The real background to the dispute between China and the USA

It is not about politics. It’s not about the eternal struggle between Chinese pseudo-communism (with the capitalist tinge) and American pseudo-capitalism (with the neo-Marxist face). It’s all about raw materials and semiconductors.

Last week, a meeting took place between US President Joe Biden and Chinese President Xi Jinping. Among other things, it was agreed that contacts between the US military and the Middle Kingdom should be resumed.

It should be remembered that the military dialog was broken off following the visit of Nancy Pelosi (then Speaker of the House of Representatives) to Taiwan at the beginning of August last year. This was the first visit by such a senior US politician to Taiwan in 25 years. China protested strongly against the visit and even threatened the US with a military response. Well, Biden’s team has always behaved like a bull in a china shop when it comes to diplomacy (see the flight of US soldiers from Afghanistan and their approach to Russia).

Although a few gestures are now being made after the meeting between Xi and Biden that could indicate a de-escalation in mutual relations, the war on the semiconductor front continues. In the middle of the year, for example, China decided to restrict exports of gallium and germanium, two important raw materials for the semiconductor industry. This was in response to the American decision to deny China access to the equipment needed for chip production. Incidentally, China is the world’s leading producer of gallium and germanium. The Middle Kingdom controls no less than 98% of the supply of gallium and 68% of the supply of germanium.

In October, Joe Biden’s administration announced that the United States would shorten the list of semiconductor types that US companies are allowed to sell to China. With this move, Washington wanted to further cut off Beijing from chips, which triggered an immediate reaction in the Middle Kingdom. This time, however, China decided to strike on a different front by announcing a restriction on the export of graphite, a raw material that is essential for the production of batteries for electric vehicles, among other things. It is worth remembering that China controls 2/3 of the world’s graphite supply. This raw material is the largest component of electric car batteries by weight. Each vehicle contains an average of 50 to even 100 kg of graphite. That is about twice as much as lithium, the processing of which is also controlled by the Chinese worldwide.


Since many of the raw materials that are indispensable for the green revolution preached by Western decision-makers are mined in Africa, China has been focusing on colonizing the Dark Continent with the help of cheap loans and direct investments since the New Silk Road initiative began in 2013. The regimes of black dictators are happy to go into debt to their Chinese friends because they don’t talk about human rights and environmental protection. Meanwhile, Americans are investing billions in AI and high-tech, which cannot function without Asian and African raw materials. They disregard the potential collapse of supply chains that has been underway since the start of this trade war and which the Chinese can exploit as a weapon.

How are you, America?

The leading media keep quiet about it, or only express it here and there in some comments by vigilant editors, that the economic situation in the U.S. is not at all as brilliant as the stock market indications (still) suggest. The yield on U.S. bonds is always climbing upward, and U.S. citizens are massively pulling their money out of the banks to invest in the government’s debt instruments. The scale of this process has reached unprecedented levels, threatening U.S. regional banks in particular with insolvency. 

Change in deposits at U.S. commercial banks since 1973. source: Apollo

At the same time, discontent is rising in American society, and not just because of what is arguably the most unpopular president in many decades, Joe Biden. How to explain the paradox that during Biden’s administration, 12 million new jobs have been created, unemployment is at 3.5%, and yet in 2023 a wave of strikes not seen in 20 years is sweeping the country? Something must be ticking not quite right in the economy and in society. 

The number of lost workdays this year is already in the millions.

We think that the global recession has already started; it is not yet becoming the central topic in the media. They are always talking about a possible “soft landing” of the economy after the current energy and inflation crisis since the recovery after the pandemic and the first wave of inflation. If you take a close look at such accumulating statements from the bright minds of television and compare them with other periods in history when economists have reassured us en masse, you can safely conclude against the tide: Recession is inevitable. 

The graph above shows that every time Wall Street Journal articles piled up about a “soft landing,” a crisis or recession came right after.

In our latest bulletin (October issue), we analyze, among other things, the state of the two of the world’s largest economies – that of the U.S. and that of China – and show other signals that may point to a world recession.

Why is this war being prolonged?

You recognize this fragment, don’t you? Suppose a king is about to go to war against another king. Won’t he first sit down and consider whether he is able with ten thousand men to oppose the one coming against him with twenty thousand? If he is not able, he will send a delegation while the other is still a long way off and will ask for terms of peace. At the outbreak of the hostilities, Ukrainians were very much aware of the proportion of the opposing forces, and so they were willing to negotiate. Such talks even began in Turkey but – lo and behold – Kiev received a command to back out. Now the hostilities are slowly nearing its second year and the number of casualties is rising. More than four hundred thousand (FOUR HUNDRED THOUSAND) Ukrainians are said to have lost their life, but despite these horrible losses and despite the ten thousand being played off against the twenty thousand – to adduce the introductory parable – the war continues and there is no sign of it coming to an end. Why? Do Ukrainians really think they can beat the Russian bear? Do Ukrainians really think they can regain lost territories? Do Ukraine’s Western supporters and guardians really think Ukraine can win and regain its lost territories? Anyone in his right senses cannot believe that, especially high-ranking officials, whether in Ukraine or in the West, because they have all the data and, consequently, they know that ten thousand is fighting a losing battle against twenty thousand. If they know it – assuming we are dealing with people in their rights senses – then why is this war being prolonged? 

The Independent

The war is being prolonged for three reasons, two of which are rather familiar to the reader. One purpose in having this war go on is to weaken Russia as much as possible, to keep it engaged in a conflict, to make Russian president less and less popular among Russians and – maybe? – have the Russian people topple him down. A highly unlikely event, considering the highest approval rates that Vladimir Putin gets as compared to all the other leaders around the globe (Western leaders are credited with less than 50% of approval). The other reason is to deplete American stockpiles of arms so as to have a pretext to replenish them i.e. so that the industrial military complex can have new government lucrative commissions for the production of replacement equipment. There is yet a third important reason why the war – a proxy-war between the United States and Russia – is being prolonged. 

The Dive with Jackson Hinkle

Up to February 14, 2022, American troops had carried out military operations or – simply put – outright wars and interventions in very many places of the world, and nowhere did they encounter an enemy to be reckoned with. Whether it was Iraq or Yugoslavia, America’s opponent was significantly weaker, smaller, and usually politically isolated. It is in Ukraine that the American military are encountering an opponent that is a match. It is not only the type and quality of the advanced weaponry that the Russians use, but also the strategy and the tactics that they employ. Americans want to learn about their rival (enemy) as much as possible from the warfare. Ukraine is their laboratory, a military area where a war game is conducted, a war game for real with this precious exception that no American soldier gets killed (save for mercenaries, but that’s a different story). Americans have their advisors there on the ground, they have American mercenaries i.e. American active duty soldiers in disguise, while obliging Ukrainians provide the Pentagon with any and all intel. The war in Ukraine is a huge opportunity to study the Russian army in action. It is a huge opportunity to make Russians reveal the most secret, the most advanced of their weapons. Wars being wars, a hope arises that some of the most advanced types weapons might be intercepted. The reader might recall how the British received the whole V-2 ballistic missile that landed in marshes in occupied Poland and was retrieved, disassembled and documented by the Polish Home Army and then sent in pieces to the United Kingdom by means of a Dakota that flew from southern Italy to Poland and back.

Ukraine cannot win this war, just as ten thousand cannot prevail over twenty thousand. Nor can the collective West win it. Still, the United States can keep one of its global rivals militarily engaged (for more information, see the geopolitical ideas developed by RAND in 61 Gefira Feb 2022), study the Russian strategy and tactics and hope for intercepting as many items of Russian military technology as it is possible. That is why Ukrainians must die.

The Greatest Threat to America

Those who lived in a so-called communist country – i.e. a country, where Marxsism-Leninism was the state ideology – remember it very well: party leaders of all calibres when delivering speeches would constantly bring up a few topics and these were class struggle, bourgeois anti-values, capitalist enemies, sanctity of the working class, historical materialism, the inevitability of the victory of Marxist and Leninist ideas, and the like. All speeches contained these phrases and got across these messages. It was like a ritual: everybody expected that and nobody was surprised. It was like saying good day or goodbye, it operated like a reflex, like responding with a not-at-all or my-pleasure upon hearing a thank-you.

Much the same we can observe nowadays when we listen to the speeches delivered by Western politicians. Surely, the set of words and phrases is different, but the ritual of repeating them now and again, here and there, without rhyme or reason is precisely the same. The words and phrases that we have mentioned at the beginning of this text have given way to words and phrases like systemic racism, democracy, human rights, right to choose, transgenderism, tolerance and a few others. Be it Rishi Sunak or Macron, von der Leyen or Biden, we may sum up their speeches even without listening to them. In general: using these words and phrases they all opt for the greatest good and are opposed to evil; by the way, just as their Marxsist-Leninist predecessors.

Still, President Biden’s speech recently made at Howard (one of the HBCUs or Historically black colleges and universities) was a bit of a surprise. Not in that he said that climate change was a problem (the usual clap-trap), not in that he said that blacks are the future of the United States (but they are! they are! – who else?), not in that he said that women have the right to choose (but of course!), but in that the most serious threat to the United States of America is – make a guess! – white supremacy! Literally, the president of the United States called on people to stand up against the poison of white supremacy which is the most dangerous terrorist threat to our homeland. You see? It is not China, after all, not even Russia, nor the hundreds of thousands of immigrants crossing the southern border, nor recession, nor the impending de-dollarization of world economy, nor the ever-present shootouts in American cities but white supremacy.

America’s future

Where can he see it? In American government? In American movies? In American advertisements? In American mass media? In American whites taking the knee before their black co-citizens? In American affirmative action? In American de-segregated schools? In the rules of the American Academy of Motion Picture Arts and Sciences?

President Biden said, racism has long torn us apart. It’s a battle that’s never really over, which reminds one of the sentence Comrade Stalin said many, many years after the Bolshevik Revolution had been completed that resistance to socialism increases as its successes mount. You see? You develop socialism and the bourgeois element is becoming stronger and stronger; similarly, you build a raceless society and all of a sudden racism (only white racism is understood, no other) is gaining momentum!

But then American elites are known for such discrepant statements: do you remember the pandemics of the unvaccinated, repeated by TV anchors ad nauseam? Due to the overwhelming propaganda Americans mostly subjected themselves to the global medical experiment and despite that fact the number of those who did not want to take part in the national stampede… grew! That’s at least the understanding of the word pandemics: the number of the infected – in this case infected with the stubborn disobedience not to be vaccinated – kept rising. How could the number of unvaccinated spread if more and more people were getting the jab?

Biden’s ghost-writer should really have resorted to this term: America is threatened by the pandemics of white supremacy or supremacists! Or he should have copycatted Comrade Stalin and formulated something like: resistance to raceless society increases as its successes mount.

FED in a china store

We have recently seen a significant increase in the price of gold, which today is approaching the mark of $ 2,000 per ounce. The appreciation we predicted in the recommendations of our bulletin was largely fueled by the liquidity crisis, which was only exacerbated by the expansion of the Federal Reserve’s balance sheet and a small rate hike (25 pts) by Jerome Powell and his colleagues. It is worth noting that the market was expecting a 50 basis point hike even before the Silicon Valley Bank problems.

The Fed’s head insists that the $297 billion increase in total assets is the result of a completely unique situation related to banks’ liquidity needs. What is crucial, however, is not the reason, but the fact that further substantial funds were created out of thin air – and this is directly related to another dose of fuel for inflation, which continues to show no signs of abating. So the risk of stagflation caused by an economic slump remains.

The last notable example of an exit from stagflation in the U.S. occurred in the 1970s. In response, Paul Volcker, then chairman of the Federal Reserve, raised interest rates above 19% to restore confidence in the economy. The positive real interest rates achieved at that time (with inflation at 13.5%) are out of reach for central bankers today.

An economic crisis will happen sooner or later for one reason or another. History simply shows that. The important question, however, is what methods will be available to central bankers when that crisis occurs (if we don’t already have it). In past decades, these were based primarily on lowering interest rates and expanding the money supply. However, the above measures are now being drastically curtailed because of their impact on the rise in inflation. A further rise in inflation would probably only prompt investors to withdraw their money from financial institutions in order to protect their capital elsewhere from the increasing loss of purchasing power. Such decisions would only lead to further liquidity problems. It also cannot be ruled out that the Fed will decide to raise interest rates further. These in turn would devalue the bonds held by banks, which would also deal a severe blow to the financial system. The impact is likely to be similar in both cases: either a liquidity crisis or inflation that is likely to spiral out of control sooner or later, or a combination of both. Janet Yellen and Jerome Powell thus seem to be caught between the hammer and the anvil, and their actions resemble those of an elephant in a china store.

Also worth mentioning is the recent news about the growing risk of a Deutsche Bank default. The banking crisis seems to be coming to a head, also in Europe. Even more important than the crisis itself, however, as already mentioned, seems to be the considerably limited room for maneuver of central bankers to counter it.

Who benefited from all this?

The mechanism is simple. The Hegemon has power. The Hegemon has power not only because it is economically powerful and because it has a powerful military force. The Hegemon has power also and perhaps above all because it has a mint where it mints the world’s coin. The Hegemon can therefore, for example, put too much money into circulation, i.e. create inflation, and since the whole world uses the Hegemon’s money in trade between countries, this inflation hits all the economies of the world! Inflation in the Hegemon translates into inflation in all the other political players. This is a political masterstroke!

We wanted to draw attention to yet another mechanism, equally efficient, equally cleverly devised. Here it is. The Hegemon looks around to select nations or states, anywhere on the globe, but especially those where there are various natural resources or developed industries. Having found a region of the world that the Hegemon would like to exploit, the Hegemon looks around for such two nations, two states or social groups that do not like each other very much. Never and nowhere in the world is this task difficult. All neighbourhoods are fraught with a long history of conflict: France-Germany, France-England, Germany-Poland, Hungary-Romania, Croatia-Serbia, Greece-Turkey, Poland-Russia, Poland-Ukraine, Ukraine-Russia… and these are just a handful of conflicts and just European ones! They all can be revived, they all can be fuelled and they all can be exploited. Religious and ideological divisions can also be skilfully manipualted: Catholic-Protestant, Catholic-Orthodox, Sunni-Shiite, believer-infidel, right-left, liberal-conservative, you name it.

States are governed by different people, not necessarily the wisest, not necessarily the most sensible, not necessarily the prudent. Since they are not the wisest or most prudent people, since they are people who have weaknesses and (often) burning ambitions, they can be skilfully controlled. This is precisely what the Hegemon does. The Hegemon seeks out individuals who have exuberant political ambitions and helps such individuals to take power in a country. The Hegemon selects people with a psychological profile that ensures they will be remotely controllable. The Hegemon can create compromising situations for such an individual or it can nurture such an individual: the Forum of Young Global(!) Leaders of the International Economic Forum or universities founded or financed by various NGOs are breeding grounds for such leaders.

Political dissidents from the countries of Central Europe before 1989, people who often emigrated to the West, acted in the West, received support from the West, these people were excellent material for the Western secret services. These services were able to pick and choose human tools, human puppets for their intelligence games and political manoeuvres, and these puppets usually did not even realise that they were someone else’s… tools. The awarding of scholarships to such people for study or research, or the granting of prizes in various fields, tied the beneficiaries to the centres that exercised power over them in an extremely strong and thus permanent manner. Who can resist an award, international recognition, acclaim, or interviews for CNN or the BBC? Continue reading

Pro-Western fifth column in Russia by default

It’s not just a question of how much military power a given side to the conflict has at its disposal; it’s not even a question of whose economy is stronger. It’s more a question of which side prevails culturally, spiritually, or psychologically (psyche is Greek for soul or spirit).

Consider. The names of the months in Germanic and Romance languages, i.e. languages spoken in the West, have Latin origin. The names of the same months in Russian… also have Latin origin. Russians could have named the months giving them names in their native language, as the Poles or Czechs did; or they could have created the names of the months by drawing from Greek. The latter would have been more natural and understandable than taking those names from Latin: after all, the Russian principalities modeled themselves on Byzantium (a state that, although derived from the Roman Empire, used not Latin but Greek). Medieval Russians referred to Byzantium (and rightly so! and correctly so!) as to the Greek state; medieval Russians took Christianity from Byzantium; from the Greeks – Rus’ took (and slightly modified) the alphabet and modeled its own political system on Constantinople, which it called Tsargrad (Царьград) or Carigrad – the city of the emperor or the city of emperors. And yet, Russians adopted the names of the months from Western languages. And not only the names of the months. Those who know the language know how many German and French and now English words have found their way into Russian. These foreign inclusions are foreign to the point that they are not even declined by grammatical cases, although all native words are. Why are we talking about this? Is it because we are interested in proper names or etymology or languages in general?

We talk about it because language reflects the soul of a nation. It’s not the Germans, French or Americans who have Russian words in their own languages, but, conversely, the Russians have plenty of French, German and English words in their language. This, in turn, attests to who has an overwhelming cultural, philosophical, mental, spiritual and psychological influence on whom. It shows who really rules over whom. This is a better litmus test for demonstrating who is subject to whom than finances, the economy or military conquests. Why? Because financial or economic advantage can be coerced, because military advantage is demonstrated through the use of brute force. In the case of language, it is quite different. No one outside Russia told Russians to adopt foreign words! They did it on their own, willingly, and they did it because they recognized the superiority of Western civilization. Patriotic Russians may deny it, but it is the language that is hard evidence that Russians have always considered themselves inferior.

To get an Oscar (or a similar award given in the West) is the dream of every Russian film director; to get a Nobel Prize for literature (or a similar award given in the West) is the dream of every Russian writer. Does any Western film director or Western writer dream of getting an award in Moscow or St. Petersburg?

It is the above-described sense of the inferiority complex on the part of Russians that makes rich Russians buy properties in the West and keep their money in Western banks. In other words, rich Russians are at the mercy and disfavor of the West, which can take these estates and accounts from them at any time it sees fit. Such Russians with estates and bank accounts abroad constitute a fifth column within the Russian Federation. Russians who have accounts in Western banks, who have properties in the West – what’s more – whose children study at Western universities do not think in Russian, whether they want to admit it or not. These Russians are a powerful force, scattered about the country, that works to the advantage of the West and to the detriment of their own homeland whether they want to admit it or not. Continue reading