Editor’s Note: Recently, longtime PBRG friend and legendary gold investor Doug Casey, and his top analyst, Nick Giambruno, were interviewed by The Tom Woods Show. During the interview, Doug and Nick discussed their recent trip to Zimbabwe and some of the shocking things they found. We think you’ll find our conversation below informative and entertaining.
Tom Woods: It’s a pleasure to talk to both of you.
Let’s start by talking about a place most people really aren’t thinking a lot about, but when they do, they think of hyperinflation… And that’s Zimbabwe.
Now, I understand you were recently in Zimbabwe. Have things improved since the currency stabilized?
Doug Casey: Well, I think they have improved a little bit.
I’ve been all over that country in the past. And there are some beautiful suburbs of Harare where the houses would be quite at home in Beverly Hills. But you can buy them for around ten percent of what they would cost in California. And your standard of living could be much higher. Where else can you get a maid for $100 a month?
The economy is on the edge of collapse again, because the government doesn’t even have the money to pay teachers, nurses—or almost anybody, for that matter. Well, that’s not such a big problem. You don’t have to pay those people. You have to pay the army. If you don’t pay the army, you’re asking for trouble anywhere, but especially in an African country.
Tom Woods: Nick, you told me in an email that you met government officials there who are familiar with the work of famed free-market economist Ludwig von Mises. How can that be?
Nick Giambruno: Yes. It was like something out of the Twilight Zone. Actually, that was probably the most shocking aspect of the trip.
The country is an economic basket case that recently experienced hyperinflation. Yet the people responsible for that hyperinflation completely understand the difference between Keynesian economics and free-market economics. They even quote Ludwig von Mises in their memos. It was quite astonishing.
Doug and I actually had the pleasure of meeting “the man who made everybody trillionaires,” Dr. Gideon Gono. He’s the former governor of the central bank. He told us he knew printing money would cause a hyperinflation. He, and everyone, knew perfectly well what they were doing.
It all goes back to what Doug was saying about the army. The Zimbabwe government was having problems with the army during the 2008–09 hyperinflation. So, in order to placate the army, Gono was ordered to print money. So he printed. And that’s what it really boiled down to.
When we met him, we found we agreed on many economic issues. He’s a huge advocate of gold. That was a big surprise.
Tom: Yeah, that’s a total surprise. It turns out that maybe we weren’t just dealing with the most crude form of economic ignorance imaginable, but rather a guy who was in an impossible situation being forced to do this.
So you’re telling me that this guy more or less understands money?
Nick: Well, they’re not implementing free-market policies yet. But they showed a genuine interest in doing so. And I think there’s a decent chance the country adopts gold as its official money.
They’ve been interested in using a gold-backed currency or a gold standard since the 1990s. But we wanted to make it very clear they should not use a gold standard or anything like that. A gold standard, for those who don’t know, is when a government issues paper money and promises to redeem it for gold.
Well, nobody is going to trust Zimbabwe to keep that promise. So we told them to simply use gold as money.
And they seemed to understand that.
Doug: Nick and I had a couple of meals with Gono and I met him one-on-one several times. And then, as I have with many ministers in various countries, I engaged in what has been a hobby of mine for the last 35 years. Which is approaching the guys that run backward Third World countries and giving them a plan to turn their country into a new Singapore, or a new Hong Kong. But to evolve much faster than those countries did.
Part of the plan is to have gold as money. Another part of the plan is to take 100 percent of all government assets of whatever type—parastatals, land, you name it—and initially put it into a big corporation. That way, the shares can be distributed pro rata to all the people in the country.
Then take maybe 5% of the shares public in New York, London, and Tokyo to generate several billion dollars of cash. This would give them a market value, and give the corporation operating capital.
I like to imagine I’ve come pretty close in some of the dozen countries where I pitched this. Perhaps one of these days we’ll get lucky…
Tom: Doug, I have to ask you more about this. Economic historian and economist Robert Higgs came up with the phrase “regime uncertainty” to explain why business firms might have been reluctant to invest in the 1930s. In short, people don’t know what the government is going to do next week. They don’t know what the tax policy is going to be. They don’t know what new agency is going to be formed. So they hold back. They’re conservative.
Well, likewise under Obama, you don’t know if there’s going to be a carbon tax. You don’t know what’s going on. Again, this causes people to be more conservative and not want to invest.
Well, wouldn’t Africa be the ultimate case of this? I mean, it’s cronyism times a thousand. And from day-to-day you wouldn’t know what the government was up to. What would make me want to invest in Africa?
Doug: Very little actually. If I was 30 again and I wanted to become a billionaire, I would go to Africa, no question about it. I wouldn’t go as an investor, however. For just the reasons that you pointed out, Tom. It’s a terrible place to invest. I would go there as a speculator.
Here in the U.S., you’re just one of many millions of people with similar backgrounds, education, and capital. It’s a very competitive market, and you have no special advantages. I don’t like to play on level playing fields. I like to play on fields that are tilted very much in my direction.
You go to Africa and you’ll find that if you have some moxie, and something to bring to the party, within a week or two you can be in the same office as the president. I’ve found myself in that position many times, pitching deals, making connections, and so forth.
It’s idiocy to stay on a sinking ship here in the U.S. when you can go to any country in Africa and immediately become a big fish in a small pond.
Tom: I bet some people are hesitant to do that, because it’s such a foreign environment to them. Like a lot of countries in the world would be. They probably want to know how to get some background before going. Where do they even begin? Would International Man help them?
Nick: Definitely. There’s lots of country-specific information in International Man. Not just in Africa, but around the world.
Also, doing business in another country isn’t as hard as it sounds. Almost everywhere in the world, most people you’re going to want to talk to for business deals speak at least some English.
I had never been to Zimbabwe before this trip. And it was obvious that being a big fish in a small pond offers tremendous opportunities.
We ran into a lot of different entrepreneurs and startups. We were able to meet with top business people and top government officials. And that’s not just Zimbabwe. As Doug says, it’s Africa in general.
Beyond Africa, you want to look for countries that are off the radar in general. That’s where you find some of the most compelling opportunities.
Tom: In all your travels, what do foreigners typically think of the U.S.? Is there an international response to Donald Trump, or the U.S. presidential election in general?
Doug: Well, I’m talking to you right now from Argentina. But this is true everywhere that I’ve been recently. Everybody is fearful of Trump, because bad things are the only things they hear about him on the media, whether it’s CNN, MSNBC, or their local media. Everybody is afraid of Trump, and think he’s going to do all kinds of disastrous things. And of course Trump says all kinds of really stupid things. He’s not a libertarian; he’s an authoritarian.
As you can imagine, Tom, I’m not going to vote for anybody for many reasons. I don’t believe in voting. But I actually hope Trump wins. And I shock people when I tell them he’s not only going to win, but I believe he’s going to win by a landslide.
The reason I hope he wins is that he’s the only one that has a chance of overturning the cart full of rotten apples in Washington. He could really upset the Deep State, at least until he’s co-opted into it. But to answer your question, I think everybody around the world outside of the U.S. is really afraid of him.
It’s the PR that the Deep State puts out against him. Here in Argentina they’re afraid of Trump, but they really don’t like Hillary at all, because they had a disastrous experience with Evita Perón. And then Juan Perón’s second wife, Isabel, who was an Evita look-alike. And then the most recent president we had down here, Cristina Kirchner, who thought she was the reincarnation of Evita, too.
So I think Argentinians have probably had it with populist women presidents for some time. Nobody that I know down here—the ranchers, the farmers, the landowners, and people like that—likes the Peróns. They all despise the Peróns. The Peróns were supporters of Mussolini and Hitler, fascists in every sense.
It’s only the “descamisados” (the shirtless ones) that actually vote for these idiots. Just as it’s going to be in the U.S. The people on welfare, the uneducated, the naive, the stupid, the envious, and of course the crony capitalists… They all want to vote for somebody like Hillary or these three Argentinian women, because you can steal more money that way.
Tom: Okay, Nick, tell me a little bit about International Man.
Nick Giambruno: International Man looks at a number of things. We talk about the big picture trends and big stories you otherwise don’t get in the mainstream media. Lately, we’ve been covering the War on Cash and the Foreign Account Tax Compliance Act (FATCA), which is really killing financial privacy.
The death of privacy in general, and financial privacy in particular, will have far-reaching consequences. It will skew the balance of power even further in favor of the government and against the individual.
I call it “the new feudalism.”
We also discuss the places you can diversify internationally. And this doesn’t always require you to up and move. You can always open a bank account in another country. That prevents you from getting hit with bail-ins, capital controls, or civil asset forfeiture, essentially preventing the government from being able to seize all your money at the drop of a hat.
There’s a lot of things you can do without leaving your home country. I have European ancestry and I was able to use that ancestry to get a second passport. Having multiple citizenships gives you enormous political diversification benefits.
We talk about all that stuff in International Man. But the bottom line is we are helping people divorce themselves from any government. To free themselves from the clutches of any single group of bureaucrats.
Doug: One thing I was going to mention is that I’ve just completed my first novel. The first of a sextet of novels, which reform six unjustly besmirched and highly politically incorrect occupations. And the first of them, Speculator, centers around a gigantic mining fraud and revolution in Africa. Mercenaries, child soldiers, big money—stuff that makes Africa an exciting place.
It will be out at the end of June. I have high hopes that it’s going to be a cult novel. Kind of an off-the-wall Atlas Shrugged, if you will.
Tom: Well, I’m very, very interested. We’ll stay in touch about that.
Doug Casey and Nick Giambruno, it’s been a real pleasure talking to you, as always. And I hope we can do it again soon.
Nick: Thanks, Tom.
Doug: Thanks, Tom.
Reeves’ Note: As Doug and Nick said, Zimbabwe’s economy is a mess. The country is on the brink. It’s a genuine crisis. But it’s also a genuine opportunity, as they found from their recent trip. They put together a video that explains the huge-upside investment opportunities they found and which can be accessed from any ordinary brokerage account. Click here to watch it now.