By Doug Casey, Casey Research
In an interview with Louis James, the inimitable Doug Casey throws cold water on those celebrating the economic recovery.
[Skype rings: It's Doug Casey, calling from Cafayate, Argentina. He sounds tired, but pleased with himself.]
Doug: Lobo, get out your mower; it's time to cut down some green shoots again, and debunk a bit of the so-called recovery.
Ah. I have to say, Doug, the so-called recovery is looking more than
"so-called" to a lot of smart folks. Even our own Terry Coxon says the
recovery is real, albeit weak.
probably looking at it by the numbers, some of which are reported to be
improving. But let's come back to the numbers later and start with
fundamentals. The first order of business, as usual, is a definition: a
depression is a period of time in which the average standard of living
declines significantly. I believe that's what we're seeing now, whatever
the numbers produced by the politicians may seem to tell us.
I was just shopping for food and noticed that the bargain bread was on
sale at two for $5. My gas costs almost as much per gallon. That's got
to hurt a lot of people, especially on the lower income rungs. I don't
need to ask; a member of my family just got a job that pays $12 per hour-about three times what I made working for the university food service
back when I was in college-and it's not enough to cover his rent and
basic bills. If his wife gets similar work, they'll make ends meet, but
woe unto them if anyone in their family crashes a car or requires
serious medical treatment.
Doug: That's just what
I mean. Actually, the trend towards both partners in a marriage having
to work really started in the early '70s-after Nixon cut all links
between the dollar and gold in August of 1971. Before then, in the "Leave It to Beaver"
era, the average family got by quite well with only the husband
working. If he got sick or lost his job, the wife was a financial backup
system. Now, if something happens to either one, the family is screwed.
think, from a very long-term perspective, historians will one day see
the '60s as the peak of American prosperity-certainly relative to the
rest of the world… but perhaps even in absolute terms, even taking
continued advances in technology into account. Maybe the '59 Cadillac
was the bell ringing at the top of that civilizational market.
friend Frank Trotter, president of EverBank, was just telling me that
the net worth of the median US citizen is only $6,000. That's the
median, meaning that half of the people have less than that. Most people
don't even have enough stashed away to buy the cheapest new car without
going into debt. It used to be that people bought cars out of savings,
with cash. Now they have to finance them over at least five years… or
lease them-which means they never ever have even that trivial asset,
but a liability in the form of a lease.
The bulk of the 49 percent
below this guy don't even have that-with the concentration of wealth
among the top one percent, most of those below average have seriously
negative net worth, at least compared to their earning capacity. In
other words, the US, Europe, and other so-called First-World countries
are in a wealth-liquidation cycle that will be as profound as it will be
By that I mean that people are on average consuming
more than they produce. That can only be done by living out of capital-consuming savings-or accumulating debt. For a time, this may drive
corporate earnings up, and give this dead-man-walking economy the
appearance of returning health, but it's essentially, necessarily, and
absolutely unsustainable. This is an illusion of recovery we're seeing-the result of our Wrong-Way Corrigan politicians continuing to
encourage people to do the exact opposite of what they should do.
Read the rest, here.