Pentagon Prepares For Economic Warfare
August 20, 2011
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.
The gentlemen were called to order and the games began.
“If you imagine the war room in Dr. Strangelove, you’re not far off,” says participant James Rickards.
Yet this was no traditional battle game, but rather the Pentagon’s first economic war game, and the authorities are loath to talk about it.
Economic war? It sounds preposterous. Except it gets less so with every dollar of debt run up by the US.
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.
Rickards is not a soldier but a banker. He was joined in the war game by dozens of his Wall Street colleagues, flown in from Manhattan to this bunker at the Applied Physics Laboratory in Maryland for the two-day event in 2009, when the Pentagon started to get really alarmed.
The group was split into five teams: America, Russia, China, Pacific Rim, and a “grey team”, representing shady outfits such as terrorist organisations. 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. The bankers liked.
“These people would normally never come together. But there is nothing more fun than to take a Wall Street guy and tell him to be a bad guy,” says Mr Rickards, a former senior executive who was involved in planning and executing the war game.