To understand how governments manufacture consent from the people they govern, it is helpful to examine a classic text about military strategy, “The Art of War.” This work has been attributed to Sun Tzu who is thought to have lived in China about 2,500 years ago. Some authorities believe this is a collective work. If so, we hope to add to the collective understanding. It was required reading in all USSR military academies. It is required reading today for anyone interested in understanding the military mindset. You may reasonably ask what this has to do with understanding investing, speculation, the sovereign debt crises.
Moa Zedong famously observed: All political power comes out of the barrel of a gun. All nation states that have issued sovereign debt claim a monopoly over the right to initiate the use of coercive force within a geographic area. The military can apply the most force. It is the bedrock of state power, the foundation stone of political power. This is where the promise to pay interest and repay principal on sovereign debt comes from.
Sun Tzu was an advisor to the king of a small rural kingdom next to a much larger, more developed, and better armed neighbour. The ruler of the larger kingdom threatened war unless the smaller submitted to his rule. Not having a professional army and only having farmers from which to draft soldiers, Sun Tzu’s king saw no way to resist. Sun Tzu boldly declared that he could make the peasant farmers into soldiers and defeat the army of the much larger kingdom. He argued that he could make soldiers of any group submitted to his authority for training. The king asked, “Anyone?” Sun Tzu responded, “Yes, anyone.” The king argued that his concubines, the most pampered of his household, certainly could not be organized into a military group that would obey orders.
Sun Tzu asserted that indeed he could do so and in a short period of time if the concubines were completely under the authority of his command. The king submitted his 180 concubines to the military authority of Sun Tzu. The concubines were organized into two companies with the first ranking in charge of one and second ranking in charge of the other. Sun Tzu then explained that he was their military commander and that he would give orders to the two company commanders to march and stop marching based on one drum beat to start and two drum beats to stop. The drum was struck once. The concubines did not march. They looked at each other and giggled. Sun Tzu then said, “If the order is unclear, the officer is at fault. If the order is clear but the soldier does not obey, the soldier is at fault.” The drum was again struck once. The concubines did not march. They were only bemused and laughed. Sun Tzu repeated, “If the order is unclear, the officer is at fault. If the order is clear but the soldier does not obey, the soldier is at fault.” He then took his sword and killed the company commanders and appointed two new ones in their place. Within a very short time the remaining concubines learned to obey orders and march in military formation. Sun Tzu demonstrated the first rule in military discipline and control.
Military Discipline and the Power of the State is Dependent upon the Willingness to Kill Those Who Won’t Submit.
Sun Tzu further taught that the highest art in war is to work so that the enemy submits without having to start the first battle. The most important element to accomplish this is good intelligence gathering. Good spies are essential. Good double agents are the most valuable asset of all. They may be worth more than half the army. The enemy will act on what it believes the facts to be. A good double agent can give the desired misinformation that will result in victory without a battle or complete defeat of the enemy in battle.
The First Priority of the Military State is to Control Information. The Use of Spies and Double Agents is Essential. Deceit is Central to the Success of the Military State.
Sun Tzu counselled that when the enemy is surrounded, it is proper to engage in protracted negotiation to give the impression that you are willing to stop the battle. If the enemy knows they are surrounded and your intent is to kill them all, they will put up a more forceful battle. If they are deceived into thinking they have a way out, they will not fight as if their lives depended upon it.
Use Psychological Warfare and Terrorist Tactics.
It should always be remembered that the central goal is to affect human action. If the enemy can be demoralized and so lose the will to fight, the battle and war may be won on that alone. Sun Tzu uses the example of an enemy outpost on the perimeter of an area controlled by the army. Each night, the soldiers manning the outpost are sent threatening and misleading messages. They are unable to sleep and at week’s end, abandon the outpost.
Always Play to Your Advantage and Make the Enemy Respond to Its Disadvantage.
Guerilla tactics can be very cost effective. A small mobile force that strikes at the perimeters and withdraws when faced with a conventional battle situation can tie down a much larger force. Bankrupting the enemy may mean there is no army to oppose you in battle.
Extraordinary speculative profits are possible with minor risk if you verify the truth, properly use logic and keep it private. The establishment will continue to make war and milk the public. If you understand exactly how they are doing this, you will also be presented with the possibility to learn how to protect yourself and profit far beyond the norm. If you are short selling shares that the establishment is short, your risk level is low and potential for profit high. This is not investment activity or undertaking a market risk. It is speculative profit in time of civil war.
Read more of: The Art of Speculation during Civil War
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