The First Casualty of War - Vivek Kaul's Diary
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The First Casualty of War

Jul 27, 2016


Among the calamities of war may be justly numbered the diminution of the love of truth, by the falsehoods which interest dictates, and credulity encourages. - Samuel Johnson, The Idler #30, November 1758

"Law is suspended in Turkey," reports the Chicago Tribune. "China enforces ban on original reporting" informs today's Financial Times. "G-20 Finance Ministers Fear Brexit Blowback if Breaking Up Is Hard to Do," says The Wall Street Journal. "Debt to top World War II peak in 20 years," reports CNN Money.

The world is breaking up again. Law, truth, trade and sound money are already casualties. It's not the first time this has happened. But for many of us, it's the first time in our lifetime. The task of Capital & Conflict this week is to figure out what you can do about this great crack up.

It's a big subject, though. We'll begin with the general (the world) and make our way to the particular (your money). Most of us here believe this is the single most important idea to understand in the world right now.

Understanding it correctly and preparing for it appropriately will determine how well you and your family fare in the coming years. I wouldn't make a claim like that lightly. But this idea touches everything in your world: your country, your job, your portfolio, your retirement, and even the cash in your pocket. All of them are about to change.

The world of security

Do you recognise the quotation at the top? You might have heard of a slightly more famous version. "The first casualty, when war comes, is truth," said California senator Hiram Johnson in 1918. He was an isolationist US politician who argued that America should stay out of Europe's troubles.

But he wasn't even the first Johnson to express the sentiment! Samuel Johnson said virtually the same thing in 1758 when he wrote that, "Among the calamities of war may be justly numbered the diminution of the love of truth, by the falsehoods which interest dictates, and credulity encourages." Humans always and everywhere have understood that once nations are on the path to war, lies become routine. The public become eager to believe them.

I mention it because Johnson had a knack for capturing the spirit of things. He's quotable and memorable because he was trying to get to the heart of the matters. In the coming posts I'll show you a lot of facts, figures, charts, and proof. But for now it's about showing you that a lot can change quickly.

Of course you probably already know that. Change is constant. What I'm talking about is radical change. Deep change. Change that turns the world upside down. That's the sort of change you'd like to have advance notice of. Because it's the sort of change that can either make or break you, and not just financially.

Stefan Zweig, the Austrian novelist, understood this tragically well. Zweig was born in 1881, into one of the wealthiest, civilised, and stable cultures in human history. Vienna in the heyday of the Habsburg Empire was, by Zweig's reckoning, the apex of Western culture. In his memoir, The World of Yesterday, Zweig wrote:

If I try to find some useful phrase to sum up the time from my childhood and youth before the First World War, I hope I can put it most succinctly by calling it the Golden Age of Security. Everything in our Austrian Monarchy, then almost a thousand years old, seemed built to last, and the state itself was the ultimate guarantor of durability. The rights it gave its citizens were affirmed by our Parliament, a freely elected assembly representing the people, and every duty was precisely defined. Our currency, the Austrian crown, circulated in the form of shiny gold coins, thus vouching for its own immutability. Everyone knew how much he owned and what his income was, what was allowed and was not. Everything had its norm, its correct measurement and weight. If you had wealth, you could work out precisely how much interest it would earn you ever year, while civil servants and officers were reliably able to consult the calendar and see the year when they would be promoted and the year they would retire.

Imagine that. An age without planned obsolescence. An age with sound and real money. An age where employment was for life, income was predictable, and interest on your savings was earned, not paid. And an age where a normal person could work his whole life and finally enjoy a retirement, just as his cash calendar had predicted. And an age where the state made looking after your best interests its main priority.

That's nothing like our age. And Zweig's world came crashing down all too soon. He fled the Nazis and the uncertainty of the world pursued him until he took his own life in 1942. He wrote:

I myself have lived at the time of the two greatest wars known to mankind, even experience each on a different side-the first on the German side and the second among Germany's enemies. Before those wars I saw individual freedom at its zenith, after them I saw liberty at its lowest point in hundreds of years; I have been acclaimed and despised, free and not free, rich and poor. All the pale horses of the apocalypse have stormed through my life: revolution and famine, currency depreciation and terror, epidemics and emigration; I have seen great mass ideologies grow before my eyes and spread, Fascism in Italy, National Socialism in Germany, Bolsehvism in Russia, and above all the pestilence that has poisoned the flower of our European culture, nationalism in general. I have been a defenceless, hapless witness of the unimaginable relapse of mankind into what was believed to be long-forgotten barbarism, with its deliberate programme of inhuman dogma.

Does any of that sound familiar?

Zweig, of course, wrote about Europe. Not Britain. In the next post on Capital & Conflict, I'll look at what this dissolution in the idea of security and certainty has meant for Britain. I'll start at the end of the Victorian Equilibrium, before the price revolution and the revolutionary crisis of the 20th century.

I know it's a long way back to go before we see where we're headed. But bear with me. Our story starts before the Great War. It will take us to the beginning of the Next War. But we have some ground to cover before we go over your potential battle plan.

Please note: This article was first published in Capital & Conflict on July 25, 2016.

Dan Denning studied literature and history, moving to Agora Financial in Baltimore fresh out of college. Working alongside Bill Bonner and Addison Wiggin, he became managing editor of Strategic Investments. He then moved via Paris and London to Australia, publishing a book - The Bull Hunter - along the way, and opened Agora's successful office Down Under. He returned to London in 2015 and became the publisher of Fleet Street Publications' financial newsletters.

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1 Responses to "The First Casualty of War"

Nikhil Nath

Jul 28, 2016


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