Today on Doug Casey’s Take: the Saudi nuke deal, Section 219, the “golden age,” coal, and why deflation deserves more of your attention.
Here are the highlights.
A nation of shoplifters
30% of Americans admit to shoplifting. Admit. The real number is higher. Doug’s response was a story about an old acquaintance named George, a charming guy with plenty of native intelligence who lied, cheated, and stole his way through life:
“We were talking about morality one time, and George said, ‘I agree. It’s a good thing, but right now I can’t afford morality.’”
George figured he’d adopt honesty once he reached an economic level where he could afford it. He never got there. Conservatives accuse the woke of holding luxury beliefs. George thought morality itself was one. As society degrades, expect a lot more Georges.
Mamdani’s New York
Doug knew New York in the ‘70s, when an upper-middle-class psychiatrist he walked home with carried a revolver in his pocket and said, “I won’t leave home without it these days.” He expects the city to revert:
“I can’t wait to see New York City absolutely run into the ground. Much worse than it was in the ‘70s... Further sign of the collapse of civilization.”
Doug always looks at the bright side.
The Saudi nuke deal
Trump signed a nuclear agreement with the Saudis, then moved to break it when the Israelis objected. Doug’s question cuts to the center of it:
“Are the Saudis the most reliable people in the world that you’re gonna set them up with nuclear power? Why are they more reliable or nicer or more on our side than the Iranians are? They aren’t.”
His bigger point: nonproliferation is a fantasy. The technology is 80 years old. North Korea, maybe the poorest country outside of Africa, has multiple nukes and missiles. The cat’s out of the bag.
Section 219
The NDAA provision calling for a melding of US and Israeli military and intelligence operations passed the House this week. Doug called it criminal, and pointed at the machinery behind it:
“A foreign country is basically calling the shots, certainly in the White House and also in Congress. This is just not right. And meanwhile, the stupid average American has to pay for all this nonsense.”
My read: it’s a signal, for anyone who wasn’t paying attention, that the America we remember is gone. Doug put it in terms of definitions:
“America is an idea. It’s a concept. It was unique, totally unique in world history... America’s dead. All that’s left is the United States.”
The golden age
We played a clip of Trump in Georgia declaring “the golden age of America is upon us. This is the greatest we’ll ever be.” Doug found exactly one true statement in it:
“The one thing he said which wasn’t either incorrect or an overt lie was, ‘America’s the greatest it will ever be.’ And that’s probably true, ‘cause we’re slipping radically.”
It is a golden age for one family, though. Don Jr. went from a $10 million net worth to $500 million since his father took office. Easily the best capital allocator of all time. Or something else is happening.
Can they kick the can with digital assets?
A subscriber asked whether stablecoins and tokenized assets buy the system another five to ten years. Doug’s gut says we’re at the edge of the precipice now, but he’s watched them pull arrows out of the quiver before. Stablecoins and money market funds do serve a function: they absorb government deficits and keep that money out of the fractional-reserve banking system, which keeps retail inflation lower than it would otherwise be.
But run the numbers. Tether, the largest stablecoin by far, has a market cap of about $185 billion. That covers roughly the last two months of US deficit spending. It’s not close to big enough to matter. As Doug put it: “They could all blow up.”
Deflation is underrated
Another subscriber brought up an econophysics book arguing deflation is as likely as inflation. The conventional view, even among hard money types, is that any crisis just gets papered over with printed money and the number goes back up. I don’t think people put nearly enough thought into the severe deflationary scenario. Doug can see it:
“Maybe a daisy chain of big institutions, all of whom are highly leveraged, go bust. One can’t pay the other, pay the other, pay the other, and the Federal Reserve can’t bail them out quickly enough.”
The leverage is massive at every level of society, from the derivatives complex all the way down to consumers paying for their delivered dinner in installments. Doug could barely believe that last one is real. It’s real.
Doug remains a coal bull
The coal market is regional, not global. At $150 to $200 a ton, shipping costs dominate, so you want your coal local. But the deeper point is that oil, gas, and coal are all just carbon and hydrogen, and chemistry makes them roughly fungible. The Germans proved coal can be oil in World War II. China is doing it at scale right now.
“Coal is cheap because the greenies hate coal... So it’s all the more reason to like coal.”
Doug still holds his Yancoal position, and we recommended a couple of other coal names in Crisis Investing two months ago if you want current picks.
Also in this episode
Doug on Wagner and Gershwin, why he’s stuck in the golden age of sci-fi, and the Louis L’Amour book everybody should read (The Education of a Wandering Man). Plus The Diamond Age as the sci-fi that’s arriving on schedule, the movie Vigilante Citizen and Doug’s novel Assassin, and his blunt answer on Israel’s trajectory. He doesn’t give it ten years.
The world could look radically different by Monday. We’ll be back Wednesday either way.
[LISTEN TO THE EPISODE HERE]
Best, Matt Smith
