Month: July 2024

Authored by Thaddeus McCotter via AmericanGreatness.com,

The left and its mocking bird media are fond of asking whether the GOP and MAGA movement will “accept the results of the election.”

Their question’s assumptions are two-fold:

• one, there will be no voter “irregularities” in the election;

• and, two, the Democrat candidate will win the presidency.

Their first assumption would constitute a historical first. America has a long history of such electoral irregularities by both parties. In addition to the Jim Crow civil rights violations against African-Americans starting during Reconstruction, various “bosses” from both parties orchestrated patronage systems designed to facilitate electoral wins by any means fair or foul to keep the graft gravy train running: phantom voters, ballot box stuffing, multiple voting by individual voters in the same election, etc.

In the 18th Century, New York was a hotbed of “bossism.” One of the earliest and most successful was former Whig and later GOP boss, Senator Thurlow Weed. Later, and ironically, the chief executive who signed the Pendleton Civil Service Reform Act was a product of New York Senator and state GOP boss Roscoe Conkling’s machine, namely President Chester A. Arthur, who was known as “the Gentleman Boss.” Meanwhile, in New York City, William M. “Boss” Tweed helmed the Democrats’ legendary Tammany Hall.

Yet, while the above instances were predicated on greed, today ideology and fear can spark the baser instincts of many politically driven individuals to “win” elections by any means necessary. Thus, in our politically divisive time, wherein many on both sides of the aisle believe the defeat of their party will result in the death of democracy and/or the republic, it is naïve to believe not one solitary individual, be they left or right, would endeavor to engage in voter irregularities to win.

For example, in a nation of more than 330 million citizens and millions more individuals who are in the nation illegally, it would be presumptuous to assume no individual would avail themselves of the opportunity to have non-citizens and/or “undocumented arrivals” illegally cast a vote, especially since many Democrats support non-citizens voting in American elections at the local, state, and national level. Further, in this and other instances, the former COVID-19 “emergency” voting procedures that have now been formalized in several states engender the temptation to engage in and hinder the ability to detect such voting “irregularities.”

Finally, it is inane to ask anyone if they accept as a fact a hypothetical. How can anyone state they will accept the rectitude and the outcome of an election that has not happened yet? Granted, in demanding Republicans and MAGA supporters concede this determination in advance, the left is attempting to promote its “insurrectionist” narrative. But it is also endeavoring to insulate itself should any of its supporters become, shall we say, overzealous in their harvesting of ballots. In doing so, they are implying that they, too, have already conceded the rectitude and the outcome of the election.

Yet, the left has most certainly not conceded this point.

This brings us to the left and their mocking bird media’s second assumption: the Democrat candidate—whoever it may be—will win the presidency; and only the GOP and MAGA election-deniers would refuse to concede the legitimacy of this win. This assumption has lately been shaken by Mr. Biden’s debate debacle. Nevertheless, Democrats have not been required to affirm their preemptive allegiance to the election’s conduct and outcome. Why?

Well, if recent history is any guide—and it is—the left is reserving its rights to dispute any 2024 election procedure, real or imagined, and the election of Mr. Trump.

Consider:

During the 2016 presidential campaign, the Democrats in the Obama administration colluded with the Clinton campaign’s partisans to launch the Russiagate lie that Mr. Trump was a pawn of Vladimir Putin. After Mr. Trump won the election, the Russiagate lie was used to falsely discredit his election and subvert his presidency through baseless investigations by a politically weaponized federal bureaucracy. All the while, after they took time off for grief counseling, Democrats took to the streets and declared they were the “Resistance” to the duly elected President Trump.

To cite but the most notorious examples, during the 2020 presidential campaign, even as the BLM “mostly peaceful” riots roiled the nation’s streets with the approval of the left’s health care “experts,” who deemed protests more important than stopping the spread of the pandemic, and while leftists and Antifa razed statues with impunity and tacit approval of like-minded officials, Democrats, their mocking bird media, and Big Tech censored the truth about Hunter Biden’s laptop and, instead, spread the deceit that it had all the “hallmarks of Russian disinformation” to discredit its revelations and facilitate Mr. Biden’s presidency.

Then, again to cite but a few egregious examples, Mr. Biden’s administration implemented their political indoctrination of their DIE (diversity, inclusion, equity) secular religion within the federal government and military and have now engaged in and/or facilitated the “lawfare” persecution of political opponents and dissenters, including Mr. Trump, thereby establishing the despicable precedent that some Americans are “below the law” and its protections due to their political and/or religious beliefs.

Heading into the 2024 election, even as leftists are engaged in pro-Hamas protests that spew virulently anti-Semitic tropes and veiled threats of violence, having sparse policy achievements to cite, the Democrats are further fueling domestic division and discord with their paranoia-addled appeals to their base, such as the “loss of their rights,” and, recently, the risible claim a recent Supreme Court decision will allow a re-elected President Trump to order “death squads” to eliminate his opponents with impunity.

In sum, Democrats, who already believe anything they do to defeat Mr. Trump is justified, are afraid democracy will destroy “our democracy” (i.e., “their party”). In consequence, it is both valid and imperative to ask whether the left will respect democracy if Mr. Trump wins. And, if they don’t, what next?

Authored by Tristan Greene via CoinTelegraph.com,

The complainants called the matter “urgent,” but it remains unclear if the SEC will open an investigation…

Parties representing anonymous whistleblowers from artificial intelligence firm OpenAI have reportedly filed a grievance with the United States Securities and Exchange Commission over the firm’s alleged use of illegal non-disclosure agreements (NDAs). 

Documents sent exclusively to the Washington Post, per a report, indicate that a group of whistleblowers associated with OpenAI filed a complaint with the SEC in June alleging the company made former employees sign restrictive, illegal NDAs in order to prevent them from discussing safety and other concerns with federal agents.

Illegal NDAs?

According to the post, the documents it received, linked here, were sent to the newspaper by Senator Chuck Grassley’s office:

“A copy of the letter, addressed to SEC chairman Gary Gensler, was sent to Congress. The Post obtained the whistleblower letter from Grassley’s office.”

Grassley appeared to side with the whistleblowers in comments published by the Post. He stated that “OpenAI’s policies and practices appear to cast a chilling effect on whistleblowers’ right to speak up” and that “OpenAI’s nondisclosure agreements must change.”

The document referring to the original complaint — which hasn’t yet been publicly disclosed — was specifically addressed to SEC Chair Gary Gensler. Text throughout the filing pointed to the perceived urgency of the situation stating that the SEC “swift and aggressive steps” to enforce rules related both to whistleblower laws and President Biden’s executive order directing domestic tech agencies to build AI systems safely, securely, and in a trustworthy manner.

While the White House executive is essentially toothless — it references no law and provides no penalty for defiance — it does outline the current administration’s outlook towards the sector.

OpenAI’s response

The company appears to be trying to distance itself from its past practices related to NDAs, but no wrongdoing was admitted in commentary provided to the post.

Hannah Wong, an OpenAI spokesperson, told the Post that OpenAI’s “whistleblower policy protects employees’ rights to make protected disclosures,” adding that the company believes “rigorous debate about this technology is essential and have already made important changes to our departure process to remove nondisparagement terms.”

Cointelegraph reached out to OpenAI for comment but didn’t receive an immediate response.

OpenAI currently faces a number of lawsuits over its alleged “scraping” of copyrighted materials to train its ChatGPT system. However, the firm continues to ink partnerships as it progresses toward its next AI model, purportedly dubbed “Strawberry.”

Authored by Lori Weintz via The Brownstone Institute,

“It is intolerable to us that an erroneous thought should exist anywhere in the world, however secret and powerless it may be.”

O’Brien, Officer of the Inner Party                                                                                           
1984, by George Orwell, Berkley/Penguin p. 225 

“We’re letting you know that we’ve permanently removed [your] content…An external report flagged the content for illegal or policy violations. As a result, our legal content and policy standards team removed the content for the following reason: unwanted content.”

Google Groups email sent to me
June 27, 2024

On the morning of the June 27, 2024, Presidential debate between Trump and Biden, I noticed an announcement on a Substack post that Robert F. Kennedy, Jr was going to join the debate, even though CNN had excluded him based on technicalities. Powered by Elon Musk’s X, the Real Debate would be broadcast at the same time, with Kennedy giving his answers after Biden and Trump.

Despite CNN’s claim that he didn’t qualify for the Presidential debate, and the Democrat Party’s continual barriers to RFK’s name appearing on state ballots, he is running for President of the United States and has significant popular support. To every normal American, it’s obvious there is a benefit to hearing from all viable candidates running for President, regardless of one’s political leanings. In that spirit, I sent out a few texts and a notice in a Google Group, with a link to The Real Debate website.

Some commentary on the debate went back and forth in the Group. Thirty minutes after my first post, I received the following email from Google Groups stating that they had “permanently removed” my content because “an external report flagged the content for illegal content or policy violations.”

My post was removed “for the following reason: unwanted content,” and I was informed, “You may have the option to pursue your claims in court.”

I clicked on the link, to see what was deleted, which opened to the screen below notifying me that the content was unavailable:

For the first time, I was censored by Big Brother for sharing an idea, without even being informed what my thoughtcrime was. I’m not on social media, so I have only been informed by others of the rampant censorship surrounding posts about January 6, election integrity, and the official Covid response, among other taboo topics.

Five years ago, if you had been told you needed to watch what you said on social media and in public in the US, no one would have believed it. It would have seemed a tongue-in-cheek reference to Orwell’s 1984, or an absurd comparison to totalitarian states where freedom of speech is not a thing.

So which group are you in? The group that thinks freedom of speech is alive and well in the US, and that our Constitutional rights are firmly protected? Or are you in the group that has watched the erosion of every civil liberty and human right over the past five years as an increasingly totalitarian machine censors discussions about topics deemed “unwanted” by…Someone?

After being censored, I learned that in addition to monitoring private groups for “unwanted” speech, Google labeled emails and social media posts about The Real Debate as “dangerous,” and discouraged clicking on any links contained within, as shown below:

Who initiated the “external report” that prompted Google to surveil a private conversation and remove “unwanted content?”

Google isn’t about to answer that question, but the case Murthy v Missouri provides a possible answer.  As can be read in the June 26, 2024 ruling from the Supreme Court, during the pandemic social media companies were harangued by various White House officials and the US Surgeon General’s Office. The platforms were pressured to remove posts, and even delete whole accounts, that were deemed “unhelpful” by the government. Section 230 of the United States Code provides immunity to online platform services for content generated by their users. The White House threatened the removal of that protection if the social media platforms didn’t comply with Big Brother’s wishes. Obviously, the removal of Section 230 protection would potentially expose the platforms to financially crippling liability lawsuits.

Through the Twitter Files, various court cases, Freedom of Information Act documents, and Congressional hearings, it has come to light that there are many organizations monitoring your online posts, your searches, and as evidenced by my own experience, even your private email correspondence. Are you good with that?

In October 2011, Supreme Court Justice Antonin Scalia testified in a Senate Judiciary Committee hearing. Scalia explained that what sets America apart from all other nations, is not the Bill of Rights, noting that “Every Banana Republic, and every president for life (dictator) has a Bill of Rights.” Justice Scalia said what sets the US apart from all other countries is a Constitution that prevents the centralization of power in one person or in one party. Without that, a Bill of Rights is nothing more than a “parchment guarantee,” meaning, no better than the paper it was written on. (This particular line of thought starts at about the 18-minute mark in the video.)

The Constitution has carried us this far, but there has been a gradual and insidious merging of government power. Something the Founding Fathers did not foresee was the rise of the Bureaucratic State. We live in a time when unelected heads of Federal and state agencies wield enormous power and money, often for decades, while elected officials come and go.

Somehow, during the Covid-19 pandemic, the whole Constitutional system of checks and balances on power was largely disregarded. All of a sudden, a network of 3-letter agencies was calling the shots. The overreaching Executive branch called for a nationwide lockdown, and later for vaccine mandates. CISA decided if your job was essential or not. The CDC decided whether or not landlords could evict tenants. The FDA inserted itself between doctors and their patients, telling doctors not to use certain already approved meds to treat Covid, and pharmacists not to fill certain prescriptions. OSHA required you to wear a mask on public transportation and airplanes. NIH agencies and health departments shut down churches, schools, businesses, and civic, cultural, and sports clubs. They issued directives on how many people could gather in your home, and whether or not you could be with loved ones in hospitals and care centers. The NSC directed a Covid response that was militant, and unconcerned with individual rights.

It went on and on and on, as we were bullied, browbeaten, and manipulated by Executive branch bureaucrats and other unelected officials inserting themselves into every aspect of our lives. The Judiciary and Legislative branches largely stood by or even supported what was happening.

Unfortunately, most people complied. With regard to information sharing, the established Legacy media mainly functioned as a mouthpiece of the government. Dissenting voices moved to social media and alternative news platforms. This was unacceptable to a voracious government that must control the official narrative, and access to information. We can’t have any of that nasty “misinformation, disinformation, or malinformation” going around. That might harm you. Big Brother will let you know what you need to know.

White House officials and the US Surgeon General’s Office threatened and coerced social media platforms to remove information deemed “unhelpful,” even if it was factually true. Dangling Section 230 over their heads, the White House demanded action. The social media platforms learned to obey. Individuals with “strikes” against them learned to self-censor. 

In the Murthy v Missouri ruling on July 26, 2024, the Supreme Court reversed (6-3) an injunction imposed by a lower court that prevented the government from contacting social media companies about the content on their platforms. The majority opinion stated that the plaintiffs “do not point to any specific instance of content moderation that caused them identifiable harm.” The Court invoked a legal term, “standing,” to say that there wasn’t sufficient evidence to retain the injunction. Basically the Supreme Court said, “Well, yeah, the White House did pressure social media companies to remove content, but the platforms might have taken that action anyway, so go ahead and ‘abridge the freedom of speech, and of the press’ for now, White House.”

In the dissenting opinion, Justice Samuel Alito stated that there was more than sufficient evidence to establish standing, which evidence he then cited for some 30 pages. It’s not hard to understand and is worth your time to read. Justice Alito wrote:

This evidence was more than sufficient to establish Hines’s standing to sue…and consequently, we are obligated to tackle the free speech issue that the case presents. The Court, however, shirks that duty and thus permits the successful campaign of coercion in this case to stand as an attractive model for future officials who want to control what the people say, hear, and think…It was blatantly unconstitutional, and the country may come to regret the Court’s failure to say so. Officials who read today’s decision…will get the message. If a coercive campaign is carried out with enough sophistication, it may get by.  That is not a message this Court should send. (p. 38) (emphasis added)

Justice Alito also wrote, “This case involves what the District Court termed ‘a far reaching and widespread censorship campaign’ conducted by high-ranking federal officials against Americans who expressed certain disfavored views about COVID-19 on social media…If the lower courts’ assessment of the voluminous record is correct, this is one of the most important free speech cases to reach this Court in years.” (p. 36)

So let’s see. On June 26, 2024 the Supreme Court said the Government could keep pressuring social media companies until Murthy v Missouri and other cases that are laboriously and expensively working their way through the courts are fully heard and settled.

The next day, Google Groups removed my post about the upcoming Presidential debate, in which I jokingly asked if anyone wanted to bet on whether or not Biden would be fed answers through some type of electronic/neural device. That evening we saw an age-riddled, confused, doddery, tired old man try to hold his own in a Presidential debate. But the White House had been saying for days that all those videos of Pres. Biden stumbling and stammering were just “cheap fakes.” The day after the debate, at a White House press event, Biden’s press secretary claimed his poor performance was due to a cold.

The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.

 1984, by George Orwell (p.71)

Freedom of speech serves many valuable purposes, but its most important role is protection of speech that is essential to democratic self-government, and speech that advances humanity’s store of knowledge, thought, and expression in fields such as science, medicine, history, the social sciences, philosophy, and the arts.

Justice Samuel Alito
Dissenting opinion Murthy v Missouri
June 26, 2024

Justice Alito wrote in his Murthy v Missouri dissenting opinion, the “White House threats did not come with expiration dates…Facebook did not feel free to chart its own course…rather, the platform had promised to continue reporting to the White House and remain responsive to its concerns for as long as the officials requested.” (p. 35)

It could very well be that my words, typed into a private email exchange, were gathered by AI, and not some lurking agent. But either way, they were gathered. It would appear that these “Officials,” who generate “external reports,” still have “concerns.”

*  *  *

Republished from the author’s Substack

Authored by Jeffrey Tucker via The Epoch Times,

June’s year-over-year Consumer Price Index is still running 3 percent, which is now considered more-or-less on target. Five years ago, that would have been seen as intolerably high. The month-over-month decline of 0.1 percent, the best in a year, was driven by gas and used cars, which are reported as down 10 percent year over year (but still up 30 percent over four years).

So while the financial press trumpeted the great news for consumers, there needs to be some context here. This is a minor blip, heavily influenced by what it excludes not to mention adjustments we cannot see, and easily reversed.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Some people speculate that 3 percent is the new target and that the old 2 percent standard is being deprecated. That very well might be true. That’s very bad news for consumers and small businesses, however. It means that incomes will continue to have a hard time keeping up with purchasing power.

This perception is reinforced by the Producer Price Index (PPI), which garners far less attention, but which clearly shows signs of re-acceleration. The year-over-year changes are worse than in a full year.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Once you adjust income per hour by even the official data, incomes have been severely harmed in recent years.

This report prepares the Federal Reserve for what has been the intention since early in the year. It wanted to cut interest rates in the fall. This seems highly likely. The expectation of the rate cut has been a driving force for higher financials and will continue for the duration. Wall Street is booming in ways that fundamentals simply cannot support, and everyone knows that. Loose credit, however, can indeed keep the magic going for a very long time.

Many people who are hoping to buy a house on a 30-year mortgage might welcome a rate cut. But we need to be clear about what the Fed can and cannot do. It can control its overnight lending rates to member banks. It cannot determine how that will affect the full shape of the yield curve.

It’s entirely possible that with a rate cut, the yield curve will simply become steeper, with rates on 5 and 10-year bonds, including 30-year mortgage rates, staying the same or even rising. It also does not directly affect interest in credit card debt, which is already floating between 20 and 23 percent.

The market function of the yield curve is to allocate credit to its most valued ends. All else equal, higher rates should discourage borrowing and encourage savings. In this cycle, however, that is absolutely not happening. As household income has become squeezed, credit card debt has risen dramatically while delinquent payments are starting to rise also.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Meanwhile, the personal savings rate has fallen instead of risen.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

How can we account for this? It’s rather simple: responding to interest rate signals requires discretionary income, which people simply do not have following the high levels of spending during lockdowns and the subsequent inflationary ravaging of whatever was remaining. It was one of economic history’s greatest head fakes, during which time people thought they were rich only to find they were suddenly poor again.

Measuring precisely how much this is true is not easy. The official inflation numbers may not entirely represent the reality of what people have been experiencing. Over five years, the Consumer Price Index (CPI) registers 23 cents in lost purchasing power of the dollar in terms of U.S. goods and services.

You can find products out there that seem to reflect that, mostly those involving consumer electronics and some items of clothing. But overall? It’s hard to believe that this number represents any real-world basket of goods.

Consider fast food, for example. In 2019, a McDonald’s cheeseburger was $1. Now it is $3.15. A Big Mac was $4. Now it is $7.50. Overall, the prices at the most popular chain are up 141.4 percent. That is a far cry from 23 percent. So too for Chick-fil-A. The signature sandwich was $3.65 but is now $6.55. Overall, prices at this restaurant are up 80 percent. At Burger King, prices are up 85.7 percent, at Taco Bell they are up 57.4 percent, and at In-N-Out Burger, prices are up 55 percent.

These numbers are provided by private industry, as reported by Bloomberg. We have no reason to doubt them.

Let’s talk about housing, which is up 41–49 percent over the same period. This is not included in the CPI, which also does not include interest-rate increases, which are up by 100 percent over this period. The Fed does track both, however, even if the CPI excludes it.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Then you have the health-insurance conundrum. The BLS has premiums falling by 19 percent since 2021 but that number comes from a strange way of subtracting consumed services from premiums. In the real world, inflation in health premiums is exactly reversed, up by 20 percent, according to KFF.

Wherever you drill down to industry data, we find numbers very different from what the Bureau of Labor Statistics (BLS) is reporting. This is owing to every manner of exclusions and adjustments.

Here’s the irony, then. Both government and industry have a strong incentive to play down or otherwise bury the truth about what is happening to prices. And today we are being invited, once again, to celebrate the end of inflation.

In short, there is no real solid grounding for a rate cut anytime in the foreseeable future.

There is an additional long-term problem. If the Fed really does embark on a new rate-cutting policy to forestall statistical recession, what are the risks? We saw this precise scenario in the 1970s. Twice the Fed concluded that it had beat back inflation with rate increases. Twice its rate cuts end up setting off another round of inflation. The Fed back then mistook a short-term trend for long-term victory and ended up with a hyperinflation it could not control.

Let’s add a final word on the financial markets. As incredible as it seems, even though the job market is weak and output is generally moribund, there is probably no imminent threat to rising financials. The frenzy over artificial intelligence has given traders a shiny new toy on which to speculate. It is also typical in credit-soaked economic environments that financials perform well and are the last sector to get hit in a crisis.

No one can wish away the devastation that has been wrought by explosive government spending since the pandemic response began. As a percentage of Gross Domestic Product (GDP), it exceeds the Second World War. The resulting debt needs to find viable markets. That’s where the Fed comes to the rescue, but at great cost.

(Data: Federal Reserve Economic Data (FRED), St. Louis Fed; Chart: Jeffrey A. Tucker)

Many people today are darkly whispering about a great economic crisis that could be coming. But we might be looking in the wrong place. The real problem we face today is a grinding stagnation together with ongoing inflation that could be kicked back into high gear with another rate cut.

That could be our crisis. Perhaps the onset seems slow but four years in the sweep of history is a very short period in which a country and global economy loses its energy and falls into decline.

Authored by Ronni Stoeferle via VonGreyerz.gold,

The rise in the gold price this spring was undoubtedly spectacular. In just a few weeks, the gold price rose by almost 20% in USD terms, with a gain of 21.7% for the first half of the year alone. In EUR terms, gold increased 16.4% in the year’s first six months.

The showdown in the gold price we predicted in the In Gold We Trust Report 2023 has passed. What is remarkable is that all of this is happening in an environment where, according to the previous playbook, the gold price should have fallen. The collapse of the correlation between the gold price and actual interest rates raises many questions. In the old paradigm, it was unthinkable that the gold price would trend firmer during sharply rising real interest rates. Gold and gold investors are now entering terra incognita.

Traditional  correlations are breaking down

In addition to the high negative correlation between the gold price and US actual interest rates, the once strong link between investor demand from the West and the gold price has dissolved in recent quarters. Given gold’s record run, one would have expected ETFs to register record inflows. First, things turn out differently, and second, they unfold contrary to expectations: from April 2022 to June 2024, there was a net outflow of almost 780 tons or 20% from gold ETFs. The old gold playbook shows gold should be around USD 1,700, given the fall in ETF holdings.

Consequently, a vital element of the new gold playbook is that the Western financial investor is no longer the marginal buyer or seller of gold. The significant demand from central banks and private Asian investors is the main reason why the price of gold has thrived even in an environment of rising real interest rates.

A reduction in gold ETF holdings when actual interest rates rise is undoubtedly a rational decision from the point of view of the players in the West, provided they assume that:

1. They are not exposed to increased counterparty risks and, therefore, do not need a default-proof asset;

2. Actual interest rates will remain positive in the future, and a second wave of inflation will not occur;

3. They suffer opportunity costs if they underweight traditional asset classes such as equities and bonds or even “concrete gold” (=real estate) at the expense of gold.

In our opinion, all three assumptions should be questioned – and that sooner rather than later.

The marginal actor in the gold market moves from West to East

The global East, on the other hand, is becoming increasingly important. This is hardly surprising given that the West’s share of global GDP continues to decline due to weakening growth and an ageing population.

In addition, many Asian countries have a historical affinity for gold (India and the Gulf States, mainly, are worth mentioning). Still, China is increasingly discovering its preference for gold.

In 2023, demand for gold jewellery totalled 2,092 tonnes. China accounted for 630 tonnes, India for 562 tonnes, and the Middle East for 171 tonnes. Together, these amounts to almost two-thirds of the total demand. Of the nearly 1,200 tonnes of gold bars and coins that were in demand in 2023, almost half went to China (279 tonnes), India (185 tonnes), and the Middle East (114 tonnes).

Gold is also benefiting from other developments. China is discovering gold as an alternative retirement provision precisely because of the structural problems in the real estate market. Gold in beans is currently trendy, especially among China’s youth. The strong demand for gold from Asian central banks is another pillar of this epochal change. These changes are also why certainties, such as the close correlation between the gold price and actual US interest rates, are disintegrating.

Central banks are becoming increasingly crucial for gold demand

Central bank demand accelerated significantly in the wake of the freezing of Russian currency reserves immediately after the Ukraine war outbreak. As a result, central bank demand for gold reached a new record high of over 1,000 tons in 2022, which was only narrowly missed in 2023. Q1/2024 was then the strongest first quarter since records began. It is, therefore, hardly surprising that the share of central bank demand in total gold demand has increased significantly: from 2011 to 2021, the share of central banks fluctuated around the 10% mark, whereas in 2022 and 2023, the share amounted to almost 25%.

The profound distortions triggered by the sanctioning of Russian currency reserves will keep central bank demand for gold high for some time. This is also shown by the recently published World Gold Survey 2024 by the World Gold Council (WGC). According to the survey, 70 central banks assume that central bank gold reserves will continue to grow. Geopolitical instability is the third most crucial reason for central banks’ investment decisions. And geopolitical instability will undoubtedly be with us for some time to come.

The debt bomb is ticking – also increasingly in the West

We are entering a new era, particularly evident from developments in the countries with the highest total debt (government, non-financial corporations & households).

Japan occupies the inglorious top spot with just over 400%. The dramatic fall in the value of the Japanese yen -12.3% in the first half of 2024, -32.6% in the past five years and even around 50% compared to the almost all-time high in 2012 – is a symptom of Japan’s increasing imbalance. Accordingly, the economic thermometer in the form of gold prices in the Japanese yen is beating intensely. At the end of June, the gold price had risen by 28.7% since the beginning of the year. Since 2023, it has increased by just over 50% and around 165% since 2019.

France is in second place worldwide and first place in Europe with 330%, making it a much bigger problem child than Italy, which is much maligned in the media. Italy’s total debt is around 80 percentage points lower. The unclear political situation following the surprising election victory of the far-left New Popular Front in the new elections to the National Assembly unexpectedly called by the French President will further exacerbate France’s debt situation.

In addition to the continued, highly loose fiscal policy, the US is in an increasingly tricky domestic political situation just four months before the presidential elections, following the disastrous performance of US President Joe Biden in his first TV debate with his predecessor and challenger – Donald Trump. This will also make solving the US debt problem more difficult, especially as Donald Trump, who is leading in the polls, described himself as the “king of debt” a few years ago. An easing of the situation is, therefore, not to be expected. On the contrary, the next major debt crisis could affect some leading industrialized nations.

The new 60/40 portfolio

The investment environment for gold investors has fundamentally changed. The reorganization of the global economic and political order, the dominant influence of emerging markets on the gold market, the reaching of the limits of debt sustainability, and possibly multiple waves of inflation are causing gold to appreciate. It is, therefore, also time to adapt the traditional 60/40 portfolio to these new realities.

Aside from gold, we also see other alternative asset classes, such as commodities and Bitcoin, as beneficiaries of the new gold playbook. Therefore, we are convinced these two asset classes are indispensable in preparing a portfolio for the new playbook. A suitable portfolio comprises 60% equities and bonds + 40% alternative asset classes.

Our interpretation of the new 60/40 portfolio for long-term investors provides for the following allocation:

Source: Incrementum AG

This marks a clear departure from traditional 60/40 portfolios. Of course, this positioning is not a rule set in stone but rather a guideline based on current market conditions and will evolve with time and changes in the currency environment. The new playbook applies as long as we are in a period of currency instability characterized by vast debt burdens and above-average inflation volatility. In other words, a higher proportion of hard currencies seems necessary until we return to an environment with a stable hard currency – be it a sovereign hard currency or a gold/Bitcoin standard.

Conclusion

We are currently witnessing a fundamental transformation. Old certainties are fading; established strategies are failing. The willingness to question established patterns of thought and break new ground often requires courage, but for those who recognize the signs of the times and dare to change, implementing the new gold playbook opens the door to growth and stability.

In principle, the new gold playbook suggests that the portfolio’s allocation to alternative asset classes should be higher to align appropriately with changes in the investment environment.

Non-U.S. members of the North Atlantic Treaty Organization (NATO) have increased their expenditure on defense, with a big spike after the Russian invasion of Ukraine in 2022.

This graphic, via Visual Capitalist’s Marcus Lu, visualizes the annual percentage change in defense expenditure among NATO members (excluding the U.S.) since 2012 in real terms.

Data is from NATO.

Non-U.S. NATO Members are Ramping Up Defense Spending

NATO members have significantly increased their defense spending over the past two years, likely due to the ongoing conflicts in Ukraine and, more recently, in Israel.

Twenty-three of NATO’s 32 members are now meeting the minimum level of annual defense spending (2% of GDP) stipulated for countries in the alliance. This is up significantly from 10 member countries in 2023.

Estimates for 2023 and 2024. All percentages are inflation-adjusted using 2015 prices as base year.

The majority of these expenditures will finance troops. It also includes payment of pensions, expenditures for peacekeeping and humanitarian operations, and investment in research and development (R&D).

Despite the growth in expenditures by non-U.S. members, America is still the most significant contributor to NATO’s budget. In 2023, the U.S. accounted for $860 billion spent by member countries in the organization, representing 68% of the total expenditure. This amount is over 10 times more than that of the second-placed country, Germany.

If you enjoy posts like these, check out Breaking Down $1.3T in NATO Defense Spending, which visualizes the expected defense expenditures of NATO members in 2023.

Authored by Mike Shedlock via MishTalk.com,

I was wondering when Brexit would come up. It has already and I am pleased to confirm the Brexit reversal idea is dead and finally buried.

Not In His Lifetime

[Via Eurointelligence] Already assured of victory at today’s general election in the UK, Sir Keir Starmer has started to make manifesto pledges for beyond 2029. Yesterday he said that the UK would not rejoin the EU within his lifetime, nor would it try to become an associate member of the single market or the customs union.

We are not surprised, except that the issue came up so early. The reason to shut this down right now and as conclusively as he did is that keeping the door open for the future has policy consequences today.

To rejoin even in the medium-distant future would have required him to start closing the massive regulatory gap that has opened since Brexit almost immediately. Most of that gap was due to divergence by the EU itself. The UK did not mirror the 50 or so laws of the Green agenda. It adopted the data protection regulation – GDPR – in the last decade, and maintains its own version to this day. But the UK does not have the EU’s digital markets act, or EU regulation on AI and cryptocurrencies. Nor does have regulation on what is euphemistically called corporate social responsibility – making companies liable for human rights violations in their supply chains. For the UK to rejoin the EU even during a second term would require such a high degree of regulatory convergence that it would dominate all other policy areas.

We see another reason in the EU’s Luddite tendency, its attachment to 20th century technologies and corporatism. We always felt that the undoubtedly large economic gains from goods trade integration need to be set against the opportunity cost of the EU’s failure to partake in the 21st century digital economy. 

The single market, as it is constituted today, is very much a product of 20th century product-focused regulatory thinking.

The Right Decision

Who in their right mind wants to adopt the EU’s green agenda? The EU’s nannycrat legislation on corporate social responsibility? On digital rights? On cryptocurrencies? On anything the EU does?

Those nostalgic for the EU membership need to address those questions.

Congratulations to Boris Johnson for getting Brexit done. Few believed he would.

His problem was not knowing what to do with Brexit once it happened.

Simultaneous Burial

It’s always a mistake to let EU nannycrats set your policy. That’s why Brexit was smart policy even if takes a while to prove that.

Not only did Starmer finally bury EU membership (the Wicked Witch of the East), he buried an even worse customs union idea (the Wicked Witch of the West) in a simultaneous burial.

Congratulations!

Authored by Tsvetana Paraskova via OilPrice.com,

• A Reuters investigation found that over 1,000 tanker trucks are smuggling at least 200,000 barrels of Kurdish oil per day to Iran and Turkey.

• The smuggling operation generates an estimated $200 million in monthly revenue, but the destination of the funds remains unclear.

• The illicit trade has flourished since a pipeline to Turkey was closed in March 2023 due to a dispute over export rights.

Kurdistan hasn’t been able to export its oil via a pipeline for more than a year now, but crude continues to flow out of the semi-autonomous Iraqi region—on tank trucks to the border with Iran. 

More than 1,000 such tank trucks are estimated to be transporting at least 200,000 barrels per day (bpd) of Kurdish oil to Iran and Turkey, a Reuters investigation has found.  

Although the price of the crude being smuggled out of the northern semi-autonomous region is reportedly around $40 per barrel in these murky deals, the trade is lucrative, especially compared to the hardships the Kurdistan regional government has seen without oil revenues over the past year. 

The smuggling is estimated to be bringing around $200 million per month, according to Reuters, whose reporters talked with more than 20 people, including oil engineers, oil industry sources, traders, government officials, politicians, and diplomats. 

Some of these sources told Reuters that the oil smuggling was likely happening with the knowledge of the regional and federal governments. Once in Iran, the oil is loaded onto ships at the Iranian ports in the Gulf at Bandar Imam Khomeini and Bandar Abbas, or transferred by road to Afghanistan and Pakistan, industry, political, and diplomatic sources told Reuters. 

Other sources said that no one really knows what happens with the $200 million monthly revenue from these operations. 

The smuggling business has thrived since the closure of the pipeline route to the Turkish port of Ceyhan, which the semi-autonomous region of OPEC’s second-largest producer used to ship its oil abroad until March 2023. 

These exports via pipeline to Turkey, of about 450,000 bpd, ceased last year after they were shut in in March 2023 due to a dispute over who should authorize the Kurdish exports. 

The impasse followed an International Chamber of Commerce ruling in March 2023 in a dispute between Turkey and Iraq regarding Kurdistan oil. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.

Now, only Iraq’s state oil marketing firm SOMO has the right to sell crude oil produced anywhere in Iraq. 

And it looks like the re-opening of the pipeline to Ceyhan on the Turkish Mediterranean coast is not a priority for politicians in Baghdad. 

In November 2023, Norwegian firm DNO, one of the six members of the Association of the Petroleum Industry of Kurdistan (APIKUR), said that the international oil companies operating in Kurdistan would not be producing oil for exports until they have clarity about overdue and future payments and sales terms. 

Some companies have resumed oil production for the local market. 

But industry sources told Reuters that the local buyers, approved to buy the crude, sell it via middlemen for export without the international firms knowing of these re-selling operations. 

The smuggling adds between 200,000 bpd and over 300,000 bpd to Iraqi supply, as estimated by various Reuters sources. Privately, Iraqi officials have cited this trade as one of the reasons why Iraq – OPEC’s second-largest producer – has failed to limit its output under the OPEC+ deal so far. 

Iraq hasn’t complied with the current cuts despite continuously pledging it would show better discipline going forward.  

Compensation plans have been prepared for Iraq, as well as non-OPEC producer Kazakhstan, which is part of the OPEC+ group but has failed to stick to its quota, too. Between January and March 2024 alone, Iraq’s cumulative overproduction stood at 602,000 bpd, per OPEC’s estimates. 

Iraq has a 4-million-bpd cap on production. It pumped 4.189 million bpd in June—down by 25,000 bpd from May, per OPEC’s secondary sources in its latest monthly report released this week. But that’s nearly 200,000 bpd above its target under the OPEC+ deal. 

Authored by Con Coughlin via The Gatestone Institute,

Before the Biden administration gets too carried away celebrating the election of Iran’s so-called moderate president, it should understand that Masoud Pezeshkian’s victory is nothing more than a ploy to distract world attention away from Iran’s nuclear weapons programme.

While Iranian voters have understandably been focused on electing a new president to replace hardliner Ebrahim Raisi, who was killed in a mysterious helicopter crash in May, the regime has been intensifying its efforts to acquire nuclear weapons.

Pictured: Pezeshkian (front left) visits the shrine of the Islamic Republic’s founder Ayatollah Ruhollah Khomeini on July 6, 2024 in Tehran. (Photo by Majid Saeedi/Getty Images)

Reports that Iran has now acquired sufficient quantities of enriched uranium to build nuclear warheads have been confirmed by Rafael Grossi, director general of the International Atomic Energy Agency (IAEA), the UN-sponsored body that is responsible for monitoring the mullahs’ nuclear programme.

Speaking in an exclusive interview with London’s Sunday Telegraph at the weekend, Grossi said of Iran’s long-standing effort to enrich uranium to the level required to develop nuclear warheads, “They have enough material for a few warheads already.”

He also warned that it could take Iran just a month or so to assemble a nuclear warhead, given the progress they have made in recent months in their enrichment programme.

“[T]hey could do it in a matter of perhaps a month or a bit more,” he conceded, adding that, so far as he knows, the Iranians “do not have nuclear weapons at this point.”

The acknowledgement by an internationally respected body such as the IAEA that Iran has now acquired sufficient material to build several nuclear warheads, which could be assembled within the space of a month, is a devastating indictment of the Biden administration’s policy of appeasement towards Iran since US President Joe Biden took office.

Rather than confronting Iran over its constant acts of aggression, and Tehran’s constant breaches of its commitments to the IAEA over its nuclear programme, Biden has instead concentrated his efforts on engaging with the Iranian regime in the vain hope of resurrecting the flawed JCPOA “nuclear deal” agreed on by the Obama administration back in 2015.

Biden’s refusal to hold Iran accountable for its actions has resulted in the Iranian regime receiving billions of dollars in added revenue because of Washington’s decision not to enforce oil sanctions against Iran. As a result, the extra funds received by Iran have been used to fund the regime’s terrorist networks across the globe, including Hamas in Gaza and Hezbollah in Lebanon.

Moreover, rather viewing the IAEA’s confirmation that Iran has now acquired sufficient nuclear material to produce nuclear weapons as a justification for taking a harder line towards Tehran, Pezeshkian’s appointment as the country’s next president will encourage the Biden administration to maintain its policy of appeasement towards Tehran.

For while Pezeshkian’s election victory has been hailed by many world leaders as an indication the Iranian regime is seriously interested in reform, the reality is that the election of Iran’s new president is nothing more than business-as-usual so far as the Iranian regime is concerned.

Far from being a moderate politician who is interested in reform, as Iran’s apologists would like the world to believe, Pezeshkian’s career both as a heart surgeon and, more recently, health minister has been defined by his unwavering loyalty to the country’s Supreme Leader, Ayatollah Ali Khamenei, as well the Islamic Republic’s hard-line policies.

As Pezeskhian himself remarked immediately after his victory was announced, “I believe in the Supreme Leader, I am totally following him,” he said.

The brutal reality is that the whole notion that Iran has just elected a more moderate president is nothing more than a confidence trick perpetrated by the regime’s hardliners who, after the intense pressure they have come under in recent months because of the brutal repression of anti-regime protesters, realised they needed to take drastic measures to justify the regime’s legitimacy.

Giving the appearance, therefore, that the Iranian people have got their wish of electing a “moderate” leader will go some way — or so they hope — to alleviating the pressure on the regime, thereby allowing it to concentrate its energy on its real priorities, such as its efforts to acquire nuclear weapons.

One of the fundamental principles of Iran’s Islamic constitution is, after all, that ultimate authority lies not with the president but with the country’s Supreme Leader.

Such is the control exercised by the Khamenei’s hardline supporters over the entire Iranian political system that all candidates — Pezeshkian included — must first be vetted by the Guardian Council, the custodians of the Islamic revolution who report directly to the Supreme Leader.

As a senior official with Iran’s Islamic Revolutionary Guard Corps admitted to The Telegraph, in the wake of the election, that Pezeshkian had only been allowed to compete in the election to “legitimise the vote”.

“No one in the Guardian Council or the office of the Supreme Leader did not expect that coming, he was just approved to boost turnout,” one official said.

It is vital, therefore, that the Biden administration fully understands the cynicism shown by Iran’s hardliners in seeking to legitimise their brutal regime before making any further overtures to the country’s so-called moderate president.

In the uncompromising world of Iran’s autocratic Islamic republic, there is no such thing as a moderate Iranian president — a fact that Iran’s long-suffering people know only too well.

China’s economic growth collapsed to just 4.7% YoY in the second quarter, missing all but one economist’s forecast, as the world’s second largest economy is slowly but surely grinding to a halt (absent a bazooka stimulus).

GDP, which rose 5.3% in the first quarter, had been expected to rise 5.1% based on economists polled by Bloomberg; instead growth slumped to just 4.7%, the lowest growth since March 2023.

In sequential terms, GDP fell to 0.7% QoQ in Q2 from 1.5% in Q1. Industrial production growth remained solid at +5.3% yoy in June, despite a moderation from +5.6% yoy in May, thanks to strong export growth.

China has grappled with weak consumer demand and a prolonged property slowdown, prompting greater intervention from policymakers in recent months, but in the absence of a bazooka stimulus – both fiscal and monetary – it is unlikely that anything will change and growth will continue to cool quarter after quarter, until there is a brutal recession and/or civil unrest.

Elsewhere, industrial production rose 5.3% in June, slightly above expectations of 5.0% but below the 5.6% increase in Q1, while retail sales rose just 2.0% missing expectations of 3.4% by a wide margin and in line with sluggish tourism revenue growth during the Dragon Boat Festival and the soft 618 Online Shopping Festival. Fixed Investment rose 3.9%, right on top of reduced expectations, and reflecting the tug-of-war between policy support, adverse weather conditions and still-depressed property investment.

Separately, new home prices in China fell 4.9% year on year last month, the fastest pace of decline in nine years, according to Bloomberg calculations, while new construction starts and property investment were down 23.7% and 10.1%, respectively, in the first half of the year.

According to Goldman, taking Q2 GDP and June activity data together, “domestic demand remained sluggish despite strong exports, and more policy easing is necessary through the remainder of this year, especially on the fiscal and housing fronts.”

The data release came as the Chinese Communist party’s Central Committee on Monday launched its third plenum, a four-day meeting in which the country’s leadership is expected to set the direction of economic policy. The last such event was held in 2018.

Beijing has set a full-year economic growth target of about 5%, and unless Beijing launches a bazooka stimulus, it has precisely zero chance of hitting it.