Doug Casey Sees Greater Depression Risk for US Economy

Doug Casey, the best-selling author of “Crisis Investing,” spoke with host David Lin on The David Lin Report, or TDLR, about U.S. debt, commodity prices, military technology, artificial intelligence (AI), and the changing balance of global power. His conclusions were frequently bearish, though he separated long-term technological progress from the valuations investors are assigning to it.

Debt Costs Tighten the Noose

Casey’s central concern is the structure of U.S. government debt. He said roughly $15 trillion of an estimated $40 trillion debt load must be refinanced within 12 months, leaving Washington dependent on buyers willing to absorb new issuance and maturing obligations.

That refinancing problem becomes more difficult as borrowing costs rise. Lin cited an estimate that each 1-basis-point increase in the government’s average borrowing cost adds roughly $3.9 billion in annual interest expense. A sustained move higher in Treasury yields would therefore widen a deficit already running near $2 trillion.

Casey argued that the Federal Reserve ultimately faces two damaging choices. Higher rates could trigger defaults among borrowers unable to refinance, while lower rates could encourage more borrowing and weaken the currency.

“I frankly don’t see any way out,” Casey told Lin during the interview. “I see we’re at the edge of a precipice at this point.”

His view is that the debt will eventually be reduced through an explicit default or, more likely, through inflation that gradually erodes its real value. He also called for sharp reductions in military spending, the sale of federal assets, and major changes to entitlement programs, while acknowledging that such measures are politically unlikely.

Consumer Debt Deepens the Strain

Casey extended the argument beyond federal borrowing. He pointed to approximately $1.5 trillion in student loans and a similar amount of automobile debt, describing both as obligations that generally finance consumption rather than the creation of productive assets.

Government spending presents a similar problem, he explained, because Social Security, Medicare, Medicaid, military expenditures, and interest payments consume most of the federal budget. Those categories may fund existing commitments, but they do not necessarily generate the new production required to service expanding debt.

“We’ve been living above our means,” Casey stressed to Lin. Casey continued:

“I think we’re headed towards something I call the greater depression.”

Casey said such an outcome would mean a lower standard of living across the United States, Canada, and Europe. That forecast represents his opinion rather than a settled economic projection, but it reflects a broader concern about governments repeatedly refinancing old obligations instead of reducing them.

Cheap Drones Rewrite Military Economics

The interview also focused on the widening cost gap between conventional military hardware and low-cost unmanned weapons. Casey cited Patriot missiles costing about $5 million, Tomahawk missiles costing near $3 million, and Iranian-designed Shahed drones that may cost as little as $30,000.

That imbalance matters because a weaker force can launch enough inexpensive drones or missiles to force a wealthier opponent to expend scarce and costly interceptors. Casey detailed that the trend is making aircraft carriers and some advanced fighter programs less useful against swarms of cheaper systems.

“The wave of the future is drones,” Casey said, pointing to their use in the Russia-Ukraine war and around Middle Eastern shipping routes.

The strategic lesson is not simply that drones are cheaper. Their production can be distributed, losses are easier to replace and large numbers can overwhelm defenses designed for smaller volumes of expensive threats. That shifts military power toward countries and armed groups able to manufacture basic systems at scale.

Oil Holds a Permanent Risk Premium

Despite recent oil-price weakness, Casey remained bullish on energy. He said conflict involving Iran, Israel, and the United States is unlikely to disappear, while threats near the Strait of Hormuz and Bab el-Mandeb continue to expose major shipping routes.

Casey estimated that oil’s marginal production economics support a price near $80 a barrel, though costs differ widely by deposit, jurisdiction and operating conditions. He said he prefers oil and gas equities outside the Middle East rather than direct futures exposure.

“I think that war in that part of the world is basically a permanent feature at this point,” Casey told the TDLR show host.

The practical implication is that even temporary ceasefires may not remove the longer-term premium attached to production losses, shipping insurance, tanker tolls, and the possibility of renewed disruption.

Gold Miners Gain as Bullion Matures

Casey said gold at $4,000 an ounce is no longer the deeply undervalued speculation it was when the metal traded at $35 in 1971. He still considers gold and silver valuable assets, but believes mining equities offer greater upside.

He estimated industrywide all-in sustaining costs near $1,700 per ounce, leaving producers with unusually wide margins at current gold prices. Even so, mining remains a difficult business burdened by exploration risk, capital costs, regulation, political pressure, and long development timelines.

Casey said he is heavily weighted toward mining and energy companies because their profitability has improved faster than investor interest.

AI Advances While Valuations Detach

Casey described artificial intelligence as a world-changing technology, but rejected the idea that every company tied to it deserves a premium valuation.

“Artificial intelligence is changing the world around us,” he said. “It’s super important. And it’s just starting.”

He said AI can improve mineral exploration by processing geological records and identifying relationships that would take human analysts far longer to detect. At the same time, he questioned whether hundreds of billions of dollars flowing into data centers will produce adequate returns, particularly when much of the infrastructure is used to collect and analyze consumer information.

His distinction is straightforward: The technology may prove transformative, while many investments built around it still fail.