Doug called in today from a hotel room in New Orleans, where the New Orleans Investment Conference starts this week. He told me he doesn’t plan to come back to this or any other conference.
Doug has been raising this topic since 2016:
Doug: “There’s a good chance we’re actually gonna go over the precipice.”
His argument is structural. Every problem gets a new layer of people to solve it, and the layer never goes away after the problem does. Things get bigger, more top-heavy, more corrupt and less resilient. He compares it to the collapse of the Bronze Age and the start of the Dark Ages after Rome.
Two kinds of rioter
France is the epicenter, but the riots have spread to Brussels, Spain, Portugal, Albania and Italy. They started as student protests and turned into what the press calls cost-of-living riots.
Doug sees two groups in the streets who agree on almost nothing: Islamists who want to impose their own law, and native French radicals raised on socialist ideas. What holds them together is a common enemy.
Doug: “The enemy is Western civilization and Western values. They don’t like the very things that have given them all the good things in the world.”
I pointed out that the shift from exclusive to inclusive is part of it. Exclusive implies you earned something. Inclusive means you get it because you exist. Doug took that straight to the guaranteed annual income: “Everybody can’t be a consumer. You’ve gotta be a producer.”
We don’t live under capitalism
Here’s where Doug surprised me a little. He’s somewhat sympathetic to the rioters’ dissatisfaction, because he thinks they’re angry at the right thing and blaming the wrong one.
Doug: “We don’t live in a free market capitalist society. We live in a fascist society.”
He’s careful to define his terms, because nobody else does. Capitalism means you’re free to produce and consume with no constraints from the state, and, as I added, no aid from it either. Fascism keeps private ownership but the state controls it through taxes and regulation. Socialism means the state owns it outright. Communism is the bottom of the slope. By that definition, “the whole world is economically fascist at this point.” I’d add public-private partnerships to the list.
The rioters’ problem, as he sees it, is that they want to jump out of the frying pan into the fire.
The list
Doug brought a list of what makes Western civilization unique, the things he thinks both sets of rioters want to destroy: free thought, free speech, free markets, limited government, individualism, rationality, liberty, progress, privacy, property rights, the rule of law, and industry and enterprise.
He remembers the chant from his own college years, though he never joined the crowd chanting it:
Doug: “’Hey, hey, ho, ho, Western civ has got to go.’ So they’re pretty much getting what they want today.”
My view is that the rioters are only the tip of the spear. Most ordinary people I meet are bothered by these values and want more government, on the right as much as on the left. So there’s no real opposition.
The Pentagon is preparing. Are you?
This is the part of the episode I’d want people to hear. In the same week, the UK told its citizens to keep three days of food, water and cash on hand. Japan issued the same three-day warning. Then a Pentagon plan leaked, approved in September, that calls for every US military base to be self-sufficient for 90 days in food, water and energy, because the grid can’t be relied on.
The three-day warnings are just talk. The 90-day plan is real work and real money, including small modular reactors on base. Doug sees a silver lining there. I’d rather see them in civilian areas.
The US didn’t tell its citizens to prepare. It said it needs to prepare. Matt Bracken put it best in a meme I shared on the show: if the grid goes down, do you think the military will let hungry civilians onto the base?
Doug: “No, no chance. No way.”
The grid is more fragile than people think. Knock out a handful of key facilities and the custom parts take years to replace. And AI is now finding serious holes in software, which means water plants and power stations are exposed in ways we haven’t seen before. Doug’s view is that modern war is “people war”:
Doug: “If I wanted to destroy the country, that’s what I would do. I wouldn’t try to build some complex super bomber to overcome the B2.”
The next catalyst
I think the next catalyst is an attack on Iran after the midterms, aimed at infrastructure, with Iran promising to hit Gulf oil facilities and cut undersea cables in response. Doug says it can serve no useful purpose. I don’t think it’s about nuclear weapons at all. I think the goal is regime change and a failed state, another Syria.
I know of two people who were recently asked if they were worried about the war. Both answered, “What war?” If the oil supply takes a lasting hit, they’ll find out fast.
What to do about it
Do what the bases are doing. Look at what your household depends on, ask what happens if it goes away, and build buffers. Doug’s caveat is that getting your money in the right place helps, but it may not matter much if the system itself goes down. That’s why I have a farm. If money is no good, we still eat. Doug has bees, dairy cows, chickens and pigs. I’m planting tomatoes this week. If you have a little room, plant a garden.
Also in this episode
The CEO who wants up to a 100% inheritance tax, why Doug respects the Democrats more than the Republicans, Michael Moore’s poll on how much government Americans want, Doug’s 1964 shock at Georgetown, digital currencies and “conditional access,” Brazil’s split and the Bolsonaro saga, and Terrorist Time, the fourth novel Doug and John Hunt are writing.
Doug is at the New Orleans Investment Conference through Oct 31, which he has called his last US conference. Got a question for Doug? Head to crisisinvesting.com, click “Ask Doug” at the top, and post it. And if you want to know what we’re actually buying while all this plays out, upgrade to Crisis Investing.
Best wishes from Uruguay,
Matt
