bobbyw24
09-22-2011, 08:18 AM
L: Doug, we talked a couple weeks ago about the US and global economies exiting the eye of the storm, and it seems thus far that you’re right on target. The eurozone is under extreme debt stress, the dollar is no better, and gold is back over $1,800 per ounce again – and has surpassed platinum again as well. People thought we were crazy when we wrote about $2,000 gold, but here we are, within kissing distance of it. Still, it sounds crazy to think this is just the beginning – too apocalyptic to believe. Are you sure there’s no way out?
Doug: Well, never say never. And I’m an eternal optimist. But as I’ve said before, even if friendly space aliens landed on the White House and gave us a magic technology that fed and housed everyone, the economic dislocation would still wreck the world as we know it. I truly can see no way out. Let me be completely clear about why. The West in general, but the US in particular, has been living way above its means for a long time. The proof for that statement is all the debt we’re awash in – federal, state, municipal, and individual. Debt is worse than living out of capital. It amounts to living out of anticipated future revenues – which may not even be there. It amounts to eating the seed corn.
L: Well, even if you could see a way out, the politicians would never do the right thing.
Doug: It’s worse than that, much worse. They can be counted on to do not just the wrong thing, but the opposite of the right thing. Everything the government is doing is making things worse – for instance, Obama’s idiotic $447 billion stimulus plan. It will extract that much productive capital from society and simply flush it down the cosmic toilet. But I’ll go further: Not only do I not see any way out – politically feasible or not – everything I know about economics tells me that it’s impossible for the global economy to get out of this intact. Important body parts are caught in the wringer; we are, therefore, going through the wringer.
L: And yet, the dollar is holding its own against the euro…
Doug: That’s just an illusion created by the race to the bottom; the euro is in even worse shape than the dollar. Italy – surprise, surprise – may not be able to enact the necessary austerity measures required for its bailout. Greece, Italy, Portugal, Spain, Ireland – all these governments are bankrupt. So is France. The euro is in terminal decline. So what does it mean that the USD is running neck and neck with it? It just means both are being debased at similar rates. Just look at the dollar or euro against the Swiss franc, for example.
L: Here’s a chart. I suggest clicking on the five-year option – pretty impressive.
http://www.caseyresearch.com/cwc/doug-casey-debt-doom-and-opportunity
Doug: Well, never say never. And I’m an eternal optimist. But as I’ve said before, even if friendly space aliens landed on the White House and gave us a magic technology that fed and housed everyone, the economic dislocation would still wreck the world as we know it. I truly can see no way out. Let me be completely clear about why. The West in general, but the US in particular, has been living way above its means for a long time. The proof for that statement is all the debt we’re awash in – federal, state, municipal, and individual. Debt is worse than living out of capital. It amounts to living out of anticipated future revenues – which may not even be there. It amounts to eating the seed corn.
L: Well, even if you could see a way out, the politicians would never do the right thing.
Doug: It’s worse than that, much worse. They can be counted on to do not just the wrong thing, but the opposite of the right thing. Everything the government is doing is making things worse – for instance, Obama’s idiotic $447 billion stimulus plan. It will extract that much productive capital from society and simply flush it down the cosmic toilet. But I’ll go further: Not only do I not see any way out – politically feasible or not – everything I know about economics tells me that it’s impossible for the global economy to get out of this intact. Important body parts are caught in the wringer; we are, therefore, going through the wringer.
L: And yet, the dollar is holding its own against the euro…
Doug: That’s just an illusion created by the race to the bottom; the euro is in even worse shape than the dollar. Italy – surprise, surprise – may not be able to enact the necessary austerity measures required for its bailout. Greece, Italy, Portugal, Spain, Ireland – all these governments are bankrupt. So is France. The euro is in terminal decline. So what does it mean that the USD is running neck and neck with it? It just means both are being debased at similar rates. Just look at the dollar or euro against the Swiss franc, for example.
L: Here’s a chart. I suggest clicking on the five-year option – pretty impressive.
http://www.caseyresearch.com/cwc/doug-casey-debt-doom-and-opportunity