Currency Wars: The Making of the Next Global Crisis Read Online Free PDF Page A

its gold to Switzerland and starting a new bank in London. The bank would issue a new form of gold-backed currency supported by gold in the Swiss vaults. Initially Russia would own all of the new currency. But everyone would be free to deposit gold and receive similar currency. It had other technical features to make the plan feasible, such as lending and clearing facilities. The kicker was that, from now on, any Russian exports of oil or natural gas would have to be paid for in the new currency. U.S. dollars would no longer be welcome.
    “Jim, I’m worried about you—you’re starting to think like a Russian,” Steve said.
    “Coming from you, that’s high praise,” I replied.
    “Why are you using Switzerland and London in this?”
    “No one trusts the Russians not to steal the gold,” I said. “But they trust the Swiss and Brits, so if you do everything under their legal systems, people won’t be afraid to deposit gold.”
    “Right. Russia has been looking for a way out of the dollar system for years. They try to play by our rules and get screwed every time,” said Steve. “This is perfect for them.”
    “Now here’s the deal,” I said, leaning toward Steve. “If you play this move for Russia, I’ll get the Chinese team to go along. If you can’t get Russia to make the move, I’ll launch this idea from China myself. Either way we’ll work this into the game and try to sink the dollar. That will be a shock to the U.S. The Pentagon is paying to learn something from this. Let’s give them their money’s worth.”
    Steve took the mock press release, folded it and tucked it inside his jacket to study in detail at home. We finished our vodka and left ready to spring our sneak attack on the dollar.
    Now Steve, O.D. and the rest of us were ready to start the war. Over those two days, the game would quickly take on a life of its own and open a lot of eyes to how markets work and how financially vulnerable nations actually are.

CHAPTER 2
     
    Financial War
     
    “The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications.... Indeed, policies . . . such as competitive currency devaluations . . . risk unleashing a wave of destructive protectionism.”
    Dennis C. Blair,
U.S. Director of National Intelligence,
February 2009
     

Day One
     
    As we arrived at the lab that rainy March morning for the war game, the first thing I noticed in the parking lot were rows of high-performance motorcycles—Kawasakis, Suzukis and the like. I guess physicists working on weapons design have their wild sides too, I thought. We were headed to Building 26, a new venue for us. We parked nearby and walked to the main entrance. Once inside, we cleared security, got our badges, dropped off our cell phones and headed upstairs. After months of meeting in seminar rooms and offices, we were being admitted to the Warfare Analysis Lab war room. The scene did not disappoint. Growing up in the Cold War, I routinely entertained visions of the war rooms used for nuclear war fighting from the classic films Dr. Strangelove and Fail-Safe . Now we were entering something similar, but would be fighting not with B-52s, but with currencies.
    The APL war room is large, with electronic battle stations and observation posts for about a hundred participants and observers. The rectangular room has four wall-sized screens at the front end and banks of smaller fifty-inch plasma video screens mounted on the walls along both sides to patch in additional participants from remote locations or to display additional graphics. The seating is tiered with a central trapezoid-shaped table for twelve on the lowest level closest to the wall screens; the trapezoid is flanked by four banks of long tables, two on each side, at a slightly higher level laid out in a chevron pattern around the center. In the rear, on an even higher mezzanine level, are rows of additional observer stations laid out across the