text: An American Suez Crisis. Back in March 2021, monetary historian Niall Ferguson pointed out that the Suez Canal Crisis was the final nail in the coffin for Great Britain as a global superpower. In 1956, Egypt nationalized the Suez Canal. In response, Britain, France, and Israel launched an invasion to take it back by force, but the operation was short-lived. US President Dwight Eisenhower threatened to sell US reserves of the Great British Pound, which forced the British to cease military operations after 10 days. The event was so humiliating for Britain that it caused a monetary and financial crisis, forcing the British to accept financial support from the International Monetary Fund. It also officially ended Great Britain’s reign as a world power. An American Suez Crisis could occur over Taiwan if the US lost face against China. Ferguson argued that if the US backed down, then the world would lose faith in the US as a protectorate, and we’d see a run on the dollar and U.S. Treasuries, similar to Great Britain’s 1956 financial and monetary crisis. That might be triggered by China threatening to sell off U.S. bonds and other financial assets if the U.S. gets involved over Taiwan. Faced with financial, monetary, and economic catastrophe due to high intensity conflict, presidents in years to come may very well blink, causing international investors to dump the dollar in favor of alternatives.Economic destruction from war with China. With a potential high intensity conflict with China on the horizon, the risk of economic and financial disruption is very high. First, imports from China would stop. Today’s supply chain bottlenecks would pale in comparison to the economic destruction should global trade stop. Second, in a high intensity conflict, we should absolutely expect a degraded information and communication environment. This could mean severe disruption to the internet, satellite communications, global positioning satellites (GPS), and cellular communication. Third, in a high end conflict, we’re likely to face severe domestic disruption from Chinese attacks. In December 2020, the US Army warned of the use of hybrid war tactics from peer competitors like China and Russia. This would include cyber attacks, the fomenting of civil unrest and riots by foreign information operations, the use of transnational criminal organizations, and other conventional or unconventional means, according to the document. The 2018 National Security Strategy infamously warned that “the homeland is no longer a sanctuary” due to the ability of peer and near-peer competitors to attack the United States. Historically, foreign bombardment and occupation have led to hyperinflationary scenarios. Even a pyrrhic victory against China would be economically and financially devastating, which could lead to hyperinflation as the Fed prints money to sustain American consumers during the conflict.Forced sale of foreign-owned property. Aside from inflation and the Fed’s pumping of asset prices, one reason for high property prices is international purchasers. According to the US Department of Agriculture, foreign ownership of American farmland doubled over the past 10 years. Foreign investors own around 3% of agricultural land, or an area roughly the size of Iowa. Although there’s not great demand for the idea right now, some have floated the forced sale of foreign-owned land and critical infrastructure due to national security concerns. In a conflict with China, for instance, the forced sale or expropriation of Chinese-owned property could scare off other foreign investment and cause foreign central banks to dump the dollar, risking hyperinflation.