Justin's note: “Trump did something. Obama went on the apology tour. It’s nice to have a president who does something.”
I overheard these words while working out at my local gym on Friday. It was part of a conversation between two middle-aged men.
At first, I didn’t know what they were talking about. But it quickly became obvious that they were talking about the US attack on Syria last week. By the sound of it, they supported President Trump’s decision.
“How can anyone condemn the United States? Innocent people are being gassed. It’s like concentration camps in Germany.”
For those out of the loop, the US military launched 59 Tomahawk missiles at Syria as retaliation for a chemical attack that killed at least 70 people, including children.
Some people, like the two men at my gym, think this barbaric attack absolutely warrants retaliation. Other people, like myself, think the US government should mind its own business, since these affairs often turn into costly, never-ending conflicts.
That said, this is a highly complex situation. I don’t claim to have all the answers.
But if there’s anyone who understands this situation, it's Casey Research founder Doug Casey.
That’s why I called Doug less than 24 hours after the news broke. I had to hear his take on this matter.
Below is the transcript of our conversation. I hope you enjoy it as much as I did.
Justin: Doug, the US just launched a major attack on Syria.
Are you surprised Trump did this? Keep in mind, he publicly criticized Obama for wanting to attack Syria in 2013. He also said that the President should get approval from Congress before attacking Syria. He didn’t do that, either.
Doug: I’m actually not too surprised. The problem with Trump is that he doesn’t have any core philosophical beliefs. He apparently has no idea what’s right or wrong, good or bad, other than the way he feels. And what he feels doesn’t reflect a well thought out worldview, but just his background or the way he’s been brought up. Like most people, he’s a creature of his emotions, not his intellect. So, he’s capable of doing absolutely anything on the spur of the moment.
Now, I supported Trump because he wasn’t Hillary. The fact that he said he wanted to “drain the swamp” told me that he wanted to change the ways of Washington. But it appears that his idea is simply to make Washington more efficient, which is a mistake. He has no clue that the essence of government is coercion—or maybe he does, which would be even worse. When you have institutionalized coercion, the last thing you want to do is make it more efficient.
But one thing is certain: he won’t succeed in making government “better.” Sure, he wants to decrease the amount of regulation from dysfunctional agencies like the EPA. But he’s just going to trim them. He doesn’t see any principles involved. Trimming these destructive agencies is like pruning a plant: it just allows them to grow back even stronger. They have to be pulled out by the roots, and the ground they grow in should be salted. Or sprayed with Roundup. Or maybe flooded with Agent Orange.
As for his foreign policy, the fact that he says we’re going to “destroy ISIS” is idiocy. ISIS has never done anything to the US. None of those countries over there have. Of course ISIS is nasty. But it’s not our problem. It’s the problem of people in the region. In fact, as a regime, ISIS is just as legitimate as any other over there. Including our loyal “allies” the Saudis. At this point, most everybody in the region has learned to hate, disrespect, and distrust the US. The US has won the Trifecta for stupidity.
And now he’s attacking the Assad regime, which has done nothing against the US. Sure, that regime had secret police, and has done some unpleasant things. But they all do, including all our “friends”—which once prominently included Saddam Hussein. In fact the Assad regime was and is quite mellow; the man is a Western-educated doctor. If you’re going to hold together a completely artificial country with about a score of mutually antagonistic groups, that’s what has to be done. Incidentally, trying to hold it all together is really stupid, but that’s another subject…
Regarding those guys in the gym, I promise you none of them can even find Syria on the map. All they think they know is what they’ve heard in the popular media, and the media itself just repeats things they hear. Most of it from highly suspect sources.
Did the Assad government launch a gas attack? Highly unlikely. They’re not that stupid; they realize that using gas in a real no-no in today’s world. Even Churchill, who advocated using gas against the Mesopotamian natives after WW1, wouldn’t dream of it today. It would just give a foreign government—like the US—the excuse they need to attack.
Further, from a purely military point of view, gas makes no sense. In today’s world there are much more precise and effective ways to get the job done. Especially considering the detailed reporting—what reporters would go into that war zone today?—the whole thing seems fabricated.
But the gym guys like this kind of macho nonsense. They like the idea of “decisive action,” "showing toughness,” and “doing something.” If they thought that the children they’re supposed to be so concerned about were Muslims who might grow up to be Jihadis, they might be less outraged.
Justin: Will this attack on Syria accomplish anything? Is this even a winnable battle?
Doug: It will accomplish nothing except to antagonize a bunch of people whose family and friends get killed. I mean the cost of each of those missiles—the hard cost is about $1 million plus ancillary costs. Where does Trump think that money is coming from? Does he think the Chinese are going to lend us even more to do that type of thing?
It’s actually quite comical, at least if you have a sense of black humor. Trump may see it as boosting US exports to the tune of $59 million of missiles. And simultaneously helping a friend somewhere among the approximately 2,341 armed groups over there that hate the US government.
The attack was economically idiotic in the here and now. It’s at once destroying capital over there, and adding to debt in the US. The world was made poorer. It’s not making any friends; it’s making more enemies. It’s alienating a lot of people in the US who hoped he would disinvolve the US from foreign adventures. After this, you have to take his bellicose rhetoric against ISIS, North Korea, and everybody else, seriously.
The attack served no useful purpose whatsoever. Except to get neocons to say he was acting “presidential.” Trump appears to have no idea even who’s kind of a friend and who’s definitely an enemy of either him or the US.
And at this point, the US has no friends over there. It just has people who are different degrees of enemy. The attack shows zero useful purpose—zero. Any thoughtful person has to say “Wow. This guy could really get completely out of control.” It’s idiocy. And scary.
Justin: Speaking of antagonizing other countries, Russia called the US attack on Syria an “act of aggression.” It also said the strikes "struck a significant blow to Russian-American relations, which were already in a sorry state."
Do you think tensions between the US and Russia will escalate because of this attack?
Doug: There’s no question about that. You know, one of the things I liked about Trump was that he seemed to want a détente, to even be friendly, with the Russians. Which would be smart. I think the Russians will go out of their way to avoid a war—their government is much more intelligent than ours—but accidents can happen. These things can spin out of control just as easily as they did a hundred years ago at the start of World War I. One things leads to another, and it becomes unpredictable.
I’m not just afraid that Trump may open Pandora’s Box in the Middle East. He might do the same on the border with Russia in the Baltics or in the Ukraine.
Even worse than that, the Chinese think that the South and East China seas are their territories, much in the same way that the US thinks all the seas next to the US are its territories. And it’s very provocative having carrier groups floating around there, basically looking for trouble. Which will be easy to find because of US alliances with the South Koreans, the Taiwanese, the Filipinos, and the Japanese, among others. It would be the same if the Chinese sent their Navy off the coast of Santa Catalina. It would be considered very provocative.
So, it’s likely to end badly.
Justin: It’s certainly unsettling. Yet, US stocks hung in there on Friday. They actually closed the day slightly up. This tells me investors aren’t taking this situation seriously.
More importantly, it doesn’t seem like anything can shake the confidence of investors at this point. What do you make of this?
Doug: Well, a trend in motion tends to stay in motion until a crisis hits. So, it’s very hard to call a top to the stock market.
I mean I’ve been saying for a long time that the market’s overpriced. But there’s no telling how much more overpriced it can get. I don’t want to pick a top.
But I will say this. In the stock market, the way you make money is by buying when things appear to be cheap and people are afraid. And right now, things don’t look cheap and people aren’t afraid. I don’t see why anyone wants to own stocks. In fact, I’m starting to buy out of the money puts on the S&P.
The problem is that, while it seems metaphysically impossible for everything to be overpriced, everything is overpriced, with the exception of commodities. They’re actually cheap. Most miners and farmers are losing money at current metal and agricultural prices. But it’s a very, very tough environment. The name of the game over the next few years is just keeping what you have.
Justin: Yeah, I guess we’ll have to wait and see what happens. Maybe if tensions between the US and Russia flare up, that could be what finally puts this bull market in US stocks to rest.
Doug: It’s quite a problem because stocks are in a bubble. Bonds are in a super bubble. Real estate is in a bubble.
It’s hard to buy commodities because they might still go lower—but I’m friendly towards them, even though commodities have been in a bear market, in real terms, for the last 10,000 years. Cash is dangerous because banks are all bankrupt and the dollar is losing value. So, it’s a very unusual economic time.
The smartest thing to do is own cash, gold, and silver. You can speculate on little mining stocks, as a leverage play on gold of course. But it’s very tough—much tougher than during the ‘70s and ‘80s. Which, I’m aware, seems like ancient history to many.
But let me conclude by saying that the problems we have in the markets are going to be completely trivial if we get into a really serious war. Not just the kind of sport wars that have been popular since Vietnam, but a serious war. And that’s possible.
Justin: Let’s hope it doesn’t come to that. Anyway, thank you for sharing your thoughts, Doug.
Doug: My pleasure.
Editor's note: Doug recently appeared on Cashflow Ninja's podcast to discuss why you need to internationalize yourself and become a speculator today. It's a fantastic interview. Click here to listen.