Wednesday, 5 April 2023 — Melbourne

By Jim Rickards Editor, The Daily Reckoning Australia

[5 min read]

Dear Reader,

In the context of this ongoing war, there’s a critical story involving the likelihood of nuclear war. It would be reassuring to believe the chances of using nuclear weapons in Ukraine were trivial. They’re not. The world is facing the greatest risk of nuclear confrontation since the Cuban Missile Crisis.

I began studying nuclear warfighting in the late 1960s and continued my studies through the depths of the Cold War in the ’70s and ’80s. It seemed that knowledge was moot after the fall of the Berlin Wall in 1989. It wasn’t.

Of course, my academic studies were not my first encounter with the reality of nuclear war. Like most people my age, I participated in nuclear bomb drills in elementary school in the 1950s. These included taking the duck-and-cover position under your desk to protect against flying glass from the blast and blistered skin from scalding heat waves.

It didn’t stop there. We studied concentric radii of blast, heat, and radioactivity emitted by a Hiroshima-type bomb and the new, more powerful thermonuclear devices.

We learned how to identify radioactive dust (it’s light grey) and how long to remain in bomb shelters until the dust dispersed from the wind and rain. We knew which radio stations to tune in to for civil defence updates. We knew our local civil defence (CD) volunteers by name and easily recognised the yellow hard hats they wore with the CD logo on the front. We knew how much water and food to store in a bomb shelter.

We were ready

This childhood training seemed about to prove its worth in the Cuban Missile Crisis of October 1962. I recall seeing the front page of The Philadelphia Inquirer with a map of the Northern Hemisphere from Cuba to Canada and concentric circles showing the range of Soviet nuclear-tipped missiles being delivered to Cuba. I quickly determined that my hometown was within range. Nothing else seemed to matter.

When my academic studies on nuclear war began in 1969, the topic already seemed quite familiar. I read the leading treatises, including On Thermonuclear War (1960) by Herman Kahn, Nuclear Weapons and Foreign Policy (1957) by Henry Kissinger, The Delicate Balance of Terror (1958) by Albert J Wohlstetter, and many other works.

I went on to receive a Master’s degree in international relations from The School of Advanced International Studies in Washington, DC, the top-rated academic institution in its field and a leading centre of studies in American Foreign Policy.

Later, I spent time inside the top-secret Los Alamos National Laboratory, where the first atomic bombs were developed. I was studying the complex dynamics of simulating nuclear tests without actually detonating devices.

Nuclear tests were banned in the atmosphere and underwater by the Limited Nuclear Test Ban Treaty of 1963. All testing, including underground, was banned by The Comprehensive Nuclear-Test-Ban Treaty of 1996, but the US did not ratify that treaty. From childhood to graduate school and beyond, my immersion in nuclear war-fighting strategy seemed complete.

What I learnt about the threat of nuclear war

Many dismiss the topic as too theoretical because ‘there has never been a nuclear war’. That’s not true. The US conducted the first and only nuclear war from 6–9 August 1945, when we dropped atomic bombs on Hiroshima and Nagasaki in Japan and killed about 200,000 people (the exact number is unknown). Japan surrendered on 15 August 1945, shortly after the bombings. There was nothing theoretical about it.

The basics of nuclear war-fighting include counterforce (aiming at military targets), counter-value (aiming at civilian targets and infrastructure), first-strike capability, second-strike capability (ability to strike back after you have been hit first), and the doctrine of mutually assured destruction (MAD).

MAD refers to the condition where both sides have second-strike capacity, but neither side will strike first because they know they will be hit in return and both sides will be destroyed. MAD is sometimes compared to two scorpions in a bottle.

What both sides can agree on

Despite the many theoretical contributors and evolution of strategies over the decades, all experts on nuclear war agreed on one thing — don’t go there. By this I mean, with the possible exception of a crazed dictator, no leader would ever launch a nuclear war out of the blue or at the beginning of a conflict.

If a nuclear war ever happened, it would be the result of escalation. A conflict that started with conventional weapons could end up as a nuclear war if the belligerents were nuclear powers and the two sides escalated to the point where one side felt cornered and had no options except to use nuclear weapons.

Ironically, in that situation, the non-cornered party might use nuclear weapons first in anticipation of a strike by the cornered party in order to avoid relying on its second-strike capability. So, it goes into the world of game theory.

All the best,

Jim Rickards,
Strategist, The Daily Reckoning Australia

This content was originally published by Jim Rickards’ Strategic Intelligence Australia, a financial advisory newsletter designed to help you protect your wealth and potentially profit from unseen world events. Learn more here.

By Bill Bonner Editor, The Daily Reckoning Australia

Dear Reader,

‘Why do fools fall in love?
‘Why do birds sing so gay
‘And lovers await the break of day
‘Why do they fall in love’

Frankie Lymon

Our guiding premise here is that we are all fools. We do things that we can’t explain, governed by forces we didn’t create.

So too are there basic ‘laws’ and ‘rules’ in our financial lives. We didn’t invent them; we can’t change them…and we ignore them at our peril. You can’t borrow your way to wealth, for example. Neither can you ‘print’ money and expect to get rich. To the contrary, the more you print…the more you distort and corrupt the real economy. You can ‘break the rules’. But there’s a price.    

And someone will pay. What follows is another way to think about it…and discover who.  

Some people succeed in life by doing extraordinary things. They strike oil. They build a home computer. They conquer England.

But most of us ‘win’ by not losing. That is, we follow the rules. We fall in love. We get married. And then, in our 50s, we don’t run off with the fetching cocktail waitress! We stick to the program. We don’t steal from the church collection plate. We don’t invest all our savings in a kooky crypto. We don’t set the neighbour’s cat on fire. And if we’re lucky, things turn out all right.

The feds, meanwhile, think they can get away with anything. And in important matters — war and finance — they are largely right. It’s not their money…and other people die in their wars.  

Who pays?

And now, after more than 10 years of phony negative-rate lending…and more than US$8 trillion new dollars ‘printed’ since 1999…creating trillions in fake prosperity and $90 trillion of real debt…

…somebody is going to pay for this nonsense. But who? How?  

The feds? The deciders? People with PhDs or accounts with Goldman Sachs?    

The following news item gives us a hint:

‘WASHINGTON, March 29 (Reuters) — U.S. Republican Senator Rand Paul on Wednesday blocked a bid to fast-track a ban of popular Chinese-owned social media app TikTok, which more than 150 million Americans use, citing concerns about free speech and uneven treatment of social media companies.

‘“I think we should beware of those who use fear to coax Americans to relinquish our liberties,” Paul said on the Senate floor. “Every accusation of data gathering that has been attributed to TikTok could also be attributed to domestic big tech companies.”’

When you’re among the ruling elites…and you’ve lost every war for the last 70 years…you’ve cut the nation’s GDP growth rate in half…made the common people’s lives more difficult by approximately doubling the amount of time they have to work to afford an average house…and added US$50 trillion in excess debt…including US$31 trillion in government debt (no one is very sure what the money bought)….

…every new thing is a threat. Every mob has a rope in its hand. Every market trend threatens to turn you into a pauper. And every entrepreneur may put you out of business.

The blame game

So, what do you do? You treat every challenge as an opportunity to grab more power and money from the public. Ban TikTok. Stop the Russians in the Ukraine…the Chinese in the Taiwan Strait…the White Supremacists in Tennessee. And don’t forget to save the banks.    

Neither Russia nor China has done anything that the US hasn’t done. The US invaded Iraq. Russia invaded the Ukraine. TikTok gathers info from its customers. So does Apple, Google, Meta…etc. etc. And banks? Zombie companies? Reckless investors? All should be allowed to go broke.  

But the mind of a hegemon is not driven by need. It is driven by the desire to keep things as they are. Its rules are those it makes for itself. And somebody pays.  

No surprise, the deciders will decide that it shouldn’t be them.

Regards,

Bill Bonner,
For The Daily Reckoning Australia