Secure Freedom Radio is with Kevin Freeman on Chinese Financial Chaos

Kevin Freeman, a global financial analyst commissioned by the Pentagon, is one of the world’s leading experts on economic warfare and financial terrorism. He is the founder and CEO of the Freeman Global Investment Council, a senior fellow at the Center for Security Policy, and the founder of the National Security Investment Consultant Institute. After listening to the interview here, check out his most recent book “Game Plan: How to Protect Yourself from the Coming Cyber-Economic Attack”.

FG: Welcome to Secure Freedom Radio, this is Frank Gaffney, your host and guide on what I think of as an intelligence briefing on the war for the free world. A man who brings extraordinary intelligence to a part of the battle space is our first guest. He is Kevin Freeman, a man who I have come to know and admire greatly, now a Senior Fellow for the Center for Security Policy, but a financial management specialist by training, a person who worked with Sir John Templeton initially, but now has his own firm Cross Consulting Services Freeman Investment Global Counsel. He is also the founder and driving force behind a new indispensible institute, it is called the National Security Investment Consultants Institute and I have been privileged to participate in some of its training programs for investment advisers. Very grateful to Kevin for all of his work, also he is the author of two very important books dealing with the subject we will be talking about today. The first is called “Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Can Happen Again”. The second is “Game Plan: How to Protect Yourself From the Coming Cyber Economic Attack”. Kevin Freeman welcome back its good to have you with us sir.

KF: Thank you Frank

FG: Well I guess I wanted to start with what is going on with China? We’ve seen what I gather now two devaluations in as many days of its currency. What is up with that and then maybe we will talk about what the implications might be?

KF: Well basically for the past five years the Chinese working in conjunction with the Russians aimed with the purpose of removing the dollar as reserve currency and replacing it with the Chinese Yuan. And this past week The International Monetary Fund gave them a blow they weren’t expecting and said the Chinese Yaun was not ready for prime time and was not prepared to be part of the special drawing rights they use when they issue those loans to Greece and other places that need it and that essentially set China back. They were told that it simply was not internationalized enough, that it is too manipulated and too controlled as a currency and I think that reached a conclusion in China. The leadership said well if we can’t hold things together we are going to let things go the opposite direction at least for awhile, and it just unraveled the Yuan in international trading it was a move by the government and it has really eroded their initial intention claiming its to internationalize the currency, but what it is actually doing is returning to the mercantilist policies because their economy is just in shambles.

FG: Lets talk about those each other several bits. The economy is in shambles of course we have seen a course a major devaluation of the stock market in China in recent weeks Kevin. Is that also part of why the IMF acted as it did?

KF: Yes because the economy is in shambles. The currency is not nearly as strong as they are reporting. The government is trying to prop everything up and they have intervened in the market in a very unusual way actually buying stocks. They have been playing this game, control the economy, and for years we have been told that a managed economy is better than a free market economy, and that has become popular in the press.

FG: The China Model as I gather its been called.

KF: Exactly and that is all unraveling before our eyes. It is not successful, as they have been told, so as a result all this intervention has created forces that are unsustainable and now they are coming apart.

FG: Kevin Freeman you have been raising the alarm about Chinese, and Russian, and others economic warfare operations and ambitions. One aspect of which is the one you touched on earlier mainly an effort to displace the United States dollar as the reserve currency of the world. This step or this devaluation of the Yuan or the Renminbi clearly is at odds with trying to achieve that goal. Does that likely mean a permanent loss for the Chinese or is this just a temporary setback in regards to that kind of campaign.   

KF: Well, I think it’s just a temporary setback in terms of their intention. I don’t know if they’ll be able to pull it off; I never have known that. The problem with the dollar as reserve currency is it’s…we’ve got our own flaws. We have our own massive budget deficits and debt. The dollar is not a good long-term global solution as a reserve currency, at least under current policies. Yet, if we remove it, it’s going to dislocate us much as we’re seeing China being dislocated now. So we have our own problems. The good news is we have fewer problems at the moment than China does, and they’re setback in their attempts to replace us. But I don’t think they’ll give up that attempt. They know how powerful and how important it is, and that is a clear act of economic warfare. This is the same group of people that is hacking everything that we do. They’re stealing secrets right and left. They won’t give up on this ambition.

FG: When you look at what is happening at the moment, and you’re using fairly stark terms reminiscent of another one of our friends and colleagues, Gordon Chang’s, to describe what’s happening in China, I take it you regard this as simply as a symptom of a very fundamental problem within both the economic and political space in China, not simply the sole problem that they are confronting.

KF: Absolutely. This is a Communist nation that is very belligerent, that has global domination plans, and their economy is backward, underdeveloped, it’s overdeveloped in the wrong areas because it has been so over-managed. They need to move to a free market system, and they need to move to a democratic system like we have, and then they can be great citizens of the world. The people are great; the potential is enormous. But they’ve been going about it the wrong way, and they’ve been going about it in what I’ve described as a global economic war. And they’ve been fighting it, and this currency war that they’ve begun is really part in parcel with that even though it’s moving in the opposite direction of how they had been moving. It’s still manipulated, controlled, and with the intention of establishing China as the dominant power in the world.

FG: A currency war indeed. Let me ask you about one other piece of this. When we’ve discussed this, including as recently as earlier this week with Gordon Chang, he continues to believe that what this will result in, this internal difficulty for China in so many different spheres is a lash out. You obviously see that as something that is already happening, and it is intensifying the economic warfare. But, Kevin Freeman, do you regard what’s taking place now in the South China Sea, including these island-building operations and live fire exercises and claims of sovereignty, as further indications that this lash out may turn into a kinetic kind as well?

KF: Absolutely. Economic wars often turn into shooting wars, and when you have a wounded dragon, as we have now economically, the same people that want to guarantee China’s dominance that they can’t see it guaranteed through economic means they will lash out and use physical means or attempt to use physical means. This is how frightening wars begin.

FG: Are we prepared either for the kind of economic war or specifically currency war let alone the kinetic kind in your judgment, Kevin Freeman?

KF: No, because our nation has been culturally infiltrated to such a degree that you’ll see China apologists on the news now, “Oh no, this is very normal activity; it’s very understandable.” And they’re apologizing for these really strong efforts to derail the dollar at one point or to manipulate and control the world economy. And this “oh no, they’re our friend,” that is the problem. We’ve been culturally infiltrated to such a degree that we are not at all prepared, and so it will come as complete shock when they do something that is so obvious. Alibaba is a great example. We just welcomed Alibaba with open arms. Those people who bought Alibaba’s stock when it IPO’ed at 80 or when it got to 112 last November are probably concerned now that they’re seeing it down to $72 a share.

FG: Wow, well this is just one manifestation as you say Kevin of a much larger problem with which you are intimately familiar and of which you are one of the most clear-eyed and I think effective experts. Keep up the good work, my friend, not least with the National Security Investment Consultant Institute, a great outfit doing really important work. Kevin Freeman, the author of “Secret Weapon” and “Game Plan.” Check them out. Also, his website which is, Kevin…

KF: Secretweapon.org and NSIC.org.

FG: Kevin, thanks, we’ll talk to you again very soon.