Clear Cut Divided World May Lead Countries Into Radioactive World War III

A war can break out for all sorts of reasons.  Sometimes, a war can just start by a strong mind leader who has a lust for wars.  Nonetheless, in a complex world of today, albeit wars might occur for the reasons that nobody will ever be able to guess, I think a global war might occur easily if the world is so clearly divided.  What do I mean by this?  Read on and I expand on this further…

Well, if the world is so clearly divided in a sense that a world is splitting into two groups — each group consists of friendly countries that are so ready to defend one another — I think this configuration for the world will easily ignite a global war.  How come?  You can call it as domino effect or a string effect or ally effect or whatever, but the reality is that this sort of division in the world will encourage one country to go to defend a friendly country with little hesitation.  Although, defending a friendly country is a noble deed, but when the world is so clearly divided into two groups, many countries may tend to look pass the diplomacy and pour resources into war preparation instead.  Of course, if a country wants peace, it must always be ready for war.  When a country is so war ready, it’s very unlikely to be considered as a weak target and will not easily be bullied or taunted into a possible war.  Nonetheless, war preparation is not the same as war preparation with clear cut global division.

When we have a world with clear cut global division, countries that are grouped together and war ready will find themselves to be overly confident.  Overconfidence may lead into pushing diplomacy aside, thus war preparation might just become preemptive strikes.  Perhaps, preemptive strikes come in all sort of forms, and eventually the physical form of war might just become a reality.

In today world though, we have nuclear weapons, thus even with our current clear cut global division world, I doubt that a global war such as World War III will easily erupt.  Nonetheless, if certain countries that are able to find a way out of (MAD) Mutual Assure Destruction situation, then a clear cut global division kind of world, even with nuclear weapons, will find itself embroil in a global war.

I think the world we are currently living in is a dangerous one.  It’s clearly that China is a rising global power, and some people even consider that China is already a super power.  Whether China is a super power or not, it does have more allies than before for China is growing in military and economic strengths.  Furthermore, with China’s advancements, many countries are rethinking about their strategic friendships.  With more countries are willing to be under China’s global influences, this will put United States in a situation which will be very uncomfortable.

Of course, United States can follow Britain’s playbook.  In the past Britain conceded its global power to the United States in a way that it did not wage war against the United States.  Of course, the British did attack the United States when the United States was still a colony or sort of.  Nonetheless, the United States declared independence from Britain, and when the dust was settled Britain did not try to invade the United States again.  After World War II, Britain conceded her power to the United States.

Another option for the United States in the face of China rising is that doing everything it can to disturb China’s rise.  The eventual outcome of this option will not be clear for obvious reasons.  One obvious reason is that nobody can be sure that the United States can contain China, because China is economically strong and militarily ambitious.  Furthermore, China is one of those countries that can use the MAD strategy.  With modern nuclear weapons, China can deny a potential enemy from being too aggressive against China’s core interests.

As China is ambitiously rising, the United States is embroiling in economic downturns and global enemies such as Russia and other players in the Middle East.  While the United States is clearly wanting to contain China somewhat, but the United States is having her plate full.  With a full plate to deal with, containing China will not be easy for the United States.

Since China is knowing that the United States is trying to contain its ambitions, thus China is working in a direction in which will not be favorable for the United States.  Furthermore, China is now working ever closer with Russia, thus the United States will have to find other allies to counter China Russia combination.  Nonetheless, China and Russia are creating their own organizations that allow even more countries to join such organizations, and so the world is becoming evermore clear cut divided.  The world is definitely being divided by United States and China.

As the world is being divided by two most awesome countries, United States and China, many smaller and weaker countries will pick side.  Some countries will try to stay neutral, but for how long?  What if China or United States wants such neutral countries to pick side at all costs, can such neutral countries stay neutral?  For an example, United States and Europe and Russia want Ukraine to pick side!  The original government of Ukraine wanted to go with Russia, but it got overthrown, and now the newer government wants to go with NATO (Europe and United States).  Nonetheless, I doubt Russia will approve of that and will do everything it can to prevent something like that from happening.

In conclusion, my theory is that if MAD isn’t useful anymore, a clear cut global divided world will find itself embroiling in global war.  Perhaps, we can call such a war a World War III.  Cliche or not, it’s a war that I do not want to see it happens.  After all, the next global war might push countries with nuclear weapons to go nuclear.  Modern nuclear weapons are way more powerful than the ones that the United States had dropped on Japan, and so I think we should be fearful of the next global war.  Instead of millions of deaths, we may witness hundreds of millions of deaths for the next global war.

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Can the United States’ high inflationary and low interest rate policies help China to grow even more?

Can the United States’ high inflationary and low interest rate policies help China to grow even more?  As we know how the United States is trying to keep the inflation rate high and interest rate low to promote consumption spending and bring in more revenues for government agencies.  United States is doing this while also cutting back some spendings in general, because the United States needs to deal with both huge foreign and internal debts and the interest of the foreign debts.  As United States prints more money to keep inflation rate high, this affects China’s inflation rate big time.

Why?  China’s Yuan is still pegging to the Dollar, and so China’s inflation rate is probably shooting up really high when the inflation rate in the United States skyrockets.  As China’s middle class is growing in astounding number, China’s middle class is sure to have a lot of cash to spend.  Although Chinese tradition is to save more and spend less — Chinese had been poor for a long while since the downfall of China’s ancient kingdom and during Mao’s time — with more money Chinese people are sure to be able to afford better modern accommodations.  As in the United States, high inflation may encourage Chinese to spend more since they may fear that prices are keep climbing for the accommodations (e.g., household items, cars, furnitures, electronic items, smartphones, etc…) that they need.

In the time that the Chinese are having a lot of money, they are sure going to spend for whatever that they must have and need. With the high inflation rate in China to boost the domestic Chinese consumers to spend even more, Chinese internal market may heat up even more and growth in consumption may as well skyrocket.  This in turn will boost firms and companies from abroad to bet even bigger on the Chinese market as Chinese market is set to grow a lot higher in term of consumption lead.

Unlike the United States in term of forgoing home manufacturing capacity, China may boost consumption even without letting go home manufacturing capacity.  Why?  Out of 1.4 billion of people or so, if I’m not wrong on this China’s middle class is roughly around 300-400 million of people or so, and so around 1 billion more Chinese are still working their way toward becoming the new middle class citizens.  With so many more Chinese that aren’t yet achieved the middle class status, they’re sure working hard in the home manufacturing based entities/market in hope of making a better living.  This is why China may not yet be able to forgo the home manufacturing capacity for cheap labor is still possible in China’s poorer areas.

Meanwhile, China may try to boost their service sector to grow even more to compete with foreign service industries.  On the top of all of that, China doesn’t need to print so much money as the United States to boost inflation rate, because the United States’ inflation rate alone is already pushing China’s inflation rate up. I think China’s market will grow even more as the United States prints more money to boost the inflation rate at home. The question is if the United States decides to tapering, what will happen to the markets and economic growths in China and the United States?

Fed’s Low Interest Rate And High Inflation Design Might Stop Functioning In The Long Run In Generating Economic Growth And Government Agencies’ Revenues

Lately, I got a bit of a fever in wanting to know more about the United States’ economy, thus I’m still reading a very long book on economics of sort.  The book is “The Death of Money: The Coming Collapse of International Monetary System” by James Rickards.  This book got advance details on various economic assessments, and so it is a bit dull for me to finish it.  Nonetheless, I’m trying to anyway.  So far, it seems this book got my attention on couple things, but let me mention one in this blog post.

As reading this book, I noticed that James Rickards mentioned the Fed intended to keep the interest rate very low and print a lot dollars in the hope of creating higher inflation.  I think the Fed has had the idea of planting the fear — of seeing prices of products keep going up — into people’s mind.  Why?  If people are seeing prices are going up for everything, they fear the prices will continue to climb for some period to come.  These people’s solution might be all about spending the money they’ve earned now on the products they’re really needing now, because they fear the prices for the products they need will continue to climb to ever higher prices.  I surmise the Fed has thought this has been and continues to be a good option for the government to generate sale tax revenues.  After all, people will have to pay sale tax for the products that they will buy, right?

As the United States economy isn’t recovering fast enough to the level of high confidence in various industries, and so the United States government is in a very tight spot of wondering how to generate a strong recovery for the United States economy.  In this slow recovering period with low growth on job generation, the United States government is also in need of money to pay for the national projects.  With tighter budgets for everything, the United States government is supporting the Fed to generate high inflation and low interest rate.

In my opinion the Fed’s design of low interest rate and high inflation can work for a short period of time.  Right after the United States’ 2007-08 financial crisis, many people who were not directly hit by the financial crisis were having money still.  These people could spend their money in low interest rate and high inflation period to sustain their comfortable lifestyle.  Unfortunately, these people were the last supply for the Fed.  After seven years of low growth and slow recovery and low growth on job generation, the people who spent their money in low interest rate and high inflation period might just have ran out of money.  Going forward, it’s pretty hard to see how low interest rate and high inflation period can help the United States sustains the slow recovery.  As of now, we are still talking about an economy that is trying to recover in a slow recovery period!  And so the outlook for Fed’s design in hoping to generate growth for the economy and collecting some revenues might not look very bright!

Of course, I’m not expert on economics matters, thus I might be very wrong on what I had detailed.  Nonetheless, it’s my opinion that the Fed might have to do something else besides printing money and keep the interest rate low.  I guess we would have to wait and see how things will unfold for years to come.

Will United States And China Go To War Against Each Other?

I’m no expert on China or Asia, because all I know about the current events and past events from China and Asia is and was from the news and various sources online. Nonetheless, I feel that China is rising to the point that certain countries — found themselves to be suspicious of China — feel very uncomfortable.  This means these countries have two choices.  Perhaps, they either decide to go against China in International geopolitical agenda, or they might just act really weak and be supportive to China so China won’t target them as potential enemies.

United States was the absolute world hegemonic power right after World War II, and now is still somewhat playing a role of a sole super power.  Nonetheless, China is rising to the point that can undermine United States’ sole super power status in all categories.  Especially, China’s economy is rising still and soon to overtake the United States as the biggest economy, it’s certain that United States will not welcome this phenomenon.

Countries around the world might slowly behind the scene find themselves busy in making a choice between being friend and foe to either United States or China.  Moreover, as United States is making Russia an enemy lately, China suddenly finds herself to have a very powerful ally which has a vast border with her.  After all, Russia needs China as a friend to amplify her influence on Europe.  Ukraine situation is quite clear in term of how Europe could not make an all out sanctions against Russia, because Europe not only depends on Russia’s energy but China’s economy also.  Nonetheless, whether China will be Russia’s instrument of containing Europe or not, it’s clear that with China as a friend Russia has more global clout than otherwise.

As United States is undoubtedly competing against China and Russia on many fronts.  With Russia, the United States might compete head to head on energy front.  With China, United States is competing in so many fronts since China is rising to replace United States as a most powerful force in the world.  Whether China would want to be a world hegemony or not, the outsiders will never know.  Nonetheless, one rising power is sure to clash against an established power unless either rising power and established power can make a compromise somehow.

Countries that are not as strong as the United States but very powerful on their own still might not want to make themselves a target by looking so powerful, because they fear that either the United States or China will target them for whatever reasons.  The world hierarchy system is an imperial one, because we got the super power and then the rest.  Just imagine the super power as a king, and the rest as officers and pawns.  Do you think officers and pawns want to stand out so much to the point of irritating the king?  Nonetheless, right now there are countries that irritate United States and please China, and there are countries that irritate China and please United States.  These countries are already picking side, and they may never be able to change side without serious consequences.

The future is bleak, because we are witnessing the two most powerful forces in the world that are at odd with each other.  Of course, these two forces can be friend or foe according to the leaders that are working for these two forces.  It’s easy to say that these two forces, United States and China, are so intertwined economically to a point that they will not want to make each other as an enemy.  It’s a lot harder for us to know if this is the case since the future is unknown.  Any small conflict can be the fuel to start a conflagration.

There are countries that do not want to see the United States and China work together so closely.  Imagine two most powerful forces in the world work as one, countries that are not viewed as favorable to either powerful force will be the targets for both most powerful forces in the world.  If United States and China are working against each other, certain countries can feel more secure for they could always find a friend in the world.  Moreover, the benefits for small countries are immense when the two giants are not thinking like one, because in the end the two giants act like two tigers that will exhaust themselves out, leaving the small cubs go unchecked.

The question is on everyone mind nowadays, will there be something so unfortunate that will start a war between United States and China?  Of course, nobody will know, because nobody knows the future.  Nonetheless, the trend is not looking very good, because the media of the United States and China are painting the other country as a potential enemy and not as a friend.  Meanwhile, around the world, smaller countries are assessing their standings between United States and China.

“I know not with what weapons World War III will be fought, but World War IV will be fought with sticks and stones.” — by Albert Einstein

Can The Euro Replace The Dollar As The Next Reserve Currency?

After finishing my reading of Chapter 5 for “Death of Money: The Coming Collapse of the International Monetary System,” it seemed at this point of the book the author viewed Euro as a potential challenger to the dollar as the reserve currency.  The author James Rickards surmised that the Eurozone could regain strength and vitality as long Germany and other Eurozone member countries could go ahead and reform several internal problems.

Although I don’t remember all of the internal problems James Rickards described that needed to be reformed for Eurozone, I think he’d mentioned about labor mobility and several others.  Nonetheless, James Rickards imagined that if Eurozone could move the unemployed workforces from Eurozone member countries to employment resource scarce countries such as Germany, then the unemployment problem for the Eurozone could be alleviated.  In effect of this, the revitalized workforces that were moved could once again contribute growth in terms of consumption and investment and so on in general.

I have to wonder though, would Germany and other employment resource scarce countries, assuming jobs are abundant and requiring to be filled, want a flood of migrants from Eurozone member countries to disrupt the local employment flow?  Nonetheless, it seemed that China had successfully implemented something like this by allowing migrants from rural area to migrate into the cities, consequently expanding the cities’ size, reach, productivity, and so on. As Chinese migrants are readily earned city’s incomes, they can then export some of their earnings back to the rural areas for whatever.  Perhaps, some of the migrants will have enough money to go back home and open up businesses of whatever, and this in turn slowly urbanizes the rural areas.  As China’s urban cities got crowded, overused, overpopulated, and so the labor demand for such cities cannot grow more — wages for such cities might be higher as workers expect cities’ wages and not of rural areas’ wages — the flood of migrants will slow down.  Nonetheless, China’s coastal cities can relocate factories and other essential industrial capacities into the inner China where rural areas are common, and in this process China finds cheaper labor and urbanizes the inner rural cities.

James Rickards imagined Eurozone member countries could do something as China’s labor mobility but without the factor of urbanization.  After all, many Eurozone member countries may not need urbanization at all if I’m not wrong on this.  I think Eurozone member countries can definitely improve the labor mobility to improve the Eurozone as a whole, but internal political strifes among Eurozone member countries may prevent this to be done without danger.

Imagine Germany’s political force may not want to see the German workforce order to be disturbed too much, because once the workforce order got disturbed it could be a lot harder for such a workforce order to be reversed back to its normal flow.  To make my point, let’s assumes that Germany is experiencing growth in general and demanding bigger labor workforce, migrant workers from Greece and elsewhere within Eurozone can migrate to Germany to fill up the labor demand.  The problem is when Germany begins to experience economic downturn, the huge number of migrants will not be viewed favorable to the local population.  At this point the migrants will stop migrating to Germany, and the migrants that are already in Germany will go elsewhere within Eurozone to find jobs.  If everything works out the way the supply and demand force is meant to behave for the labor demand in Eurozone, things will not be so bad.  Nonetheless, will Germany in an economic downturn easily find it to be easy to accept migrant inflow when the economy picks up again?  The bigger question is what if the whole Eurozone experiences economic downturn, where the migrants who work in Germany migrate to within the Eurozone?  Perhaps, the migrants may have to go beyond the Eurozone for jobs, but it’s not easy for the migrants to migrate beyond the Eurozone for jobs for obvious reasons (i.e., documentation issues, immigration issues, etc…).

It’s hard for me to imagine Eurozone as a whole uses a single dominant language for facilitating economic conditions.  French will forever speak French, German will forever speak German and so forth for the whole Eurozone.  I assume this will be the same for writing too for the Eurozone member countries.  My point is that every time migrants from Eurozone relocate themselves elsewhere within Eurozone, they may have to learn new language (e.g., writing, speaking) in order for them to be effective at their new jobs.  This won’t be easy if the economies within the Eurozone change too frequently (e.g., economic downturn, economic upturn).

I think we can pretend that many economic models and facts and equations can point out the problems and provide solutions for an economy, but we fail to realize that what matters most is the irrational behavior of humans.  We humans don’t behave rational all the time, because we are not the robots.  Robots follow the rules of the algorithms without theirs own rationalization.  Us humans tend to do things on our own as if we know best, thus when we become irrational we don’t think that we are irrational.  As a collective whole humans can be very irrational, and this shows why our history is full of wars and tragedies.  Our economies behave the way we are, and so when we are not so rational, our economies become irrational.  With this notion, I don’t think few simple suggestions such as labor mobility and so forth can be implemented with certainty.  Even with labor mobility and so forth could be realized, the global economy as a whole has too many moving parts, and these moving parts can be counter productive to the positive trends that occur within the Eurozone.  For an example, United States will not want to see the Euro rises for obvious reason (i.e., dollar’s reserve currency status must be upheld).  China too wants its currency to become a reserve currency in the near future.  With the two biggest economies in the world, United States and China, with very powerful military mights to back their agendas, it’s easy to imagine there are so many more moving parts within the global economy as a whole.

I think the author is too optimistic about the whole Eurozone as a whole.  I do think the author does have many good points on why the Euro won’t collapse and Eurozone won’t be breaking apart, because he explained well why United States and China do not want to see the collapse of Euro and Eurozone.  James Rickards mentioned that the United States had been wanting to keep inflation high in the United States and interest rate low for revitalizing exports and easy debt payments.  By printing more dollars, the United States can push inflation up.  By printing more dollars, the United States also keeps the Euro strong.  Besides United States exports deflation to Eurozone member countries, China too wants the Euro to stay strong for many reasons.  One noticeable reason which James Rickards mentioned is that China wants to diversify its foreign investments.  Instead of only investing in United States treasury bonds (i.e., dollar holding), China wants to convert some of its Dollar holding to Euro holding and other Eurozone investments.  This way, China does not have to put all of its eggs in one basket.  After all, how can one be sure that the dollar will be alright for indefinitely?

Entering Russia and so the picture of global economy becomes even more complex.  Russia does not want the dollar to be the only reserve currency, and Russia isn’t having a good relation with the United States since forever.  Especially since Syria, Libya, and Ukraine crises/conflicts, United States-Russia relationship has gotten worse than ever before.  In fact, many people think this relation is making a full circle (i.e., getting worse to the freezing point of the cold war).  Russia is an energy export country, and so Russia’s energy geopolitical maneuver has great impact on the world.  As United States boosts its own energy export sector, it’s in conflict with Russia in the energy export market.  Meanwhile Eurozone member countries are depending on Russia for energy supplies such as natural gas.  This is a big security issue for Eurozone member countries, because Russia can blackmail Eurozone member countries into submission by raising prices or producing less energy resources.  Can the United States help Eurozone member countries to rely less on Russia’s energy resources?

Anyhow, Russia with its own geopolitical agenda can make the whole global economy a lot more complex.  It’s already happened as Russia and China signed the $400 billion natural gas deal.  With this deal Russia will not have to worry about too relying on Eurozone member countries for natural gas export.  As Ukraine conflict continues, United States and Eurozone member countries continue to sanction Russia.  Returning the favor, Russia cuts more ties with the United States and Eurozone member countries.  With these economic sanctions between them (e.g., Russia vs United States and Eurozone member countries), the outlook for the global economy might be dampened by a lot.  Meanwhile Japan, Philippines, and Viet Nam are in territorial disputes against China.  China might play hardball and sanction these countries.  If the tension between these countries against China are not dying down, the global economy as a whole might get even worse.  Simply put, there are way too many uncertainties and moving parts for the author, James Rickards, to be certain that Eurozone will be able to reform without issues.  Without reforming appropriately, the Eurozone will not be able to perform.  If things got really bad, the Eurozone might even see the collapse of the Euro.  This is why China isn’t exactly put all of its eggs into the Eurozone.  Although China is cutting back on the buying of the United States’ treasury bonds, China isn’t exactly cashing out all of United States’ treasury bonds.  It means that China is still hedging between the United States’ dollar and the Eurozone’s Euro.

In summary, I think the author is too bullish on the Euro even though the Eurozone isn’t exactly doing too well at the moment.  If the Eurozone fails to reform as how James Rickards had advised in “Death of Money: The Coming Collapse of the International Monetary System” book, the Euro may suffer great setback.  Furthermore, Ukraine conflict might add more energy, economic, and political issues for Eurozone to be dealt with.  If the United States sees the Euro as the potential rival for the dollar’s currency reserve status, the United States might not want to see the Euro rise.  China might not want to see the Euro rise also, because this might dampen the potential for the Yuan to become the sole reserve currency.  Nonetheless, what if the Euro rise will happen anyway and China will insist the Yuan to become another reserve currency?  This will be very problematic for the United States for obvious reasons.  One noticeable reason would be the world will use the dollar even less as the reserve currency, and this will make it harder for the United States to print more dollar to pay off debts.  In a nutshell, the global economy is a mess and a battlefield, and James Rickards might be very wrong for being too bullish on the Euro.

Can Financial War Foretell That A Physical War Is Near?

After I had done finished the reading of Chapter 2 for “The Death of Money: The Coming Collapse of the International Monetary System” By James Rickards, I’m convinced that financial war could precede the physical war.  In fact, I think financial war might be one of the early telltale signs that may point out that the physical war is near.  After all, financial war is designed to be first strike of first strike, because it helps the attackers to damage the enemy’s economy, consequently weakening the enemy’s ability to conduct physical war in the long term basis.  Nonetheless, it doesn’t mean that a physical war is definitely going to happen when a financial war has happened.  It’s just that I think financial war is definitely preceding a physical war, because financial war can be used to weaken an enemy’s economy.

In the digital age we’re living in, financial war can cause havoc beyond imagination, because trillions of dollar could be vanishing in digital wipe.  Perhaps, the digital wipes could come in waves such as stock market collapse, bank runs, bond market collapse, and so forth.  Systemic collapse such as the financial crisis in 2007 was experienced waves of paper wealth loss, and the same thing can be happening again either by targeted attack by designed or by another unseen consequential event which happens naturally by the design of nature (such as systemic risk).

By digital wipe I meant that our money (more like the world money) can vanish in the digital world even though paper wealth loss might be the eventual explanation.  After all, money nowadays can be zeros and ones in the digital world.  Stock market is trading in the digital age with digital technology.  The book suggested that successful cyber-attacks could amplify the financial war in general.  In fact, cyber-attack method is one of the methods a state can employ to launch a financial war.  Nonetheless, cyber-attack method isn’t the only mean for financial war, because financial war in general is a lot more complex.  Such as sanction and other means can be employed too!

Anyhow, once the financial war attack begins, I bet the chain of big events will eventually follow.  Until the point of an enemy’s economy can no longer be weakened by the means of financial war, then the physical war might follow unless one of the war participants decides to make peace and prevent the physical war.  Of course, physical war between major powers such as China, Russia and United States cannot be breaking out easily, because these are nuclear power states.  Besides financial mutual destruction capability, these states can probably annihilate each other with radioactive capability such as nuclear bombs/missiles and so forth.  They might deliver these nuclear weapons at hypersonic speed which is up to 10 times the speed of sound, consequently making it very hard for a defense apparatus to shoot down such nuclear weapons before these devastated radioactive weapons reach the intended targets.

As the book suggested, perhaps physical war might not happen as one side might back down from further conflict as the financial war might be devastating enough to dictate the winner in the conflict.  The book suggested further that major forces such as China and Russia are preparing for such possibilities by accruing gold.  The book detailed that at the height of financial war between United States and Iran, Iran was partly successfully circumvented the United States dollar sanction by accepting gold as payment for the oil export.  Until when the United States told its allies to stop trading goods with Iran using gold, it was then that Iran had to import and export goods using its allies local currencies such as Yuan, Ruble, and Rupee.

In these two early chapters, the book already suggested that United States unintentionally pushed Iran to stop using the dollar as the reserve currency.  This might suggest that other countries are looking at Iran and fearing that one day they maybe in the Iran situation, thus they might have to face U.S. dollar sanction, consequently putting their economy at risks of collapsing.  These other states may already have been diverting and diversifying their dollars into something more tangible such as gold and so forth.  In China and Russia case, these two countries are now ramping up their natural gas deals and whatever else to partly diversifying their dollar reserve holding.  So too hoarding gold is among the plans of their diversifying activity in case the dollar is in trouble.  The United States government was shutdown not too long ago, because of the debt limit ceiling bickering between the political parties — this had further added the anxiety for the states that are currently holding dollar as their reserve currency for oil trading and so forth.

Even if a physical war breaks out, the book suggested that the winner of the physical war in the end might still regain the financial war lost.  After all, the winner can dictate the terms in the end right?  Nonetheless, in my opinion nobody knows how the next great war will turn out to be since we’re living in the nuclear age.  The nuclear fallout is beyond my imagination.  Sure, I have seen movies’ depictions of the nuclear fallout, but how close to the reality the movies’ nuclear fallout depiction is remaining to be seen.  Nobody knows the future I would say!  If God forbid that the nuclear fallout might occur and be so devastated, the victor of a physical war might not be able to regain the financial war lost, because the situation got so bad that dictating terms at such time might not be even feasible or sensible for all involved parties/states.

Perhaps, the nuclear age is so scary that major powers such as United States, China, and Russia, if sensible enough, may dare only to engage in financial war — leaving physical war to be carried out by the Hollywood movies.  If this is a possible scenario, I must say that financial war is even more important than otherwise.  After all, the victor in financial war will be able to dictate terms that are favorable for a victor’s state in today globalized world in the aftermath.  Perhaps, financial war will be able to be used as a targeted weapon which isn’t involving too many states at the same time, because it’s not as destructive as a physical great war such as World War II.  Because World War III may go nuclear!

As the case of United States sanctioned Iran from the dollar payment system, it was clear that United States could orchestrate a targeted financial war against a single state.  Sure, the United States did involve its allies to stop trading dollar for Iran goods; these so called allies had their own interests to be contented with, consequently forcing them to not carry out their financial war against Iran at 100% effort.  Moreover, Iran got the oil that could be bought at cheaper price during the height of the  United States’ Iran sanctions, and the so called allies had allowed Iran to export oil for gold and so forth.  With accruing gold, Iran could then trade the gold with its allies such as China, Russia, and India for other goods and services.  Even when the United States had involved allies such as Germany and so forth to stop Iran from exporting oil for dollar and gold eventually, Iran survived the sanction and the allies were humming fine.  This demonstrated that the financial war could destroy the targeted enemy’s economy without ending humanity.

Knowing financial war can destroy an enemy’s economy without ending humanity, nuclear war might only be the last desperate attempt for a state to defend itself.  This might encourage states to use financial war more frequently to push the boundary of bargaining at world stage.  Nonetheless, since we are living in the digital age and globalized world, financial war can be very consequential.  In the United States case, if an enemy is successfully bringing down the economy of the United States through financial war, it may not destroy the United States in short term.  In the longer term though, a successful financial war against the United States can be devastated for the overall health of the United States economy.  Furthermore, if the United States gets weaker financially, United States won’t be able to maintain her military might and so forth.

Certainly, it’s in the United States’ best interests to not let a financial war attack to bring down the United States economy, because in the longer term the United States may not be able to grow normally again.  Certainly, it’s the case for other countries besides United States to make sure their economy won’t be disturbed by financial war.  After all, I think a financial war can be devastated enough to disrupt even the everyday peoples’ lives.  I think financial war should not be taken lightly and be waged so carefree.  Countries of the world should care more for the health of global finance, because we’re living in a globalized world.  A break in the chain might do more harm in the long run, because things are moving faster in a much more complex globalized and closely finance linked world.



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