Month: June 2023

The precise question one needs to ask is: What the hell is continuing to unfold in South Africa? An economic crisis is worsening, and extended rolling blackouts have been the norm over the last several months, but in the last week, multiple major railways have ground to a halt due to rampant theft of power cables. 

Bloomberg said a 535-mile rail line used to haul iron ore and manganese from Kumba Iron Ore Ltd.’s giant Sishen mine in the Northern Cape province to west coast ports was paralyzed on Tuesday after criminal organized gangs stole power cables used to power electric locomotives. 

Transnet SOC Ltd., the state-owned entity that operates the line, wrote in a statement:

“Security teams were immediately activated and are working with law enforcement agencies, stakeholders and customers to curb this security threat.

“Our employees will be working around the clock to get services back to normal and get customers’ cargo moving as soon as possible.”

The 535-mile rail line is the second to be vandalized by theft within a week. This time last week, a 428-mile rail line from the Port of Durban to Gauteng province had capacity significantly reduced due to “theft, vandalism, and rail damage” by gangs. 

Meanwhile, this morning, South Africa’s rand hit a new record low against the dollar due to rising diplomatic tensions and worsening economic risks. 

The rand touched 19.9204 per dollar, just shy of the 20 handle. 

Bloomberg noted:

The latest setback for investors is the government’s plan to provide diplomatic immunity to attendees of BRICS meetings as it prepares to host Russian President Vladimir Putin at an August summit. That’s added to power cuts that are hurting the economy, concerns over China’s growth, and renewed gains in the US dollar.

And it’s been about a week since the African National Congress, a social-democratic political party in the country, warned that the country could become a “failed state.”

Authored by Andrew Moran via The Epoch Times,

Will gold rescue Zimbabwe from the ashes of economic despair and usher in a new economic era?

Since Zimbabwe declared independence from the former Republic of Rhodesia in 1980, the southern African country has been ravaged by inflation and overall economic turmoil. Over the past 40 years, the annual inflation rate has only touched single-digit territory twice: 1980 (7 percent) and 1988 (7 percent).

Excessive money printing, fiscal mismanagement, economic sanctions, and currency instability have been the root causes of its perpetual financial crisis, resulting in political and social upheaval.

In 2008, Zimbabwe was given the unfortunate record of the highest inflation rate in the world, touching 250 million percent. This forced then-President Robert Mugabe and his government to abandon the Zimbabwe dollar and begin relying on nine foreign currencies, particularly the U.S. dollar and the South African rand. In 2019, Harare introduced a new Zimbabwean currency, but it did not take long for the revival of hyperinflation, with the inflation rate surpassing 600 percent by March 2020.

After numerous trials and errors on the monetary policy front, the Reserve Bank of Zimbabwe (RBZ) experimented with something old and something new: a gold-backed digital currency.

“Pursuant to the resolution of the Monetary Policy Committee (the MPC) on 28 March 2023 to complement the issuance of physical gold coins with gold-backed digital products, the Bank wishes to advise that it will be issuing gold-backed digital tokens with effect from 8 May 2023,” said RBZ Governor John Mangudya in a statement. “The gold-backed tokens will be fully backed by physical gold held by the Bank.”

Central bank officials say this money will be supported by 140 kilograms (4,900 ounces) of gold.

The two-phase implementation began with the RBNZ selling digital tokens to investors for a minimum price of $10 for individuals and $5,000 for businesses and other entities. The transition will then allow consumers to purchase the digital currency from banks and use the tokens to conduct “person-to-person and person-to-business transactions and settlements” by using “e-gold wallets or e-gold cards” held by these financial institutions. Consumers can also rely on virtual tokens to save their money.

The announcement came months after the government allowed gold coins to be used as legal tender, but the decision did not appeal to struggling families because they were too expensive.

Gold bars at Korea Gold Exchange in Seoul, South Korea, on Aug. 6, 2020. (Kim Hong-Ji/Reuters)

A Lack of Trust

But while this policy pursuit might sound like music to the ears of sound money advocates, a chorus of critics contend that this will not achieve the desirable outcome of currency stability.

Some economists have expressed doubt about the efficacy of this project, asserting that this is not a traditional gold standard because the tokens are not convertible to gold bars and coins.

A notable drawback is a paucity of trust in the institutions and officials managing the precious metal, says Aaron Rafferty, CEO of the financial technology firm Standard DAO.

“The critical factor here isn’t gold itself, but rather a reliable, trusted institution to maintain the gold reserves and handle redemption requests,” Rafferty told The Epoch Times. “Any nation considering such a policy will need robust systems to manage these requirements.”

Richard Gardner, the CEO of financial technology company Modulus, says the better option is to re-adopt the greenback.

“There is an easy solution here, and it doesn’t involve a digital currency,” he told The Epoch Times. “Instead, the country should simply take its medicine: re-adopt the US dollar. Not only will this move not be the start of an avalanche effect of similar global efforts, it will almost certainly be a failure.”

The International Monetary Fund (IMF) has cautioned against the campaign, warning of the financial stability, governance, operational, and legal risks.

Currency Experiments

Across the global economy, a growing number of countries are experimenting with digital currencies backed by central banks. Some have already launched these virtual currencies, while others are in the trial phase.

Last year, Nigeria released the eNaira, the country’s central bank digital currency (CBDC). However, nearly a year later, the adoption rate has been abysmal, with about 99 percent of digital wallets unused.

“The take-up of the eNaira by households and merchants has been slow,” the IMF said in a recent report assessing the eNaira.

“As indicated by the levels of wallet downloads and transactions, the public adoption of the eNaira thus far has been disappointingly low.”

The Bahamas and Jamaica have released their digital currencies. China, Japan, and Russia are testing the digitization efforts of their currencies. The United States, UK, and the European Union are still in the research phases of their CBDCs.

But Zimbabwe’s endeavor is unique because it is backed by the yellow metal, meaning it is not a digital version of physical fiat currency.

At a time when more central banks are stockpiling gold, experts have speculated that more nations could integrate the commodity with their currencies.

Gold: The New Money

Could Zimbabwe be facilitating a new era of gold-backed money?

At the very least, the development of a gold-supported digital currency comes at a time when there has been a substantial increase in demand for the metal.

In the first quarter, central bank demand for gold reached 228.4 tons, up 176 percent from the same time a year ago, according to the World Gold Council (WGC). This was also higher than the previous first-quarter record established in 2013.

Singapore (69 tons), China (58 tons), Turkey (30 tons), and India (7 tons) were the largest buyers of the metal commodity. Selling was modest, led by Kazakhstan (negative 20 tons), Uzbekistan (negative 15 tons), and Cambodia (negative 10 tons).

“Our broad expectation for central bank demand in 2023 has, so far, been borne out,” the WGC said in its report this month.

“Central bank buying remains robust, with little to indicate that this will change in the short term. As such, we maintain our belief that purchases will continue to outweigh sales as we move into Q2.”

WGC data also confirmed in January that 2022 was a record year for central bank gold demand, soaring more than 1,100 tons worth approximately $70 billion.

Moreover, emerging market countries are poised to surpass their developed market counterparts in gold reserves by 2050 “should they maintain the current pace of acquisition,” noted In Gold We Trust.

Central banks acquire gold for a variety of reasons, including the diversification of reserves, hedging against inflation and currency risks, and bolstering the credibility and confidence of these institutions. But during geopolitical turmoil and a bloc of nations altering the world order, some officials have signaled that gold could play an integral role, particularly as they reduce their exposure to foreign currencies, like the greenback.

Ahead of the annual BRICS Summit in August in South Africa, officials have hinted that the annual meeting will focus on the creation of a new currency that could rival the U.S. dollar or euro, effectively bolstering the global de-dollarization campaign.

Russian President Vladimir Putin told BRICS Business Forum participants last year that the bloc (Brazil, Russia, India, China, and South Africa) is reviewing the creation of a new international reserve currency based on the basket of currencies of our countries.”

Russian President Vladimir Putin takes part in the XIV BRICS summit in virtual format via a video call, in Moscow, on June 23, 2022. (Mikhail Metzel/Sputnik/AFP via Getty Images)

State Duma (the Russian legislative assembly) deputy chairman Alexander Babakov purported in March at the St. Petersburg International Economic Forum event in New Delhi, India, that a currency could be pegged to gold or “other groups of products, rare-earth elements, or soil.”

While a currency supported by commodities is not universally endorsed, it has been championed by several leading economic figures.

Stephen Moore, a bestselling author and economic adviser to former President Donald Trump’s 2016 campaign, believes monetary policy could be based on general commodity prices, such as cotton, copper, crude oil, and wheat.

“However, I do not advocate a return to the gold standard today,” the former Fed nominee wrote in a 2019 op-ed.

In a June 2018 paper for the Cato Journal, economist Judy Shelton, who was nominated to the Fed by Trump, wrote, “We make America great again by making America’s money great again.”

She proposed linking the greenback to gold or another commodity instead of just trusting Washington.

“In proposing a new international monetary system linked in some way to gold, America has an opportunity to secure continued prominence in global monetary affairs while also promoting genuine free trade based on a solid monetary foundation,” Shelton wrote.

“Gold has historically provided a common denominator for measuring value; widely accepted at all income levels of society, it is universally acknowledged as a monetary surrogate with intrinsic value.”

At a time when the U.S. government is facing astronomical levels of debt—a $32 trillion national debt and trillion-dollar budget deficits—sound money proponents aver that gold could help restore fiscal discipline.

According to former Fed Chair Alan Greenspan, gold limits the amount the government can borrow because it cannot be printed.

“But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues,” Greenspan wrote in a 1966 essay entitled “Gold and Economic Freedom.”

However, critics charge that commodity-backed currencies would pose trouble for governments because they would prevent officials from responding to changes in economic conditions and leave currencies vulnerable to commodity price fluctuations. A dramatic shift might also distort the allocation of resources and cause transactional difficulties for everyday purchases.

A New Monetary Regime

As the international de-dollarization initiative accelerates and more economies attempt to shift away from dollar dependence, there is an expectation that a new monetary regime could be forming. Experts have noted that if the BRICS or individual countries do successfully topple the dollar hegemony, it might not happen for many years. With global debt exceeding $300 trillion, could the world economy afford to dismantle the fiat empire?

Authored by Kyle Anzalone via The Libertarian Institute,

As a condition for ending the war, an aide to President Volodymyr Zelensky has demanded Russia remove its military forces along its border with Ukraine. Kiev hopes the area within Moscow’s borders will be manned by international forces.

Presidential adviser Mykhailo Podolyak called for a 100-120 kilometer demilitarized zone within Russia. “It will be necessary to introduce a demilitarization zone of 100-120 km on the territory of Belgorod, Bryansk, Kursk, and Rostov republics. Probably with a mandatory international control contingent at the first stage,” he tweeted on Monday.

Kiev is seeking to take control over Moscow’s nuclear and missile programs as well. “Reduction of offensive weapons (missiles with extended range). International conference to organize control over the nuclear arsenal of the [Russian Federation],” Podolyak said in a separate tweet.

Podolyak has made other demands of Moscow on the social network during recent days. On Saturday, he stated that the war can only end when the Russian government of Vladimir Putin was removed from power.

The adviser added that “there is nothing to talk about with” the current administration in the Kremlin and Putin should be extradited for war crimes.

While Kiev makes one-sided proposals for ending the conflict, the Ukrainian army is struggling to regain any of the territory controlled by Moscow. Russian forces control about 20% of Ukraine, recently capturing Bakhmut after a months-long battle. The Kremlin says it has annexed about five Ukrainian oblasts and it will not return those to Kiev’s control.

It seems unlikely Kiev will be able to force Moscow to make concessions demanded by Podolyak. However, the conditions laid out by Zelensky’s adviser could hinder international efforts aimed at ending the war in Ukraine.

Brazil’s President Luiz Inácio Lula da Silva was attempting to build momentum towards a deal, but that was scuttled when Zelensky skipped a meeting with the Brazilian leader. Additionally, a coalition of African nations and China are attempting to work towards a negotiated settlement in the war.

Authored by Irina Slav via OilPrice.com,

• Labour leader Starmer said that his party would end oil and gas investment in the UK North Sea.

• Scottish politicians called the plan a ‘job destroyer’.

• Energy security could be at risk if the UK actually bans new upstream investment in the North Sea.

In January this year, at the Davos summit, the leader of Britain’s Labour party, Keir Starmer, said that if Labour won the next elections, they would put an end to investments in oil and gas in the North Sea.

This month, Starmer reiterated the promise—or threat, as Scotland saw it. The official announcement that a future Labour government will not approve any new oil and gas licenses for the North Sea is due to be made next month.

“What we’ve said about oil and gas is that there does need to be a transition,” Starmer said back in January, as quoted by Reuters.

“Obviously it will play its part during that transition but not new investment, not new fields up in the North Sea, because we need to go towards net zero, we need to ensure that renewable energy is where we go next.”

This month, a high-ranking labour official and shadow work and pensions secretary told Sky News that the move to wind and solar would create jobs and bring energy bills down—something that new oil and gas exploration in the North Sea will not do, according to Labour.

Yet Scotland begs to differ. Right after Starmer said Labour would ban new oil and gas exploration in the North Sea, former Scottish First Minister Alex Salmond dubbed Starmer the “North Sea job destroyer” and accused Labour of trying to sabotage Scotland’s energy security.

“The last Labour government sabotaged the past Miller project in 2007 depriving Scotland of an early move into both carbon capture and the hydrogen economy,” Salmond wrote in a tweet.

“Now Keir Starmer wants to sabotage the future by a blanket ban on North Sea development. The way to develop the resource compatible with the planet is to make every development consent contingent on a full carbon capture proposal,” he also said.

Scotland itself has rather ambitious low-carbon energy goals, betting heavily on offshore wind because its main potential is there. Yet, speaking of “green jobs”, Scottish media reported that the offshore wind industry has only delivered a tenth of the jobs promised by politicians, which certainly casts a new light on the transition and its promises.

According to official job estimates cited by The Herald, the Scottish offshore wind industry saw a total of 3,100 people in full-time employment in 2021. That’s compared with the stated employment of some 28,000 people, per government visions made public ten years ago.

As for energy bills and the promise that more wind and solar will bring these down, the most recent developments in electricity prices in the UK paint a clear enough picture: when gas is cheap, so is electricity, regardless of how much wind power you produce.

Oil and gas exploration bans are tricky business, especially at a time when demand for both is on the rise despite the best efforts of transition enthusiasts. Colombia earlier this year said it would ban new oil exploration because, per President Gustavo Petro, “The only way to halt the climate crisis is through zero consumption of carbon and petroleum.”

Fast forward four months, and the Colombian government is reconsidering the ban on oil exploration. In fact, it is considering more oil exploration contracts, according to a cabinet minister.

“We’ll certainly take measures to ensure environmental sustainability, but also economic sustainability,” Economy Minister German Umana said, as quoted by Bloomberg, last week.

This, in a nutshell, is what oil and gas production are all about: economic sustainability and energy security. There is, after all, hardly anyone who would argue that locally-produced energy is worse for energy security than imported energy.

Four months after The Guardian and other European media outlets revealed the world’s leading carbon credit certifier sold worthless offsets to major corporations, the head of Washington-based Verra has stepped down. 

“I am writing to let you know that after nearly 15 fantastic years as the CEO of Verra, I have decided to step down,” Verra’s CEO, David Antonioli, wrote in a LinkedIn post last week. He’s leaving the role after dominating the multi-billion dollar carbon offset market for years and certifying over a billion dollars in credits through its verified carbon standard (VCS). 

Antonioli expressed gratitude towards the current and past employees and was proud of Verra’s accomplishments as the world’s leading standard-setter for climate action and sustainable development. He did not give a reason for his abrupt departure. 

Antonioli’s exit comes four months after The Guardian, German weekly Die Zeit, and SourceMaterial, a non-profit investigative journalism organization, revealed a damning report on how Verra approved tens of millions of dollars of worthless offsets to Disney, Shell, Gucci, and other big corporations. 

The report found Verrra issued “phantom credits” to major corporations that don’t represent genuine carbon reductions. Some corporations purchased these fraudulent credits and labeled their products as “carbon neutral.” 

Days after The Guardian’s report in January, Antonioli rejected the findings, calling them “outlandish claims” and heavily defended Verra’s certification of carbon credits. But after all that, Antonioli is still stepping down. 

Meanwhile, “Some firms are moving away from offsetting-based environmental claims, such as Gucci, which has removed a carbon neutrality claim from its website that heavily relied on Verra’s carbon credits,” The Guardian said. 

Diego Saez Gil, the CEO of Pachama, a carbon offsetting firm, said Verra should update its programs to improve the company’s integrity. He told The Guardian: 

“This is a pivotal moment for carbon markets. In order to scale the critical funding required for carbon sequestration at a planetary scale, we must ensure integrity, transparency, and real benefits for local communities and biodiversity. A new generation of innovative players is collaborating with standard bodies, academics, corporates, and communities, creating a new era of carbon markets that gives me hope.”

Despite having previously purchased “worthless” carbon offsets, companies such as JPMorgan, Disney, and BlackRock continue their ESG commitments. In particular, JPMorgan pledged hundreds of millions of dollars to purchase credits for carbon removal. 

Insiders have spoken up about the murky ESG industry. Take, for example, an insider who told Bloomberg in 2021 that TotalEnergies SE orchestrated a “carbon-neutral” liquified natural gas shipment with China National Offshore Oil Corp on math that was “guesswork” and involved lots of “googling.” 

Recall Elon Musk tweeted one year ago, “ESG is a scam. It has been weaponized by phony social justice warriors.” 

As we noted earlier this year, “Carbon Credits Are The Biggest Scam Since Indulgences… How You Can Avoid Being Fleeced.” 

Authored by John Cody via Remix News,

A world without cash would lead to “financially incapacitated” citizens, argues the Freedom Party of Austria (FPÖ)…

After 530,000 Austrians signed a referendum petition calling for the right to cash payments to be enshrined in Austria’s constitution in 2022, Austria’s political class is refusing to move forward with adding this legal right, warns the Freedom Party of Austria (FPÖ).

“Nowhere else in the world is an everyday life without cash so clearly rejected as in Austria. We see this justified desire of the population, which is reflected in the popular petition ‘For unrestricted cash payment,’ as a concrete work order to the parliament!,” said Finance and Budget Spokesman of the Austrian Freedom Party (FPÖ) Hubert Fuchs during a parliamentary debate.

Although the referendum is not binding, in a country of 8.9 million, the fact that over half a million signed the referendum petition shows a broad level of resistance against the push for digital currencies promoted by central banks across the world and institutions like the World Economic Forum (WEF). It was the 13th most popular referendum in the country’s history. However, the center-right Austrian People’s Party (ÖVP), which has long been said to have backed the right to cash, is now joining the left-wing parties of Austria and blocking all attempts to add this right to the country’s constitution.

FPÖ says ‘cash is freedom’

Fuchs sees the great support for the petition as a clear mandate to the National Council, which is one of the two houses in Austria’s parliament.

“The initiators and supporters of this petition do not just want words of thanks. Rather, it is a concrete request to the National Council to ensure that the federal government finally gets its act together. But let me report from the finance committee: Our motion for the preservation of cash was once again rejected by the ÖVP. So it’s all just lip service and fine words, while these are not followed by action,” said Fuchs.

Austrian Freedom Party financial spokesman Hubert Fuchs. (Austrian Parliament)

The ÖVP is reportedly attempting to blame their coalition partners, the Greens, but the FPÖ rejects these claims. Fuchs argues that if “nothing can be brought forward in the country (through legislation), one should step soon again to the ballot box — the republic would be served thereby very much.”

The FPÖ, known for its stance against Russia sanctions and its calls to stop immigration by building “Fortress Austria,” is currently the most popular party in the country, with polls putting it at approximately 27 percent. The party, although conservative, takes a skeptical view of unbridled free market capitalism, and argues that the government must protect against real estate speculators and provide generous cash benefits to encourage Austrians to have more children.

The party has also made the right to cash payments an intrinsic part of its platform, arguing that they ensure freedom from government oversight and also protect Austrians from predatory banks and credit card institutions.

“We, the Freedom Party — in contrast to all other parties — have already been campaigning for years for the preservation of cash as well as for the anchoring of the right to cash payments in the constitution. This was also included in the ÖVP-FPÖ government program (of the previous government), but unfortunately could no longer be implemented. And I wonder why, if all parties are in favor of preserving cash, especially the Austrian People’s Party (ÖVP), they have not tabled a motion on this today?” asked Fuchs. “According to the current legal situation, there is no real obligation to accept cash. The relevant legal provisions need to be tightened up here.”

Fuchs also said in his speech that implementing a financial system where only digital currencies exist would lead to an increase in money laundering and covert financing of terrorism, as according to him, digital and cryptocurrencies are a hotbed for criminality.

“This freedom of choice must continue to exist in the future. Cash is data protection in action. Cash is printed freedom. And another aspect should not remain unmentioned: Without cash, how are children supposed to learn how to handle money and thus how to do business? Money at their fingertips is very important for children. But it is not only important for children, but also for adults in terms of their own spending control,” explained the FPÖ finance and budget spokesman.

Fuchs may be referring to the practice of many consumers reverting back to cash to better control spending, which is a trend seen in the United States this year. Experts argue that using physical cash instead of electronic payments helps people better control and track their spending.

However, the FPÖ also points to a new Marketmind study, which shows that 48 percent of women and 40 percent of men in Austria cannot get a credit card due to their low income and are therefore dependent on cash. 

“That’s no wonder when you consider that in our country around 17 percent of the population must be classified as at risk of poverty. That is just one of the many reasons why we have to insist on (the right to) receiving cash with all our might,” said the FPÖ consumer protection spokesman, Peter Worm.

“In view of the fact that more than 530,000 citizens have signed the referendum entitled ‘For unrestricted cash payments’, it is more than opportune to recognize the importance of the issue. The unified opposition of the ÖVP, SPÖ, Greens and NEOS talk loudly about receiving the cash, but votes against every one of our proposals to ensure cash, including cent and euro coins along with notes in the current form, is preserved and to anchor cash in general in our constitution. Our application to establish a constitutionally stipulated obligation to contract for the movement of goods and services in connection with the basic acceptance of cash as a means of payment in the Austrian legal system also failed due to all four parties,” explained Wurm.

“But we Liberals will continue to comply with the will of the citizens. Cash means survival, freedom and self-determination. The transparent citizen has already become a reality to some extent, and only receiving cash in a constitutionally protected form can prevent even worse things from happening,” emphasized Wurm.

In Austria, 50 percent of all transactions are still conducted in cash, far above the European average of approximately 30 percent. Germans are also against digital transactions, with just 9 percent saying they would use mobile payments.

Why protect cash?

As Remix News previously reported, privacy and civil rights organizations have long advocated the right to cash with the argument that privacy, civil liberties, and finical security are at stake. Abolishing cash would force citizens to conduct all transactions through a digital medium, such as mobile payments, credit cards, or digital currencies. Banks and electronic mediums remain vulnerable to hack attacks and even natural disasters, for example, if the power grid were to be knocked out. The Swedish Civil Contingencies Agency, which is a part of the Ministry of Justice, warned in one report that a totally cashless society would be extremely vulnerable if the country were attacked or exposed to a natural disaster

For those concerned about privacy, such as those in Germany and Austria, digital payments give law enforcement and government authorities a direct window into all transactions.

Even more worrying for some, digital money could one day be linked to political and social behavior in Western countries in a social credit system, as seen in China. Already, during the “Freedom Convoy” trucker protests against Covid-19 policies in Canada, the left-wing government of Justin Trudeau took the unprecedented step of freezing the bank accounts of protesters. Although civil liberty groups decried the authoritarian action as a flagrant abuse of power, many critics worry that the action could now serve as a template to deal with protesters and dissent in the future. If dissidents and those critical of the government cannot keep their money outside the digital space, then they will have nowhere to hide their finances should governments, like the one in Canada, take action against them.