Pearl Harbor's Ghost: How Far Is the World from a Hot War Today

February 2026, three signals simultaneously turn red. At the Munich Security Conference, the leaders of Germany, France, and the United States rarely reach a consensus — the post-World War II world order has collapsed. Almost simultaneously, top global investors like Ray Dalio issue a lengthy warning that we are in a “disorderly period” of a major cycle. The World Uncertainty Index (WUI) breaks historical records, surpassing levels seen during 9/11, the 2008 financial crisis, and the COVID-19 pandemic.

This is not a pessimistic prophecy from an individual but a convergence of signals from politicians, investors, and data. The question is: how much time do we have before these warnings escalate into actual military conflict? The answer may be hidden in history — especially in the economic logic behind Japan’s attack on Pearl Harbor in 1941.

How Economic Warfare Gradually Escalates into Hot War: Lessons from Pearl Harbor

Dalio studied the rise and fall of 11 major empires over the past 500 years and offers a core insight: the nature of international order is not rules but power. Domestically, laws, police, and courts maintain order, but internationally, there is none. The United Nations cannot control stronger nations. Therefore, disputes among great powers are ultimately resolved not through negotiation but through force — either compromise or confrontation.

He divides conflicts into five escalating levels:

Trade War → Technology War → Geopolitical War → Capital War → Military War

The first four levels intensify gradually. Once it reaches military conflict, all dimensions are weaponized. The most dangerous moment is when both sides are evenly matched and core interests cannot be reconciled.

History in the 1930s provides a complete case study. After the 1929 crash, Germany’s unemployment soared to 25%, Japan’s exports halved, and its financial system collapsed. Both countries turned to populism and military expansion — not because they were inherently warlike, but because economic desperation made external plunder seem like a “more profitable” way out.

But the key escalation logic occurred with Japan. The economic strangulation chain from the U.S. determined the timing of war:

In 1940, the U.S. restricted steel exports to Japan.

In July 1941, the U.S. froze all Japanese assets, embargoed oil, and closed the Panama Canal.

This cut off 80% of Japan’s oil supply. Japanese military strategists calculated that, at their current consumption rate, they had only two years of fuel left. After two years, the country would be unable to operate — armies would be immobile, factories would shut down, and the economy would be thoroughly paralyzed.

Faced with this corner, Japan had only two options: unconditional surrender, giving up expansion into China and resource raids in Southeast Asia; or gamble on a surprise attack to buy time for a large-scale war.

Japan chose the second. On December 7, 1941, Pearl Harbor was attacked.

This was not an impulsive decision but a forced choice driven by economic warfare pushing the country to the brink. Dalio repeatedly emphasizes: there is usually a decade of economic warfare before hot war erupts. Although the official declaration of war came in 1939, the confrontation between Japan and the U.S. began as early as 1929 — through sanctions, trade restrictions, and finally asset freezes and energy embargoes.

From Japan’s Oil Embargo to Today’s Capital War Freezing: The Critical Point

Applying the Pearl Harbor logic to today’s situation, the most critical part is the full freezing of capital war.

What stage are current conflicts at?

• Trade War: Fully underway. U.S.-China tariffs have escalated since 2018.
• Technology War: Fully underway. Chip export bans, AI restrictions, decoupling in quantum computing, and other technological blockades deepen.
• Geopolitical War: Intensifying. Taiwan Strait, South China Sea, Belt and Road, and Indo-Pacific strategies are increasingly confrontational.
• Capital War: Partially underway, but not yet at a dangerous threshold. Mainly restrictions on investments in China; assets are not yet “fully frozen.”
• Military War: Not yet erupted.

Compared to WWII timelines, we are roughly between 1937 and 1940 — in the middle to late stages of economic warfare. We are still some distance from the most dangerous critical point, but that distance is shrinking.

The key variable is whether capital war will escalate into “full freezing.” Once that happens, it’s essentially the same as the oil embargo and asset freezes on Japan — forcing the other side to choose between total retreat or war.

Dalio explicitly points out that the most explosive potential conflict is the U.S.-China confrontation over Taiwan. Taiwan is China’s core interest that cannot be compromised — just as oil was for Japan.

Five Levels of Conflict: How Close Are We to Stage Four?

Let’s clarify where we are now.

In Q3 2025, the World Uncertainty Index (WUI) hit a record high of 106,862.2 — surpassing levels during 9/11, the Iraq War, the 2008 financial crisis, and COVID-19. This index quantifies global panic by tracking the frequency of the word “uncertainty” in reports by The Economist.

Drivers include: escalating global tariffs, regional conflicts, a weakening dollar, and political interference in Federal Reserve independence.

But there’s a strange contradiction: while uncertainty hits record highs, U.S. stocks also reach new highs. The Nasdaq surpasses 24,000, and the S&P 500 exceeds 7,000. This seems contradictory but actually confirms Dalio’s late-cycle characteristics: massive government money printing and fiscal spending inflate nominal asset prices, while real purchasing power declines.

The real panic indicator is precious metals. Gold surpasses $5,500/oz, silver exceeds $100/oz — both hitting record highs. Dalio emphasizes in his article: “In wartime, sell bonds and buy gold.” The market is voting with its feet — smart money is preparing for the worst.

Why History Might Repeat: Prisoner’s Dilemma and Irreconcilable Interests

Dalio is not purely pessimistic. He notes that cycles do not have to end in disaster if countries:

1. Maintain productivity and discipline when strong, avoid overextension
2. Ensure institutions benefit the majority, not a few
3. Maintain win-win relationships with opponents, rather than zero-sum conflicts

He emphasizes a principle: “Power, respect for power, and wise use of power.” Power is best like a hidden knife — not displayed openly. Overexposure invites arms races and pushes others to extremes. Generosity and trust are powerful tools for creating win-win relationships, far more valuable than zero-sum conflicts.

But he admits that foolish wars still happen often. Reasons include the prisoner’s dilemma (both sides hesitate to retreat first), gradual escalation (each step seems rational but accumulates toward war), and misjudgments by decision-makers.

Pearl Harbor exemplifies this. Japan’s leaders did not intend a full-scale war but were pushed into a corner by the gradual escalation of economic warfare. When the U.S. fully froze oil and assets, retreat meant self-destruction; war was the only remaining option with a chance to win. Under this logic, the attack on Pearl Harbor was a “rational” choice — though from a human perspective, a catastrophic decision.

Will History Repeat? Warnings and Possible Paths Forward

Dalio’s framework is not the only truth, but it offers a valuable perspective: the current world is not moving toward some new order but is in a dangerous vacuum where the old order has died and the new has not yet emerged.

Since 1500, Europe has experienced three complete peace-conflict cycles, each about 150 years. Each period of prosperity has been followed by large-scale war. We are now at a turning point in the fourth cycle.

The key question: can humanity make better choices than before Pearl Harbor?

The uncertainty index shows that current uncertainty is at record levels. Gold prices indicate that smart money is preparing for the worst. The Munich Security Conference reveals that even the most reluctant politicians are forced to face reality.

History does not simply repeat but rhymes. When economic warfare escalates to full capital war freezing, and one side is pushed to the brink where retreat equals self-destruction, the decision Japan faced at Pearl Harbor may reoccur — not because someone is aggressive, but because they are forced.

The question now is: can world leaders recognize the logic of Pearl Harbor’s prelude and brake in time across all levels of economic warfare? Or will they follow Dalio’s warning and slide along the same trajectory toward that final critical point?

The answer depends on whether, in the coming year, capital war will escalate into full freezing.