While the Democrats impeached Donald Trump twice for optics – once because he asked Ukraine for evidence of the Biden family’s obvious corruption, and a second time for ‘incitement of insurrection’ related to January 6th, newly minted House Speaker Mike Johnson (R-LA) is a no-go on a Biden impeachment despite ample evidence that the Bidens received and distributed large sums of money from foreign sources – which raises obvious questions over foreign influence and pay-for-play.

“We’ll just go where the evidence goes and we’re not there yet,” Rep. Don Bacon (R-NE) said, paraphrasing Johnson’s comments on the inquiry from the Republican Governance Group’s weekly lunch on Tuesday. “Most of us are saying, look, we can’t even get a single Democratic vote on this right now. I think the voters will reject what they are seeing when it comes to Biden [policies] — but high crimes and misdemeanors? I don’t think we’ve seen that or enough data to really make a good case and I feel like [Johnson] really agreed with us on that,” the Washington Post reports.

The Post feigns ignorance of how money laundering works, claiming “House Republicans have not put forth any direct evidence that Biden profited from his son Hunter Biden’s work in Ukraine and elsewhere, nor has the president been linked to any potential wrongdoing in the probe of the Justice Department’s investigation of his son,” despite the fact that Joe Biden was paid at least $240,000 from his brother via checks indicating a loan repayment – shortly after China wired money to the Bidens in connection to international dealings.

Further:

Entities controlled by James and Hunter Biden ended up receiving nearly $5 million in legal and consulting fees from the Chinese energy company and its executives when his father was out of office, according to a Washington Post analysis published last year. At a plea deal hearing this July, Hunter Biden acknowledged receiving income from CEFC.

…

Former business contacts of James Biden alleged in a lawsuit in 2019 that he promised that Joe Biden would incorporate their business model in his presidential campaign in order to entice them into a partnership. “All the promises were on the Biden name,” one of the executives involved in the suit told the Knoxville News Sentinel at the time. James Biden has denied the allegations. –Politico

And then there’s a text message between Biden associates James Gilliar and Tony Bobulinski which reads: “Don’t mention Joe being involved, it’s only when u are face to face[.] I know u know that but they are paranoid[.]”

And of course, On July 30, 2017, Hunter Biden demanded money from Chinese business associates and threatened that Joe Biden was sitting next to him: “if I get a call or text from anyone involved in this other than you….I will make certain that between the man sitting next to me and every person he knows and my ability to forever hold a grudge that you will regret not following my direct.”

What’s more, business associate Devon Archer in July described how Joe Biden was “The Brand,” and was used to send “signals” of power, access, and influence to enrich the Biden family from foreign sources (via the House Oversight committee).

Joe Biden also spoke at least 20 times on speakerphone with Hunter Biden’s foreign business associates, according to Archer’s testimony.

And in February of 2014, then-Vice President Joe Biden dined with oligarchs from Russia and Kazakhstan who then funneled millions of dollars to Hunter and pals.

In April 2015, then-Vice President Biden dined with Hunter Biden’s foreign business associates, including Ukrainian Burisma executive Vadym Pozharsky. Burisma was then being investigated by Ukrainian Prosecutor General Viktor Shokin for corruption.

Hunter Biden was also CC’d on an email to Biden’s “Robert L. Peters” email account regarding a 2016 call with then-President of Ukraine Petro Poroshenko.

On December 4, 2015, Biden business associate Eric Schwerin wrote to Kate Bedingfield in the Office of the Vice President providing quotes to use in response to media outreach regarding Hunter Biden’s role in Burisma, a Ukrainian energy company. Later that day, Ms. Bedingfield responded to Mr. Schwerin saying, “VP signed off on this[.]” According to Devon Archer, after a Burisma board of directors meeting in Dubai on the evening of December 4, 2015, Hunter Biden “called D.C.” to discuss pressure that Burisma asked him to relieve.

The list goes on and on…

If only Trump’s brother had repaid ‘loans’ directly after receiving wire transfers from China, after using the family brand to ink deals with companies linked to US adversaries.

Speaker Mike Johnson: “There is insufficient evidence at the moment to initiate formal impeachment proceedings.”

Congratulations everyone!

— Cernovich (@Cernovich) November 10, 2023

Authored by Charles Hugh Smith via OfTwoMinds blog,

As in the Gulag it replicates, the innocent are swept up with the guilty in a disconcertingly unjust ratio.

The human mind is not particularly well-adapted to polycrisis: we struggle to adapt to the drought, then the earthquake knocks down the village walls, then the tsunami pounds what was left, followed by the epic flooding, then the hurricane batters the survivors, who witness the volcano erupting and wonder what they did to anger the gods and goddesses so mightily.

Now put yourself in the shoes of those tasked with governing / leading the traumatized, overwhelmed masses. If you call a public meeting to hear what the masses reckon are causes and solutions, you find a near-riot of vociferous wrangling over the equivalent of how many angels can dance on the head of a pin: all sound and fury, signifying nothing.

With the populace stripped of the sense that things are still under control, the emotions being bared put a blow-torch to civility and common sense: the toxicity of the indignation (this shouldn’t be happening to me), entitlement, grievances, resentment, distress, angst and accusations knows no bounds.

This fuels a searing desperation to pin the collapse of what was known and predictable on some villainous force or cabal, and so witch hunts proliferate and wild theories gain adherents who found little solace in the official pablum (everything’s fine, we have it all under control).

The voices murmuring that this is what we deserve for our hubris and pride are lost in the cacophony.

So what’s your instinctive response as someone in authority to this bedlam? Try to regain some control by getting everyone on the same page. The free-for-all didn’t fix anything, and so our instinct as leaders is to circle the wagons, tighten control of available resources and dampen or shut down the cacophony feeding the divisive, deranging emotions.

While it’s ghoulishly entertaining to use ChatAI to translate the cries of those swept away into whatever language you prefer and watch the videos that fade to black as the camera came to a bleak end, the technological genies afoot are obvious allies in the campaign to quiet the voices feeding the bedlam.

And so Big Tech is persuaded to do its public duty to tamp down the voices threatening to spin the collective distress out of control. The obvious tools to do so are algorithmic, i.e. automate the survey and weeding out of disruptive voices, regardless of their source.

Despite claims to the contrary, algorithms aren’t that smart and neither are LLMs (large language model software that uses natural language as its interface with human users).

Algorithms and other software are blind to the fact that they’re in effect courts of inquiry and judgment that make assessments and sentence the accused in the blink of an eye, with minimal evidence, no hearing and no recourse, i.e. no appeal process. The verdict issued is final.

And since this entire process must be kept secret lest it arouse further tumult, the automated courts do not notify those sentenced of their verdict: we don’t receive a court declaration–you are hereby sentenced to exile in Digital Siberia–you infer it when you awaken alone in the snow drifts of a vast wilderness. No one hears your digital shouts or sees your digital footprints.

As in the Gulag it replicates, the innocent are swept up with the guilty in a disconcertingly unjust ratio. Use the wrong word or phrase in a public text, podcast or video, and the secret court concludes you are an agent of intentional upheaval and chaos.

The secret courts are good at covering their tracks and subtle in their ways. You might think your digital footprint remains visible to all, and then you notice your income has collapsed. Your sentence: demonetized. Funny how quiet people get once their income vanishes.

This desire to herd everyone into a common understanding of the polycrisis is understandable, but the blunt instruments being deployed undermine our collective effort. If in fact foreign agents are spreading fentanyl and similarly destructive fabrications and distortions in the digital realm, then that demands a legitimate effort to identify and cut off these incitements of disunity and despair.

But automating the verdicts and sentencing end up hurting the nation in other profound ways. Skeptical inquiry and dissent are essential dynamics in democracy and the processes of experimentation at the heart of science and innovation.

If you’re lucky, you’ll locate another exile in the wastelands.

Is a 70% Consumption Economy Sustainable? (43:53 min)

*  *  *

My new book is now available at a 10% discount ($8.95 ebook, $18 print): Self-Reliance in the 21st Century. Read the first chapter for free (PDF)

Become a $1/month patron of my work via patreon.com.

Subscribe to my Substack for free

Who could have seen that coming?

After a disastrous 30Y bond auction this week, a collapse in Treasury market liquidity, and an accelerating rise in the market’s perception of the United States’ credit risk, Moody’s has just cut its outlook on US credit ratings to negative from stable.

Source: Bloomberg

The key driver of the outlook change to negative is Moody’s assessment that the downside risks to the US’ fiscal strength have increased and may no longer be fully offset by the sovereign’s unique credit strengths.

In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.

Continued political polarization within US Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.

Moody’s does affirm the Aaa rating:

The affirmation of the Aaa ratings reflects Moody’s view that the US’ formidable credit strengths continue to preserve the sovereign’s credit profile.

• First, Moody’s expects the US to retain its exceptional economic strength. Further positive growth surprises over the medium term could at least slow the deterioration in debt affordability.

• Second, the US’ institutional and governance strength is also very high, supported in particular by monetary and macroeconomic policy effectiveness. While the adjustment of the US economy and financial sector to higher-for-longer interest rates is underway, policymakers have facilitated the transition through transparent and effective policy.

• Finally, the unique and central roles of the US dollar and Treasury bond market in the global financial system provide extraordinary funding capacity and significantly reduce the risk of a sudden spiraling of funding costs, which is particularly relevant in the context of high debt levels and weakening debt affordability.

The US’ long-term local- and foreign-currency country ceilings remain unchanged at Aaa. The Aaa local-currency ceiling reflects a small government footprint in the economy, relatively predictable and reliable institutions, very low external imbalances and moderate political risks, all of which reduce the risks posed to non-government issuers by government actions or shocks that would commonly affect the government and the private sector. The foreign-currency ceiling at Aaa reflects the country’s strong policy effectiveness and open capital account which reduce transfer and convertibility risks to minimal levels.

The market – late on a Friday – pushed yields on the 2Y and 5Y Treasyr notes to fresh new highs for the day…

Full Rationale for Outrlook cut:

ABSENT POLICY ACTION, FISCAL STRENGTH WILL DECLINE

The sharp rise in US Treasury bond yields this year has increased pre-existing pressure on US debt affordability. In the absence of policy action, Moody’s expects the US’ debt affordability to decline further, steadily and significantly, to very weak levels compared to other highly-rated sovereigns, which may offset the sovereign’s credit strengths.

Past increases in interest rates by the Federal Reserve will continue to drive the US government’s interest bill higher over the next few years. Meanwhile, although the government’s revenue base will rise in line with the economy as a whole, in the absence of specific policy action, this will occur at a much slower pace than the rise in interest payments.
Moody’s expects federal interest payments relative to revenue and GDP to rise to around 26% and 4.5% by 2033, respectively, from 9.7% and 1.9% in 2022. These projections factor in Moody’s expectation of higher-for-longer interest rates, with the average annual 10-year Treasury yield peaking at around 4.5% in 2024 and ultimately settling at around 4% over the medium term. The debt affordability forecasts also take into account Moody’s expectations that, absent significant policy changes, the federal government will continue to run wide fiscal deficits of around 6% of GDP near term and to around 8% by 2033, the widening being driven by higher interest payments and aging-related entitlement spending.

By comparison, deficits averaged around 3.5% of GDP from 2015-2019. Such deficits will raise the US federal government’s debt burden to around 120% of GDP by 2033 from 96% in 2022. In turn, a higher debt burden will inflate the interest bill.

For a reserve currency country like the US, debt affordability – more than the debt burden – determines fiscal strength. As a result, in the absence of measures that limit the size of fiscal deficits, fiscal strength will increasingly weigh on the US’ credit profile.

FISCAL RISKS ARE EXACERBATED BY ENTRENCHED POLITICAL POLARIZATION UNDERSCORING RISING POLITICAL RISK

At a time of weakening fiscal strength, there is an increased risk that political divisions could further constrain the effectiveness of policymaking by preventing policy action that would slow the deterioration in debt affordability. These risks underscore rising political risk to the US’ fiscal position and overall sovereign credit profile.

Recently, multiple events have illustrated the depth of political divisions in the US: renewed debt limit brinkmanship, the first ouster of a House Speaker in US history, prolonged inability of Congress to select a new House Speaker, and increased threats of another partial government shutdown due to Congress’ inability to agree on budgetary appropriations. In Moody’s view, such political polarization is likely to continue. As a result, building political consensus around a comprehensive, credible multi-year plan to arrest and reverse widening fiscal deficits through measures that would increase government revenue or reform entitlement spending appears extremely difficult.

While the US’ Aaa rating takes into account relative weaknesses with regards to the quality of the country’s legislative and executive institutions and fiscal policy effectiveness compared to other Aaa-rated sovereigns, there is a risk that these weaknesses take greater credit relevance because the deteriorating debt affordability trend would call for a more significant and effective fiscal policy response.

In particular, the US’ lack of an institutional focus on medium-term fiscal planning, either through legislated fiscal rules aimed at improving the fiscal balance or general bipartisan consensus on the need for fiscal consolidation, is fundamentally different from what is seen in most other Aaa-rated peers such as in Government of Germany (Aaa stable) and Government of Canada (Aaa stable). Meanwhile, the more short-term focus of US fiscal policymaking, along with limited fiscal flexibility – because a very large portion of nondiscretionary budgetary spending is on mandatory entitlement programs and debt service (around 75% of total outlays), exacerbates already fractious bipartisan politics around a relatively disjointed and disruptive budget process. As annual debt service costs continue to rise, fiscal flexibility will diminish even further.

And cue Janet Yellen to dismiss this as folly…

Five minutes later, US Deputy Treasury Secretary Wally Adeyemo comments in emailed statement to Bloomberg:

“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset”

“The Biden administration has demonstrated its commitment to fiscal sustainability, including through the more than $1 trillion in deficit reduction included in the June debt-limit deal as well as President Biden’s budget proposals that would reduce the deficit by nearly $2.5 trillion over the next decade”

Still, not a great look as she “negotiates” with the Chinese.

Authored by Dave DeCamp via AntiWar.com,

Chairman of the Joint Chiefs of Staff Gen. Charles Q. Brown has expressed concern that Israel’s killing of Palestinian civilians will help Hamas recruit more militants and cautioned against a long war in Gaza.

Asked by reporters if the high civilian casualty rate will create more Hamas fighters, Brown said, “Yes, very much so. And I think that’s something we have to pay attention to.”

“That’s why when we talk about time — the faster you can get to a point where you stop the hostilities, you have less strife for the civilian population that turns into someone who now wants to be the next member of Hamas,” he said.

Brown, who replaced Gen. Mark Milley as the top US military officer last month, said Israel’s stated goal of eliminating Hamas is a “large order” but did not call for a ceasefire. He also claimed Israel was following the laws of war despite the massive child casualty rate.

Israel has been relentlessly bombing Gaza since October 7 and launched a ground invasion of the north on October 27, but a US official told The New York Times recently that the campaign has not come close to destroying Hamas.

The Times report, published on November 4, reads: “One senior US defense official, who spoke on condition of anonymity to discuss sensitive details, said the operations so far have not come close to destroying Hamas’s senior and middle leadership ranks.”

Regardless of the US concerns and the White House acknowledging Israel has killed “many, many thousands of innocent people,” the US is providing unconditional support for the war.

🇵🇸🇮🇱 Elon Musk on Israel – Hamas

“If you kill somebody’s child in Gaza, you’ve made at least a few Hamas members.” pic.twitter.com/8oE3S9OSpO

— Censored Men (@CensoredMen) November 10, 2023

The Pentagon has said there are “no limits” on how Israel can use its US-provided weapons, despite a growing number of global leaders and institutions condemning what’s widely seen as collective punishment.

Update(1515ET): On Friday Israeli media produced this headline hailing that “Israeli flags wave proudly along the shores of Gaza”. Starting on Thursday footage began widely circulating online showing IDF troops holding an Israeli flag raising ceremony, laying stake to conquered areas of the Strip. In a short speech during the ceremony on a Gaza beach, just prior to leading troops in the national anthem, an IDF soldier said “this is our land” and told his forces they are leading the way for Jews “to return to our lands.” 

Israeli military official says Gaza is theirs:

“We returned, we were expelled from here almost 20 years ago. We started this battle divided & ended it united. We are fighting for the Land of Israel. this is our land! And that is the victory, to return to our lands” pic.twitter.com/IG3nB3zFAW

— Younis Tirawi | يونس (@ytirawi) November 9, 2023

Following this highly provocative scene, on Friday Iran issued a new warning, saying that Israel’s expansion of its operations and attacks on Gaza hospitals and other provocative acts make an expansion of the scope of the war “inevitable”. 

Iranian foreign minister Hossein Amirabdollahian conveyed the statement in a phone call with Qatar’s prime minister Mohammed bin Abdulrahman bin Jassim Al Thani, according to state media.

“Due to the expansion of the intensity of the war against Gaza’s civilian residents, expansion of the scope of the war has become inevitable,” Amirabdollahian said. He separately posted to X that “time is running out” for Israel, and stated, “The only benefit of Netanyahu was that he made the foundations of the fake Israeli regime more shaky and showed the criminal, violent, and aggressive face of the Zionist regime in the massacre of women and children in Gaza.”

* * *

After reports emerged starting Wednesday and Thursday that Israeli tanks had pushed to the center of Gaza City, Palestinian officials have said tanks have drawn close to and have surrounded key hospitals where thousands of Palestinians are taking shelter as wounded patients are receiving treatment. They said Friday that air strikes have hit the Strip’s biggest hospital, Al Shifa, killing at least one and wounding several others.

Other hospitals were were also reportedly struck at dawn, including strikes on the grounds of the Indonesian Hospital and the Rantissi cancer hospital, according to eyewitnesses cited in Reuters. Sprawling tent encampments of the internally displaced can be seen on the hospital campuses, but Israel claims that Hamas has ‘terror tunnels’ underneath, and further that the group has a base of operations in Rantissi hospital. Civilians waiving white flags have been trapped, in at least one instance coming under fire while trying to escape. Gazan authorities say the Israel’s military is firing on them, while Israel claims Hamas is shooting its own people to keep them as “human shields”. 

Israel Defense Forces (IDF) tanks have been observed near these hospitals, with some unconfirmed video evidence emerging that civilians taking shelter there have been hit either by IDF snipers, artillery, or possibly drone strikes.

The Israeli military has ordered the immediate evacuation of these hospitals but people reportedly have not moved, fearing any attempt to exit will be more dangerous.

The White House announced Thursday that Israel agreed to implement daily four-hour pauses in fighting to facilitate a humanitarian corridor for civilians to flee south, but it’s unclear how this will effect standoff situations where civilian enclaves are surrounded by tanks.

Al Jazeera, which has correspondents on the ground, says that tanks are within a mere hundreds of meters of some of the hospitals in question: “Using tanks and armored vehicles, they have closed a roughly 100-metre perimeter around these hospitals, still sheltering thousands of wounded and displaced people,” the Friday report says.

The moment the Al Shifa Hospital courtyard was struck last night as displaced civilians slept. Body parts blown off. You can hear the pain in the screams.

At least 2 other hospitals were bombed in the same night.

There are no words to describe this level of barbarity. None. pic.twitter.com/87wacC1MvX

— Hamza (@Hamza_a96) November 10, 2023

“People have sent appeals from inside al-Rantisi Hospital and Nasser Hospital, asking to be allowed to flee,” Al Jazeera writes.

And yet the situation is growing more dangerous for civilians as the bombs fall. Gaza health ministry has alleged that Israeli jets struck al-Shifa Hospital buildings five times since Thursday night. This sent some of the civilians leaving for more potentially safe areas.

“They shelled the maternity department and the outpatient clinics building. One Palestinian was killed and several were wounded in the early morning attack,” the health ministry said.

Heavy and back to back Israeli air strikes bombed the vicinity of Al-Awda hospital. This is what they refer to as a fire belt. No place is safe in Gaza.
Video by Feras Al-Ajrami pic.twitter.com/6usNA1eWCO

— MoTaz (@azaizamotaz9) November 10, 2023

The ministry said in response to the IDF’s evacuation order: “We are talking about 45 babies in incubators, 52 children in intensive care units, hundreds of wounded and patients, and tens of thousands of displaced people.” There are conflicting reports of casualties as gunfights have been reported on the perimeter of Shifa hospital, with reports of IDF special forces operating there:

However, according to AFP, a government statement claimed that there were “thirteen martyrs and dozens wounded in an Israeli strike on Al-Shifa compound today,” and hospital director Mohammad Abu Salmiya alleged that “Israeli tanks fired on Al-Shifa hospital.”

Israel has alleged that a Hamas military quarter lies adjacent to Shifa Hospital and has called the area “the heart” of Hamas’s intelligence and operational activities.

Meanwhile the UN and aid organizations have had new issues getting trucks into the Strip and to the necessary locations amid “hell on Earth” – as the UN Office for the Coordination of Humanitarian Affairs (OCHA) described. 

Below: Palestinian sources say civilians waiving white flags who have tried to exit hospital grounds have been fired on by the IDF, while Israeli sources say Hamas is firing in order to prevent them from leaving:

⚡️Israeli army fired on displaced families and medical teams who tried to leave Al-Nasr Hospital in Gaza, which has been besieged since dawn by the occupation pic.twitter.com/XKGphbtOMl

— War Monitor (@WarMonitors) November 10, 2023

“We cannot drive to the north at the current point, which is of course deeply frustrating because we know there are several hundred thousand people who remain in the north,” said OCHA spokesperson Jens Laerke.

“If there is a hell on Earth today, its name is northern Gaza,” he said. “It is a life of fear by day and darkness at night and what do you tell your children in such a situation, it’s almost unimaginable – that the fire they see in the sky is out to kill them?” 

There have been reports that top US and Israeli officials are in Doha seeking potential hostage deals via Qatar government mediation. But Israeli President Isaac Herzog has said “there is no real proposal” currently on the table, NBC News reports.

Hamas has continued publishing high quality close-quarter combat footage showing IDF tanks suffering damage:

V. impressive footage, clearly the al Yassin/PG-7VR (Sometimes called the al Yassin 105) functions well- but apparently not enough to pen IDF armour reliably.

Some of these maybe mission kills? But seems heavier AT capability needed even at close range.pic.twitter.com/M8nkuYI8Bn

— Cᴀʟɪʙʀᴇ Oʙsᴄᴜʀᴀ (@CalibreObscura) November 8, 2023

“There is no real proposal that is viable from Hamas’ side on this issue. Whilst there are many, many people who are third parties who are sending optimistic messages to the newsreels, I’m saying outright: According to my knowledge, up to now, there is no real substantial information that is showing any real offer of any process on the table,” Herzog explained.

As of Friday, Israel’s military has announced its official troop death toll has risen to 37. Some analysts believe this figure to in reality be much higher, given the extremely difficult nature of tight urban combat, and Hamas’ guerilla tactics and use of sprawling tunnels for ambush operations. 

Apocalyptic scenes from Gaza like the following have now become daily…

🇮🇱🇵🇸 This must be a scene from an apocalyptic film. pic.twitter.com/P9D8jRJv4n

— Mario Nawfal (@MarioNawfal) November 10, 2023

There are around 11,000 Gazans dead at this point, mostly civilians, causing UN Secretary-General António Guterres to tell a conference this week that something has gone “clearly wrong” with Israel’s operation. “There are violations by Hamas when they have human shields. But when one looks at the number of civilians that were killed with the military operations, there is something that is clearly wrong,” he said.

Authored by Simon White, Bloomberg macro strategist,

The market’s point of focus in the UMich data is the higher-than-expected inflation expectations figure, which potentially brings more risks to bonds.

One-year inflation expectations rose to 4.4% from 4.2%.

But more saliently for the bond market, the long-term median of inflation expectations rose to 3.2%, its highest since 2011.

As we saw yesterday with the weak 30-year auction, the Treasury market is facing mounting challenges with oversupply and poor liquidity.

Rising consumer inflation expectations compound the issue as the household sector has become the marginal buyer of USTs as other sectors retreat.

Household’s rising inflation expectations therefore point to higher term premium (chart above), i.e. the US government will likely have to accept a bigger discount on its issuance to compensate for the household sector’s inflation outlook.

By Jan Nieuwenhuijs of Gainesville Coins

The PBoC is in a hurry to buy enormous amounts of gold, indicating it’s preparing for substantial changes in the dollar-centric international monetary system.

Based on information from industry sources and my personal calculations, total gold purchases by the Chinese central bank (reported and unreported) in Q3 accounted for 179 tonnes. Year-to-date the PBoC bought 593 tonnes, which is 80% more than what it bought in the first three quarters last year. Its total estimated gold holdings are 5,220 tonnes, more than twice what’s officially disclosed at 2,192 tonnes.

The movement towards gold by central banks is showing no sign of slowing down. Mainly the Chinese central bank is on a voracious buying spree since 2022, and it’s obtaining way more metal than what is officially reported. The People’s Bank of China (PBoC) buys gold off the radar, not to send shockwaves through the market, allowing it to exchange its dollars for more bullion in anticipation of shifts in the international monetary order.

Every quarter we at Gainesville Coins compute an estimate of how much gold is bought by central banks surreptitiously. Of these unreported purchases about eighty percent is bought by the Chinese central bank; the other twenty percent is acquired by central banks from, for example, Saudi Arabia, according to industry sources that prefer to stay anonymous.

In the Gold Demand Trends Q3 by The World Gold Council (WGC) total estimated gold purchases by central banks, derived from publicly available data and field research, accounted for 337 tonnes. Reported gold acquisitions by central banks—data collected by the International Monetary Fund (IMF)—accounted for 211 tonnes. Eighty percent of the difference is 101 tonnes, which, added to what the PBoC publicly states to have bought in the third quarter, compounds to 179 tonnes. Year-to-date the PBoC has bought a record 593 tonnes, which is 790 tonnes annualized! (For more details on how I calculate PBoC gold holdings please read my previous article).

The start of the Ukraine war, early 2022, sparked the US to optimal dollar weaponization, which made the PBoC ramp up gold buying aggressively. Ever since, the Chinese central bank’s shopping has been a huge support for gold as evidenced by the spread between the price of bullion and the TIPS yield. Although the (inverse) correlation between gold and the TIPS yield has always been nonsensical, it took a war for the PBoC and market participants with similar interests to end it, because time was running out to diversify their dollars.

Now that the TIPS model to price gold is of less relevance (in October real rates and gold went up together), we can extend our discussion of de-dollarization. Some pundits claim there is no de-dollarization, or, even, there will be no de-dollarization. Although I agree the role of the dollar in international finance is not quickly to wane, we must make an important distinction between the dollar as a trade currency and a reserve currency. As a reserve currency there is no fiat currency that can replace the dollar. The US has broad and (usually) liquid financial markets, no capital controls, and it’s running sizable fiscal and current account deficits that can supply the world with debt securities to store dollars in.

But that doesn’t mean that gold, which has no counterparty risk, is universally accepted, and evenly distributed, can’t replace the dollar as the world’s reserve currency. Not only are China and other countries in the Global South preparing for this scenario, the European Union is doing the same. And with more war in the Middle East, and few solutions other than inflation to resolve the global debt overhang, gold’s time to shine comes closer and closer.

Thai central bank: “We need to create a resilient portfolio against all shocks and changes around us. So, diversification [into gold] is the key issue.” https://t.co/Oc741273Df

— Jan Nieuwenhuijs (@JanGold_) October 31, 2023

Regarding trade currencies, the Chinese have set up the Shanghai International Gold Exchange (SGEI) in the Shanghai Free Trade Zone that facilitates “offshore” gold trading in renminbi. The SGEI empowers foreigners to use renminbi as a trade currency that can be converted into gold to store any surpluses without affecting China’s balance of payments. (For more information read “The Shanghai International Gold Exchange and Its Role in De-Dollarization.”)

My estimate of world central bank gold holdings is at an all-time high, and gold’s share of global international reserves has been steadily increasing in recent years, from a historic low that was formed during a time of financial stability and relative peace. My expectation is that gold holdings relative to foreign exchange (mostly dollars) will continue to grow in the foreseeable future.

Whether it’s the former CEO of Walmart, Mike Wilson from Morgan Stanley, or credit card data from various research desks, there’s a unified message emerging about waning consumer strength. 

In the luxury space, we asked in May Did Europe’s Luxury Bubble Just Burst? 

By June, we pointed out Luxury Recession: Diamond Prices Crash, Rolex Downturn Persists. 

In early October, we noted:

•  First Rolexes, Then Diamonds, Now Consumers Revolt Against Mercedes S-Class As Luxury Bust Worsens. 
• ‘It Ain’t Gucci’: LVMH Shares Tumble As Luxury Bubble Unravels

On Friday, luxury group Richemont provided what appears to be the latest evidence of faltering consumer demand for luxury watches, jewelry, and clothing. The owner of Cartier Jewelry reported first-half profits that missed Wall Street’s forecasts. 

Richemont Chairman Johann Rupert said on a call with analysts that inflation, slowing economic growth, and rising geopolitical tensions hurt sentiment, while interest rates’ full effects have yet to be seen. 

“There has been a moderation in demand, which was to be expected, because that’s exactly what the central banks of the world intend. They wanted less demand, and it’s across all asset classes,” Rupert said. 

He continued, “We will see a softening in demand across all categories, across all asset classes, whether it’s housing, art, the automobile sector, because that’s the goal of the reserve banks. Otherwise, how do you get inflation down? So, and I suspect that interest rates will remain higher for longer than most people think.” 

A slowdown in luxury spending comes as the labor market is softening, and according to JPM’s market desk, “Sentiment is quickly turning very negative across retail/discretionary (seeing weakness across retail, casual diners, casinos etc).” 

The message from Richemont and other luxury brands in recent months signals a broader slowdown in spending that could signal dismal outlooks for Black Friday and Christmas sales across the West. 

Richemont shares in Switzerland were down more than 6% on Friday. Rival luxury brands, such as Paris-listed LVMH and Kering, were down as much as 4%. These luxury stocks have been sliding all year. 

Additionally, the company behind Don Julio tequila, Diageo, saw shares plunge 12%, the largest intra-day drop since 1997, following a warning about a “materially weaker” performance in Latin America and the Caribbean.

Global luxury and goods stocks via MSCI are in a bear market, down 23% from the peak in November 2021, but remain well above pre-Covid levels. 

The slowdown in luxury spending comes as corporate America has delivered its “bleakest sales reports in four years this earnings season, a sign that weakening consumer demand is limiting companies’ ability to raise prices further,” according to Bloomberg’s Sagarika Jaisinghani and Farah Elbahrawy.

Authored by Michael Maharrey via SchiffGold.com,

Mainstream financial network pundits and government officials keep telling us that the economy is chugging along because Americans continue to spend money. But it’s clear that borrowing is the only thing sustaining this spending spree.

Meanwhile, the “resilient” American consumer is drowning under a surging tidal wave of debt.

Total household debt rose by $228 billion in the third quarter, setting a new record of $17.29 trillion, according to the latest data from the New York Federal Reserve.

Surging credit card balances led the way, increasing by 4.7% to a record $1.08 trillion. Year-on-year, credit card debt spiked by $154 billion. That was the biggest annual increase since 1999.

The bigger problem is the double whammy of rising debt and rising interest rates. Average credit card interest rates eclipsed the previous record high of 17.87% months ago. The average annual percentage rate (APR) currently stands at 20.72%.

According to the Consumer Financial Protection Bureau, Americans paid $130 billion in interest and fees on their credit cards over the last year. That was the largest amount on record.

As prices skyrocketed last year, Americans blew through their savings to make ends meet. Aggregate savings peaked at $2.1 trillion in August 2021. As of June, the San Francisco Fed estimated that aggregate savings had dropped to $190 billion.

In other words, Americans ate away $1.9 trillion in savings in just two years.

Then they turned to credit cards.

“People have to deal with this somehow. After blowing through savings to buy essentials, they do what’s next: Find sources to borrow,” Villanova University finance professor John Sedunov told ABC News.

According to MarketWatch, “Americans appear to be relying more on debt to pay for their purchases. They are also using more ‘buy now and pay later’ plans.”

New York Fed economic research advisor Donghoon Lee also credited the resilience of the American consumer to Visa and Mastercard.

Credit card balances experienced a large jump in the third quarter, consistent with strong consumer spending and real GDP growth.”

Debt.com chairman Howard Dvorkin told CNBC, “Consumers are maintaining and supporting their lifestyles using credit card debt.”

In other words, the economic growth President Biden and others keep bragging about is merely a function of borrowing.

This is not exactly indicative of a healthy economy, and it’s not sustainable.

Consumer spending, which we all know is the base of GDP, is really being held up by credit card debt and maybe it’s not sustainable,” American University economic professor Mary Hansen told ABC News.

There are some signs that the debt-fueled spending spree is slowing down. After rising by over 13% in August, revolving credit growth (primarily credit card balances) slowed to 2.9% in September, according to the latest Federal Reserve consumer credit data. This could signal a significant slowdown in spending. That would mean an end to the mythical “strong” economic growth.

Americans aren’t just borrowing using credit cards. Every other category of debt also increased in the third quarter.

Mortgage balances rose by $126 billion from the previous quarter and stood at $12.14 trillion at the end of September. The big increase in mortgage balances happened despite a drop in new mortgage originations, reflecting rapidly increasing mortgage rates.

Despite the higher rates, more Americans appear to be tapping into their home equity to make ends meet. Balances on home equity lines of credit (HELOC) increased by $9 billion and now stand at $349 billion.

Auto loan balances rose by $13 billion and now stand at $1.6 trillion. Auto loan debt has grown consistently since 2011.

Outstanding student loan debt increased by $30 billion and stood at $1.6 trillion at the end of Q3.

There are signs that Americans are starting to crack under the strain of this debt load. Delinquencies rose across all debt categories.

As of the end of September, 3% of outstanding debt was in some stage of delinquency. According to the New York Fed, delinquency transition rates increased for most debt types except student loans and home equity lines of credit.

The report noted a big jump in credit card delinquency, particularly in the 30-39 year old age range.

The continued rise in credit card delinquency rates is broad-based across area income and region, but particularly pronounced among millennials and those with auto loans or student loans,” Lee said.

Missed federal student loan payments will not be reported to credit bureaus until Q4 2024.

According to the Consumer Financial Protection Bureau, “nearly one-tenth of credit card users find themselves in ‘persistent debt’ where they are charged more in interest and fees each year than they pay toward the principal — a pattern that is increasingly difficult to break.”

The surge in household debt signals that Americans are struggling to make ends meet as prices rapidly rise, and they’re burying themselves in debt to keep their heads above water. The stimulus checks are long gone. Savings are being depleted. The average person has no choice but to borrow.

Debt is creating an illusion of prosperity and economic growth. The question is how long can that last?

Rising levels of debt are also a problem for the Federal Reserve as it tries to battle sticky price inflation with higher interest rates. The longer rates stay elevated, the harder it will be for people to maintain these massive levels of debt. At some point, something has to break.

While the jury is still out over whether the wife of Judge Arthur Engoron made anti-Trump posts on X, Rep. Elise Stefanik (R-NY) has filed an ethics complaint against judge himself, accusing him of displaying “inappropriate bias and judicial intemperance” towards the former president in his civil fraud trial taking place in New York.

“I filed an official judicial complaint against Judge Arthur Engoron for his inappropriate bias and judicial intemperance in New York’s disgraceful lawsuit against President Donald J. Trump and the Trump Organization,” Stefanik told NBC News. “Americans are sick and tired of the blatant corruption by radical Leftist judges in NY. All New Yorkers must speak out against the dangerous weaponized lawfare against President Trump.“

According to the complaint, Engoron has exhibited “clear judicial bias” against Trump, including telling Trump’s attorney that the former president is “just a bad guy,” who NY Attorney General Letitia James “should go after.”

“Simply put, Judge Engoron has displayed a clear judicial bias against the defendant throughout the case, breaking several rules in the New York Code of Judicial Conduct,” reads the letter.

“Judge Engoron entered summary judgment against the defendant before the trial even began, without witnesses, other evidence, and cross-examination,” she continued, noting that this was “despite the fact there’s disputed material evidence–and there’s no victim of the defendant’s supposed fraud. “

Stefanik also notes that Engoron and his staff are “partisan Democrat donors,” and that Engoron himself, as recently as 2018, “donated to the Manhattan Democrats.”

“If Judge Engoron can railroad a billionaire New York businessman, a former President of the United States, and the leading presidential candidate, just imagine what he could do to all New Yorkers,” the letter continues. “Judge Engoron’s lawlessness sends an ominous and illegal warning to New York business owners: If New York judges don’t like your politics, they will destroy your business, the livelihood of your employees, and you personally. This Commission cannot let this continue.”

“Section 100.2(A) states: ‘A judge shall respect and comply with the law and shall act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary.’ Judge Engoron has grossly failed to do this,” she wrote.

Activist wife?

On Thursday, Engoron’s wife, Dawn Engoron, denied making anti-Trump posts on X, after journalist Laura Loomer claimed to have “uncovered screenshots” showing extreme bias.

EXCLUSIVE: I have Uncovered screenshots from the X account of Dawn Marie Engoron, the wife of Leftist NYC Judge Arthur Engoron, who is overseeing the civil fraud against President Trump shows that she has been posting attacks on Trump from her account @dm_sminxs as the trial is… https://t.co/LynqZsciiz pic.twitter.com/07xcIo7Kma

— Laura Loomer (@LauraLoomer) November 8, 2023

Dawn Engoron denied the claims, telling Newsweek: “I do not have a Twitter account. This is not me. I have not posted any anti Trump messages.”

Engoron is overseeing Trump’s New York civil case, in which AG Letitia James has accused the former President and his organization of inflating their net worth by billions of dollars to obtain premium financing between 2011 and 2021. In September, Engoron ruled – sans jury, that Trump’s financial statements committed fraud.

Following the denial, Loomer doubled down, noting that the suspected X account has been locked, that Newsweek “admit(s) they can’t definitively say this account doesn’t belong to Arthur Engoron’s wife,” and that Engoron’s son has deleted his LinkedIn account yesterday “after I exposed him getting preferential seating from his father in the trial of President Trump.”

There is now a Leftist attempt to run cover for Judge Engoron, his wife, and his son, all of whom I exposed this week with my investigative reporting.

His wife has locked her Twitter account down and @newsweek wrote and article with a deceptive news headline, but at the end of… https://t.co/fBMt1lxMAZ pic.twitter.com/vxnnge7XT0

— Laura Loomer (@LauraLoomer) November 9, 2023

Read Stefanik’s complaint below: