The following is a reprint of the Front Page of the July 2002 Early Warning Report.
Copyright © 2002 by Richard Maybury

"Analysis would need to be more heavily focused on geopolitics, so we added geopolitics to the model along with other essentials including law, history and military weapons, strategies and tactics."

Dear Reader,

    To understand the present condition of the investment markets, it helps to know where the financial newsletter industry came from.

    There were newsletters prior to 1970, but not many.

    1970 brought the publication of Harry Browne's book HOW YOU CAN PROFIT FROM THE COMING DEVALUATION. This outstanding best-seller contained investment advice, but it was different from anything that had come before. The first 100 pages were a brilliantly clear, concise layman's explanation of the economic model on which Browne's advice was based.

    In the face of the blizzard of incoming data, what other tool do we have to separate the wheat from the chaff? We all need a model, a description of how the world works.

    Browne's model was the "Austrian" explanation of the business cycle. Austrian economics--so-named because the founders were from Austria--is the most free-market of all economic viewpoints.

    Browne's book was so enlightening it sold 440,000 copies, which created a pool of investors who had the model.

    The mainstream news media were almost 100% Keynesian. Keynesianism was (still is) the federal government's policy, so this is what was taught in the schools, which were government-controlled. There was no mainstream Austrian view, and still isn't.

    Readers of Browne's book wanted analysis written from the Austrian view, so newsletters sprang up to fill the void. By the late 1970s, the financial newsletter industry was booming, and investors who had followed Browne's advice were swimming in profits. (Browne had recommended gold. In 1970 the yellow metal was $35; a decade later it was $850.)

    But, over the years, there has been very little reinforcement of the model, and the people who read the devaluation book have been dying or forgetting what they learned. The financial newsletter industry has been in the doldrums for a decade or more.

    One benefit of having an audience that understands the model is the newsletter writer can explain things more completely and get deeper into the material without having to write the equivalent of a small book every month.

    A larger benefit is that once the reader has the model, he can use it continually to understand the news and events affecting his investments and daily life. He can also explain things to his children and friends, who need the wisdom a good model provides.

    When Henry Madison Research, Inc. launched Early Warning Report in 1991, we decided the model had been almost completely forgotten and would need to be revived. Also, conditions were far different than in 1970. The Soviet Empire was collapsing and wars were spreading all over east Europe and Asia. Analysis would need to be more heavily focused on geopolitics, so we added geopolitics to the model along with other essentials including law, history and military weapons, strategies and tactics.

    My "Uncle Eric" series of books is designed to give teenagers the law, economics, geopolitics and history they do not get in school. These books explain the model on which EWR is based, so we recommend them as the quick, painless way for readers to get the fundamentals.

    This is not to say the model used by EWR and explained by "Uncle Eric" (me) is the last word on these subjects, or that it is perfect; it's just the best I have seen. It builds upward from the two fundamental laws explained in the Uncle Eric book, WHATEVER HAPPENED TO JUSTICE?

    Again, we need some model to understand our world, and we won't get a useful one from the schools or mainstream press. Keynesianism does not work any better today than it did in the 1970s. And, many publications still use no model at all.

    Reading the 11 ("Uncle Eric") books takes about 25 hours. A comment I hear often from those who have finished them is "now I know why there is so much confusion in the investment markets."

    I hope you will lend your books to everyone you care about.

   Richard Maybury
   Editor, Early Warning Report
   July 2002 EWR

Book covers and order information for Uncle Eric's Books