Welcome to the Era of new Realism

2026 increasingly looks like the year the world stops pretending. We are entering what I call the Era of Realism—a period in which governments, companies, and investors are moving away from ideology and abstraction and back toward pragmatism. In simple terms: a return to what works for security, reliability, and long-term survival.

The past few years have delivered a series of hard lessons. AI is consuming power at an unprecedented scale. Geopolitics is becoming more transactional and coercive. Supply chains optimized purely for cost have proven fragile. And prolonged monetary expansion is producing consequences that savers and institutions can no longer ignore.

The old policy playbook—aggressive climate neutrality at any cost, reliance on multilateral institutions to enforce a rules-based order, offshoring everything to the lowest bidder, and treating government-issued fiat money as a store of value—is being dismantled in real time. In its place, we are seeing baseload energy, raw power projection, domestic industrial revival, and a return to scarce, non-sovereign assets.

Below are four core themes shaping the second half of this decade and beyond. These shifts will not be linear, comfortable, or universally acknowledged—but they are already underway.

1. Baseload Energy Takes Precedence Over Climate Neutrality

Germany’s Energiewende stands as a cautionary example. After investing hundreds of billions of euros into renewable energy over two decades, Europe’s largest economy now faces some of the highest household electricity prices globally—around €0.38–0.39 per kWh in 2025, roughly triple early-2000s levels—while its industrial base continues to erode under sustained pressure.

Energy-intensive industries have been forced to restructure, relocate capacity abroad, or shut down altogether. Small and medium-sized enterprises have disappeared in large numbers, and cumulative job losses across energy-dependent sectors have mounted into the hundreds of thousands over time.

These outcomes are not accidental. They are the direct result of elevated energy costs and declining system reliability driven by aggressive climate policies, including the premature phase-out of fully functional nuclear plants and the accelerated shutdown of coal capacity.

Replacing reliable baseload generation with intermittent renewables has increased dependence on backup power and imports, undermining both price stability and energy security. The loss of Russia as a decades-long supplier of low-cost natural gas following its invasion of Ukraine merely exposed vulnerabilities that were already embedded in the system.

The European Union is now quietly recalibrating the Green Deal—delaying reporting requirements, softening emissions-trading timelines, and granting exemptions or fast-tracks for strategically important projects such as AI data centers—in an attempt to balance decarbonization with economic survival.

The reason is simple: intermittent renewables cannot deliver the 24/7 power that AI data centers and reshoring factories require.

Global data-center electricity consumption is projected to approach 945 TWh by 2030—roughly double current levels. AI-related capital expenditure has surged to roughly $400–440 billion in 2025, driven by compute infrastructure, data centers, and power build-out. Projections through 2030 point to a multi-trillion-dollar supercycle, with cumulative spending potentially reaching $5–7 trillion.

To meet this demand, nuclear power remains one of the few proven technologies capable of delivering dispatchable, low-carbon baseload generation at scale. New builds, life-extensions, and modular reactor programs are accelerating across Asia, Europe, and North America, increasingly framed in terms of national security and AI competitiveness rather than climate symbolism.

Energy is reverting to its historical role as a strategic input—not a moral signaling tool.

As AI and compute-heavy industries scale rapidly and nations prioritize reliability over ideology, baseload power is becoming a non-negotiable condition for economic sovereignty. The transition is early, politically sensitive, and uneven—but it is already narrowing the range of realistic policy options.

2. Raw Political Power Supersedes International Legal Norms

The so-called “rules-based international order” functions only as long as major powers choose to abide by it. When they do not, it predictably breaks down—no differently than at any other point in history.

Russia’s invasion of Ukraine, China’s pressure on Taiwan, and recent U.S. actions in Venezuela and toward Iran all demonstrate the same underlying reality: raw leverage—military, economic, and resource-based—decides outcomes.

The January 3 operation in Venezuela involved precision strikes and the detention of the sitting president and his wife. While officially framed as a campaign against narco-terrorism, senior officials openly acknowledged broader strategic objectives: securing energy resources and reasserting control over the Western Hemisphere.

The regime had long ignored international rulings, refused compensation for prior nationalizations, and evolved into a narco-state hub supported by external powers. Many Western governments had already refused to recognize its legitimacy following allegations of electoral fraud.

International outrage followed swiftly. Critics condemned the operation as a violation of international law and insisted on the primacy of sovereignty—even when exercised by an illegitimate regime. The U.S. response was blunt and unapologetic, reflecting a worldview in which outcomes matter more than procedural legitimacy.

Iran now faces similar pressure. Repeated warnings against violent suppression of protests serve as an unmistakable signal that red lines exist—and that they may be enforced.

This doctrine prioritizes decisive action when vital interests are threatened. It aims to reduce exposure to uncontrolled migration, terrorism, and narcotics flows while reinforcing energy and security objectives.

These actions are inseparable from a broader strategic reality: the need to preserve military superiority in an increasingly contested, multipolar world.

Defense spending proposals reflect this shift, with budgets expanding toward historic levels. The rationale is increasingly empirical rather than ideological. Ukraine has become a live laboratory for modern warfare, demonstrating that control of the electromagnetic spectrum, autonomous systems, cyber capabilities, and space-based assets now determines battlefield outcomes. These lessons are being absorbed rapidly by military planners.

As a result, security is being repriced. Where legal norms no longer constrain behavior, deterrence fills the vacuum—and sustained military capability becomes a prerequisite for strategic autonomy rather than a temporary policy choice.

3. Industrial Reshoring Replaces Reliance on Low-Cost Offshoring

For decades, global manufacturing followed one dominant rule: produce where costs are lowest. Companies moved factories to China, Mexico, Eastern Europe, and Southeast Asia to reduce labor costs and boost margins. The model worked well in a stable world and delivered strong short-term profits. But its weaknesses were built into the system.

Those weaknesses surfaced through repeated shocks. During the COVID-19 pandemic, factory shutdowns in China and Southeast Asia abruptly disrupted global supply chains and caused large economic losses. Semiconductor shortages—driven by capacity concentration in Taiwan and South Korea—forced production halts across the United States and Europe. China’s export controls on key materials further exposed how concentrated many critical inputs had become. Wars, sanctions, natural disasters, and rising U.S.–China tensions repeatedly shut down single points of production, with global effects. The problem was not globalization itself. It was globalization designed for a world without disruption.

Over time, offshoring also hollowed out domestic industry, particularly in the United States. As production moved abroad, supplier networks disappeared, skilled labor declined, and entire regions lost their industrial base. Long-term job losses, stagnant wages, and social dislocation followed. Once industrial capacity was gone, rebuilding it proved slow and costly.

Political pressure was the inevitable result. In the United States, industrial decline translated into electoral backlash and growing concern over economic dependence and national security. Rebuilding domestic manufacturing moved from the margins to the center of policy. Washington responded with tariffs, subsidies, and direct support for strategically important industries, accepting higher short-term costs as the price of resilience.

In Europe, the response has been more limited and defensive. Governments have acknowledged supply-chain risks and energy dependence, but efforts have focused on protecting a narrow set of strategic sectors rather than rebuilding broad industrial capacity. Fiscal constraints, fragmented decision-making, and political resistance to higher prices have limited the scope of industrial policy. As a result, Europe is de-risking selectively rather than reshoring at scale.

Tariffs initially raised prices and disrupted trade flows, particularly between the United States and China. Over time, however, they evolved into tools of leverage, used to pressure Beijing over intellectual property practices, state subsidies, and market access. While outcomes remain uneven, the direction is clear: lowest cost alone is no longer the organizing principle of global production.

If current U.S. policies persist, reshoring and industrial policy could mobilize trillions in public and private investment over the coming decade. Domestic capacity is being rebuilt selectively, focused on semiconductors, energy systems, defense-related manufacturing, and other strategic sectors. In Europe, similar ambitions exist in rhetoric, but execution remains narrower and more constrained.

Critical minerals illustrate the stakes. Inputs essential for advanced manufacturing, energy infrastructure, and defense systems remain heavily concentrated in China, which dominates both mining and refining for many materials. In response, the United States and select allies are investing in domestic processing, recycling, and alternative supply chains to reduce dependence and strategic vulnerability.

Reshoring raises costs—but it restores flexibility and control.

4. Monetary Debasement and the Rise of Hard-Money Hedges

Central banks and governments continue to expand money supply to finance mounting obligations: military buildup, industrial policy, energy infrastructure, and social stabilization. The post-1971 fiat regime allows virtually unlimited issuance, but at the cost of purchasing power, asset inflation, and widening inequality through Cantillon effects.

Global debt now stands at approximately $338 trillion, or 324% of world GDP, with public debt alone exceeding $100 trillion. In the United States, national debt reached $38.5 trillion in early 2026, driven by pandemic-era spending and interest costs that now exceed $1 trillion annually.

Geopolitical tensions are accelerating this erosion. China has reduced its holdings of U.S. Treasuries to their lowest level since 2008, reflecting growing distrust in dollar-denominated assets. The European Union’s freeze of Russian central bank reserves since 2022 demonstrated how government-controlled money can be weaponized. Such precedents undermine confidence in fiat reserves and encourage a search for seizure-resistant alternatives.

In this environment, demand for non-sovereign stores of value has intensified. Bitcoin has emerged as a digital, scarcity-based hedge despite volatility, while gold has returned to prominence in central bank reserves. Together, they reflect a broader reassessment of fiat money’s role as a long-term store of value.

Gold offers physical scarcity without issuer risk. Bitcoin adds digital portability and strict supply constraints. Both serve as hedges against monetary debasement in an increasingly fragmented financial system.

The Realism Trade – Positioning for a New Era

These four pillars - reliable baseload energy, strong power projection, reshoring to rebuild industrial strength, and sound money - form the solid base of a new global order. They aren’t separate trends; together they supply the real-world strength and financial stability needed to grow the AI economy at scale. Reclaiming the tangible economy is no longer optional; it is the essential bedrock upon which AI-led global leadership will be built.

The smart money is already moving here. Reliable baseload energy means nuclear power and next-gen reactors to feed AI’s massive, 24/7 hunger for electricity. Strong power projection translates to defense tech and secure resource control, protecting the critical minerals and supply chains that power everything from chips to missiles. Reshoring industrial strength targets semiconductors and advanced manufacturing, bringing production home to cut risks. Sound money offers debasement hedges like hard assets and commodities that hold value when currencies weaken.

This isn’t a short-term trade. It’s a framework for navigating the next phase of global competition