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 we have simply failed to recognize it. From this perspective, and as written in Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Could Happen Again, we were expecting a “Phase Three.” This new phase would represent a simultaneous attack on the dollar, the integrity of the U.S. Treasury, a shock in interest rates, a collapse in bonds, and another possible market crash. Basically. everything we’ve witnessed in the past week. The Dow fell over 2,000 points on the Dow Jones Industrial Average in the first three trading days of February, more than half of that today, before a late afternoon rebound.
From another perspective, WAR was declared (albeit silently) in the 1990s as Chinese policy toward the U.S. shifted dramatically. In 1999, the Chinese book Unrestricted Warfare was published and explained exactly what was happening although it was (and remains) largely ignored by the West. This view would hold that the 9/11/01 attack was a part of an initial attack on the West. And, we believe that the financial heart attack that began on 9/11/08 began the next phase. The End Game is designed to permanently take down American leadership, collapse the dollar and removing its reserve currency status. This would effectively bankrupt the Treasury and de-fund our military. We have a tremendous amount of intelligence that demonstrates that this plan has been around for decades.
So, has Phase Three finally arrived? While we cannot rule out the possibility that the Chinese/Russian coalition is making its move now, it is too early to tell. This may be another weapons test, probing to see how we respond. There are a number of critical timing factors at work. First, today was the first day for the new Federal reserve leadership. Markets may be testing Chairman Powell’s approach. It is also on the heels of the President’s first State of the Union speech. It is also just after the meeting of globalists in Davos, Switzerland. Or, today’s drop could simply be a very normal correction after huge market gains. Until we learn otherwise, Occam’s Razor would suggest we stick with that.
It is important to understand that IF the Chinese or others had unleashed an economic weapon to wipe out our stock market, most people wouldn’t believe it. But such a weapon is certainly feasible and could prove far more devastating than an attack on a major city. And the attack would be difficult to attribute, meaning the potential for a first strike without retribution.
The point is this. Wall Street is inwardly focused, searching desperately for an explanation because the market had been so strong and calm for so long. This is a shock for certain. But we MUST NOT IGNORE the very real signals of looming war. This installment will cover some of the prepatory efforts that have been underway for years but now seem to be accelerating. While they are not a “smoking gun” by any means, they certainly demonstrate a pattern consistent with preparation for World War.
Let’s begin with the reality that our Western Financial System is vulnerable. Whether from an exogenous shock or a purposed attack, the absolutely existential nature of finance should be self evident. If the financial markets were gone, we would have no nation left. Simply look to the collapses of history and you will see that nations require a functioning financial system.
New technologies add a layer of economic vulnerability to geopolitical disruptions, with emerging risks of asymmetric economic warfare including potential cyberattacks designed to disrupt critical financial infrastructure.
It is striking how sanguine financial markets have remained while political and geopolitical risk has jumped in recent years. Given current market dynamics, it may not be rational for any single market participant to price in rising political and geopolitical tensions. The risk is that we will hit a tipping point at which point everyone prices in these tensions, with a rush to the exits that hits asset prices, strains the resilience of the global financial system and tests whether policymakers retain the firepower to prevent deep and long-lasting impacts on the real economy.
This report is barely a week old (based on extensive interviews and surveys with previous and expected Davos participants over the past several months) and yet we are watching it play out just as written. This could be asymmetric economic warfare using cyber and other means to undermine markets. The resulting panic could produce a tipping point.
This is not news to the Chinese. In fact, they have been preparing for it along with the support of Russia. It is not news to readers of the Blog or our books. We have been at the forefront of warnings for the past decade. But it is news to most Americans and other Western investors, the very ones who will react in panic and also could be hurt the worst.
So what has China been doing? They have been lining up allies. Some are bought off, some are influenced, and some bullied. But they have certainly been pulling together a formidable alliance in case of a financial confrontation with the United States. In addition, the Chinese have made a fervent and concerted effort to compromise political factions in our nation that would clearly divide any attempted response we might prepare. The learned the lesson from our failure in Vietnam. Sometimes what happens on the battlefield matters less than how it is reported to the American people. As a result, a very powerful influence operation has been underway for years, softening our resolve and unity.
According to a Wall Street Journal account from Clinton days, a bipartisan congressional inquiry “found Beijing has stolen U.S. design data for nearly all elements needed for a major nuclear attack on the U.S., such as advanced warheads, missiles, and guidance systems. Targets of the spying ranged from an Army anti-tank weapon to nearly all modern fighter jets. Most wasn’t done by professionals, but by visitors or front companies. Lax security by the Clinton Administration is blamed in part, and satellite makers Hughes and Loral are criticized.”
China accuses US of ‘Cold War mentality’ with new nuclear policy
China urged the United States to drop its “Cold War mentality” and not misread its military build-up.
It comes after Washington published a document on Friday outlining plans to expand its nuclear capabilities to deter others.
The review of U.S. nuclear policy has already riled Russia, which viewed the document as confrontational.
“We hope that the United States will abandon its Cold War mentality, earnestly assume its special disarmament responsibilities, correctly understand China’s strategic intentions and objectively view China’s national defense and military build-up…,” the ministry said in the statement posted on its website.
In other words, “nevermind our military buildup…you be responsible and disarm!” We must not be fooled, however, as noted by the International Business Times recently:
China has overtaken the US in terms of number of scientific publications in what is seen as a key indicator the country on the verge of becoming the next global superpower.
According to statistics compiled by the US National Science Foundation (NSF), China published more than 426,000 scientific studies indexed by Elsevier’s Scopus database in 2016, the equivalent of 18.6% of the worldwide total.
For the first time, the US came in second place after publishing around 409,000 papers that year.
While the report still said the US leads the way in terms of science and technology, China as well as other developing countries are starting to step up their input and are making “rapid strides” in their scientific achievement.
The report says China’s advancing in researching could also impact national security and economy as “industries like computing, robotics, and biotechnology are pillars of US economic competitiveness, sustaining and creating millions of high-paying jobs and high-value-added exports”.
The report adds “the loss of global leadership in these future drivers of global growth” would hamper the US economy.
Elsewhere, economics expert Robert J Samuelson, writing for the Washington Post, said one danger of China’s rise of scientific research is how it could affect their military operations.
He said: “If China makes a breakthrough in a crucial technology — satellites, missiles, cyberwarfare, artificial intelligence, electro-magnetic weapons — the result could be a major shift in the strategic balance and, possibly, war.….
Just imagine how this might work. What if we had a market meltdown just as there was a Washington debate over the debt ceiling and government shutdown. Then, as we are panicked over a collapsing economy, questioning if we can afford any military expenditure possibly accompanied by a power blackout from EMP, the Chinese invade Taiwan but also offer to fund our debt. Or, to simply promise to not dump their massive Treasury holdings. We know that these type of scenarios have been discussed at length in Beijing.
So how would they get away with any of this? They have conducted an extensive campaign based on Unrestricted Warfare. The strategy has also been labeled The Three Warfares:
The Trump administration’s upcoming National Security Strategy — a document required by Congress — will be the first one to have a deep focus on economic competitiveness, particularly with China, according to a source familiar with it.
Towards that end, the NSS is expected to be actionable, in terms of recommending certain economic trade laws be reformed, the source told Breitbart News on Friday. The NSS is expected to be released on Monday.
In the Trump administration’s view, the United States’ greatest weapon is a strong and sustainable gross domestic product (GDP).
Along those lines, the NSS is expected to have a heavy focus on reciprocal and fair trade, economic strength, economic competitiveness, and economic warfare directed towards the U.S.
President Trump made American economic competitiveness with China a key campaign issue. The administration has made it a key focus, at the same time attempting to work with China to denuclearize North Korea.
National Security Adviser H.R. McMaster earlier this week at an event in Washington provided a preview of the NSS, outlining the four core pillars: Protecting the homeland, advancing U.S. prosperity, peace through strength, and advancing U.S. influence.
He also outlined the nation’s five major threats: revisionist powers like China and Russia, rogue states like Iran and North Korea, and transnational terrorist groups.
Bottom Line? We are feeling the Winds of War. In our next post we will delve into how far this might go. For now, we should start preparation.
By Ewan Palmer January 23, 2018 11:22 GMT
