A couple of week’s ago, financial analyst and economist Jim Rickards was invited to give a seminar at the U.S. Army War College in Carlisle, PA on the foundation, effects, and need for economic warfare to be an integral part of the military’s overall battle plan. And in today’s world of cyber hacking and how rogue nation’s use counterfeiting as well as electronic theft to fund their regimes, it is vitally important for the military to have a complete understanding of how nation’s conduct their financial affairs.
During the two hour training session, Rickards spoke about how economic warfare enhances today’s ‘Asymmetrical warfare’ concept where destruction of an enemy entails much more than simply destroying their armies, and seizing their capitals.
My presentation began by defining financial warfare as the effort to:
Degrade and defeat the capabilities of adversaries by nonkinetic means through sanctions, capital markets, banking systems, exchanges, clearinghouses and payments channels for cash, stocks, bonds, deposits, commodities, foreign exchange and derivatives.
I unpacked this definition by explaining the difference between the banking system (mostly about deposits, cash and money transfers) and capital markets (having to do with securities underwriting and trading and derivatives).
I also explained the difference between exchanges and clearinghouses. In a future crisis, the role of clearinghouses may prove crucial both as a means to untangle the web of cross-obligations, and as a vulnerable node that could be the target of an enemy attack.
Other topics covered in the seminar included financial sanctions, the role of gold in transferring wealth while avoiding digital payments systems in order to escape detection and interdiction and an endgame that could lead to the demise of the U.S. dollar as the benchmark global reserve currency. – Daily Reckoning
The power of financial and economic warfare was perhaps best seen in the fall of the Soviet Union, and how the U.S. was able to bankrupt the Russian empire through deflating the price of oil, and enticing the Soviets into competing in an imaginary arms race.
Today’s modern warfare is often done through covert financing, and with armies that are not tied to any particular sovereign government. And ever since the beginning of the 21st century, whether it involved Saudi’s financing of Al Qaeda to bring about 9/11, or Turkey’s purchasing of black market oil to help fund ISIS, finance and economics will continue to play a significant role on how warfare is engaged in, and conducted.
Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.com, Roguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.