get worse than that?
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
I thought you said you're an optimist!
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
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
Okay, I know you believe that. Can you substantiate the police-state
Well, 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.
I'm sure I don't want to hear this, but okay, shoot.
[Chuckles] 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 radical.
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.
Assassination 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.
conceit will get completely out of control after the next real or
imagined major terrorist incident.
This 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 trade.
Exactly. 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.
"Under 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 of terrorism."
This was a precedent set by Guantánamo,
where scores of the accused continue to rot without even a
"The 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.
Note to readers: you can't hear Doug's voice, but I assure you that his
use of the word "like" is sarcastic.
Moving right along:
"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.
Or any advanced Western country. I've read that there are more
surveillance cameras per square mile in London than anywhere else.
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:
"The 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 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.
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 during
Exactly. 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 employs.
Immunity from 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.
Continual 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.
"The 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
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.
That's a pretty depressing list, 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
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?
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 strongly enough.
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?
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 one basket.
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?
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.
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
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
They should be criticized and opposed at every opportunity.
Okay, Doug. Thanks for another challenging but enlightening