Watch: Drone Smashes Into Central Moscow As Attacks Become Daily
Closter to the opening of the Ukraine war it seemed unthinkable that a scenario of foreign drones reaching deep inside Russian territory to strike Moscow would become ‘normative’ – but this is now what’s happening, as Ukrainian drone attacks on Russia become daily.
Overnight, a drone again reached central Moscow, slamming into a high rise building in the capital’s business district, authorities confirmed Wednesday, in what’s a sixth consecutive night of aerial attacks on Moscow.
Ukrainian toy drones target buildings in Moscow city.
This particular attack was caught on video from multiple angles. Though likely a small drone, the explosion upon impact was significant and left visible damage on one or more floors of the large building.
Russia’s defense ministry said it downed at least two other inbound drones, in the Mozhaisky district and one in the Khimki district of the heavily populated Moscow oblast.
Overnight, commercial air traffic was halted at all Moscow airports, including Vnukovo, Sheremetyevo and Domodedovo airports, but operations later resumed as normal.
Moscow Mayor Sergei Sobyanin said of the fresh attack that “several windows were smashed in two adjacent five-story buildings.”
The somewhat meaningless attacks suggest growing desperation on the part of Ukraine forces, given the counteroffensive is now widely acknowledged to be a failure, and so the aim seems to be to put the Russian population on edge, and to disrupt ‘normalcy’ and stability of major cities like Moscow as much as possible.
⚡️The moment an explosion took place in central Moscow tonight, likely drone attack pic.twitter.com/30cZ7SOF6W
But the cross-border attacks are likely to escalate Russia’s missile attacks on Ukrainian cities in return, at a moment the front-lines are largely stalemated, but with Russian forces for the most part in firm control of the four territories now declared part of the Russian federation, a key part of Putin’s objective.
Home Purchase Applications Plummet To 28 Year Low As Nobody Can Afford To Buy A Home Anymore
To all Americans hoping to be able to buy a home some time soon, or at least afford to do so once in their lifetimes, we have bad news.
On Wednesday, the Mortgage Bankers Association reported that US mortgage rates rose to the highest level since late 2000 last week, sending a key measure of demand down to the lowest in nearly three decades. The contract rate on a 30-year fixed mortgage increased 15 basis points to 7.31% in the week ended Aug. 18.
Separately, the MBA reported that its index of home-purchase applications fell for a sixth straight week to the lowest level since 1995, which dragged the overall measure of mortgage applications down further.
The MBA’s overall gauge of mortgage applications, which also includes refinancing, fell to 184.8, near the lowest level since 1996.
The reason for the collapse is simple: with housing affordability at or near the lowest on record, the average monthly mortgage payment – based on a median home price and average 30Y fixed-rate mortgage, assuming a 20% down payment – has exploded to a record $2,322m more than double from pre-covid levels.
And it’s about to get even worse: according to Mortgage News Daily, borrowing costs have continued to rise so far this week and on Tuesday the 30-year fixed rate hit almost 7.5%.
Mortgage rates are benchmarked to US Treasuries, and yields on those securities have been climbing as traders increasingly see a resilient economy keeping interest rates higher for longer. Fed Chair Jerome Powell is set to speak at the central bank’s annual Jackson Hole symposium later this week, and minutes from policymakers’ gathering last month showed most officials still saw significant upside risks to inflation, which could require further rate hikes.
As Bloomberg notes, that’ll keep mortgage rates elevated and, along with still-high home prices, put further strain on a residential housing market that had been showing promise earlier in recent months.
The latest housing data further illustrate the trend — homeowners are reluctant to move and take on a higher mortgage rate, so prospective buyers are seeking out new construction instead. As shown int he chart below, the average effective mortgage rate (on outstanding mortgages) is 3.6%, half of the actualy 30Y mortgage, which means tens of millions of homeowners are trapped and unwilling to sell as they would have to refi into a sharply higher rate.
A report later Wednesday is expected to show new-home sales ticked up last month to hover near the highest level in a over a year.
US PMIs Signal Stagflation: Service-Sector Slump, Price-Pressures Mount
After Europe’s (and UK’s) disastrous PMIs this morning – showing stagflationary threats rearing their really ugly head – hopes were for some stability in US PMIs… but there wasn’t as the flash August print missed across the baord:
“A near-stalling of business activity in August raises doubts over the strength of US economic growth in the third quarter. The survey shows that the service sector-led acceleration of growth in the second quarter has faded, accompanied by a further fall in factory output.
“Companies report that demand is looking increasingly lethargic in the face of high prices and rising interest rates. A resultant fall in new orders received by firms in August could tip output into contraction in September as firms adjust operating capacity in line with the deteriorating demand environment. Hiring could likewise soon turn into job shedding in the coming months after a near-stagnation of employment in August.
“Rising wage pressures as well as increased energy prices have meanwhile pushed input cost inflation higher, which will raise concerns over the stickiness of consumer price inflation in the months ahead. One upside is that weak demand is starting to limit pricing power, which should help keep a lid on inflation around the 3% mark.”
Tesla Shares Slip After Report That Company Has Lowered German Gigafactory Production Targets
Tesla shares are staring Wednesday off sliding more than 2% in the pre-market session after the company lowered the production target for its German plant to 4,350 vehicles a week in July in August.
The company had previously hit 5,000 vehicles a week, an initial report by Business Insider said, but plans to reduce its output further, with BI citing internal documents and anonymous sources.
Tesla had previously disclosed in late March that it hit the 5,000 per month run rate at its newest plant in Gruenheide near Berlin. Business Insider and Reuters are reporting that this rate was a “one-off” and that average output since then has been “much lower”.
The company said as recently as June that its production targets were “on track”, the report says, but new information shows that the company’s target for July had been lowered to 870 cars per day. On days like July 25 and July 28, the company only produced 692 and 806 vehicles, respectively, the report says.
Internal targets have been moved lower to 750 cars per day, or less than 4,000 vehicles per week, the report says. In July, Tesla said it would be expanding the factory’s capacity to 1 million cars per year.
This hasn’t been the only sign of potentially slowing demand for the EV automaker. Recall just days ago Tesla once again slashed prices of its Model S and Model X vehicles. The company posted on Weibo about one week ago that its Model S price was being cut 6.7% to 754,900 yuan ($103,477) from 808,900 yuan prior. The company’s Model X is priced 6.9% lower at 836,900 yuan, down from 898,900, according to Reuters.
The news follows reports that Tesla was adding new, lower-range iterations of its Model S and Model X that would be priced $10,000 lower than previous base prices, Yahoo reported earlier this month.
The new standard range Model S will start at $78,490 and will offer 320 miles of range and the standard range Model X will now be priced $88,490 and will have a range of 269 miles per charge. Tesla delivered just 19,225 Model S/X vehicles last quarter.
Before today’s landing, the agency said it had perfected the art of making it to the moon, “but it is the landing that the agency is working on,” according to The Associated Press.
India’s previous attempt to land a robotic spacecraft near the moon’s little-explored south pole ended in failure in 2019.
It entered the lunar orbit but lost touch with its lander that crashed while making its final descent to deploy a rover to search for signs of water.
According to a failure analysis report submitted to the ISRO, the crash was caused by a software glitch.
The $140-million mission in 2019 was intended to study permanently shadowed moon craters that are thought to contain water deposits and were confirmed by India’s Chandrayaan-1 mission in 2008.
But this time – success…
Chandrayaan-3 Mission:
‘India🇮🇳,
I reached my destination
and you too!’
: Chandrayaan-3
Chandrayaan-3 has successfully
soft-landed on the moon 🌖!.
A rover, named Pragyan, or wisdom, is set to analyze the chemical makeup of the moon’s surface and search for water over the course of one lunar day, which is equivalent to 14 days on Earth.
The timing of the successful landing – in the middle of the BRICS Summit, and just days after Russia’s epic fail – is not lost of most as Indian Prime Minister Narendra Modi said: “This is an unprecedented moment.”
“This is the moment for [a] new, developing India. This is the moment for 1.4 billion” Indians, he said via videolink from South Africa where he is attending the BRICS summit.
“India’s successful moon mission is not just India’s alone,” Modi added, saying it belongs to all of humanity.
Only the United States, the former Soviet Union and China have made soft landings on the surface before.
Finally, as we detailed previously, China, which along with the U.S. is a leading country in space technology, has agreed to pursue a project to establish a human settlement on the moon together with Russia, but this weekend’s crash of the Luna-25 could mean that Moscow, which is the junior partner in the relationship, has less to offer than originally assumed.
China has accelerated its space program in recent years, and is currently the only country (known) to have landed anything on the moon in the 21st century. The CCP also landed a lunar probe on the moon’s far side for the first time in history in 2019.
Prime Minister Narendra Modi wants to bolster the country’s place among the world’s space faring nations and in June India signed the Artemis Accords, a US-backed initiative with more than two dozen other countries to govern joint missions and civilian space exploration.
Peloton Crashes To Record Low As Sales Tumble, Forecast Slashed
Peloton Interactive shares crashed to a record low in premarket trading on weak revenues for the fiscal fourth quarter and dismal outlooks for its bikes and treadmills while revealing the seat recall for bikes earlier this year severely impacted its business. CEO Barry McCarthy’s much-hyped turnaround strategy is crumbling faster than you can say ‘spin class.’
Peloton’s earnings fell short of analysts tracked by Bloomberg:
Revenue $642.1 million, -5.4% y/y, estimate $641.6 million
Connected fitness revenue $220.4 million, -25% y/y, estimate $210.2 million
Subscription revenue $421.7 million, +10% y/y, estimate $430.8 million
Connected fitness subscribers 3.08 million, +3.8% y/y, estimate 3.09 million
Adjusted Ebitda loss $34.7 million, -88% y/y, estimate loss $19.5 million
Loss per share 68c
Peloton said, “The slowdown exceeded our expectations through May and through the first three weeks of June as consumer spending shifted toward travel and experiences. Then eight weeks ago the trend reversed itself, and we began to see a reacceleration in hardware sales.”
It noted the recall of seats for Bikes announced in May “substantially exceeded our initial expectations, leading to an additional accrual of $40 million this quarter for actual costs incurred as well as anticipated future recall-related expenses. In addition, an estimated 15 to 20 thousand of our 2.2 million impacted Members elected to pause their monthly subscriptions in Q4 pending the receipt of a replacement seat post.”
Peloton barely achieved free cash flow:
For the second time in the turnaround of Peloton, we achieved positive free cash flow* in the most recent quarter, excluding the DISH legal settlement, and despite the impact of the seat post recall on Q4 sales revenue. Pro-forma free cash flow was $1 million, so barely positive and only positive on a pro-forma basis, which was not the goal we set for the business. Nevertheless, we achieved an important milestone in rightsizing the cost structure of the business.
… but that won’t last. The company warned:
We don’t currently expect to remain free cash flow positive in the two upcoming quarters, mainly due to seasonality of our hardware sales, timing of inventory payments, marketing spend as we invest for growth and prepare for the holiday season, and one-time cash outlay for seat posts; but we do expect to achieve this objective once again in the second half of FY24.
First-quarter forecasts were also dismal, missing average analysts’ estimates:
Sees revenue $580 million to $600 million, estimate $647.8 million (Bloomberg Consensus)
Sees adjusted Ebitda loss $10 million to $20 million, estimate profit $5.68 million
Sees connected fitness subscribers 2.95 million to 2.96 million, estimate 3.08 million
Sees gross margin 46.5% to 46.5%
The news sent shares to a record low, down 28% to $5-handle.
Why work out when you can take Eli Lilly’s fat drug “Ozempic.”
We’ve seen this game before: Queue the headline that says ‘Peloton buyout’ to squeeze shorts.
As the first Republican presidential debate approaches, many may wonder how the various hopefuls are getting ready—and how the American people will receive their pitches against the backdrop of the absence of former president Donald J. Trump.
In a series of interviews, campaign representatives and knowledgeable analysts shared insights on the coming spectacle.
Last week, a debate memo published on the website of a firm linked to Florida Governor Ron DeSantis offered some initial clues as to what observers should expect at the event, which will take place in Milwaukee on Aug. 23.
The memo suggested Mr. DeSantis could “hammer Vivek Ramaswamy in a response.”
“Take a sledge-hammer to Vivek Ramaswamy: ‘Fake Vivek’ Or ‘Vivek the Fake,’” it reads.
In addition, it advises him to attack both President Joe Biden and the media repeatedly and “defend Donald Trump in absentia in response to a Chris Christie attack.”
The Pence campaign did not respond to requests for comment from The Epoch Times.
When asked how Mr. Ramaswamy is preparing for the Aug. 23 debate, a spokesperson for his campaign directed The Epoch Times to a 45-second clip the candidate recorded with ABC News’ Kelsey Walsh.
Mr. Ramaswamy told Ms. Walsh he didn’t want to be “overly prepared.”
He said the event would be his “first time ever” participating in such a primary debate, setting him apart from his competitors.
“It’ll be something of a warmup for me,” Mr. Ramaswamy added.
The millennial entrepreneur and anti-woke investor generated a little more pre-debate publicity on Aug. 21, posting an RFK, Jr.-style video of himself playing tennis shirtless, with the caption, “Three solid hours of debate prep this morning.”
Mr. Trump’s absence from Wednesday’s debate, and prospective appearance with Mr. Carlson on another medium, has elicited a range of responses.
While Mr. Christie accused his competitor of “running scared,” a Ramaswamy’s campaign representative told The Epoch Times that the former president “should do whatever he wants!”
“Having counter-programming during the debate is a smart move by both Carlson and Trump since it will help distract from the debate and attract attention, which is their goal,” said Kevin Tober, a news analyst with the Media Research Center, in an email interview with The Epoch Times.
“We can expect Trump’s absence to loom large over the debate. Many of the questions, if not most, will end up having to do with him or about him,” Mr. Tober predicted.
Mark Jones, a political scientist at Rice University, said he thinks Mr. Trump will ultimately “overshadow everything the seven candidates on the stage do, and thus will undermine the ability of all of them to achieve their respective goals due to the fewer number of eyeballs watching the debate and the less intense media coverage of the debate.”
“At the end of the day, the Republican candidate Democrats most want to face in 2024 is Donald Trump, since they believe Biden can beat Trump but would have a much more difficult time beating DeSantis, Scott, Haley, etc.” Mr. Jones told The Epoch Times via email.
Timothy Head, executive director of the Faith & Freedom Coalition, told The Epoch Times that Mr. Trump’s rivals for the presidential slot are in a delicate position.
“Not only do you attack Trump at your own peril of being retaliated against by Trump himself, but even more importantly for the other candidates is trying to court Trump voters,” Mr. Head said in a telephone interview.
Both Mr. Tober and Mr. Jones expect Mr. DeSantis to be the most mercilessly scrutinized candidate on stage.
“Due to some recent missteps from the DeSantis campaign, you can expect some tough questions to come his way. That’s expected, though, since he’s the leading candidate among those participating,” Mr. Tober said.
Mr. Jones said he anticipates Mr. DeSantis “will try to set himself clearly apart as the only viable option to Trump without being seen as overtly anti-Trump.”
He suggested that Mr. DeSantis’s rivals will go after the governor “with the goal of freeing up his donors and voters”—a prediction in line with what other insiders have told The Epoch Times about the intra-GOP scramble for the presidential nomination.
“The lane is for Trump and a non-Trump candidate. That’s an oversimplification, but sometimes a simple story is right,” Daron Shaw, a presidential campaign veteran and professor of government at the University of Texas at Austin, told The Epoch Times in a July interview.
According to Mr. Head, a very big question will loom over the debate: “Which candidate can establish themselves as the Trump alternative?”
He said he’s paying close attention to which candidates succeed in connecting with the electorate.
That holds true even for candidates who have strong records on the Faith & Freedom Coalition’s central issues—parental rights, religious liberty, and abortion.
While he argued that Mr. Pence’s “political and policy backgrounds could hardly be any stronger” for religious voters, he acknowledged that there is a “personality equation” as well.
‘Not Afraid of Hard Questions’
Other 2024 hopefuls shared some details about what to expect in Milwaukee with The Epoch Times.
An advisor to former South Carolina Governor Nikki Haley told The Epoch Times that the candidate has “been preparing for six months on the campaign trail answering unscripted questions from voters across New Hampshire, Iowa, and South Carolina.”
“She’s not afraid of the hard questions. She’ll always fight for what she believes in,” the advisor added.
A campaign spokesperson for Sen. Tim Scott (R-S.C.) told The Epoch Times that the presidential hopeful “will share his positive, conservative message on the debate stage in Milwaukee.”
“This debate is another opportunity to connect with millions of voters across the country and show why Tim has faith in America and why he is the strongest candidate to beat Joe Biden,” the spokesperson continued.
The Epoch Times contacted the presidential campaign of North Dakota Governor Doug Burgum. The campaign did not respond to requests for comment.
The EM-ification Of Developed-World Government Bonds
Authored by Simon White, Bloomberg macro strategist,
Heightened inflation risks and more profligate governments are pushing developed-market bond yields higher, closing the gap with their emerging-market counterparts.
It couldn’t last forever. After more than a decade of ultra-low DM rates driven by forward guidance and central-bank balance-sheet expansion, the higher-rates genie is out of the bottle.
The repressed risks from years of QE, which allowed debt, leverage and other financial risks to build, as well as the “government put” – a sea change to the fiscal backdrop where DM governments run persistently large fiscal deficits – have conspired to make developed-market bonds look increasingly EM-like.
The average yield of DM government bonds is as high at it’s been relative to the average EM bond yield since the early 2000s, the time of China’s accession to the WTO, the rise of the BRICs and the general improvement in financial prudence shown by EMs after the Asian crisis in the late 1990s.
In median terms, DM yields are now just a hair’s breadth below those of EMs. Again it was the 2000s since the two were so close together. The difference this time around, however, is not a marking down of EM risks, but a notable marking up of DM ones.
Ten-year bond yields are up almost everywhere. But there is a notable bifurcation, with most of the largest yield moves over the last two years in DM countries.
There are clear reasons why.
First, inflation has generally been a worse problem for DMs than EMs.
The median year-on-year CPI for DM countries rose by almost 9 percentage points between 2020 and 2022 versus only six points for EM.
Second, fiscal deficits have risen globally since the pandemic.
But even though the median deficit of EM and DM countries currently sits at about the same level, DM fiscal deficits have risen by more since 2020. Countries across the globe had to increase borrowing to cope with lockdowns, but DMs – with their more generous government support – borrowed more.
Furthermore, the emergent change of attitude in DM countries after the pandemic – that governments are now there to backstop a litany of downside risks, from job loss to ill health to higher energy prices – has led to the government put, where elevated fiscal deficits are becoming a feature rather than a bug.
The rise in fiscal deficits has driven a marked increase in government debt-to-GDP levels of DM countries. While they have generally had a higher debt-to-GDP level (often EMs’ problems manifest first on the private sector’s balance sheet), DMs’ debt ratios have recently risen to new highs while those of EMs have remained steady.
These official debt ratios do not take account of the huge unfunded liabilities in medical care and pensions carried mainly by DM countries – a fact that will not be lost on bond investors.
The increased debt load, along with a greater proportion of debt at ultra-low rates, means that DM countries’ interest expense is poised to rise faster than EM countries. For the US we can see the outcome clearly, with the rise in bond yields leading the annual interest expense of the US government by six months.
Governments have two main sources of income: borrowing, and taxation. Given fiscal deficits are already large – especially when you factor in that most DM countries are not (yet) in recession – taxing more would normally be an option. But here DM countries are already hitting against limits.
The chart below shows the tax-to-GDP ratio of EM and DM countries in the OECD (EM OECD countries include Mexico, Turkey, Colombia and Hungary). The ratio has risen in both EM and DM countries, but the DM’s ratio is greater, and is close to all-time-highs going back to the 1960s.
It’s possible DM countries in the aggregate are unable to tax much more in a net productive manner.
It has been speculated that the recent rise in global yields, led by the US, is due to an increase in the neutral rate’s estimate (Federal Reserve Governor Powell may address this at Jackson Hole this week). Even if that is the case, it means the economy needs higher real yields to prevent inflation from accelerating – an implicit acknowledgment fiscal risks have risen in the US (and likewise in other DM countries).
For international investors there is less to like about developed-market bonds. Yields, and their volatility, are beginning to reflect that. EMs are no bed of roses either, but their longstanding additional risks associated with borrowing in a non-hard currency, a history of more recent defaults, more volatile growth, and the possibility of capital becoming trapped have not significantly worsened in recent years.
What has got worse is the developed-world’s attitude to debt. Starting out in the 1980s with the great bond bull market, and reaching its apotheosis in the post-GFC QE years, a dalliance with MMT-like policies, and finally the pandemic, DMs’ fiscal situation has become increasingly precarious – leaving the line between EMs and DMs ever more blurred.
China’s Rainfall Is In The Wrong Place For Hydropower
By John Kemp, senior market analyst
Typhoon Doksuri brought some of the heaviest rain on record to northern China at the end of July and the start of August, causing severe flooding in the province of Hebei and low-lying cities around Beijing. But in southern China, which accounts for most of the country’s total hydroelectric generation, the drought that began in the middle of 2022 has persisted, limiting hydro output and forcing increased reliance on coal.
China generated 121 billion kilowatt-hours (kWh) from hydro in July 2023, down from 146 billion kWh in the same month a year earlier, and the lowest since 2015.
The gap was filled by thermal generation, mostly from coal, which increased to a record 600 billion kWh in July 2023, up from 556 billion kWh the year before.
China also boosted generation from wind farms (+16 billion kWh) and solar farms (+5 billion kWh) compared with July 2022.
But without the extra generation from thermal (+44 billion kWh) it could not have offset the drop in hydro (-25 billion kWh) while meeting growth in load (+40 billion kWh).
China continues to rely on its massive domestic coal reserves for energy security amidst a drought even as it ramps up the production of wind and solar power.
To ensure coal-fired generators had sufficient fuel on hand, domestic coal production increased to a record 2,672 million tonnes in the first seven months of 2023, up from 2,562 million tonnes in 2022.
Coal imports also surged to a record 261 million tonnes in the first seven months, up from 139 million tonnes in the same period in 2022.
SOUTH CHINA DROUGHT
Four-fifths of China’s total hydro generation comes from provinces along the Yangtze River system and further south.
The two southwestern provinces of Sichuan and Yunnan alone accounted for almost half (48%) of the country’s hydro power in 2020, according to the National Bureau of Statistics (NBS).
Including other central and southern provincial-level areas like Hubei, Guizhou, Guangxi, Hunan, Fujian, Guangdong and Chongqing takes the total share to 80% (“China Statistical Yearbook”, NBS, 2022).
But the region has experienced much lower than average precipitation since the middle of 2022, severely depleting the volume of water behind the hydro dams.
Regional precipitation is concentrated in the months of July and August when the wet phase of the East Asian Monsoon peaks and brings around one-third of the total annual rainfall.
But precipitation across the region was unusually low in July and August 2022 and the pattern is repeating in July and August 2023.
At the city of Yibin, on the Sichuan-Yunnan border, precipitation totalled 79 millimetres in July 2023 and 45 millimetres in July 2022 compared with an average of 191 for the same month between 2014 and 2021.
Precipitation has totalled 102 millimetres so far in August, up from 84 millimetres in August 2022 but down from an average of 246 millimetres in the same month between 2014 and 2021.
Droughts in consecutive years will severely deplete the region’s hydro resources and depress generation until at least the middle of 2024.
Facing continued restrictions on hydro generation, coal-fired generation, coal production and coal imports will have to rise even further.
With inflation plaguing the economy as the U.S. dollar is increasingly being sidelined in international trade, potentially even at risk of losing its status as the global reserve currency, lawmakers in Washington and state capitals are touting gold and precious metals as the solution.
From congressional efforts that would once again back the U.S. dollar with gold to state-level initiatives to facilitate commerce in precious metals, proposals are proliferating. Some have already advanced.
Private-sector players are getting in on the action, too, arguing that gold can be a defense against economic calamity as foreign governments and central banks stockpile record amounts of precious metals.
In a series of interviews with The Epoch Times, state and federal lawmakers working to restore gold as money argued that this was the best way to defend the dollar, stabilize the economy, rein in government spending, and protect U.S. interests.
A bill introduced in Congress this year by U.S. Rep. Alex Mooney (R-W.Va.), dubbed the Gold Standard Restoration Act (H.R. 2435), would redefine the dollar in terms of a fixed weight in gold. The legislation would also require authorities to exchange paper currency for gold.
“How can you look at a country that’s 32 trillion in debt with out-of-control spending and think it’s the right standard to go by?” Mr. Mooney asked in a phone interview with The Epoch Times, warning of peril ahead for the dollar if its gold backing was not restored.
“Returning to the gold standard would bolster domestic and international confidence in the U.S. dollar because its value would be tied to something of actual worth, not just the ‘full faith and credit’ of the U.S. government,” added Mr. Mooney, who has been sounding the alarm throughout his political career. “This would preserve the U.S. dollar’s global reserve status.”
Meanwhile, in Texas, lawmakers concerned about the stability of the dollar and the U.S. economy are working to facilitate commerce in gold through the Texas Gold Depository.
“You have to look at history,” said Texas Rep. Mark Dorazio, a Republican who introduced the bill to facilitate intrastate trade in gold. “Over the last 6,000 years of history, gold and silver have kept their value and served as the standard.”
“It is the go-to in economic crisis and instability—everyone knows you go to gold,” the lawmaker told The Epoch Times in a phone interview.
“Everybody I talk to likes the idea of using our depository to conduct business,” he added. “Plus it would make money for the state. It’s a win-win for everyone.”
Ron Paul, a longtime champion of the gold standard and sound money who spent decades in Congress attempting to draw attention to the issue and wrote a best-selling book called “End The Fed,” told The Epoch Times that gold is likely to play a major role in the future.
As what he called the “Mickey Mouse” dollar continues to lose dominance, “something will have to replace it, [and] now we are seeing that,” he said, warning that “the Chinese are buying a lot of gold.”
Dr. Paul ridiculed the IMF’s Special Drawing Rights and emerging central bank “digital” currencies without inherent value as potential alternatives, saying something tangible such as gold is what’s needed.
“If there’s a digital currency that is truly backed with gold, that might be helpful,” he said.
Ultimately, Dr. Paul said he would repeal legal tender laws, abolish the Federal Reserve, and allow the market to decide what should be used as money.
“Gold and silver became money spontaneously thousands of years ago, and metals have worked well,” he said, praising state and federal efforts on precious metals. “We need sound money.”
Despite his pessimism about the economy, Paul, who gained national prominence during his runs for president, celebrated the growing number of states declaring gold and silver to be legal tender.
“The Constitution is very much on their side,” he said.
Among other benefits, this can facilitate trade in precious metals by removing sales taxes and eliminating other obstacles, he said.
“This is a silent revolution going on at the grassroots level, passing legislation on this,” Paul said, adding that gold could protect countries, states, and even individuals. “That is a help in changing attitudes.”
As government debt and inflation continue to grow amid moves by U.S. adversaries to displace the dollar, interest in precious metals will continue to expand, multiple experts told The Epoch Times.
What Happened to Gold?
Until about 50 years ago, the U.S. dollar was still officially backed by gold. Because other currencies were mostly exchangeable for dollars on demand, the global monetary system was in effect underpinned by gold—at least in theory.
In fact, for thousands of years, precious metals have served as money. Economists say this is because they are durable, portable, scarce, and inherently valuable.
But with a series of major policy changes, beginning with the establishment of the Federal Reserve in 1913 followed by a 1933 executive order by President Franklin D. Roosevelt limiting gold holdings, that began to change.
Under the leadership of President Richard Nixon, the U.S. government formally severed the dollar’s final link to gold in 1971, ending the ability of even foreign powers to exchange their dollars for gold.
That was a turning point. Conventional wisdom holds that the move by Nixon resulted in the end of the gold standard forever as most of the world was suddenly plunged into what is known as a “fiat” monetary system. Fiat means the currency has value by government edict, rather than any inherent value.
Economist John Maynard Keynes famously referred to the metal as a “barbarous relic,” a view that has proliferated in academia and in central banking circles.
But the world is now facing escalating economic and monetary turmoil. Just last week, Fitch downgraded U.S. debt in a historic blow as debt levels surge and the purchasing power of currencies worldwide plummets.
The problems with the dollar are growing. As reported in May, U.S. adversaries such as the Chinese Communist Party are actively working to reshape the global monetary system and replace the dollar.
Even traditional U.S. allies such as France and Brazil are now doing international deals in other currencies.
Multiple experts explained that Biden administration and Federal Reserve policies were contributing to the trend through high spending and loose monetary policy blamed for inflation.
Calls for major monetary reform at the international level have been steadily growing for decades, and have ramped up further in light of current events.
Numerous world leaders and central bankers, including the People’s Bank of China, have proposed an international reserve currency to displace the dollar, and senior U.S. policymakers have even flirted with the idea publicly.
But in the United States, more traditional options for drastic reforms involving metals are being explored, too. Indeed, developments are causing many experts and lawmakers to take a fresh look at the “barbarous relic.”
At the same time, reports that authorities in the BRICS nations (Brazil, Russia, India, China, and South Africa) will consider a gold-backed currency are fueling interest in monetary metals worldwide.
Non-Western central banks are buying gold in record quantities, according to the World Gold Council, and analysts expect that demand to remain strong.
“We think this trend of central bank buying is likely to continue amid heightened geopolitical risks and elevated inflation,” Swiss bank UBS said in a note to clients in late May.
Gold Standard to the Rescue?
Several congressional Republicans who spoke with The Epoch Times pointed to current events to highlight what they say is the urgency of legislation to protect the dollar by once again tying it to gold.
Mr. Mooney of West Virginia, the chief sponsor behind the “Gold Standard Restoration Act,” explained that severing the link between the dollar and gold has produced extreme spending, inflation, and other problems.
“We need to learn from history,” he told The Epoch Times. “When President Nixon unfortunately took us off the gold standard, it made everything worse. He claimed at the time it was going to control inflation, but the opposite occurred.”
“It was a huge mistake,” continued Mr. Mooney, who introduced the bill in the last Congress as well. “Inflation is still out of control to this day.”
Because the dollar is no longer tied to gold, and because the federal government is rapidly losing the trust of Americans and people worldwide, the dollar’s status as the global reserve currency is at risk, he said.
“They keep playing monetary games at the Fed, with borrowing and printing money, and that makes the dollar less stable and more susceptible to international competition,” the congressman warned, adding that the Chinese Communist Party is taking full advantage.
But eventually, change may be forced upon the United States.
“If we get to the point where we literally can’t pay our debts anymore—where we default on our loans—it would force some fiscal restraint in our country, but it would also jeopardize the dollar and give a great opportunity for communist China and other countries to not use the dollar anymore as the standard,” he said.
Mr. Mooney also pointed to increasingly erratic U.S. foreign policy such as the Afghanistan withdrawal “debacle,” saying other governments were now reconsidering whether the United States is truly as stable as previously believed.
Aside from restoring the gold standard, Mr. Mooney said it was imperative for the U.S. government to come up with a plan to control spending. “Democrats have absolutely no plan to do that,” he said.
He also warned that if current trends continue, economic disaster is a certainty.
“I can’t tell you what the exact limit is, but I never thought we’d be able to get this far,” he said, blasting the $5 trillion in new debt added under the current administration as “totally irresponsible.”
The only answer is to get back to a real standard where the dollar is backed by gold, he said. “If we got back to the gold standard, at least we would have a restriction there in terms of government spending,” Mr. Mooney added.
