China’s War on the US is On

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To comment on this or any other article, find us on Facebook, Twitter, or on our Youtube channel. James R. Gorrie, Managing Editor, Absolute Wealth.

While the President is busy giving credit to “someone else” for any successes in small business America, someone else is busy helping the president kill the dollar around the around the world…

That “someone else” is China.

As Obama and the Federal Reserve cut the American economy to pieces with taxes, regulations, and crush it into oblivion with ungodly debt, China is setting up bilateral currency trading areas in Africa, Asia, and now, in Latin America.

And of course, there is not one happy or unhappy story from the president to Americans about this.

Why not?

This is a very big deal…

Is it because the president thinks that “no one country” should dominate the world, as he said in a speech to the United Nations in 2009?

Is it because he wants to see the US dollar go the way of his US birth certificate and the American economy, into the realm of fables and non-existence?

Like so many policies of this administration, one can only speculate on the reasons why an American president would work so diligently to deconstruct the greatest economy and greatest nation in the history of mankind…

It makes it hard to believe that the administration isn’t a manned by a bunch of amateurs, as the current best selling book of the same title claims is the case.

But true or not, the fact remains that China, with the world’s 2^nd largest economy, has an agreement with Japan, the world’s 3^rd largest economy, to trade directly with their currencies...

That is, without using the dollar as an intermediary currency. This is an unprecedented development…

And is not good for the dollar, not good for America, and not good for Americans.  It would be nice to know what the plan is to challenge China on this, wouldn’t it?

Ah, but it gets worse…a lot worse.  China is not only in a bi-lateral currency trading agreement with Japan, but has entered currency swap agreements with Russia, India, Iran, Brazil and Chile as well.  The continent of Africa is next on their list.

The bigger problem is that these agreements are not just with countries agreeing to do business in their own and Chinese currency; they are also agreements to exclude the dollar completely. 

They are called, appropriately enough, “dollar exclusion zones” and China is rapidly setting them up all over the globe.

Do you see what’s happening here?  China is moving quickly to undermine the US dollar throughout the world.

Let me make it clear for you…

There are two ways countries war with one another.

One way is a currency war.  If you destroy the viability of a county’s currency, you destroy a country’s ability to compete in the world and destroy its power and influence.

Without a viable dollar, the US will go into a deep depression as we will have to trade near valueless dollars into an expensive currency, such as the Chinese yuan, in order to trade.  It would lead to almost immediate impoverishment for Americans.

The other way is a hot war, where you attempt to destroy the ability of a nation to project its will and power militarily.  That, of course, involves any and all means of power; military and otherwise.

Are either, or both, of these happening right now?

The reality is that China is directly threatening the US dollar as the world’s reserve currency.  Without that status, the US economy will go into a free fall.  If that happens, today’s economic malaise will seem like ‘the good old days.’  Dollar-denominated assets would instantly lose most of their value.  Think about that.  All the trillions in the stock markets would be lost; trading agreements would be void as trading partners around the world would refuse to accept the US dollar.  American wealth, power, and influence would evaporate over night.  And yet, this is the end game of China’s currency war against the US.

But it is not just a currency war that China is waging; it is an act of war outright.

Think I’m kidding?

Then chew on this…

Each and every day, 35,000 or more computer hackers in the People’s Republic of China Army do nothing but try to hack into the Pentagon and disrupt the US military computer systems.

Chinese hackers attack our defense computer networks in order to steal data, gain access to our defense plans, and to learn how to interrupt our ability to coordinate our defenses and paralyze our military assets.

China has been at war with the US in the cyber world for years; today, the Chinese are making war on the US dollar. These aren’t the actions of an economic competitor; they are, in fact and deed, the actions of an enemy engaged in deliberate acts of war.

And what is the administration’s response to protect our currency, our wealth, and the capitalist system that sustains all of those advantages for America?

Who knows?  Anybody heard a peep about this from Washington?  The biggest challenge to America’s economy and our very existence as a superpower in 50 years, and what is our response?

We have none.  We are too busy deciding how much more of the economy should be run by those who know nothing about it.

And those are…The Gorrie Details.

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15 Comments

1. 

   Peter

   July 17, 2012 at 8:45 pm

   You mean that the World is tired of being financially raped by the US. Who would have thunk?
   You should return all the money you owe to China and have nothing further to do with them. That will put them in their place.

   Oh is China the second largest Economy or is it the US, I forget.

   Reply
2. 

   Dr.K.Chan

   July 17, 2012 at 9:03 pm

   sheer fear-mongering !
   Actually USA has been the only country which for very selfish reason has been fuelling destabilisation in other countries in the world !

   Reply
   • 

     James R. Gorrie

     July 19, 2012 at 4:00 pm

     Well, Dr. Chan, since you haven't denied any of the facts that I presented in the article, I can only conclude that you agree with the facts, but disagree on whether or not China's posture toward the US is a good thing or a bad thing. I happen to think that a more powerful China is a bad thing for the world--it has certainly been a bad thing for Chinese the past 60 years. Imagine a world system run by China; how open and mutually beneficial would that be? If it's anything like the political oppression the Chinese Communist Party treats its own people, we're in for a world of hurt.

     You speak of selfish behavior on the part of the US. Are we THE ONLY country in the world that acts in selfish way? Really? And China is altruistic? Are you self-medicating? All countries act in their self-interest--China included. It's just that some countries' self interests also happen to improve the lives of millions and are more tolerant of dissent than others. Get yourself off the Zolof and Vicodin and come to the party. Or maybe you already are in the Party. In either case, the reality of a Chinese threat to the international system is ugly, but it is real. JRG

     Reply
3. 

   Jeri French

   July 17, 2012 at 11:36 pm

   I have been watching all these things (contracts and etc...) play out since O came in office.
   While China has been going around the World; buying up debt from other countries as they did ours, investing and buying land in Veitnam, making deals with other Countries to eliminate the dollar, putting penalties on us over Iraq(O giving them our IQD), making deals with Iraq to get Oil cheaper and eliminating the petrodollar and there is SOO Much More China has done while The Great President of the USA SITS BACK and even Helps them.I am trying to tell people, family, friends all the things that are going on and do you know their reply. Oh really, huh ok. That is it. WHAT IS WRONG WITH THE USA, THE PEOPLE HERE: The problem is We think Washington is working for us. Sorry for ranting, but I have been watching and trying to figure this out. I cannot see a Method to Madness of doing Nothing Just A US Citizen,
   Jeri

   Reply
4. 

   Surferdude

   July 18, 2012 at 12:44 am

   Aloha James!! Well when you keep the Populace HOPPED Up on I-PADS, I-PHONES and All the NEW up and Coming TECHNOLOGICAL Wonders; which keep them Busy and ENTERTAINED, You could Have North Korea Nuke Hawaii,Russia Nuke the east Coast and China buy ALL of Canada,and DO YOU Really Think anyone would Notice or least of which CARE!!???? lol Aloha friend!

   Reply
   • 

     James R. Gorrie

     July 19, 2012 at 2:39 pm

     Surferdude--Gracias for the props and your frequent visits. Really enjoyed our trip back to the OC. The water was cold--so was the weather--but was fine by me. We really had a great time. It's not always a joy to write and see what I see, but someone has to do it...We are definitely in a period of shifting power and unfortunately, power is shifting away from the US, certainly helped along by various policies of the administration and the ones that came before. But, nothing is written in stone, so things can change, for better or worse, at any time. JRG

     Reply
5. 

   JOHN

   July 18, 2012 at 6:53 am

   THIS IS UNBELIEVABLE THAT IT CAN BE AS YOU SAY(DOLLAR EXCLUSION ZONES&CHINESE HACKERS) ATTEMPTING TO TOTALLY UNDERMINED AND DESTROY US AS A PEOPLE AND COUNTRY.HOW CAN OUR LEADERS NOT KNOW THESE THINGS AND LET THEM CONTINUE WITHOUT SO MUCH AS A WORD.SO NOW I MUST SAY WHAT CAN WE DO ABOUT IT?

   Reply
6. 

   Earl McHugh

   July 18, 2012 at 8:47 am

   Mr, Gorrie,
   I do not know anything about you, but it seems there is no place for this kind of political trash talk on this site. Clearly the owners decided otherwise. I think the beneficiaries of your stuff are retrograde savages who are willing to destroy our political system in the name of....tax cuts?What a swinish objective.
   EJM

   Reply
   • 

     James R. Gorrie

     July 19, 2012 at 2:32 pm

     Earl, Thanks for stopping by. "Political trash talk" as you put it, is an American tradition going all the way back to the founding of the nation. It was recognized back then, perhaps much more so than today, that political power, economics, and liberty are inextricably linked together. Remember, the Boston Tea Party was a tax rebellion. Of course some level of taxation is required for a society to function; but confiscatory taxation changes the society from a free one to an oppressed one. Working half the year to pay taxes is a bit much, don't you think? It becomes one part of society working to support another. As far as social and economic destruction is concerned, they are already broken, are they not? Our economy runs on debt, half the households in the country pay no federal income taxes, and who can then vote themselves more benefits care of taxpayers, and you whine about retrograde savages. Just how high should our taxes be, Earl? 70% 80%? 100%? Get a clue and let's talk. JRG

     Reply
7. 

   James Wallace

   July 18, 2012 at 11:13 am

   This whole article appears to presume that the US came to "dominate" the world in ethical and legitimate ways... it did not... and somehow that this is being undermined inappropriately (not true). It presumes that the USD should in fact be used to trade between China and Japan... which, it should not (the idea is actually ludicrous when you think about it - two sovereign countries forced to transact in another currency = ludicrous).

   The bottom line is that if the US was providing value in these things, there would be little concern for the US, as the parties involved would be more than happy to continue with such a system as the enjoy that added value. However, it is not providing value, and actually has extracted value with none in return for decades from these countries... and these countries are waking up to that reality and simply responding. Wave the flag if you want, be bothered if you want, but at the very least be honest about what is going on and why. If the US steps up and (perhaps for the first time, in a long time) seeks to add value to foreign/internal trade rather than stomping it's feet that it should be the worlds reserve currency (without bothering to explain to anyone why exactly), there might be a mitigation to the steep decline of this failing empire.

   I understand that Americans would be concerned about these developments. But, the reality is simply that the inevitable is occurring... the inflation America has exported for decades, the inappropriate interventions in foreign trade that were forced upon nations (via world bank loans and IMF restructuring), free trade agreements that positioned the other country as a de facto colony and siphoned off assets and resources and imported them to the US, the bombing of countries to acquire natural resources and allow for massive US engineering firm contracts is all (hopefully) coming to an end. No country/empire can defend any of this, and we're all better off with that passing.

   The real question/concern is not if the US should lose that... it definitively should as it was mostly acquired illegitimately. The real question/concern is will China copy the American empire's play book and god forbid, take it to a whole new level.

   The world would be better off with the US empire retreating. The world would actually be best without an empire at all. However, the world would be a nightmare no doubt if the Chinese went imperialist; and I think we all see signs of that octopus wrapping it's tentacles around the globe.

   The real bottom line, we need to stop whining and complaining about the decline of the American empire, as it's inevitable and appropriate, and it's distracting us from the very real threat of the Chinese empire. I think we'll be better off shedding the former, and focusing wholly on the latter.

   The best option actually, rather than worrying about others, is just to focus on being good business partners (as individuals, corporations and nations)... as the old saying goes "add more value than expected and they'll keep coming back". The US definitely forgot that, as all empires do, and choosing the lazy path of exploitation, as all empires do... maybe it's time to revisit what has always worked... add more value than expected, the rest will take care of itself - pretty simple.

   Reply
   • 

     James R. Gorrie

     July 24, 2012 at 6:30 pm

     James--

     Which nation "came to 'dominate' the world in ethical and legitimate ways?" Russia and the old Soviet Union through the enslavement of 100s of millions? How about China today? (Only multiply that number by 10). The US rose to dominance through war--WWII to be exact. It was victorious for many reasons. In the aftermath of the victory, the US set up the international financial system that was based upon primarily the US dollar. Even today, about 80% of international trade is transacted with dollars. The Chinese, as I noted, are challenging that.

     Your supposition that no added value comes with a US-dominated world ignores the reality, in no particular order, of peace in Europe for 60 years, the rollback of Soviet tyranny, the Pacification of Imperial Japan, 30 years of some kind of peace between Israel and Egypt, raised living standards throughout the Third World, rescuing China from utter collapse in 1991, feeding the Soviet Bloc with low interest loans on winter wheat, allowing the flowering of the liberal welfare state in Western Europe by paying for their defense, stopping the progress of Communism in Latin America and Southeast Asia, being the world's largest foreign aid partner for over 50 years, rebuilding both Europe and Japan, allowing generous access to US markets for nations around the world, etcetera, etcetera.

     Did the US take advantage of its position? Of course; and there have been abuses and mistakes and tragedies. But by and large, the US did not treat its former enemies as enemies; it did not starve millions of people. it did not wall people in, it did not restrict its technological advances, and it did, in many cases, provide food and comfort to a dangerous world.

     Ask yourself, James, why more people sneak into the US than any other? Are they sneaking into China? Russia? Iran? People vote with their feet, old sport, and the US is still the destination of choice. To say that the world will be better off with the US retreating is utter idiocy. As it is, we are entering a period of multipolarity, which historically, are much more dangerous. The last two periods both brought about two world wars.

     As for China, you hit the nail on the head. China will be to the world--if allowed--what they are to their own people: a tyrannical regime bereft of any sense of humanity, save the lower forms of brute power and oppression.

     To your last point, if that's what it is, "adding value" to the world, as you put it, is hardly the problem. Do a little research on how many counties benefit from the US position in the world. More than likely, getting folks like yourself to understand the world is a much tougher problem to solve than hoping the US finds a way to "add value" to the world.

     JRG

     Reply
8. 

   stormydave

   July 18, 2012 at 2:59 pm

   The U.S. is like Rome, fiddling while we're burning down. You see every day, when Obumer talks about everything exept what he can't do. We are to busy playing with Apples latest gaget. I'm over the hill, so it maters little to me. But my son and his wife are in for a rude awakening.

   Reply
9. 

   echo5n

   July 20, 2012 at 12:48 pm

   Thanks James for the article. Keep up the good works, because from my observation I think Americans are somehow refusing to accept realities. If you look around we are rapidly loosing our beloved nation right in front of our eyes. It's been going on for the past 20 years, but with the Obama's administration in charge of the White House the pace has been increasing ten folds. One thing we have to remember that the Chinese government has never see us as their friend. They are just taking advantage of our stupidity. Did you know they indoctrinated their military and the Chinese people that America is an evil Capitalist? That all the killings and the hungers taken place around the world is because of us Americans. That we out using our military power to deprived the worlds resources. Meanwhile they are out doing exactly of what they've indoctrinated their people about us!

   Reply
10. 

    jamesboy

    July 24, 2012 at 9:32 pm

    What would you do if you were governing China ? See the value of your country's investments declining in USD terms and do nothing. What China is doing is for its long-term self-presevation and survival. Its foresight. Its not attacking the US dolllar. But you see it as currency war. You got to put your own house in order first otherwise you will be seeing through distorted glasses. If you think its a war, then its a clever strategy of the Chinese. As Sun-tzu said, the art of war is to win it without fighting it.

    Reply
    • 

      James R. Gorrie

      July 24, 2012 at 10:19 pm

      Jamesboy--

      The whole point of the article is for the US to get our house in order. The Chinese are indeed having their way with us, and not without consent. I would, however, disagree with you that China's policies are for its long-term preservation and survival--quite the opposite--but that's another conversation. There is, of course, more than one way to defeat a nation; destroying its currency is the preferred method for obvious reasons. The issue is not "seeing through distorted glasses" but rather, what to do when the financial powers, who have no allegiances, run policies at odds with our national interests. And yes, the Chinese want the dollar to lose its reserve status, but not before they move away from it as much as possible. Hegemony is a double edged sword and has its costs as well as it advantages; to get it, you sometimes have give up things like a devalued currency in order to gain the mantle of legitimacy. If you think the Chinese are playing at anything other than "regime change" in the world order, you are naive. JRG

      Reply