International Man: What important trends do you see unfolding in 2023?
Doug Casey: Perhaps the biggest turning point in recent modern history will turn out to be 2020. Governments and their minions found novel ways to gain huge amounts of control. These things were well underway before 2020, but since Covid, they’ve all gone hyperbolic. That trend will accelerate this year—albeit with some much-delayed pushback.
Four areas stand out.
First, a relatively inconsequential flu, followed by a vaccine hysteria, got far more voluntary compliance to all manner of extreme measures than most anyone could have imagined. The powers that be found that the public is vastly more likely to do as they’re told if the rationale is health rather than politics, ideology, economics, or the like. So we can count on many replays of this tune, including mandatory vaccine passports and lockdowns.
Second, the drumbeat against the newly-minted enemy element, carbon, has reached manic levels. A substantial part of the population, and a large majority of youth, have been convinced that Global Warming will destroy the planet unless we go Green, stop using fossil fuels, and attempt to run an industrial civilization on windmills and sunshine. It stands a chance of destroying civilization.
Third, central banks are racing to impose CBDCs, while governments run multi-trillion dollar deficits and bailouts, doubling and tripling debt levels with little discussion. This is unprecedented.
Fourth, the widespread acceptance of Wokism, racial quotas, aggressive LBGT++ promotion, ESG, and DIE. There are serious discussions of race reparation payments and a Guaranteed Annual Income. It’s part of an accelerated general collapse of traditional moral values.
What’s happening will, I think, be seen as a turning point greater than either WW1 or WW2. And there’s an excellent chance we’re looking at something akin to WW3 in the bargain. I don’t doubt that the era before 2020 will soon be referred to as the “Before Times,” a phrase that’s been used in dystopian science fiction. And the future could resemble dystopian sci-fi.
The future is what this discussion is about. But I’m not a fortuneteller and don’t have a crystal ball. All I can do is look at the facts. Ideally, facts that not everybody is paying attention to—interpreted through a lens that not everybody else is using.
Let’s briefly run down trends in the major markets. As with the four societal trends I just mentioned, this isn’t the place to go into the rationales, the “why” of things. I’ve spent time on that in past conversations. I just want to call 2023 the way I see it.
In 2023, the big economic/financial story will likely be gold. It’s been flat for the past decade and is reasonably priced relative to other tangible assets. It’s going higher because there will be serious talk of remonetizing it; BRICS don’t want to use the dollar—and for good reason. The public, who’ve forgotten gold even exists, will start buying it, driven by fear—fear of currency debasement, and fear of counterparty risk in the financial markets. So physical gold is going to do really well in 2023. And gold miners will do even better.
The great bull market that started in the early ’80s came to an end in 2022. The bull market was driven by a number of things, but not least has been the immense amount of currency units created by central banks. It’s caused a very, very long business cycle—a super cycle. As it rolls over, we’re going to see lots of trouble in the corporate sector as distortions, and misallocations of capital caused by inflation are liquidated. Indebted companies that catered to “Before Times” patterns will go bust. By the time this bear market bottoms, the average guy will have forgotten the stock market even exists. And will want to attack the person who reminds him it does.
The entire world, from governments to corporations to individuals, are head over heels in debt. Encouraged partly by the fact that rates have been dropping for 40 years—a lifetime.
Interest rates, however, have a life of their own. They’re not entirely controlled by central banks, contrary to what most people have come to believe. The world will start to see bonds as a triple threat to capital—higher rates, currency risk, and default risk.
The interesting thing here is that bonds are not generally owned by the retail public but by institutions—ETFs, mutual funds, pension funds, hedge funds, and the like. Institutions have a hard time justifying owning bonds with ratings of less than BBB. The bonds of struggling companies will be downgraded this year, and they’ll have to be offloaded. But to whom? Because other institutions can’t buy them either. At some point, bonds will be a huge bargain, and I hope to urge buying them. But it won’t be in 2023.
Let me reemphasize what I’ve said many times over the last several years: If you own any bonds, sell them yesterday morning. At the latest, sell them tomorrow morning. They’re going a lot lower.
Real estate floats on a sea of debt in the US and the rest of the Anglo-Saxon world. If he can’t borrow money, the average guy can’t buy property. And he can’t sell it either, because the buyer needs financing. Housing is in big trouble, as are bricks and mortar retail and all manner of office properties.
With interest rates going up, while economic activity goes down, property is headed down. Real estate is very overpriced all over the world. Real estate is something that you need to live in, to build on—but it’s become a speculative vehicle financed by debt. Not good.
In today’s world, currencies are all fiat. Just pieces of paper or digits created arbitrarily by governments and their central banks. They’re all in trouble, with no exceptions. The US dollar’s liquidity has kept it strong, and a debt crisis could even give it strength as the world scrambles for dollars to pay dollar debt. But these aren’t strong fundamentals. If you need a currency, buy the Swiss franc. And gold. And Bitcoin.
Bitcoin has a chance of becoming an actual currency competitive with government fiat currencies. From a worried individual’s point of view, it can be as private as buried gold coins if used properly. And the perfect transfer mechanism to get your assets across international borders; that’s critical in today’s world.
But there’s still a bubble in the cryptocurrency world, even though Bitcoin has collapsed from its 2021 peak of $69,000 to about $17,000. Is it the bottom? Not yet, if only because the chaos created by the FTX scandal, which vaporized $30 to $40 billion worth of “altcoins,” isn’t over yet.
There are about 20,000 altcoins, and almost all of them should, more correctly, if impolitely, be called shitcoins. Take dogecoin (I think it should be pronounced doggycoin), which was created as a joke, having no value, no use, nothing. But, amazingly, it still has a market cap of $13 billion dollars.
On the one hand, as the Western world’s economy slows down, there’s going to be less use of oil. But on the other hand, the powers that be are very anti-carbon-based fuels, and they’re going to make them harder to come by.
That said, we’ve got to remember that the United States and Western Europe are no longer “where it’s at.” The US is only 4% of the world’s population, about the same for Europe. The other 90%+ of the world cares less and less what the West says or does. Instead, they care about what the Chinese and Indians do and increasing their own wealth. Oil, coal, natural gas, and uranium are all going higher. And the stocks of companies that produce them are going much higher.
International Man: Where do you think the conflict between Russia and Ukraine (and NATO) is headed in 2023? What are the broader implications?
Doug Casey: It’s funny, because we don’t really know what’s happening on the front lines. It’s long been said that the first casualty in any war is the truth. That basically means you can’t believe anything that you hear coming from almost any source regarding this conflict.
I’ve been pretty clear about how I feel regarding this. It’s a border war between two shithole countries in a region where wars like this have been going on for a thousand years. Russia actually has a very good historical case for reacquiring the Donbas and Crimea, and that’s all they wanted to start with. But the situation has gotten out of control—courtesy of the US Deep State.
Where’s it going at this point? Is it true that the Russian army is terminally incompetent and ill-equipped? An overseas Russian friend said that a member of his family told him a firsthand story about a relative who was drafted and sent to the front lines with no equipment, no rifle, no helmet, and no rain gear. It appears the stories about wholesale corruption and looting of the assets of the Russian military may be true.
On the other hand, the Zelensky regime forces appear to have taken huge casualties. A large number of the military-aged men in the Ukraine have left the country. Those who stayed have sustained perhaps 100,000 to 130,000 deaths. And generally speaking, when you have a military death, you probably have two disabling injuries. The Zelensky regime may be running out of cannon fodder.
The Russian army may be bad, but at this point, there’s not much left to the Ukrainian army either. That’s on top of the fact that the Ukraine, long known as the most corrupt country in Europe—including Albania—is nothing but a fiction to launder money for politicians in the West. I don’t doubt that many of the weapons the US has given them have been sold to nasty regimes and groups in the Third World, enriching well-placed Ukrainian military and politicians. They’ll come back to bite the US.
What’s going to happen?
Now that winter is here, assuming the Russian army isn’t totally incompetent, it will launch a real attack on the Ukraine. Putin is now almost forced to take out the whole country because this thing has gotten out of control. Putin needs a regime change in Kiev, a rectification of borders, and for the Ukraine—which means “borderland”—to be a buffer state.
The implications of the conflict—since Russia is a major energy and grain producer—are a crimp in world food and energy supplies. And higher prices for both.
International Man: The US is the most polarized it has been since the 1860s. What do you see happening in 2023?
Doug Casey: I’ve said many times that individual nation-states are not part of the cosmic firmament; they come and go. The colors of the map on the wall are always running, and that will be especially true this decade.
Even in the US, which has been one of the world’s most stable countries, things could change radically. Regions of the US have less and less in common with each other, entirely apart from the fact that the country has divided into red people and blue people. And they really don’t like each other. It’s a semi-religious divide where people are incapable of having a calm, rational discussion about politics or economics. There’s no longer much communication, and what there is, is emotion-based at this point. That’s not good.
I’m not saying that it’s going to happen this year, but by the end of this decade, there are likely to be some serious secession movements in the US. Whether they’re formal or informal, violent or peaceful, is an open question. But the US is coming apart at the seams for lots of reasons. It’s devolved from an honest yeoman republic into a multicultural domestic empire. It’s become unstable, with a bankrupt government, a rapidly depreciating fiat currency, disintegrating traditions, a degrading culture, and corrupt moral values.
International Man: It’s pathetic but, unfortunately, true that most financial markets revolve around what the monetary central planners do.
Is a dramatic Fed pivot back to extreme money printing on the menu?
Doug Casey: I would hate to be Jerome Powell at this point because, on the one hand, the US government will continue running $1 to $2 trillion deficits as far as the eye can see. And those deficits are going higher when the economy collapses over the next couple of years. We’re likely to see $3 or $4 trillion deficits. How can they be funded? At this point, only from money printing—in accordance with the doctrines of Modern Monetary Theory.
Money printing is currency inflation. The result is rising consumer prices.
But on the other hand, they have to curb rising prices because it’s creating chaos, destroying people’s assets, causing a declining standard of living, and making the serfs restive. It’s a classic case of “between a rock and a hard place.”
They want rates low to stave off collapse—because corporations, individuals, and the government, have tons of debt. Right now, the US government is paying around 3-4% interest on its debt. If it pays 6% interest, half of its total spending will be just interest on the debt. Interest will be a bigger burden than Social Security, Medicare/Medicaid, or the military. The government is going to keep those 87,000 new IRS agents busy.
The Federal Reserve wants to keep interest rates low for lots of reasons. But they’re raising interest rates because they want to discourage people from borrowing and encourage people to pay off their debts. Because of the way the fractional reserve banking system works, reducing bank loans also reduces the money supply, which in turn which reduces price inflation. They’re actually in an untenable, schizophrenic position.
There’s no way out for them other than a total reform of the system. And that’s unlikely to happen in this decade, barring a real collapse. It’s going to be ugly and chaotic.
Reprinted with permission from International Man.
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