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good afternoon welcome to capital account i'm lauren lyster here in washington d.c. these are your headlines for monday october twenty second two thousand and twelve the final mitt romney rock obama debate is tonight focused on foreign policy but we will talk to our guest about his foreign policy strategy this strategy of the international man of casey research is here and caterpillar considered an industrial economic bellwether cut its forecast for two thousand and twelve a second time this year it's the world's largest maker of construction and mining equipment warning the global economy has is slowing down faster than it had expected meanwhile japan's exports fell the most since the aftermath of the earthquake last year bloomberg reports so who will be hit hardest by this slowdown and how will it be felt will discuss plus let's rewind.

what you could have heard there was then a i.g. c.e.o. edward liddy saying that a i.g. made her arithmetic mistakes before was bailed out by taxpayers despite those mistakes that cost the entire financial system well now c.e.o. robert van motion seems to think a id's record is so glowing he deserves a thank you for his cronies at the fed in the treasury we'll talk about why let's get to today's capital accounts. well as a couple of data points in my headlines evidence economic outlook are gloomy and

with an upcoming us election that doesn't offer much of a choice between mr pepsi and mr coke you may feel the political outlook is gloomy too and maybe you even feel like a political prisoner. if you. catch one of. the. one of the markets. so for those who feel like a political prisoner in your own country are those americans becoming a political refugees leaving the country for more freedom and opportunity economic and otherwise elsewhere last year just to give you some numbers a record number of people did renounce their u.s. citizenship or permanent residence close to one thousand nine hundred the most since the i.r.s. began publishing its list in one thousand nine hundred eight that's according to reuters and joining me now to talk about all of this is doug casey chairman of casey research and so when they were so lucky and happy and grateful to have in studio thank you for being here felix crucial science oh bat's really an honor and

you're definitely being too kind but i'm just let's start with that tony montana song sound bite that we played in the intro so do you think that was of course the crude cuban refugee character from scarface do you think americans have more in common with him now than they did thirty years ago. is that there's a lot less freedom in this country than there was thirty years ago and there was a lot less freedom in this country thirty years ago and it was sixty years ago every day here we are in washington d.c. every day these government agencies are passing new laws new regulations. so you have all these people just telling you what you must do what you must not do so of course americans want to swear to becoming a police state and i hate to say that because. the united states well let me correct myself the united states used to be america america it was a fantastic idea it was a unique idea unique in the world that's why everybody wanted to come to america

but now it's no longer america because america is the idea that idea has been. vanished from the geographical area known as the united states which is increasingly just one of two hundred other nation states that are covering the face of the globe skin disease so i'm very unhappy with the evolution of the u.s. what was the tipping point in your view where america was no longer america where you feel that freedom has been eroded more and more that's a very good question because you can make the argument that the united states or the idea of america which is what i prefer has been going downhill since just after its founding because you may recall that in seven hundred ninety two not long after the country was in going downhill a long time well as the day had arrived. yes because in seventeen ninety two they passed the alien and sedition acts which were

horrible and. it basically made thought crimes but then they eliminated of those but. i'd say the peak of us civilization was reached in the late sixty's. it was the time of the beach boys in california girls muscle cars and. the u.s. was on top of the world seventy five percent of the world economy was in the u.s. about point. it started going downhill actively in one thousand nine hundred seventy one when nixon devalue the dollar took away whatever relationship would have to to gold and. the standard of living of the average guy has been going down since then now two things have been keeping the standard of living higher three things that should be number one. is the average guy understands that he has to produce more than it consumes and save the difference in order to be able to survive so that'll continue that's just human beings although that is savings part

can't happen and yet really save anymore well the problem is that people are saving in terms of dollars and the dollar is a figure out currency it's a floating abstraction it's being created by the trilliums by ben bernanke in the central bank so this is this is a social and political and economic earthquake that's building when inflation in the next few years reaches twenty or thirty percent per year it's going to wipe out the savings of the middle class that's number one second thing is tell you do you see major inflation coming you're on the inflation side of the inflation deflation debate well let's put it this way the one thing you can be certain of is we're going to have financial chaos now whether that's going to be an inflationary depression more like what germany had in the twenty's or a deflationary depression similar to what we had here in the thirty's it's a horse race but i come down on the side of inflation because they're creating trillions of dollars in a vain attempt to prop up dinosaurs like these banks and money anyway

technology unfortunately is continuing to compound and that increases the standard of living but a big thing that most people don't think about is that the major export of the united states now and has been since one thousand something in the seventy's is dollars we ship dollars abroad and those most japanese sundress sullenly isn't toyotas and nice germans sunday it is numerous serious. there are seven trillion us dollars out side of the united states in the hands of foreigners but they're hot potatoes and to some point they're going to come back into the us in exchange for the titles to real estate and corporations and this is very very serious so we were like wiley coyote that's walked over the edge of the cliff but we don't know it yet do you have a timeline so you say what wiley coyote has walked off the edge of the cliff give a timeline for how fall he how fast he falls or what makes that acceleration

really happen well as most friedman correctly say there's a lot of room in a country. i live in argentina a good part of the year. the united states is following the path of argentina which used to be one of the two or three wealthiest countries in the world at the beginning of the last century and now just stumbles from one disaster to another so we're going the direction of argentina we're doing exactly what the argentines have done what you see is the similarity the spending the debt accumulation and this yes that more regulations all the time political favors being passed to the people that are friends of the government. lots of welfare benefits thrown as a sop to the middle class which basically is pushing them into the lower class with more taxes of various types and so forth. we're definitely on the same road that argentina was on so then why do you feel like you'd rather be an orange argentina

why do you choose to be in argentina if you're not making it sound great right now . in point one reason is i like the wide open spaces and i like the down at the heels elegance which the argentines have but another thing is that. the government there is so incompetent that if you're a tourist first of all if you're a tourist you're a welcome guest and they leave you alone and not subject to the regulations of their nonsense and so forth. and the cost of living is extremely low there which means that my dollar goes several times further than it does here in the us not that that bothers me but everybody likes a bargain. and there's actually more freedom in argentina despite the fact their governments completely insane than there is here if you're a foreigner because they don't they consider me to be a belonging to the us government and therefore as

a foreigner they kind of leave you alone ok interesting so do you advice because obviously you don't think that the us is on the up and up when it when other people ask you know how can i protect myself from the us economic situation and now look what do you tell them to do do you suggest that other people leave the country and what if they don't want to look what i do for a living where we're publishers but what i do for a living person lives on a speculator a speculator incidentally is somebody that takes advantage of political because distortions of the marketplace if we lived in a free market society i would be unemployed as a speculator but the government here in the us to so many stupid things are constantly creating distortions and misallocations of capital that i can take advantage of so. that's a preamble to what i was going to say to answer your question the markets are very dangerous today almost everything sounds metaphysically impossible but there are no bargains everything is overpriced in the financial world and why is that because so

much liquidity is going to stop because of these ridiculous currency creations which they call quantitative easing was and everybody parrots back because that's what they call it and what do you call it it's currency of the basement they're doing about it that maybe more people that we see upset about us there destroying those dollars that you are saving right before your very eyes. so the markets are very dangerous but i'll tell you what's even more dangerous market risk is bad political risk is worse. so you must of or you must diversify yourself internationally you must diversify yourself politically because that's the biggest danger that confronts you your personal freedom as well as your financial welfare in the future so you've got to get diversified you've got to move money outside of the u.s. while it is still legal while it is still possible and it's already inconvenient ok why how do you suggest people do that what do you suggest people do you know this

is only a few years ago i would have told people open up a bank account in canada the canadian banks are generally sounder than the american banks that's a different jurisdiction now if you go to canada as an american your persona non-grata in fact if an american tries to open up a bank account or a brokerage account almost anyplace else in the world it will be turned away they don't want american business because of american law is that because of the reach of the i.r.s. we have seen going to fire for any institutions to report more about us and comply and you know from experience not because we i read a lot of stories that i haven't tried to open up a swiss bank account you know all of this from experience right yes look it's very hard for an american to get money out of the country today because you can't open a foreign bank account or a brokerage account it's very hard much you have a lot of money and you're well connected that's just a fact so the gates already mostly closed it's still possible to buy real estate in a foreign country it's still possible to open a bank safe deposit box in

a foreign country and put gold coins and that's not reportable before close that off too i promise you then when the next real or imagined crisis occurs and it could take any of a number of forms. the average american is going to go to the government who they think are supposed to control everything they're going to say do something do something and they will do something. that will make a totally impossible. well to be patriotic by diversifying your assets and at that point you're a lobster and apart well ok well i want to talk more about what happens in that pot boils over and also what exactly people because i think it gets thrown around a lot this idea of offshore tax havens especially and the political debates i want to kind of clarify the reasons for that when we get back in just a moment a lot so much more with doug casey chairman for casey research and still ahead one wall street c.e.o.

is not too bashful about his company's quote unquote stellar record we'll tell you why a.i.g. top exact says his firm didn't get a free lunch in fact they deserve the thank you themselves but first your closing market numbers. cultures that show emotion going to huge music history and on the mark when germany and in the road ahead a little over a year ago turkey was being heralded as the new leader in model for the muslim world along with the turks the. it's a. little

. a little. welcome back we're talking to doug case the economist and chairman for casey research today and i don't want to waste another minute on any kind of an introduction i want to get straight back to our interview doug so before the break you were talking about getting money diversifying getting money into different countries keeping in different places one thing that comes up many times in kind of

the mainstream discussion about politics is this idea of offshore tax havens and that they're kind of synonymous with tax evasion so can you kind of clarify for any naysayers or people that are confused why people would want their money overseas or their property overseas or somewhere else well in the first place we have to recognize that the united states in some ways is the world's biggest tax haven if you're a foreigner a lot of foreigners put their money in the united states because it's still a relatively stable political jurisdiction and if you're french for instance you're much better off having your money in the u.s. than you are keeping it in france so it's it works both ways no matter what country you're room you want to have. a portion of your assets out of the control of your local politicians who treat you as a moco may treat you as a beef co if they think it's to their advantage. that's about confiscation of

assets or about. it's about currency controls capital controls which we're going to see in this country it's going to become much harder to get your money out of the country in the future but you're always able to bring your money back into the country so give yourself. that extra advantage so that you have options either keep your money or bring it back if you've got all your money here i don't think you're going to be able to get it out in the future so it's just prudent on the part of the average person to do this but even you are financially sophisticated and even you haven't yet because i'm not rich if i can make you get money actually is a benefit i don't know a lot of money back and that is going to get action but you don't have to be rich it's a matter of attitude and psychology so the longest journey starts with the single step you know well i you know you're inspiring me to start that single step let's look globally though because when you're talking about political risk i'm sure

there's also economic risk how do you know where you want to be or what countries are are going to be winners or losers looking at the globe just to show today we have you know bad export numbers from japan this has people concerned about the third largest economy you can see down ten point three percent industry bellwether caterpillar cut their forecast for the second time this year we have a look at what they cut their numbers today think that the global economy is slowing so who do you think are going to be the winners and losers looking at the globe well look lauren what we're going to have something that i call the greater depression i call it the greater depression because it's going to be much worse much different than what we had in the one nine hundred thirty s. and forty's and unfortunately the whole world is on the edge of the precipice it's not just the u.s. that's been creating trillions of currency units the e.u. has been doing that japan's been doing this for a couple of decades china has been doing this right now all these currency units

are sitting in banks people are afraid to borrow and the banks don't really want to lend but at some point with interest rates at all time lows. people are going to start moving that money out and placement is going to explode it's going to be a hurricane of inflation so they're really. finding a good place to put your money is a real problem today we're in a financial twilight zone or let me put it this way we went through the leading edge of the hurricane in two thousand and seven two thousand and eight part of two thousand and nine they printed up trillions more dollars and whatnot which make people feel wealthier than they really are. but we're going to come off the other end of the hurricane the trailing edge and it's going to last a long time because everything these governments are doing is not only the wrong thing it's exactly the opposite of the right thing so this is going to be very serious just quickly to follow what does something like japan though show how long

government can keep that going because japan's been running these enormous deficits for decades that's right well as i said before there's a lot of room in the country but. it's it's going to be a very serious thing it's not just going to be financial consequences we're talking about it's going to be social consequences when the average guy loses house campaign his mortgage can put one hundred fifty dollars in his pickup truck to drive two hours to from were every can afford to live to where this job is if he still has a job he's going to get i'm happy and that's going to have political consequences. which is very problematical as we're seeing with this current election we're having here in the year well let's talk about that because some people growing up in the u.s. conventional wisdom your vote matters your vote counts. do you challenge that notion

and also do you challenge the notion that there is even like a difference in choice between the candidates we see. fighting in these debates you know we have to we know there's no essential difference between these two it's a difference of so difference of style and a difference of party affiliation affiliation do you prefer the demo publican or the. craft party are just two sides of the same false scorning they're they're both interested in war for the welfare and at this point the situation's almost irredeemable you'll notice that they don't talk about serious things about the economy they talk about trivia like whether whether. public broadcasting big bird or what is that that's that's one hundred million dollars or something a frightening rate we're talking about the government with a sixteen trillion dollar but that's just acknowledged national debt we're not talking about. obligations that are payable in the future and aren't counted on

that the real that is someplace in between seventy trillion and two hundred trillion dollars it's totally impossible to pay back the impossible can't be done so it's going to be defaulted on directly or more likely indirectly through inflation which is what you think that they that they've got to just try and print in print and print and exactly what's going to happen to all those people that are saving dollars the dollars are going to dry up and blow away as the currencies of so many countries have done even over the last couple of decades now you said that these candidates are just interested in warfare and welfare i'm curious what you were interested in when you did this that we can play this great clip of you well our audience will see what you did in a in a speech you gave. bill what are you supposed to smoke a cigarette i mean in the appropriate times they tell me for smoking the cigarette . after lunch well this is before lunch after sex that's not or

before you are executed this country is so politically big correct it's disgusting this is. a great clip just quickly before we go whoa what were you wanting to accomplish by lighting up at the podium now with that cigarette was an american spirit yeah. it's funny that they have to name a cigarette which are almost outlawed american spirit which is what i would love to play amazing. look. those laws and regulations on everything in this country my view of what the government should do and most is have a police force to protect you from force and fraud within the country and an army to protect you from active invaders from without side and a court system to allow you to adjudicate disputes without resorting to force but

the government does absolutely everything but those things so very have it your version of the american spirit you let up a cigarette to really hammer that home in my lap next lifetime as snake plus can i hope there you go thank you so much for being on the show decades a real pleasure having you on and start. all right let's wrap up with a quick loose change because dimitri this is just so outrageous a.i.g. c.e.o. robert benmosche really knows how to push people's buttons in fact short while ago he suggested that countries in the euro zone up there were tire of an age to say the economy. people at sixty to sixty five years old it's not retirement age

anymore we're living longer which means retirement ages have moved to seventy to eighty years old. ok well that's the least inflammatory thing he has said recently because in a recent new york magazine article a key seemed a bit hurt that he hasn't been thanked by the u.s. government after it was bailed out to the tune of one hundred eighty two billion dollars he said the fact is we've now succeeded in getting the fed all of their money and we're just close to getting that treasury paid back and you know neither of them have ever said thank you dimitri how about a big huge opposite of thank you for not exhibiting what capitalism is supposed to be i mean i'm sorry you get away with like totally you know being a winner even though you're a loser and you want to thank you because you get to cut the line in front of everybody else and succeed there's a when we interviewed them when we had that question about the bear stearns deal where you participate with the fed they said it mainly in one member mainly to it through sort of. and the whole thing is all the money that these guys are making

the financial sector is either through direct mail or implicit backstop that allowed them to take risks and carry on really realize losses and and then whenever they have a loss the small loss or whatever so it's a huge loss and then they need another bailout again also with only understand how they pay this money because they blew up he had written all this insurance and then they didn't have any of the capital to make it and so i don't even understand how this gets paid it's interesting because the fed has been selling off the instruments that were on a i g's books and one of the reasons why it's been reported in the wall street journal that there's a demand for this stuff is because it yields more relative to other instruments in this incredibly low yield environment which is again so then you have to the fed to think for the fact that you want. to also i don't know what it is back to the fed with poor value or i don't know i don't even know how they bought them when you look at it you can't even get answers and when the graphs he was doing he was look

trying to figure out if you could get straight answers and we still can't yet and we're looking for him now so that's all continue to do but in. meantime that's all we have time for thank you so much for watching be sure to come back tomorrow in the mean time you know you can follow me on twitter you can like us on our facebook page watch us on you tube or in h.d. on hulu and have a great night. i wish it was that so much to know there's a huge music history the person on the mark when germany and its motorhead a little over a year ago turkey was being heralded as the new leader in model for the muslim world along with the turks the. morning used to.