Wednesday, August 17, 2011

Richard Maybury and Rick Rule on Why More War is Likely, the Future of the US Dollar and Why Neither of Them Vote

Introduction: Following the recent FreedomFest conference held in Las Vegas, Nevada, The Daily Bell had an informal discussion with two of the free-market world's more prominent figures, Rick Rule and Richard Maybury. Both men have been relentless in their efforts to educate people about Austrian economic principles and the benefits that accrue to individuals who accept personal responsibility for their own life decisions. Rule and Maybury are frequent speakers at investment and freedom-oritented conferences around the world and regular guests on a wide spectrum of radio and television programs. Their opinions are already widely disseminated around the 'Net, but as the truth-telling power of the Internet Reformation grows forward it is highly likely their work will be in even greater demand.
Daily Bell: Hi, Richard. Thanks for taking time out of the Freedom Fest to talk with me today.
Richard Maybury: You're welcome. There's a lot to talk about right now. How much time have you got?
Daily Bell: You're right about that. Rick Rule's planning to stop by, too, but let's go ahead and get started now if that's okay with you.
Richard Maybury: Sure. We'll save a chair for Rick.
Daily Bell: For quite some time you've been referring to a place you call "Chaostan." Before you explain just where Chaostan is, could you share any thoughts on what you see as the level and source of corruption in government today?
Richard Maybury: Writers for thousands of years have observed that political power corrupts the morals and the judgment. Political power corrupts because it is itself, corruption. It's the legal privilege of using brute force on persons who have not harmed anyone. Only governments have this privilege. Again, power corrupts not only the morals but also the judgment.
Daily Bell: So tell us about Chaostan, then. Given the global financial chaos we're seeing right now, it could be almost anywhere on earth.
Richard Maybury: I would like you to keep that in mind as I describe two trends in Chaostan that are likely to have an effect on you and your loved ones. I coined the term Chaostan in 1992 and it means the land of the great chaos. It refers to the area between the Arctic Ocean and the Indian Ocean and Poland to the Pacific, plus North Africa. This is a most important area that entered the modern era without legal systems that were rational, meaning for the most part that laws were and are simply made up out of nothing. There is no requirement for ethics or logic and so that area of the world has been a vast sea of blood and destruction for centuries. If you don't have law based on ethics and logic, that's what you get.
Daily Bell: Which relates to what you said about governments' morals and judgment being affected by power.
Exactly. Chaostan has easily been the bloodiest place in all of world history. Ever since the Soviet Empire fell apart launching the new era of peace and brotherly love two decades ago, I have been saying, invest in things that do well in wartime.
As you can imagine, those who have followed this advice had made astounding profits. I think the spectacular performance of investments that do well in wartime has plenty of life left in it.
Daily Bell: What leads you to suggest this wartime environment will continue for a long time?
Richard Maybury: The main reason is called Westphalia. Since 1945, Washington has been the leader of the world and the top player in international agreements and law. In February 2001, I began warning about federal officials erasing the 1555 peace of Augsburg and the 1648 Treaty of Westphalia. These two treaties today are generally referred to as simply, Westphalia.
The agreements were a reaction to the invention of gunpowder during the Middle Ages. Gunpowder was un-nerving for rulers because the new weapon made it cheap and easy to blow down the walls of the castles. The two treaties were a partly successful attempt to keep any Tom, Dick or Harry from settling old scores. The treaty said no nation could attack another unless the other was a clear and present danger. This was a principal of ethics drawn from the old common law. My right to swing my fist ends where your nose begins. We don't know how many wars were prevented by these treaties because none of this is measureable. We do know that eventually these treaties lead to the Nuremburg trials in which Nazi leaders were sentenced to death for starting a war in the absence of clear and present danger.
Daily Bell: That treaty seems to have had no effect on recent American Presidents, has it?
Richard Maybury: In 2001, I warned that Clinton's attack on Serbia and Bush's attack on Iraq were precedence replacing this ancient Westphalian principle with a more primitive Roman one. The Roman principle says the only justification you need to get into a war is the belief that the other side is up to no good.
Daily Bell: It sounds like you could be talking about any of the present conflicts.
Richard Maybury: Now, Gaddafi is one of the least important tin leaders of our time. In the vast array of political leaders I doubt he's murdered enough people to rate an honorable mention. Until this year, US officials had been boasting that Gaddafi was tamed. They forced him to give up his WMDs (weapons of mass destruction) and they were bragging that he was no longer a threat. Then suddenly this year, on a completely unverifiable assumption, the new rulers of Libya will be more ethical than Gaddafi. Obama followed the precedent of Clinton and Bush. He jumped into the North African war on the side of the Libyan rebels. Obama's participation in the war certainly completes the demise of the Westphalian principle, but I have seen little about it in the mainstream press.
Daily Bell: What do you see as the broader effect of the media's silence on this issue, giving Obama a pass as they have?
Richard Maybury: By replacing the Westphalia rule with the Roman one, that is by cementing the Clinton and Bush precedence, Obama has given any Tom, Dick or Harry permission to settle old scores. Because all you need now to start a war is a belief that the other side is up to no good. Clear and present danger is no longer required. In an Armed Forces Journal article by Colonel Robert Killebrew titled, "A Darwinian World," Libya points to a New Era of Aggression and Turmoil, and this is my key point. "Armed intervention across international boundaries to the internal affairs is now accepted. The Westphalia ideal of non internal affairs of other states is as dead as a doornail."
Daily Bell: So what you are really suggesting is that we as a society have actually regressed because of this "cementing the precedent" of war without a clear and present danger, then.
Richard Maybury: Geopolitically we are back to the Dark Ages. As the title of Killebrew's article indicates, whatever geopolitical epics were in effect for centuries are gone. We are entering a dog eat dog Darwinian free for all, a new era of aggression and turmoil. You can hit anyone for any reason. That is one big development in Chaostan.
Daily Bell: What else do you see happening in Chaostan?
Richard Maybury: A second one is the use of mercenaries. At their peak in 2008, there were more than 160,000 mercenaries operating in Iraq. They outnumbered the uniformed army, navy, marines and air force. The mercenary casualties are off the books; no reliable count is kept by anyone we know of, so these casualties do not affect the political decisions about getting into a war or about staying in one. Most importantly, mercenaries are called military contractors, which leads the public to assume that these are all guys who are friends and neighbors who were in the US armed forces but went private, that they are in the armed forces but are not wearing uniforms.
Actually, a lot of them are Iraqi or Afghan tribal warlords and their troops are on the federal government's payroll. Washington doesn't have enough of its own troops to secure the supply line from Pakistan to Afghanistan, so it hires warlords to do that job. These warlords are paid a hefty amount of money, part of which they hand over to al-Qaeda or the Taliban to buy passage along the road. It's important for our fellow taxpayers to know that in effect, the use of these mercenaries means our tax money is buying weapons and ammunition for al-Qaeda and the Taliban.
What's worse is that everyone in Iraq and Afghanistan knows these warlords are on Washington's payroll. So when one of the warlord troops murders an innocent person, we Americans get blamed for it. Also, by hiring the local warlords by giving them money, Washington strengthens them and gives them control of the central government. So at the same time America is spending American lives to prop up the Iraqi and Afghan governments, it is also helping to strengthen the rivals who are trying to overthrow those governments. Washington is paying for the bullets being fired at American troops. Mercenaries have worked so well for Washington because in effect, they are Washington's private army that is not subject to the law or to political debate.
Daily Bell: Is this increase in the use of mercenaries a uniquely American issue?
Richard Maybury: No. There are lots of other governments around the world that are getting interested in mercenaries now, too.
Returning to my point I made at the beginning, political power corrupts not only the morals but also the judgment. So we are now seeing this yet again being demonstrated in Chaostan, specifically in Iraq and Afghanistan. Put the two new Chaostan factors together – the abolishment of Westphalia and the rise of mercenaries – and what picture do you get?
Daily Bell: We see chaos.
Richard Maybury: Well, the one I get is kings, presidents and prime ministers with their own private secret armies that invade other countries without regard for any law or political process. If you think the last two decades have been filled with war – you haven't seen anything yet.
Daily Bell: That's not very optimistic, Richard. Good thing Rick Rule just got here. Maybe he'll have a more hopeful perspective. Hi, Rick. Thanks for joining us.
Rick Rule: I got held up with the crowds at Freedom Fest. This is a great event.
Daily Bell: We agree. Do you have a few minutes to have a seat and join us now?
Rick Rule: Sure. I was just listening to Richard and I'm not sure view of things is going to be the optimistic one you're looking for, but I'll try.
Daily Bell: Well, let us ask Rick Maybury one follow-up question to what he just said and then perhaps you can jump in?
Rick Rule: Sure.
Daily Bell: You just said that we "haven't seen anything yet" when it comes to the number of wars underway. Where do you think the next war will be?
Rick Maybury: I think the next war will be in the Islamic world. Conflict in North Africa and the Mideast is just going to keep on spreading. The rebels have every reason to try to keep it going. The point is, these people are not any better than the rulers they are trying to overthrow. The US government has jumped to the conclusion that the rebels are good guys. I don't believe that for a minute. I would not imagine that there are more than one or two Thomas Jeffersons over there and the thought that one of them is going to get control of those countries is ridiculous. It's a done deal that the whole North Africa and Mideast area is just going to keep mushrooming with more war.
Rick Rule: One of the bright things that I see is that I have a different view of the Middle East and about Thomas Jefferson. Mercifully, the Middle East doesn't have so many rich and proud people who are generally designed to be slave owners. I see a lot of things about Thomas Jefferson that I don't see particularly attractive. I do a lot of business with and have a lot of friends in the Middle East and I would not describe it as a uniformly evil place. I agree with Richard that the people that are fighting for political power for the most part are parenthetically republicans and democrats, which is to say, bad people (laughing) Islamic democrats and republicans.
I do a lot of investing in the Middle East and I don't disagree with Richard's stance that that part of the world is chaotic. But my point of view is different; I have come to find that the rule of law is increasingly absent in places like Albertastan, in Californiastan and Pennsylvaniastan. The difference is that Caucasian people, Western people like myself, tend to believe that political risk – that is, political theft that takes place in English by white people according to the rule of law – is somewhat less heinous than honest political risk that takes place with a warlord taking your wallet at the point of a gun. The money is in fact no less gone. My difficulty is that in the West, I don't get paid to take the political risk.
You will remember a discussion we had earlier in a period of high natural gas prices, when the people's republic of Alberta, the bastion free enterprise of Canada, decided that the rents that were accruing to private risk takers were egregious and the conservative government of Alberta decided to up the social take from 30 to 50%. At that point in time the fiscal regime in Alberta resembled the fiscal regime in Libya extremely well.
I agree with what Richard has said, except that I think the political risks that we face in the United States or in Canada are more extreme than we realize as a consequence of the political corruption that Richard has talked about.
Rick Maybury: I agree with what you said and I don't want anyone to accuse me of saying that the US government is less corrupt than any other government.
Daily Bell: Do you think the American public is "getting" the free-market movement or has nothing changed?
Rick Rule: One thing that is for sure is the movement is getting younger. Doug Casey used to have a conference and instead of gaining younger people it was older, white males getting together and the crowd was older and older. I speak at many conferences and see younger faces in the crowd. There is a group out there called Students for Liberty and they are working to advance the vision of free academy and a free society.
Rick Maybury: I got into this movement in 1971 and believe me, there was nobody in it. It was me and two other people. It was right after Vietnam and the US coming off the gold standard. Now people realize that there is a lot of bad happening out there and it needs to be stopped, but they are not moving too quickly to make anything change.
Daily Bell: Tell us about being in Vietnam. Did it serve a purpose?
Rick Maybury: I flew into Vietnam but I wasn't stationed there. I was stationed in Central America. I was in the 605th Special Operations squadron, which was a revival of the air commando units that the Air Force had during WWII. They decided during Vietnam they were going to revive the air commando units. They made several of them and that was mainly what my job was. I was stationed in Central America training those troops. The reason, we were told, was we are protecting the world from communism. That was the excuse for everything.
We are protecting the world against communism. Friends in my outfit spoke Spanish and so when we were working with other people down there, whether they were friends or enemies of the dictator, it didn't matter. These Spanish speaking guys could talk to them and talk politics and the story that you heard all the time was exactly the story you heard coming from Vietnam, I asked about Marxism and Communism and all that, but they thought that Karl Marx was Groucho's brother.... It began to dawn on me that this hasn't got anything to do with communism. These people don't know what it is.
So I came back after I realized the government was lying like hell to everybody and it was a big wake-up for me. I was young. I went in at 20 and came out at 24. Another realization for me was when the bombing of Cambodia was taking place it was top secret. Well, why was it top secret? Everybody in Europe knew and the enemy knew we were dropping bombs on them, so who is this secret from? It was secret from the American people.
Rick Rule: I was not in Vietnam. I got out of high school in 1970 and as a young American male was going to travel – I chose Vancouver rather than Saigon. The weather was not as good, of course, but the other reason for chosing Vancouver was there was a draft in those days. And although I went north before the draft, I wanted to be sure my number was low. The choice of whether I went or not was my own. My lottery number was such that Russian troops would have had to threaten Blaine, (WA) for me to have been called. That was what I was dreaming. I decided in terms of a geopolitical sense that the communists were making faint in Vietnam and the Russians were going to come across the Bering Sea and down to the Columbian and Fraser Gorge and I alone had figured this out and I alone was left to defend America.
Daily Bell: Too funny. Moving on... did or has the US achieved anything in Afghanistan?
Rick Maybury: I think the main thing they helped in destroying is the Treaty of Westphalia. They have shown to the world that Washington and the US military-industrial complex will attack you for no reason at all or some ridiculously minor reason or who knows? There are no guidelines so you just better obey.
Rick Rule: You know when I look in the dictionary and I look up defense it doesn't describe sufficiently for me what we are defending. I could understand if there are Pashtun troops in Florida, how we have to take a run at them. It is very difficult to understand what we are attempting to accomplish there. It would make perfect sense to me if the Afghans were harboring Osama bin Laden, which at one point in time allegedly they were. But at some point in time we say, "Sorry, you have a house guest that we have to take out and you can produce him for us or we will take out your house." After we have done that, the idea that we have the obligation to rebuild the house doesn't make a lot of sense.
I am not a geopolitical guy per se, but I think in terms of US defense and we said to these foreign countries, "If you guys, the ruling class, are harboring people who make attacks against US soil, we can't tell you much except that you won't be the ruling class next week. We don't know who will replace you but bear in mind you will be excused from your job forcibly." And we need to go in and break legs, if we need to, and then we have to leave. We have proven in a series of places that we don't do a very good job of remaking places that don't want to be remade by us.
Rick Maybury: The whole Iraqi and Afghanistan war thing is ridiculous. An experiment that Washington doesn't want to try is to just lay out a reward for the death of whoever they know was behind this. If this doesn't get the guy killed then raise the reward and keep on raising it until he is dead. It is certainly going to be a lot less money than what they are doing there now.
Daily Bell: What are your thoughts on 9-11? What do you think happened?
Rick Rule: I personally don't subscribe to the conspiracy theories. I think that a group of Arab Muslims, probably called al-Qaeda, probably lead by bin Laden, decided to make a spectacular hit on a group of people they had cultural and military dislike for. I think it came down more or less as described by the popular media.
What I disagree with in terms of the media's assessment is that their attack on 9-11 was unprovoked. Osama bin Laden himself said that he didn't have a dog in this fight, except that there were infidel troops in Muslim lands – true or false, it sounds true to me. That we were propping up corrupt dictatorships that were oppressing Muslim people – true or false, it sounds true to me – and that we were participants in aggressive Zionism, protecting the state of Israel – true or false, it sounds true to me. So the suggestion that what they did was unprovoked is not something that makes sense to me.
Were I Osama bin Laden, I probably would have, for various reasons, as Doug Casey says, made reprisal to the Pentagon, the Whitehouse and the IRS. Had they hit the IRS, I suspect that the reaction of some elements of American society would have been substantially less hostile and some Americans might have regarded him as a liberator. And that is only partly in jest.
So in terms of what happened on 9-11, my inclination in a factual sense is it happened very much as I have described. My belief with regards to the origin of that incident and the response to that incident is very different than the interpretation you would get from mainstream media or a US citizen.
Rick Maybury: I agree with absolutely every word you said, but I think there is more depth to it – and I emphasize, I THINK. If you look at the history of covert warfare you see it was invented in the Middle East. And it was invented by a group of people that became known as the Assassins, which is a branch religion from Islam, and there are still some remnants around above ground. For 15 or 20 years I have suspected that when the Assassins were eliminated they weren't really eliminated; they went way underground and they still exist. The federal government blamed al-Qaeda and bin Laden for all this but I kind of think that bin Laden was just a gopher for the real covert group that is underground and that we will never find out about it. They have centuries of experience in staying hidden and in concocting these sorts of things. In one of my Uncle Eric books called The Thousand Year War I suggest they are so far underground that we will never know. It could be somebody who lives down the street from you, or anywhere else in the world. They are not confined to the Middle East.
I think they put this thing together for all the reasons Rick described and all this killing that is going on over there now is basically for nothing because it doesn't have any ability to hurt the people that are basically behind it and never will have that ability.
Rick Rule: I have to respond to that because we might have an argument now. The Hashishin, which is the root word of assassin and also hashish, were Shia, not Sunni, Muslims. And this branch of Shia really were driven out of Persia and they evolved into the Shia sect today known as Ismail. To the extent that some remnant of Hashishin didn't become Ismail is something else I would have to consider. The descendants of the Hashishin are the followers of the Aga Khan and if I were to be a religious person, which I am not, I would probably be Ismail Muslim. The Aga Khan is the only exemplary religious leader I know of, other than perhaps the Buddhists. I personally fear least the direct descendants of the Hashishin which are the today's Ismailis, the followers of the Aka Khan.
Rick Maybury: I don't disagree with that. The Ismails are the go-betweens between the open world that we all know and that covert world. There may only be one in a thousand of them that are in contact with anybody. But I keep coming back to covert warfare and it was invented in the Middle East and for us to think that we are going to somehow compete or do something about this covert group that have been there for nine centuries – these guys have experience beyond our imagination. I don't think we have a prayer against them.
Daily Bell: Let's talk about gold and silver. What is going to be the better performer in the near future?
Richard Maybury: I think silver is your best bet because it tends to be so volatile and it is going to spike sooner than other precious metals as the people's money becomes in greater demand due to general panic conditions.
Rick Rule: For the speculator, the greed buyer, clearly silver. Silver is extremely volatile and there is a shortage in the physical market relative to the futures market. There is the making of a short squeeze on steroids. I am not a greed buyer. I speculate in other ways. I am a fear buyer. From a fear buyer's point of few, gold has certain advantages. It is more valuable and you can store greater amounts of it in smaller space. So if you are asking which will do better? Silver. If you are asking what am I buying? Gold.
Daily Bell: Will the US dollar ever be backed by gold again?
Richard Maybury: I think something will be – maybe the dollar. I think economic forces will push some number of governments into backing their currencies by gold or a basket of commodities. Otherwise, I cannot make that prediction.
Rick Rule: I think it's highly unlikely. Gold restrains politicians and politicians would prefer not to be constrained. Gold also is a form of wealth – it isn't somebody else's liability – so a gold-backed currency reduces society's ability to steal from winners to subsidize losers and the nature of society is there are many more losers in society than there are winners. And in a democracy, one of the things that a democracy exists to do is to legitimize the theft by the many from the few. So in the first instance, a gold standard isn't in the interest of the political class and the second, a gold standard isn't in the interest of the majority of the population. So I am very gloomy about the prospects of a gold standard, which shouldn't diminish gold's attractiveness for people who would like to store their wealth in a non-fiat form.
Richard Maybury: You're assuming the continuation of the US government.
Rick Rule: Maybe not, but if the US government were to fall – about 70 percent of the people would still prefer a form of theft to a form of freedom.
Richard Maybury: As things exist now they will. But I remember in Vietnam, there was one point where the Vietnamese president had been killed and a bunch of generals met in a room and said, "Now what are we going to do?" And they said, "Well, we have to pick somebody to be a president," and nobody would do it. (Laughing) I think America is leading up to that kind of crisis, where there is going to be a meeting in a room and somebody is going to make a decision.
Daily Bell: Do you think the US dollar will lose its reserve currency status?
Rick Rule: Absolutely!
Rick Maybury: I think it is already very close. This is a point Peter Schiff recently made and he should be credited with this. Regarding the debt ceiling raise, Peter says there will be a limit to the debt. If the US government doesn't impose a limit on itself, the rest of the world will. I don't think there will be a choice. It's going to happen. The typical individual in America or anywhere in the world is paralyzed by confusion about what the government is doing. If you listen to what Obama is saying about the debt level, he's asking, if we don't go further into debt we are going to get into financial trouble?
The majority of people are raised in government-controlled schools where they are taught to worship and trust the government. Now people know, listening to the President practically every day making statements like that. The average person now can tell – these people are nuts. So, on one hand he's got this propaganda that's been poured into his head for 12 years in the government-controlled schools and on the other hand, his own personal common sense is telling him, "These people I was taught to trust are crazy." So I don't think the US has ever been in a situation like that before where the average person could sit and listen to the President on TV and realize that the guy is nuts.
Rick Rule: I wonder – during the depression when Franklin Delano Roosevelt came on TV, if he was nuts. But people didn't want to believe he was nuts. People want other people to solve their problems mostly. I would prefer someone else solve my problems, but they have never been solved to my satisfaction by anybody but myself. So I wonder. You know the hippies had that great slogan, "What if they gave a war and nobody came?" Well, what if they charged a tax and nobody paid? What if they passed a law and nobody obeyed? In the near term, I don't think I am very optimistic. Eventually though, if the money doesn't exist to keep it going, when the thing really starts to wobble, people have to wake up.
Richard Maybury: There is another factor here that we haven't really looked at and that is the generation that is running the world right now, which is the baby boom generation. And the baby boomers went through the Vietnam War and they have it engrained in their DNA to not trust the government. That's the one thing they learned in the Vietnam War. So they have this inclination already to be extremely skeptical and I think a lot of them now are having Déjà vu to the war protest days. They're seeing the same sorts of body language and general lying from the leaders that they did in the 1960s and '70s. So, you have really extremely influential people who have that Vietnam background and it's been lying dormant for 30 years, but I suspect that may be coming back to the surface now, too.
Rick Rule: I never would have described myself as gloomier than Richard Maybury. (Laughing) But my suspicion is that the baby boomers are so self absorbed that what we thought was wrong with government was the fact that we didn't run it. And it would surprise me if we didn't believe that now that we run it, that we somehow aren't better thugs – I mean governors – than those that came before us. But I would love to see what Richard said come to pass.
Daily Bell: Do you either of you vote?
Rick Maybury: I did once.
Rick Rule: I voted when Harry Browne was running because it was so amusing to me that I could vote for someone who was close to me. I haven't voted since.
Daily Bell: What are some of your top sites for news and information?
Richard Maybury: I have researchers who go through numerous sites and stations looking for stories and information searching out bits and pieces for me to review.
Rick Rule: I pay Bloomberg to be a news aggregator for me. That's my primary source. My secondary source of raw news but also paradigm is Aljazeera, to me the best regular news site in the world, in fact owned by the Qatar government. It's the most unbiased news organization on the planet. They state their bias as opposed to imply it. I get paradigm mostly from the newsletter writers, but all raw news from Bloomberg and Aljazeera. I often check The Daily Bell, too.
Richard Maybury: I also review The Daily Bell, especially to read the economic analysis.
Daily Bell: Thank you for sitting down with us today. It's always a pleasure to speak with both of you.
Richard Maybury: Thank you. The Bell is a wonderful resource.
Rick Rule: Yes, thanks.

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