BALTIMORE – As we told you yesterday, we were just at a meeting in Miami with some of the best “big-picture” thinkers in our business.
One of the provocative ideas came from our old friend and Casey Research founder Doug Casey:
“Private property in the U.S. will disappear in our lifetimes,” Doug announced boldly.
It sounded far-fetched at first. But let’s explore it.
Slaves to the Elites
Marxists aimed to bring all property under government control. Major assets were to be owned by the state, which meant they would be used and controlled by the people who ran the government.
This was such an awkward and unnatural situation that it took bloody revolutions and civil wars to bring it about.
The result was a disaster. Deprived of their assets, citizens became slaves to the ruling elite. They had little choice about what they did, where they lived, or what they had. They were trapped.
The appeal of communism was that it could make people materially better off. Without the costs of advertising, competition, errors, unneeded luxuries, and private caprice… the economy was supposed to be able to produce goods and services more efficiently.
It was like a machine, they thought. Watchful, expert, and civic-minded technocrats could rationalize output, making it work better.
But it didn’t work out.
Without honest price signals to guide them… and no need to satisfy customers with decent products and services… the central planners made one mess after another.
Every deal was win-lose. These benefited the elite and left the average person poorer. And after a few decades, the whole economy became a lose-lose proposition: Real output was so low and of such poor quality that the elite ran out of things to steal.
After 70 years of this in the Soviet Union and 30 years in China, governments decided to abandon the fantasy and restore private property.
These experiments took place with the whole world watching. You wouldn’t think anyone would be dopey enough to repeat them.
But although progress is cumulative in science and technology, in the world of politics and economics, it is cyclical.
One generation learns. The next forgets. The old mistakes are repeated over and over again.
What are the major categories of private property?
Families own houses, cars, a few appliances… jewelry… and some financial assets. Even in China and the Soviet Union, families kept some personal possessions. Financial assets and real estate were taken away.
Could it happen here? Maybe it already is.
We’ve seen how fake money is being used by the elites like a stickup man uses a pistol: to get their hands on other people’s property.
We explained our “claim ticket” analogy to the group in Florida:
“You leave your car at a parking garage. You get a claim ticket. That is a form of money. It is not real wealth, but it represents real wealth – your car.
“Now, imagine that the parking lot prints up extra claim tickets. It increases the ‘money supply.’ It may even have a temporary boost to the economy, as people think they are richer and better able to spend. Now, several people may think they own your car.
“Of course, there’s only one car there. But the people in the financial industry who print the claim tickets can use them to take your car away from you.”
And they can use the same system to take your house… your stocks… and your bonds. This would be a hidden revolution. Private property would largely disappear. It would become the property of the Deep State elite who control the system.
And who would complain? The feds would be paying top price for them.
A Prediction of Our Own
Central banks and sovereign wealth funds are already buying bonds in trillion-dollar quantities.
But did you know they are buying stocks, too?
According to Bloomberg, Japan’s central bank is now a top-10 holder of 90% of stocks in the Nikkei 225 (Japan’s equivalent of the S&P 500).
Under its QE program, the Bank of Japan is buying 6 trillion yen’s ($53 billion) worth of stock market ETFs a year.
And since they are driving in other people’s cars… they can go as far as they want. No need to worry about price. Or return on investment. Or risk management.
Is a stock too expensive? Is a company mismanaged? Is the stock market going up or down? What does it matter when you’re buying with free money?
And here we offer a prediction of our own: Come the next financial crisis, central banks, including the Fed, will buy stocks and bonds on an even larger scale.
No act of Congress needed. No debate in the Senate. Not even a presidential tweet.
They will claim to be “protecting the economy.” They will say they are “saving jobs.” But the effect will be to move wealth from private hands into the slimy mitts of the feds and their cronies.
And what about real estate? Much real estate is already owned by REITs, which could be bought up, too.
[Note: A REIT is similar to a mutual fund, except that it is composed of property instead of stock.]
And the cronies in the finance sector may already have a claim on your house. But most houses are bought with mortgage financing. Banks lend you the same fake money that the Fed uses to buy stocks.
They create deposits out of thin air when they make a loan, using nothing more than keystrokes on a computer.
They never earned the money. But you have to borrow it from the bank… buy the house… and then pay back the bank. And if you don’t pay, the bank takes the house and sells it to someone else.
Years ago, people would celebrate when they paid off their mortgages. At last, they owned the house free and clear. Now they are taught to “manage” their credit… and refinance.
And with mortgage rates so low, why not?
Most homeowners never own their homes. They simply rent them from banks… paying all their lives for the roof over their heads and the flat screen in the rec room.
But wait. They also pay property taxes. In Baltimore, we now pay as much in property taxes as we paid in rent a few years ago.
Even our automobiles are now often leased or financed. We talk about “our” cars and houses. But many are no more ours than a rented bicycle.
They, too, belong to the banks – the finance arm of the Deep State.
Further Reading: In his latest warning, Bill exposes how the cronies behind the Deep State have pushed the world to the brink of an irreversible disaster. Bill reveals how it could all unfold – and, more importantly, how it could change your life forever – right here.
BY Louis James, Editor, International Speculator
Editor’s Note: Louis James, Casey Research’s top resource expert, is an unabashed gold bull, but today he shares his 2017 prediction for the “other yellow metal.”
People like predictions. They ask what my gold price projection for this year is.
But the truth is that all the math in the world won’t make such a price “projection” more than a guess.
I’d rather simply say I think gold and silver are going higher. I expect precious metals to have a better year than 2016. It could be a much better year.
There’s also the “other yellow metal” to consider. The price of uranium must and will at least double in the not too distant future. But I’m concerned that uranium’s great start this year may be premature.
Yes, Kazakhstan, the world’s largest uranium producer, has announced a cutback in production. It may even follow through. But that won’t make the current glut disappear in a day.
Remember, it’s supply and demand. We need to see demand eat up the glut before prices can be counted upon to rise and stay up.
With reactor restarts going slower than hoped for in Japan, and anti-nuclear sentiment there remaining very strong, there are still Japanese stockpiles coming on the market at prices roughly half the typical cost of production.
As long-term contracts that utilities had set at higher prices with miners expire, they can switch to buying cheap secondary supplies, like those from Japan.
Until this supply runs out, buyers won’t be forced to pay prices that make mining uranium profitable. With Kazakhstan’s help, that should come sooner. I hope to see it before the end of this year. Until then, however, uranium prices are vulnerable to correction.
The good news is that uranium needs to at least double for the average uranium mine to be worth operating. Once the glut is gone, miners will be able to demand – and get – new contracts at much higher prices.
It’s either that or the lights go out in large parts of the world.
That’s what makes dramatically higher uranium prices as close to a sure thing as exists in resource investing. Only the timing is in question. This makes me reluctant to recommend uranium stocks that have doubled recently, for now.
All the more so, given that even the best of the producers and projects don’t make much money at current prices. I’d love to see a near-term correction bring these stocks back in range, and if we get one, I’ll be an enthusiastic buyer.
Either way, I expect 2017 to be the year of the two yellow metals.
– Louis James
P.S. A gold mine I think is going to be the richest mine in the world is coming online in just a couple months. This could transform the tiny company building it into one of the biggest and most profitable mining companies ever. Best of all, it’s not too late to buy this stock before it skyrockets. Find the full details of my visit to the mine here.
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Great feedback today on yesterday’s Diary, “A Government for Old People.”
“‘Private property will disappear in my lifetime,’ said one, boldly. This was such an explosive prediction…”
Bill, if you are referring to homes and businesses in the U.S. and in many other countries, there is no private property. It is an illusion. All property is owned by local or the federal government. We all pay rent to those entities in the form of property tax, other taxes, and fees.
If you do not believe that statement, do not pay the property taxes on your home or business holdings. Then stand and observe those bidding on your “private property” at the Sheriff’s Auction.
– Tom S.
When we buy a house, we put ourselves in subordination (a form of slavery) to the mortgage bank until the mortgage is paid off. Our politicians have put us in the same position with the other nations and the banks that they have borrowed all those trillions of bucks from to further their ambitions.
We citizens have let them do it. The blame is ours for allowing it to happen. There is no practical way that debt can ever be repaid, except in the way Germany’s politicians repaid their reparations after World War I: by allowing inflation to happen to the point that repaying the debt becomes only a small part of GDP.
Of course that puts the load on citizens just as much as increasing taxes to repay the debt would. Or even more.
– Charles B.
If it were up to me I would tell the feds to take their Social Security and Medicare programs and stuff them where the sun doesn’t shine. In return, just leave me alone. Don’t tax anymore of my income, private pension, or my self-directed IRA. I will take care of myself. If I run into hard times, so be it.
As a country I think everyone is running scared. And the biggest source of this fear is the government.
– Chris D.
This country needs more legal immigrants that are able to work for good salaries and pay taxes to help support the aging population. They must be willing to assimilate into our population and become good American citizens that support our form of government.
– Joseph M.
I love your essays and the mailbag comments. I especially appreciate your willingness to present opposing ideas, some of which contain rather vicious personal attacks. I enjoy thinking about all of the above as well as your lack of defensiveness.
As to old people, I can honestly state as a soon to be old person that I would rather lose most, if not all, government benefits now than hamper my children and grandchildren with the bill. I’ve learned through dealing with some hard times that I can handle them, whether or not I “deserve” them.
– Brian B.