A Casey Report Interview with Richard Maybury
With everything going on in the world today, we thought it a good time to catch up with the views of longtime friend Richard Maybury, a low-key but highly respected author, lecturer and analyst. In addition to his work consulting with businesses and high net worth individuals on strategic planning, Richard is the editor of the U.S. & World Early Warning Report, a monthly service that helps readers see the world as it is, versus how the media and the officialdom would like you to see it. Richard is widely regarded as one of the finest free-market writers in America today. His articles have appeared in the Wall Street Journal, USA Today and other major publications.
David Galland: You've been steadily warning your readers for years about the coming chaos in what you call "Chaostan," yet another forecast of yours that is coming true today. Before we get to current events, could you define Chaostan for readers who aren't familiar with it.
Richard Maybury: In Central Asia, the word "stan" means "land of." Therefore Kazakhstan is the land of the Kazakhs, Kurdistan is the land of the Kurds, and so forth. I coined the word Chaostan in 1992, the land of chaos, to refer to the area from the Arctic Ocean to the Indian Ocean and Poland to the Pacific, plus North Africa.
To understand why I call this area Chaostan, you have to first understand the two fundamental laws that make civilization possible. The first being "You should do all you have agreed to do," which is the basis of contract law. The other is "Do not encroach on other persons or their property," which is the basis of tort law and some criminal law.
Where you find these laws most widely obeyed, especially by government, you find the most peace and prosperity and economic advancement, especially peace. In areas where they are less obeyed, you find chaos.
The area that I refer to as Chaostan never developed legal systems based on those two laws, at least not legal systems that the governments feel obligated to follow. I should point out those two fundamental laws provide the foundation for the old British common law, which was the basis of our Declaration of Independence and Constitution - essentially the legal documents that make America what it is or, rather, what it was.
So that's the essential thing, that Chaostan is the primary area that never developed rational legal systems, or at least not rational legal systems that governments are required to obey. As a result, throughout history they have suffered, and will continue to suffer, political, economic and social upheaval... chaos.
DG: Which brings us to the present, with a real flare-up going on in Chaostan. As Doug Casey has often said, "The thing that gets you is the thing you don't see coming." Other than you and Doug, no one else I'm aware of anticipated the current trouble in places like Tunisia, Egypt and Libya. One day, things are quiet, the next we've got all sorts of major oil-producing countries - countries that people believed would never really change - up for grabs. What are your general thoughts on the situation?
RM: Since you've read Early Warning Report for so many years, you know that there is nothing going on today that surprises me or my readers. That's the direction I thought Chaostan would go. I'm just surprised that it took as long to get to this point as it did. In that regard, I have often used a quote from Doug...
DG: "Just because something is inevitable doesn't make it imminent"?
RM: That too, but I was thinking of this quote to the effect of, "The nasty things that you think are coming always take longer to arrive than you think they will, but once they get here, they make up for their tardiness by being worse than you thought they'd be."
I think that's a fantastic observation, and it sure does apply here. I've always been convinced that this mess was going to happen, but will confess to being amazed that it is all happening at the same time, and that it's occurring in such a short period of time.
DG: What do you attribute the upheaval to?
RM: There are two big things going on: One is the fall of the U.S. Empire, and that is leading to the second, which is the breakup of the geopolitical matrix. In the case of the latter, I am referring to the many relationships the governments of the world have with each other and with their own people.
This matrix of relationships and political structures are called countries, most of which have existed for a long time, but that's breaking up now, in part because, in most cases, the borders between these countries were drawn a long time ago by people who knew nothing about the local populations.
While the breakup is starting in North Africa, I think it's going to spread across most or all of Chaostan. And it will have effects even in North America and South America. While it's almost impossible to predict exactly how, it's my view the world that we grew up in is going away, and it will be replaced by some new political matrix.
These changes will only be exacerbated by the fact that the U.S. Empire that we grew up with is crumbling very fast. As the U.S. Empire collapses, all sorts of relationships will die, leading to yet more chaos. You can see this with Obama calling up Mubarak and ordering him to resign, so I think chaos is the only word that fits.
As far as I know, nothing on this scale has ever happened before in world history, and for people who don't understand it and are not paying close attention, it's going to be hell. But for those who do understand it, it's going to be one of the biggest money-making opportunities in all of world history.
I don't know what to say other than just look out.
DG: We'll get back to the money-making opportunities momentarily. First, however, a bit more on the crumbling U.S. Empire, an assessment we agree with. The administration was clearly caught flat-footed by what happened in Egypt. First it supported Mubarak's regime and then, as you noted, it flipped and Obama demanded he go. It seems like right now the U.S. government really doesn't even know whom it should be talking to, let alone supporting, in these various countries.
This is no small matter seeing that for decades much of U.S. foreign policy has been directed at ensuring a steady supply of oil by creating relationships in the Middle East, including setting up and supporting various despots. With these relationships now at risk, the U.S. government has to be seriously concerned that it will see a steep degradation of its influence in the Middle East. Would you agree?
RM: Yes, I think U.S. government influence in the area is probably almost completely gone. The only real influence they have is within, let's say, a hundred miles of any given aircraft carrier. I don't think Washington is taken seriously by anybody anymore, except for its military power.
The simple fact is, and you saw this in the Bush administration as well as in the Obama administration, it's clear to everybody that they don't know what they're doing. They have absolutely no understanding of the things that they're meddling in.
I remember watching a television interview with Condoleezza Rice right after 9/11, when she said "Nobody in the White House knew where Afghanistan was." And that after the Twin Towers came down, they all gathered in the Oval Office and had somebody bring in a globe so that they could all find out where Afghanistan was.
DG: Of course the region really only matters to the U.S. because of its oil, and I think right now something like half of Libya's production is off line. Do you see the situation region-wide affecting supplies on a sustained basis?
RM: Let me push back a bit on your comment that "The only reason it's important to the U.S. is because of the oil." I would modify that a little bit by saying, "The only reason the region is important to you and me is because of the oil."
But to the U.S. government, the region is a place they have exerted their power, and that is what drives the U.S. government - a lust for power. You have a whole lot of people who spend their adult lives trying to acquire power, and once they get it, they want to use it on somebody, and one of the groups of people that they have used it on are those in the Mideast.
The American founders understood that. It's why they created the Constitution as they did, as an attempt to limit the use of power, but the Constitution stops at the border. So U.S. politicians, almost right from the beginning, have gone outside the country to exert their power because it's a whole lot easier to do it in other countries than it is to do it in this country, and we have to keep that in mind.
While the oil is definitely a big factor, more of an excuse, for the U.S. government's involvement over there, it's the exercise of power that they draw satisfaction from and that's the reason they have meddled in these countries for so many decades.
Now as far as what's going to happen with the oil, my guess is that there will be more uprisings, and Washington will try to establish new relationships with whatever regimes rise up out of that. In the end, as you know, fundamentally whoever owns the oil can't do anything with it except sell it, and so they will sell it and we will buy it.
DG: Might the Chinese, for example, move in there and take these opportunities to redirect more oil in their direction?
RM: Sure, but you've got to pay for the cost of the extraction, and there will be all sorts of governments, probably already are, sending agents in there to try to steer things in directions favorable to them, and they will try to use whatever oil they get control of as a weapon against their enemies.
I'm not talking about anything that hasn't, in essence, been going on for centuries. That's how governments behave. I have no idea how it's going to shake out in the end, other than to say that ultimately whoever owns the stuff is going to sell it to somebody. They may not sell it directly to the United States or to U.S. oil companies, but they'll sell it somewhere in the world, and that will increase the general world supply, and the U.S. will then buy oil from somebody.
I think that a whole lot of politics will be tangled up in these transactions, but I guess maybe the main factor to keep in mind is how much of the oil infrastructure is going to be destroyed while these governments are maneuvering against each other over there. While it's too early to say, if a lot of that infrastructure isn't destroyed, I'll be very surprised.
DG: With the U.S.'s long relationship with Israel and support for all sorts of despots in the region, is the guy on the streets in the Middle East anti-American at this point?
RM: I've heard of a few incidents here and there, but the impression I get is that people around the world generally like the individual American, because we are a personality they have never run into before.
In most countries, if you tell an insulting joke about the government, everybody looks over their shoulders to find out if somebody overheard. An American never looks over his shoulder when he tells a political joke, and they find that fascinating. We speak with confidence and openly and about subjects that they will never talk about in public. So they're captivated with our personalities as individuals, but they really hate and fear our government, just like many Americans do.
To illustrate that point, just think about the sick feeling you get in your gut when you go to your mailbox and find a letter with a return address for the IRS. Now imagine what it's like being, let's say an Iranian, and looking out your kitchen window and seeing an American guided missile cruiser sitting out there in the water.
DG: I remember when I lived in Chile being shocked to see U.S. soldiers jogging in double lines up the roads. This was a regular sight. It doesn't take much imagination to figure out how people in the U.S. would react if Iraqi troops were a regular sight in their towns.
Back to the question of oil, the big players in the region are Iraq, Iran and Saudi Arabia. Do you think Saudi Arabia, in particular, will be in play before this is over?
RM: They already are in play in the sense that they're trying to steer events in directions that are favorable to them. Maybe we should explain to the readers where Saudi Arabia came from. This is not a natural country. It is a country created by the government of Britain. Britain went into Arabia and picked the Saudi tribe as the one that ought to run the place as a surrogate of the British government. They supported the Saudi tribe so the Saudi tribe could conquer the other tribes, and that's essentially what Saudi Arabia is today.
It's as if someone went into Texas and picked the Jones family to run Texas and renamed the place Jones Texas. That's what Saudi Arabia is, and the other tribes don't enjoy being dominated by the Saudi tribe, so there is inherent tension in that country all the time. The way the Saudi tribe tries to avoid violence is by buying off the population. They just keep pumping money into the population in an attempt to keep them fat, dumb and happy, but the population is getting tired of the whole scam, and that ancient hatred of the Saudi tribe is always there, just under the surface. There is a horrible resentment in the population.
When the ocean of oil is poured into the mix, yielding unimaginable riches for the Saudi rulers, it's a nitro and glycerin combination that people have been writing about for decades. I'm one of them. I'm amazed Saudi Arabia is still there. I thought it would have blown up a long time ago, but it could be the uprisings spreading all across the Islamic world now that light the fuse on their overthrow.
Saudi Arabia is the big prize, and this means a lot of people want it and they'll be likely to fight over it - and where it is going to go, I don't know. This may be the greatest level of uncertainty since World War II.
DG: It would be logical that the U.S. military-industrial complex is going to use all this instability as an excuse to rationalize continuing with the huge levels of military spending, which is a big problem in terms of reducing the deficit. Do you see the U.S. military remaining as big as it is, or is there a change coming as the empire continues to dwindle down?
RM: I think there will be some token cuts to the military, but I can't see anything serious because all you need to do to get the American people to support a larger military is to just scare them a little bit. And that's easy to do - in this present situation it is very easy to do.
So I would tend to think that all you've got to do is announce that we need more aircraft carrier battle groups, because the oil supply is threatened, and the typical American on the street is going to say fine, build more aircraft carriers.
A point here to keep in mind is that, yes, the U.S. has by far the largest military force in the world, but Washington has taken unto itself the largest military obligation in the world - namely the responsibility of policing the whole planet. There is no other country that thinks it has the obligation to police the earth, so in terms of fire power versus territory that is being controlled, Washington is actually very weak and its enemies know this.
DG: Recently the U.S. Secretary of Defense Gates told cadets at West Point that we may never fight another large ground war. Do you believe that? I mean, if Saudi Arabia gets really unstable, do you think we are going to put boots on the ground there?
RM: Yes, definitely. This idea that you can fight a war without the use of ground forces is ridiculous. It shows a lack of understanding of what government is. A government is an organization that has control over a given piece of territory, and to control it you've got to have infantry standing on the ground. The phrase "boots on the ground" is a very good one for that.
The place has to be occupied by soldiers with rifles, and if you don't have the ability to do that, then you can't control the place. You can just bomb the heck out of it, but eventually you've got to put troops on the ground.
DG: Yet in his speech to the cadets, Gates said that wars like Afghanistan are not likely and in fact he would advise against it. I have a copy of the article here, and I quote; "In my opinion, any future defense secretary that advises the president to again send a big American land army into Asia or into the middle of Africa should have his head examined."
RM: What he's saying is absolutely true, that you should not get involved in foreign wars, but I think it's a naïve idea to assume that they won't do it, because after all it's a government. It wants to use its power. It's going to use its power on somebody, and it will get into more wars, because the people who run the government are power seekers and they want to use their power. Until there is an amendment to the Constitution that says the U.S. government can't meddle in other countries, we're going to have wars in other countries.
DG: Speaking of foreign entanglements, Israel has got to be watching all this stuff with great concern.
RM: Yes, if I were the Israelis, I'd be pretty scared, and certainly they are also working secretly to try to steer events in directions favorable to them. I don't know what to say about it other than the old phrase, "The situation is fluid."
It sure is fluid, no doubt.
DG: Returning just for a moment to your contention that governments need to exercise power. Is this just a psychological aberration amongst power seekers, or is there more to it than that?
RM: I regard it as a mental illness. People such as you and me and our readers are generally wealth seekers. We want to live a prosperous, comfortable life and we seek wealth in order to do that. By contrast, people who rise to the top in government are power seekers. They get their satisfaction from forcing other people to do what they want. They are essentially bullies.
Let's offer a little proof here. Practically every piece of legislation enacted in the last 100 years has involved the use of force on persons who have not harmed anyone. Anybody who wants that privilege has to have something wrong with them, so I think it's a given that when you're dealing with a high-level politician or a high-level bureaucrat, you're dealing with somebody who likes to push other people around, and that's the fundamental factor that the American founders were looking at when they created the Constitution. They understood that political power corrupts the morals and the judgment.
DG: A moment ago, you mentioned that one way the government can get people to go along with its schemes is to scare them, and history supports that this isn't a new tactic. Yet, a lot of Americans look at 9/11 as proof that Muslim extremists are after us and we have to defend ourselves, and see that as sufficient rationale for the U.S. military to take action in the Middle East. Even from our readers, we hear things like "Kill them all and let God sort them out." How would you respond to that?
RM: I know a lot of people that seem to need somebody to hate, and when the government gives them somebody to hate, they're grateful. I've known a lot of people like that. They enjoy despising whole classes of people, painting them all with the same brush, even the children.
DG: Yet people would argue that the U.S. government did not give us the Arabs to hate. They blew up the World Trade Center. There is clear evidence that in fact somebody does hate us, and so we should hate them back.
RM: Yes, well, as Ron Paul has pointed out, and I think this is a direct quote from Ron, "They didn't come over here until we went over there."
DG: And we've been over there an awfully long time at this point.
RM: That's right. You can go back 200 years, if you want, which I do. The original war between the U.S. and Muslims was the Barbary Wars back in the early 1800s, and that was essentially an extension of the Crusades. The Europeans were fighting the Muslims, and the Europeans hoodwinked the American politicians into joining the war on their side.
When you hear the Marine Corps hymn "From the Halls of Montezuma to the Shores of Tripoli," to the shores of Tripoli refers to the Barbary Wars in which the U.S. came into the Crusades against the Muslims on the side of the Europeans.
So you can go back 200 years when the Europeans manipulated us into this thing, or you can count the modern onset as being in the 1940s when Roosevelt made an agreement to support the Saudis. There has never been a case where an Islamic government sent armies into the United States, but the U.S. has done it in the Mideast numerous times.
DG: Speaking of being manipulated, it is always remarkable to me how the British were up to their necks in Israel, as were the French in Vietnam, and presto chango, they're out of the picture, replaced by the Americans. How we ended up as Israel's number one benefactor is amazing, just as it is amazing to me that we ended up losing 50,000 men in Vietnam after the French left. It makes no sense to me, but I guess it's to be expected once you start getting drawn into foreign adventures.
What else are you following for your readers? What sort of themes are you getting into?
RM: In terms of economics, we've been writing about the decline of the dollar for years now. But actually, as of the March issue, I'm making a turn and going back to a much deeper geopolitical orientation, because I think what's going on in the Islamic world now is going to be at least as dominant as the fall of the Soviet Empire was back in the 1990s.
Jim Powell has made an interesting point. He said that it won't be very long and we will all be looking back and referring to life before Tunisia and life after Tunisia, and I think that is true. The Tunisia uprising will be viewed akin to the attack on Pearl Harbor or the assassination of Archduke Ferdinand in 1914 where life was totally different after that incident happened. I think we're in that situation now.
DG: And I take it for granted that you think oil is going a lot higher.
RM: Yes, not that it isn't going to have corrections along the way, but I've been predicting for a long time we are going to see oil at $300 a barrel. I don't know when, but I'm sure it's coming.
DG: And gold is a core holding at this point?
RM: Absolutely, gold and silver. I think they still have a long way to go, which is to say the dollar still has a long way to fall.
DG: Any other quick investment ideas that you would share?
RM: I still like Fidelity Select Defense and Aerospace Fund. The symbol is FSDAX. I think the military industries are going to be selling a lot of weapons, and so why not invest in it?
Our newsletter is based on what I regard as the two carved-in-granite long-term economic trends; one of them being the decline of the dollar and the other one being war. I think those are locked in, and so I recommend people buy investments that do well during wartime or during periods of currency debasement, which we have. Those two trends - war and currency debasement - are essentially what Early Warning Report's whole strategy is at this point. Buy whatever does well during war and currency debasement.
DG: A final question. Do you see the government pulling out of Afghanistan more or less on schedule?
RM: I doubt it, but given how fluid the situation is, who knows? Gates' comment was very revealing. It is amazing he would admit in public that it was a stupid thing to go into Afghanistan. If U.S. officials can divert the public's attention enough with what's going on in North Africa, maybe they can pull it off - maybe they can cut and run, and let the Afghan government fall without the American public noticing the lives that were wasted propping it up.
The one thing I can tell you for sure is that if you want to keep track of what's really going on in the world, you have to watch the aircraft carriers. The U.S. has 10 aircraft carriers - the big super-carriers - and they are always an indication of what Washington is really serious about.
DG: So when you read that a carrier is being moved into a certain area, then that's a tip-off that something's about to go on?
RM: Yes. The position of carriers is a tip-off. Google "Positions of U.S. Aircraft Carriers." Secondarily, Washington uses amphibious warfare ships as substitutes for the big carriers, so you want to keep an eye on those as well.
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