by Kevin D. Freeman, CFA

Economic warfare is as old as war itself. It has played a significant role in every major conflict of the past several centuries. The British blockades of the 1700s and the French embargoes under Napoleon gave way to more sophisticated techniques such as Nazi counterfeiting in World War II. The goal in each case was to destabilize an enemy’s economy in order to gain advantage in war. We used to be rather sophisticated at the effort ourselves. Franklin Roosevelt had a Board of Economic Warfare during the Second World War. Ronald Reagan used economic means to help win the Cold War.

Unfortunately, with the fall of the Berlin Wall in late 1989, it appears that we deemed the Cold War to be concluded. The prevailing American sentiment became that the global economy was an opportunity for growth as a “peace dividend.” Economic warfare was an arcane concept. Our goal was to Americanize the world. We wanted everyone to become “capitalists” with pure economic motivations, promoting peace, harmony, and globalization.

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