“A Path To A Shooting War?” World’s Largest Hedge Fund Manager Reflects On US-China Relations
by Ray Dalio via LinkedIn,
ZeroHedge.com
Fri, 09/21/2018
The following is taken from the 1930s US Great Depression chapter of A Template for Understanding Big Debt Crises (which is available for free download HERE). I’m passing it along because I think that the 1935-40 period is most analogous to the current period and that it is worth reflecting on what happened then when thinking about US-Chinese relations now.
To be clear, I’m not saying that we are on a path to a shooting war, but I am saying that we have to watch what path we are on, given these cause-effect relationships that history has taught us and that are described in the template. This excerpt describes how the economic and political conditions of the late 1930s evolved into the wars that followed.
The Path to War
While the purpose of this chapter has been to examine the debt and economic circumstances in the United States during the 1930s, the linkages between economic conditions and political conditions, both within the United States and between the United States and other countries—most importantly Germany and Japan—cannot be ignored because economics and geopolitics were very intertwined at the time. Most importantly, Germany and Japan had internal conflicts between the haves (the Right) and the have-nots (the Left), which led to more populist, autocratic, nationalistic, and militaristic leaders who were given special autocratic powers by their democracies to bring order to their badly-managed economies. They also faced external economic and military conflicts arising as these countries became rival economic and military powers to existing world powers.
The case is also a good example of Thucydides’s Trap—where rivalries between countries lead to wars in order to establish which country is more powerful, which are then followed by periods of peace in which the dominant power/powers get to set the rules because no country can fight them until a rival power emerges, at which time they do it all over again.
To help to convey the picture in the 1930s, I will quickly run though the geopolitical highlights of what happened from 1930 until the official start of the war in Europe in 1939 and the bombing of Pearl Harbor in 1941. While 1939 and 1941 are known as the official start of the wars in Europe and the Pacific, the wars really started about 10 years before that, as economic conflicts that were at first limited progressively grew into World War II. As Germany and Japan became more expansionist economic and military powers, they increasingly competed with the UK, US, and France for both resources and influence over territories. That eventually led to the war, which culminated in it being clear which country (the United States) had the power to dictate the new world order. This has led to a period of peace under that world order and will continue until the same process happens again.
The Rest…HERE
