The Danger That
Threatens to
Destroy America as We Know It |
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| Dear Concerned Investor - There’s no easy way of telling you this. Especially in light of the past few weeks we’ve experienced with the market’s wild swings. Frankly, I expect that you will find it disturbing -- particularly once all the implications of what I am about to reveal begin to sink in. But it’s the truth. A painful truth about a serious and extremely menacing threat to America that has already started to put you, your children, your grandchildren, all your assets and your entire financial future in real danger. And yet… surprisingly few Americans have much awareness of this danger at the present time. One reason for that is because hardly anyone is even talking about it. In fact, virtually nowhere can you hear a frank discussion of the full dimensions and impact of the enormous disaster staring us in the face. That’s something we want to help to start changing -- right here and now, in this presentation. For the longer America puts off opening its eyes, and still more important, the longer we postpone taking effective action to deal with this danger, the more terrible and devastating the outcome is going to be for us, for our families, and for the future of our country. What is this danger, and what does it mean? It’s
about China.
And how that country’s explosive economic growth now poses an incredibly powerful, actually lethal challenge to America and our whole way of life. As you’ll learn in this presentation, it’s like World War III has already begun – only very few Americans know it yet. And why would they, based on what our government, politicians, business leaders, and news media focuses on. But the Chinese know it.
You can see that from what they’re doing at every turn. And there’s no doubt about it – the Chinese are fighting to win. You need to understand, the Chinese are relentless long-term thinkers, too. They are used to thinking in terms of 5, 10, and even 20-year plans. They’ve proven they’re very good at achieving their goals -- and very good at hiding their intentions, as well. “Hide a knife behind a smile.”
That’s Stratagem No. 10 from the classic Thirty-Six Stratagems, a 300 year-old Chinese essay on the use of deception in war, politics, and interpersonal relationships. And the Chinese are SO successful in their deception… another reason why America is so oblivious to China’s actions and how these relate to their long-term objectives. Maybe it’s also because this is a different kind of war – an economic war. But make no mistake: no less than actual military combat (which unfortunately this economic conflict could very well lead to) this is without exaggeration a truly life-or-death struggle. In a
minute, I will explain why the Chinese
economic juggernaut means economic disaster for the U.S. – and how it’s already starting to happen. I will also tell you where you can find answers to the critically important questions:
Before we go any further, it’s important to recognize that besides China the other key element in this picture is Commodities. That’s right: Commodities - the materials and resources every society needs to build and sustain its development. As the largest and most powerful of the emerging economies, China’s rapid, gargantuan growth requires the acquisition and consumption of massive quantities of commodities… on an ever-increasing scale. We’re talking about everything from:
Keep in mind that China’s ravenous appetite for commodities is a consequence not only of rapid industrialization and development, but a matter of consumer demand as well. With a population of over 1.3 billion, that’s a lot of consumers. And demand. In the past, when China’s population was overwhelmingly the poor and rural demographic of a still largely underdeveloped third-world nation, its effect on global commodity demand and markets was of much less significance. But today, as a result of rapid industrialization, urbanization, the rise in living standards and the emergence of a growing middle-class, demand and consumption have skyrocketed. For example, between 1961 and 2011 per capital consumption of meat in China rose from 3.8 kg to 53.5 kg – a more than 13-fold increase. The level doubled between 1990 and 2002.  Think that’s substantial growth in meat consumption? They’re only getting started. And be aware that those ‘per capita’ figures are an average. More than half the 1.3 billion population of China is still rural, and they’re currently consuming less than half of that 53.4 kg of meat per year. As China’s development push involves bringing most of its rural population to the cities, when they get there you can be sure their standard of living -- and aggregate consumption levels -- are going to go much higher. Although China supplies almost half the world’s pork, it now also imports record quantities of that meat to keep up with internal demand. Today it’s also a net importer of beef, too. What do you think the chances are that the demand curve for Chinese consumption of meat and other food stuff is going to level off soon? Exactly! It’s not going to happen any time soon. The future outlook is for continuing growth, proceeding from an already huge base. And the effect on global demand and prices? The prices you’re going to pay at the supermarket to feed your family? You know the answer to that one, too – UP, up, up. Now take a look at oil, a commodity with both industrial and consumer usages.  From under 2 million barrels per day in 1980, China consumed nearly 5 times as much by 2010, and projected demand rises more steeply for the decade ahead. The point should be clear: whether it’s meat, oil, copper, soybeans or cotton (China is the now the world’s largest importer of the last two commodities in that list) these are the very same materials and resources the U.S. needs to support the functioning and growth of our own industries… technology… military capabilities… and virtually everything a society in the modern world requires. Now, there would be no problem if the available quantity and accessibility of all these resources was unlimited, and the difficulty of extracting and processing them wasn’t very great. But that’s not the case.
If we don’t wake up soon and start taking the steps needed to protect ourselves, the result will be an alarming deterioration in America’s well-being through soaring costs for virtually everything we consume. Even worse, we can expect severe dislocations and an irreparable drop in our national income. Our children will experience a decidedly lower standard of living. Many fewer people will be able to afford a college education. We will enter a period of:
We will live in smaller houses, and there will be a mass exodus from the suburbs and exurbs to cities, where more affordable larger scale public transportation and other services will be available.
So, what do you say about all this? Pure fantasy or imagination? Something that could only be the plot of some kind of science fiction spectacular out of Hollywood? No, believe me – it’s real!
And that’s why earlier I called this an economic war. Because the effort needed to maintain our way of life, and all that goes with it, will require a warlike commitment in terms of focus and money. We need to view it as a fight for our lives – a fight to secure the resources that will enable us start achieving growth in our own economy again. And in an age of increasing resource scarcity, that means those resources which are going to allow us to switch to an economy built around renewable energies, the only thing that can truly sustain us in the long-run for the coming decades and beyond. The leaders of China clearly understand ALL of this. In spades. And they’re already taking massive action on a number of fronts to make sure they come out the winners. Clearly, China’s actions and publicly stated commitment to the development of alternative and renewable energy during the past several years suggests that to a far greater extent than the U.S. they get the key concept of… Peak Oil
 In its broadest sense, ‘Peak Oil’ refers to the point at which demand for oil begins to outstrip the world’s ability to supply it. Now some people regard this concept as a fringe belief or myth. Those individuals may or may not admit that oil is a finite commodity, and that one day it will cease being available in the amounts required. But if they do, they think the day of reckoning is many, many years away.
The “Peak Oil” concept is of tremendous importance, because our economy and whole way of life is predicated on access to cheap energy. And, currently there is no viable substitute that provides large amounts of energy with the same or greater efficiency than oil. The bad news is that just like the era of “Peak Oil” has arrived, Peak Coal isn’t far behind. And the same with Natural Gas. Make no mistake. Developing alternative energies is not simply a matter of clean air and environmentalism. Or reversing the effects of global warming. Even if you’re skeptical about all of that, alternative, and renewable energy are a practical matter, a critical imperative for a world where fossil fuels (oil, coal, and natural gas) are not long-term solutions to powering the world’s economies. NOTE: in discussing its well-developed renewable energy plans China has conveniently avoided mentioning peak oil or peak resources. They typically express these plans in terms of clean energy. Like they’re in this only because they’re environmental “good guys.” Meanwhile, what are they actually doing? China is the top country in the world for importing highly toxic electronic wastes – old computers, cell phones, etc. – in order to recapture the precious metals they contain:
Much more important, China has become the utterly dominant world leader in every aspect of renewable energy – wind, nuclear, solar, and hydropower. It is the only country that mines in quantity the 17 so-called rare earth elements (REEs) that are essential in the development of renewables. For example…   
The answer is incredibly alarming. Our country has ceased its own production of REEs and has gone from being self-sufficient to relying entirely on imports – most of which come from -- you guessed it -- China. How did this happen? In the 1980’s we did mine rare earths in America. But then China began to sell these elements at prices well below the costs of our mines. You see, they not only have the advantage of cheap labor, but also a cavalier attitude toward pollution and the highly toxic processing processes involved. China’s ruthlessness in pricing REEs completely undermined the emergence of competing providers in countries where free enterprise rules. In other words… without the possibility of enough profits to cover development and operating costs, there’s no point in launching a business. But China, a nation governed by state capitalism, operates by different rules and calculations; it’s not profit-and-loss calculations that determine industrial activity, but rather the long-term strategic interests of the state are paramount. Thus they are willing to forsake profits so no one else can compete. And now that they’ve driven everyone else out of business, they’ve drastically curtailed their production as well as exports of REEs, which is sending prices for these vital minerals through the roof! That’s not the only way China is outmaneuvering us when it comes to achieving a strategic advantage regarding commodities. Take the area of foreign policy. Today the U.S. is concentrating on a variety of perceived threats, which we address with diplomacy, force, and dollars: Iran, Iraq, Afghanistan, Pakistan, North Korea. But by focusing on political, security, and military objectives, we’re missing the huge and critically, important problem of resource scarcity that’s going to affect us for generations to come. To compare the U.S. and Chinese approaches, consider what’s been happening in Afghanistan. We have been spending many billions of dollars fighting there (actually, to date our wars in Iraq and Afghanistan have cost the American economy something on the order of more than $3 trillion).
No, China’s aim is to secure access to one of the most critical of the world’s major metals… copper.
Besides the mine itself, the company will build a smelter to refine the copper ore and a 400-megawatt power plant to run both the mine and the smelter. Ultimately the operation will employ around 10,000 people, but for now the work is mostly carried out by Chinese nationals behind barbed-wire fences in fortified positions, protected by a private armed Chinese security force – not to mention the general security also provided by the U.S. and its allies. This is just one of a number of examples where China’s actions clearly indicate how resource scarcity is the paramount factor in their foreign policy. And clearly illustrates their determination to secure as much as they can of those resources and materials that are available only outside their borders. Nowhere is this more evident than in Africa, which contains enormous but still largely untapped deposits of everything from oil, coal, and iron to zinc, copper, industrial diamonds, platinum, silver, gold, and more. Rather than marching in and seizing power by force, which was the model of earlier 18th and 19th century colonialism, China comes with a blank checkbook and an army of construction workers offering to help African nations build up their infrastructures and create all the trappings of a modern state.
As in Afghanistan, corruption often plays a role in securing these deals, with suitcases full of cash, Swiss bank accounts, and the funding of presidential palaces not uncommon. But Chinese companies don’t have a ‘Foreign Corrupt Practices Act’ to be concerned about, the way American firms do. And whereas American development aid is frequently tied to improved human rights and democratic reform, China’s policy appears to be totally pragmatic, apolitical, and amoral. Yet China’s nominal communist and “anti-colonialist” identity makes it a more welcome partner than Western countries in most of the Third World, whose prior histories are associated with an exploitative past. A similar pattern is repeated around the globe: in Myanmar (Burma), whose military rule has made the state an international pariah, China has been provided military hardware, concessional loans, and hydroelectric dams in exchange for access to oil and nickel. In Latin America, China’s goals have centered on access to crude oil primarily, but also include arrangements regarding natural gas, iron ore, copper, and other minerals, in deals signed with Venezuela, Brazil, Bolivia, Ecuador, and Argentina. Given all of these examples around the world, could China’s intentions and objectives be any clearer? And yet the overwhelming majority of U.S. policy and political leaders seem to be paying little or no attention. One final very key aspect of the China and Commodities picture needs to be mentioned here, and it’s something that involves an important consideration concerning how you manage your own investments, now and in the future: Gold
Not only are there television and other ads presenting gold as an excellent investment, there are also rules that limit the profit Chinese banks can make on sales of gold (1% or less, according to our sources). In addition to being a major buyer of gold on the world market, the Chinese are making a concerted effort to extract every ounce of the precious metal that can be found within its borders. Even though its reserve base of gold yet to be mined is much smaller than in other countries (e.g., less than half of that of South Africa) during the past several years China has been far and away the world’s largest producer of gold. The country’s desire for the metal has been so intense that mining accidents are on the rise. And gold is an important aspect of the highly toxic and hazardous process of extracting metals from scrap computers and electronic devices, in which China is a leading global practitioner. All of this is solid evidence that the Chinese are more determined to accumulate gold than any other country. And it should give pause to the many commentators, pundits and other investment ‘experts’ who scoff at the importance of gold, describing the current run up in price as a “bubble” and refusing to even consider gold (and other precious metals) as a legitimate asset class. The fact is that for two generations now, gold has outperformed the S&P 500 with dividends. From a low of around $250 an ounce in the late 1990’s, gold today costs roughly 7.5 times more. This is hardly a recent phenomenon, as gold has been prized as a store of value for five millennia. Traditionally regarded as an inflation hedge (e.g., in the 70’s).  When we look deeper we see that more accurately that gold is really a hedge against the debasement of paper currencies – thus functioning more like a currency than a commodity in this respect. This essentially monetary character of gold also stems from the fact that unlike other precious metals such as silver or platinum, it has relatively few industrial uses for which there is no substitute. Now, today and for the foreseeable future, debasement of currencies is rampant in the U.S. and Europe. The Fed’s ‘quantitative easing’ programs of pumping money into the financial system was but one factor. Record levels of government debt and the apparently great difficulty of achieving any semblance of budgetary reform form are other factors. As a policy option, the idea of printing money and thereby debasing a currency as a way of funding government projects, paying debts, and making a nation’s products more attractive to foreign buyers seems to be widely endorsed by the central bankers of nations throughout the world. This “print more money” policy is essentially a terrible race to the bottom. Our own Mr. Bernanke is among the bankers who endorse this as a solution. How does this figure in China’s strategy, going forward? Imagine you’re the Minister of Finance for a country which is offering its extensive copper deposits for sale, and China along with other buyer nations are offering the same price. But China is willing (and able) to pay in gold vs. its competitors’ debased currencies. Which offer would you take? Alternatively, a massive hoard of gold makes it possible to back up a paper currency with the precious metal, i.e., you can exchange that currency for a certain amount of gold. Either way, in a world of resource scarcity, controlling gold is as close as you can get to controlling your economic fate. At this point, you may be asking yourself…
Well, the first thing is to become more knowledgeable and better informed about the threat of Chinese economic expansion described here. Because in truth, I’ve only scratched the surface as far as the many developments and details involved.
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