Note from Shaun: Richard Maybury is a genius. He’s written books on everything from philosophy, to politics, to financial planning, to business to history. He knows his stuff. I’ve talked about Maybury before in the article How the Universe Works. He changed the way I look at everything.
In April of 2008, Maybury gave the following address to the Phoenix Investment Seminar. Read the entire speech; this is one of the most important lessons of all when it comes to your financial future. Reprinted with permission.
When talking about geopolitics and economics, it’s easy to fall into the trap of being a gloom and doomer, so I’ll start this presentation with some good news.
On September 11, 2001, times began getting hard, and they will probably get a lot harder before they get better. But they don’t have to be hard for everyone, meaning they don’t have to be hard for you. They can be a big opportunity.
I find it helps to take the long view. Have a sense of history.
I once read that there have been 22 civilizations on this planet before ours. The ancient Aztecs, Incas, Romans, Greeks, Babylonians, Phoenicians, Egyptians and so on. By that count, our civilization is number 23, and after it declines, there will be a 24th, and a 25th, and so on.
Because the tide comes in, and the tide goes out. 23 times it’s come in, and, so far, 22 times it’s gone out. And it’s going to go out again, and in again, and out, and in.
Economist Milton Friedman once pointed out that as near as he was able to determine, the fall of each civilization was preceded by a vast increase in the size and power of government.
The thing to focus on is that no matter how bad things get, there are always people doing well. Either because they understand what’s happening and how to prepare, or just out of dumb luck, being in the right places at the right times, they’ve prospered while others have been hurt.
Perhaps the best example is the Black Death in the fourteenth century. It was one of the worst catastrophes in history. In a space of just four years, the bubonic plague killed somewhere between and fourth and a half of the total population of Europe, and left a lot of the remainder in bad shape and starving. An estimated 75 million were killed, across Asia and Europe.
But the ones who stayed healthy, either because of natural immunity or because they escaped to safe areas, ended up much more wealthy. You see, the plague did not destroy the land, buildings, tools, money, roads, windmills, and other forms of wealth, so there was a lot of surplus wealth just laying around for the survivors to pick up. In many cases, I’m sure, a survivor who had been just a farm laborer ended up owning a whole farm, and in some cases, several farms or a whole village. His personal wealth increased perhaps a hundred fold or more.
Europe didn’t vanish, and in fact, a few generations later, it was a much better place.
That’s the way it’s been all through history. In every crisis some people have prospered, and been around to enjoy the good times afterward. In the Fall of the Roman Empire, the Dark Ages, the Vietnam War, World War I, World War II, the oil shocks of the 1970s, the Great Depression, there were always people who came through fine, and lived well during the good times afterwards, because they were in the right places at the right times, doing the right things.
We’re facing it again today, and the people who weather the storm will find when it’s over that they are a lot better off than they were when it began.
Because most of the real wealth will survive. The land, offices, factories, cars, boats, planes, computers, refrigerators, hockey pucks, baseballs and Frisbees are not going to just vanish into thin air.
But they will change hands.
They’re changing hands right now, which is what you’ve been seeing in the subprime real estate mess. The houses are not vanishing, they’re changing hands. The trick is to be on the receiving end of the wealth, not the losing end, by being prepared.
In the Great Depression of the 1930s, the real wealth — the skyscrapers, farms and steamships — did not disappear, they changed hands.
And that’s what my newsletter, Early Warning Report, is about. I’m doing my best to make sure my readers are on the receiving end, not the losing end, of the transfers of wealth.
As you know, if you are a long time reader of Early Warning Report, so far we’re doing very well, mostly because my readers are people who have the courage to face what’s happening. They are part of a very small elite segment of the population who have refused to stick their heads in the sand, and who have instead decided to study what’s really happening, and take advantage of it.
My readers are people who refuse to be victims. Unlike most of the population, they’re not just sitting there on the railroad tracks hoping that before the train comes roaring down on them the government will snatch them to safety.
Maybe it will, but that’s not the way to bet. Waiting for the government to save you wasn’t the way to bet in the 22 civilizations before us, and it’s not the way to bet now.
Because, as Ronald Reagan said, government isn’t the solution, it’s the problem. 22 times it’s been the problem, and it’s still the problem.
It’s not going to save us. It’s going to try to save itself.
More good news: America is one of the best places in the world to prosper from the crises that roll around occasionally, because Americans are taught nothing useful about history, especially economic history. Even the ones who have PhDs in business and finance, they know very, very little about economic history. So they make a lot of big mistakes, and are forced to sell their assets at fire sale prices. Hard times are bargain hunting times.
The more often you can pick up a newspaper, read a headline, and say to yourself, I remember reading about this happening before, the better equipped you are to profit from whatever is coming.
Again, when the wealth changes hands, someone is on the losing end, and someone is on the winning end. There’s no middle ground — no way to break even — you are either going to be a winner or a loser.
Summarizing, in geopolitics and economics, bad things happen. But they never happen to everyone, and they don’t have to happen to you.
Doug Casey once made the comment that, the future of mankind is in the stars, not in the breadline. I agree. We are headed for a civilization something like the one depicted in the Star Trek stories. We will get there faster if governments get out of our way, but we will get there.
For more information about Richard Maybury, check out his investment newsletter, The Early Warning Report.