Bud Conrad: U.S. Collapse Predicted
Source: JT Long and Karen Roche of
Casey Research Chief Economist Bud Conrad believes the United
States is acting as a late-stage empire, acting aggressively on the
world stage, lowering its moral standards and debasing its
currency. In this exclusive interview with
The Gold Report
at the Casey Research/Sprott Inc.
"When Money Dies"
Summit, he explains the options for how the inevitable collapse
The Gold Report:
At the Casey Research/Sprott Inc. Summit, you gave a presentation
called, "A Crisis of Confidence." After all the government stimulus
from the U.S. and the rest of the world aimed at injecting
liquidity and keeping interest rates low, why didn't any of it
work? Why is the economy still hurting?
First, printing money doesn't create wealth. Putting bits in a
computer doesn't create wealth. When politicians hand out money,
they are the ones who get powerful and the banks get wealthy. The
middle class with savings gets hurt. What creates wealth is people
working and creating things.
Internationally, the Chinese are papering over their slowing
growth rate by providing liquidity, but paper money systems will
collapse. That is the reality. The global financial system is
supremely unstable. When people wake up to the fact that this is a
"king ain't got no clothes" economy, we will see a run to the
It seems like we are saying that the currency is going to
fail because of debt to gross domestic product (
), not because governments can print money. If governments were
disciplined, then would printing money be a problem?
When the U.S., and therefore every other country, went off
the last vestige of the gold standard, we were placed in a
fairyland. That is even more important than the debt. It is linked.
Debt is the result of the ability to print money. If there were
redeemability, the U.S would have stopped issuing debt when it ran
out of money. Without fiat currency, the country wouldn't have
reached the current level of debt.
No government is disciplined. My question is: "Why are people
letting them get away with it? Why aren't people out protesting in
the streets?" Thousands of bankers should be in jail right now.
There is an attitude of resignation in young people today that
dismays me. Maybe they know they can't fight city hall.
If we are all resigned that whatever is going to happen will
happen, how can people protect themselves?
A lot of people probably believe that everything will be
okay. When we have a financial collapse and people stop getting
their payments and they see bankers and government contractors
getting rich, maybe people will take matters into their own hands.
It could be dangerous to be in the streets because people who are
hungry will rob you.
If the bubble has already broken in the U.S. stock and real
estate market and is getting ready to burst in China, are there any
In a paper money/fiat currency collapse, the things to hold
are real assets-gold and oil will look like you are making money.
Gold doesn't change. It is just gold. When the price goes up, the
metal isn't any different. Only the dollar is going down.
There is also a moral component to the question. A lot of people
are getting out of the country. This is where I was born and where
my family lives and I am an American so I probably won't go
anywhere, but a lot of people are considering moving out of the
U.S. to protect themselves and their assets.
What is your biggest fear for your children?
That the government has turned it into a totalitarian state
where the people don't have personal freedoms to assemble, think
and live their lives without surveillance, over-taxation and
subservience to the state. I worry that my children and
grandchildren could be impoverished by conflict, by a society that
dissipates it resources in wars that only destroy wealth, rather
than creating anything.
I also worry about how they will fuel their economic growth.
Fossil fuels created the abundance of our generation like humanity
has never experienced before. We have used half of the dinosaur
remains out there. If we use it all up, then we will have to reduce
the number of people on the planet. Now we need to start thinking
about what is next. I don't know how my grandchildren will live in
an abundant society when energy becomes so expensive and scarce
that we have big wars over it. It's already happening. Energy
explains the conflicts in the Middle East more than religion ever
You have said we are entering Cold War II. Can you explain
Everyone is uncomfortable with the role we played in the
Middle East. They fear we could enter a World War III. But a cold
war is not a conflict between the main parties. We didn't battle
with the Russians directly. We fought in Vietnam. The same is going
on with China in an economic war over resources. The U.S. bombs the
place in hopes that a new government will come in and give us cheap
oil while China is busy winning contracts for the access to
resources in many far-flung regions from oil in Africa to soybeans
in South America. China is building cultural centers and roads to
mines in an attempt to gain the favor of the people while gaining
access to resources. Our approach of bombing people just makes
enemies and is very expensive. It is another example of the
stupidity of a late-stage empire.
You have referred to the fight over access to oil, but I hear
the U.S. is the Saudi Arabia of natural gas. Can that replace oil
in the future?
Like any extractive resources, we have to approach this new
technology with care. Fracking can leave a messed up underground
and contaminate water. But natural gas is abundant and affordable
and it can make a difference.
What about uranium?
The problem is not just the radiation and the bad design of
the early plants revealed by Fukushima. The problem is that it
isn't price competitive. We can build nuclear plants safely, but it
isn't cost effective compared to oil or natural gas. There will
still be a uranium mining business in replacing spent nuclear fuel,
but not in building new plants for a while.
You mentioned we will soon have two retirees collecting
benefits for every one worker. What is the solution for the
imbalance between workers and beneficiaries short of older people
wandering off into the desert so they won't be a liability on their
The government will continue to print money to meet its
obligations to retirees, but the problem is that those dollars
won't buy as much in the future. That is why people are trying to
find protection for their retirement assets. Those relying on
Social Security will find it difficult.
We have heard about a possible economic slowdown or collapse
in China, but it has one of the highest personal savings rates in
the world. Wouldn't that mitigate some of the economic turmoil of a
real estate bubble bursting?
China is strong because it has gone through so many
revolutionary problems during the lifetime of people who can still
remember. The Chinese know how bad it can be so they fight to avoid
returning to economic subsistence levels. What China has done
economically puts Japan's economic miracle to shame. The country
has overbuilt during the last few years, but it has a lot of people
and the one-child policy is being dismantled. It will manage any
bubble bursting well. We, in the U.S., have an arrogance of wealth
and that blinds us to possible problems. That is why we are
unwilling to take the strong necessary steps to right our economic
disasters of too much debt, too much government and little concern
for concentrating on economic development.
You said you are expecting a recession next year and a weaker
economy or "stagflation." Will that be limited to the U.S. or will
it impact the entire world economy?
The U.S. economy will suffer greatly because we are
unprepared for how serious the situation will become, but this is a
worldwide phenomenon. Inflationary central bank printing is going
on in Europe and China so they will be impacted as well. The world
is interconnected so what happens in the U.S. does spill over into
other economies and the other way around. The European weak
countries failing will cause several big European banks to fail, be
nationalized and cause debt crisis for U.S. banks as well.
International contagion is particularly true when the U.S. starts
wars to divert people from thinking about the economy. Wars damage
productivity of personal consumption and therefore the perceived
wealth of individuals.
I think of the U.S. as a late-stage empire. There are lots of
ways to collapse. The Third Reich collapsed cataclysmically. The
British Empire wound down in a gentlemanly fashion. I think the
U.S. is headed to Roman type of collapse where the internal
dissipation was as big a problem as the external conflicts. We have
a culture of corruption with no accountability. In this most recent
crisis, no bankers have been indicted, never mind convicted,
compared to the Savings and Loan crisis, when thousands went to
How are you protecting your wealth?
I have some precious metals and energy. I expect interest
rates to rise.
You are predicting a weaker economy. When are interest rates
going to move?
How about now? I warn you, I have been wrong before. I
predicted the debasement of currency would require higher interest
rates to get people to invest. I didn't give enough credit to the
Federal Reserve's ability to manipulate the market. We are now at
record low rates and the government deficit is at such extremes
that rates can only go up. I don't know how it will all unravel.
But at some point people will wake up to this sham and they won't
want to keep their money in banks. Then they will go buy physical
assets, gold and food and, sometime later, real estate.
After all this bailing out, what will be the trigger point
for a collapse?
We all want to know that. We look at the numbers and I can't
see it going on for the rest of the decade. When it goes, it could
go very rapidly. The markets feed on themselves more now than at
any other point in time. What happened over a period of years in
the Great Depression could take weeks this time around. Currency
collapse could happen quickly. The collapse is already happening in
Europe and more countries may follow Greece.
This is not war; it is merely the collapse of a currency. People
aren't wiped out by the thousands. But their savings are. Currency
disintegration is not unusual. It happens all the time-about once a
generation a collapse happens in every country. The fact that the
U.S. dollar is the second oldest in existence today is an anomaly,
an anomaly that may come to an end soon.
holds a Bachelor of Engineering degree from Yale and an MBA
from Harvard. He has held positions with IBM, CDC, Amdahl and
Tandem. Conrad, a futures investor for 25 years and a full-time
investor for a decade, is also sought after as keynote speaker in
Dubai, New Zealand, Vancouver, New York and many other cities. He
has appeared on TV on CNBC, FOX, and on many radio shows. As
chief economist at Casey Research, he produces original
For the complete audio collection of the Casey Research/Sprott
Inc. Summit "When the Money Dies,"
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