By Doug Casey
International Man
November 7, 2026
International Man: The midterm elections are now behind us. What impact do you expect the results to have on financial markets?
Doug Casey: It's unfortunate, but political outcomes now dominate financial and economic outcomes. Politics have always been important, but you have to remember that before World War I, the U.S. Government was a relatively trivial influence on both the country at large and individuals. Its sole source of funding was import duties and excise taxes. And that was adequate because it was quite small. Minuscule relative to its size today.
The answer to your question is that the Democrat sweep in the elections (and I'm writing this on Tuesday, before the results are in) will have an immense effect on the markets. On the one hand, they'll be prone to print even more fiat money than even Trump-who is profligate. That will tend to move asset prices up. But the Dems hate markets and what's left of capitalism, which is disastrous.
Government is a dead hand upon the economy as well as the society at large. The Dems will do their best to bury the markets under more bureaucracy. Let's hope for gridlock. It's our best-case scenario.
International Man: Wall Street has become addicted to easy money, government spending, and rising asset prices. In the wake of the midterms, do you expect any meaningful changes in economic policy, or will Washington continue down the same path?
Doug Casey: The only changes I expect are towards more taxes, more regulation, and more inflation. The U.S. reminds me of a man who's jumped off the top of a hundred-story building and, as he passes the ninety-fifth floor on the way down, says, "So far, so good."
The government is underwater, well over $40 trillion, and essentially half of the country is on welfare. The situation has taken on a life of its own. Things are out of control. There's nothing they'll do about the K-shaped economy where the rich have gotten much richer, the poor are struggling, and the middle class is gradually ceasing to exist. The only solution is to return to a free market, but that's out of the question.
They're unlikely to make much of a change in the so-called "defense" establishment, which has built the world's best 20th-century military-but this is the 21st century. There's not much that they can do to turn around the antagonism between the blacks in the central city and the whites who live in the suburbs and the countryside. There's not much they can do to avert a variety of civil wars that are brewing.
Something wicked this way comes.
International Man: Investors often assume a divided government is good for stocks because it means political gridlock. Do you agree, or could gridlock make the next financial crisis even worse?
Doug Casey: Gridlock is absolutely the best thing that can happen where the U.S. Government is concerned. When the Democrats and Republicans stymie each other, it's hard to pass any new legislation. As H.L. Mencken said, no man's life or property is safe when the Congress is in session.
Gridlock keeps them fighting with each other as opposed to imposing new taxes and regulations on their subjects.
Most new legislation is economic in nature. It creates ever more distortions and misallocations of capital in the marketplace because some groups get money and political favors to the detriment of other groups. It creates uneconomic and unsustainable conditions which eventually must be liquidated.
You'll recall that I use two broad definitions of a depression.
One. It's a period of time when most people's standard of living drops significantly.
Two. It's a period of time when distortions and misallocations of capital that have been cranked into the economy by inflation and regulation are liquidated.
What can the government do when the next financial or economic crisis arrives in earnest ? Basically, they can only print more money to maintain economic dinosaurs. Or pass more laws telling the economy what it must do or must not do. Both only create more distortions.
What they should do is radically reduce the size of government, radically cut taxes, default on most of the national debt (yes, I know that's shocking), and institute a gold-redeemable dollar. That's just to start.
However, the chances are zero that the Democrats and Republicans will get together to undo the legislation they've imposed on the country. Simply because they sense that would bring on a depression under definition number two. It would also significantly reduce the power of the government, which is antithetical to their beliefs.
I'm hoping for gridlock over the next couple of years, but we're more likely to get chaos. That's because the Democrats are firmly in control of Congress, as well as many states and cities, and they're more radical than ever. We're going to see a lot more of the type of things that got us in the pickle that we're now in.
International Man: If the stock market suffers a serious meltdown, do you expect the Federal Reserve and Washington to rush to the rescue with more money printing ? What would that mean for the dollar, gold, and ordinary investors?
Doug Casey: It's a question not of "if" the stock market will suffer a serious meltdown, but when. By all conventional parameters, stocks-particularly tech stocks-are insanely overpriced. That's been true for years. Maybe it'll stay true for a few more years, but I sincerely doubt it. I certainly wouldn't plan my life around stocks staying where they are. In fact, we're probably at the edge of the precipice right now.
What the government and the Federal Reserve fear most is a repeat of what happened in 1929. So when the house of cards starts to collapse, they'll do everything they can to prop it up by printing trillions more of fiat dollars. And probably taking more direct equity positions in companies. The Trump regime has already done so with about 40; the Dems will accelerate that trend.
You should expect the dollar to lose value at an accelerating rate. A lot more money will flow into gold, which is the only financial asset that's not simultaneously somebody else's liability.
International Man: Given the uncertainty surrounding the economy, financial markets, and the political landscape, what should investors do to protect their wealth-and where do you see the biggest speculative opportunities emerging?
Doug Casey: I've explained why I'm leery of real estate ( link). I think bonds are perhaps the worst place for your money today ( link). Stocks in general, but tech stocks in particular, which dominate the market, are a giant accident waiting to happen ( link).
In the past, when assets were overpriced, cash was the place to be-dollars in a bank account. But that's a problem in a high inflation environment. Apart from the fact that you might find your account is part of a bail-in since banks are so unstable now.
Commodities are the cheapest part of the markets-especially corn, wheat, soybeans, and rice. The petroleum complex has gone up a lot since Trump launched his war on Iran. But I suspect it's going a lot higher, because we're not just looking at the war on Iran, but the early stages of World War III ( link).
Gold and silver have treated us extremely well. They're currently weak coming off a top back in March. I don't know where the bottom is, but I think it's close, and I'm certainly not selling them.
We're all going to be forced to be speculators in the years to come, whether we like it or not. People will be forced to look at areas of the market that they've never previously considered and that they're unfamiliar with.
Even though small mining stocks and oil stocks have done extremely well for us over the last couple of years, I think they're going much higher. So my answer to the question remains the same as it's been for several years. You want to own mining stocks and energy stocks.
That said, these are very volatile and cyclical industries. You shouldn't consider them heirlooms, but something more like burning matches.
I look forward to the time when general stocks are a bargain, and I can buy solid dividend-producing companies and hold them for the long term. But now is not that time.
Reprinted with permission from International Man.