In the News (from poorrichards-blog): “The guests were assembled in the Warfare Analysis Laboratory, surrounded by uniformed officers from the highest levels of the Pentagon and a dizzying array of screens normally used to simulate nuclear world war.
“Behind the scenes, the military are worried about the market. For who owns much of this debt? China, the US’s most powerful rival and threat. And that makes America vulnerable to a new kind of bloodless but ruthless war.
“The group was split into five teams: America, Russia, China, Pacific Rim, and a ‘grey team,’ representing shady outfits such as terrorist organizations. They were sent into ‘bunker rooms’ and told to use financial or economic tools – currency, debt, stocks, gold – to bring their enemies to their knees. Everything was conducted via computer, and they could be as devious and ruthless as they liked.
“When the game was halted, the result left the military men quiet and sobered. Why did the bankers scare the soldiers? The answer lies in the way the world is now interconnected as never before.
“Over the past few years, China has been buying up US government debt and is now its biggest holder. If China were to dump this debt, it would totally screw with the economy.
“The markets are now global, the holdings in each other’s finances deep, and the technical ability to manipulate them instantaneous. In the 1970s the West feared that its enemies had their fingers on a nuclear button. The modern equivalent may be China’s ability to press the button on US Treasury bills.
“‘China is, Professor Bracken says, ‘the huge threat,’ but Russia, with its oil and gas, has shown no compunction in waging economic war on its neighbours, and could do so on a larger scale.
“Another possibility is that major oil-producing countries could destabilize America by switching to euros instead of dollars as the currency in which oil is priced – so-called ‘petro-dollar warfare.’ Or a terrorist organization might trigger a financial crash via some kind of shady hedge fund or computer attack.
“At the end of that Pentagon session, the 80-odd players returned from their bunkers and assessed the damage.
“China won, without so much as reaching for a gun. And the soldiers looked at each other and wondered if it was still only a game.”
My Comment: There is nothing surprising in the results of the economic war played out by their rules. But the experts were wrong: Namely due to total interconnection, there are no winners or losers in this war. Everyone will lose, and the only way out is to sequentially bring everyone to a single global community with reasonable consumption.