Pentagon Has Been ‘War Gaming’ for Economic Disaster Since Early ‘09

While we learned yesterday that the U.S. is preparing its domestic response to a potential economic collapse, the bigger story might be that the U.S. has been playing such “war games” for almost two years.

“The Pentagon sponsored a first-of-its-kind war game last month focused not on bullets and bombs — but on how hostile nations might seek to cripple the U.S. economy, a scenario made all the more real by the global financial crisis.” That’s how Politico reporter Eamon Javers (now with CNBC and who brought us Monday’s report) began an article dated April 9, 2009

In that article, he describes how the U.S. first began preparing for an economic collapse. “Participants sat along a V-shaped set of desks beneath an enormous wall of video monitors displaying economic data,” he writes. “Their efforts were carefully observed and recorded by uniformed military officers and members of the U.S. intelligence community.”

The Office of the Secretary of Defense hosted the two-day event March 17 and 18, 2009, at the Warfare Analysis Laboratory in Laurel, MD.

The “game” didn’t end well for the United States: “the savviest economic warrior proved to be China.”

“We were allowed to fight with financial weapons only (stocks, bonds, currencies, gold, reserves, etc.) and no kinetic weapons,” James Rickards, who participated in the game, told The Blaze in an e-mail.

“This was an example of the changing nature of conflict,” Paul Bracken, a professor and expert in private equity at the Yale School of Management who attended the sessions, told Javers. “The purpose of the game is not really to predict the future, but to discover the issues you need to be thinking about.”

“Why would the military care about global capital flows at all?” asked another person who attended the game. “Because as the global financial crisis plays out, there could be real world consequences, including failed states. We’ve already seen riots in the United Kingdom and the Balkans.” That was in 2009, before European unrest began grabbing headlines weekly.

Those real-world consequences are exactly what the U.S. is preparing for. And according to a picture we stumbled upon, those consequences include civil unrest over lack of food caused by a financial crisis.

This picture, reportedly released by the Air Force, shows Alaska National Guard troops taking part in a training exercise. According the picture’s caption, “Alaska Army National Guard Soldiers assist Anchorage Police to calm or detain rioters as part of the training scenario of exercise ‘Vigilant Guard.’” One actor is holding a sign saying, “FOOD NOW!”:

“America‘s intelligence community has said the global economic crisis is now the top threat to the nation’s security,” NPR reported in February ‘09. “The downturn could produce political instability and damage the ties that hold countries together. Countries might even be tempted to engage in financial warfare, officials say.”

Rickards was quoted in that piece saying the tempted could include a country such as China. “You can envision scenarios where they launch a financial attack, you know — a Pearl Harbor on the dollar, if you will,” he said. “And those are the things that I think national security professionals rightly think about. But it doesn’t even have to be that. It could just be China acting in its own best interests, in a way that causes interest rates to go up, the dollar to go down.”

Fox Business also reported on the war gaming in ‘09 and laid out a shockingly relevant scenario involving none other than China:

Picture this hypothetical dreamed up by a national security expert obsessed with economic catastrophe:

Angry that U.S. policies aimed at boosting the economy have devalued their $2 trillion of currency reserves, the Chinese decide to stop buying Treasurys just as America tries to finance its massive spending plans.

In response, the U.S. imposes trade sanctions against China, which in turn pushes for a global currency. From there, the U.S. accuses China of manipulating its own currency and things escalate further.

Without a shot being fired, those actions represent a type of unfriendly economic competition that some are very worried about.

At the time, Fox reported that the Pentagon would hold future war games. That seems to have happened last month as Javers recently reported.

The new war game, called Unfied Quest 2011, “is the Army Chief of Staff’s primary mechanism to explore enduring challenges and the conduct of operations in a future operational environment.”

“Army officials met outside Washington last week for a thought experiment about the implications of a large-scale economic breakdown that would force the Army to absorb significant funding cuts and prepare the service for an increased role in keeping domestic order amid civil unrest,” InsideDefense.com reported on the recent games.

The article says that officials chose the global financial collapse scenario because “it was deemed a plausible course of events given the current global security environment.”

“In such a future,” the article says, “the United States would be broke, causing a domino effect that would push economies across the globe into chaos.”

The latest game included a grim outlook: cuts in defense and international relations, fragmentation of power, and consolidation of “common functions, like logistics, training, medical services and information systems.”

But there was one “sliver lining” according to the article: “The Army would have an influx of qualified recruits as the result of an unemployment rate between 25 percent and 30 percent.”

Original Article