Doug Casey on How the Homeless Crisis Could Soon Become an Epidemic

International Man: There is a growing homeless crisis in liberal West Coast cities, including San Francisco, Portland, Seattle, and many others. People living on the street are overrunning these cities.

Residents must deal with human feces, syringes, disease, and filth every day. In some areas, it’s worse than the dirtiest slums of Brazil, Kenya, and India.

How did this happen?

Doug Casey: Well, taking a long-term view, I see it as part of the continuing decline of Western civilization.

The West has always been distinguished relative to the rest of the world by its order, its cleanliness, its respect for property rights. These things are all going by the wayside. We were a middle class society with “bourgeois” values, essentially Boy Scout virtues. But these things are now held in contempt, even while the middle class is being squeezed. “Ground between the millstones of taxation and inflation,” as the phrase attributed to Lenin puts it.

Some members of the lower and middle classes are still moving up, but it’s easier to fall than to rise. Most of the homeless are whites who are headed down. We haven’t seen this since the 1930s.

This epidemic is concentrated in so-called sanctuary cities, which go out of their way to bring in people who are unwilling or unable to support themselves. But most of the newly minted “street people” aren’t migrants. They seem to mostly be failed ex-members of the middle class.

It’s quite novel to see people in camping tents on city sidewalks. It’s different from the occasional bum sleeping under newspapers on a park bench. A tent implies a measure of permanency. It stakes out a property right.

Let me pause over my use of the word “bum.”

I learned a few things when I went on a couple of adventures “riding the rails.” There were three classes of people you’d meet in and around the railyard, on the “wrong side of the tracks”: hobos, tramps, and bums. They were all “homeless people,” but that term wasn’t used. Hobos were people there for the lifestyle; often well-read, dropouts with wanderlust. Tramps were people down on their luck; they rode the rails to get someplace there might be work or where they had a friend. Bums were those with terminally bad habits: lazy, dirty, usually dishonest.

The distinction between hobos, tramps, and bums appears to have been lost. None of the new breed of street people are hobos, I promise you. They’re tramps at best, but mostly bums. But it’s now fashionable to call them “the homeless,” because the PC world likes euphemisms. Not so long ago, these people used to be called “derelicts” or “vagrants.”

Part of the Orwellian PC trend in language is that you can no longer call something what it is. You have to make up a softer and less accurate description of who or what they are. You’re not allowed to offend bums, derelicts, or vagrants. Even though they are, by their very nature, offensive.

Why is this happening? It’s no longer just the occasional lowlife just passing through, but whole communities of people who take over sections of cities and camp out on public sidewalks.

What’s caused that? The media says it’s because of alcohol, drugs, and mental problems. But as usual, the brain-dead and blow-dried media is wrong.

Where were these lowlifes before? And what’s drawn them out of the woodwork where they were apparently hiding? I question whether junkies and crazy people are the cause; I suspect they’re an effect.

In other words, it’s quite possible that the hard times that started in 2008 drove a lot of people, who were already psychologically unstable, into full-fledged psychosis. And caused others to take up alcohol and drugs as a way of hiding from an unpleasant reality.

On the largest scale, I blame it on government action. Which shocks most people, because they see the government as the solution, not the cause. They see a real or imagined problem, and they want the State, because it has a lot of power, to “do something.” In fact, the only way the State can solve a problem is by undoing things that it’s already done, not doing more.

Even though it’s said that we have all-time low unemployment, these are mostly minimum-wage jobs. And the numbers are further disguised by the fact a lot of people who’d like to work as something other than a fast-food clerk or a Walmart greeter are what are called “discouraged workers.” They’re not counted as unemployed if they’ve stopped looking for work. I suspect that very few of the street people are counted as unemployed.

International Man: Cities like San Francisco spend tens of millions of dollars each year trying to keep the streets clean to no avail. Within hours, freshly cleaned streets are again covered in filth. Many people seem to think the city needs to throw more money at the problem.

What do you think? How should they address the problem?

Doug Casey: Cleaning up after these people isn’t a solution. It’s cosmetic, at best.

What we have are thousands on the streets who produce nothing, and only consume. They survive on food stamps, various welfare programs, handouts, petty theft, and the like. In other words, they’re not an asset either to themselves or to society. They’re an active liability, and they’re actually encouraged by being allowed to group together on other people’s property.

Will cleaning up after them solve the problem? No, it aggravates it.

It’s now an epidemic. It started in 2008 when lots of middle-class people lost their houses. And oddly, the trend toward people living on the street has been growing over the last 10 years of artificial boom.

We’re going to have a very real bust very soon. The high levels of debt that we have today have allowed the whole country to live above its means. When the economy adjusts to lower levels of consumption, a new avalanche of people will lose their jobs, and they’ll have no savings to fall back on. However, their debts will remain and keep them from getting back up.

Not so long ago, Americans saved up and bought their cars for cash. Your car was a small asset, but it was an asset. Then came two-year, then three-year, five-year, and now seven-year financing. In fact, most now lease their cars, because they can’t afford to buy them, even with seven-year financing. The things have gone from being a small asset into a major liability. With simple pickup trucks selling for upwards of $50,000, many are going to lose their transportation. Then they can’t get to their job, can’t pay their rent or mortgage, and they’re out on the street. It’s easy to see how an ex-member of the middle class could become mentally unbalanced and start doing drugs.

People could lose houses they bought with mortgages they can’t afford but think they can because of today’s very low floating interest rates. Just like back in 2008 and 2009. Plus, real estate taxes keep going up—partly because local governments are in good measure responsible for supporting lowlifes forced to live on the street, ironically due to high real estate taxes.

Utilities are going to go up because commodities are very, very low now. They’re going higher—good for commodity speculators; not good for Joe and Jane Consumer.

So, you’re going to see more people moving onto the streets. And let me reemphasize this: They’re not—now—necessarily junkies or mentally disabled. But they may be, once they lose everything they thought they had. Their numbers are going to grow as the economy goes downhill.

This is an explosive problem. These are people who will have nothing to lose. They’re going to be overcome by envy of and resentment against the rich. You can count on them to vote Democratic in 2020. There’s no question the state of the economy will be by far the biggest influence in the election.

All the while, because of the financialization of the economy, the rich are getting richer. This isn’t just unfair—it’s dangerous. Incidentally, “unfair” is a word I hate to use, because it often implies a whole set of assumptions. But that’s another topic. Anyway, the situation is setting up the United States for class warfare, the haves against the have-nots. Middle class societies are stable; we’re becoming less middle class.

International Man: The Fed has reflated the housing bubble with years of easy money. It has distorted the housing market and artificially increased real estate prices. How does the Fed relate to the homeless crisis?

Doug Casey: One indirect and delayed consequence of their creating all this money out of nothing—in order to keep the big banks, brokers, and insurers from failing during the crisis that began in 2007—is the creation of bubbles. The biggest bubble is in tech stocks. But the real estate bubble that busted in ’08 and ’09 has been re-inflating, at least until the last year.

International Man: California politicians have implemented rent controls and more regulations in the hope of solving the problem. The situation has only gotten worse, and the calls for the government to “do something!” only grow stronger.

If the inclination is to ask for more government, what do you expect the outcome to be?

Doug Casey: Rent control, like other forms of wage and price controls, seems logical to someone who doesn’t understand economics. It always sounds good to politicians—they like “bold action” to keep prices down, appear to help the little guy, and punish rich landlords all at once. What’s not to like?

In addition to their crime of initiating force, stealing, and destroying the moral tenor of society, they’re looking only at the immediate and direct consequences, not the delayed and indirect ones. Namely that nobody will build new buildings or even maintain old ones if they can’t make money doing so.

Rent controls result in housing shortages, run-down neighborhoods, and an atmosphere of class warfare. Rent controls are usually a consequence of money printing, which is actually the root cause of homelessness. But government is prone to disguise symptoms, not cure the disease itself—which they cause. Nobody learns anything. It’s why historians tend to be pessimistic.

International Man: Elizabeth Warren and other notable Democrats have called affordable housing a “basic human right.” They suggest that the federal government should make housing affordable or even free. It seems this will be a new plank for the party. What do you make of this?

Doug Casey: The only real human right is the right to be left alone.

You don’t have a right to free housing or free medical or free education or free food or a guaranteed income. You don’t have a right to any of these things because the question is: At whose expense? You’ve got zero right to make anybody give you things or do things for you. Warren’s policies will turn the US into a dog-eat-dog nightmare.

What’s going on today will overturn the foundations that made the progress we’ve had in the US possible. Once you start thinking like a Third World or Soviet country, you’re going to get their results.

The fact that the US still has a lot of wealth means nothing. That wealth can be destroyed very quickly. Practically overnight, as happened in places like Venezuela and Zimbabwe. I’ve spent time in both, and they used to be quite nice. Now they’re full of people sleeping on the streets, under bridges, and in cardboard shacks. For exactly the same reasons we’re seeing this in the US.

International Man: The homeless crisis is a trend in motion. It’s picking up momentum and spreading to new cities. What do you think happens next?

Doug Casey: One of the best definitions of a depression is a period of time when most people’s standard of living drops significantly.

As the Greater Depression deepens, for the reasons we mentioned earlier, you’re going to see more people living on the street.

What’s going to be done about it?

It can’t be solved by the government pushing them off the streets. Where are they going to go—outside the city limits to empty lots and fields? Actually, that’s just what Austin, Texas, did a few weeks ago. They set aside a five-acre plot near downtown where people can camp. Vagrants and their possessions were forcibly relocated to it.

Of course that temporarily solves the esthetics problem of bums camping on the street. But this is exactly how what are called “favelas” in Brazil and “ranchos” in Venezuela got started. The indigent move to state property, start out by camping, then start building informal houses out of trash and stolen building materials.

It’s an unsolvable problem, unless the country returns to prosperity. Will the government bulldoze the camps and then build high rise ghettos like they did for blacks in all the big US cities? That didn’t work really well… You only make the problem worse by putting these people in what amounts to zoos.

The interesting twist here is that today’s street people are mostly whites who’ve lost their middle class status—not blacks, not Latino migrants. This is a huge straw in the wind. So much for White Privilege…

International Man: What are the bigger implications of the homeless crisis for the future of the US economy and political system?

Doug Casey: It’s going to be very hard for everybody, especially as the government inflates more, taxes more, and regulates more. They’ll do massive amounts of all three. The situation will necessarily get worse for most people. The people who are benefiting from this one way or another—the rich and politically well-connected—will increasingly be in barrio cerrados (gated communities) to protect themselves.

It’s another sign that the state of civilization in the United States is changing radically. So far it’s been a slow slide down. But when the economy falls apart this time, it’s going to look like we’ve fallen off a cliff. We’re going to have to adjust to a whole new reality politically, socially, and economically. I’m not looking forward to it.

Editor’s Note: The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion.

The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.

That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now.


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