Thucydides's Trap and the Global Economy

War between the US and China is almost certain Harvard University’s Graham Allison believes.

His book - Destined for War: can America and China escape Thucydides's Trap? - draws comparisons between what is happening now and those that led to the outbreak of the Peloponnesian War in ancient Greece between 431–404 BC.

According to Greek historian Thucydides “What made war inevitable was the growth of Athenian power and the fear which this caused in Sparta.”

In other words, a rising power threatened to displace an established one.

Over the past 500 years such struggles have occurred between major powers just sixteen times. In twelve cases, it resulted in war.

The rise of China as a global economic powerhouse contrasts sharply with the gradual decline of America, which desperately wants to cling on to power and influence.

Both Xi Jinping and Donald Trump vowed to make their respective countries 'great again', and so the seventeenth such power struggle appears to be brewing.

Unless China scales back its ambitions or the US accepts becoming number two in the Pacific, a trade conflict, cyber attack, or accident at sea could easily escalate into all out war.

The US is indisputably the world's premier military power right now, but this situation will not last if the emergent Chinese choose to invest significantly in arms.

With the Chinese economy set to accelerate far beyond that of the US, it's likely that the People's Republic will increase its defence spending.

Putting the obvious aside, a war will be catastrophic for the Dollar, Pound, Euro, or Yen if the sabre-rattling between the US and North Korea is anything to go buy.

But consistent throughout have been the financial safe havens of Gold and Silver. Wise investors repeatedly turn to precious metals as a defence mechanism to ward off financial catastrophe at times of increased tension.

If a political impasse leads to armed conflict, then it'll be far too late to take any preventative steps to protect your wealth.

Put simply, your life savings and business profits are extremely vulnerable.

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