Doug Casey on 2024’s Defining Events and What Comes Next
What are your thoughts on this policy shift and its broader economic implications?
Doug Casey: I’m amazed that anybody really cares about what the Federal Reserve says or seems to do. Manipulating short-term interest rates by a quarter or a half of a percent here or there is trivial. Long-term rates are what count; long-term, not short-term, rates represent the cost of capital to build industry and develop property. With the Fed creating dollars by the trillions to support the government, rates can only go up.
The dollar has lost at least 98% of its value since the Fed was created 111 years ago. And that trend is accelerating as the US government runs multi-trillion-dollar deficits, which can only be financed by the Fed, creating more dollars. They have no real choice.
The question is not whether the Fed is going to adjust rates up or down. It’s whether we will have a 1923-style German runaway inflation or a 1929-style catastrophic deflation. If the Fed doesn’t print money fast enough to finance all the debt in the world, the whole system will come unglued in a deflation. So, I’m betting on more money and credit being created. And higher prices to go with them.
International Man: What were the most crucial geopolitical events of 2024, and how might they shape the future?
Doug Casey: The most important geopolitical event has received the least press: the election of Javier Milei in Argentina. His success in rolling back the size of the Argentine government is historic. He has fired scores of thousands of government employees, abolished agencies, abolished many taxes, and abolished a lot of price controls and subsidies. The government, which has perpetually run in deeply the red, financed by printed fiat money, is now in the black after only one year. This is a really major change, a veritable first in world history, and a change in the megatrend, with any luck.
A lesser noticed but related sea change is the triumph of Bukele’s policies in El Salvador. Two years ago, it had probably the world’s worst crime problem after Haiti. Now, it’s one of the world’s safest countries. It was solved, at least temporarily, by locking up about 65,000 known gang members. In the meantime, there’s complete freedom of speech and opinion, and property rights are secure. As a bonus, Bitcoin is recognized as an official currency.
The other big event is the collapse of the Assad regime. There will be complete chaos as numerous groups jockey for control of Syria. I think it’s a template for the future in most of the artificially constructed countries of the Middle East and Africa—the whole world, in fact—although hopefully more peaceably in most places.
International Man: Gold and Bitcoin hit new all-time highs in 2024, while the S&P 500 rose around 24% year-to-date at the time of writing.
What’s next?
Doug Casey: Gold is no longer cheap. It’s about where it “should” be, compared to historical prices of houses, cars, clothes and food.
Bitcoin, as a new asset class, a digital age money, is finding its level. As it catches on with the world at large, it’s going higher. But this isn’t the time to discuss why I think that’s true.
Resource stocks—gas, oil, uranium, coal, gold, silver, copper, etc.—are truly cheap. They’re the best speculative vehicles I can think of. Will they go 10-1 as a group? It wouldn’t be the first time.
As for the bubbly stock and bond markets, there’s an incoming tsunami. Get out of the water.
