The Trade War Distraction: Huawei And Linchpin Theory

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by Brandon Smith, Alt Market:

Since the beginning of this year, I have been warning that trade tariffs initiated by Donald Trump would develop into a full-blown trade war with China, and perhaps other nations, and that the timing of this trade war is rather suspicious. Suspicious how? Almost every instance of further escalation was made by Trump around the exact time that the Federal Reserve was also making a large cut to its balance sheet or raising interest rates. Instead of focusing on the fact that extreme volatility has returned to markets because central banks are pulling the plug on life support, the mainstream media is holding up the trade war as the ultimate culprit behind the accelerating crash.

In other words, Trump’s trade war is acting as a perfect distraction from the crisis which the banking establishment has now deliberately triggered.

The initial response to my suggestion by a minority of liberty movement activists and skeptics was outright denial. Some people argued that the trade war would be over before it even began and that China would immediately capitulate in fear of losing the U.S. consumer market. Others argued that the trade war “had been started by the Chinese years ago” and Trump was simply “fighting back.”

Clearly, the trade war is not fading away as many assumed. As I predicted, it is only continuing to grow. And the notion that a trade war is necessary at this time in defense of the U.S. economy ignores certain realities. For example, the trade deficit itself was never “theft” by the Chinese, but a BARTER between the Chinese and the U.S. government and U.S. corporations. In exchange for the Chinese and other trade partners using the dollar as the world reserve currency (and petro-currency) and buying up US treasury debt, U.S. elites have arranged a deficit advantage for China. One could also add China’s cheap labor and low cost manufactured goods as part of that barter as well.

While the American working class got the short end of the stick in this deal, the government and the corporate cabal certainly benefited.

Now, if Trump had pressured corporations to bring manufacturing back to the U.S. in order to reap the rewards of his dramatic tax cuts, tariffs after the fact might make a little more sense. With production back on U.S. soil we would have more economic stability to weather future crisis events. Instead, Trump gave corporations a tax cut for nothing. And instead of using that extra capital to innovate or add value to the real economy, companies used the money to continue artificially propping up their own stock prices through stock buybacks.

It should be obvious to most people at this point that Trump has no intention of “winning” the trade war. As I noted just after the G-20 conference and the dinner negotiations with China:

“Of course, the outcome is being touted by both sides as a “win,” but it is clear that the goal was to head fake the public rather than actually resolve trade disputes. Will the 90-day delay be seen as “good for markets?” Possibly. Though, the housing market, auto market, and credit markets will continue to crash as they have been for the past few months. I expect this development might buy stocks another week of rest, but little else. As the next Fed meeting approaches this month and it becomes clear that they intend to continue hiking rates into 2019, the false optimism will fade. I also expect that negotiations with China will fall apart yet again well before the 90-day delay is over…”

The G-20 honeymoon ended even faster than I imagined.

The arrest of Chinese CFO of Huawei Technologies, Meng Wanzhou, has immediately destroyed any possibility of legitimate diplomatic negotiations going forward, and this seems to be by design.   The 90 day “truce” set apparently by verbal agreement during G-20 is likely over mere days after it started. National Security adviser and CFR ghoul John Bolton admitted in an interview with NPR that he was aware that Canada was preparing to arrest Meng at the request of the U.S. while he was eating grilled sirloin with the Chinese. The claim that Trump was not aware of the situation, to me, sounds absurd.

The detainment of Meng and the targeting of Huawei comes with a host of significant potential consequences. First, as noted the trade truce is likely dead on arrival.  While Trump continues to claim that progress is being made and that “soybeans are being sold”, we have heard this kind of rhetoric for the past several months.  These claims are designed to produce headlines that create a steam valve for stock markets, bringing them down slowly instead of collapsing them outright.

Second, the possibility of further escalation of tariffs is much higher (U.S. farmers should not expect a reprieve anytime soon, despite rumors of “progress”).

Third, there is a chance that China will retaliate by snatching up U.S. corporate representatives (many of them just as embroiled if not more so in criminal enterprises). This is a development I realize the average liberty activist could not care less about, but the average American will see such actions as a slight by the Chinese against the U.S. as a whole. The narrative once again turns to the idea that China should be our focus rather than the banking elites.  Thus, the false East/West paradigm is further entrenched in the American mindset.

If this trend continues, the trade war will eventually expand into a war on the U.S. dollar itself, and when it does, the U.S. will suffer the worst fiscal crisis in its history. Without the world reserve status of the dollar as well as continued foreign investment in U.S. debt, what’s left of our economy will disintegrate.

Meng’s arrest is a deliberately engineered “linchpin.” I have written extensively in past articles on DARPA’s “linchpin theory,” which is a kind of propaganda exercise more than a theory. According to DARPA, overly complex systems invite growing instability, and like a chain of dominoes, the smallest part of that system could be knocked over by a minor event causing a chain reaction that ends in total collapse.

Of course, this is a misrepresentation of reality. Complex systems do not invite instability, they create redundancy, making the system stronger and more resistant to disasters. Instability is actually caused by oversimplification of a system; that is to say, CENTRALIZATION is the true cause of large-scale crisis. As we have seen time and time again with globalism, the more economically interdependent and centralized the world becomes, the more vulnerable each nation is to the calamities of other nations.

DARPA loves centralization and is certainly not going to point a finger at it as the cause of global distress. And so they have created a scapegoat of decentralization through linchpin theory.

Linchpin theory also asserts another lie — the lie that most disasters are a product of “random chance.” The problem is that the only way that linchpin theory works is if disasters are created through conspiracy, not coincidence.

A system must be purposely weakened over time to the point that any crisis will translate into a collapse of the entire edifice. Central banks have done this quite expertly through the use of debt-based bubbles, followed by fiscal tightening into economic weakness. When you build up an economy like a great Jenga tower and begin pulling the most vital pieces in a calculated manner, eventually it’s going to come crashing down.

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