CW 375: Crisis Investing with Doug Casey NY Times Bestselling Author & Chairman of Casey Research

Welcome to Creating wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven't thought of before. And a new slant on investing. Fresh new approaches to America's best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self made multimillionaire who not only talks the talk, but walks the walk. He's been a successful investor for 20 years and currently owns properties in 11 states and South 17 cities. This program will help you follow in Jason's footsteps on the road to financial freedom. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Hey, it's my pleasure to welcome Doug Casey back to the show. Of course, you've heard his name and he's been on before. He's the founder and chairman of Casey Research and author of several books including Right on the Doug Casey on economics, investing and the ways of the real world. Doug, welcome. How are you?

Good. Jason, I'm talking to you from Buenos Aires, Argentina, as you know. And everything's fine and dandy, as they say.

The Paris of South America, I love it down there. It's a beautiful city. It's a beautiful city and you're doing a lot in Argentina. I know you've got, I guess, a resort project there and a whole bunch of other investments, right?

Yeah, I'm pretty heavily invested in Argentina, which unfortunately has a bad reputation because of the government, which is perennially goofy, more goofy even than most governments and they're all goofy. But it's a delightful place to be. The culture is marvelous. The cost of living is extraordinarily low. The standard of living is extremely high. I love being in Argentina. And when I'm not in Buenos Aires, I'm at a resort that we put together in the northwest of the country in the town of Cafe Jate that may be the best resort in the world at any price. I think I'm not inaccurate in saying that. We have an 18 hole bobcup golf course, polo fields, we have a gym that's as good as anything in California, a spa, lots and lots of amenities. We've got a five star boutique hotel. And all right outside of this delightful little town with a central plaza that's surrounded with sidewalk cafes in the middle of grape growing and wine country. It's just fantastic. So I'm happy to be here in Argentina and spend much more time in Argentina and Uruguay than I do in the US anymore.

Well, fantastic. You know, Doug, you reminded me of something funny. I've had Kathleen Pedagord on the show a few times and I'm sure you probably know who that is. And back when she was with Agora's International Living, she described the government on Argentina. She said the government in Argentina is so corrupt it's almost part of the charm. So when you said it was goofy, I thought that was funny.

Yes, that's right. I mean, but.

It'S been that way since Peron. But the US is going the same way?

Oh, most definitely, most definitely. You know, I describe the US as the corruption is more legal corruption in the way of like lobbyists and the corporatocracy and the crony capitalism. This stuff is not blatantly illegal sometimes, but it's still corrupt in my eyes in many ways.

Well, obviously. No, you're quite correct. Like here it's said, it's widely said that Cristina Kirchner Fernandez has stolen billions of dollars that are mostly in the form of payoffs and hundred dollar bills and steamer trunks. Whereas in the US which is a higher trust society, Bill Clinton got his $50 million.

And maybe much more after he was out of office in the form of corporate directorships and speaking fees and book contracts and sweetheart deals. I mean, so Bill could wind up as a billionaire too. It's just a different way of taking the payoff.

Right, but he hasn't done nearly as well as Vladimir Putin with probably 80 billion or more or those Ukrainian people. That's just unbelievable the way they were stealing the money of the, the country's money. It's just unbelievable what goes on.

If you want to make money today, you really should get into politics. An alternative, of course, is to become a professional speculator. And I define a speculator as someone who capitalizes on distortions in the marketplace caused by government intervention of various parts. It's really a pity.

Of course, I don't believe that government as an institution serves a useful purpose. It's a dead hand on society.

I'll agree with you there. All they do is take, take, take, and they just slow everything down and make it less effective. But there's some balance between Somalia and the overreaching government of the United States nowadays. Somewhere in there, I think.

Well, actually.

I've been to 175 countries. Unfortunately Somalia is not one of them. But what I hear is that the situation in Somalia is actually much, much better than is reported in the press. They've got their cell phone system, works perfectly. Things are actually pretty good on the ground in Somalia. But it gets a. An extremely bad rap because.

Look who's.

Running the media because of that incident where the Americans invaded them back in 1991. But you know, when you send. I should think that if the Somalis invaded the U.S. they would have had the same fate as the Americans did when they invaded Somalia.

Yep. Yeah. Very interesting. Very interesting. Well, Doug, I love so much of your work and it's really fascinating. And there's a recent article on your blog written by Alex Daly that talks about bitcoin's. Well, in fact, the title is Bitcoin's Uncomfortable similarity to some Shady episodes in Financial history. And just to give you and the audience where I'm coming from on this, I would love to see an alternative currency succeed and flourish and not be controlled by the central banking cartel or the governments of the world that are all in cahoots with that cartel. But.

I'm not too positive about bitcoin or any cryptocurrency's future because they say the US Dollar isn't backed by anything. Well, at least it's backed by battleships and aircraft carriers. But some of these other things, they really aren't backed by anything. What are your thoughts?

Well, I've watched bitcoin since it was about three or four dollars, and I regret that I didn't back up the truck in those days because obviously it had a wild run in a couple of years from a few dollars to $1,200. Now it's back to 600 or something like that as we speak, I guess. Look, I like the idea of free market currencies. I mean, what is money? It's a medium of exchange and a store of value. The problem with Bitcoin is that you can't use those bitcoins for anything. They're like trading sardines as opposed to being eating sardines.

I'm inclined towards a commodity currency, something that has value and utility in itself. And throughout history, gold has proven of all the 92 naturally occurring elements to be particularly well suited for use as money. So I'm on the side of bitcoin. I like the idea, but I guess I'll wait for version 2.0 before I get involved.

Yeah, yeah. And there's always a Kanye coin. There's Conway west is out with his own cryptocurrency, so I'm sure we'll want to jump on that one.

Oh, yes. I mean, we could all have our own digital currencies, but when you want to get rid of it, the question Is to whom?

Yeah, is there any liquidity in that marketplace? Well, you know, I had the founder and CEO of Overstock.com, patrick Byrne, on the show yesterday, and of course, he was the first major E tailor to accept Bitcoin. And.

He very much is like you and I, against fiat money and these cartels and these systems. But, you know, again, I hope something in that world works. But the fear I have, Doug, is that the powers that be are so powerful, they can just crush it. I mean, look, China made it illegal. People say to me about bitcoin, they say, hey, Jason, you know, there's nothing the government can do about it. It's not controlled by the government. I said, are you kidding me? Cocaine is not controlled by the government, but it's certainly illegal to use that as a currency. They can just make it illegal. I mean, periodically.

Well, no, you're quite correct. And all these governments around the world, but especially the US Government, are totally out of control at this point. The sociopaths that populate these governments are capable of trying to do almost anything. And with the huge computing power available to the nsa, for instance, I mean, they can get into all kinds of trouble with Bitcoin, so. Yeah, I know, you're right.

Well, we'll see how that goes. But what's interesting about this article is you talk about Ponzi schemes, Bernie Madoff, the Hunt Brothers, demand outstripping supply, and you've got a stock chart of Tesla. And I know that you didn't write this article yourself, this was written by one of your people, but I was just kind of curious, maybe for selfish reasons. Only because I test drove a Tesla recently, and I was wondering what you thought of that company.

How'd you like the Tesla when you drove it? Instantly.

It's certainly lightning fast. I mean, that's the way electric cars are. I have long been a detractor of Tesla. I thought the Fisker was the most beautiful work of art car on earth. Better than the Aston Martin, which I think is. Is the most beautiful. But, you know, I don't think anything that's subsidized by government really works in the. If it doesn't work in the free market, I'm not a believer. But I don't know, maybe I need to shut my mouth because Tesla's making a lot of headlines.

Well, they are, and they're selling a few cars, but the valuation of the. Of the stock is simply off the wall. It's absurd. I mean, it's a science project. I hope it's a successful science project, but you don't assign a multibillion dollar market capitalization to a startup business. So if you have any Tesla stock, I would tend to hit the bid. I tend to be a value.

I like to buy things at the bottom, not after they've run up so much.

Yeah, couldn't agree with you more on that. It's a speculative bubble on the stock side. I just wonder if the company is going to make it and if the car is going to be a proven concept and maybe we really will have electric cars. I mean, any thoughts on that?

I'm a huge believer in technology in general and in principle. And batteries are advancing and their storage capacity constantly. Things are becoming more and more efficient. So, sure, I think that the electric car does have a future.

And maybe Tesla will turn out to be the next Ford Motor Corporation or the next Daimler Benz. But I don't want to buy it now at this market cap. I mean, I'll buy anything if the price is right and I'll sell anything if the price is too high. So that's the way I treat it. I mean, it's nothing personal against Tesla.

Sure, yeah. Makes a lot of sense. Makes a lot of sense. Doug, you were really probably the pioneer. I mean, I don't know of anybody else back in decades ago who was talking about the international man concept. And my understanding of that concept is, you know, that you want to diversify your interest and your access globally around the world. So, you know, maybe have a second passport, have companies in one country, the banking for those companies in a separate country. And really this is a phenomenal way possibly of protecting oneself against geopolitical risk and economic risk. Tell us about that a little bit.

Well, the biggest risk, and I really hope your listeners take this seriously, the biggest risk to your life and your money today, it's not economic or financial. And those are huge risks in today's world, bigger than they've been for decades. Your biggest risks in the world are political risks, what your government is going to do to you. Because governments view their subjects as milk cows and as they're all going bankrupt all around the world, almost all governments are bankrupt at this point. They're going to become more and more voracious. They may feel the need to treat you as a beef cow. So it's important that you diversify so that you're not entirely under the control of your home government. You've got to get assets abroad. You start with a foreign bank account, a foreign brokerage account. Better yet, get Foreign real estate.

And if you're an American, this is not going to be very easy for you. Any advice, Doug, on how you. I mean, you know, maybe the first step to make it easy is see if you can get dual citizenship in another country and then you can open a bank account more easily with that other passport, with that other citizenship. Because I mean, I mean, you have a US Passport and no bank in the planet wants to do business with.

You unless they're in the U.S. you're quite correct. It's very hard for an American to find a financial institution that will take as money. So that's a type of de facto foreign exchange control where you're trapped like a lobster in the US it can be done and you should get the show on the road towards doing that. And to help you, you should have a second or even a third citizenship and passport. No question. Because.

If you look at your passport, it says property of the US Government and they can take it away from you at will for any kind of a real or imagined error or omission on your part.

Very scary for any government to have that much control over somebody. And so for the individual to be sovereign, that's not easy. I mean, I've read some of your writings on the second passport concept. What are your favorite jurisdictions now? Where is it easy to do that? It seems like everything is. You've got to invest hundreds of thousands of dollars in a country. Gosh, that's pretty onerous. It's not an easy deal.

Well, there's several ways you can pursue it. The easiest and quickest way is to trace your ancestry. If you're of European background and descent, in particular Ireland, the uk, Poland, Lithuania is a possibility. Hungary is a possibility. A number of European countries, if you have relatives going back at least as far as your grandparents, will grant you citizenship automatically. That's just the way their laws are written. So that's the number one thing to look at. A second possibility that's quick and easy but not cheap is to buy citizenship. And half a dozen countries in the world will essentially sell you government ID. The cheapest is probably Dominica at about $125,000 and it goes up from there.

And Doug, is that so that's the Dominican Republic, right?

No, no, no, Dominica, not the Dominican Republic.

Okay, what is Dominica?

Dominica is one of the Antilles, one of that string of islands on the eastern side of the Caribbean. They have a passport program. St. Kitts, another of these ex British colonies in Ireland, has a program. Grenada is starting One Antica. And Barbuda is a fourth country down there that's starting one in Europe. Malta has a program much more expensive. Cyprus has a program much more expensive to buy citizenship.

I mean, is that just a straight 125?

The last way is to move abroad and live in a country for several years. In some cases as little as two years. Usually it's five years and you become a citizen by naturalization.

Right, right, right. When you're paying $125,000 to buy economic citizenship, do you just pay it to the government and that's it? You know, here's your 125. Here's my passport. Or is it invest it, open a bank account there? I mean, I would feel much more comfortable with that than just paying it like a ticket price to the government. I just hate that. That's a lot of money.

Well, yes, that's, that's true, but it's how much is your potential freedom worth? And there are variations on the theme. In the case of both Dominica and St. Kitts, the two most popular programs, you don't have to give the government the money. You can buy a condominium in an approved development. Maybe we're talking $400,000. Then at least at that point you have a piece of property that you can go to. So there are a number of ways of playing the, the game.

Sure, sure. Yeah, yeah. Good. Any, Any advice on the two year. I mean, two years isn't that long if it's a good place to live. Where can you do that?

Well, the quickest ones that I can think of right now are Uruguay and Paraguay. Those aren't so bad here in South America where I am. But all these countries are tightening these things up. And since. Who's that idiot that said never let a good crisis go to waste?

That was Rahm Emanuel, Obama's former chief of staff.

Yeah, exactly. And this disaster with the Malaysian airliner in the Orient recently where they discovered two people had stolen passports, this is going to be used as an excuse to tighten things up even more. So the window's closing to take action and diversify. And no.

You'Ve got to act immediately on this because I think if we have this conversation in a year or certainly two years, things are going to be much tighter than they are now.

Yeah, and I bet you're right. They always find some excuse and it's always under the guise of public safety. And that's what they'll do to destroy the cryptocurrencies. They'll say they're funding terrorism or people are getting burned and various exchanges and so forth. So that's how they'll get rid of those. And then the same thing with the passports, just like you mentioned. And then the Myra my Ira Obama mentioned in his last State of the Union, this will be the road toward nationalization of our retirement accounts, just like they did in Argentina. I mean, it's just unbelievable that these governments can get away with this stuff.

But they did this in Poland, Hungary. No, you've got to. Look, it's very important for people to diversify internationally and diversify politically. And they should start working on it tomorrow morning if they haven't already done so.

Yeah, I agree. That's a good point. Doug, what is your outlook for the economy? Are you thinking inflation, deflation?

I don't want to sound too gloomy, but I have to at the same time call things the way I see them. And, and since the Crisis started in 2007, all these governments all around the world, not just the American government, but the European Union, the Chinese, the Japanese and all these minor countries, have been printing up trillions and trillions of currency units. And the upshot is going to be at some point, maybe starting this year, inflation, retail price inflation, is going to explode. At the same time, there's so much debt in the world that you could see huge defaults. And when a billion dollar bond issue is defaulted on, that's a billion dollars that is wiped out, dies and goes to money heaven. So you've got the forces of inflation, money creation by governments and deflation, destruction of real estate and stock market values and collapses in the bond market, where, incidentally, we have the biggest bubble in world history right now. Bigger than the bubble that we had in tech stocks in 2001, bigger than the real estate bubble was in 2006. The bond bubble is the biggest of all. So will it be inflation or deflation? It's hard to call in the long run since these governments can print up unlimited amounts of currency and they will. It's going to be inflation. So don't hold too much of your net wealth in US Dollars.

Do you have a favorite currency?

No, because all of them in the world are fiat currencies. Some of them are better managed than others, but they're all just pieces of paper.

It's ultimately a race to the bottom for all of them. Yes, it's just paper.

Even the best managed currencies that have the lowest amount of inflation, their central banks all own lots of US Government paper. So something bad goes Wrong with the dollar, it's going to affect all these currencies. So at this point, it's a question of finding the best productive real assets to put your wealth in. Now here in Argentina, I've got a dairy herd, I've got a beef herd. And every year the mama cows have baby cows. And it's a nice form of compound interest. So I like things like that. And of course I like to look at the bright side of these governments destroying their currencies. And the bright side kind of is that it's going to create more bubbles in the market. And I think that we will have a bubble in mining stocks again, which are right now really in the dumpster. They're in real terms at about the lowest level in history. That's when you want to buy them. So you've got to. In this environment, you're going to have to be calm, whether you like it or not, a speculator just to maintain what you have.

And that's exactly what this crappy monetary policy does. It forces people to speculate because there are so few things where you can get any real yield. And I mean, my investment of choice is cash flowing real estate. And you're into that too. I know. And you know, it's funny, Doug, one of the things that really struck me the last time I had you on the show is you were talking and I thought you were a wild man for this one about. You had said that you purchased a bunch of apartment complexes in Egypt. And I thought, wow, that's exotic. Whoa.

How'S that going? Do you still have.

With that? My partners and I put up. We didn't buy the apartments. We were in a. Well, we were going to buy the apartments in Cairo because I don't know how many of your listeners have been to Cairo, but it's a horrible, gigantic city.

Oh yeah, it's terrible. And the smog is unbelievable.

Wow, awful place. That's the bad news. But the good news is that in the downtown area, right on the river in the old city, they have these beautiful old Belle Epoc buildings, very rundown. And we were going to buy those.

They're rent controlled and so forth. But the situation deteriorated so quickly. Maybe we'll come back and take a look at it again in a year or two. So it cost us a little bit of money, not too much. We didn't buy the buildings, but that's the type of thing that I look for.

Right, right. So you're very much a contrarian investor and a value investor, right?

Well, you had to be a contrarian to go to Cairo a couple of years ago.

Yeah, I would agree that's.

It doesn't always work out. I mean, you know, there are some things that I almost did that I didn't do that would have worked out spectacularly. Well. I was in Rhodesia, which is now Zimbabwe during the war. And there was this fantastic castle built by Italian prisoners of war during World War II right on the border with Mozambique. Was a very, very hot war zone at that. So this huge castle being run as a bed and breakfast, I could have bought that with all the linen and silverware, 50 acres of coffee, a nine hole golf course was $85,000 in 1979. That's like free and it hands to somebody else for 13 million. Now if I bought it then I would have had to have stayed there to manage it. Otherwise it would have been a ruin within 24 hours. But things like that come and go throughout the world. So that's why it's good to look in places other than just your local neighborhood for value.

I couldn't agree more. I mean, we've all got to think from a global perspective. There's no question about it. Well, Doug, give out your website and tell people where they can find out more about you. And if you have any particular books or anything you want to mention, I mean, you've got such a big body of work.

Well, I'm working on right now actually on a series of six novels to reform six unjustly besmirched and politically incorrect occupations. So the first one is going to be out I hope within six months. Certainly. But the other two recent books I have that people might enjoy are one called Right on the Money, which is investment oriented and the other one is Totally Incorrect which debunks all the politically correct nonsense that we have certainly in the US So they're both available from Amazon and also our website where we have a lot of free products, free newsletters and free reports. Just go on there and Download them. Is CaseyResearch.com fantastic.

Well, Doug Casey, thank you so much for joining us today.

Well, my pleasure, Jason. And we'll do this again, I hope. Sometimes.

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