Currency Wars

New Battlefields

The United States’ military power rests on advanced technology, complex battle systems, clandestine espionage and other tools. But the US now faces new threats from “rival nations and transnational actors such as jihadists.” These perils include chemical, biological and Internet-based attack systems, and “in the most unexpected twist of all, financial weapons,” varying from possible fiscal aggressions to computer manipulations to potential counterfeiting schemes designed to undermine the economic foundations of US and global capital markets. The threat of financial attacks prompted the Pentagon to develop a war game to simulate a global economic battle and to analyze how a financial war could threaten the US. The players included Wall Street professionals, international policy experts, Department of Defense staffers and military brass. The group met in late 2009 in a secluded research laboratory near Washington, DC, to plot the first official financial war game in US history.

The participants divided into competing teams and scripted region-specific goals and political moves. Using notes and outlines, role players scrimmaged over currency, gold and...