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Posted June 04, 2024

Byron King

By Byron King


This month in Strategic Intelligence, Jim Rickards examines “lawfare,” the process of attacking an opponent through the legal system. 

I’ll follow Jim’s theme but address things from a different angle. Here, we’ll ponder the pursuit of honest money and wealth protection in a culture that is increasingly built on a foundation of untruth, misdirection, and outright lies. Of course, I’ll also present some investable ideas. 

Warfare and Lawfare: Two Bookends of Compulsion

First, let’s briefly revisit Jim’s key point, about how lawfare is a combination of law and warfare. That is, instead of one side attacking the other with armies of soldiers, the assault comes via armies of lawyers. And instead of operational movements on a battlefield, one side works to wreck the other within the confines of the legal system.

Keep in mind, though, that at a fundamental level warfare and lawfare are two ends of the same spectrum, namely that of compulsion. 

On that last point, one pithy definition of warfare comes from the German theorist Karl von Clausewitz, who in the 1830s wrote about war and strategy based on his experiences fighting against Napoleon: “War,” said Clausewitz,“is an act of force to compel our enemy to do our will.” 

In many ways, Clausewitz’s short sentence embodies the essence of warfare. Indeed, the guy wrote a 500-page book wrapped around that concept, and over the past 190 years, other fine thinkers have filled many a library shelf with further discussion. But you get the point. 

At the other end of the spectrum of compulsion lies the non-kinetic approach, meaning to use a legal system to force another to “do our will,” to borrow Clausewitz’s phrase; the trials of Donald Trump – literal and figurative – being the foremost current example.

In Trump’s case (or his numerous cases, to be exact), the former president is not dodging real bullets but instead must fight his battles on far-flung legalistic fronts. These have ranged from procedural skirmishes in Colorado and Maine to deny him ballot access, based on ill-defined, conclusory allegations of “insurrection,” a Constitutional point resolved in his favor by the U.S. Supreme Court; to serial criminal indictments in Florida, Georgia, the District of Columbia and New York over a wide range of matters: classified documents, election questions, “January 6” events, and paying for a nondisclosure agreement. 

The goal of all this anti-Trump lawfare is perfectly obvious. Trump’s political opponents want to hamstring him in terms of lost time and adverse media attention, huge legal bills, burdensome discovery, eye-popping financial penalties, and possibly the stigma of a criminal conviction, if not incarceration. 

But as the old saying goes, be careful what you wish for… Because the more Trump’s political enemies pile on, the higher he has risen in the polls. 

In recent months, Trump has been isolated inside courthouses, listening to prosecutors accuse him, witnesses malign him, and judges chastise him. Still, at the end of each day he has walked out to a sea of microphones and cameras to hold press conferences that receive global coverage. One might even say that Trump bears up well under the stress and looks rather “presidential” in his ability to absorb abuse and fire back at the other side.

One way or another, and as more than a few surveys clearly demonstrate, an innate sense of the rank unfairness of the anti-Trump lawfare has spread wide and far. If the election was held today, Trump could win. 

As to the outcomes of these Trump trials, we shall see. One criminal matter is now in the hands of a Manhattan jury, and anything could happen. Looking ahead months and years, no doubt we’ll watch the Trump appeals unfold from his cases, and the scope of what’s called, in antiseptic terms, “reversible error” will become manifest. 

Or let’s put it this way: if use of the legal system for political ends is a form of political warfare, then abominable misuse of the legal system is a form of war crime, and nobody wants to be on the side of war criminals. Apparently, the Lawfare fanatics failed to think this through.

Our Culture of Untruth

Sad to say, one factor that enables lawfare such as what we see with Trump is that we live in a gullible, miseducated culture that is wide open to mass persuasion towards preposterous ends. When large numbers of people hear little else but a litany of tailored tales, they can be made to believe just about anything. 

Yeah, sure, we have our wonderful First Amendment in the U.S. Constitution, and anyone can find their inner Benjamin Franklin and publish a newspaper. Then again, we live in an era when most channels for news are wrapped up quite tightly by people and institutions that control what gets out. 

At root, the issue of “what is the news?” is economic because, like with any other business, running a news site and related newspaper has expenses, and the bottom line always rules. Across the U.S., over the past two decades, more than 2,000 local and regional newspapers have closed their doors, succumbing to high costs and competition from so-called “free” news on the internet. 

One major city example is the Pittsburgh Post-Gazette, which has been in business since the 1780s but is now a shadow of its former self. It’s published in paper only on Thursdays and Sundays. (But to be fair, it’s online every day.)

Meanwhile, if you’re above a certain age you likely recall how three networks dominated television news in those olden days: CBS, NBC, and ABC. Perhaps you remember how the late newsreader Walter Cronkite used to sign off his evening broadcast with his iconic line, “And that’s the way it is…” 

pub Walter Cronkite: “And that’s the way it is…”

Well, that was the “way it is” per Cronkite’s opinion. He and his producers were ruthless about what to include in the man’s 22-minute weeknight news show. And the fact is that, over many years, Cronkite and CBS left plenty of important news and perspective on the cutting room floor; definitely, they left out anything that was contrary to what they wanted the audience to know. 

Or consider the inordinate power of the New York Times and Washington Post. Over many decades, they have published innumerable stories that created national levels of narrative. In other words, if something was “in the Times” or “in the Post,” then large numbers of people believed that the story was a real thing, and that the resulting worldview was appropriate. All this, while many other news sources took their cue, if not doctrine, from these two newspapers (NPR, I’m looking at you!). 

This all makes for a long discussion, which I’ll spare you; but the point is that personal views and biases, and editorial decisions by a small handful of people have long shaped widespread public perceptions and opinions in the U.S. 

Now, fast-forward to today, when network news remains in the hands of corporate insiders, and the Times-Post narrative still dominates nationwide storylines. Plus, we now have all-digital sites like Google and Facebook/Meta, which are in the business of curating narratives to the point of notorious shadow bans that all but censor content that goes against certain political grains. 

Or recall how, for way too long, ex-Twitter shadow-banned and censored people and content. Things became so openly notorious that Elon Musk came in and grossly overpaid to buy the site, an act of public charity in support of honest discussion. Now called “X,” we’ll see how it all evolves. 

Consider Donald Trump’s new site, “Truth Social.” This is an effort to create a content platform with far less oversight and moderation than, say, Facebook, YouTube, etc. That is, Truth Social is not just Trump’s personal bullhorn; it’s an open forum, with its own hardware system, to support content creators. It won’t get canceled like the former Parler site simply vanished way back in 2021. Again, we’ll see how this evolves over time.

So, as we discuss lawfare, and certainly the anti-Trump lawfare, one point to keep in mind is that it only succeeds when large numbers of people don’t know what’s going on behind the scenes, in the shadows. If all that one hears or sees are inflammatory headlines atop partisan articles written by hacks who cherry-pick facts or just plain make stuff up, then yes… one might just believe anything, to one's long-term detriment. 

Financial Lawfare

We could talk all day about Trump and lawfare, but let’s go to a different level of the basic idea. Let’s discuss a different version of lawfare, namely the use and misuse of financial sanctions by the U.S. against other nations, with the goal of shaping or changing the other side’s political behavior; in other words, how the U.S. utilizes its legal and financial power at the strategic and geostrategic level.

One historical example of U.S. lawfare at an international level is America’s use of sanctions against Japan in 1939 – 41, prompted by Japanese aggression against China. It’s a long story, and for a highly detailed explanation see a superb book published in 2007 by historian Edward Miller, entitled Bankrupting the Enemy: The U.S. Financial Siege of Japan Before Pearl Harbor.

In short, U.S. sanctions cut off Japan from international banking services and eventually embargoed Japan from buying oil, iron ore and more. It must have seemed like a great idea to the lawyers in Washington, D.C., but over time the sanctions contributed mightily to Japan’s government decision to attack the U.S. at Pearl Harbor in December 1941. In other words, those legalistic U.S. sanctions directly pulled the U.S. into the Second World War.

Postwar, and over many decades, the U.S. government continued to use economic sanctions – a form of lawfare, to be sure – against geopolitical opponents. The U.S. government placed sanctions against communist nations during the Cold War, such as the Soviet Union, and we still have long-running sanctions against, say, Cuba. These and many more. 

More recently, the U.S. and Wes placed sanctions against Russia over the conflict in Ukraine, dating back to Russia’s takeover of Crimea in 2014. Over the past decade, the U.S. has enacted all manner of sanctions against Russian individuals, companies, government entities and others. 

Since February 2022, and over the past two years, since Russian tanks first rolled into Ukraine, the U.S. has placed enormous numbers and variations of new sanctions against Russia and Russians, up to barring that nation from using the SWIFT system (Society for Worldwide Interbank Financial Transactions); in essence, the U.S. cut Russia out of the standard international system for finance and commerce.

So, one might ask: have these anti-Russian sanctions – U.S. lawfare – been effective? Have they worked? Well, apparently not because Russia seems to be doing just fine, economically. 

Right now, the Russian economy is humming nicely, at near full employment; indeed, Russia reports labor shortages due to the needs of its internal, organic growth coupled with wartime demand for military products. Russia remains among the world’s leading producers of energy (oil, gas, uranium), metals and materials, agricultural products, and various forms of machinery and finished goods, including high-end aerospace technology. 

All this while Russia maintains robust trade relationships with the world’s two largest nations, China and India. Russia’s national debt is about 14% of gross domestic product (GDP), compared with the U.S. national debt, which is about 140% of GDP and climbing. Plus, to cap it all off, Russia has the world’s best ratio of gold reserves versus GDP.

Another way to say it is that Russia is “too big to sanction.” Russia has too much energy, resources, industry, and definitely plenty of gold in the national vaults. 

Another blowback from all this is that U.S. sanctions have led to massive, global-scale de-dollarization, a situation in which many trading nations switched to other currencies (i.e., not the dollar) to settle accounts. 

Protect Your Wealth from Lawfare

Okay, now let’s get personal. What does lawfare mean to you, whether it’s against Trump, Russia, or anyone else?

Well, it’s definitely not a positive thing – not a favorable harbinger of the future – that the U.S. legal system has become weaponized, let alone that lawfare has a growing constituency. If prosecutors can come after Trump for whatever sort of charges they can concoct, they can go after anybody. If judges and juries can personalize the legal process against people or entities that they just plain don’t like, we’re sliding down the proverbial slippery slope.

Frankly, based on what we’ve seen in the courtrooms of New York City, you’d have to be crazy to trust the fairness of that jurisdiction. Meanwhile, the D.C. courts are equally hyper-partisan, with surly judges and biased jury pools that seem to be brain-melded to the left-wing editorial board and self-styled progressive columnists of the Washington Post.

Of course, de-dollarization means that many nations across the globe now require fewer dollars for their own trade; so, they use their American currency to buy “real” things like precious metals, oil, or other assets, and this includes bidding up U.S. real estate, which prices locals out of many markets.

If you are a regular reader, then by now you must know where this is going: protect your wealth with hard assets, such as energy, precious metals, and commodities. 

We’ve long been fans of ExxonMobil (XOM) and Chevron (CVX) as dividend-paying energy plays; they’re big, asset-rich, and have plenty of money to pay lawyers when they get sued in other lawfare cases over so-called “climate change” and similar. 

If you believe Donald Trump will be the next president in January 2025, one strong call on future energy is with U.S. offshore oil and gas. For that, look at drilling plays like Transocean (RIG) and Diamond Offshore (DO). And don’t forget service plays like Schlumberger (SLB) and Oceaneering International (OII)

For precious metals, you should definitely own physical bullion, meaning gold and silver. Prices have moved strongly in the past year, with more to come in our ongoing era of inflation and blowout government spending. 

We’ve often discussed large mining plays like Barrick (GOLD) and Newmont (NEM), and we’ve mentioned a great, smaller play just on the cusp of serious cash flow, a company called Contango Ore (CTGO), which works in Alaska. 

On the commodity side, we like Freeport-McMoRan (FCX) for copper and many other metals, as well as Rio Tinto (RIO) for copper and a wide array of related metals. 

Note that these are all general recommendations, some in the portfolio and some not. We won’t track names that are not in our official portfolio, but I keep an eye on all of these companies. I’m confident that these names will hold up in whatever economic or business environment we encounter in the next few years.

Finally, keep in mind the distinction between a legal system and a justice system. That is, every country has a legal system: Stalin’s Soviet Union had a legal system, Mao’s China had a legal system, and Pol Pot’s Cambodia had a legal system. But were they “justice” systems? 

For over two centuries, one of the great national strengths of the U.S. was that, overall, our legal system also focused on delivering fair and impartial justice. Yes, the country had problems at times and in places; Southern Jim Crow comes to mind and more. But the country has never before put on such a sordid legal spectacle as we see with former President Trump. 

This too will pass, or so we hope. Meanwhile, protect your wealth. Look for honest money while we collectively search for a way out of our current era of deep untruth. 

Thank you for subscribing and reading. Best wishes…

P.S. Make sure you watch Jim Rickards’ amazing video about the Trump Witch Hunt here.

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