Profit in the Investment Ecosystem: Catherine Austin Fitts

The Gold Report: According to your website, your mission is to provide the "deeper intelligence" investors need to succeed in this environment. From your perspective, what are the top two or three issues that most investors don't understand because they don't have that deeper intelligence they need to make better investment decisions?

Catherine Austin Fitts: Our goal is to help readers, subscribers and clients build family wealth. We believe that the success of the family depends very much on the success and the building of community wealth. In other words, it's very difficult for people to build wealth if everybody is making money in ways that destroy the greater economy. So we focus both on family wealth and on the wider community wealth.

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My fundamental paradigm is economic warfare. I believe we have a group of people intentionally trying to centralize the economy in a way that shrinks wealth. As a result, literally every household in every country is, if you will, being harvested. I'm very interested in helping people see that game of economic warfare, see the harvesting and then, whether it's their health, their time, their financial assets, take steps to protect themselves from being harvested.

For example, I do a lot with precious metals, as I'm very concerned about debasement of people's assets. I call it a slow-burn process, whereby our incomes generally decline but our expenses generally rise. We're watching monetary supply inflate but as that inflation happens and our expenses increase, our incomes and our assets aren't keeping up. Consequently, my recommendations are very much organized around what people need to do within this prism of economic warfare to avoid debasement of their assets, their time and their other resources.

TGR: How do they avoid the debasement?

CAF: It's different for assets than for time. So, for example, it's extremely important that everybody in the family builds skills at endeavors that either lower expenses or allow them to generate income in something sustainable. We're watching a tremendous bifurcation in the economy between industries going through a creative destruction process and industries that have a future. One of the most draining things to see is the tremendous number of young people-our children and grandchildren-spending a fortune for college and graduate school education that really doesn't prepare them for the future. They study things that were useful 20 years ago but not what they need for careers in robotics or advanced manufacturing. Putting money and time into institutions that train people for yesteryear as opposed to tomorrow is a very poor investment. That's an example in terms of intellectual capital where we're trying to protect people from debasing their assets.

In terms of time, we work hard to get people to understand there is no more important issue than the quality and the integrity of the people they do business with. For instance, I constantly ask people why they use any of the large banks that engage in all these financial frauds. I tell them to find a really great local community bank or credit union they can trust because across this society, as we go through this debasement process, more and more people find themselves wasting time dealing with all sorts of scams, padded bills and problems in the quality of service because they're dealing with organizations that aren't trustworthy.

Then, in terms of assets, instead of industries and demographics that are aging or not involved in primary trends, investors should look at industries and parts of the world that are growing, where the demographics are winds in their sails. I try to help people identify the primary trends and how to invest in them in a manner that will protect them from the dirty tricks of the insiders. For example, I never want to see clients keep their money in one place. In fact, we recommend against ever putting more than 50% of your money in one place. I'm very big on both geographic and industry diversification. To me, diversification also means not having all your money in one broker's account. That's the opposite of diversification.

TGR: Can you highlight the top one or two primary trends investors should focus on?

CAF: Number one is the shift from paper assets to tangible assets. If you go back through history, you'll see cycles from when paper assets rise in value versus tangibles and tangibles rise back up. I used to work in the energy finance group at Dillon Read, a Wall Street investment bank, and we regularly tracked how much it would cost to acquire a barrel of oil exploring in the oil patch versus how much it would cost to buy it on the floor in the New York Stock Exchange. There's historically been this arbitrage, if you will, between owning real things and paper.

What have we done for the last 20 years? We've printed lots and lots of paper, currency and government bonds and all sorts of other instruments, and piled it up with derivatives. We're going through a reset between the value of real things and the value of paper because the paper is very bubbled and overvalued, and it's being reset down to the real thing.