General Question

rOs's avatar

Economist Doug Casey Interview - What do you think?

Asked by rOs (3492 points ) September 30th, 2011

Doug Casey Answers The Hard Questions About Hard Times

This interview happened just two days ago – Is this the sort of conversation we should be having? I’d like to hear from everyone, but it would be great to get another Economist’s opinion.

Specifically, discuss the pros and cons of Casey’s specific solution.

I simply don’t know what to think now. Government or private control? Regulate or de-regulate? Prioritize or monetize? Let’s make sense of this!

Observing members: 0 Composing members: 0

14 Answers

Blackberry's avatar

I can’t watch it now, so I have to wait until I get home.

wundayatta's avatar

What you are hearing is a lot of philosophy without any supporting evidence. Not that he could put evidence in an interview. But it’s all opinion, and you need to be careful about that, especially since he’s giving stock tips.

His notions about the impact of regulation and the the idea that money is ever anything more than an idea show a clear lack of understanding. If he has money, it’s because he’s been lucky.

A gold standard will not restore our trust in money. Neither will removing regulations. The reason why we don’t trust money is because we have little confidence in business. They are proven liars and confidence artists. That’s why we don’t trust money. The value of stuff in this country and the world was pumped up in our minds way beyond what was actually there, and business folks were the ones lying so people would believe their stuff was worth way more than it was.

Going to a gold standard helps nothing. Gold will fluctuate the same as currency does. Although since there is a fixed amount of gold, what we will actually see is horrendous deflation. Gold will become more and more valuable. People will buy it and hold onto it instead of doing anything productive, since they need do nothing and the price of gold will go up and up and up. It is meaningless to have a gold standard. It is counterproductive.

Similarly, removing regulations will be counterproductive. The only force that is able to keep business in check is regulations. No one else can even try to keep them honest. Competition sure didn’t. Every bank went the same way because they could steal more money that way. The government is at a huge disadvantage, but it’s still better to have them trying to watch the foxes than to let the doors open and let the foxes run around wherever they want. Without government watchdogs, confidence will fall further and the economy will only get worse.

Casey likes these things because they open the door for him to make more money. He’s probably pumping and dumping. Just look at him. He looks way too smug to be trusted as far as you can push him. He knows he’s getting over on people and that they are colluding with him to let him get over on them.

There is one thing he is right about and that is military spending. Needs to be cut dramatically. Military spending is the most wasteful way to use our surplus value that there is. Military spending has the lowest multiplier effect of any kind of investment. Military spending can, at best, lead to nothing, and at worst it leads to active destruction.

This is not a man you can trust. His ideas don’t make sense. He is blinded by ideology. He has some kind of overachiever complex. I guess he’s kind of megalomaniacal. No hubris. Be very careful about his advice. Already he may be wrong. Gold is going down even as the world’s economy is getting worse.

mazingerz88's avatar

I get a sense of pragmatism everytime someone says better default now, stop printing money and suffer the pain now rather than prolong the inevitable, which is pain for future Americans with trillions of debt. But it seems no one has a crystal ball to see if it all collapses now, the US will be able to get back on its feet and what would that look like?

I wish the US leadership could figure that out for us. A way to find long term solutions and sacrifice now rather than prolong the inevitable. Doesn’t that make more sense? Assuming of course that that is the right thing to do, meaning there will still be a US after this great purge.

Btw, I find what he said interesting, blaming those countries lending money to the US. It sounded like those countries are encouraging Uncle Sam’s addiction for debt.

And was he right about when he said generations of black Americans have spent their lives on welfare and if taken away, they would be more productive? Do we actually have the numbers on how much money goes to black Americans from welfare compared with their productivity levels and are they sucking in money like the military establishment for example? Or this is all just speculation? Hope someone could enlighten me.

Blackberry's avatar

I’ve been looking for a thread from another website. This woman made this thread about how Obama doesn’t “get” the American people because he tries to find more long term solutions instead of pleasing everyone with short term solutions.

Then she explains how in general, people don’t care about fixing the problem, they just want another bubble, regardless how it is made or what happens after it.

I was pretty sickened that some people were agreeing with her. I mean it makes sense, but how long can you keep that up? These up and down waves are just a way for investors to make money, right? Buy low, sell high.

CWOTUS's avatar

Wow, @wundayatta. I had my doubts before, but now I know that you don’t understand economics – or money. Money is nothing but “an idea” – ever. If you consider business people to be primarily thieves (which leaves me wondering where you buy your groceries), then that still shouldn’t make any difference in the trust you place in money. You said The reason why we don’t trust money is because we have little confidence in business.

Do you want to recant that statement? It’s just… silly. It’s nonsense. Even if every business person you’ve ever known and all of the ones you don’t know are trying to steal from you, that shouldn’t affect anyone’s trust of “the value of money”. Business, no matter what cabal or conspiracy theory you want to support, does not set the value of money.

No, what makes me devalue money is when it is devalued by my own government. ‘Regulations’ have little to do with that, except as they contribute to the decline in value.

I will admit that Casey is selling his advice, and it seems to have been pretty good advice overall, because I expect that he’s richer from following it himself than I will ever be. He’s also more of a speculator / gambler than I am, and his time frame for “utter collapse” may be off. But it’s not wrong. The collapse is coming, especially as more and more people sign on to the ridiculous notion that there are elements of our economy that are “too big to fail”. That would be funny if it weren’t the obvious policy of the government.

rOs's avatar

Assuming we did end government regulations on business – where does accountability come from? If already successful corporations were to gain this extra advantage, wouldn’t that make it harder for new/small businesses to compete fairly in the market?

rOs's avatar

Former US Representative and Director of the Office of Management and Budget under Reagan, David Stockman, says Blame the Federal Reserve

wundayatta's avatar

@CWOTUS It’s the mortgage loan industry and the insurance industry and the financial industry that caused the most recent loss of confidence. The loss of confidence in money is short hand for saying the amount of money does not reflect the value of goods and services in the country… or world, since we’re all connected.

The purpose of money is to place a value on things so that we can exchange goods and services without having to resort to barter. For this to work, people have to trust that the value of money is accurate. That is, that there is precisely the right amount of money for all the goods and services there are in the world.

When the supply of goods and services rises, there has to be more money in the system. The right amount. We don’t want there to be either too much money or too little. Too much money and we get inflation as there are too few goods for all the money that is around. Too little money, and we get deflation, as the money is now worth more than it was.

The fed carefully tries to print just enough money to keep up with the supply of goods and services so that these things are equal. Anyway, as long as the money supply is perceived to equal the supply of goods and services (this is all psychological—there is no there there, even if you use the gold standard), we are good. But if it gets out of balance we can be screwed.

There are a number of ways it can get out of balance. One, as we all know, too much money could be printed. Then we get inflation. Then people are afraid to save money. They need to spend now before it becomes worth less. No savings, no capital, no ability to respond to the surge in demand. People lose confidence. They can’t buy anything. We get recession and depression.

Too little money can be printed, and then we get deflation. With deflation, people stop spending. They want to wait until they can buy more with their money. No spending, excess business capacity, layoffs, confidence goes and we get recession and depression.

Another way things get out of balance is if the value of goods and services is pumped up higher than it really is. In other words, shysters make it seem like, say, the housing supply is worth a lot more than it is, thus encouraging people to buy more home than they can really afford. It’s a Ponzi scheme of sorts. As long as more and more people buy into the idea that things are worth more than they are, we can grow. But the second a chink appears in the edifice, we crash.

So when it became clear that these confidence men has been selling these derivative products that were worthless, the economy crashed. The public stopped trusting the fancy financing moves of big business, hunkered down and refused to buy anything until the dust settles. Nobody buys anything, no demand, factory shutdowns, layoffs and recession and depression.

In all these cases, it is the lack of trust that screws us over. This is because we still have all these factories and all these skilled people. We could produce all kinds of stuff if there was any demand for it. Increased demand won’t cause inflation for years because we have all these factories that can start producing in an instant. There won’t be too much money chasing too few goods.

But no one believes this is possible. Everyone is in bunker mentality. No one wants to be the first to show confidence. We all wait until everyone else is confident.

Thus, to encourage people to open up the mothballed capacity, we try to goose the economy. We can put more money in the system, but right wing types who don’t understand the economy, such as Casey, don’t like this. They say we are selling our children’s future. They scare people, thus keeping confidence low.

The are similarly hard on other stimulus moves. They have this blind faith that if you lower taxes on the rich and on business, they will open up factories. They fail to understand that demand drives everything. Supply side economics are a fantasy. Why would anyone build a factory if there was no demand? It’s simple logic. Everyone should be able to see it. Business folks don’t want to piss away money for now reason. Like everyone else, they are waiting for demand to show up.

It isn’t all business that people mistrust, but it is important businesses, like the finance sector and the energy sector. There is corruption in too many places and that makes it very difficult to rebuild confidence.

There are other ways that people lose confidence, too, such as the one that is bothering you. You believe the government is causing the problems and until the government gets the hell out of the way, we’ll be in trouble. It doesn’t matter whether you are wrong or right. You have lost confidence and are just another brick in the wall between us and a good economy. I am, too, as are most of us, all for our own reasons.

I think you could say I am guilty of taking a lot of shortcuts when talking about economics, but I don’t think it’s fair to say I don’t understand it. I’m tempted to say you don’t understand it, but I think it’s deeper than that. Economies are so complex and we each take little bits of what we understand and try to extrapolate, often in places where it isn’t appropriate. I’ve taken economics in graduate school and read about it and heard many analyses over the years. I’ve even worked as a health care economist. In other words, I was paid money for my thinking.

You’ve worked in business for decades, and you have learned much there, I presume. We see it differently. I’m sure we think each other is wrong, but there’s no need to disrespect the thinking of the other, even if we do think each other is a fool. And I know we don’t do that.

rOs's avatar

I can attest to that- Criminal Financial and Energy policies. The Energy article is recent, and it’s very upsetting.

Linda_Owl's avatar

One of the few things that he said that I agree with, is to cut the military budget, end the wars, bring home the troops, do away with the Federal Reserve & Homeland Security. I would also add that the Supreme Court decision to extend “People” status to big corporations should be rescinded immediately. Giving big corporations “People” status has enabled them to literally BUY our elections, it has put them above the law because they have the money to bribe (Lobby money) Congress. Corporations only seek to increase their bottom line, they feel no obligations to the ordinary American & they cheerfully ignore the damage they do to our environment.

bkcunningham's avatar

@wundayatta, did you watch the same video that I watched? The closest he comes to stock tips is a discussion about junior mining/resource stocks and how you must educate yourself on the markets, geology, interviewing the guys who run the companies…He didn’t advocate going back to the gold standard either. Did I miss something?

LostInParadise's avatar

This a pure libertarian philosophy. Basically, dump the government and put us back on the gold standard. It is completely wacko. What brought us out of the Depression was getting us off the gold standard and massively spending money. The problem right now is very simple. Incomes are skewed way toward the rich. There is massive unemployment and industry is not going to hire if people cannot afford to buy more goods. John Maynard Keynes had it right. The poor spend a much larger proportion of their income. Take money from the rich and give it to the poor. Things cannot continue as they are. Something has to give. At some point the poor and middle classes, including those conservatives who have been voting against their own interests, are going to get real ticked off and demand that the most wealthy pay their fair share.

I have posted this in a question that I asked. Scroll down to the line graphs of per capita GDP and median income. There is the story of what is wrong. GDP is rising steadily. Median income is not going up. It did when Clinton turned the economy around, as you can plainly see in the years from 1992 to 2000. Bush I, Bush II and the Tea Party have succeeded in driving median income back to where it was 20 years ago. Like I said, this cannot continue.

wundayatta's avatar

@bkcunningham Yes. You missed something. He said gold was the place to be. I believe he said it would continue to go up. I forget the stocktips, but he recommended some things he thought people should invest in.

bkcunningham's avatar

He, like many others, say gold is the place to invest. I wish I would have invested in gold years ago when the price was down. On the video, he doesn’t say America should go back to the gold standard, @wundayatta. That is what I thought you meant.

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther