08/19/09 - Doug Casey on Protecting Your Assets
Doug Casey on Protecting Your Assets
(Interviewed by Louis James, International Speculator)
L: Doug, we’re getting a lot of questions from readers on how to follow your advice to diversify assets, politically. I know it’s a prickly subject, but what can you tell us about getting our money out from behind the new iron curtain that seems to be descending?
Doug: First – and I can’t stress this enough – you’ve got to accept the grim reality of impending currency controls. The modern era of foreign exchange controls really started with the perversely Orwellian-named Bank Secrecy Act of 1970. For the first time, that made it obligatory for U.S. citizens to report any foreign bank or brokerage accounts they had to the government.
But the threat is older than that, of course, going back to 1933, when Roosevelt confiscated Americans’ gold. Interestingly enough, only gold bullion held by Americans within the United States was confiscated. If you had gold outside the United States, you were insulated.L: I didn’t know that – if history repeats itself, that could be a key tactical factor for our readers to consider.
Doug: Yes. There are no guarantees, of course. Those in government today think they can do absolutely anything they deem necessary and expedient. But at least if it’s out of their physical bailiwick, it improves your odds.
L: Why do you think they allowed that exemption last time? I doubt it was because they had any shred of respect for private property – maybe they just recognized that trying to seize gold overseas would be impractical.
Doug: Good question. Well, the 1930s were a different era. Communication, for one thing, was vastly slower and more expensive than it is now. And you have to remember that though we had an income tax in the 1930s, since 1913 actually, very few people were paying it – even among those allegedly legally obligated to pay it. It was hard for the government to find out who they were, and how much they were earning, and so on. Even though there were only 140 million people in the country then, the absence of computers, and much less centralization, made it very hard for Washington to keep tabs on them.
L: The income tax really was a voluntary tax back then!
Doug: [Laughs] Much more so than now – it really was a different era. At any rate, based on this history, and that the juggernaut is building momentum towards the bottom of the ditch, I have to reiterate my advice on the most important investment decision you can make. And it isn’t one among the different classes of investment; it’s political and geographical diversification. Simply put, that’s because no matter where you live, your government is the greatest threat to your wealth today.
If you’re a high-income earner, the state basically takes 50% of what you earn, and then from what’s left, you have to pay your real estate taxes, sales taxes, and many, many other kinds of taxes. Government is without question the biggest danger to your financial health. You’ve got to diversify your assets so they are not all under any one government’s control.
L: You say that in almost every speech you give these days, and you said it in one of our interviews a couple weeks ago.
Doug: Yes, and it bears repeating, constantly. It’s the elephant in the room that very, very few people pay any attention to, and it’s going to stomp most people to death, for just that reason.
L: Okay, so give us a primer. For those who want to avoid getting crushed by the elephant, where do they begin?
Doug: To start with, it makes all the sense in the world to have a foreign bank account. Not a hidden one – I’m not advising anyone to break any laws. You report it on your annual tax filings. So, the government will know about it, but if it’s a foreign bank account, they can’t just step in and lock down your assets in an instant.
