When the technology of warfare changes, so does everything else. State-of-the-art
roads and siege engines gave the Roman Empire control of the western world
two millennia ago. The long bow won some notable battles for England in the
Hundred-Year War. Machine guns opened pretty much the whole world to European
imperialists in the 1800s. And so it has gone, through tanks, jet fighters,
and nuclear weapons.
But where previous breakthroughs made it easier to destroy things and kill
people, the newest super-weapons don't blow things up, at least not directly.
They disrupt information systems, without warning and frequently without betraying
the source of the attack. Drawing on recent news accounts along with America
the Vulnerable, a terrifying book written by former National Security
Agency official Joel Brenner, here's the cyberwar story in a nutshell:
Over the past couple of decades, humanity has grafted its most important systems
onto the backbone of the Internet, which was originally designed for scientists
to share data easily - that is, with convenience taking precedence over security.
So our banking, military, energy and corporate data networks now make critical
information available to lots of people using lots of sign-in credentials from
lots of different places. As a result, these systems are easy pickings for
thieves, vandals, and enemies.
Meanwhile, teenage hackers have been replaced as top predators in this ecosystem
by sophisticated organized crime groups and even more sophisticated branches
of foreign military/intelligence services. Since it's easier to penetrate critical
systems than it is to prevent or detect penetration, it's safe to assume that
major military networks, multinational corporations, and top-tier banks have
been - and are being - hacked.
This matters because once a hacker is inside a system they can do pretty much
anything an authorized user can do, from withdrawing money, to stealing critical
data, to crashing the whole system. It is now possible for hackers to: remotely
change the operating parameters of power generators to make them blow up, in
the process taking down regional power grids; move so much money out of bank/brokerage
customer accounts that the institutions fail; and crash the clearing mechanism
of a country's banking system. And that's just the obvious stuff. Attacks that
we can't currently conceive of are no doubt being contemplated and/or planned
by governments and mafias around the world.
All of which explains why cyber-conflict has become front page news. Here's
a more-or-less random sampling of recent headlines:
world's first cyberwar has started
password isn't enough to keep your info secure on the internet
preparing for cyber war
war: mutually assured disruption
Knight: preparing for cyber-war
declares global cyberwar
Reserve gets hacked!
in growing cyber war with China?
how preemptive cyberwar is entering the nation's arsenal
granted cyberwar powers
Why is cyberwar a topic for a site like DollarCollapse? Because assuming -
as we should - that the global financial system is now so complex, leveraged,
interdependent and fragile that a disruption in one part can easily spread
to the rest, the only remaining question is which catalyst will be first to
set off the avalanche. A major cyber-attack is a pretty good candidate.
How likely is such an event? Well, based on what the world's governments and
corporations are willing to admit (almost certainly the least serious tip of
the iceberg), big things are already happening, and the threat of massive retaliation
and/or preemptive strike looks both real and imminent. The Japan/China conflict
in the China Sea, for instance, could easily pull the US into a cyber-battle,
if not war. Because this is uncharted territory, there's no way to predict
the impact on the financial markets.
Meanwhile, the cyber-powers now being granted to governments to fight the
next war are eviscerating Constitutional protections of personal privacy and
liberty. So the ability to fight a cyberwar is also the ability to create a
high-tech police state.
Seen this way, cyberwar is yet another reason to avoid keeping a lot of capital
tied up in financial assets. If the banks, brokers and insurance companies
holding those assets are hacked and maybe disrupted, what happens to your stocks
and bonds? Again, this is uncharted territory, which adds to the appeal of
real assets held out of the mainstream financial system. The only thing that
can be said with certainty is that in a cyberwar your gold coins and farmland
will still be there when the virtual dust clears.