'Greater Depression' Triggered: What Happens After Debt Default | Doug Casey
Summary
Market Outlook: Doug Casey predicts a looming Greater Depression due to economic mismanagement, particularly in the West, exacerbated by government policies and rising national debt.
Argentina's Economic Reforms: Casey praises Argentina's President Malay for his anarcho-capitalist approach, aiming to dismantle government structures and promote free-market policies, which he believes could serve as a model for Western countries.
US Economic Policies: Criticism is directed at Trump's tariffs and economic strategies, which Casey argues are creating artificial market distortions and could lead to long-term economic damage.
Federal Reserve Critique: Casey advocates for the abolition of the Federal Reserve, claiming it contributes to inflation and economic instability by distorting capital allocation.
Investment Opportunities: Despite a bearish outlook on North American markets, Casey highlights the resource sector, particularly gold and mining stocks, as undervalued and promising investment opportunities.
AI and Tech Sector Risks: He warns of a speculative bubble in the AI and tech sectors, suggesting that current investments may not yield expected returns and could lead to significant financial losses.
Educational Reform: Casey promotes an alternative educational path outlined in his book "The Preparation," emphasizing practical skills and experiences over traditional college education to better prepare individuals for economic challenges.
Retirement Philosophy: He challenges the traditional concept of retirement, advocating for continuous productivity and personal development throughout one's life.
Transcript
I think we're heading into a really massive crisis uh here in in the West in many ways. The dust up between Israel and Iran, that's not over by a long shot. Uh and there's a bunch of other places in the world that are time bombs waiting to go off. Our next guest has argued that a greater depression may be upon us. What does this look like? Are we entering the stages now? Uh what is unraveling with Trump's policies? and how will these policies affect not just corporate America but our investments? Doc Casey joins us once more. He is a best-selling author of crisis investing and the international man. Recently he's published a new book called uh the preparation. We'll talk about that. Uh he's also the author of a number of other works including his series on uh Charles Knight uh the fictional character who's gone through um several different phases in at least three different books. So uh we'll talk about some of that. Thank you very much Doug. Welcome back to the show. >> Well it's always good to be here with you David. I'm not I'm not in Buenosares at the moment which is where I usually am. Uh, I'm on the shores of the Chesapeake Bay, uh, in Virginia, uh, because it's summer here and it's winter in Buenosaris. So, uh, time to fly north. How how are you liking it now? I I remember speaking to you last time you were in Argentina and we actually talked about Argentina briefly, so good to have you back in the US. Are you liking the transition? >> Uh, yeah. Well, I go where the I go where the weather suits my clothes. Uh, which is to say I like summer. But as far as Argentina's concerned, uh, I've been a huge supporter of Malay's policies because, uh, as all the world knows, uh, he's, uh, the first anarcho capitalist in world history, uh, to have won a national election. And by an anarchal capitalist uh I mean somebody that does not believe in government as an institution and is doing has been doing his best to uh disband the Argentine government which has been pathological for the last 80 years. So uh Argentina is looking quite good uh much much better than it was before Malay was elected. I'm very happy to have made a big bet on Argentina some years ago. U it's paying off because he's he's upsetting the entire political and economic uh super structure of Argentina. >> In which way can the West learn from MLE? Well, you've got to uh attempt to totally abolish many regulatory agencies and fire all the people that live there. And when I say abolish, I don't mean cut back. I mean pull them out by their roots. And so Agent Orange where they grew because most of the uh infrastructure of government uh serves no useful purpose. Well, that's understating it. Uh is corrupting and destructive of capital and uh uh holds down entrepreneurialism and production. So Malay is in the process of changing Argentina from a country that uh was modeled by Juan Peron after Mussolini's Italy, a genuine fascist country where the state and corporations are handin glove together and he's trying to free marketize it. Uh we'll see uh if he uh uh wins the u uh elections that are coming up in two couple of months uh to see if he can take over the Congress. Right now he's like Trump doing a lot of things by executive order which is kind of risky. Uh what he needs to do is change the laws. So if he wins the elections in a couple of months, uh, Argentina is going to totally overturn its past sorted 80 years of history. You know, it used to be one of the three or four most prosperous countries in the world 100 years ago. Now it's just another third world country. So anyway, >> turning to turning back to the rest of the world in the US, uh, how close or far away are we to this greater depression that you've been talking about? uh given Trump's policies. I believe we spoke just after the inauguration or shortly around that time and so a lot has changed, a lot has developed. How would you evaluate the last 9 months or so? And um are we closer? We're farther away from this greater depression. >> Well, Trump is a mixed bag. Uh there are some things that you have to love about them and some things that are really stupid and destructive. But let me say this, it's that uh given a choice between Trump and uh uh Camela uh there was no choice. uh the US was sliding down down downhill uh to become uh a highly regulated, highly taxed socialist state and something had to be done. Uh Trump was not the optimal solution but thank God we dodged the bullet with the uh Democrats and Kamla. The thing that worries me most about Trump are his um are his tariffs, which uh amount to a gigantic tax increase on the American public because of course tariffs are something that importers pay, which is to say the residents of the US pay. And not only is it hurting uh the average his tariffs are hurting the average American, but uh they're hurting uh our partners that we trade with. So it's uh uh I understand why Trump put on the tariffs because he's trying to bring manufacturing back to the US, but he's trying to bring it back in an artificial way. He's creating another distortion in the economy. And to answer your earlier question, uh the greater depression, uh yeah, we're uh we're on schedule for that. A depression uh you'll recall is a period of time when most people's standard of living drops significantly. And uh you can argue that that's been going on for some years uh because the uh the state in the US the government has been growing and growing and growing uh at the expense of the private economy. uh and these two trillion or even $3 trillion a year deficits that the government is running is coming directly and indirectly out of the pockets of the American people. So yeah, the answer to the question is we're headed for something uh that uh is going to be much worse and much longerlasting and much different than the unpleasantness of 1929 to 1946. I know that's a radical statement to make but uh and there are things that are ameliorating uh that trend uh which we could talk about but uh uh I'm not uh very sanguin about any of the markets in North America today with one exception uh the resource market uh which is where you are in Vancouver. You've heard me talk a lot recently about rising gold prices and how important it is to be building your savings in hard assets like gold and silver. But what if I told you that you could do a lot more than just holding gold? What if you could also earn income from it pay in gold? That's exactly what today's sponsor, Monetary Metals, is doing. They're revolutionizing how people invest in gold and silver. Instead of paying to store your metal or watching it sit idle, now you can get paid to own it. Right now in the marketplace, you can earn up to 4% interest on gold paid in gold. That means your holdings grow in actual ounces, not dollars, on top of any price appreciation. Interest is paid monthly in physical gold, which you can redeem and take delivery of. Thousands of investors are already earning real interest in physical gold and silver through monetary medals every month. It's time you did as well. Go to monetary-medals.com/lin link down below or scan the QR code here to learn more and get started. Yes, that's right. Uh capital of mining. Yes, we'll talk about the resource sector and also your greater depression thesis in just a bit in more detail. I want to play for you this clip. Uh it's an interview with an expert on China relations. His name is Victor Gao from 60 Minutes Australia. This references your uh earlier statement and um and uh remarks about manufacturing, bringing manufacturing back home. This is what he had to say. Take a listen where we act together. >> Do you accept that Mr. Trump is is trying to protect his businesses and jobs? >> No. First of all, the maximum tariff against the rest of the world, including against China, will not move manufacturing jobs back to the United States. If President Trump is serious, President Trump need to talk with China because China has been the most successful manufacturing country in the world today. China's manufacturing output is larger than EU, US, Japan combined together. And China produces about six times more power for industrial use than the United States does. So if President Trump is serious about recreating manufacturing jobs in the United States, he need to do several things. And I offer this advice without charging him a penny. He need to build up connectivity, build up container ports, build up highspeed railway, build up high quality uh highway system for example, build up inner river uh transportation and he need to increase power generation like crazy. He need to at least double the power capacity in the United States to really achieve meaningful amount of manufacturing jobs back to the United States. He need to train the American people. He need to instill this discipline and work ethics which will enable the great people in the United States to work in factories which need to be competitive which need to be have the marketability not only in the US market but in the global market. Okay, I'll stop there. Uh, I mean, notwithstanding the fact that the US already has the most sophisticated infrastructure in the world, but what what about his other remarks? What of it? >> Uh, I agree 100% with Mr. Gao. Uh, it was Mr. Ga, wasn't it? >> Yes. Victor Ga. Yes. >> Yes. Everything he said is quite correct with one critical exception. He's seems to be looking for Trump to do these things. Uh, America could be competitive with China, uh, but not by putting on tariffs, but by freeing itself up. And that's not something Trump can do by doing things. The way for America to win is by getting the government out of people's hair. So Trump doesn't have to actively do anything. What Trump has to do is follow the path of Malay and Argentina and uh abolish regulations and get rid of taxes. Uh that is what will make America as competitive as China. If anything will uh so he's right, but his solution is a little bit offkilter. Trump should not be doing actual things like look what Trump's doing. uh taking 10% of Intel corporation having golden shares and US steel. Uh uh this is this is economic fascism. He should be disinvolving the US government from the economy as opposed to involving it more more um deeply. Incidentally, uh my first novel, Speculator, has just been published in Chinese. I don't know if you can see it. I'm not >> yes not marketing it but I agree with Mr. Mr. G's analysis in many ways though. >> Well, what is economic fascism? Are governments not in theory allowed to or supposed to be participating in the free markets by buying shares of a company or uh suggesting some sort of partnership whereby in this case that you mentioned the company will provide a certain revenue. I think Nvidia will give a certain revenue of chip sales to China to the US government in exchange for access to the US markets I guess um in perpetuity. >> Yeah, this is exactly the opposite of what the government should be doing. Look, what should the government be doing? Uh the government is a coercive power. It's a dead hand on the economy. So what should the government do? Since the government is force, it's coercion. That's the nature of the state. It should do nothing but protect people from force and coercion. What does that mean? It means uh uh a military to protect the citizens from coercion from abroad, police to protect uh them from criminals and coercion in the country and a court system to allow them to adjudicate disputes without resorting to force. And it shouldn't do anything else. it shouldn't have any involvement in the economy. Uh the result of government involvement in the economy is creating distortions which lead to a depression eventually and corruption as uh government officials uh find ways to enrich themselves. So, uh, he should be, uh, doing kind of the opposite of what he's doing and get rid of his shares in US Steel and Invidia, whatever else, but he's going just the opposite way. So, the prognosis, the long-term prognosis for what Trump is doing is not good, but a lot better than what it would have been if Kamala had been elected. The idea here is that maybe there's short-term pain, meaning some shareholders might not like this idea. Actually, Invidia shares haven't really declined much on this news. Uh, but that's a different story. Uh, I know personally several people who have struggled with their import export businesses because of tariffs, had to lay people off and whatnot. Uh the idea here is that they're short-term paying for long-term gain, meaning potentially this could revitalize American manufacturing, bring back jobs, reinvigorate the overall labor force. >> David, the way to invigorate the uh US economy, as I said, is not by putting on tariffs, which hurt the American people as well as our foreign trading partners. The way to solve the problem is by deregulating the US economy and radically cutting taxes as well and radically cutting government spending so that you can cut taxes. In other words, freeing the American economy up. He's doing just the opposite, I'm afraid. >> What should that process look like, Doug? If we were to if you were to instill these policies yourself, if you were the president and you had to by constituents orders make America freer, make America greater again, what would you do? >> Well, one thing that Trump has done which is absolutely wonderful is abolishing US aid uh which was spending how much was their budget? Uh $40 billion a year gigantic. So he's a boiler sled agency which was just a giveaway scheme to uh uh transferring money from uh like like all foreign aid schemes. That's basically what US ID was taking money from poor people in a rich country America and giving it to rich people in foreign countries. Uh USAID was full of corruption. Now what he did to USA ID should be done throughout the US government. Those all those buildings in Washington DC should be emptied and the people that are working in them should find something productive to do in the real economy. That's what I would do. >> Okay. Uh this also leads to ultimately uh your book the preparation. uh uh the training of the labor force starts at the education age which is something that your book addresses in detail. So the the standard procedure is finish high school, go to college, get a job, perhaps get a master's degree, go back to the workforce, you know, rinse and repeat. Is that the way forward? Yeah, that that is no longer uh once once upon a time uh like 50 years ago that was uh arguably a formula for success. Get get a college education. But the world has changed and even 50 years ago when people were getting a college education, it was marginal. But today, college is uh going to college can bankrupt you. But that's not the real problem. The fact that most kids uh get out of college with a huge albatross of debt around their necks. Uh the real problem is that college isn't just a neutral experience. Uh it's no longer a positive experience. It's uh you're jumping into a cesspool. Most of the professors in most colleges today, it's unbelievable, but it's true, are woke or Marxists or worse. Uh, so college is a corrupting influence. Uh, a young man will go to college for four years, which is really like extended adolescence these days. Uh, kind of living in luxury. I'm not talking incidentally about going to college for STEM courses, science, technology, engineering, math, math. That's different. Uh a formal structured environment can be very beneficial for those things. Medicine, law, but most people don't take these things. Most people take liberal arts. uh and what I'm suggesting is during those four years of time uh a young man do something that we call the preparation. Uh what we've done in this book is we divide the four years or uh after you graduate from high school into 16 quarters and in each of these quarters uh you set a task for yourself in addition to the uh academic studies which will would continue. I'll tell you how like over the course of the four years when most people just sit in a desk and listen to lectures and a lot of time cut their classes because they've been out partying the night before. I'm I'm speaking from my own experience having gone to college and I think most people's uh or falling asleep in class or taking bad notes or letting their mind wander when the professor is talking if the professor is any good and you don't just have a substandard teaching assistant. So we've solved that problem I think with uh the way we would deliver courses but young men want to go out and do things not be lectured to. So when they take the preparation uh you'll learn like for instance you might go to um Florida for 3 weeks and learn to drive heavy equipment. Does that mean that you're going to be a heavy equipment driver? No. But you'll know something that very few other people know how to how to do. You'll spend a month in Maine learning how to build a house so that you'll learn how to be an electrician, a plumber, uh a carpenter, uh to a apprentice level. Anyway, uh these skills will last you the rest of your life. Uh you'll learn to fly a plane in Alaska. Uh you'll go to Thailand for three months during one of our one of our uh quarterly cycles we call them and take martial arts, Muay Thai, so that uh every young man should know how to handle himself if things get rough. So that um at the end of four years when most people might just have a degree uh you'll already have broad experience in many subjects all over the world. The idea is to become a renaissance man. David, everybody should attempt to be a renaissance man. what the Italians of those days called an omo universal a universal man >> this sounds like a good system uh a good alternative and I don't think anyone listening would disagree with you that a lot of college courses that we took are not even in the uh frontal lobe of our memories right now but when we even talk about this take a look at the stat I mean we say this but there is still according to labor statistics a correlation between higher education and income even today which persists and people look at this as justification for investing in four years of a college degree. So look look at this less than a high school diploma your chances of unemployment the unemployment rate is 6.2% and it goes down dramatically as you progress through the um higher education tree. >> That's that's confusing cause and effect. The reason why college graduates earn more than people that don't have college educations is because they're smarter. That's why they went to college. So, of course, people that are brighter are going to do well, but it's not because of college. Uh it's because they're naturally more enterprising and h have higher IQs, but they're misallocating that time in college. You get out of college, you're burdened by debt. Uh you've picked up lots of bad ideas from your professors uh who who are trying to indoctrinate you with woke ideas which have totally conquered academia. So the cause and the effect are confused uh with that. Uh you don't h earn a higher income because you went to college. uh >> it it's it's you're earning a higher income because you have you're you're brighter typically, but you shouldn't waste that intelligence uh with the uh preparation. We suggest uh that it's possible to get both a bachelor of arts degree where you're learning history and English. Basically, the these are the two main things, but skipping things that they're trying to indoctrinate you with in a college like sociology, psychology, political science, and so forth by taking courses from oh MIT and Oxford are two universities that offer free courses uh online. And I like the teaching company especially because they've rounded up worldclass professors who give command performance lectures that are very entertaining and you can listen to them numerous times to learn a subject. So at the end of the preparation which is four years in addition to doing all these fun things that we just talked about uh you'll have the knowledge of a BA you'll also have the knowledge of a BS uh taking a bachelor of science uh by taking courses online uh >> physics, chemistry, biology, astronomy and on top of that because even if you have a Bachelor of Science and a Bachelor of Arts from a college. Uh very valuable knowledge but no practical application when you're looking to get a job. That's why we have uh uh four quarters devoted to what you learn in an MBA. Marketing, sales, uh business administration, accounting, law, which most college graduates know nothing about. So uh we're cramming a lot into uh into this time uh these four years, but those four years are among the most valuable in your life. You're like a sponge and you should be absorbing all the knowledge and all the experience that you can. Look, I'm of the opinion that once a young man gets out of high school, he should go on what Joseph Campbell called a hero's journey. Challenge yourself. Do things that other young men are not doing. And that's what this book is all about. >> I want to play for you this skit to end this conversation on this segment. And before we move back to the economy, this is um I'm not sure if you're aware, Father Guido Sarduchi. It's a fictional character by the comedian Nollo in the 70s. Okay. He has a he has a what he calls a fiveminute university. I'll just play a minute and then you know this is comic relief here. >> I got this idea for a school. I would like to start with something called the fiveminute university. And the idea is that in 5 minutes you learn what the average college graduate remembers 5 years after he or she's out of school. with the cost of like $20. That might seem like a lot of money, $20 just for 5 minutes. But that's for like a tuition, capping and gown, the rental, graduation, a picture, snacks, everything. Everything included. Say if you want to take a Spanish, what I teach is that means how are you? And the answer is ween means very well. And believe me, if you took two years of college Spanish, five years after out of school, That's very That's very good, David. And there's a lot of truth in that. That's why it's funny because it's true. >> Yeah, I I know. I've been to college. All right. Um I want to turn back. >> Me, too. If if I'd had if I'd had this damn book when I got out of high school, it would have accelerated my life. It would have put it on steroids. But I didn't have any guidance. Nobody was thinking about that. They all want you to go to college and become an organization man to be employed by somebody else. And the end phenomenon of the preparation is that you're ready to be an entrepreneur and employ other people, not be employed as a middle manager. So, >> sure. I mean some people look I I think your system is good for some people but I I I I observed that the majority of people don't want to be entrepreneurs and they want to be an organization person um for right or for wrong and you know the society can't function if everybody is an entrepreneur. Entrepreneurs need to hire people to work for them. So you know maybe maybe that college institution is still relevant for most people >> for some people. Yeah. But you're you're quite correct. But there's a uh a better alternative that I think would >> not for everybody. >> Sure. >> Nothing's for everybody. College itself is not for everybody. So, yep, you're right. But uh >> let's turn Yes. Let's turn back on the economy and I want to just address the um greater depression that you were talking about earlier. And in particular, let's take a listen to what Jerome Powell had to say at the Jackson Hole Symposium uh last week. Uh this is a clip where he highlighted some of the challenges that the economy is currently facing. I'm just curious if if you agree with him or not. Take a listen. >> Economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. there is significant uncertainty about where all of these policies will eventually settle and what their lasting effects on the economy will be. >> Okay. Can you evaluate what he just said? >> Yeah. The way I would read it is that he sees that there are a lot of distortions uh economic distortions and misallocations of capital that have been cranked into the economy uh in good measure because of the Federal Reserve, our central bank for many years. And if they're unwound, it's going to unemploy a lot of people and bankrupt a lot of businesses. So, he's worried about that. Of course, that's that's how I read between the lines of what he said. >> Should he be worried? Is that a legitimate worry at this point? >> It's a legitimate worry. Of course, as you know, David, I would go further and I would say that the uh Federal Reserve should be abolished. It's really nothing but an engine of inflation. Uh it's only been around for the last hundred years or so and >> we don't need a central bank. Everybody's got one. But it's just another way for the government to indirectly tax uh the citizens of the country. >> How would the country work without >> I'm just let's explore this idea further. By the way, you're not the first to talk about abolishing the Fed. Ron Paul, for example, is an advocate of abolishing the Fed. But anyway, how would the system work theoretically speaking? How would a country govern itself monetarily without a central bank? >> The way the US did before 1913 when the Fed was created, uh you you would need a sound money. That would mean a commodity money that can't be created out of thin air. Uh gold would be ideal. Uh perhaps in the years to come, it will be joined by Bitcoin. uh which I've been a fan of since 2017. Anyway, uh you don't need the Federal Reserve. Uh the way a bank historically has worked is people put their money in a bank for a period of time. The bank consolidates small deposits, lends pays 3%, lends them out at 6% to make up for possible losses. and uh and uh it's profit margin and and that's the way the banking system works. Uh real capital as opposed to phony fiat money capital. Uh the Fed serves no useful purpose. It it does nothing but distort the economy by directing credit to politically favored institutions. So uh >> you don't think that they have any role in controlling unemployment as well and keeping the unemployment rate low which is one of their mandates? >> No. As a matter of fact, it does exactly the opposite of that by destroying the currency. Uh it makes it harder for people to save money uh and cap and build capital. and capital is what you need uh to create wealth and employ people. Uh they're making the country poorer. Uh look, one of the countries that I've spent a lot of time in happens to be Zimbabwe. Uh and they have a central bank. In fact, it's the biggest building in Harrari by far, their central bank. And uh by printing up uh hundreds of trillions of dollars uh they didn't employ more people. Uh they made it impossible to destroy more people. Uh and the US is doing that. It's it's not as bad as Zimbabwe quite obviously because we have an immense amount of capital stored up in the US that we're living off of at this point. But at this point, what the US is doing is it's living off of capital that's been stored up in many many decades before and it's mortgaging itself uh for many decades of production into the future. So yeah, we're heading for a really nasty depression and the Federal Reserve is not the solution to the problem. Juggling interest rates and juggling the fiat money supply. the Federal Reserve is one of the great causes of the depression. I know that's a shock. I know that comes as a shock to a lot of people to hear that because it's about the opposite of what they learned in college uh in in the BS economic courses that are generally taught in universities today. >> You know, um former Fed chair Jenna Yelen actually uh made a joking remark that kind of mirrors what you said. Somebody asked her at a CFA event, what causes recessions? Uh I was there I attended I was in the audience and she said two things caused economic recessions. Number one economic distortions were financial distortions were her words. Financial distortions and number two the Fed. So um there was an eruption of laughter from the audience. Um I I think she was half joking. Anyway uh I will >> whether she knew it or not though she she was quite correct in in what she what she said. what should be done about Janet did Janet did quite well for herself as uh Fed chairman. It was >> it was amazing that she was paid about I don't know what it was 8 $10 million for speeches that uh banks gave her before she became uh chairman of the Fed to favorably incline her I guess. Yeah, but that's very funny. You're right, David. >> Well, what should be done about this issue? July budget deficit up 20% year-over-year despite record Trump tariff income. The US budget deficit rose 20% in July. Uh while the US saw a 20 273% increase or 21 billion increase in customs revenue in July over the same period last year mostly from tariffs. Uh overall the Treasury uh recorded a record national debt and a higher deficit. The national debt now creeps up to above the $37 trillion mark. What should be done about this? >> The national debt is never going to be paid off. It's going to be defaulted on. And it can be defaulted on one of two ways. Either in a by not paying it, which would result in a deflationary collapse, or by printing up more money to pay it, which means that the US dollar is eventually going to be hyperinflated out of existence, which would be the ultimate catastrophe for the US. And the way to solve the problem is for the US government to radically cut its spending. Uh which as I said before means abolishing wholesale lots of agencies in the government. Uh name them one after another. They all should go. Anything that these government agencies do uh could be done if it's needed by entrepreneurs in free market doing things for a profit efficiently. So uh that's the only solution. You've got to get rid of the dead end of government uh and free the country up because we're we're devolving in the US towards what China was 30 years ago. Well, before Deng Xiaoping uh freed it up. So, actually we're regressing. >> Okay, let's finish off on markets now. Before we talk about commodities, which and the resource sector, which is your preferred sector right now, let's talk about the um biggest sector, the hottest sector right now, which is AI. Uh there's an MIT study that I like to point uh to your attention. MIT study on AI profits rattles tech investors. uh driving the news. According to researchers at MIT, 95% of organizations found zero return despite enterprise investment of $30 billion to $40 billion into Gen AI. The study says this is uh they study 300 public AI initiatives to try to try and sus out the no hype reality of AI's impact on businesses. Even firms that are now using AI are not seeing widespread disruption between the lines. companies that bought AI tools were far more successful than those that built internal pilots. However, um so what they're saying here, my fear is that at some point people will wake up and say, "All right, AI is great, but maybe all this money is not actually being spent all that wisely." Um you've criticized uh tech and AI as being in a deflating bubble, I believe, where your words, you know, maybe help us make sense of this research that may or may not align with what you already think. >> Well, you're quite correct again, David. Uh AI is wonderful. It's um look the printing press was wonderful. Uh the internet was fantastic. The cell phone uh the computer all these things are fantastic and AI could be the biggest thing of all. But uh there's a speculative bubble going on in the stock market and in spending by companies like uh Meta and Google and all the rest of them building these giant data centers. And um I think this is going to be a classic example of the old saying high-tech big wreck. So uh I'm all for AI. uh not not discounting its its dangers to uh to put us into the world of the Terminator. >> You know, I' I've heard the opinion and I kind of agree, but I'll let you let you address this that robotics will be the next multi-trillion dollar industry following AI. After the software is more developed, I'm talking about the AI front. The next step is to put it in robotics that can do physical labor and things for us. >> Absolutely. AB, no question about it. Uh I mean this is all moving towards Ray Ray Kerszswhile's idea of the singularity where all of these fantastic technologies basically come together in a few years. uh bioengineering, AI, uh space exploration, robotics, nanotechnology uh and as far as robotics is concerned, absolutely correct. I mean it was only last week that in China they had a fair where they had uh how many hundreds hundreds of country companies that are building robots that it was an athletic cont. It was it was an Olympics for robots to see what they could do, play soccer, box, all this type of thing. So, uh, robotics is advancing more quickly than Moore's law. And we've all seen the videos from like Boston Dynamics here in the US. China's way, way ahead of the US, but Boston Dynamics is, I guess, our leading company. And uh they already have a robot that can operate independent. Look, in 5 years, in 10 years, as Elon Musk has said, everybody is going to have his own robot. That's the good news. The bad news is that the government's going to be replacing soldiers with actual real true-to-life terminators. So uh there's a lot of dangers uh involved in this as well as opportunity opportunities. >> Do you think at that point humanity will have an existential crisis? Many people will wonder what the relevance of them is if robots can do their jobs for them if non-scentient entities can perform tasks that people do today? You know >> well I'm not look I'm not worried about unemployment in the long run. And why is that? Because every individual on this planet has an essentially infinite desire for goods and services. So you can be employed right now or 10 years from now 24/7 providing goods and services for your fellow humans. So unemployment is not a problem and we don't you we don't need a universal basic income or any destructive nonsense such as that uh to solve the problem. But um it look it's going to create a lot of changes. Just like during the last industrial revolution uh there were millions of people that were weaving cloth at uh with hand looms in their cottages, cottage industries. They all lost their jobs. They had to go to the big cities and be remployed. Uh same thing happened when the cell phone was invented. When the computer was invented, uh typing pools vanished and all those basically women that were working in them had to do something else and they did. So, you know, people will adjust. I'm not too worried about uh that. I am worried about the financial markets though because uh uh it's the financial market is hugely skewed towards high-tech and pension funds and mutual funds and people's individual accounts are hugely skewed towards the mag seven uh high-tech stocks and if this AI um boom goes bust and I will they're going to lose a lot of money and then what are they going to do? Uh because they were looking at that money to pay their mortgages, to pay their car payments, uh to pay their student loans. Uh so what are they going to do? They're going to go whining to the government, asking the government to do something and the government will something really stupid and destructive. So um yeah. Yeah, we're heading into dangerous times. the greater depression uh is still with us. David >> Doug, what uh do you like in particular about the resource sector now if if the other sectors look a little bit frothy to you? In particular, AI and tech. Uh gold uh as you know has performed extraordinarily well in the last 18 months. It's at new all-time highs. Um platinum, palladium have done well palladium in particular skyrocketing this year. Uh, but are you still a believer in in the metals at current prices today? In other words, if somebody who had not previously invested already were to say to you, Doug, maybe I missed the boat. What would you say? >> Well, as you know, I've been a uh supporter of gold for philosophical reasons like forever. I've been buying it since it was about $45 an ounce and it's at all-time highs. So, you know, I've gotten about 100 to one on my money. I've always used it as a savings vehicle though sometimes as a speculative vehicle. Uh and to answer that question, should you buy gold now? Yeah, you should because it's the only financial asset that's not simultaneously somebody else's liability. And it's a way to get out of fiat money, whether it's the Canadian dollar or the US dollar. They're all just toilet paper that printed up at will by central banks. So yeah, you should buy gold, but for safety and security, uh it gold is right now is priced where it kind of should be relative to the price of meals or clothes or houses. It's about where it should be. It's not underpriced anymore. But uh where I am putting money is into these crappy little mining stocks, development companies, exploration companies, and producers because they're u the producers are very very profitable at the moment. the industrywide all-in sustaining cost of uh mining an ounce of gold uh it's about say $1,300 an ounce but gold is about $3,300 an ounce. So miners are coining money but the market doesn't care. Uh so I own gold miners and I own gold developers that are uh working to put a deposit that they've laid out into production as well as some explorers which are on Easter egg hunts to find deposits. And they're very volatile. And in past bull markets over the last 50 years, uh many many of these uh gold stocks have not just gone 10 to one, they've gone to 100 to one. And actually uh some have gone a thousand to one just in a few years. They're very volatile. They're as volatile as >> begs the question as to how you pick stocks. I mean, you don't have to give specific names if you don't want to, but what is your process? You're the one who addressed this to me and brought this to my attention. You said of the 2,000 or so junior miners out there in the universe of investable stocks, 95% of them are in your words crap. So, how do you select the 5%. >> Yes, that's an exact quote for me and I think I'm quite accurate uh in that. Well, uh it's been an area of specialty of mine for many years and uh in order to invest successfully in junior mining stocks uh and it's not just gold uh it can be for that matter coal and oil and uh platinum and copper nickel uh I've developed something called the nine P's uh a little pneummonic to uh help you remember what you should look at when you're looking at a stock. Uh first is the property. In order to analyze the property, you should know a little bit or maybe a lot as you learn about geology and mining engineering. Uh more important than that is the people. Who are the people in back of it? Are they have they been successful? Uh or are they just stock promoters? uh look at the paper. Where's all the stock? How much money is in the bank? The finances spelled with a ph. So when you're looking at these companies, you can go down the list and but this is the type of thing that we emphasize in this book, the preparation so that you're not a babe in the woods even in the stock market. Uh but uh yeah, it's a minefield investing in uh small resource companies just like it's a minefield investing in small biotech companies or small computer companies or almost anything. Uh and most people are unprepared for it. So what do they do? they give their money to Black Rockck or somebody like that who uh take 2% of their capital every year to make the same mistakes that they probably make as individuals. It's it's perverse. I mean, the whole economy is a bubble today. Greatly over financialized, but that's another tangent. I don't want to go off on that. >> Right. Okay. So are you more uh inclined to invest in the uh gold space, silver space, copper and nickel and base metal space uh or are they equally uh attractive to you now? >> And don't forget uranium because >> uranium. Yes, uranium. >> Yeah, because nuclear is uh I've always said is the safest, the cheapest, and the cleanest form of mass power generation. And the technology there is changing right before our very eyes. Uh so it's like what Mr. Gaus said uh China has many times more electrical uh generating capability than the US does at this point and nuclear is the only solution to that problem. So uh what am I I'm interested in all of them cuz all of these things are cheap. the stocks in particular. Nobody wants to own the stocks because uh look uh mining is a 19th century choo choo trading business. I mean, you're out playing around in the dirt with big yellow trucks. Uh so, of course, most of the younger generation doesn't want to, you know, mess around with stuff like that. But uh you know if if you want to have buildings or or knives and forks to eat with or anything uh you need the stuff that comes from mining a and then the NOS's uh will make your life miserable and native tribes and all that will try to shake you down and the government will try to shake you down. mining is a horrible business. Uh I recognize that. That's why I say it's a I've always said it's a crappy business. Most of the stocks are crappy. But that said, that's all over discounted by how cheap the stocks are right now because of those things. So um yeah, I expect that if we talk I hope uh in 6 months or a year or two years uh the average mining stock which is already perking up and they're doing quite well. Thank you very much. Uh my the average stock might have gone already 5 to one even 10 to one. I'm very very optimistic about the prospects for it. It's the only cheap place in the market. Let me let me say that. The only cheap place in the stock market is in mining stocks. They're close to the cheapest level in history relative to other stocks. >> All right. So then final question, you were uh a very well-known author even in the 80s for your work on investing during crisis. Like I mentioned, you were the bestselling author of the book Crisis Investing. How can we apply some of the lessons from that book which was published first published in 1980 I believe to the present today? Well, the market always presents new opportunities, but things are a lot different now than they were back in the 80s. uh one of the lessons that we can look at look it's the uh I call that book crisis investing uh partially because in Chinese the symbol for the word crisis is a combination of the symbol for danger and the symbol for opportunity and that is a crisis so I think we're heading into a really massive crisis uh here in in the West in many ways uh economically, financially, socially, demographically, uh militarily too. Uh you know, this war between the Ukraine and Russia, it ain't over yet. And uh not to mention the dust up between Israel and Iran, that's not over by a long shot. Uh, and there's a bunch of other places in the world that are time bombs waiting to go off. Uh, so we're going to be living in a world of crisis. And the question is you've got to build some capital and then you got to deploy it intelligently. And um the only defense against what's going on is to learn as much as you can and do develop as many skills as you can so that no matter what happens, they'll be able to land on your feet. Don't be a one-trick pony. Not in today's world. You never should have been anytime, but I think now more than ever. I guess that's the only general advice that I that I can give. Uh don't spend your time online watching funny cat videos. I mean, you should spend your time online trying to learn something that's going to improve your status in the world and thereby improve the world itself. By making yourself better, you make the world better. >> Well, I the best type of altruism. >> That that that's good advice. I mean, I I I I happen to like the cat videos, but I I'll cut down on those. Thank you, Chuck. >> I do, too. >> We all do. >> I I I I like talking to you more than the cat videos, and I like reading your work more than the cat videos. So, where can we read your work, Doug? >> Well, look, people should buy this book. They're going to be very happy if they do, especially if you've got kids that are approaching college age. Or for that matter, if you're if you're in a dead-end job and having a mid a midlife crisis, you should buy this book. It's on Amazon, and I think you're going to be very happy with it. So, uh I guess uh that's what I'd say. Listen, I hate to be selling something because, uh you know, I don't need to sell anything. I mean, I I'm just fine. Life has treated me really well. Uh, but uh to me, it's kind of a good karma thing. Uh, and I'd like people to follow the instruction here because I wish I'd had this damn book when I was 18 years old myself. I >> I'd be curious to read a book that you wrote on how to prepare for investing. Oh, sorry. Uh, retirement. Not investing. Uh, retirement. Um, I I I I wonder if you've ever done work on that. I mean, this the preparation is a book on how to prepare for the start of your career. How do you prepare then for the end of your career? I I'd be curious to get your thoughts, but >> I I don't think that uh you should retire, David. Uh because what does that mean? What are you going to do? Sit on the front porch and feed the pigeons or go fishing every day? I mean uh I think it's incumbent upon all of us as individuals to be productive to produce more than we consume. So you can consume more too. That's good. And you can't consume unless you produce. >> So uh I don't believe in retirement. Uh quite frankly it's uh it's a trap to think you're going to retire. Uh if anything, you should change your occupation and do something else that you might like better, that you might find more interesting, more stimulating. And uh that's why actually this book is probably even better for somebody who's 65 and wondering what to do with themsel for somebody that's 18. I don't know. It's the way I live my life, quite frankly. >> Okay. Well, good good stuff, Doug. We'll put the links down below. So, make sure to follow Doug at the International Man and also check out his new book. We'll put the Amazon link as well in the description. Welcome back to the show, Doug. It's always good to see you. We'll speak next time. >> I look forward to it, David. Thank you. >> And thank you for watching. Don't forget to like and subscribe. [Applause]
'Greater Depression' Triggered: What Happens After Debt Default | Doug Casey
Summary
Transcript
I think we're heading into a really massive crisis uh here in in the West in many ways. The dust up between Israel and Iran, that's not over by a long shot. Uh and there's a bunch of other places in the world that are time bombs waiting to go off. Our next guest has argued that a greater depression may be upon us. What does this look like? Are we entering the stages now? Uh what is unraveling with Trump's policies? and how will these policies affect not just corporate America but our investments? Doc Casey joins us once more. He is a best-selling author of crisis investing and the international man. Recently he's published a new book called uh the preparation. We'll talk about that. Uh he's also the author of a number of other works including his series on uh Charles Knight uh the fictional character who's gone through um several different phases in at least three different books. So uh we'll talk about some of that. Thank you very much Doug. Welcome back to the show. >> Well it's always good to be here with you David. I'm not I'm not in Buenosares at the moment which is where I usually am. Uh, I'm on the shores of the Chesapeake Bay, uh, in Virginia, uh, because it's summer here and it's winter in Buenosaris. So, uh, time to fly north. How how are you liking it now? I I remember speaking to you last time you were in Argentina and we actually talked about Argentina briefly, so good to have you back in the US. Are you liking the transition? >> Uh, yeah. Well, I go where the I go where the weather suits my clothes. Uh, which is to say I like summer. But as far as Argentina's concerned, uh, I've been a huge supporter of Malay's policies because, uh, as all the world knows, uh, he's, uh, the first anarcho capitalist in world history, uh, to have won a national election. And by an anarchal capitalist uh I mean somebody that does not believe in government as an institution and is doing has been doing his best to uh disband the Argentine government which has been pathological for the last 80 years. So uh Argentina is looking quite good uh much much better than it was before Malay was elected. I'm very happy to have made a big bet on Argentina some years ago. U it's paying off because he's he's upsetting the entire political and economic uh super structure of Argentina. >> In which way can the West learn from MLE? Well, you've got to uh attempt to totally abolish many regulatory agencies and fire all the people that live there. And when I say abolish, I don't mean cut back. I mean pull them out by their roots. And so Agent Orange where they grew because most of the uh infrastructure of government uh serves no useful purpose. Well, that's understating it. Uh is corrupting and destructive of capital and uh uh holds down entrepreneurialism and production. So Malay is in the process of changing Argentina from a country that uh was modeled by Juan Peron after Mussolini's Italy, a genuine fascist country where the state and corporations are handin glove together and he's trying to free marketize it. Uh we'll see uh if he uh uh wins the u uh elections that are coming up in two couple of months uh to see if he can take over the Congress. Right now he's like Trump doing a lot of things by executive order which is kind of risky. Uh what he needs to do is change the laws. So if he wins the elections in a couple of months, uh, Argentina is going to totally overturn its past sorted 80 years of history. You know, it used to be one of the three or four most prosperous countries in the world 100 years ago. Now it's just another third world country. So anyway, >> turning to turning back to the rest of the world in the US, uh, how close or far away are we to this greater depression that you've been talking about? uh given Trump's policies. I believe we spoke just after the inauguration or shortly around that time and so a lot has changed, a lot has developed. How would you evaluate the last 9 months or so? And um are we closer? We're farther away from this greater depression. >> Well, Trump is a mixed bag. Uh there are some things that you have to love about them and some things that are really stupid and destructive. But let me say this, it's that uh given a choice between Trump and uh uh Camela uh there was no choice. uh the US was sliding down down downhill uh to become uh a highly regulated, highly taxed socialist state and something had to be done. Uh Trump was not the optimal solution but thank God we dodged the bullet with the uh Democrats and Kamla. The thing that worries me most about Trump are his um are his tariffs, which uh amount to a gigantic tax increase on the American public because of course tariffs are something that importers pay, which is to say the residents of the US pay. And not only is it hurting uh the average his tariffs are hurting the average American, but uh they're hurting uh our partners that we trade with. So it's uh uh I understand why Trump put on the tariffs because he's trying to bring manufacturing back to the US, but he's trying to bring it back in an artificial way. He's creating another distortion in the economy. And to answer your earlier question, uh the greater depression, uh yeah, we're uh we're on schedule for that. A depression uh you'll recall is a period of time when most people's standard of living drops significantly. And uh you can argue that that's been going on for some years uh because the uh the state in the US the government has been growing and growing and growing uh at the expense of the private economy. uh and these two trillion or even $3 trillion a year deficits that the government is running is coming directly and indirectly out of the pockets of the American people. So yeah, the answer to the question is we're headed for something uh that uh is going to be much worse and much longerlasting and much different than the unpleasantness of 1929 to 1946. I know that's a radical statement to make but uh and there are things that are ameliorating uh that trend uh which we could talk about but uh uh I'm not uh very sanguin about any of the markets in North America today with one exception uh the resource market uh which is where you are in Vancouver. You've heard me talk a lot recently about rising gold prices and how important it is to be building your savings in hard assets like gold and silver. But what if I told you that you could do a lot more than just holding gold? What if you could also earn income from it pay in gold? That's exactly what today's sponsor, Monetary Metals, is doing. They're revolutionizing how people invest in gold and silver. Instead of paying to store your metal or watching it sit idle, now you can get paid to own it. Right now in the marketplace, you can earn up to 4% interest on gold paid in gold. That means your holdings grow in actual ounces, not dollars, on top of any price appreciation. Interest is paid monthly in physical gold, which you can redeem and take delivery of. Thousands of investors are already earning real interest in physical gold and silver through monetary medals every month. It's time you did as well. Go to monetary-medals.com/lin link down below or scan the QR code here to learn more and get started. Yes, that's right. Uh capital of mining. Yes, we'll talk about the resource sector and also your greater depression thesis in just a bit in more detail. I want to play for you this clip. Uh it's an interview with an expert on China relations. His name is Victor Gao from 60 Minutes Australia. This references your uh earlier statement and um and uh remarks about manufacturing, bringing manufacturing back home. This is what he had to say. Take a listen where we act together. >> Do you accept that Mr. Trump is is trying to protect his businesses and jobs? >> No. First of all, the maximum tariff against the rest of the world, including against China, will not move manufacturing jobs back to the United States. If President Trump is serious, President Trump need to talk with China because China has been the most successful manufacturing country in the world today. China's manufacturing output is larger than EU, US, Japan combined together. And China produces about six times more power for industrial use than the United States does. So if President Trump is serious about recreating manufacturing jobs in the United States, he need to do several things. And I offer this advice without charging him a penny. He need to build up connectivity, build up container ports, build up highspeed railway, build up high quality uh highway system for example, build up inner river uh transportation and he need to increase power generation like crazy. He need to at least double the power capacity in the United States to really achieve meaningful amount of manufacturing jobs back to the United States. He need to train the American people. He need to instill this discipline and work ethics which will enable the great people in the United States to work in factories which need to be competitive which need to be have the marketability not only in the US market but in the global market. Okay, I'll stop there. Uh, I mean, notwithstanding the fact that the US already has the most sophisticated infrastructure in the world, but what what about his other remarks? What of it? >> Uh, I agree 100% with Mr. Gao. Uh, it was Mr. Ga, wasn't it? >> Yes. Victor Ga. Yes. >> Yes. Everything he said is quite correct with one critical exception. He's seems to be looking for Trump to do these things. Uh, America could be competitive with China, uh, but not by putting on tariffs, but by freeing itself up. And that's not something Trump can do by doing things. The way for America to win is by getting the government out of people's hair. So Trump doesn't have to actively do anything. What Trump has to do is follow the path of Malay and Argentina and uh abolish regulations and get rid of taxes. Uh that is what will make America as competitive as China. If anything will uh so he's right, but his solution is a little bit offkilter. Trump should not be doing actual things like look what Trump's doing. uh taking 10% of Intel corporation having golden shares and US steel. Uh uh this is this is economic fascism. He should be disinvolving the US government from the economy as opposed to involving it more more um deeply. Incidentally, uh my first novel, Speculator, has just been published in Chinese. I don't know if you can see it. I'm not >> yes not marketing it but I agree with Mr. Mr. G's analysis in many ways though. >> Well, what is economic fascism? Are governments not in theory allowed to or supposed to be participating in the free markets by buying shares of a company or uh suggesting some sort of partnership whereby in this case that you mentioned the company will provide a certain revenue. I think Nvidia will give a certain revenue of chip sales to China to the US government in exchange for access to the US markets I guess um in perpetuity. >> Yeah, this is exactly the opposite of what the government should be doing. Look, what should the government be doing? Uh the government is a coercive power. It's a dead hand on the economy. So what should the government do? Since the government is force, it's coercion. That's the nature of the state. It should do nothing but protect people from force and coercion. What does that mean? It means uh uh a military to protect the citizens from coercion from abroad, police to protect uh them from criminals and coercion in the country and a court system to allow them to adjudicate disputes without resorting to force. And it shouldn't do anything else. it shouldn't have any involvement in the economy. Uh the result of government involvement in the economy is creating distortions which lead to a depression eventually and corruption as uh government officials uh find ways to enrich themselves. So, uh, he should be, uh, doing kind of the opposite of what he's doing and get rid of his shares in US Steel and Invidia, whatever else, but he's going just the opposite way. So, the prognosis, the long-term prognosis for what Trump is doing is not good, but a lot better than what it would have been if Kamala had been elected. The idea here is that maybe there's short-term pain, meaning some shareholders might not like this idea. Actually, Invidia shares haven't really declined much on this news. Uh, but that's a different story. Uh, I know personally several people who have struggled with their import export businesses because of tariffs, had to lay people off and whatnot. Uh the idea here is that they're short-term paying for long-term gain, meaning potentially this could revitalize American manufacturing, bring back jobs, reinvigorate the overall labor force. >> David, the way to invigorate the uh US economy, as I said, is not by putting on tariffs, which hurt the American people as well as our foreign trading partners. The way to solve the problem is by deregulating the US economy and radically cutting taxes as well and radically cutting government spending so that you can cut taxes. In other words, freeing the American economy up. He's doing just the opposite, I'm afraid. >> What should that process look like, Doug? If we were to if you were to instill these policies yourself, if you were the president and you had to by constituents orders make America freer, make America greater again, what would you do? >> Well, one thing that Trump has done which is absolutely wonderful is abolishing US aid uh which was spending how much was their budget? Uh $40 billion a year gigantic. So he's a boiler sled agency which was just a giveaway scheme to uh uh transferring money from uh like like all foreign aid schemes. That's basically what US ID was taking money from poor people in a rich country America and giving it to rich people in foreign countries. Uh USAID was full of corruption. Now what he did to USA ID should be done throughout the US government. Those all those buildings in Washington DC should be emptied and the people that are working in them should find something productive to do in the real economy. That's what I would do. >> Okay. Uh this also leads to ultimately uh your book the preparation. uh uh the training of the labor force starts at the education age which is something that your book addresses in detail. So the the standard procedure is finish high school, go to college, get a job, perhaps get a master's degree, go back to the workforce, you know, rinse and repeat. Is that the way forward? Yeah, that that is no longer uh once once upon a time uh like 50 years ago that was uh arguably a formula for success. Get get a college education. But the world has changed and even 50 years ago when people were getting a college education, it was marginal. But today, college is uh going to college can bankrupt you. But that's not the real problem. The fact that most kids uh get out of college with a huge albatross of debt around their necks. Uh the real problem is that college isn't just a neutral experience. Uh it's no longer a positive experience. It's uh you're jumping into a cesspool. Most of the professors in most colleges today, it's unbelievable, but it's true, are woke or Marxists or worse. Uh, so college is a corrupting influence. Uh, a young man will go to college for four years, which is really like extended adolescence these days. Uh, kind of living in luxury. I'm not talking incidentally about going to college for STEM courses, science, technology, engineering, math, math. That's different. Uh a formal structured environment can be very beneficial for those things. Medicine, law, but most people don't take these things. Most people take liberal arts. uh and what I'm suggesting is during those four years of time uh a young man do something that we call the preparation. Uh what we've done in this book is we divide the four years or uh after you graduate from high school into 16 quarters and in each of these quarters uh you set a task for yourself in addition to the uh academic studies which will would continue. I'll tell you how like over the course of the four years when most people just sit in a desk and listen to lectures and a lot of time cut their classes because they've been out partying the night before. I'm I'm speaking from my own experience having gone to college and I think most people's uh or falling asleep in class or taking bad notes or letting their mind wander when the professor is talking if the professor is any good and you don't just have a substandard teaching assistant. So we've solved that problem I think with uh the way we would deliver courses but young men want to go out and do things not be lectured to. So when they take the preparation uh you'll learn like for instance you might go to um Florida for 3 weeks and learn to drive heavy equipment. Does that mean that you're going to be a heavy equipment driver? No. But you'll know something that very few other people know how to how to do. You'll spend a month in Maine learning how to build a house so that you'll learn how to be an electrician, a plumber, uh a carpenter, uh to a apprentice level. Anyway, uh these skills will last you the rest of your life. Uh you'll learn to fly a plane in Alaska. Uh you'll go to Thailand for three months during one of our one of our uh quarterly cycles we call them and take martial arts, Muay Thai, so that uh every young man should know how to handle himself if things get rough. So that um at the end of four years when most people might just have a degree uh you'll already have broad experience in many subjects all over the world. The idea is to become a renaissance man. David, everybody should attempt to be a renaissance man. what the Italians of those days called an omo universal a universal man >> this sounds like a good system uh a good alternative and I don't think anyone listening would disagree with you that a lot of college courses that we took are not even in the uh frontal lobe of our memories right now but when we even talk about this take a look at the stat I mean we say this but there is still according to labor statistics a correlation between higher education and income even today which persists and people look at this as justification for investing in four years of a college degree. So look look at this less than a high school diploma your chances of unemployment the unemployment rate is 6.2% and it goes down dramatically as you progress through the um higher education tree. >> That's that's confusing cause and effect. The reason why college graduates earn more than people that don't have college educations is because they're smarter. That's why they went to college. So, of course, people that are brighter are going to do well, but it's not because of college. Uh it's because they're naturally more enterprising and h have higher IQs, but they're misallocating that time in college. You get out of college, you're burdened by debt. Uh you've picked up lots of bad ideas from your professors uh who who are trying to indoctrinate you with woke ideas which have totally conquered academia. So the cause and the effect are confused uh with that. Uh you don't h earn a higher income because you went to college. uh >> it it's it's you're earning a higher income because you have you're you're brighter typically, but you shouldn't waste that intelligence uh with the uh preparation. We suggest uh that it's possible to get both a bachelor of arts degree where you're learning history and English. Basically, the these are the two main things, but skipping things that they're trying to indoctrinate you with in a college like sociology, psychology, political science, and so forth by taking courses from oh MIT and Oxford are two universities that offer free courses uh online. And I like the teaching company especially because they've rounded up worldclass professors who give command performance lectures that are very entertaining and you can listen to them numerous times to learn a subject. So at the end of the preparation which is four years in addition to doing all these fun things that we just talked about uh you'll have the knowledge of a BA you'll also have the knowledge of a BS uh taking a bachelor of science uh by taking courses online uh >> physics, chemistry, biology, astronomy and on top of that because even if you have a Bachelor of Science and a Bachelor of Arts from a college. Uh very valuable knowledge but no practical application when you're looking to get a job. That's why we have uh uh four quarters devoted to what you learn in an MBA. Marketing, sales, uh business administration, accounting, law, which most college graduates know nothing about. So uh we're cramming a lot into uh into this time uh these four years, but those four years are among the most valuable in your life. You're like a sponge and you should be absorbing all the knowledge and all the experience that you can. Look, I'm of the opinion that once a young man gets out of high school, he should go on what Joseph Campbell called a hero's journey. Challenge yourself. Do things that other young men are not doing. And that's what this book is all about. >> I want to play for you this skit to end this conversation on this segment. And before we move back to the economy, this is um I'm not sure if you're aware, Father Guido Sarduchi. It's a fictional character by the comedian Nollo in the 70s. Okay. He has a he has a what he calls a fiveminute university. I'll just play a minute and then you know this is comic relief here. >> I got this idea for a school. I would like to start with something called the fiveminute university. And the idea is that in 5 minutes you learn what the average college graduate remembers 5 years after he or she's out of school. with the cost of like $20. That might seem like a lot of money, $20 just for 5 minutes. But that's for like a tuition, capping and gown, the rental, graduation, a picture, snacks, everything. Everything included. Say if you want to take a Spanish, what I teach is that means how are you? And the answer is ween means very well. And believe me, if you took two years of college Spanish, five years after out of school, That's very That's very good, David. And there's a lot of truth in that. That's why it's funny because it's true. >> Yeah, I I know. I've been to college. All right. Um I want to turn back. >> Me, too. If if I'd had if I'd had this damn book when I got out of high school, it would have accelerated my life. It would have put it on steroids. But I didn't have any guidance. Nobody was thinking about that. They all want you to go to college and become an organization man to be employed by somebody else. And the end phenomenon of the preparation is that you're ready to be an entrepreneur and employ other people, not be employed as a middle manager. So, >> sure. I mean some people look I I think your system is good for some people but I I I I observed that the majority of people don't want to be entrepreneurs and they want to be an organization person um for right or for wrong and you know the society can't function if everybody is an entrepreneur. Entrepreneurs need to hire people to work for them. So you know maybe maybe that college institution is still relevant for most people >> for some people. Yeah. But you're you're quite correct. But there's a uh a better alternative that I think would >> not for everybody. >> Sure. >> Nothing's for everybody. College itself is not for everybody. So, yep, you're right. But uh >> let's turn Yes. Let's turn back on the economy and I want to just address the um greater depression that you were talking about earlier. And in particular, let's take a listen to what Jerome Powell had to say at the Jackson Hole Symposium uh last week. Uh this is a clip where he highlighted some of the challenges that the economy is currently facing. I'm just curious if if you agree with him or not. Take a listen. >> Economy has faced new challenges. Significantly higher tariffs across our trading partners are remaking the global trading system. Tighter immigration policy has led to an abrupt slowdown in labor force growth. Over the longer run, changes in tax, spending, and regulatory policies may also have important implications for economic growth and productivity. there is significant uncertainty about where all of these policies will eventually settle and what their lasting effects on the economy will be. >> Okay. Can you evaluate what he just said? >> Yeah. The way I would read it is that he sees that there are a lot of distortions uh economic distortions and misallocations of capital that have been cranked into the economy uh in good measure because of the Federal Reserve, our central bank for many years. And if they're unwound, it's going to unemploy a lot of people and bankrupt a lot of businesses. So, he's worried about that. Of course, that's that's how I read between the lines of what he said. >> Should he be worried? Is that a legitimate worry at this point? >> It's a legitimate worry. Of course, as you know, David, I would go further and I would say that the uh Federal Reserve should be abolished. It's really nothing but an engine of inflation. Uh it's only been around for the last hundred years or so and >> we don't need a central bank. Everybody's got one. But it's just another way for the government to indirectly tax uh the citizens of the country. >> How would the country work without >> I'm just let's explore this idea further. By the way, you're not the first to talk about abolishing the Fed. Ron Paul, for example, is an advocate of abolishing the Fed. But anyway, how would the system work theoretically speaking? How would a country govern itself monetarily without a central bank? >> The way the US did before 1913 when the Fed was created, uh you you would need a sound money. That would mean a commodity money that can't be created out of thin air. Uh gold would be ideal. Uh perhaps in the years to come, it will be joined by Bitcoin. uh which I've been a fan of since 2017. Anyway, uh you don't need the Federal Reserve. Uh the way a bank historically has worked is people put their money in a bank for a period of time. The bank consolidates small deposits, lends pays 3%, lends them out at 6% to make up for possible losses. and uh and uh it's profit margin and and that's the way the banking system works. Uh real capital as opposed to phony fiat money capital. Uh the Fed serves no useful purpose. It it does nothing but distort the economy by directing credit to politically favored institutions. So uh >> you don't think that they have any role in controlling unemployment as well and keeping the unemployment rate low which is one of their mandates? >> No. As a matter of fact, it does exactly the opposite of that by destroying the currency. Uh it makes it harder for people to save money uh and cap and build capital. and capital is what you need uh to create wealth and employ people. Uh they're making the country poorer. Uh look, one of the countries that I've spent a lot of time in happens to be Zimbabwe. Uh and they have a central bank. In fact, it's the biggest building in Harrari by far, their central bank. And uh by printing up uh hundreds of trillions of dollars uh they didn't employ more people. Uh they made it impossible to destroy more people. Uh and the US is doing that. It's it's not as bad as Zimbabwe quite obviously because we have an immense amount of capital stored up in the US that we're living off of at this point. But at this point, what the US is doing is it's living off of capital that's been stored up in many many decades before and it's mortgaging itself uh for many decades of production into the future. So yeah, we're heading for a really nasty depression and the Federal Reserve is not the solution to the problem. Juggling interest rates and juggling the fiat money supply. the Federal Reserve is one of the great causes of the depression. I know that's a shock. I know that comes as a shock to a lot of people to hear that because it's about the opposite of what they learned in college uh in in the BS economic courses that are generally taught in universities today. >> You know, um former Fed chair Jenna Yelen actually uh made a joking remark that kind of mirrors what you said. Somebody asked her at a CFA event, what causes recessions? Uh I was there I attended I was in the audience and she said two things caused economic recessions. Number one economic distortions were financial distortions were her words. Financial distortions and number two the Fed. So um there was an eruption of laughter from the audience. Um I I think she was half joking. Anyway uh I will >> whether she knew it or not though she she was quite correct in in what she what she said. what should be done about Janet did Janet did quite well for herself as uh Fed chairman. It was >> it was amazing that she was paid about I don't know what it was 8 $10 million for speeches that uh banks gave her before she became uh chairman of the Fed to favorably incline her I guess. Yeah, but that's very funny. You're right, David. >> Well, what should be done about this issue? July budget deficit up 20% year-over-year despite record Trump tariff income. The US budget deficit rose 20% in July. Uh while the US saw a 20 273% increase or 21 billion increase in customs revenue in July over the same period last year mostly from tariffs. Uh overall the Treasury uh recorded a record national debt and a higher deficit. The national debt now creeps up to above the $37 trillion mark. What should be done about this? >> The national debt is never going to be paid off. It's going to be defaulted on. And it can be defaulted on one of two ways. Either in a by not paying it, which would result in a deflationary collapse, or by printing up more money to pay it, which means that the US dollar is eventually going to be hyperinflated out of existence, which would be the ultimate catastrophe for the US. And the way to solve the problem is for the US government to radically cut its spending. Uh which as I said before means abolishing wholesale lots of agencies in the government. Uh name them one after another. They all should go. Anything that these government agencies do uh could be done if it's needed by entrepreneurs in free market doing things for a profit efficiently. So uh that's the only solution. You've got to get rid of the dead end of government uh and free the country up because we're we're devolving in the US towards what China was 30 years ago. Well, before Deng Xiaoping uh freed it up. So, actually we're regressing. >> Okay, let's finish off on markets now. Before we talk about commodities, which and the resource sector, which is your preferred sector right now, let's talk about the um biggest sector, the hottest sector right now, which is AI. Uh there's an MIT study that I like to point uh to your attention. MIT study on AI profits rattles tech investors. uh driving the news. According to researchers at MIT, 95% of organizations found zero return despite enterprise investment of $30 billion to $40 billion into Gen AI. The study says this is uh they study 300 public AI initiatives to try to try and sus out the no hype reality of AI's impact on businesses. Even firms that are now using AI are not seeing widespread disruption between the lines. companies that bought AI tools were far more successful than those that built internal pilots. However, um so what they're saying here, my fear is that at some point people will wake up and say, "All right, AI is great, but maybe all this money is not actually being spent all that wisely." Um you've criticized uh tech and AI as being in a deflating bubble, I believe, where your words, you know, maybe help us make sense of this research that may or may not align with what you already think. >> Well, you're quite correct again, David. Uh AI is wonderful. It's um look the printing press was wonderful. Uh the internet was fantastic. The cell phone uh the computer all these things are fantastic and AI could be the biggest thing of all. But uh there's a speculative bubble going on in the stock market and in spending by companies like uh Meta and Google and all the rest of them building these giant data centers. And um I think this is going to be a classic example of the old saying high-tech big wreck. So uh I'm all for AI. uh not not discounting its its dangers to uh to put us into the world of the Terminator. >> You know, I' I've heard the opinion and I kind of agree, but I'll let you let you address this that robotics will be the next multi-trillion dollar industry following AI. After the software is more developed, I'm talking about the AI front. The next step is to put it in robotics that can do physical labor and things for us. >> Absolutely. AB, no question about it. Uh I mean this is all moving towards Ray Ray Kerszswhile's idea of the singularity where all of these fantastic technologies basically come together in a few years. uh bioengineering, AI, uh space exploration, robotics, nanotechnology uh and as far as robotics is concerned, absolutely correct. I mean it was only last week that in China they had a fair where they had uh how many hundreds hundreds of country companies that are building robots that it was an athletic cont. It was it was an Olympics for robots to see what they could do, play soccer, box, all this type of thing. So, uh, robotics is advancing more quickly than Moore's law. And we've all seen the videos from like Boston Dynamics here in the US. China's way, way ahead of the US, but Boston Dynamics is, I guess, our leading company. And uh they already have a robot that can operate independent. Look, in 5 years, in 10 years, as Elon Musk has said, everybody is going to have his own robot. That's the good news. The bad news is that the government's going to be replacing soldiers with actual real true-to-life terminators. So uh there's a lot of dangers uh involved in this as well as opportunity opportunities. >> Do you think at that point humanity will have an existential crisis? Many people will wonder what the relevance of them is if robots can do their jobs for them if non-scentient entities can perform tasks that people do today? You know >> well I'm not look I'm not worried about unemployment in the long run. And why is that? Because every individual on this planet has an essentially infinite desire for goods and services. So you can be employed right now or 10 years from now 24/7 providing goods and services for your fellow humans. So unemployment is not a problem and we don't you we don't need a universal basic income or any destructive nonsense such as that uh to solve the problem. But um it look it's going to create a lot of changes. Just like during the last industrial revolution uh there were millions of people that were weaving cloth at uh with hand looms in their cottages, cottage industries. They all lost their jobs. They had to go to the big cities and be remployed. Uh same thing happened when the cell phone was invented. When the computer was invented, uh typing pools vanished and all those basically women that were working in them had to do something else and they did. So, you know, people will adjust. I'm not too worried about uh that. I am worried about the financial markets though because uh uh it's the financial market is hugely skewed towards high-tech and pension funds and mutual funds and people's individual accounts are hugely skewed towards the mag seven uh high-tech stocks and if this AI um boom goes bust and I will they're going to lose a lot of money and then what are they going to do? Uh because they were looking at that money to pay their mortgages, to pay their car payments, uh to pay their student loans. Uh so what are they going to do? They're going to go whining to the government, asking the government to do something and the government will something really stupid and destructive. So um yeah. Yeah, we're heading into dangerous times. the greater depression uh is still with us. David >> Doug, what uh do you like in particular about the resource sector now if if the other sectors look a little bit frothy to you? In particular, AI and tech. Uh gold uh as you know has performed extraordinarily well in the last 18 months. It's at new all-time highs. Um platinum, palladium have done well palladium in particular skyrocketing this year. Uh, but are you still a believer in in the metals at current prices today? In other words, if somebody who had not previously invested already were to say to you, Doug, maybe I missed the boat. What would you say? >> Well, as you know, I've been a uh supporter of gold for philosophical reasons like forever. I've been buying it since it was about $45 an ounce and it's at all-time highs. So, you know, I've gotten about 100 to one on my money. I've always used it as a savings vehicle though sometimes as a speculative vehicle. Uh and to answer that question, should you buy gold now? Yeah, you should because it's the only financial asset that's not simultaneously somebody else's liability. And it's a way to get out of fiat money, whether it's the Canadian dollar or the US dollar. They're all just toilet paper that printed up at will by central banks. So yeah, you should buy gold, but for safety and security, uh it gold is right now is priced where it kind of should be relative to the price of meals or clothes or houses. It's about where it should be. It's not underpriced anymore. But uh where I am putting money is into these crappy little mining stocks, development companies, exploration companies, and producers because they're u the producers are very very profitable at the moment. the industrywide all-in sustaining cost of uh mining an ounce of gold uh it's about say $1,300 an ounce but gold is about $3,300 an ounce. So miners are coining money but the market doesn't care. Uh so I own gold miners and I own gold developers that are uh working to put a deposit that they've laid out into production as well as some explorers which are on Easter egg hunts to find deposits. And they're very volatile. And in past bull markets over the last 50 years, uh many many of these uh gold stocks have not just gone 10 to one, they've gone to 100 to one. And actually uh some have gone a thousand to one just in a few years. They're very volatile. They're as volatile as >> begs the question as to how you pick stocks. I mean, you don't have to give specific names if you don't want to, but what is your process? You're the one who addressed this to me and brought this to my attention. You said of the 2,000 or so junior miners out there in the universe of investable stocks, 95% of them are in your words crap. So, how do you select the 5%. >> Yes, that's an exact quote for me and I think I'm quite accurate uh in that. Well, uh it's been an area of specialty of mine for many years and uh in order to invest successfully in junior mining stocks uh and it's not just gold uh it can be for that matter coal and oil and uh platinum and copper nickel uh I've developed something called the nine P's uh a little pneummonic to uh help you remember what you should look at when you're looking at a stock. Uh first is the property. In order to analyze the property, you should know a little bit or maybe a lot as you learn about geology and mining engineering. Uh more important than that is the people. Who are the people in back of it? Are they have they been successful? Uh or are they just stock promoters? uh look at the paper. Where's all the stock? How much money is in the bank? The finances spelled with a ph. So when you're looking at these companies, you can go down the list and but this is the type of thing that we emphasize in this book, the preparation so that you're not a babe in the woods even in the stock market. Uh but uh yeah, it's a minefield investing in uh small resource companies just like it's a minefield investing in small biotech companies or small computer companies or almost anything. Uh and most people are unprepared for it. So what do they do? they give their money to Black Rockck or somebody like that who uh take 2% of their capital every year to make the same mistakes that they probably make as individuals. It's it's perverse. I mean, the whole economy is a bubble today. Greatly over financialized, but that's another tangent. I don't want to go off on that. >> Right. Okay. So are you more uh inclined to invest in the uh gold space, silver space, copper and nickel and base metal space uh or are they equally uh attractive to you now? >> And don't forget uranium because >> uranium. Yes, uranium. >> Yeah, because nuclear is uh I've always said is the safest, the cheapest, and the cleanest form of mass power generation. And the technology there is changing right before our very eyes. Uh so it's like what Mr. Gaus said uh China has many times more electrical uh generating capability than the US does at this point and nuclear is the only solution to that problem. So uh what am I I'm interested in all of them cuz all of these things are cheap. the stocks in particular. Nobody wants to own the stocks because uh look uh mining is a 19th century choo choo trading business. I mean, you're out playing around in the dirt with big yellow trucks. Uh so, of course, most of the younger generation doesn't want to, you know, mess around with stuff like that. But uh you know if if you want to have buildings or or knives and forks to eat with or anything uh you need the stuff that comes from mining a and then the NOS's uh will make your life miserable and native tribes and all that will try to shake you down and the government will try to shake you down. mining is a horrible business. Uh I recognize that. That's why I say it's a I've always said it's a crappy business. Most of the stocks are crappy. But that said, that's all over discounted by how cheap the stocks are right now because of those things. So um yeah, I expect that if we talk I hope uh in 6 months or a year or two years uh the average mining stock which is already perking up and they're doing quite well. Thank you very much. Uh my the average stock might have gone already 5 to one even 10 to one. I'm very very optimistic about the prospects for it. It's the only cheap place in the market. Let me let me say that. The only cheap place in the stock market is in mining stocks. They're close to the cheapest level in history relative to other stocks. >> All right. So then final question, you were uh a very well-known author even in the 80s for your work on investing during crisis. Like I mentioned, you were the bestselling author of the book Crisis Investing. How can we apply some of the lessons from that book which was published first published in 1980 I believe to the present today? Well, the market always presents new opportunities, but things are a lot different now than they were back in the 80s. uh one of the lessons that we can look at look it's the uh I call that book crisis investing uh partially because in Chinese the symbol for the word crisis is a combination of the symbol for danger and the symbol for opportunity and that is a crisis so I think we're heading into a really massive crisis uh here in in the West in many ways uh economically, financially, socially, demographically, uh militarily too. Uh you know, this war between the Ukraine and Russia, it ain't over yet. And uh not to mention the dust up between Israel and Iran, that's not over by a long shot. Uh, and there's a bunch of other places in the world that are time bombs waiting to go off. Uh, so we're going to be living in a world of crisis. And the question is you've got to build some capital and then you got to deploy it intelligently. And um the only defense against what's going on is to learn as much as you can and do develop as many skills as you can so that no matter what happens, they'll be able to land on your feet. Don't be a one-trick pony. Not in today's world. You never should have been anytime, but I think now more than ever. I guess that's the only general advice that I that I can give. Uh don't spend your time online watching funny cat videos. I mean, you should spend your time online trying to learn something that's going to improve your status in the world and thereby improve the world itself. By making yourself better, you make the world better. >> Well, I the best type of altruism. >> That that that's good advice. I mean, I I I I happen to like the cat videos, but I I'll cut down on those. Thank you, Chuck. >> I do, too. >> We all do. >> I I I I like talking to you more than the cat videos, and I like reading your work more than the cat videos. So, where can we read your work, Doug? >> Well, look, people should buy this book. They're going to be very happy if they do, especially if you've got kids that are approaching college age. Or for that matter, if you're if you're in a dead-end job and having a mid a midlife crisis, you should buy this book. It's on Amazon, and I think you're going to be very happy with it. So, uh I guess uh that's what I'd say. Listen, I hate to be selling something because, uh you know, I don't need to sell anything. I mean, I I'm just fine. Life has treated me really well. Uh, but uh to me, it's kind of a good karma thing. Uh, and I'd like people to follow the instruction here because I wish I'd had this damn book when I was 18 years old myself. I >> I'd be curious to read a book that you wrote on how to prepare for investing. Oh, sorry. Uh, retirement. Not investing. Uh, retirement. Um, I I I I wonder if you've ever done work on that. I mean, this the preparation is a book on how to prepare for the start of your career. How do you prepare then for the end of your career? I I'd be curious to get your thoughts, but >> I I don't think that uh you should retire, David. Uh because what does that mean? What are you going to do? Sit on the front porch and feed the pigeons or go fishing every day? I mean uh I think it's incumbent upon all of us as individuals to be productive to produce more than we consume. So you can consume more too. That's good. And you can't consume unless you produce. >> So uh I don't believe in retirement. Uh quite frankly it's uh it's a trap to think you're going to retire. Uh if anything, you should change your occupation and do something else that you might like better, that you might find more interesting, more stimulating. And uh that's why actually this book is probably even better for somebody who's 65 and wondering what to do with themsel for somebody that's 18. I don't know. It's the way I live my life, quite frankly. >> Okay. Well, good good stuff, Doug. We'll put the links down below. So, make sure to follow Doug at the International Man and also check out his new book. We'll put the Amazon link as well in the description. Welcome back to the show, Doug. It's always good to see you. We'll speak next time. >> I look forward to it, David. Thank you. >> And thank you for watching. Don't forget to like and subscribe. [Applause]