In New York City, 34th Street Partnership, a non-profit retail trade group serving Midtown retailers, hired a security firm that provides K-9 units equipped with handlers, the New York Post reported.
Earlier this month, the K-9 program was launched at the CVS at Eighth Avenue and West 34th Street. The pharmacies have been plagued with thefts.
“We’ve had a lot of complaints. A lot of shoplifting occurs in drugstores,” said Kevin Ward, the vice president of security for the 34th Street Partnership.
La nueva arma contra hurtos en las tiendas de la calle 34 de Manhattan, donde los robos han aumentado casi 60%. El grupo 34th Street Partnership dice que son muy efectivos y han evitado 27 hurtos en menos de un mes 🐶 pic.twitter.com/PRPLUtQHE4
“It’s effective so far,” said Ward. He added, “We’ve had a couple of people who were known shoplifters who saw the dog and walked out without stealing anything.”
Between Feb. 15-19, K-9 units prevented at least 25 thefts at the CVS stores. Here are some examples of how the K-9s are visible deterrent shields for stores (list provided by NYPost):
On Feb. 15: a homeless man attempted to leave the store with unpaid items in the morning. He dropped the goods and fled after being approached by the security officer and the K-9.
On Feb. 16: Two known serial shoplifters entered the vestibule of the store — but left without entering after seeing the K-9 and guard.
On Feb. 17: A man attempted to leave the store without paying for two boxes of Tums and three bottles of juice that morning. The manager alerted the guard and K-9, and the thief returned the items when approached.
On Feb. 19: A homeless man attempted to steal a carton of orange juice along with a container of fruit salad, but returned the goods after management alerted the K-9 and security, who confronted him.
The canine patrol is a pilot project as desperate retailers in Midtown grapple with out-of-control shoplifting. There were more than 1,000 theft complaints last year versus 2021.
Just when you thought that the Kyle Rittenhouse case was over . . . it is back.
Gaige Grosskreutz who was shot in the arm by Kyle Rittenhouse during the Kenosha riots in 2020 is now suing him as well as Wisconsin police and officials.
Grosskreutz effectively repeats his earlier rejected claims that he was merely trying to protect others and had his hands up when Rittenhouse shot him.
The difference is that this civil lawsuit will be resolved under the lower standard of proof by a preponderance of the evidence (rather than beyond a reasonable doubt). Nevertheless, the case could prove messy for Grosskreutz whose criminal background and actions that night could undermine his claims.
Indeed, the most damaging witness against Grosskreutz may prove to be himself.
The lawsuit names as defendants Rittenhouse, the city of Kenosha, Kenosha County, five other neighboring counties, police officers, former Kenosha County Sheriff David Beth and former Kenosha Police Chief Daniel Miskinis. Grosskreutz alleges assault, battery, and intentional infliction of emotional distress. Rittenhouse was also added to Grosskreutz’s civil rights and Equal Protection claims against the city and local officials.
In the trial, Grosskreutz admitted that he pointed a firearm at Rittenhouse before the then-teenager shot Grosskreutz and two others. He testified that he carried a loaded gun that night and, during cross-examination, defense attorney Corey Chirafisi asked Grosskreutz, “It wasn’t until you pointed your gun at him, advanced on him … that he fired, right?” Grosskreutz responded, “Correct.”
Grosskreutz also admitted that he refused initially to answer questions from the police and refused to give police permission to look through his phone. He also did not tell police that he was armed that night or pointed a gun at Rittenhouse. As shown in the testimony below, Grosskreutz admits that Rittenhouse did not shoot while Grosskreutz had his hands up. He fired when Grosskreutz pointed his Glock at Rittenhouse.
Grosskreutz also admitted that Rittenhouse told him that he was going to the police and was running in their direction. He also admitted that he lied to police when he said that he tried to tell a man with a skateboard to stop hitting Rittenhouse before he was shot. The false statement to police portrayed Rittenhouse as shooting him after he tried to help him.
The complaint repeatedly brushes over that earlier testimony and reframes the facts as if Grooskreutz was shot virtually randomly:
“Plaintiff Gaige Grosskreutz watched all of this happen.
He approached with his hands in the air to try to ease the situation and stop the killing. 27. Defendant Rittenhouse instead shot Mr. Grosskreutz in the bicep, leaving a gaping wound.
Thankfully, Mr. Grosskreutz did not die that day.
…
Plaintiff Gaige Grosskreutz approached Defendant Rittenhouse with his hands up, pleading with him to stop his shooting rampage. Without provocation or any legal justification, Defendant Rittenhouse shot at Grosskreutz from point-blank range, hitting him in the arm. Thankfully, Grosskreutz survived.” But he must live with the physical and emotional wounds inflicted by Defendant Rittenhouse and the Defendants who deputized and enabled him. The conduct of the Defendants in this case directly caused Gaige Grosskreutz’s injury.”
Grosskreutz also admitted that it was him on his cellphone footage who angrily yelled at Rittenhouse to go home as Rittenhouse tried to give masks to protesters. He admitted that did not see any violent acts or threats from Rittenhouse before the shooting.
Grosskreutz also admitted his CCW permit was invalid and that he was therefore illegally carrying a concealed weapon on the night, though he insisted that he did not know it was invalid.
Grosskreutz was also questioned on the stand about his seeking $10 million in a lawsuit against the city and another lawsuit in federal court for damages. He admitted that he did not mention in the two filings that he was armed at the time. He also admitted in trial that a conviction of Rittenhouse would help him secure the $10 million.
It is not clear how he will get around that admissible earlier testimony. Instead, the complaint seems more of a diatribe against the police who it alleges “deputized these armed individuals, conspired with them, and ratified their actions by letting them patrol the streets, armed with deadly weapons, to mete out justice as they saw fit.” The problem is that these individuals had a right to carrying guns. Indeed, Grosshreutz also came to the protest armed.
The complaint also alleges that Rittenhouse was linked to right-wing white nationalist and militia groups, noting that a member of the so-called Boogaloo Bois was seen “patrolling the streets” with Rittenhouse that night, and that he later met with Proud Boys leader Enrique Tarrio. It also states that “in the months after he killed two people and maimed Mr. Grosskreutz, Defendant Rittenhouse was seen in a bar in his hometown flashing an ‘OK’ sign, a symbol of white supremacy/white power.” Such evidence would be challenged by the defense as prejudicial and inadmissible at trial.
There is also likely to be fight over the admission of Grosskreutz’s criminal history, which was not fully admitted at the criminal trial. That criminal history extended a full decade before the Kenosha shooting and involved violence against his girlfriend. Indeed, just days before the shooting, Grosskreutz was arrested for allegedly “prowling” when he was videotaping police vehicles in a police department parking lot around 1 a.m.
In May 2015, Grosskreutz was stopped by police near Kenosha with allegedly “bloodshot and glassy” eyes and found to have a 9mm Glock 19 handgun in his vehicle.
In 2013, he was charged with smashing the bedroom window at a former girlfriend’s home at 4 a.m.. The girlfriend alleged that he had been harassing her.
In 2012, Grosskreutz was charged with a felony burglary charge in New Berlin when he was caught trying to sell three stolen PlayStation consoles.
In 2010, Grosskreutz was arrested and charged with hitting his grandmother in the face during a dispute. During the attack, he also alleged threw a lamp and damaged a wall. He was charged with disorderly conduct and criminal damage.
He also reportedly had various sealed juvenile arrests.
The lower standard of proof will obviously work to the advantage of Grosskreutz, but it will be hard to get around his prior testimony or the image of him pointing the Glock at Rittenhouse before the teenager fired, wounding him in the arm.
Rittenhouse is also facing a lawsuit by one of the men shot on that night. A federal judge ruled that the lawsuit by the family of Anthony Huber could go to trial. Huber, 26, struck Rittenhouse with his skateboard before Rittenhouse shot and killed him.
Big Bear Mountain—home to one of Southern California’s premiere ski resorts tucked in the San Bernardino National Forest—received more snowfall this week than it normally receives in a year, according to a spokesperson for the resort.
During the week, snowfall exceeded more than 100 inches—the retreat’s yearly average—resort spokesman Justin Kern told The Epoch Times on Friday.
The sudden deluge comes as Southern California faces its first blizzard warning since 1989, beginning Feb. 23, for much of the region. Officials and resort personnel alike have been warning residents not to travel up the mountain until the advisory is set to expire after the weekend.
However, the resort remained open during the day on Friday with only a cancellation of its night operations.
Kern said some roads heading up the mountain, like State Route 330, are closed off. While other roads may be open with traction requirements, like Highway 38 to Mentone or Highway 18 to Lucerne Valley, the resort is encouraging people not to come until the storm clears, especially since the average Californian is not used to driving in this kind of weather.
“Our primary concern is just making sure that people are traveling to and from the mountain safely,” Kern said. “This is not the time to start learning how to drive in the snow.”
All vehicles, including those with four-wheel drive and snow tires, must have chains, Kern said.
Meanwhile, on the mountain—which is projected to get up to 8 feet of snow from this storm—those who already had reservations in the town’s lodges could be seen snowboarding and skiing on Friday. The resort is keeping an eye on strong gusts of wind, which could result in ski lift closures.
Additionally, the Bear Valley Unified School District canceled classes Thursday and Friday for “snow days,” due to hazardous driving conditions.
The unexpected snowfall comes as mountains in several counties—Los Angeles, Ventura, San Bernardino, and Santa Barbara—all fell under blizzard warnings on Thursday. The National Weather Service warned these mountains would experience “heavy snow, winds gusting up to 80 mph, and near zero visibility.”
National Weather Service meteorologist Andrew Orrison said there’s a “unique combination” of what’s causing this winter phenomenon across Southern California.
“It’s a combination of it being a very cold storm and it’s slow-moving, and because of it being slow-moving, it has time to bring in a lot of moisture from the Pacific Ocean,” Orrison told The Epoch Times. “And the persistence of that feed of moisture off the Pacific Ocean coupled with the fact that this is a very cold system is really what’s driving the very heavy snowfall totals.”
The impacts of the storm, Orrison said, are concerning to forecasters, as the resulting blizzard conditions will be dangerous and could potentially cause power outages.
And while the blizzard warning is supposed to end by Saturday, there’s a possibility it could be extended, he said, as heavy snowfalls coupled with strong winds could be “near hurricane force.”
“It definitely is an extreme event, because of the way this has come together,” he said.
Shortly after noon on Friday, Vineland Avenue in North Hollywood adjacent to the Hollywood Burbank Airport was flooded, trapping at least five cars. Subsequently, a flash flood warning was in effect through 10 p.m. Friday in inland parts of Los Angeles and Ventura Counties. Weather experts warned earlier in the week that flooding was likely to occur.
“As a reminder, if you see flooded roads, TURN AROUND, DON’T DROWN! You can’t tell how deep the water is and you (and your vehicle) can be swept away,” the National Weather Service in LA wrote on Twitter Friday.
Orrison said this storm system—what he calls an atmospheric disturbance—is different from typical winter storms in California, which are often associated with so-called atmospheric rivers. Unlike those storms, this system came down from the north and is stronger, but colder. As a result, snowfall is occurring at lower elevations and even in some valley areas, including near the Pacific coast.
One popular state landmark at a lower elevation that saw light snowfall yesterday morning was the 45-foot Hollywood sign, sitting at about 1,600 feet on the southern slope of Mount Lee in the Santa Monica Mountains.
It was a rare sight to see, Hollywood Sign Trust Chairman Jeff Zarrinnam told The Epoch Times.
“I was surprised,” Zarrinnam said. “I walked outside my door yesterday and I see snow on the ground, and I said, ‘Well, I’d better make a snowball and take a picture with the sign because that never happens.’”
On taking the stage in the East Palestine High School auditorium on Feb. 24, environmental activist Erin Brockovich told a crowd mostly composed of local residents dealing with the aftermath of a toxic train derailment she was “here with a message you don’t want to hear but maybe you know.”
“Superman is not coming. Nobody is coming to change what has happened to you, magically fix everything, or give you all of the answers,” Brockovich said. “You will become the strongest advocate you have.
“You have the ability to become—and you will become—your own critical thinker,” Brockovich added.
“You will vet information. You will ask questions. You will demand answers.”
Brockovich cautioned audience members that there will not be a swift resolution to the issues that now impact East Palestine and surrounding communities.
“You want to be heard, but you’re going to be told it’s safe, you’re going to be told not to worry,” Brockovich said.
“That’s just rubbish, because you’re going to worry. Communities want to be seen and heard.
“This is not going to be a quick fix. This is going to be a long game,” she added.
Environmental activist Erin Brockovich speaks at a town hall in East Palestine, Ohio, on Feb. 24. (Jeff Louderback/The Epoch Times)
An overflow crowd of more than 2,000 gathered in this village of 4,761 near the Pennsylvania border to hear Brockovich speak, with more than 100 media members covering the event.
Brockovich was joined by water expert Robert W. Bowcock and trial attorney Mikal Watts. They are the principles of East Palestine Justice, an organization of lawyers, environmental activists, and scientific and medical professionals providing assistance to eastern Ohio and western Pennsylvania residents affected by the derailment.
On Feb. 3, a 151-car Norfolk Southern Railway freight train derailed in East Palestine.
When the train crashed, 38 rail cars derailed, and a fire ensued which damaged an additional 12 cars, according to the National Transportation Safety Board (NTSB).
“There were 20 total hazardous material cars in the train—11 of which derailed,” according to an NTSB statement.
Environmental activist Erin Brockovich (C-R) speaks to concerned residents as she hosts a town hall at East Palestine High School in East Palestine, Ohio, on Feb. 24, 2023. (Michael Swensen/Getty Images)
Fears escalated in the immediate aftermath of the wreck. Seeking to avoid an explosion that officials claimed would send shrapnel into the air, vinyl chloride was intentionally released and burned on Feb. 6, sending a massive cloud of black smoke into the sky that could be seen for miles around and was likened to a mushroom cloud caused by a nuclear weapon.
The burn triggered questions about the health effects that could potentially impact the residents of East Palestine.
Vinyl chloride, a chemical used to make PVC pipes and other products, has received extensive attention as part of the emergency. The National Cancer Institute notes that vinyl chloride has been linked to cancers of the brain, lungs, blood, lymphatic system, and liver.
Other rail cars contained ethylene glycol monobutyl ether, ethylhexyl acrylate, isobutylene, and butyl acrylate, which are all used in the making of plastic products.
Officials from federal and state agencies have repeatedly said that tests show the air and water are safe in East Palestine and surrounding communities. However, residents continue to report headaches, vomiting, burning eyes, skin rashes, and other ailments.
“I’ve never seen anything in 30 years like this and the situation happening in East Palestine,” Brockovich said.
“You all know the story about digging the hole and draining the chemicals in there and lighting it on fire,” she added. “I don’t think that turned out well for anybody.”
Brockovich said she traveled to East Palestine after receiving numerous emails from residents who requested her presence.
“I feel your angst and I feel your frustration. And I want to share something with you: You are not alone,” she said. “It feels like every community I’ve been going to for 30 years gets the same run-around, and you don’t get clear information.
“You own this narrative, not an agency that wasn’t here, and certainly not Norfolk Southern,” Brockovich added. “You know how you feel. You know if you’re sick. You know if you smell something. You know if the water’s a funny color.”
Communities confronted with an environmental disaster can handle the truth, Brockovich added, “but what they can’t handle is being misled and lied to.”
At that moment, the auditorium’s lights turned off, promoting Brockovich to say, “That is how we feel—in the dark—and in the dark, we will continue to talk.”
[D]eveloped in 1966 by Americans Richard Cloward and Frances Fox Piven — both sociologists and political activists…
…[t]he strategy focused on overloading the United States public welfare system in order to precipitate a crisis, which would ultimately lead to replacing the welfare system with a national system of “a guaranteed annual income and thus an end to poverty.”
It worked pretty well – so well, in fact, the outline has been applied in many instances to bring about the disruption of public programs, policies and systems:
Time marches on and the Cloward–Piven strategy, as Elbel puts it, “remains an active instrument of change in America. Ultimately, it is the tool by which multicultural elites aim to “fundamentally transform America.”
To fully appreciate the genius of the strategy, just look around at the other pressure points of American society being clogged and hamstrung by the nonstop avalanche of C-P red tape.
The southern — and now northern — borders are beyond overwhelmed. Border Patrol agents are taken away from the flood of illegals and reassigned to paper-pushing, babysitting, and chauffeuring gigs. And the flood continues unabated.
As the immigrant invasion continues — over 5 million by current estimates — local support structures and systems are overwhelmed: schools, housing, law enforcement, retail outlets are unable to cope. The damage is not reserved to the systems. Visit a local hospital E.R. And not just in towns in Texas, Arizona, Oklahoma, and California. Identical issues around the country are similarly effected as “got-aways” and exported aliens make their way to Chicago, New York, Miami, L.A., San Francisco. All those cities already had overcrowding problems left over from the COVID-19 “pandemic.” Crime stats are skyrocketing, primarily in Democrat-governed cities and blue states.
Food shortages are ubiquitous. Baby formula to Brussels sprouts to ground meat to eggs continue to run in short supply as prices rise. Suspicious fires, bombings, and “accidents” at food processing plants are blamed without explanation along with droughts, avian flu, and the dreaded (supposed) COVID-19 super-duper “sub-variants.” Government regulations reducing the application of certain fertilizers on farms in Holland, Spain, France are proliferating, forcing crop, flock, and herd reductions. Results: farms closing, creating more food shortages, unemployment, and increasing welfare rolls.
Public outcry and political pressure have been suppressed through ignorance caused by the media. The MSM’s OCR (Obsessive Compulsive Regurgitation) of the most salacious to the most dramatic to the most irrelevant “news of the day” leaves no air time for hard news stories and continuing tragedies that will inform the affected about the coming tragedies of system collapse.
Meanwhile, politicians continue to focus on J6, laptops, classified docs, name-calling, distractions, denials, Harry and Meghan, and similar matters irrelevant to the preservation of liberty, erecting a fog bank over the news and information the public needs. People sufficiently talented to get themselves elected can whistle and chew gum simultaneously. But the analogy is lost on the blow-dried celebrity news media set.
Don’t presume that the C-P strategy can’t — or doesn’t — work both ways. What if the internals of the bureaucratic deep swamp work in harmony with the overwhelming external pressures by slow-walking the very administrative solutions to the problem?
Overall, that’s been the plan all along. Proven effective over decades, Cloward-Piven remains the strategy “multicultural elites are using to fundamentally transform America.”
Nothing good can come of it. It’s rotten to the core.
EU’s War Anniversary Anti-Russian Sanctions Package: 121 Businesses & Individuals
The European Union has rolled out with fresh sanctions on Russia, which comprises the 10th package, marking one year since the Ukraine invasion. “New EU sanctions over Russia’s war in Ukraine adopted on Saturday target 121 individuals and entities, including Iranian drone manufacturers, officials said,” AFP writes.
European Commission chief Ursula von der Leyen described this latest round of EU measures as “the most far-reaching sanctions ever — depleting Russia’s war arsenal and biting deep into its economy.” She added: “We are also turning up the pressure on those trying to circumvent our sanctions.”
This was announced in tandem with wealthy G7 nations saying they are preparing new major sanctions:
Earlier, Britain and the United States separately imposed new sanctions including export bans and tariffs on all materials used in the war, as well as “third country actors” supporting Russia’s war effort across Europe, Asia and the Middle East.
The G7 groups Canada, France, Germany, Italy, Japan, Britain and the United States. The same group came together last year hours after Russian President Vladimir Putin launched his invasion of Ukraine, imposing the first round of a series of sanctions.
Representing the current G7 presidency, Japanese Prime Minister Fumio Kishida said Friday that “Russia is refusing to change their hardline stance.”
“The international community must come together and show solidarity and impose strong sanctions against Russia,” he added.
However, some ‘global south’ countries which represent a huge chunk of the globe’s population have been resistant:
India, which has maintained a neutral stance on the conflict, does not want the G20 to discuss additional sanctions on Russia. G20 officials told Reuters it was also pressing to avoid using the word “war” to describe the conflict in G20 communique language.
Recall the last time CNN tried to shame India’s Minister of Petroleum and Natural Gas over refusing to sacrifice India’s national interest for the sake of ‘punishing’ Russia…
“Let me correct the perspective: 1) India only bought 0.2% of Russian oil 2) India buys in a quarter of what Europe buys in one afternoon” – STRONG 💪🏼 response by India’s Minister of Petroleum H.E. @HardeepSPuri to CNN’s Becky today. pic.twitter.com/JeLrGm3Bgx
— حسن سجواني 🇦🇪 Hassan Sajwani (@HSajwanization) October 31, 2022
So it clearly won’t be so easy to get these “third country actors” on board after all.
Jennifer Siebel Newsom, the wife of California Governor Gavin Newsom, has been criticized for allegedly making a profit by screening her “gender justice” films to public school children.
The scrutiny comes from a nonpartisan government watchdog group called Open the Books, which claimed that “Siebel Newsom spent years laying the ideological groundwork and political infrastructure to support her policy ambitions,” in a research report published on Feb. 13.
CEO and founder of Open the Books Adam Andrzejewski told NTD, a sister media of The Epoch Times, that his organization found out about Siebel Newsom’s alleged scheme by “following the money.”
Andrzejewski said they followed it “right into the governor’s wife’s … public charity, which is a film and curriculum nonprofit organization that licenses her films and curriculum to public schools across the country and in the state of California.”
The First Lady of California’s nonprofit organization “The Representation Project” was founded in 2011. It has produced four films, all advocating for gender or racial justice.
Siebel Newsom is the producer and director of the films. Andrzejewski said the secret is that “she hires her for-profit film production company to contract with her nonprofit film distribution company.”
Siebel Newsom’s for-profit company, Girls Club Entertainment, has received $1.6 million from The Representation Project since 2012, the report stated.
She also earned $1.5 million in salary from the nonprofit company from 2013 to 2021, which means she has personally received $3 million in profit, according to Andrzejewski.
In the health education framework for California public schools issued in 2021 by the State Board of Education, Siebel Newsom’s nonprofit films and curriculum are recommended.
In the summer of 2022, Gavin Newsom convinced the state legislature to pass a budget providing $4.7 billion for K–12 mental health services, which, among other things, funded 10,000 new school counselors.
“The Mask You Live In,” one of the films produced and directed by Siebel Newsom, would warn “teachers in the classroom that when they show the film and walk students through the curriculum, they should have therapists on hand,” Andrzejewski said, and this became one of the main argument points for Gavin Newsom to convince the state legislature.
The film features porn website addresses, and the pornographic images displayed are tagged with descriptions such as “domination,” “kinky couples,” etc.
The movie claims it will show “how we, as a society, can raise a healthier generation of boys and young men” and will help “shape the national conversation around healthy masculinity.”
However, Andrzejewski said, “This incredibly gives students a roadmap to see this stuff for future exploration outside of the classroom.”
“This is exactly what parents across the entire country should be scared of that their children are seeing in their public school classrooms,” he said.
Besides the sexually explicit imagery shown in two of the four films, lessons that include Marxist ideology and critical race theory are being taught in classrooms, Andrzejewski said.
“This is a classroom very physically divided between those that are, quote unquote, oppressed and those that are, quote unquote, privileged,” said Andrzejewski.
He said Gavin Newsom stars in two of the four films Siebel Newsom made.
“In the curriculum, students are asked to vote for politicians that espouse the same views as her husband, Gavin Newsom,” Andrzejewski said. “We think it’s an on-its-face conflict of interest.”
NTD has reached out to The Representation Project for comment but has not received a response as of this writing.
NTD reporter Jackie Rios contributed to this report.
Vandy DEI Office Used ChatGPT To Write Message About Mass Shooting
We’ve all wondered what the hell collegiate diversity, equity and inclusion (DEI) bureaucrats do all day. Whatever it is, the DEI grifters on the Vanderbilt University payroll gave it a higher priority than writing original copy for a pointless “inclusivity” message about the Feb.13 mass shooting at Michigan State University.
We pause to note that — at Vandy — they’re “EDI” grifters: Apparently prioritizing Marxist wealth redistribution, Vanderbilt puts “equity” first in what it calls its “Office of Equity, Diversity and Inclusion.”
The five-paragraph email to the Peabody College of Education and Human Development is about what you’d expect from DEI programmers — which is to say it sounds like it was written by a robot. Here’s a sample:
Another important aspect of creating an inclusive environment is to promote a culture of respect and understanding. This means valuing the diversity of experiences, perspectives, and identities on our campus, and actively working to create a space where everyone feels welcomed and supported. We can do this by listening to one another, seeking out new perspectives, and challenging our own assumptions and biases.
It just happens that, in this case, it actually was written by a robot. It’s likely nobody would have noticed — if the email hadn’t actually disclosed its AI authorship.
We’re not sure if we should credit the EDI office for transparency or lampoon them for inattention to detail: Intentionally or not, the email included this parenthetical language: “Paraphrase from OpenAI’s ChatGPT AI language model, personal communication, February 15, 2023.”
“Deans, provosts, and the chancellor: Do more. Do anything. And lead us into a better future with genuine, human empathy, not a robot,” said Laith Kayat.
“They release milquetoast, mealymouthed statements that really say nothing whenever an issue arises on or off campus with real political and moral stakes,” said Jackson Davis.
Rather than expecting college deans to lead them to a “better future,” rational students might ask why Vandy’s EDI office felt compelled to write an inclusivity message about a mass shooting perpetrated by a non-student on a campus 500 miles away in the first place.
Then again, such check-the-box pronouncements from universities (and corporations) on all kinds of topics have become an aggravatingly standard part of modern life. “They’re a form of ‘do something‘-ism that college students have grown to expect, but they’re not actually useful or important,” writes Reason’s Liz Wolfe.
Associate Dean for Equity, Diversity and Inclusion Nicole Joseph followed up on the robot-written message with an apology,saying that using ChatGPT to communicate in a “time of sorrow…contradicts the values that characterize Peabody College…This moment gives us all an opportunity to reflect on what we know and what we still must learn about AI.”
Joseph was just appointed to her post in January. As an associate math professor, her research focused on “Whiteness, White Supremacy and how it operates and shapes underrepresentation of Black women and girls in mathematics.”
Vanderbilt announced that Joseph and assistant EDI dean Hasina Mohyuddin — who “facilitates workshops on such topics as unconscious bias, inclusive leadership, the impact of racism and structural inequalities, restorative justice, and narrative circles” — will step back from their duties while the university investigates what happened.
While it wasn’t disclosed, it’s safe to say they’ll still receive a full salary while doing little or nothing of value. In other words, life won’t be so different for these two as they await their inevitable reinstatement.
According to my analysis, the Chinese central bank owned 4,309 tonnes of gold on December 31, 2022, which is more than double than what is officially disclosed. My estimate would make China the second largest gold reserve country after the US. The Chinese private sector holds 23,745 tonnes, bringing the total amount of gold in China to 28,054 tonnes.
China and European countries are in agreement to equalize their ratios of monetary gold relative to GDP in order to prepare for a global gold standard.
Introduction
For estimating the true size of the gold reserves of the Chinese central bank (the People’s Bank of China, PBoC), we first need to make a clear distinction between monetary gold (owned by a central bank) and non-monetary gold (owned by the private sector). Without getting into the exact mechanics of the Chinese gold market here, suffice to say that only non-monetary gold imports into China are publicly disclosed. These imports are required to be sold first through the Shanghai Gold Exchange (SGE), and for tax and liquidity reasons virtually all other supply (mine and recycled gold) in China is sold through the SGE as well. On the demand side, private market participants acquire gold at the SGE. It’s unlikely the PBoC buys at the SGE.
Any analysis about the PBoC’s gold reserves based on known import numbers and domestic mine supply is flawed, therefore. It’s true that in the past the PBoC was the primary gold dealer in China—being the monopoly wholesale buyer and seller—but this has changed since the Chinese gold market was liberalized with the launch of the SGE in 2002.
These are the reasons why the PBoC doesn’t buy gold on the SGE:
The PBoC wants to diversify its foreign exchange reserves—worth more than $3 trillion at the time of writing—by buying gold mainly with US dollars. Gold on the SGE is exclusively quoted in renminbi: not suitable for the PBoC.
As we shall see the PBoC prefers to buy gold covertly. If it buys gold abroad with US dollars, the monetary gold is exempt from being reported in international customs data when crossing borders (non-monetary gold is not exempt). Buying abroad allows the PBoC to purchase and repatriate gold without leaving a trace in the public realm.
Gold on the SGE often trades at a premium. The PBoC is more likely to buy gold that is priced lower abroad.
In 2015 I was in contact with a precious metals trader at a large Chinese state owned bank. He told me that the PBoC buys gold through Chinese proxy banks, such as the one he worked for, in the global OTC market from bullion banks and refineries in, for example, South Africa and Switzerland. Not at the SGE.
Another person I had the opportunity to converse with in 2015, let’s call him Mister-X, worked at one of the big consultancy firms. He was well connected in the industry. Somewhat similar to my Chinese source, he told to me the PBoC uses proxies to purchase gold in the London OTC gold market.
What I don’t know is about the Shanghai Gold Exchange sales, they’re pretty transparent, how much of that is private and how much of that is the government [PBoC]. And I was sort of guessing 50/50, 70/30, whatever. What they told me, and these guys are the dealers, it’s 100% private. Meaning, the government operates through completely separate channels. The government does not operate through the Shanghai Gold Exchange. … None of what’s going on on the Shanghai Gold Exchange is going to the People’s Bank of China.
Until I bump into evidence convincing me of the opposite, my conclusion is the PBoC doesn’t buy gold on the SGE and thus all known supply in China (import, mine output, recycled gold) must be eliminated from our analysis for estimating the PBoC’s true holdings. Most likely, the PBoC buys gold abroad and from there ships it to vaults in Beijing.
Estimating PBoC Gold Reserves
Let us first have a look at what the PBoC has disclosed in the past.
We often see long periods of no purchases and then a sudden large increase in reserves, which suggests they mostly buy by stealth. In June 2015 the Chinese central bank disclosed to have 1,658 tonnes, up from 1,054 tonnes a month prior. Obviously, 604 tonnes weren’t bought in one month.
On one hand the PBoC wants to show the world they are buying gold to catch up with the West, support renminbi internationalization, and move away from the dollar. On the other hand, they don’t want to disclose too much, or they would rock the gold market and drive the price up, which is not in their interest, yet. The Chinese central bank’s interest is to accumulate gold for itself, but it also has a policy of “storing gold among the people” to strengthen China’s economic security (source, page 27). If the price rises, China as a whole can buy less gold.
In March 2013, deputy Chinese central bank governor Yi Gang told the press:
If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers.
We will always keep gold in mind as an option in reserve assets and investments.
We are able to import 500-600 tons a year, or more, but we will also take into consideration a stable gold market.
Some analysts have interpreted the “500–600 tonnes a year” as what the PBoC buys every single year. It’s more likely, though, Yi referred to the weight imported in 2012 by the Chinese private sector and the PBoC in aggregate. Global cross-border statistics show countries net exported 590 tonnes in non-monetary gold to China in 2012. Add whatever the PBoC bought, and you get “500–600 tonnes a year, or more.”
Another argument why the PBoC doesn’t buy 500 tonnes every year is because the gold market is in constant flux. If the price goes up the PBoC can’t buy much for reasons just mentioned. If the price goes down the PBoC can purchase hundreds of tonnes on sale.
In a previous article I have explained that for at least 90 years the gold price is set in the West. The East dampens volatility by ramping up purchases when the price declines, and lowering purchases when the price rises. Many countries in Asia, like Thailand, even turn into net sellers when the price goes up. This analysis rhymes with Yi’s remarks from 2013: the Chinese don’t set the gold price. (In late 2022 and January 2023 Chinese buying was strong while the price went up, but it’s too soon to confirm a trend reversal.)
After having researched the true size of the PBoC’s gold hoard for some years now, I conclude there is but one approach to get close to what they actually have: through intelligence from those dealing with the PBoC: bullion bankers and people at refineries and secure logistics companies around the world. The following analysis is solely based on industry sources.
Every quarter the World Gold Council (WGC) publishes the Gold Demand Trends (GDT) report, which contains statistics provided by Metals Focus (MF) on mining output, scrap supply, newly fabricated jewelry sold, retail bar demand, ETF hoarding or dishoarding, etc. In these reports there is a single sum divulged for the official sector: a net purchase or sale by all central banks and international financial institutions, such as the Bank for International Settlements (BIS), International Monetary Fund (IMF), and European Central Bank (ECB), combined. This is an estimate based on MF’s field research and doesn’t necessarily align with what central banks openly declare. From the WGC:
Central banks
Net purchases (i.e. gross purchases less gross sales) by central banks and other official sector institutions, including supra national entities such as the IMF. Swaps … are excluded.
A … vital source is confidential information [by MF] regarding unrecorded sales and purchases.
For example, when MF—a consultancy firm in close contact with bullion bankers and people at refineries and secure logistics companies around the world—judges the PBoC bought 50 tonnes in Q1 2023, this tonnage will be attributed to official sector activity in its respective GDT report.
By comparing MF’s official sector estimates to what the official sector publishes, we can deduct what’s bought surreptitiously. People familiar with the matter, but prefer to stay anonymous, told me that the majority of these clandestine acquisitions can be ascribed to the Chinese central bank. Saudi Arabia is also known for buying in secret. Let’s say 80% of the difference between MF’s data and the official numbers released by the IMF are PBoC acquisitions.
Since 2010, when MF’s estimates started, the gross difference has mushroomed to 1,945 tonnes, as can be seen in the chart below.
The PBoC thus holds at least 1,556 tonnes (80% of 1,945 tonnes) more than what they disclosed last December (2,010 tonnes), which totals 3,566 tonnes. But how do we know what happened before 2010 when MF’s data begins?
Mister-X told me in 2015 that it was very difficult for his company to go on record with what they truly think the Chinese central bank owns. The PBoC is very influential and upsetting them would make his company’s operations in the mainland impossible. Though he told me that when the PBoC announced to have 1,658 tonnes in June 2015, his firm estimated that in reality they held twice as much (3,317 tonnes). I’m tempted to believe Mister-X because this tonnage would make more sense than the official number relative to, i.e., China’s vast foreign exchange reserves. If we assume the PBoC held 3,317 tonnes in June 2015, and we add 80% of the furtive investments trailed by MF since then, we arrive at 4,309 tonnes on December 31, 2022.
How much gold did the PBoC buy covertly before 2010? According to my math they did 1,700 tonnes in unreported procurements from the 1990s, when the PBoC held 395 tonnes, until 2010*.
The further back in time the more interesting it gets. After China’s hardline communist leader Mao Zedong died in 1976, a more market oriented economy was structured under the guidance of Deng Xiaoping. Individual gold prospecting was allowed in 1978 (source, page 97), though all output was required to be sold to the PBoC.
China’s new economic model soon bore fruit. Instead of having to sell domestic mine output to raise foreign exchange, the PBoC was buying gold in London from the Dutch central bank (DNB) in 1992. An article in Dutch Newspaper NRC Handelsblad from March 27, 1993, about a 400 tonnes gold sale from DNB is profoundly informative:
for traders in the international gold market there is no doubt that the People’s Bank of China (PBoC) has bought a part of the 400 tonnes of gold,… which DNB has sold late last year [1992] in utmost secrecy.
“With 99 percent certainty we know that the People’s Bank of China has been one of the buyers of the Dutch gold”, said Philip Klapwijk from Goldfields Mining Services… Also other London bullion dealers have a strong suspicion that China was involved in the gold sales of DNB. “We have noted that the Chinese central bank has bought gold in recent months”, said John Coley of the London bullion dealer Sharp Pixley and spokesman of the London Bullion Market Association.
On 29 September Duisenberg [DNB President] sent a letter to Kok [Dutch Minister of Finance] in which he explained that the sale was intended “to equalize our gold holdings relative to other important gold holding nations.”
Kok agreed on 2 October and in the fall several sales transaction followed in the London forward market. The Bank for International Settlements (BIS) acted as an intermediary.
Duisenberg expanded on the gold sales at a BIS meeting on January 12, 1993. The sale had already taken place, only the gold had yet to be delivered. Not all members of the BIS welcomed the Dutch move, nor were they consulted for its decision.
It’s impossible DNB entered the gold market itself because this would immediately leak in the closed world of gold trading. The few remaining Dutch players in the gold market are tiny. In London, there are four major gold traders: Sharps Pixley, Samuel Montague, Mase Westpac and Rothschild. According to John Coley, spokesman of the London Bullion Market Association, it was obvious that DNB would use the BIS as an intermediary. Duisenberg is very well known in Basel because he was President of The Board of the BIS from 1988 to 1990.
“Part of the sale was handled off the market”, says Philip Klapwijk… He says he came to this conclusion because the price of gold last year, although slightly down, should have shown much greater fluctuations if 400 tonnes had been sold in the market…
The BIS probably contacted the People’s Bank of China as the buyer. Why the People’s Republic of China? “The Chinese love gold,” says an expert, and he refers to the huge Taiwanese gold purchases in 1987. Second, China has large dollar surpluses as a result of spectacular economic growth. And third, China announced that it is working to build up its reserves in order to bring it more in line with the size of Chinese GDP.
Presumably, the increase in China’s gold reserves will never be visible. The statistics produced by the IMF for China record the same amount of gold for a decade [395 tonnes] …. China experts, however, know that the People’s Bank has additional secret gold reserves, which are held outside the statistics … If part of the gold reserves of DNB have been added to these, as many suspect, no one will ever officially know.
NRC Handelsblad is a respected newspaper in the Netherlands. Knowledge by industry insiders with respect to covert PBoC acquisitions as early as 1992, may explain how the Chinese central bank had accumulated a total of 3,317 tonnes by 2015. To give you an idea, DNB sold 400 tonnes in 1992 and an additional 700 tonnes in the following years. Other European central banks sold another 3,000 tonnes over this period (“to equalize … gold holdings relative to other important gold holding nations”). Not all could have been bought by the PBoC, but still. In the 1990s the gold price was declining so there were more sellers than buyers: a situation the PBoC has likely exploited.
The PBoC had the opportunity to buy substantial amounts of gold, in and off the market, for decades. It’s not evident all this gold was added to secret monetary reserves, though. Liberalization of the Chinese gold market, initiated in 2002, wasn’t completed until 2007. Chairman of the SGE Shen Xiangrong stated in 2003:
Although four large domestic banks were granted approval to import and export gold back in 2002, they have not yet started these cross-border activities, and the PBOC still remains the only bridge connecting the international bullion market with China.
Any shortfall in domestic mine and scrap supply to meet private demand in the mainland, from 1982 when jewelry sales were first allowed by the Communist Party, up until at least until 2003, was supplemented by gold imports by the PBoC. Even if we knew exactly how much the PBoC imported since 1992, we would only know the amount it accumulated for itself after offsetting those purchases against supply shortfalls in the domestic market.
Estimating China’s Private Gold Reserves
How the Chinese populace has accumulated 23,745 tonnes.
China became a net importer of gold somewhere in the 1990s, according to the China Gold Market Report 2010 that was co-authored by the PBoC. This means Chinese domestic mine production hasn’t crossed a border afterwards.
By 2004 the formal prohibition on bullion possession for Chinese people was lifted and private investment took off. In 2007, the Chinese gold market functioned as was intended by the PBoC, as total supply and demand went through the SGE that year for the first time. The China Gold Association (CGA) Yearbook 2007 states (page 39):
2007年，上海黄金交易所黄金入库量394.855 吨，即我国当年的黄金实际供给量
In 2007, the gold storage volume at the Shanghai Gold Exchange was 394.855 tonnes, that is, the actual supply of gold that year …
2007年，上海黄金交易所黄金出库量363.194 吨，即我国当年的黄金需求量，
The amount of gold withdrawn from the warehouses of the Shanghai Gold Exchange in 2007, the total gold demand of that year, was 363.194 tonnes …
因而2007年出现了31.661吨未能交割的库存，
Therefore, there was 31.661 tons of undelivered [SGE] inventory in 2007…
Before 2007 not all supply and demand moved through the SGE, according to CGA Gold Yearbooks, indicating the PBoC was still be involved in the allocation of metal. We shall assume that starting in 2007 the PBoC was no longer interfering in the market.
To calculate private reserves, I have added annual mine production and non-monetary import since 1994 to the jewelry base. From this total I have subtracted openly declared additions by the PBoC from before 2007, because these were presumably sourced, in part, from domestic mines. My methodology is not perfect, but it will do.
The chart below is the result of my calculations on China’s official and private reserves from 1994 through 2022. All shades of blue are private reserves; red is central bank reserves.
Conclusion
All in all, 4,309 tonnes for China’s official gold reserves is the best estimate I can come up with. Not unrealistic, because from the moment China’s economy started expanding in the 1990s, and it ran a persistent current account surplus, it had sufficient foreign exchange reserves to buy gold with, and there was a drive to catch up with other large economies.
There is no doubt in my mind the PBoC bought gold from DNB in 1992. In addition to the evidence in NRC Handelsblad, it’s cited in DNB’s Annual Report 1992 that “demand in the Far-East was strong” when they sold 400 tonnes.
Previously, I have demonstrated on these pages that European central banks have been preparing for a global gold standard since the 1970s through equalizing their monetary gold to GDP ratios. Balanced gold to GDP ratios will smooth the transition to a gold standard (or gold price targeting system) if the current international monetary system is stretched beyond its limits. The Chinese were in on this plan since the 1990s.
China communicated in 1993 (source, NRC Handelsblad) to “build up its [gold] reserves in order to bring it more in line with the size of Chinese GDP.” The significance of this statement is that it can’t be viewed in isolation. Gold is an internationally traded commodity, and its price is the same in everywhere. The Chinese didn’t say, “we aim to have gold reserves worth [i.e.] 10% of our GDP,” because they can buy gold and grow their economy, at the end of the day the gold price is what determines their gold to GDP ratio. What China implicitly said was that it’s aiming to bring its gold to GDP ratio more in line with other countries.
DNB’s Annual Report 1992 states (emphasis mine): “Within the EC [European Community], the Netherlands was and is, when gold reserves are compared to GDP, one of the largest gold holding countries. On this basis, the Bank [DNB] lowered its gold stock from 1707 tonnes to 1307 tonnes in the fall of 1992.” We know DNB eventually lowered its reserves to 612 tonnes, brining it close to the European average (currently 4% of GDP).
In the early 1990s, both the Netherlands and China were candid about equalizing their gold reserves relative to GDP internationally. However, when I asked DNB in 2020 about the reason for past gold sales, they evaded the subject. My question:
Is it true that DNB wanted to achieve a more balanced distribution of official gold reserves worldwide with the sales of its gold since 1992?
Answer:
De Nederlandsche Bank (DNB) weighs several factors in forming an opinion on the total amount of gold in its possession …. We believe that … the current amount [is] balanced at this time. Furthermore, we have no insight into the motivation of other central banks to be able to make statements about their gold reserves and gold policy.
Why did this become a secret? Duisenberg must have agitated the US when he expanded on DNB’s sales to China at the BIS meeting on January 12, 1993. In NRC Handelsblad we read: “Not all members of the BIS welcomed the Dutch move…” Major economies balancing gold reserves, ready to be deployed during a dollar crisis to transit to new monetary system, is not in America’s best interest to say the least. It’s feasible the countries that agreed on balancing gold reserves silenced themselves to avoid conflict with Uncle Sam.
Because we know about an international effort of equalizing reserves, DNB selling gold to China in 1992 made sense as the Netherlands had too much gold (1,707 tonnes) and China too little (395 tonnes), both of their Gross Domestic Product being roughly the same.
On the non-monetary side, China wants private gold reserves to be proportionate to its peers too. Sun Zhaoxue, President of the China Gold Association, wrote in 2012 in Qiushi magazine (the main academic journal of the Chinese Communist Party’s Central Committee):
as an important part of China’s gold reserve system, we should also encourage individuals to invest in gold. Practice has proven that private gold reserves are an effective supplement to official reserves and are very important for maintaining national financial security. World Gold Council statistics show that Chinese individuals possess less than 5 grams of gold per capita, a significant difference to the global average of more than 20 grams.
Multiplying 5 grams by 1.3 billion people (the Chinese population in 2012) equals nearly 7,000 tonnes, which matches my estimate of Chinese private reserves held at the end of 2011. My estimate for Chinese private reserves in 2022 is nearly 24,000 tonnes, divided by 1.4 billion people (the Chinese population in 2022), equals 17 grams per capita. China’s non-monetary gold reserves are close to the global average.
China’s monetary gold to GDP ratio (computed with 4,309 tonnes) is 1.5%, which is still lower than 2% in the US and 4% in the eurozone. It’s clear that now is the time for the PBoC to speed up buying. One, China is still behind in its relative gold holdings vis-à-vis Western powers. Two, Russia’s dollar assets were frozen due to the war in Ukraine and the Chinese don’t want to suffer to same fate. Three, the Chinese population has accumulated enough already. Remember Yi Gang was considering private hoarding when he deliberated on how much the PBoC was able to buy in 2013? That doesn’t have to be an issue anymore. Tellingly, the PBoC bought a staggering 522 tonnes in 2022 (based on MF data), which was supportive of the gold price. I think future PBoC procurements, mostly from Russia I suspect, will be supportive of the gold price as well.
There has been much comment over the likelihood that central bank digital currencies will be introduced. I conclude they are unnecessary — a red herring. But it does allow us to discuss their possible relevance to a new Asian super-currency.
Earlier this month, the Bank of England in partnership with the UK Treasury produced a white paper on the subject, which waters down the objectives identified by the Bank for International Settlements considerably. The British proposal is a bad idea because it is pointless and I explain why.
In this article, I describe how a new gold-backed currency can do away with the US dollar for trade settlements and commodity purchases entirely between participating nations in the Russia China axis. Some informed commentary on the topic suggests that a blockchain will be involved, and Sberbank, the Russian state-owned lender has already issued a gold-linked fund designed to be available to the public by being compatible with ethereum. Perhaps it is front-running developments…
The ugly side in our title is found in the BIS’s dystopian proposals, which sees CBDCs as an opportunity to allow central banks to double down on their attempts to manage economic outcomes while restricting personal freedom.
Messing about with fiat currency alternatives such as CBDCs could end up revealing the formers’ fragility. CBDCs will take years to implement in any major currency anyway, during which fiat currencies led by the dollar are likely to fail anyway.
Introduction
It is not clear what encouraged central banks to think about introducing their own digital currencies, other than possibly a feeling that if they didn’t do something, then private sector money could threaten their monopoly.
Initially, bitcoin was touted as sound money with a hard stop of 21,000,000 coins and proof of ownership recorded on a blockchain. Bitcoin’s strength was to be the opposite of fiat currency weakness, whose expansion is the primary means by which a central bank stimulates an economy. But if central banks think that bitcoin could overturn fiat currencies, they merely exposed their own ignorance about the nature of money and credit.
Bitcoin is not legal money. As opposed to credit where there is a counterparty risk, the only lawful money is gold (and silver for small amounts), usually in coin, acting as an anchor for a gold substitute in the form of credit. Therefore, if bitcoin is to be regarded as money by its users, they must accept that they do not enjoy the protection of the law. In day-to-day transactions this might not matter to the parties involved. After all, they are free to exchange goods or services for anything — in the past family doctors have even been paid by their patients in cigars and whiskey.
Money and credit have a legal status which differs from other forms of property. Some things can only be acquired through legal tender, and bitcoin is not legal tender. But there is a further distinction which kills bitcoin and any copycat cryptocurrency stone dead: when ownership of legal money and credit transfers, it transfers absolutely, but this is not true for bitcoin.
Consider the situation if someone steals your wallet containing banknotes. There is no doubt that the thief has committed a crime. But if he spends the stolen banknotes in a shop, and the shopkeeper was not a party to the theft, then the banknotes become the shopkeeper’s property, and you have no claim against the shopkeeper. This is equally true if you had coins stolen, or the thief transferred credit from your bank account. This happens all the time today, and you may have wondered why your bank cannot recall the funds.
A bank can recall funds if an error has occurred, and the error can be established in reconciliation differences between banks, such as a misposting. If the bank has made a mistake in the management of your deposit account, you may have a claim against the bank, but once funds have left your account the bank usually cannot reclaim them so the bank must bear the loss. But if the bank received valid instructions to transfer funds from your account, then on the transfer there can be no reclaim, even if your account was hacked. The basis was established in Roman law, which differentiated between money and credit in the normal course of banking, and a bank’s legal obligations to items, including money, held in custody. The former being mutuum, in modern accounting being a bank’s balance sheet liability or obligation in favour of the customer. And the latter is a depositum (not to be confused with the term bank deposit), whereby the property in the money remains with the customer.
The difference between mutuum and depositum is not strictly limited to money and credit but extends to some other asset classes which can be transferred. For example, debts can be freely bought and sold, without the debtor’s agreement. After all, this happens when a bank’s customer transfers a bank’s obligation to him to another party by writing a cheque or tapping a debit card on a payment machine.
An interesting case occurred when Richard Cantillon, having acted as a banker, was sued by customers to whom he had loaned funds to acquire shares in John Law’s Mississippi venture. On taking in the shares as collateral, he immediately sold them. Technically, he remained liable for the return of the shares’ value.
But Cantillon collected twice: the first time from the sale of the shares into the market which subsequently collapsed, and the second time when he sued the debtors for repayment of their loans. The Court of Chancery in London decided he was legally entitled to sue because the shares were in bearer form and not numbered, and therefore were not identified specifically as the debtors’ property. In other words, they were classed as mutuum.
But bitcoin does not have the legal status that permitted Cantillon to claim that Mississippi shares were in effect mutuum and taken in onto his balance sheet, and not identifiable as a depositum. With its blockchain, Bitcoin is specifically identified property, just the same as ownership of a painting, or any tangible asset. Its downfall as a currency is that the blockchain identifies it as having been someone else’s property in the past. This may not matter to a current owner. But if the authorities have evidence that your bitcoin was previously stolen, used in money laundering, or purchased with the proceeds of crime, they can trace the bitcoin to you and seize them legally without compensation. Any protestation that they need the wallet key to regain possession counts for nothing: legally they may not be your property and if you refuse to allow access, you will be guilty of obstructing the law.
Obviously, with cryptocurrencies being a relatively new development, this needs further testing in law and confirmation in multiple jurisdictions. But recent actions by various authorities and agencies to perfect recovery appear to be moving in this direction. Clearly, without the protection offered to legal money and credit, bitcoin cannot be used as a settlement medium except for ad hoc transactions.
That is the first point. Even more important perhaps is its unsuitability for use as money, and a misunderstanding of the relationship between money and credit. Ever since Rome’s Twelve Tables setting out the original basis of Roman law dating from about 450BC and at the time when, according to Gaius in his Commentaries (on the Twelve Tables) Roman coins were first introduced, credit rather than coin has provided capital for merchants and businesses.
Credit has always been the principal means of financing ventures and trade. The Phoenicians trading in the Mediterranean and further afield will have needed credit a thousand years before Rome’s Twelve Tables became the basis of Roman law. And when credit became based on money as opposed to an obligation to deliver specific goods in Phoenician times, it required a certainty of value. Being inherently volatile, bitcoin is not suited for this role. And the hard stop on its quantity means that if it was to act as money ubiquitously, the continually increasing purchasing power that would likely ensue would kill off demand for credit based upon it. Fans of bitcoin might argue that that is the point, in which case they merely expose their ignorance of the relevance of credit to all economic development.
Therefore, to the extent that central bankers are worried that bitcoin or other private sector monies pose a threat to their status as controllers of the currency, they are themselves ignorant of their trade. However, the idea of central bank equivalents in their own digital currencies has taken hold. The Bank for International Settlements took it upon itself to coordinate research into CBDCs, for which they have determined two separate roles. The first is when a central bank issues a CBDC purely for domestic circulation. It is presumed that citizens and foreigners, such as tourists, can use a CBDC so long as they are in jurisdiction. But they will become worthless outside the country. The second is collaborative CBDCs, when two or more central banks settle on a CBDC to be used to settle trade between their jurisdictions.
This gives rise to the title of this essay: the good, the bad, and the ugly. The good may come from collaborative efforts to do without the fiat dollar, ensuring cross border trade can continue in the event that the dollar collapses, or if the US continues to weaponise it. The bad is considering the introduction of a CBDC for no good reason. And the ugly is when a CBDC is devised to give the state greater control to manipulate its citizens’ behaviour.
The good
On the information available, it appears likely that under the aegis of both Russia and China, a new currency will be issued for the purpose of replacing the dollar for commodity purchases and cross-border trade. This project centres on the Eurasian Economic Union (EAEU), which is the political vehicle which hosts the committee considering the matter. Already, on 26 December Russia’s state-owned Sberbank issued tokenised gold on the Sber blockchain, having launched its first digital asset some time ago based on factored invoices. Furthermore, having made its blockchain compatible with Ethereum, Sberbank intends to make it widely available to consumers.
Given that Sberbank is state-owned, this project can be regarded as not just licenced by the state (digital financial assets require permission from the Central Bank of Russia) but perhaps as a testbed for the state’s own monetary intentions. And Sergey Glazyev, the senior Russian economist who is leading the EAEU committee clearly sees gold replacing the dollar as the monetary standard for cross-border settlement. In an article for Vedomosti on 27 December (the day after Sberbank announced its gold-linked digital asset), he said as much.[i]
There are other gold related developments in Asia. Notably, this week it transpired that the Central Bank of Iran is in talks with Russia to create a stablecoin backed by gold for settling trade through the Astrakhan special economic zone, through which goods from Europe transit to the Middle East and south Asia.
But when it came to central banks trying to come up with roles for CBDCs, none thought a CBDC would be deployed to facilitate a return to sound money. If they weren’t just trying to fend off private sector currencies, they were thinking up new ways to deploy fiat either to stimulate economic activity selectively, replace bank notes, or exercise greater control over individual users of currency. We do not know if Sergey Glazyev is considering using a CBDC to keep track of a new trade currency, but in the plans outlined below, it is unnecessary. Normal accounting conventions will suffice, and gold will provide the standard.
Glazyev is also the moving light behind a new, enhanced Moscow gold exchange. And now, all the signals are pointing in the direction of cross-border transactions being settled in gold, or gold substitutes. One condition which will need to be in place is for a value for gold measured in fiat currencies to ensure there is sufficient available valued in goods to back inter-Asian trade. Despite the accumulation of gold by the central banks of the Shanghai Cooperation Organisation membership (SCO), some of them may not have sufficient official gold reserves to cover their trade deficits except for limited times, requiring a higher gold value in order to do so. And other members, such as Russia, could see continual accumulation of physical gold because of her net energy and commodity exports. Ideally therefore, instead of trade settlements being entirely in physical gold, they should be facilitated by a banking system based on gold which is properly valued.
What is required is an entirely new currency backed by gold specifically created for cross-border trade. Presumably, this is what Glazyev is trying to achieve. But it is relatively simple and does not require blockchains and the paraphernalia of a CBDC. However, being a revolutionary concept, it might be established as a CBDC to provide extra credibility to satisfy those whose understanding of money and credit falls short.
The bulleted list that follows is a brief outline of how a new trade settlement currency based on gold can be established to replace the fiat dollar in all transactions between member nations. It is designed to be politically acceptable to all involved, as well as a long-term practical solution to facilitate the Russian Chinese axis’s ambitions for an Asian industrial revolution free from interference by America and her allies. The essential elements are as follows:
The announcement of the creation of a new central bank (NCB) and a new gold-based currency on the lines below will be made in advance of implementation to allow bullion markets to adjust to the new regime before it comes into existence.
A new central bank is then established, whose function is to issue a new digital currency backed by physical gold, available only to participating central banks. It will be designed to be a fully trusted gold substitute, fully independent of fiat currency values.
The new currency will only be redeemable for gold by participating central banks. They are also free to add to their NCB currency reserves by submitting additional gold to the NCB at any time.
The NCB’s eligible participants will be the central banks of participating nations, broadly limited to member nations of the EAEU, SCO, and BRICS+. The NCB’s currency is issued to the national central banks against their provision of a minimum 40% gold backing for it. For example, currency representing one million gold grammes secures an allocation of 2,500,000 currency units denominated in gold grammes. The gold does not have to be delivered to a central storage point but can be earmarked[ii] from within a central bank’s gold reserves, on condition that they are securely stored in Asian vaults on a list approved by the NCB.
Commercial banks trading in member nations and elsewhere will be free to create and deal in credit denominated in the NCB’s new currency. Issuers and users of this credit are always free to acquire physical gold in the markets, should they wish to back credit created in the new currency with gold itself.
All taxes and restrictions on gold ownership must be fully rescinded by participating nations.
An efficient central clearing system for commercial banks dealing in credit based on the new currency will need to be established.
Accompanied by the major energy producers setting price benchmarks, Asian commodity exchanges will price all products in the new NCB currency, replacing pricing in US dollars completely for trade between participating member nations.
The purpose of the new currency is to provide the basis for trade finance and other cross border financial settlements on a sound money basis. It is also likely to lead to participating nations placing a greater emphasis on their own currencies’ stability while providing a safe haven from a fiat currency system collapse, to which the establishment of gold backing for payment systems is likely to contribute in its consequences.
All empirical experience informs us that when gold becomes the means by which credit is valued, credit’s own value becomes tied to that of gold and is not dependent on stability in credit’s quantity. This stability imparts pricing certainty to trade and investment, necessary conditions for maximising economic development.
Constructed on the lines above, remarkably little physical gold would be required to underwrite cross-border payment values for trade in Asia and beyond. It should be simple and quick to establish. It must be free from interference from members of the western alliance trying to preserve their own fiat currency systems. And the 40% gold backing rhymes with the basic requirement for a metallic monetary standard set by Sir Isaac Newton, when he was Master of the Royal Mint.
For participating central banks, the replacement of gold in their reserves for allocations of the new currency would represent a significant increase in their reserves. As confidence in the scheme builds, it could be argued that only minimal gold reserves need to be retained by participating central banks, with the balance swapped for the new currency. For example, the Reserve Bank of India officially possesses 787.4 tonnes of gold. Converted into the new gold currency, its value in reserves is uplifted to 1,968.5 tonnes equivalent.
One difficulty which will need to be considered is the repatriation of gold held in western central bank vaults. Between the Bank of England and the New York Fed, earmarked gold totals 10,693 tonnes. The bulk of gold held at the NY Fed appears to be earmarked for the IMF, Bundesbank, and Banca D’Italia. Very little Asian gold would appear to be stored there. More Asian gold is likely to be stored at the Bank of England. This could be a concern, because the Bank of England on instructions from the US Government refused to repatriate Venezuela’s gold when requested. If in losing its dollar hegemony the Americans become obstructive to Asian monetary plans, it could become a problem for nations with gold earmarked at the Bank of England.
Presumably, the consequences for gold would be to drive the price up measured in dollars, euros, etc. Foreign central banks in the Asian camp would be selling down currency reserves to acquire gold. Furthermore, it would suit the new central bank to see a higher stable gold price as a starting point, which is the reason to let the market find a level between announcing plans for the NCB and implementing them. And it is worth making the point that if the price of oil adjusted by the price of gold is to be returned to its post war dollar value, the dollar price of gold should be $3,360.
It could be argued that it’s not in China’s interests to undermine the dollar so dramatically, given her dependency on exports to the US and elsewhere. Undoubtedly, while being open about her desire to replace the dollar for cross-border transactions as much as possible, China has preferred to let the change be evolutionary. But the time for caution has ended, and unless China joins in with Russia’s plans, Russia will make all the running.
The bad and the ugly
It should be noted that, to date, there are just two live retail CBDCs (the Sand Dollar in The Bahamas and DCash in the Eastern Caribbean). For a major jurisdiction to introduce a CBDC there are significant bureaucratic and technical issues to be addressed, which inevitably means that lead times are substantial. The first step is to come up with a discussion paper, which is what the Bank of England in conjunction with the UK Treasury did earlier this month.
According to the Bank of England and the Treasury, there are two basic reasons for issuing a digital pound: people are not using cash as much as they used to, with digital payments becoming more common. And “there are new forms of money on the horizon, some of these could pose risks to the UK’s financial stability.”
Let us address these two issues. Digital payments are indeed becoming more common. Credit cards have been around for decades, so there is nothing new there. The Bank is referring to debit cards, which authorise the transfer of a bank’s obligation a customer in accordance with the customer’s instructions. This form of payment has become progressively more efficient, leading to a public choice for paying with debit cards. A separate wallet for a CBDC, as proposed by the Bank, is unnecessary. That leaves us dealing with fear of the unknown — the new forms of money on the horizon, and the risk to financial stability.
This is a straw man fallacy. There is no threat from private sector currencies. As pointed out earlier in this article, they lack the legal status of money and credit, and are entirely unsuitable. But what the bitcoin revolution has done is create a lot of excitement amongst the progressives, who feel a response is necessary. And reading the Britcoin’s consultation paper, we see that the intention is for a CBDC which is limited in its scope compared with some of the ideas coming out of the Bank for International Settlements’ own consultation documents.
The UK’s proposed CBDC will use digital wallets and not require individual bank accounts with the Bank of England. Retail and business accounts at a central bank was one of the BIS’s ideas. But this cuts across the role of commercial banking and faces enormous technological challenges. If the Bank wishes to introduce a CBDC, then private sector wallets make more sense for this reason. They should allow payments to be made between individuals and businesses as if they are made in bank notes, and without these transactions being recorded at the Bank, they should retain their anonymity.
The intention is that there will be no difference between a CBDC pound and a one-pound coin. The consultation paper argues that it is not intended to be a cash replacement, but an additional equivalent of cash payment. A CBDC pound will not earn interest, but there will be a limit on the quantity held in a wallet which is yet to be decided or how it is to be implemented. Implementation rings warning bells with respect to privacy.
But the exercise appears to be pointless. At least in its scope it is not as ugly as some of the objectives coming out of the BIS. In an official video recorded by the BIS, Augustin Carstens, its General Manger, said the following:
“The key difference with a CBDC is that the central bank will have absolute control on the rules and regulations that will determine the use of that expression of central bank liability. And also, we will have the technology to enforce that. Those two issues are extremely important and make a huge difference with respect to what cash is.”
Carstens is describing a system where central banks intrude upon the use of their CBDCs, presumably through requiring individuals and businesses to maintain accounts at or under the control of a central bank, or by central banks having access to individual wallets. Absolute control determining their use is a dystopian vision of the future of currencies.
It seems unlikely that the fullest ambitions for CBDCs revealed by Carstens will find support from commercial bankers, because it treads on their toes. This is important in the US’s political context because commercial banks bankroll congressmen and senators. One can envisage commercial banks supporting a CBDC as proposed by the Bank of England, because it is clearly a supplement to bank notes and not commercial bank credit. However, it is difficult to see how a CBDC-lite model will find much public favour, because current payment systems are so efficient that they are unlikely to be bettered by a CBDC.
There is a risk that tinkering with a fiat monetary system by adopting CBDCs will end up eroding confidence in fiat currencies generally. This outcome may seem unlikely to the planners, but if the Russian Chinese partnership does move towards gold-backed trade settlements, for fiat currencies the retention of public confidence in them should be their highest priority.
In any event, even without the Asian hegemons backing a new trade currency with gold, the western alliance’s fiat currencies face enormous challenges. The days when interest rates could be contained at, below, or marginally above the zero bound are over. Entire banking systems from central banks downwards are threatened with liquidity issues which can only be defrayed by yet more credit expansion, which ends up making things even worse.
The whole CBDC story is a red herring. The plan outlined above for a new Asian trade settlement currency does not require a CBDC. It can be progressed within current banking systems. And as for the time taken to implement CBDCs in the western alliance’s fiat currencies, it is highly likely that they will have collapsed into worthlessness long before CBDCs can be adopted.
