Recently: Doug Casey on Unemployment

L: Doug, a hot topic of conversation this week is the man who flew his airplane into the IRS building in Austin, Texas. What do you make of it? Is the guy a hero for the downtrodden taxpayer? Or a terrorist? Or just some lone lunatic?

Doug: First, I’d say we have to define what terrorism is. The generally accepted definition being that it’s the use of violence to create fear in a society in order to induce political change. I don’t think that’s the case here. So I’d say this was just an angry man, acting as an individual, attacking those he saw as destroying his life. The fact of the matter is that it was an act of revenge, not terror.

But according to the FBI, terrorism is the unlawful use of force or violence against persons or property, meant to intimidate or coerce a government or the civilian population as a means for achieving political or social goals. It’s to their advantage to see this as an act of domestic terrorism. It makes their jobs seem important and will result in more personnel to fill their gigantic new Homeland Security complex in DC, and more funding to look into Americans’ comings, goings, and thoughts.

L: Heh — so if it’s lawful use of force to intimidate the population, it’s not terrorism.

Doug: Of course; that’s a key word, completely unnecessary to the real definition of the word, and one that opens a real Pandora’s Box. From Big Brother’s point of view, it’s always "do as we say, not as we do." Based on the FBI definition, state terrorism apparently isn’t terrorism, because it’s lawful.

L: Okay, so, given that the explanation the guy left behind goes beyond simply saying "I’ve had enough" to stating that violence is now the only solution, and calling for revolution, I guess that makes him a terrorist, by the FBI’s definition.

Doug: Well, I suppose. His call to violence seemed like an afterthought to me. In reality he’s just calling for the righting of egregious wrongs. However, it’s getting to the point in the U.S. that you have to be careful about even complaining, or you might be put on some kind of "watch list." You actually better be careful about what you say, and how, and to whom. The walls have ears, as the Soviets, among others, used to say.

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The media has downplayed his letter as a "rant" or a "screed" penned by a lunatic, partially to be self-righteous and partially to discourage others from reading it and thinking about it. But it’s actually worth reading and thinking about. It’s not that often you get to read a suicide note written by what appeared to be quite an intelligent guy. His letter is a little disjointed, agitated, and a bit ungrammatical at times — after all, it is a suicide note — but it’s not at all irrational. And I suspect he put his finger on what is probably going on in the minds of a fair percentage of the population.

You know the old saw people once used, but don’t anymore, as it’s become politically incorrect? Three guys are doing the same thing, and one says, "I’m a freedom fighter. You’re a rebel. He’s a terrorist.’" So, bandying these terms around makes conversation difficult. The FBI’s definition is self-serving and, in this case, serves — perhaps not accidentally — to obscure the truth of the matter.

L: It was always darkly humorous to me that in the Reagan years, the same people the lawfully constituted government of Nicaragua called rebel guerillas, the U.S. called freedom fighters — and yet the U.S. helped Saddam Hussein put down rebellion when he was an ally. Not that I cared for the socialist government of Nicaragua. The point is that if "we" like them, their opponents are terrorists, and if "we" don’t like them, their opponents are freedom fighters. It’s so hypocritical.

Doug: It’s perverse enough to be black comedy. I think this needs to be looked at from a personal point of view. Here was a man who was apparently just going about his business. He quite justifiably resented the government taking forty-plus percent of everything he produced. And worse than that, they were making it hard for him even to produce. They made his life miserable. He spent much of his time and money trying to fight within the system and got nowhere. Perhaps that was foolish of him, perhaps he should have just rolled over on his back and wet himself… just done what he was told and paid what he was told to. It’s the New American Way.

On a moral plane, I think it’s important to remember that groups of people can have no rights that the individuals who compose the group don’t have. In other words, if an individual does not have a right to do something himself, then neither can he delegate that right to a politician, policeman, nor some other authority. If it’s not his to give, he can’t give it.

If I don’t have the right to take money by force from my neighbor, I don’t gain that right by teaming up with others. A bunch of people voting for it doesn’t make it any more right. Suppose, for instance, a neighborhood voted to hire a motorcycle gang to defend it and "authorized" that gang to levy taxes by force, including on residents who didn’t want to go along with the plan. Most people would say that’s wrong. But somehow, if the government does exactly the same thing, people see it as okay.

There’s no difference in this instance, morally, between the motorcycle gang and the government. Of course, this calls to question the legitimacy of the state itself, as an institution.

L: Indeed. And I’d like to talk to you about your anarchist tendencies, but that’s a long topic, perhaps for another day.

Doug: Okay, but one other thing I’d like to point out about this incident. It’s a clear sign of the direction in which warfare is going — we talked about this very sort of thing in our conversation on the military. Warfare is becoming what you might call "open source." You no longer have to get an army together, teach them how to spit-shine boots, and attack another army. We’re approaching the end of direct conflict between standing armies. This trend has its roots at least as far back as the American Revolution, during which the British were outraged that the Americans wouldn’t stand and fight. They’d take potshots from behind trees and then run. They even shot officers — officers! — from hidden positions. Most ungentlemanly.

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Today fighters no longer need the aegis of a government. Instead, they organize loosely, for ideological or other reasons, and strive to sting with maximum effect, while presenting the smallest, least useful target for retaliation. They realize that with $100 they can cause a million dollars of damage. Wars are won on economics, in the long run. It is, for instance, quite stupid of the U.S. government to think that it can quash Al Qaida or the Taliban the way the Spanish took over the Aztec and Inca empires — by grabbing the guys at the top. There is no head to strike off.

To head off flaring tempers and angry letters, let me make it very clear I am not defending these groups. I’m very much opposed to them. If either the Taliban or Al Qaida came to power where I live, no doubt I’d be among the first they’d want in front of the firing squad.

But quashing individuals in such loosely organized groups, no matter how important they might be, doesn’t quash the reasons why such groups exist. It’s like whacking a hornet’s nest. Once you whack one, you don’t have just one hornet’s nest to deal with — now you have hundreds of completely unrelated hornets to deal with, all attacking you, because each sees you as his enemy.

L: It occurs to me… the U.S. Army has, or had — I’m not sure if it’s current — a slogan: "An army of one." The idea was that each U.S. soldier’s training would make him or her so capable of individual devastation, each one counted as an entire army.

Doug: I remember that.

L: Well, I wonder if it’s dawned on any of these geniuses in the Pentagon that the same is true — much more true — for their opponents…

Doug: [Laughs]

L: This incident in Austin is an example. This individual man decided to strike out at the U.S. government. Whether you approve or not, you have to admit that he created quite a stir, especially for a simple impromptu action. He made an army of one of himself — and since one individual can keep a secret, that sort of army is all but unstoppable.

Doug: And it’s the way things are evolving all over the world. In previous times, you needed to organize a bunch of people to do serious damage. But with today’s — and especially tomorrow’s — technology, the individual is increasingly empowered. Let’s look at the big picture. This guy, Stack, was just one individual; but at this stage in the deepening crisis, there are a lot of people in similar circumstances. Millions of Americans have lived on maxed-out credit cards for years, and more than six million have lost their jobs since the current bout of crisis started. These people were already on the ragged edge. And the single largest expense in everyone’s life is the government.

At least that’s true for productive people. In my own case, it costs me far more to support the U.S. government — which does absolutely no good for me whatsoever — than all the rest of my living expenses combined.

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L: Hm. Let’s see… My earnings are far more modest than yours, and I pay about three times more in taxes than on housing — and that includes two houses. I hadn’t thought of it, but I can’t imagine that food, utilities, and other bills would even match my housing expenses. So I guess that the direct cash cost of the U.S. government is also much more than all my other living expenses combined. And that’s not even counting the cost of regulation, indirect taxation through inflation of the money supply, etc., etc.

Doug: I think there are millions of people out there like you, in that regard. But unlike you, most of them are also deeply in debt. A large number of them are close to the edge — and many could easily go over it, like this guy in Texas. There’s a rage out there, largely incoherent but real and powerful, and some are starting to strike out against this grasping octopus of a government that’s reaching its slimy tentacles into every aspect of their lives.

It could be that we are reaching a critical mass of such people, the so-called "100th Monkey Effect."

L: It’s a question of how much of an anomaly this guy really is. I know that in the pro-gun community in the U.S., many people feel that the U.S. government lost any shred of moral legitimacy as a result of the Waco massacre. And some have wondered why people who are, by definition, armed and trained in the use of weapons, have not dropped the hammer on the government thugs that come to take their guns (in blatant violation of the Constitution and the human right of self defense).

I suspect that the gilded cage most Americans live in has just been too comfortable for them to toss everything and turn violent. But that may be changing now, with more and more people being pushed over your ragged edge. Clearly, a guy who flies an airplane into a building, as in this Austin case, thinks he has nothing to lose. If a lot of people who think they have nothing to lose are pushed beyond the edge, things could get pretty ugly in the U.S. very quickly.

Doug: Entirely possible. People forget that this type of thing has gone on in many countries, across history. As bad as the Greater Depression promises to be, anything is possible in the U.S. Americans don’t expect anything… weird… only because they’ve been uniquely blessed so far. It’s too early to say whether this act will spark other similar actions, but there’s already another story of a man who decided he’d had enough and wasn’t going to stand by while a bank seized his home. So he bulldozed it, while it was legally still his.

L: I heard about that. Apparently the guy even found a source to pay off what was owed, but the bank refused because the man owed less than half of what the house was worth, so they could get more by foreclosing and selling the house.

Doug: You know, when individuals start taking actions like this, it can change things. An army of one can sting, but what happens when you have 100,000 armies of one? Or a couple million? Just think of what would have happened back before WWII in Germany if each one of the millions of Jews and Gypsies and others the Nazis rounded up had fought back. The death camps were made possible by people who, although they had the capacity to act like wolves, acted like sheep. I’m not saying things will go that way in the U.S. But I do think there’s increasing resentment on the part of the average citizen against those who work for "The Man."

L: It comes back to hope. As long as people have a shred of hope that things might get better, or at least that they themselves might survive, most won’t embrace violence, because that sets you irrevocably on a path that can very easily get you killed.

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Doug: Although it’s true that nobody gets out of here alive, it’s natural to want to delay the eventuality as long as possible. But when you push a person far enough, he doesn’t care anymore — as recent events have shown.

L: That’s pretty scary, Doug. Given how few Americans have savings — or even a work ethic — and given what we’ve been saying in this conversation, a protracted economic crisis seems like a recipe for violence in the U.S. What happens to a people who think that the Good Life is winning a lottery or suing McDonald’s for millions of dollars, when their jobs go away and don’t come back? And if, on top of that, the cost of government goes way up, to pay for all the so-called stimulus programs and social spending the government has on tap… Well, a lot of rage seems inevitable.

Doug: We didn’t talk about this in our conversation on movies, but there was a movie made about 25 years ago, starring George C. Scott, called Rage. In it, the government killed the hero’s herd of animals in some sort of nerve gas experiment gone wrong. The hero decides to take the fight, as an individual, to the army base that did the test.

The interesting question is: at what point do such actions reach a critical mass that renders a society non-viable? Although the average person doesn’t seem to have a clue what really caused this crisis, he deeply resents the bailouts and the worthless corporate "suits" who continue reaping multi-million-dollar bonuses. The system is rapidly losing legitimacy. What little is left of the free market will be blamed for what was caused by government intervention.

That in mind, it’s worth noting that the government’s response to the current crisis has been to do more of the exact same things that caused the crisis. These buffoons are not just doing the wrong thing; they’re doing exactly the opposite of the right thing. Too much debt sent the economy into a tailspin, so the government throws more debt at it. They are printing more and more dollars, which is going to result in widespread capital destruction. And they are hiring swarms of bureaucrats to gum up everyone’s lives — while paying them about 60% more, on average, than people make in the private sector.

L: And it just piles on — like in a Rugby game. Speaking of movies, there was a movie made back in the early ’90s, called Falling Down .

Doug: With Michael Douglas — I saw that.

L: The protagonist is just some unemployed guy who gets pushed over the edge and "goes postal." But what you’re saying is that there’s a pattern here, and that even though the actions are individual, a large wave of them is… predictable? Inevitable? You’re talking about blood in the streets, Doug — is that really where you think things are headed?

Doug: I’m sorry to say it, but I find myself coming to the conclusion that we may well be reaching such a point. I don’t see any way out, not without a lot of pain and turmoil, at this point.

L: That brings us to the concept of unintended consequences. Not least because the Austin case seems related to incidents in the book by John Ross by that name.

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Doug: Governments are constantly passing laws with certain stated objectives; the real objective, however, is to further the interests of the politicians behind them. Sometimes the stated objectives are met, sometimes not, but there are always unintended consequences, and they are usually unwelcome. In the case of the government meddling with the economy, including an increasingly rapacious tax code, the unintended consequences can include a violent backlash, like this one. We’re talking mostly about the U.S. here, but the problem is not limited to the U.S., by any means.

In his book, John Ross explains how one thing can lead to another, and unintended consequences can get totally out of control — even to the point of revolution. Ross couldn’t get the book published — it was considered too much of a political hot potato. So he self-published, and it’s sold something like 75,000 copies in hardback, by word of mouth. That’s an incredibly large number, especially for a novel. And that tells us something about what a lot of people feel.

L: One of the connections between that book — written in the mid-’90s — and the Austin case is that Stack takes a pot-shot at the FAA in his note. Coincidentally, it’s excessive and abusive action by the FAA — an agency most Americans barely even know exists — that’s one of the sparks of revolution in the novel.

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Doug: The book was worth reading before and is all the more worth picking up now. And there’s another book that deals with this theme, by my friend Boston T. Party, a well-known gun-guru. It’s called Molon Labe , after what the Spartans told the Persians at Thermopylae. When the Persians demanded their arms, the Spartans responded: "Come and take them." What’s particularly pertinent in that book is that individuals pushed too far by the government fight back — not to start a revolution, but as individuals responding to individual thugs, who just happen to work for the government.

I hate to say it, and I’m not encouraging it, but the truth is that it’s entirely possible that this could happen, even in the United States.

Another work of fiction that deals with this is, of course, V for Vendetta , which we spoke of in our conversation on movies. Incidentally, at about the time when that movie was supposed to be released in England, there was apparently an act of terrorism, and they decided to delay the release of the film.

L: Another novel along these lines is Vin Suprynowicz’s The Black Arrow . Have you read it?

Doug: No, but I know Vin is a solid libertarian thinker.

L: So, government action may have unintended consequences. But even though they’re unintended, we can’t say the consequences are unimaginable, or even unpredictable, since all of these authors clearly saw the possibilities for the sort of thing that this Austin event might lead to.

Doug: As angry individuals lash out, feeling a kind of inchoate rage, it’s entirely predictable that an increasing number of those targets are going to be in government. Back in the early ’80s, when there was a serious tax revolt brewing, before the Reagan reforms, I was told a first-hand story about a guy who, when confronted by a threatening IRS agent, collared him and took his driver’s license. He looked at the address, then grabbed a tomahawk he happened to have, smashed it into his desk, and said: "Pal, it’s you and me. It’s not me and the government. I expect you to go away, or you’ll have to deal with me in a very personal manner." Of course the agent could have reported the incident, but he figured it would be wiser to just close the case and go on to the next guy. Who needs the risk?

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L: That is very much the theme of books such as we’ve been talking about, especially Unintended Consequences, in which taxation and regulation become very difficult for the government to enforce, because individuals who’ve been pushed too far start fighting back. Once the badge and the uniform stop intimidating everyone into compliance, and especially once uniformed thugs face personal, physical danger, being a thug stops being much fun anymore.

Doug: And very few of the people who wind up taking radical measures will actually be radicals, as they generally were in the ’60s. Most will have no philosophical or theoretical basis for their actions; they won’t think of themselves as revolutionaries. But a lot of these ordinary Joes will act. And if they act in large numbers, it could turn into a major social upheaval. Could we be getting to a tipping point? I don’t know, but there are straws in the wind.

Another book on this subject is a rather hefty new one by Jim Davidson — not James Dale Davidson, but the other James Davidson who deals in similar subject matter — called, Being Sovereign . Unlike the others, it’s non-fiction and runs to more than 600 pages, with a lot of very cogent material related to what we’re talking about. It’s quite eclectic, well researched, and full of interesting gems of data. I wonder if the memes in books like these will start spreading through society more, now that the economy is on the rocks — now that the gilded cage you mentioned is no longer so comfortable.

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L: Could be… such books would have appealed only to anti-government types before, but now, with fear and anger sweeping through the population, who knows if such seeds won’t be much more widely dispersed?

Doug: I don’t know — but it’s as interesting as it is horrifying to watch the slow-motion train wreck of the U.S. and global economies continuing.

L: Okay, Sunshine. Investment implications?

Doug: I would have to say that, generally, they’re not very good. At least not for the kind of stuff your broker at Merrill is told to recommend.

L: [Laughs] I think I’ve heard this song before… But can you be more specific?

Doug: Well, I sure wouldn’t want to own any government bonds…

L: [Laughs]

Doug: [Chuckles] No bonds. And owning the government’s currency is going to be an extremely bad idea when inflation gets really bad — which it will do. If they wind up destroying the dollar, we’re in for really serious trouble — which looks like exactly what’s going to happen. And I don’t think people are going to panic out of greenbacks and into the stock market, not when corporate America is looking so shaky.

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L: Don’t hold your punches, Doug…

Doug: I won’t. I think we’re on the ragged edge, and this Austin thing is a clear warning shot across the bow. It’s absolutely time to start rigging for stormy weather, if you haven’t already.

L: Which leads us to your mantra of diversifying one’s assets, and entire life, out of a single political jurisdiction, especially the U.S.

Doug: For openers. And if you don’t have a significant part of your assets, wherever you are, in real money — that’s to say, gold — you’re putting your neck on the block. Real estate is going to get taxed to death, paper currencies are circling faster and faster down the drain, government debt is a joke. This is a really, really serious set of circumstances that’s building up.

People need to start thinking in terms of a major turning point approaching.

I won’t try to predict all the details, but I will say you better prepare for big changes over the next decade, or you will get run over by events.

L: Got it. Note to self: avoid becoming roadkill. I guess you’ll have more specifics in future editions of The Casey Report?

Doug: Yes. I’m working on an article on China for the next issue.

L: Can you give us a sneak preview? Are you bullish or bearish on China?

Doug: I’ve been a bull on China and the Orient for many years, but times have changed. China could be in even bigger trouble than the U.S. The problems in Greece are going to spread; I’ve been predicting the euro was going to disintegrate for some time. What’s going on is a worldwide phenomenon.

L: Well, that sounds pretty grim. But it is what it is. It may seem pretty extreme to think about, let alone plan for, the U.S. busting apart at the seams, but if this Austin thing — and the guy who bulldozed his house — are the leading edge of a wave of action and not just isolated incidents, it would be stupid, by your definition, not to think and plan.

Doug: It always pays to plan for the worst while you hope for the best.

There are times in history when sweeping social changes seem to come out of nowhere — to most people. But we can clearly see signs of this one coming, and there’s still time for people to get their own houses in order. Get out of debt. Accumulate capital. Protect yourself from currency destruction with gold. Diversify your assets across political jurisdictions. All the things we’ve talked about.

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