Reheating The Cold

We may be entering a new Cold War.

I know, I know, I know what I’ve said before about Cold War mentalities. But I do think this is a Cold War, just with very different characteristics and to a new level of sophistication such that we cannot stick with the old mentality. We need a new Cold War mindset.

Of course, the protagonists will be China and the US. But let’s not put the cart before the horse.

Theoretically, China now has the means to completely wreck the US, and by extension global, economy simply by dumping its T-Bills. Unfortunately for Beijing, it can’t really do that under the current economic system because that would trigger a massive meltdown of its own holdings.

What it can do, however, would be to shake that stick every now and then at Washington, which certainly can, rather perversely, shake back with its own debt. Inflating the debt rapidly would force devaluation, effectively killing Beijing’s liquidity but also leaving the US in shambles.

If you’ve not drawn the parallel yet, let me shout it in your face: this is the 21st Century equivalent of Mutually Assured Destruction. A lot more bloodless than the sort Moscow threatened back in its day, a lot more subtle, but it will be no less tense.

We can thus expect that leaders of both sides will be busy trying to figure the new algorithm for winning. Proxy wars were once abound in the old Cold War, and now may be again, albeit fought with industries and human resource rather than nations and militias. Washington for one will be racking its brains over how its brilliant masterplan of forcing the USSR to spend itself into the grave came back to bite itself in the butt. The Chinese will be no less anxious about uncovering the flaws in the Soviet approach to securing resources in order to better avoid them.

There will be rumblings of course, and the economic equivalent of the Cuban Missile Crisis one day. Perhaps some Chinese company will attempt the takeover of GM? One thing is just as sure: the two behemoths are just as likely to start a currency and trade war as the US and USSR were to start a nuclear or conventional one.

In short, not so likely. Well, at least most of the time, so I really wouldn’t worry about another global economic superstructure shakeup any time soon.

This dynamic hasn’t quite caught on yet, and to no surprise really. Any war, let along a Cold one, gets bad press. The Russians, hankering after an honorary seat in the West, wouldn’t like to be told that their pursuits have every likelihood of becoming a sideshow. And in a world where the lake which matters is the Pacific, Continental Europe is chump change. They haven’t quite realized it, and both sides of the Pacific would really rather keep things that way. There’s no telling where Old World defiance, arrogance and xenophobia could end up.

I suppose we’ll see if I’m right or wrong then. But for those of you seeking to put me down quickly by suggesting that China can’t compete because its military and diplomatic clout nowhere match the US’, I’d remind you that the USSR matched the US only in one aspect out of any dozens of measures, but that was enough because that was the one which mattered. In the 21st Century, it’s starting to look like money is the only dimension which matters.

I do forecast that this Cold War will be carried out behind so many smiles and handshakes one could scarcely imagine the rivalry. After all, business is business is business, and whatever business is, we prefer it to be as bloodless as possible.

Piaroh-Cze:

Murder, is bad for business.