Louis: 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?
Doug: 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. A person who feels threatened by ideas and who responds with emotion is acting irrationally. 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 record.
Louis: I'll bring a copy if they ever do put you on trial for thoughtcrime - which is frighteningly close to being real these days and called treason to boot.
Doug: It's not just close; it's here. Just try telling an unapproved joke in a security line in an airport these days.
Louis: True enough. Where to begin?
Doug: At the beginning. America was founded as a confederation of independent countries - that's what a state is. Or was, in our language. The 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.
Doug: 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 then-independent states. 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 ethically. But the question was settled by force, not reason, and the wrong side won.
Louis: Another coup?
Doug: 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. Then came 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 government. 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.
Louis: But crash it did in 1929…
Doug: 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 we discussed recently). 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. The bullet-finned 1959 Cadillac is a symbol of this peak, in my mind.
Louis: 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.
Doug: 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 largely financial.
Louis: Which is as it should be, in a publication designed to help investors navigate these turbulent times.
Doug: 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 Germany.
Louis: How could it get worse than that?
Doug: Because 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 often antithetical.
Louis: I thought you said you're an optimist!
Doug: 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 not. 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 don't.
Louis: Okay, I know you believe that. Can you substantiate the police-state claim?
Doug: 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.
Louis: I'm sure I don't want to hear this, but okay, shoot.
Doug: [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. First:
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. This conceit will get completely out of control after the next real or imagined major terrorist incident.
Louis: 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.
Doug: 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.
Indefinite detention: "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 kangaroo-court trial.
Arbitrary justice: "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.
Louis: Note to readers: you can't hear Doug's voice, but I assure you that his use of the word "like" is sarcastic.
Doug: Just so. Moving right along:
Warrantless searches: "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.
Louis: Or any advanced Western country. I've read that there are more surveillance cameras per square mile in London than anywhere else.
Doug: 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:
Secret evidence: "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 US.
War crimes: "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 international law."
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.
Louis: 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 WWII.
Doug: Exactly. The next point is:
Secret court: "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.
Extraordinary renditions: "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 torture suspects."
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.
Louis: That's a pretty depressing list, Doug.
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 going hyperbolic.
Louis: 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?
Doug: 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.
Louis: 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?
Doug: 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.
Louis: 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?
Doug: 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. But I 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 it pronto.
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 America. They should be criticized and opposed at every opportunity.
Louis: Okay, Doug. Thanks for another challenging but enlightening conversation.
Doug: My pleasure.
Doug Casey -a renowned contrarian investor and speculator, and a highly respected author and public speaker - has never been afraid to speak his mind. His staunch free-market advocacy make his ideas a welcome respite from the ongoing calls for more government interference for many. Agree or disagree with Doug, he will give one something to think about... and on subjects as diverse as the TSA; health and the state of health care in the US; speculative fiction; capitalizing on corruption; war; charity; and many more.
Right now you can get a terrific deal on Doug Casey's ideas and insights: his first book in 15 years, aptly titled Totally Incorrect, is due out in early December. Learn more about Totally Incorrect and pre-order your copy - plus a few for gift-giving - today at a great discount.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.