Phase Three in the Global Economic War Heats Up

by Kevin D. Freeman on March 31, 2018

We are monitoring events closely in the Economic War Room. Two things stood out this past week, both related to a coming Phase Three attack on the US dollar.

First, the Chinese finally launched an oil futures contract traded in gold-backed yuan. This is a big deal. In its debut, the contract exceeded trading for dollar-based oil contracts.

Many believe that this is one critical step in China’s long-held desire to de-Americanize the world and end the US dollar’s status as primary reserve currency of the world. The Chinese believe that since they are the largest importers of oil, their trading should no longer require American dollars. Further, they believe that when other nations understand that they can buy and hedge oil in yuan, the dollar will no longer be a necessary holding.

From ZeroHedge on March 26:

“As we most recently noted, after numerous “false starts” over the last decade,  the “petroyuan” is now real and China will set out to challenge the “petrodollar” for dominance. Adam Levinson, managing partner and chief investment officer at hedge fund manager Graticule Asset Management Asia (GAMA), already warned last year that China launching a yuan-denominated oil futures contract will shock those investors who have not been paying attention. This could be a death-blow for an already weakening U.S. dollar, and the rise of the yuan as the dominant world currency.”

Since the US now has more than $21 trillion in Federal debt (and growing about $1 trillion per year), requiring more than $6 trillion of foreign nation holdings, the idea of reduced foreign buying is ominous. We had to borrow $300 billion in a single week. If foreigners stopped buying our debt or worse still started selling, interest rates would spike. Our Federal budget would be in shambles and there would be repeated calls to reduce our military. The $1.3 trillion omnibus spending bill would prove to be a disaster. There are still some steps remaining before the Chinese dollar attack is in place. But rest assured they are moving that direction.

The second major news item came from the UK. It is reported that Prime Minister Theresa May is considering banning the sale of Russian debt in London markets. This, too, is ominous as it portends a rapid escalation in the global economic war. The Prime Minister is understandably upset over a chemical weapons attack targeting a turncoat Russian spy that took place on British soil. And, the idea of ceasing bond sales is quite reasonable in context. The problem is that this could give excuse to Russia to dump their holdings of our debt and encourage China to do the same. This almost happened in 2008. If Russia had persuaded China then, we might still be in recession. Now, the Chinese are openly discussing their plans to punish us via our debt and also our stock market.

From China Daily on March 23:

“…China’s countermeasures should not be limited to goods trade; they should extend to the financial sector, including underselling the US’ Treasury bonds and undermining the US stock market. Since the stock market’s strong performance has been trumpeted by Trump as proof of the success of his economic policy to impress US voters over the past year, China should take strong measures to make Trump feel the ‘pain’ in this area.”

Remember, it was China’s Unrestricted Warfare doctrine that suggested that a “single man-made stock market crash” is a weapon.

Russia clearly has a long-term plan to remove the dollar from the world stage and destroy American hegemony. They have likewise threatened to crash our stock market (and even sent spies to see how best to do it). Putin is ruthless and looking for any opportunity to accomplish his long-term goals. Thus, a move against Russian debt (no matter how well deserved) would provide political cover for a retaliatory strike.

We will continue to monitor these developments and watch for further signs of the global economic war already underway. Hopefully, incoming National Security Advisor Bolton will be more aware of these threats and more receptive to addressing them.

One last word: Don’t Despair! There is HOPE! I am about to sign off for a celebration of resurrection Sunday. My Jewish friends are celebrating Pesach (Passover). This is a time to deeply know that the Almighty holds our future. To best protect our nation, we should follow the wisdom of the Creator who spoke to Solomon as recorded in the Old Testament:

2 Chronicles 7:14 (KJV)

“If my people, which are called by my name, shall humble themselves, and pray, and seek my face, and turn from their wicked ways; then will I hear from heaven, and will forgive their sin, and will heal their land.”

May you be blessed in celebrating this Holy Week.


{ Comments on this entry are closed }

The Looming Debt and Pension Crisis (part three: China’s Latest Threat)

March 25, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditOne simple truth of life is that if you spend more than you take in, you have to either cut your spending, increase your income, or borrow some money. That is true for individuals and it is also true for governments. If you already owe a lot of money, your spending is further crimped […]

Read the full article →

Headlines From the Economic War Room

March 16, 2018

Share this…emailFacebookTwitterLinkedinGoogle+Reddit We just posted last night with a recap of the Winds of War as the opening to part two of the Looming Debt and Pension Crisis. In less than 24 hours, however, there were multiple additional reports that came into the Economic War Room that we feel should be brought to your attention. […]

Read the full article →

The Looming Debt and Pension Crisis (part two)

March 15, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditIn our last post, we provided a brief introduction to a most serious topic. Before we dove into the debt and pension crisis, however, we offered another installment on our “Winds of War” theme. We thought that would be our last mention, at least for a while, of the mounting evidence that we are headed […]

Read the full article →

The Looming Debt and Pension Crisis: An Introduction

March 8, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditAs I write this, I’m tempted to do a “Winds of War (Part Five)” blog in continuation of the series begun ia little over a month ago (Part Four of Winds of War available HERE). The reason is that in the past week, there have been so many data points affirming everything we have […]

Read the full article →

The Winds of War (Part Four)

February 27, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditThis is the 4th and last installment of our The Winds of War postings. To catch up, parts one through three are linked here: The Winds of War (Part One) – Global Economic Warfare The Winds of War (Part One). by Kevin D. Freeman on January 29, 2018. Share this… Email this to […]

Read the full article →

The Winds of War (Part Three)

February 16, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditIn the past week, so much information has emerged that corroborates our basic thesis. The winds of war are blowing and the intensity is increasing. To catch up, please review our last two posts: The Winds of War (Part One) – Global Economic Warfare Jan 29, 2018 – That’s despite the U.S. having higher […]

Read the full article →

The Winds of War (Part Two)

February 5, 2018

Share this…emailFacebookTwitterLinkedinGoogle+Reddit In last week’s post, we warned that the scent of the next World War was already in the air. Readers know that we believe the next war will be cyber-economic in nature, at least in the early stages. We have warned for nearly a decade that perhaps the war started in 2008, but […]

Read the full article →

The Winds of War (Part One)

January 29, 2018

Share this…emailFacebookTwitterLinkedinGoogle+RedditThere is a lot of positive economic news. Economic growth has substantially strengthened in the wake of regulatory reform, corporate repatriation, and tax cuts. The stock market is at all-time highs. Interest rates are appearing to normalize, at least in small measure. Despite this, according to this week’s BARRON’S, capital is fleeing the US […]

Read the full article →

Facing the Darkest Hour

January 23, 2018

Share this…emailFacebookTwitterLinkedinGoogle+Reddit I saw Darkest Hour this past weekend for the second time and I plan to see it a third before it leaves the theaters. Like Dunkirk, this movie carries a powerful yet historical message of inspiration. It also has multiple lessons for students of Economic Warfare with significant application for today. This blog […]

Read the full article →