International Man: Governments learned during COVID that populations will tolerate extraordinary restrictions if they’re sold as an emergency. Could an energy crisis become the next excuse for lockdown-style controls?
Doug Casey: We’re looking at something much worse than another lockdown, as bad as that was. The big question is whether we’re now in World War III. I think we are. The US has increased its military budget by 50%, and is pushing the Europeans to double their military spending. The war in the Ukraine is ongoing, and the Europeans want to ramp it up further. Nor do I think that the current focus of everybody’s attention, the war between the US/Israel, and Iran, will end anytime soon. It’s going to drag on for many months or even years. And if the Americans or Israelis push the Iranians too far—which is likely—the Iranians could respond with not just drone and missile attacks in the region, but with all-out cyber war. Since the world runs on computers, that could be as devastating as a nuclear war.
At the moment, the war is centered on destroying or disrupting energy in the Middle East. But it can’t possibly stay there. That’s because Asia, which is to say two-thirds of the world’s population, is totally reliant on petrochemicals from the Persian Gulf. They can’t remain passive observers as the war destroys their economies.
So the answer to the question is, yes, you should plan on severe energy shortages. We’ve already seen hints of this: four-day government workweeks, travel restrictions, remote schooling, scheduled power cuts, and flight cancellations. There’s already fuel rationing in the Philippines, Sri Lanka, Bangladesh, Pakistan, and Vietnam. The US is shipping emergency gasoline and diesel to Australia, whose Green government idiotically has made it impossible for them to refine any themselves.
Napoleon once said, correctly, that in war the psychological is to the physical as three is to one. So if Western populations are propagandized enough, I suppose they can absorb an immense amount of damage. But they shouldn’t be fighting the Iranians, the Chinese, or other largely imaginary enemies. The real malefactors in this scenario are Western leaders, especially in the U.S. Of course, most world leaders are sociopaths; I certainly don’t support the mullahs. But at the moment, our leaders in the West are the most aggressive and virulent offenders.
International Man: If the Iran-U.S./Israeli war continues to disrupt the Strait of Hormuz, Asian economies will face a serious energy shock.
Do you think governments will use that crisis to impose temporary rationing measures, or are we looking at permanent energy controls and managed scarcity?
Doug Casey: Whenever governments impose controls or restrictions, they’re always presented as “temporary.” More than ever before, the world is dependent on energy. If you cut the supply of energy enough, the current order of things, civilization itself, could collapse. Governments notoriously like to rely on price controls to ration energy rather than letting the market do it by allowing prices to rise to whatever level necessary to ration supplies. I
Price controls inevitably require new bureaucracies and result in massive corruption as people try to get around the rules. Governments tend to find the worst possible solutions to the problems that they’ve caused. Throughout history, war has been a huge driver for the expansion of the State. As Randolf Bourne said, war is the health of the State. As the State expands, personal freedom contracts. Especially for those who aren’t already rich and politically well-connected. The next five or ten years are going to be pretty grim.
The dangers of this energy crisis are greatly compounded by the world’s financial and economic instability. We’ve been looking at the eventuality of what I call the Greater Depression for years. There’s every chance that this war will put us over the edge.
International Man: How should investors think about a world where governments can restrict travel, mandate work-from-home, shut schools, or ration fuel in the name of “energy security”?
Doug Casey: Ideally, you should position yourself to be self-sustaining. This is a bad time to live in or near a major city. You should position your portfolio by owning companies that can capitalize on energy shortages and monetary instability. The good news is that energy and mining stocks are still very cheap, certainly relative to other investments.
I’ve been beating that drum here for years, and the results have been excellent. But the trend is still in motion.
International Man: Which countries or regions are most vulnerable to energy lockdowns, and which places still offer the best odds of personal freedom, reliable power, and economic resilience?
Doug Casey: You certainly don’t want to be anywhere near a war zone. That rules out much of Europe and the Middle East. Dubai, in particular, will be in a lot of trouble as this war persists. Not just because of the physical danger, but because governments everywhere crack down on personal freedoms in the phony name of “national security.” I’m pretty happy having major investments in Argentina and Uruguay. In the Pacific region, I still like New Zealand.
International Man: For the individual who doesn’t want to be trapped by rationing, digital IDs, carbon limits, or emergency decrees, what practical steps should he be taking right now?
Doug Casey: Everyone should have a good stash of small gold and silver coins purchased for cash, privately. It makes good sense to have a pantry full of long-life foods. Adequate weapons. Plenty of tobacco and alcohol, which will store indefinitely. It’s a bad idea to have an apartment in an urban area, either as an investment or a residence.
But on the bright side, things have looked grim a number of times over the last 50 years. And each time society has recovered and gone on to bigger and better things. Hopefully, that will happen this time as well, although I wouldn’t plan my life around it. Don’t forget that Ray Kurzweil’s predictions about the Singularity are at hand. If we can get through the oncoming rough patch, life on this planet could be better than ever.
Let’s hope so. But remember, hope is not a strategy for prosperity, or even survival.
Editor’s Note: This jump in energy prices is not a passing disruption. It is one more sign that the financial and political cracks are widening—and that Americans could soon be hit with a much broader economic reckoning.
To see what may come next and how to prepare now, see our urgent new video, The Most Dangerous Event of the 21st Century, where legendary investor Doug Casey lays out what’s ahead. Click here to watch it now for free.
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