As usual, political tensions are running high in the world.  They are particularly high right now given the U.S. government’s antagonism towards China and Russia.

With China, the issue in the news has been tariffs and trade wars.  Tariffs are nothing new.  Trump’s predecessors (Bush and Obama) both enacted tariffs.  They just didn’t call great attention to them.  Bush and Obama were paying off the lobbyists and wanted to do it quietly.  They could impose protectionist tariffs to benefit certain industries without any strong words to go along with it.

In Trump’s case, he wants the tariffs to be known.  His bad knowledge of economics, coupled with his desire to look tough and look like a negotiator, makes Trump call attention to his tariffs.  And since most of the entire establishment media hates Trump, they will oppose Trump on his policies, even if it contradicts previous things they promoted.  All of a sudden, some in the media became advocates of free trade.

The economic consequences of the Trump tariffs are real, but they were also real under Bush and Obama.  It is mostly words that make these tariffs different.  I don’t expect a full-blown trade war, as it is in neither country’s interests.  Chinese officials are mercantilists, and they want to continue to subsidize their export industry at the expense of the Chinese people as a whole.  They do not want to get into a major trade war with the United States.

The situation with Russia is much more serious.  The U.S. government has dropped bombs on Syria and has been trying to overthrow the Assad regime for quite some time.  We cannot believe anything we are told by the U.S. establishment media, as they help spread the lies and propaganda.  It is usually more propaganda than lies, but in the last few weeks, I believe the media in many cases is just outright lying.  This is especially the case regarding chemical weapons use in Syria and almost anything to do with Russia.

The war hawks, who almost always advocate war in any situation, think that Russia will never react in a forceful way.  Perhaps they are right, but we don’t really want to find out.  It is not good to play games with another country when both sides are capable of destroying the entire planet with nuclear weapons.

Russia has actually showed amazing restraint up to this point.  For all of the talk about Putin being evil, I think people need to step back and look at his interests and the interests of the people in Russia.

Putin is a nationalist.  Trump campaigned as a nationalist, but now he is under the thumb of the deep state and the war propagandists.  Putin is not interested in taking over the world, or if he is, he realizes that it is not going to happen.  I believe he wants good relations with the United States, but the U.S. government is making it impossible to happen.  Putin wants the U.S. empire to stop spreading closer and closer to Russian borders.  He also wants the total chaos, which is close to home, to stop.  The U.S. continues to destabilize the Middle East, and now it has done so in Syria.  Putin, and most Russian people, want to see stability in the region.  Assad provides some stability, and he also allows Christianity to flourish in Syria.  The U.S., for some reason, likes to overthrow secular heads of state and cause total chaos and destruction.

Like much of the rest of the world, I assume that most of the Russian people do not like the policies of the U.S. government, particularly when it comes to foreign policy.  On the other hand, they would like to emulate parts of American culture and enjoy the same high living standards.

Most people don’t want war.  The U.S. government gets away with it because of American apathy.  It is easy for some American to say in a poll that we should bomb Syria.  It probably won’t impact him at all, except for the small hidden monetary costs.

If you are skeptical about China and Russia, I will tell you definitively how we can be certain that they do not want war with the U.S.   Aside from not wanting to end life on the planet, they have economic interests in maintaining some relations.

The U.S. Treasury publishes each month a report of the major foreign holders of Treasury securities.  In other words, it shows which countries and their central banks hold U.S. government debt.

The latest update was published on April 16, 2018.  China is still the number one holder of U.S. debt.  From February 2017 to February 2018, China’s holdings actually went up.

And while Russia’s holdings are small in comparison to China, even its holdings have stayed relatively stable.  Its holdings went up in early 2017 and then declined later in the year.  But year-over-year, its holdings are up slightly.  We’ll see in a couple of months if anything changed in March and April, but it is doubtful that it will be significant.

If China and/ or Russia really wanted to make trouble for Washington DC, it would sell all of their Treasury holdings.  If Russia did it, it might not have that big of an impact.  But even the announcement of a sale of almost $100 billion of U.S. debt into the market would have its effects.  Interest rates would likely move up in response.

If China announced that it would begin selling U.S. debt, this would really trigger a major economic event.  Yields would likely spike, and the Fed would be faced with a massive selloff of Treasuries when it has already adopted a policy of mild monetary deflation.

If China ever makes an announcement, even of a mild selloff of U.S. debt, then you will know things have gotten serious.  Until then, I think it is mostly talk with the Chinese.

The situation with Russia is obviously more serious because there are fingers on triggers, and these are not metaphorical economic triggers.  They are triggers that actually kill people and could blow up the planet.  Again, all indications show that Russia wants to avoid any kind of war with the United States, but it is always a risky situation when the U.S. government keeps poking sticks at Putin and company.  You never know when they might poke too hard.