Is the US in an economic war with China?

Former Israeli central banker and now Vice Chairman of the Federal Reserve Stanley Fischer said Wednesday he sees four interest rate hikes this year.

The end result of this statement is that China’s Shanghai Composite was closed after just 30 minutes of trading overnight. The index crashed 7 percent on the open and could not get off the floor.

Now this may not be a hot war, but it certainly has all the markings of an economic cold war.

China in the last year has been flexing its economic muscles with it starting a pan Asian economic development bank to revival the IMF and World Bank. China has also pushed to have its currency included in a basket of currencies recognized by the IMF in its Special Drawing Rights, which are foreign exchange reserve assets credits.

Why else would Fischer be stating four hikes in 2016? Surely he doesn’t believe that. Not with a global recession — partly engineered by Washington it appears — and a presidential election happening.

China’s flirtation with a capitalistic economy is what is hurting them since it’s the one trading area┬ávulnerable to manipulation by the West. As Beijing pushes for greater inclusion of the yuan, it leaves itself open to Forex fixing. Look at the disparity between the currency’s value in Hong Kong trading — where the yuan trades against all other currencies — and China’s official peg against the dollar.

This is where the pain is found for Beijing. But there is an upside for the Chinese government. All that dollar debt in the form of US treasuries and notes are rising with the strengthening greenback.

So to paraphrase from the “Princess Bride” what the US and China may be facing in 2016: “never get involved in a land war in Asia” – but only slightly less well-known is this: “Never go in against a Israeli when money is on the line”! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha… ”