Gold Based Trade

There will be a BRIC meeting in South Africa this August, and there's a rumour that a new world currency will be announced at this event. This currency will, as rumours have it, be linked to gold.

But how exactly will such a currency work? The BRIC isn't a politically unified organization. The fact that Putin cannot attend it because South Africa will be compelled to arrest him proves this fact. The only thing BRIC members has in common is a desire to move away from the dollar, and that on its own isn't a good basis for a new currency. However, there's a way to introduce a gold standard without having to add any new currency. Every country can keep its currency as it is. There's no need to linking it to gold or scrapping it for some other currency linked to gold.

All that's required for a world wide trading system based on gold is for every country interested in such a system to open a gold exchange where physical gold can be traded without any limits. This can be illustrated with some examples.

Let's say we're operating a trading house out of Brazil. We're sending a ship load of sugar to India where we sell it for Indian Rupees. However, we don't need all the Rupees we receive. Our next shipment is to China with rice from India, and the price of the rice is such that we end up with a surplus of rupees. That's a problem we currently solve by keeping our reserves in dollars because they are accepted everywhere. But this problem can also be solved if we can buy gold at a local gold exchange.

If the local gold exchange is linked to a global network of gold exchanges, operating under identical rules, we can tell the exchange in India that we want our gold ready for delivery in China where we expect to buy goods for more than we receive from our sale of rice. Instead of transporting gold across the ocean, we can rely on book keeping similar to the system Richard Cantillon worked with back in the 17th century. Only difference would be that Cantillon operated with paper records, while a modern system would use electronic ledgers.

When we arrive in China, we have rice and gold with which to buy goods. We don't come with Rupees nor do we come with dollars. The trade is gold based, yet the Rupee was never linked directly to gold. It was indirectly linked to gold through a network of exchanges.

This system will also solve the problems of long term contracts between trading houses from different nations. If we operate out of Brazil, we're unlikely to want to write five year contracts in Rupees, and our partners in India won't be excited about a contract written in Brazilian Reals. That's why such contracts are currently based on the US dollar. But writing contracts against gold will work equally well, provided every BRIC member has a free and open gold exchange.

The result of such a system will be that international trade becomes gold based, with local currencies only used internal to each country. But the gold standard will gradually find its way into local trade as well. Importers who buy merchandise in gold will want to be paid locally in gold as well. Everyone will eventually migrate to the new standard unless states prohibit this by law.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

Record High Temperatures

Summer in Porto has so far been mild and pleasant with temperatures steady at around 24C since early June. We haven't had a single heat wave. If this persists, this year's summer will be the mildest, most pleasant summer I've had over the sixteen years I've lived in Porto. It has therefore come as a surprise to me that the rest of southern Europe is said to suffer intolerable from the heat. However, there's a twist to the reporting that explains it all.

The temperatures reported this year are measured closer to the ground than they used to. The standard was to report temperatures measured at 2 meters above ground, but this has now been changed. Temperatures closer to the ground are typically warmer, so this explains why we're getting such high temperatures reported for what is in most places nothing but a normal summer.

This is of course done in order to substantiate the claim that we have a climate crisis on our hands and that urgent and radical actions need to be taken. But we are no more having a climate crisis than we had a pandemic a few years back. It's all spin for the purpose of moving wealth from the middle class into the hands of politically connected billionaires.

Greta Thunberg

Eco-anxiety - By Anders Hellberg - Own work, CC BY-SA 4.0, Link

Earth's Uneven Expansion

Back in 2018, I noted that Earth's equator during the last ice age was unlikely to have been where it is today due to the weight of the ice mass centred above Hudson Bay. I further suggested that this could be used as a dating mechanism for ancient monuments.

As it happens, a Dutch researcher has done exactly what I suggested, and his findings are both conclusive and informative. By comparing the orientation of more than a thousand ancient monuments, he's been able to demonstrate that the equator has shifted no less than five times during human existence.

The shifts haven't been due to the location of the ice caps, but rather the expansion of the Pacific ocean. With the Pacific expanding more than the Atlantic, Earth has had an uneven redistribution of its mass. This has in turn forced the north pole to shift from south of Greenland to north of Greenland during human existence. The orientation of ancient monuments suggest that this has happened in jumps that lasted about ten thousand years each.

When this data is correlated with ice core samples taken from Antarctica, we see that the jumps correspond to ice ages, and that humans have been around for several hundred thousand years. We didn't first start building monuments a few thousand years ago. Our history of monument building dates back far longer than that.

On a related note, we have this article from Yahoo asserting that Earth has tilted more than 31 inches on its axis since 1993. The article claims that human activity is to blame, but a continued expansion of the Pacific seems a more reasonable explanation. It appears then that the next destination of Earth's north pole is somewhere close to Alaska.

Earth's expansion seen from the South pole

An Organic Roll into Shares

I haven't yet received any concrete offer to buy shares for my son in my family's business, and I'm probably not getting any such offer before the fall. This has given me some time to think about the best way to go about this business, and I've come to the conclusion that I should avoid acting too eagerly too soon. All I need to begin with is for my son to have a handful of shares in order for him to start accumulating shares over time.

My experience with the family business is that good offers come every now and again. Someone gets in trouble and has to sell, and family members with savings come in to pick up shares at a good price. It's a predictable pattern that I expect to continue, so there's no rush.

Another aspect of this is the sale of gold required to raise cash to buy the shares. My initial thought was to sell my gold back to the bank where I bought it. But that's not a very appealing option. I didn't buy the gold just to make some money off of it. I bought it just as much in order to get away from the current banking system. My idea was to trade it with friends and family as an alternative to the current financial system where banks always get a cut of the action.

This has prompted me to check with friends and family if there's any interest in buying some of my gold at spot price, which is several percentage points cheaper than buying gold at the bank, but also a little above the price that banks are willing to pay for it.

As it turns out, I have some offers to buy. Here too, there's no definite commitment, but the interest is genuine. I'm sure I'll be able to sell some gold through my personal network, and since I only need a few shares in the family business in order to give my son a foothold, I see no reason to sell additional gold through the bank.

This approach comes with some noteworthy advantages.

• My son will only buy as many shares in the family company as my network of friends and family can sustain.
• We're therefore likely to be able to buy back gold from family and friends should they themselves need cash at some future point.
• The gold is never returned to the bank, which means that it cannot be used in price suppression schemes.
• Friends and family will learn through experience what it's like to own gold, and may themselves set up personal networks.
• My overall vision of a parallel economy based on networks of friends and family becomes reality.

I expect this to move slowly to begin with, but once friends and family discover how much better gold performs than other types of savings, the demand will likely go up. My son will be able to sell some gold whenever there's a good offer to buy shares in the family company. When friends and family want to sell some gold themselves, we're likely to be modest buyers. But the total network will be large enough to absorb more. Sellers are likely to get their offers absorbed without having to go to the bank.

This will have the overall effect of producing an extended network that can act in ways reminiscent of how business was done in the olden days. With gold always retaining purchasing power, there's no rush to invest in alternatives. Only when a really good offer comes along is there any need to transact. This slows down the pace of things. It puts us in a position to wait and see. We sleep better at night, because our investments are organic rather than debt funded.

Sovereign

By Heritage Auctions for image, Mary Gillick for coin - Newman Numismatic Portal, Public Domain, Link

Russia's Options

With this year's NATO summit taking place in Vilnius this coming week, speculations are running wild as to what the Russians may do during this high level display of western power. Adding to the speculations, we have the fact that Jens Stoltenberg is pushing for Ukraine membership, which would if it happened, lead to de facto world war 3. Article 5 would be activated, and the war extended to all NATO members.

Some have suggested that the Russians would in such a situation unleash their full strength, and go all out to capture Kiev. With Wagner forces stationed some 100 kilometres north of Kiev, this scenario seems plausible. However, a different strategy seems to me more likely.

The Russians can simply choose to do nothing, indicating in this way that NATO's top officials are unable to stir the Russians one way or the other. This would be more in tune with the way the Russians have acted so far. The response to enemy hubris has been measured and unspectacular. Rather than a grand winter offensive, we got a meat grinder in Bakhmut. The response to the Ukrainian counteroffensive this summer has so far been measured.

A continuation of this strategy would mean that a NATO inclusion of Ukraine would put it on the west to act offensively. The west would have to send more weapons and ammunitions. They would also have to send soldiers. An invasion into Russia from Norway, Finland and Poland might be needed in order to circumvent Russia's defensive lines in eastern Ukraine.

None of this would be very popular with regular Europeans. The war in Ukraine is unpopular as it is. Adding a lot of dead western soldiers, and a lower standard of living for everyone in order to finance this costly war, is hardly a winning strategy. This means that the Russians can wait out the storm, and this is exactly what I expect them to do.

Mark Esper with Jens Stoltenberg

By U.S. Secretary of Defense - 200212-D-AP390-6107, CC BY 2.0, Link

A Sudden Drop in Life Expectancy

Looking superficially at the death statistics I've gathered from Wikipedia, we have no definite proof that the excess deaths that we've had ever since the lockdowns are due to government incompetence rather than some long lasting effect of the virus.

Notable deaths according to Wikipedia

Looking at the percentage of people dying before the age of 70, we have the same problem. The trend line has moved up from 22% to 23%, indicating a drop in life expectancy since 2018, but it's not immediately clear if this is due to the virus or the government.

People dying before the age of 70

However, closer scrutiny reveals the culprit. If a trend line is drawn from January 2018 until September 2020, it will be flat at about 22%. If another trend line is drawn from November 2020 until today it will also be flat, but at about 23%. We can therefore conclude that the drop in life expectancy happened suddenly and shortly after November 2020. This is a year after the virus started spreading. It's therefore safe to say that the drop was caused by the prescribed remedy rather than the virus.

UN's Delusion of Grandeur

The UN is seeking global emergency powers in case of world wide threats to humanity. The sort of threats they imagine include meteor strikes, pandemics and global warming. In other words, just about anything that can be easily put into a coherent narrative without having to be backed up with any actual facts.

A bunch of unelected bureaucrats believe that they are the ones that have the solution to any and all problems that might ail the world, and that they must therefore be granted sweeping powers to rearrange things according to their vision.

This is of course nonsense. A few thousand bureaucrats cannot possibly direct billions of people. Certainly not now that they have proven themselves incompetent in the face of a relatively harmless virus.

At the very least, the bureaucrats would have to be highly regarded by just about everyone in order to act efficiently as a micro-managing outfit. But people aren't exactly brimming with trust in these people, and ordinary people are therefore likely to either ignore UN directives or skirt the rules in all sorts of ways.

The sheer size of the bureaucracy that would be required for global governance to be implemented implies that there will be corruption everywhere along the line, and hardly any directive will be implemented as intended. If the UN ever tries to act as a global governing body, it will fail miserably. Instead of obedience, there will be anarchy. Instead of centralization, there will be decentralization. People will seek ways to skirt the directives, and they will discover that this can be done by activating local communities, family and circle of friends.

The social contract