US in Economic Cross Hairs of Emerging "Sino-Russian-Islamic Hegemony"


Preemptive Action Can Win this War for the US!
But Will the Bush Economic Administration Act?
by James Sinclair


There was a messenger that history speaks well of. And his ride on horseback to announce the arrival of the British at Concord, Massachusetts so the local militia could defend themselves, is a part of American folklore.

I am not for a moment comparing myself to this great patriot (Paul Revere). But I'd be derelict in my duties to the gold community by not raising an alarm that must be communicated within and outside of this community. The trend is all too obvious as to what is about to happen.

The Master of the Universe who defeated the Soviet Union was none other than Chairman Volker of the US Federal Reserve. When Volker took action in March of 1980 by cranking interest rates through the ceiling, he killed more than inflation. He killed all commodity-producing countries in the world which represented 100% of the client nations of the Soviet Union.

The Soviet Union never reduced its military spending as its Federal deficit skyrocketed. Their fatal mistake, however, was the invasion and occupation of Afghanistan. The final outcome of that debacle was the implosion of the Russian Ruble which was followed by the exposure of the non-functional balance sheet condition of everything Russian.

Communism collapsed before Capitalism thereby reinforcing the inherent strength of the capitalist system in people's eyes. Capitalism then moved towards Global Markets during an administration of the "Music Man" whose economic team did everything economically inappropriate long-term and extremely practical short-term to boost US equity markets into the stratosphere to the glee of Wall Street and the brainless financial TV talking heads who became the Gurus of the techies.

From 1996 onward, it has been official Asian/Islamic buyers of US treasury instruments that have financed the ever-mounting transmission of capital out of the US into non-US hands.

The smart bombs without a mechanism for jamming their GPS targeting are twofold: First it is the mountain of US Treasury instruments held by the Sino-Russian-Islamic challenge. This is because these instruments can be utilized to bomb the US Treasury markets into oblivion simply by a slow-down in purchasing under present circumstances.

Second is the purchase of every ounce of gold sold by every central bank, by every cartel member, by every disinvestor and by every gold producer hedger.

Now it is the United States that is in the position that the Soviet Union was in when the final nuclear economic event killed Communism.

Now the US is the largest debtor nation, getting ready to go ballistic in their debt structure via Guns, Butter and Rebuilding Iraq and maybe Afghanistan. The $350 billon Senate surprise reduction of the Bush tax cut was a step in the right direction but by no means a solution to the growing problem.

Now the US has both Afghanistan and Iraq on its hands without the financial means to sustain its objectives. Have you noticed that there is a major action taking place in Afghanistan over the past three days? The Afghans have been fighting for more generations than even they can recall. The game is fall-down when the opposing force arrives, then slowly stand up again and start their traditional guerrilla warfare. This is exactly what happened to the Russians and it is starting now for the US. It is exactly what Saddam Hussein plans after he negotiates his way out of Baghdad when we are stalemated there.

Now there is a clear probability that the greatest advantage long-term from our military presence in Afghanistan and Iraq will be the new triumvirate of power: the Sino-Russian--Islamic challenge against US Hegemony.

There is a strategy that could be used by the US to win this economic war. First, understand the weakness that is the "Clear and Present Danger" to the US. That weapon is the huge amount of debt we think we have stuffed down the throats of Asian nations. Note that Russia is already a net seller of US Treasuries. All the Sino-Russian-Islamic nations need to do to defeat the US is to hammer the US Treasury market with those instruments and the US dollar will follow the old Soviet Union's ruble into oblivion and the fall of capitalism will be right behind it. That is pure fact!

The worst concept is that of the "Intellectual Establishment Economic Ostrich" with its head in the sand thinking no one can hurt it. I have heard it said that this would never happen because foreign selling of US Treasuries would hurt the seller of the US Treasury instruments as much as the US and the US dollar. That is nonsense because US TREASURY INSTRUMENTS USED THIS WAY ARE SMART WEAPONS and this is war for survival OF THE FITTEST. The concept that General Patton would hurt himself by firing all his ammunition in the first 15 minutes of a conflict never occurred to him in battle. He was one of the greatest generals in US history because of this self confidence.

These financial instruments, the US Treasuries, are national assets of the Sino-Russian-Islamic hegemony. They are weapons and they will be fired. It is true that the greatest risk now is not the "Evil Empire" or "Axis of Evil" but rather the "Amoral Personal Enterprise Financial Genius" that will form the "Evil Corporation" that now plans to own the world. Well, it is happening now in the corporate merger of Sino-Russian-Islamic Inc. and the US has a perfect defense but will they use it? Probably not!

The defense is simple and Chairman Greenspan plus Governor Bernanke may well already know they have it. The mechanism to prevent a huge run up in the gold price (above $529) and fall in the dollar (below .62 on the USDX) is gold itself.

But before dealing with gold, the US must decide exactly what will be the event upon which victory can be claimed in Iraq.
Is Victory?
1/ Armed forces reaching Baghdad?
2/ A siege of the city of Baghdad?
3/ An attack on the city of Baghdad?
4/ An uprising of the non-military citizens within the city of Baghdad?
5/ Our armed forces camped out at the red line around Baghdad for six months?
6/ An about face and return home?

Since the constraints imposed upon the military include not killing anything shielding Iraqi forces (civilians), a classic victory is not possible.

We need to bring closure in Afghanistan and Iraq before they become the cement shoes that Afghanistan was for the old Soviet Union. But this will more than likely not occur.

Next we need to kill the tax bill completely and cut 15% from all spending programs, putting the rebuilding of Iraq on hold for better times. But this will not occur.

We may end up facing the fact that all the gold we have sold has come to naught as it has gone into the hands of those who would oppose us.

We need to know that the old tactics of making the way clear for the cartel of common interest to play the short side of gold every day in every way, sell gold from central banks, bad mouth gold at ever opportunity, and use the Exchange Stabilization fund via huge spreads to manipulate the gold market lower intra-day, will be of no use whatsoever to offset what is coming down the pike.

Gold is going to be remonetized by official Islamic sources. Gold will benefit from the fall that will occur in the US Treasuries. Gold will benefit from the fall in value of US Treasuries and from the resulting fall in the US dollar.

To offset this scenario, the US economic functionaries of this administration must remonetize gold as the tool to prevent gold from opposing the dollar before there is a confirmed technical top in Treasury Bonds.

There will be precious little time to defend once the US treasury market is confirmed technically (today's market religion) in a bear market and therefore recognized as such within the establishment circles.

I have given you here the mode of remonetization that is feasible now for the US dollar which is the "Federal Reserve Gold Certificate Ratio" tied to M3. I have suggested that it will come before June of 2004 but now feel it must come immediately. The dollar has to start becoming as good as gold if we are to avoid the downfall surely planned for us.

As the ruble left the Soviet Union in rubble, the dollar can be the demise of the Western Capitalist System.

If the egotism normal to establishment intellectuals continues to reject gold as being too antiquated for modern times, then modern times are over.

So now for the long-term understanding of what is happening in markets and the world, the US Treasury market takes center stage. To know what is happening in gold short-term ,the US dollar remains of primary importance.

I do not see any chance of reversing the long-term bull market in gold and the long-term bear market in the dollar. There must be a clear understanding that we are in the final days of the capitalist system and the weapon employed by those who would replace us is US Treasury Instruments, the soldier is the US dollar, and the beneficiary of continuing ignorance will be the price of gold.


March 26, 2003


A message from Jim Sinclair:

Do not harm the messenger, me. Jane's is respected and read throughout the military and intelligence communities. Regardless of if or not these words irritate you, they will influence the thinking of powerful and DANGERIOUS people. Because of that, they must be reviewed if you wish to know the perspectives of a total situation that must be analyzed in order to plot our personal future. It is for this reason that I lay this in front of you. I think you need to know because knowledge is the key to survival.

Jane's The Famous War Weapons Compendium Service Reports from their Intelligence Service


The Jane's Intelligence Digest says that the failure to find popular support for the invasion of Iraq within Iraq could prove disastrous for the United States. Other sources indicate that Iraqi forces within Baghdad may be gravely underestimated. The guerrilla war outside the Cities could turn Iraq into another Afghanistan where the United States only controls Kabul, and where the effort has been a disaster. Every helicopter that is shot down in Afghanistan is reported as an accident. And under CIA supervision Afghanistan has become the largest grower of heroin in the world.

Based on huge troop concentrations in Baghdad the United States faces a momentous decision. If it decides to fight street by street, it does not have enough troops, and the casualties suffered by the United States will be unprecedented. The only other alternative is to bomb Baghdad to the ground, killing hundreds of thousands of Iraqis, if not millions, as the city has over a five million population, and that the invasion was intended to save from tyranny and oppression.

The downside to this, says the CIA, is that the humongous slaughter will blow up the entire Middle East, jeopardizing the oil supply from Saudi Arabia and Iraq that the invasion was really launched to protect. We are not even talking about the danger of weapons of mass destruction that could take out Israel and the oil supplies in the region wielded by terrorists, or Iraq.

The Bush Administration had hoped that the gigantic pressure leading up to the war would result in a regime change more palatable to the United States without a fight, and then found it could not back down without losing face when they were stupefied that it did not work. Then, it went in expecting to be greeted by a jubilant population as the soldiers liberating France but instead faced bitterness and anger. All of these lies are now being exposed for what they are as the situation gravely deteriorates.

Jane's says that the billions spent on homeland defense are a joke, as the terrorists can buy at hardware stores the tools to terrorize the populations, and this total waste is to make the American people think this Administration is doing something to protect them, whereas every bomb dropped on Iraq stirs wrath throughout one billion members of Islam, and is creating terrorists en masse.

The New York Times magazine article Sunday on the foundations of Osama bin Laden's Islam, demonstrates that this fanaticism has deep theological roots with great attraction in the Middle East and Islam. The use of force and intimidation to destroy this religious faith only will stimulate an adverse reaction to the United States and polarize the region even more.

It is vitally important to understand that if the Saudi Arabian oil is knocked out, it will cause an economic collapse of unprecedented proportions since the great depression, and the very liberal and open political systems fostered since World War Two could be easily overthrown German style as in 1933.

The neocons do not realize that they could be digging their own graves as the heights of arrogance and power that they have arrogated to themselves and risen to could find them plunging and crashing to their ruin in an unprecedented economic and political collapse.

The risks of their adventure into the Middle East, and their spurning of every institution set up after World War Two to stop the preemptive style of aggression of Germany, have never been worth the possible rewards, and are dangerous without precedent since World War Two.


Dear Friends: I would like to bring your attention to this article that appeared in the Guardian, arguably the United Kingdom's most popular newspaper.

Bush fiddles with economy while Baghdad burns



Could a faltering dollar and global rebellion against its values presage the decline, and eventual fall, of the American empire, asks Mark Tran business editor of Guardian Unlimited.

Wednesday March 26, 2003

The war in Iraq is not going as smoothly as the Bush administration would like and the conflict is looking less and less like a walkover by the day.

Yet there can be little doubt that the US, backed by Britain, its loyal junior ally, will eventually prevail. The conflict will bring the US little glory, pitting the world's most powerful military machine against a dilapidated army, but when American and British troops enter Baghdad, the US will surely cement its status as a hyperpower.

But does the US colossus have feet of clay? It takes a brave soul to argue that America, the world's largest economy and by far its most potent military power, is about to go into decline, when it is widely perceived as a hyperpower. But Independent Strategy, a financial research company for institutional investors, has made the case in a paper that is making the rounds of big investment banks such as Goldman Sachs.

Independent Strategy believes that the US shows many symptoms of an empire that is cresting. First, it sees deepening mistrust of the US and predicts a rise in terrorism in reaction to US unilateralism.

That is certainly the case with the Bush administration, which has made a habit of tearing up international treaties from Kyoto to the anti-ballistic missile treaty. Iraq is the culmination of the Bush administration's unilateralist streak, as the White House plunges into an unpopular war in disregard of the UN security council.

Second, Independent Strategy sees trouble ahead for US economic policy. It notes that Mr Bush has boosted discretionary government spending more than at any time since the Vietnam war. Inheriting big budgetary surpluses from the Clinton administration, the Bush White House is heading for record deficits.

True, budget deficits were probably unavoidable as a 10-year economic expansion ran out of steam. But Mr Bush is not helping matters with a $726bn (£462bn) tax cut that, even though reduced by the senate to $350bn, benefits mostly the rich and a war that will add at least $74bn to the books, and probably considerably more.

Third, what was known as the Washington consensus - free market economics and deregulation - has broken down. As Bob McKee, chief economist with Independent Strategy, notes, a populist reaction has taken hold in Latin America, while in Asia, Malaysia has gone its own way economically. Moreover, South Korea and Taiwan never really bought into supply side reform.

"Empires work best when they project power through the successful export of a social model or ideology," argues Independent Strategy. "The rot started when the US failed to project its economic ideology and social model globally. Japan and Europe have long rejected both, at least implicitly, as inimical to their culture and alien to their social contract."

Independent Strategy sees the weakening dollar as the fourth strand in the decline of empire.

"The dollar will go on down because the good empire has the same faultlines as many other empires: unsustainable living standards at the core depend on flows of wealth from the periphery," says Independent Strategy in terms that would not be out of a place in a Marxist textbook. "The US no longer earns the return needed to sustain these flows. The costs of war and unilateralism will increase the thirst for capital, but reduce the return earned by it."

In plain English, America relies on the rest of the world to finance its deficits. The rest of the world was happy to do so when the US economy was strong and returns were high, but investors will put their cash elsewhere if America looks weak economically. America borrows hundreds of millions of dollars from the rest of the world each day to cover its savings gap and, under George Bush, US dependence on foreign capital is set to increase.

The decline of empire thesis is not exactly new. Paul Kennedy, the British historian, wrote the best-selling The Rise and Fall of the Great Powers back in 1988, where he coined the phrase "imperial overstretch". It was a great read, but then the US embarked on a record-breaking expansion that lasted 10 years and saw Wall Street shoot up to over 11,000 points.

But that great economic expansion turned out not to be so great after all, culminating in a wave of financial misreporting and outright fraud at Enron and WorldCom. The twilight of empires can last a long time, but judging from his reckless unilateralism and his economic vandalism, George Bush seems to be determined to do his level best to hasten that decline.



Dear Friends:

I recommended that you look at the Russian web site for the Iraq War in order to compare their coverage with that of the West and see evidence of the new Cold War we have entered into.The Russian site translated into English is now at: http://www.aeronautics.ru