R.E. McMaster, Jr. graduated cum laude from the University of Houston, has been initiated into four national honor societies, was both a United States Air Force captain (certified to instruct in the supersonic T-38) and a senior instructor at the U.S. Air Force Academy, has been — at one time — one of only five commodity trading advisors formally approved by the international firm of Hornblower and Weeks, and is currently editor of The Reaper, a respected internationally circulated economic and trading advisory service which specializes in the analysis of commodity markets.
It is news when a man of Mr. McMaster's stature spends 13 years researching a book, and it is news when that book is finally published. Especially when the finished work — in this case, Cycles of War: The Next Six Years — documents the fact that a great number of business, weather, and other cycles all point to one thing: the extremely high probability of international wars, national revolutions, riots, and other conflicts in our very immediate future. Here are some brief excerpts from Cycles of War. We hope they'll whet your appetite enough to make you want your own copy of the book.
It has become apparent to me — through traveling around the country, speaking to investment groups, and visiting with Americans — that there is a nagging sense of uneasiness among our citizenry, about the future of the United States over the next few years. Investors are intent upon retrenching and maintaining their wealth. Caution is their watchword. The "sensitives" of the country — the psychics, poets, artists, composers, and writers — all express considerable insecurity over the future at hand. Intellectuals and educators are voicing concern, and the masses are beginning to feel impending danger. The nostalgia of the past few years is only an indication of the wish to withdraw to more pleasant times.
In Cycles of War: The Next Six Years, I shall bring to light evidence that not only substantiates but helps to account for this condition of national restlessness.
This is the somber conclusion of the leading secular historian of the twentieth century, Arnold Toynbee. Toynbee's words are food for thought, particularly when one considers that the man spent forty years writing three million words with well over 19,000 footnotes for his monumental work, A Study of History.
Yet, among U.S. citizens, discussion of warfare is as rare as a fulfilled political promise. It could almost be classified as a social taboo, not proper for conversation at bridge clubs, cocktail parties, poker games, or gatherings for Monday night football. It hardly goes down well with a Ritz or a Schlitz. (Few Americans, however, would be willing to bet their lives that the subject is unimportant.)
So, except for the poor souls plagued with hostile and/or destructive tendencies, war is a subject relegated to the moviemakers, the military, the poets, and the philosophers . . . unlikely bedfellows, to say the least.
At the outset, it is important to note that warfare doesn't spring upon one like a surprise party. One doesn't come home, unlock the door, turn on the light, and discover a war in the living room. Rather, it is like an approaching thunderstorm. The clouds build up, the darkness increases, and thunder and lightning give advance warning.
For the purpose of discussion here, warfare is to be considered any type of violent human conflict. International warfare is a social activity that requires the greatest amount of teamwork and integration of effort by the whole society. Labor, the industrial complex, the military, the government . . . all subordinate their special interests to the violent adventure. Thus, international warfare necessarily takes place between mature civilizations which are complex and technologically efficient, and which have sophisticated international communications and pervasive governments.
As Karl von Clausewitz stated in his classic, On War,
Historically, the political act of war by the United States has supposedly been with the consent of the people.
While international war is an example of coordinated social process, the internal wars of the nation/state — revolutions, civil wars, riots — represent a collapse of the social order, a disintegration of coordinated activity. Civil war occurs most often when there is a highly centralized government, when the nation is geographically large, and when the culture is heterogeneous. It can also be triggered by governmental failure to fulfill the expectations of ethnic groups, or when the necessities of life are in scarce supply.
The incidence of warfare has much to do with timing. Timing in life is everything. Those who fish, make or catch passes, buy and sell stock, or fly airplanes will readily agree. If the weight of the evidence gives a high probability of warfare during a certain period of time, then one can ill afford not to structure one's activities accordingly.
It is my own conclusion that the American nation will be forced to struggle with both internal conflict and international war within the next six years.
The prospect of a second American Revolution was discussed in the November 1976 issue of International Moneyline, when Crane Brinton's Anatomy of Revolution was reviewed. Brinton had studied the periods of time just prior to four major revolutions. He analyzed the French Revolution, the Russian Revolution of 1917, the American Revolution, and the Glorious Revolution of England in 1688. The similarities of these periods to present conditions in the United States are ominous.
Brinton found that, in each situation, revolution was foreshadowed by the potential or approaching bankruptcy of the government. It is not with much comfort, then, that we note that the National Tax Foundation has reported the current commitments and liabilities of the U.S. Government to be in excess of $7.56 trillion. The words of Thomas Jefferson return to haunt us: "I place economy among the first and most important virtues, and public debt as the greatest of dangers . . . "
Just as serious a threat today is inflation, which is simply the result of an increase in the supply of money. And since government is the creator of money and regulates the supply thereof, it is also the creator of inflation. The government can work to increase the money supply in a variety of ways: through the Federal Reserve's open market operations (the discount rate and reserve requirements), through the fractional reserve banking system which creates credit, or simply by printing money.
Very small changes in climate cause severe disruptions in human life. This exhaustively researched conclusion was reached by Nels Winkless III and Iben Browning in their scholarly work, Climate and the Affairs of Men. Their study revealed that:
"Changing climate alters the amount and nature of food supply . . . the marginal croplands of the world become submarginal and food production even in comparatively rich agricultural areas is disrupted . . . highly productive food plant strains cannot tolerate large variation in environment . . . "
Winkless and Browning noted that the climate in the recent past has been the warmest and most benevolent in hundreds of years, and that the world should soon return to harsher, more "normal" conditions.
This situation is accentuated by a cooling trend in the climate such as the one we are facing presently. The Morgan Guaranty Survey of New York, March 1977, noted that 23 of the 28 scholars who published papers on climatology in recent years thought the earth will be cooler within the next decade than it is today.
In the January 1977 issue of Cycles, Jack Sauers, a geologist and member of the Foundation for the Study of Cycles, stated that:
" . . . only every other 50-year cycle does the U.S. solve its monetary problems by going back on the gold standard. Perhaps you can add your current Federal Reserve Notes to your collection of Civil War greenbacks and Confederate money of 100 years ago, or your Continentals, the Revolutionary script of 200 years ago . . . "
The "gold bugs" should smile. We should return shortly to a gold standard. Unfortunately, if Sauers's cycle occurs, we'll have a revolution to live through first.
In 1925, Nikolai D. Kondratieff, a Russian economist and Director of the Conjuncture Institute of Moscow, published his work on Western economic cycles. It has become popularly known as the Kondratieff Wave. Kondratieff's thesis is basically that the free world economy fluctuates in an economic cycle that peaks approximately every 54 years. He based his studies upon such items as industrial production, wages, wholesale prices, and interest rates. France, Great Britain, the United States, and Germany were the nations Kondratieff studied.
Kondratieff actually stated that the cycle could vary between 48 and 60 years. This is logical: Cycles can extend, contract, and even sometimes disappear where human action is involved. It's only been in more recent times that the Wave has been pinpointed to 54 years from peak to peak.
Kondratieff's work wasn't appreciated in Russia, since his Wave implied that the capitalistic system was basically self-correcting . . . an idea contrary to the thinking of Marx. Nikolai was exiled to a labor camp in Siberia as a result of his efforts.
Nor did the Western world, indoctrinated in the god of rationalism/reason (humanism), take too kindly to Kondratieff's work. The very concept of a cycle falls in the school of economic determinism, which says — in effect — that man has little or no control over his destiny. The event will occur to fit the cycle. Cycle says, "Thumbs up," . . . thumbs up. Cycle says, "Thumbs down," . . . thumbs down, as it were. Obviously, this humbling revelation by Kondratieff did not set well with intellectuals and university professors. It made them (particularly the fundamental economists) look foolish at best, useless at worst.
In any case, the Wave runs roughly as follows: At its trough, there's a war. Then the Cycle moves up for slightly longer than 20 years. These are the good times, times of peace and prosperity. Next, there's a sharp drop-off, as in 1974, followed by a plateau period of between 7 and 10 years. (There is also a war near the peak period.) After the plateau, it's all downhill for the next 20 years or so.
There are some signs that the late 1970s are the plateau period of the Kondratieff Wave. The era has witnessed relatively good economic stability and good times, free of the severe inflation of the previous era. But the storm clouds of economic protectionism are building. And there are still rising prices, and economic expectations have not eased or retrenched on the part of the masses, which should have occurred during a plateau period. The caldron that bubbles below the apparently cool lid of today's cities can best be seen by the riots, burning, and looting during the New York City blackout of 1977.
W.D. Gann is a market legend today, as he was in his own time. He was a genius who was held in awe by the lesser stock and commodity traders during the first half of this century. Thought by many to be arrogant and proud, Gann simply exhibited the self-confidence that comes from wisdom, knowledge, and understanding.
Gann's genius was confirmed by the fact that more than 85% of his predictions over many years were correct. He pulled more than $50 million from the stock and commodity markets over a 50-year period because he knew well ahead of time exactly what the markets would do.
Gann studied, really studied. His charts and other work on markets literally fill a moving van. It's doubtful that the efforts of 10 men, working all their lives, could equal his production. He researched some commodities back four centuries in order to learn their natural cycles.
And Gann also peered into the future to see what was ahead. In 1914, he predicted World War 1. In March of 1918, he called for the end of the war and the Kaiser's abdication. In July of 1939, he predicted the beginning of World War II.
W.D. Gann passed from this earth in 1956. His war charts foresaw Vietnam, and they also predict war in 1982—83.
It may well be that during the next six years true wealth will be measured by having plenty of food to eat and water to drink, good health, and safe and warm living quarters in the midst of friends and family. The cycles say the judge with the sword is on the way.
One can best prepare for such a difficult period by doing whatever one can to become self-sufficient. I recommend creative brainstorming with like-minded friends and family, because — in hard times — no man is an island: Group efforts and support are a must.
Start with the basics, such as self-sufficiency in the production of food, water, shelter, clothing, and energy. A garden, a greenhouse, a hydroponics system, and the raising of small animals such as rabbits, milk goats, and chickens are excellent for food production. Property on a creek or near a body of water, a spring, a windmill, a cistern . . . all fulfill the water self-sufficiency requirements. A well-insulated dwelling with a wind or solar energy source makes sense, as does a wood-fired heater and cookstove. Underground protection is a must, and an oversupply of clothing for all seasons is recommended. Provision for self-defense goes without saying, and excess capital should be applied toward barter items and real money: gold and silver coins.
As is said in real estate, the three most important considerations are location, location, and location. At a certain point of time in the near future, living in the cities could be the equivalent of holding a stick of lighted dynamite. The best locations would then be in rural communities that meet the following criteria:
1. Low crime rate, traditional American values of hard work and self-sufficiency, conservative political leanings, ethics based on absolutes
2. Racial harmony
3. A widely dispersed local population (low population density)
4. Necessary skills widely distributed in the local population (medical, dental, carpentry, etc.)
5. No potential military targets within a 100-mile radius
6. No large government installations of any type
7. Favorable wind currents and climate that provide ample moisture, good growing conditions, and no danger of fallout
8. More than a tank of gas away from any major city
9. A commodity-based economy
10. Low risk of earthquake, volcanic activity, flood, and fire.
There's no such thing as neutralizing all risks, because there's no place on earth where all of the above criteria are perfectly met. Life itself is a risk . . . perfect security doesn't exist. Lack of perfection, however, doesn't justify a "let's eat, drink, and be merry" attitude. Risk must be managed . . . that's the prudent approach. This work has attempted to show that during the next six years the risk of war is very high. In light of this, priority should be given to preparation for the coming difficult times.
From Cycles of War: The Next Six Years by R.E. McMaster, Jr., copyright 1977 by Timberline Trust and reprinted by permission of the author.