Perspectiva económica: Doug Casey

Wars, sanctions, supply shocks, and years of underinvestment are reshaping the global commodity landscape. Energy, metals, agriculture, and strategic resources are no longer just "cyclical" sectors. They are becoming matters of national security.

Yet many of these markets remain deeply misunderstood, underowned, and ignored by mainstream investors. That is where Chris MacIntosh and Glenorchy Capital focus their attention.

For years, International Man readers have turned to Chris for independent, contrarian analysis—especially in overlooked sectors and countries where the mainstream sees only risk, but disciplined investors may find value.

Iran negotiations have failed.

And that could unleash the biggest oil shock in history.

If that happens, oil could race toward $200 a barrel… or even higher… and stay elevated far longer than Wall Street expects.

The consequences could hit the financial system hard.

• Stocks could sink.
• Interest rates could jump.
• And the bond market could come under serious pressure.

But while chaos hits much of Wall Street, one corner of the market could soar – The energy sector.

Inflation has always benefited rich asset owners at the expense of current earners. That's true for several reasons.

First, the earners have to pay taxes on the money as it comes in, but asset owners don't pay tax on the increase in value of their property until they sell. And then it’s at lower capital gains rates.

Second, even though earners typically don't keep up with the rate of inflation, they're constantly pushed into higher tax brackets as their wages rise.

Inflation—currency debasement—enriches asset holders in the short run, but hurts everybody in the long run.

Your house may be worth 10 million dollars, but it's still just an expensive consumer good. It's Lewis Carroll's famous Red Queen effect. If prices are rising 10% per year, even a rich man has to increase the value of his assets by more than that just to stay in the same place. Your standard of living is dropping, but you may not fully realize it because you have more dollars.

One reason that the old saying, "the rich get richer and the poor get poorer", is true is because the rich own assets, and the assets benefit from inflation. That helps create an atmosphere of envy and class warfare.

Revolutions typically have economic causes that are later gussied up with political slogans.

You've heard the axiom "History repeats itself." It does, but never in exactly the same way. To apply the lessons of the past, we must understand the differences of the present.

During the American Revolution, the British came prepared to fight a successful war—but against a European army. Their formations, which gave them devastating firepower, and their red coats, which emphasized their numbers, proved the exact opposite of the tactics needed to fight a guerrilla war.

Before World War I, generals still saw the cavalry as the flower of their armies. Of course, the horse soldiers proved worse than useless in the trenches.

Before World War II, in anticipation of a German attack, the French built the "impenetrable" Maginot Line. History repeated itself, and the attack came, but not in the way they expected. Their preparations were useless because the Germans didn't attempt to penetrate it; they simply went around it, and France was defeated.

The generals don't prepare for the last war out of perversity or stupidity, but rather because past experience is all they have to go by. Most of them simply don't know how to interpret that experience. They are correct in preparing for another war but wrong in relying upon what worked in the last one. Investors, unfortunately, seem to make the same mistakes in marshaling their resources as do the generals.