Strategic Depth & Personal Finances: Part Political Rant & Part Financial Freedom

Geography is the curse and the trap of history that few countries can escape. 

If you look at the history of Russia, they have been invaded by almost everyone at least 51 times in history: endless hordes of nomad warriors like the Khazars & Pechenegs, the Vikings, the Mongols, Teutonic Knights, Swedes, Poles, Turks, France, the Germans twice, and it was done through the very flat plains of Eastern Europe which leads directly to Moscow. Basically there are no geographic barriers like mountains, forests or deep oceans to block opposing armies from marching to their major population centers. And because of this the rulers of Russia were always forced to look at “Strategic Depth” to protect themselves. 

“Strategic depth” as defined on Wikipedia is a term in military literature that broadly refers to the distances between the front lines or battle sectors and the combatants' industrial core areas, capital cities, heartlands, and other key centers of population or military production.

This term is deeply ingrained in every Russian ruler and led to the expansion of the Russian empire from the 1600 to the 1900s and also to the establishment of the Soviet Union in 1917 and it’s extension to incorporate East Germany, Ukraine, the Baltic countries, Poland, Hungary, Bulgaria, Georgia, Czech & Slovak republics & the Central Asian “Stans” where they could buffer the Russian heartlands as much territory and distance as possible. And hence Putler’s present insane obsession with Ukraine & Baltics. 

For the record, this absolutely does NOT in any way remotely justify the horrific & barbaric Russian invasion of Ukraine and the outright takeover of Belarus. This is putting aside the senselessness of war & the gross repudiation of international law in an unjust invasion of another sovereign country. It’s obscene, immoral & awful because we are now in the 21st century where we have supposedly advanced as a civilization and society. 

There are so many ways to take over countries instead of the violence of war. You buy your way in through bribes/investments/trade deals, you use proxies, or do media/ “Black” ie. negative PR or fund opposition political parties. You don’t send in soldiers and fire bombs and missiles. It’s pure 20th century barbarism. I truly hope Ukraine continues to kick the Russian army’s ass. But having said that, we do need to understand that strategic depth drives the thinking and imperative of every Russian ruler since the beginning of their state. 

You can also see the concept of “Strategic Depth” in Pakistan’s interest in Afghanistan. Their not so secret support of Taliban since the late 1990s. They view the influence and control of Afghanistan through these proxies as Strategic Depth against their arch enemy India. Probably more of a 21st century way of doing this. (not a value judgment here just an observation)

It’s an important concept to understand in relation to your own personal finance. Strategic depth can be seen from having a low cost structure and inexpensive tastes. This should be job one so you can allow your money to go further. It can also come from having capital reserves, like having enough cash on hand to cover 6-12 months of monthly expenses. This just gives you so much more leeway and freedom. At a basic level, it actually just gives you a good margin of safety in your life. 

Having strategic depth in your personal financial life is important although you can take this way too far. 12 months of cash seems smart. 36 months of cash seems very extreme & probably not productive, due to the government printing machine. You are losing money due to inflation which the government reports at over 5-7%, which means it’s probably much much higher. You are better off using this money and investing in stocks, crypto, real estate or startups, assuming your timeline is far over 5 years and that prices have been knocked down so much in the last half year. Don’t think you can go too wrong here. 

But assuming you just want to keep the cash and plan on buying assets during some major economic dip, this would be a damn smart move too. Hard to do timing wise though as it requires lots of discipline to leave the money sitting there without spending it on stupid stuff. Or maybe this is just my personal issue :)

The net net: keep some strategic depth in your personal finances. It’s your downside protection which is always useful in tumultuous times like the raging 2020s.