"Something is lost from the meaning of independence. Mouths are shut and what is in the heart cannot be expressed. We are afraid to say anything because the police will be urged to act.
"Sometimes I feel like we are already in a police state, but maybe this is just an overreaction," he added.
"I believe we still value our freedom, our independence. But something has happened to make us feel unhappy on the anniversary of our independence. We regret that we are unable to do anything to bring back the joy of an independent race.
"But the leaders must understand why the people feel sad this year. Don't fool yourself by saying that it is not true that the people are not happy, just look at how many people came out to watch the fireworks. Unfortunately, this (watching fireworks) is not the benchmark.
In his latest blog posting, Mahathir argued that the gloomy feeling could be related to the hike in petrol prices and other essential items.
But, he also noted that something was not right, and this has robbed the people of the joy in celebrating the 51st anniversary of the nation's independence on Aug 31.
To illustrate his point, the former premier cited the 'fly the flag upside down' campaign initiated by blogger Sheih Kickdefella to protest the greed of political leaders from both sides of the divide.
Such a suggestion was never made during the past 50 years since the country achieved independence, he said.