Solwd

Authored by Techno Fog via The Reactionary,

This week of The State of New York v. Donald Trump began with Judge Juan Merchan’s threat to imprison Trump for his social media posts. Again, at the insistence of the State, Judge Merchan leveled monetary penalties against Trump for the remarks he has made outside the Court.

Voicing his frustration with Trump, Judge Merchan reminded the Republican candidate for president that jailtime is a very real option:

“Your continued violations of this Court’s lawful Order threaten to interfere with the administration of justice in constant attacks which constitute a direct attack on the rule of law. I cannot allow that to continue.

So, as much as I do not want to impose a jail sanction, and I have done everything I can to avoid doing so, I want you to understand that I will, if necessary and appropriate.”

This third week of evidence in the Trump trial started with the State continuing to lay the foundation for the Stormy Daniels non-disclosure agreement (NDA), Michael Cohen’s involvement in that deal, and how Cohen was compensated after that deal took place.

Witness: Jeffrey McConney

It began with the testimony of Jeffrey McConney, the former corporate controller of the Trump Organization. He was a longtime employee who started with the company in 1987. He has since retired.

After some description of the Trump Organization’s corporate structure, McConney detailed the payments to Michael Cohen that are alleged to be related to the Stormy Daniels payoff. McConney oversaw the company’s accounting department, which included accounts payable and the company’s general ledger, and he explained the process used by the company to issue checks.

His former boss, Allen Weisselberg (the company’s former chief financial officer) directed McConney to issue montlhy payments to Michael Cohen. Here are McConney’s notes from his meeting with Weisselberg:

McConney said the checks to Cohen were to start in early 2017 and were to be wired monthly from President’ Trump’s personal bank account. (Some of the payments were also issued from the Donald J. Trump Revocable Trust account.) In total, 9 of the 11 checks issued to Cohen were sent to the White House for Trump’s signature. The prosecutors walked through McConney through each invoice from Cohen, each check issued to Cohen, and each ledger entry issued to Cohen. On direct, McConney also discussed a conflict of interest document signed by then-President Trump which listed his financial obligations to Michael Cohen.

Cross Examination

Importantly, it was McConney who instructed a colleague in the accounting department to record the payments to Cohen as “legal expenses.” This was apparently standard protocol at the Trump Organization. The defense extracted these key points from McConney during cross:

Q: In that timeframe, 2017, Michael Cohen was a lawyer, right?

A: Okay.

Q: Right?

A: Sure, yes.

Q: And payments to lawyers by the Trump Organization are legal expenses, right?

A: Yes, sir.

Q: And you booked those payments on the General Ledger as legal expenses, correct?

A: Yes.

McConney testified that he never talked with Trump about any matter relating to the Cohen payments. He never received directions from Trump about the Cohen payments or how to classify those payments. McConney would also state that he had “very few” conversations with President Trump, and none about the company’s accounting system. Furthermore, Weisselberg never told him that these payments or issues with accounting were made at Trump’s direction.

McConney also had no knowledge as to whether Cohen did any legal work for Trump or Trump’s family in 2017. In fact, e-mails dated 2017, from Michael Cohen to Weiselberg suggested to McConney that there were legal matters Cohen was handling.

Trump’s attorneys also scored points when discussing the company’s accounting system. McConney agreed the system was “antiquated” – dating back to 1991 – and was a “rigid” system where “legal expenses” were part of a drop down menu. This is how payments to attorneys were to be classified within the system, seemingly because there was a lack of better options.

McConney would further explain that all the payments were disclosed to the IRS and to Office of Government Ethics, undercutting any argument from the State that the checks to Cohen were purposefully concealed.  

Witness: Stormy Daniels

Direct Examination

The long-anticipated testimony of Stormy Daniels began on Tuesday morning. Prosecutors walked her through her upbringing: raised by a poor single mom in Louisiana before she left home at the age of 17. She discussed her career, from dancing in Baton Rouge to venturing into adult entertainment.

Eventually, they reached her July 2006 encounter with Donald Trump. Daniels described meeting Trump at a celebrity golf tournament in Lake Tahoe, where she eventually agreed to have dinner with Trump after her publicist said “what could go wrong.” Judge Merchan, in large part, allowed the State to ask Daniels questions about their “encounter” in Trump’s hotel suite. Daniels said they discussed the business side of the adult industry, the WWE and Vince McMahon, and magazine covers – and had a brief conversation about Melania – before Daniels excused herself to the bathroom.

Daniels stated she exited the bathroom and Trump had entered the bedroom wearing boxers. When asked what happened next, Daniels described the sexual encounter – a brief time in which she “blacked out,” though she admitted to not having any drugs or alcohol. Daniels admitted she didn’t recall certain parts about the “encounter” until “some years” later.

Trump was understandably frustrated with this line of questioning, and in Judge Merchan for allowing the salacious testimony. (Judge Merchan would later warn Trump’s attorneys about this.)

In the years that would follow, Daniels would have interactions with Trump in New York and DC. She testified about an alleged encounter in Las Vegas, where a mystery man approached her in a parking lot and told her to essentially stay quiet about her encounter with Trump. Daniels also described her attorney’s efforts to take down a story about the alleged relationship on the blog The Dirty.

Now, you might be asking why Judge Merchan would allow Daniels’s testimony when Trump is only charged with falsifying business records. Before trial started, Judge Merchan ruled that Daniels’ testimony could generally be allowed because her testimony regarding Trump, et al. is “inextricably intertwined with the narrative of events and is necessary background for the jury.” And before Daniels testified, Judge Merchan denied the defense objection to Daniels’s testimony about the alleged affair.

Of course, whatever occurred in Trump’s hotel room is not relevant or material to the business records at issue. And the details of the encounter, as described by Daniels, have little probative value – especially considering the potential for prejudicing Trump. In New York, relevant evidence may be “excluded in the exercise of the trial court’s discretion if its probative value is substantially outweighed by the potential for” unfair or undue prejudice. People v. Frumusa, 29 N.Y.3d 364, 372, 79 N.E.3d 495 (2017). But Judge Merchan observed that Daniels’s credibility was at issue, given her differing stories and previous denials of the affair, and held that the state would be allowed to “establish her credibility by eliciting certain background information about the events that led to the encounter.” This ruling was made with the State’s promise that there would be “very brief” details about the “sexual act.”

But, under Judge Merchan’s oversight, the prosecutors went too far. During a brief recess during her testimony, Judge Merchan instructed the prosecutors that they’re going into details that are “unnecessary.” This was a bit too late – Daniels, being led by the prosecutors, has already damaged Trump.

Prosecutors repeatedly asked Daniels for details about the alleged sexual encounter. Though many of the objections from Trump’s lawyers on that topic were sustained, these questions can’t be unheard by the jury. Judge Merchan should have shut down that line of questioning and ordered prosecutors to move on.

Continuing with direct examination, Daniels was informed she could sell her story for more money after Trump secured the Republican nomination for president in 2016. She believed that both Trump and Michael Cohen wanted to purchase her story as the election neared, and for her it was the best-case scenario because she would get paid and because the story would remain secret (she was married at the time).

After the lunch recess, Trump’s attorneys moved for a mistrial based on Daniels’s testimony, stating it was unfairly prejudicial and irrelevant to the case. Judge Merchan disagreed and denied their request, though he conceded there were some parts of her testimony that would have been better left unsaid. He did allow for a limiting instruction as to the 2011 parking lot encounter

Continuing with direct, Daniels explained the process of signing the NDA, how her life changed for the worse after the story of the affair was reported by the Wall Street Journal, how she sued Trump for defamation (with her then-attorney Michael Avenatti) and how Trump was awarded attorney’s fees, and being paid $100,000 for the licensing rights to her book.

Cross Examination

Cross examination of Daniels was conducted by Susan Necheles. It was, at times, brutal for Daniels, who was portrayed as a vitriolic, money-hungry liar who was determined to send Trump to prison – all of which was supported by her own words and actions. Here are some excerpts:

Q: That motivates you a lot in life, making more money; right?

A: Well, it is the United [States] – that’s what we do here.

Q: Am I correct that you hate President Trump?

A: Yes.

Q: You want him to go to jail; am I correct?

A: If he is found guilty, absolutely.

Daniels was presented with a series of tweets she posted, where she hoped for Trump to go to prison and said she would never pay over $660,000 in legal fees she owed Trump for filing a frivolous case, despite a court order. Here’s what she had to say about that:

Q: Well, you’ve chosen to disobey the Court Order; right?

A: I have chosen not to make a payment while it’s still pending, yes.

Q: You have announced publicly that you will never pay President Trump the money that you owe him; right?

A: Right.

Necheles showed Daniels an assets form (relating to a case in Florida where Trump is trying to collect the fees) – submitted under penalty of perjury – where she refused to document the cars she owned, her husband’s income, and failing to disclosure her bank accounts. She was shown a tweet where she lied about purchasing a home. And she was confronted with how she has monetized her allegations:

Q: Now, while you’ve been refusing to pay President Trump the money that you owe him, you’ve also been making money by claiming that you had sex with President Trump; right?

A: Are you talking about the book? Yes.

Q: You’ve been making money by claiming to have had sex with President Trump for more than a decade; right?

A: I have been making money by telling my story about what happened to me.

Q: And that story, in essence, is that you say you had sex with President Trump; right?

A: Yes.

She was presented with an excerpt of her book, which indicated she never told Gloria Allred (with whom she consulted for potential representation) that she had sex with Trump. Daniels would testify that she later told Allred they had sex.

Necheles effectively seized on Daniels’s inconsistent stories – not just with the alleged Trump affair, but with the “threat” in Las Vegas, which she first shared publicly in 2018. In her testimony, as Necheles observed, Daniels offered new variations to the “threat” story: that she didn’t attend the exercise class (her book says she did) after the incident and that she cried in the bathroom (a new fact never alleged). Daniels would also admit to never telling anyone of the threat – not even the father of her baby. (The baby was allegedly with her at the time.)

When asked whether Daniels vehemently denied the affair story to E!, Daniels said that was false. This contradicts E!’s reporting, which stated “Daniels herself told E! News that she is not commenting but the story is bullshit.” She also denied having anything to do with taking down the affair allegations published in The Dirty, saying her attorney Keith Davidson handled that. Yet, at the same time, she admitted denying “having had sex with President Trump.”

Necheles then shifted her focus to portraying Daniels as an extortionist. Texts between AMI’s Dylan Howard and her publicist, Gina Rodriguez, showed that Daniels wanted $100,000 to tell her story through a “source.” This would allow Daniels to maintain plausible deniability while making a sizeable profit. Here’s what Daniels had to say about these texts:

Q: [Discussing texts about Daniels giving her story] “She will do it under two conditions.” … “She doesn’t want to go on record about it, but will tell her story through a source.” It says “she had sex with him. She wants $100,000.” Do you see that?

A: I do.

Q: And you had authorized Gina Rodriguez to try to sell your story; right?

A: Correct.

As cross examination continued, Daniels denied she had a desire to sell her story to President Trump. She claimed she wanted to sell her story to the “media” and to “get it out” – an explanation at odds with the deal with Michael Cohen and her decision to sign the non-disclosure agreement (NDA). She even told a reporter from Slate that she wanted to be paid for her story, not to be paid for her silence. Daniels also conceded that she signed a statement in January 2018 that denied allegations of the affair. And in response to her claims that she wasn’t trying to make money from her story (after it was publicized), she admitted to selling a book with her story for $800,000 and appearing on the Surreal Life for $200,000.

Subscribers to The Reactionary can click here for the rest, including what to expect next week…

By Jan Nieuwenhuijs of Gainesvillecoins.com

Recently the dollar gold price aggressively broke a multiyear resistance level on the back of escalating wars, worrying asset bubbles, and sticky inflation. Long term indicators show gold is undervalued under these circumstances and can easily double in price over the coming years.

The past decades have been characterized by an elevated trust in credit instruments that blew the global financial system to colossal proportions. Now tensions between East and West, debt saturation and inflation are chipping away this trust, the balance between financial instruments with counterparty risk (credit) and without counterparty risk (gold) will go through a process of adjustment in favor of the gold price.

The Theory of Money and Exter’s Inverse Pyramid

“Money is gold, and nothing else.”

J.P. Morgan testimony before Congress 1912 (page 5)

Philosophically speaking all moneys are backed by trust. Because money is a social agreement it can be whatever we think it is—tobacco, salt, paper slips, silver, book entries, and so forth. Money functions as long as it is accepted by market participants.

But not all moneys are equal. Some moneys—for example tobacco and salt—are inconvenient in the modern age. Other moneys are issued by banks and therefor carry counterparty risk. Since the late 19th century gold is “officially” the only form of money that is universally accepted, has no counterparty risk, and therefore underpins the global financial system.

In previous articles we talked about Perry Mehrling’s hierarchy of money, Exter’s inverse pyramid, and the order in which the International Monetary Fund (IMF) lists financial assets. All three have in common that they pose gold as the ultimate money, followed by national currencies, debt securities, equity, and then derivatives. This sequence of financial assets reflects if assets are more money or credit like.

Below is a visualization of Exter’s inverse pyramid, whereby gold sits at the bottom, ultimately “backing” all forms of credit resting on top of it and providing indispensable trust to the financial system.

In moderation, credit is beneficial to a capitalist economy—too much credit (debt) results in lower growth, too little means foregone opportunities. But in general, and especially during a crisis, people have more trust in gold than credit.

Because everything above gold can be created out of thin air, the top of the pyramid can be easily widened. Throughout the business cycle balance sheets are extended—credit is created, the crown of the pyramid is enlarged—causing an economic boom. During a recession balance sheets shrink, the gold price increases, and the shape of the pyramid is remodeled. The overall size of the pyramid grows over time, while the pyramid’s form changes simultaneous with debt cycles.

Ratios between gold and credit assets can tell us where we are in a debt cycle. At the time of writing, we are in a boom as:

Gold as a share of global financial assets is low.
The US broad money supply relative to the gold “backing” it is overstretched.
Gold’s share of central banks’ international reserves is low.
Equity market valuations are high.

All the while trust in credit is waning, suggesting the gold price will rise (policy makers will avert outright defaults inducing a deflationary collapse).

New Multi-Year Gold Bull Market Has Begun

Let us first define what has recently happened to the gold price. From a technical perspective, as you can see in the chart below, the price of gold has broken out from a multi-year consolidation phase. If we may use history as our guide, we are now entering a multi-year bull market.

Chart 1. Gold price in US dollars from the 1960s until March 2024.

Next, we will examine the long-term fundamental indicators that display gold is undervalued under the conditions of declining trust in credit.

Unfortunately, it’s impossible to find global data on all financial assets going back 150 years to compare the value of all credit to that of gold. Though I did find estimates by Bridgewater Associates on the ratio between gold and “financial assets” (in this case gold, debt, and equity) from 1924 until 2020. I was able to roughly mimic Bridgewater’s methodology for the last two decades and could thus extend their data series.

Chart 2. Above ground gold as a percentage of global financial assets (gold, debt, and equity).

As we can see, during periods when trust in credit is poor, in the Second World War and at the end of the 1970s, gold’s value relative to financial assets was in between 7 and 10%. Currently gold is worth 3%, which goes to show there is ample upside for gold this bull run.

Let’s also have a look at the value of the monetary gold supporting the US dollar broad money supply. What currency is more appropriate for assessing this ratio than the world reserve currency?

Chart 3. Value US monetary gold divided by the broad money supply (M2), versus the dollar gold price. For the sake of simplicity, I have left out Eurodollars.

The value of the US monetary gold ultimately underpinning the dollars in circulation is rising from a near historic low. The two previous lows were in 1971 and 2000, after which multi-year gold bull markets followed. So, most likely a new bull market is upon us.

Making matters worse is that the dollar’s reserve currency status is slowly declining at the moment. My next measurement, therefor, is the relationship between gold and credit in the form of foreign exchange.

On the classical gold standard in the 19th century, it was mainly gold that underpinned confidence in central banks. Most of their reserves consisted of gold that literally backed the monetary base as currency could be redeemed for physical metal at a fixed parity. In the Interbellum it was agreed that foreign exchange (sterling and dollars) could substitute gold on central banks’ balance sheets to allow monetary expansion beyond the growth of the above ground stock of gold. This came to be known as the gold exchange standard. After the Second World War the US pushed the world to save in dollars and gold’s share of global international reserves declined sharply. Especially in the 1980s trust in dollars boomed.

Chart 4. Gold as a percentage of global international reserves. Gold’s increasing share of reserves is a form of de-dollarization.

But gold’s share of total reserves is presently on the rise, for one because trust in dollars is eroding due to the freezing of Russian assets worth $300 billion since the war in Ukraine that started in 2022. Second, the United States’ public debt is spiraling out of control while the Federal Reserve can’t get inflation tamed. Central banks are currently buying record amounts of gold and drive up the price.

For our final data series, we will look at the size of the US equity market versus the size of the economy (GDP) going back 120 years. Equity can be seen as a form of debt with no maturity. What the data reveals is that over time there have been cycles of easy money (credit) blowing equity bubbles, followed by the debasement of currency, reflected in a higher gold price.

Chart 5. US equity market capitalization to GDP and the dollar gold price. The chart suggests being overweight in gold.

The cycles can be best explained as follows: once a bubble pops, central banks ease monetary policy to stimulate the economy, but they often overshoot and plant the seeds for the next bubble—national currency (fiat) is the air that bubbles are commonly made of. This leads to a vicious cycle of bubbles and ever-easier money in which the value of currency incrementally declines, and the gold price appreciates. Cycles reminiscent of Exter’s pyramid widening (credit expands) and reshaping (gold price goes up). Time and again.

Currently the equity market (relative to GDP) is probably close to its peak, suggesting the gold price will see a significant rise in the coming years.

Conclusion

The West not only froze dollar assets owned by the Russian central bank early 2022 at the start of the war, but Congress just approved a bill to confiscate such assets and give them to Ukraine. What could speed up “de-dollarization” by BRICS members and other countries faster than this? Tensions between East and West will not be resolved quickly, telling us the gold price will continue to march higher and gold’s share of global international reserves will rise to the detriment of the dollar.

It should be noted that the Chinese central bank was a buyer of gold in the 1960s and 1990s before gold made substantial moves to the upside (see chart 1). Timothy Green writes in The World of Gold Today (1973):

In 1965 …., China bought 100 tonnes of gold … in the London market; the following year she came back for another 30 tonnes. Two years later China topped up with another 60 tonnes. The main reason behind these forays into the gold market appears to have been to divest itself of sterling [the second world reserve currency at the time]. Although no official figures of China’s reserve are available, it is likely that she substituted a good part of her holdings of sterling for gold before [the sterling] devaluation in 1967.

Dutch Newspaper NRC Handelsblad reported in 1993 that the People’s Bank of China (PBoC) was one of the buyers of a massive sale by the central bank of the Netherlands. As other European central banks sold heavily during the 1990s as well, we may assume the PBoC bought some more of that and reaped the benefits when the dollar gold price began its ascent around 2000.

As I have reported repeatedly since 2022, the PBoC is presently buying gold hand over fist. Do the Chinese have a sixth sense for sniffing out currency devaluations?

The gold price can be used as an inflation expectations indicator. In the chart below one can see that a turnaround in the price of gold is often followed by surging inflation within two years. To me it would only make sense if this time around it’s no different.

Chart 6. US consumer price inflation versus the gold price.

As global debt levels are near record highs and have become unsustainable, the most expedient, least well-understood, and common way of restructuring debt (credit) is inflation, according to former hedge fund manager Ray Dalio. Indeed, global debt stands at $313 trillion dollars (330% of GDP) and there are few other options to lower the debt burden. Inflation and a higher gold price would deleverage the system and restore the pyramid.

Chart 7. Global debt as measured by the Institute of International Finance (IIF). Debt to GDP figures are my personal estimates.

All in all, it sure looks if we are at the tipping point of rebalancing credit assets compared to gold. Signs of stress in the system are real estate sectors collapsing, banks failing, and central banks making losses. Credit booms are inevitably followed by busts.

Not only are central banks buying gold because “it may play a stabilizing role … in times of structural changes in the international financial system,” (central bank of Hungary) investment funds are slowly doing the same. The Bangkokpost wrote last April that “the Thai Government Pension Fund is reducing investments in assets that may be affected by war and increasing investments in gold and oil to mitigate risk.”

“The Thai [$35 bn] Government Pension Fund is reducing investments in assets that may be affected by war, and increasing investments in gold and oil to mitigate risk.”

Notice a trend?

Via @wmiddelkoop @BangkokPostNews https://t.co/A7sW8Mfs8D

— Jan Nieuwenhuijs (@JanGold_) April 28, 2024

In 2023 I speculated the gold price could reach $8,000 dollars an ounce in the decade ahead. Based on all the data I came across in writing this article I still think that is a reasonable number that would stabilize the financial system by adding more trust to it.

This week AstraZeneca recalled its COVID-19 vaccine after admitting that it caused a ‘rare but serious’ clotting.

Then we find that former CNN host Chris Cuomo has been taking Ivermectin, after mocking people for taking ‘dewoming medication,’ leading one to wonder how many dead Americans were dissuaded from taking it during the pandemic.

And in the fullness of time, we’ve learned that vaccine maker Moderna employed a former FBI analyst to secretly police ‘vaccine misinformation,’ while the Biden White House directed virtually every social media platform to censor those questioning vaccinations. Hell, the NY Times suggested ZeroHedge was spreading misinformation for suggesting, in December of 2020, that vaccine cards would be used to track people and limit their freedom.

And now people like former NY Governor Andrew Cuomo (D) are playing the whole thing off like he wasn’t a complete iron-fisted authoritarian during the pandemic – suggesting that masks were optional.

Former New York Governor Andrew Cuomo is now comfortable telling you the truth about the government’s lack of authority to enforce mandates:
“Government had no capacity to enforce any of this [mandates]. You must wear a mask. People wore masks in New York. If they said ‘I’m not… pic.twitter.com/vvxUlushfs

— Eric Abbenante (@EricAbbenante) May 7, 2024

Or Deborah Birx, who admitted she and Dr. Anthony Fauci pulled all sorts of pandemic-era lockdown protocols out of their asses, and has now remade herself into some sort of vaccine freedom advocate.

The Scarf Lady, Dr. Deborah Birx, now says that thousands of American could be vaccine injured from the mRNA shot and hints that some groups should not have been forced to get the jab.

The truth is slowly coming out and people are realizing we were right all along. pic.twitter.com/2m95ycXQ8q

— Charlie Kirk (@charliekirk11) May 9, 2024

And so, while there are a plethora of examples out there – and these barely scratch the surface, it’s worth watching a montage of authoritarians and their propagandists in the corporate media peddling lockdown hysteria, only to flip-flop with nary a mea culpa (Chris Cuomo blames ‘bad information’ – not his fault!).

Watch:

🚨Compilation of the insane amount of rewriting & 180s around COVID & COVID vaccines the past week! 👇👇 pic.twitter.com/jM3FdQpuds

— MilkBarTV (@TheMilkBarTV) May 9, 2024

These people…

Authored by James E. Fanell and Bradley A. Thayer via RealClearPolitics.com,

From the war in Ukraine to the horrific terror attack on Oct. 7 and the subsequent conflict in the Middle East to the roiling waters of the South China Sea, the world today is in crisis. The causes are not found in Moscow or Tehran alone, but primarily in Washington and Beijing.

They are the consequence of two fundamental and interrelated grand strategic mistakes made by the U.S.

First, the failure to understand the threat from the People’s Republic of China.

Second, the failure to balance against it. As a result, the U.S. is at risk of losing its dominant position to an emboldened PRC working in cooperation with Vladimir Putin’s Russia and the mullahs in Iran.

Surveying the global unrest, Americans must comprehend three reasons why they face this dire strategic landscape.

First, U.S. elites did not perceive the threat due to the triumphalism of the “End of History” – the false assertion that modernizing nations like China were on the path to democratization and free market economics.

Great power conflict was seen as an artifact of the past. This hubris contributed to what we term “threat deflation,” where year after year U.S. decision-makers consistently dismissed or underestimated the threat from the PRC.

Second, U.S. business interests and financiers indefatigably sought economic gain from cooperation with Beijing. This facilitated China’s rise as it entered the West’s economic ecosystem, as did its admission to the World Trade Organization.

Their influence on the major U.S. political parties and at the highest levels of U.S. politics hindered the U.S. response and promoted the conceit of globalization. Thus emerged an “engagement school,” which asserted that by engaging the PRC, it would become wealthy, a “responsible stakeholder” in the international order, and even democratic. In essence, the U.S. willingly and enthusiastically taught, trained, and even equipped, its mortal enemy. Business interests and financiers funded our national security think tanks which contributed to a bias towards the engagement school, and thus to the threat deflation of the PRC.

Third, Deng Xiaoping, arguably one of the greatest strategists of the 20th century, advanced a brilliant political warfare strategy to promote threat deflation.

Deng’s strategy focused on U.S. and other Western elites, enriching them, and shaping their perception of the PRC and of the Chinese Communist Party, while using the enticement of a growing market to influence their behavior. For a generation, Chinese leaders masked their intentions and framed their expansion as economic, for the good of all, rather than strategic and for the benefit of the CCP.

Consequently, the PRC has risen and now employs its power to the detriment of U.S. national security through its worldwide actions, especially in the East and South China Seas and Taiwan, as well as through its proxies in Iran and Russia.

To meet this threat, Washington first needs to see the Communist China for what it is: an aggressive great power which seeks the overthrow of the U.S.

Second, the U.S. must support the education of strategists so younger generations may understand how to defeat the PRC. Education in the principles of power politics and the CCP’s ideology are essential to achieve victory.

Third, there must be sustained presidential leadership to define the enemy, educate the American people, and generate the necessary whole-of-government response.

Fourth, the failure of the intelligence community to identify China as an existential threat greatly weakened the ability of American national security decision-makers to identify and act against the threat. The fundamental assumptions regarding China’s behavior were informed by the engagement school of thought. Ultimately, and perversely, the intelligence community was aiding threat deflation for a generation. This must be reversed.

Fifth, U.S. military leadership did not recognize and prepare for China’s emergence as a formidable military power. It must also be held accountable for the current state of unpreparedness. Specifically, the failure of the U.S. Navy’s leadership to recognize the centrality of the maritime domain to the PRC’s grand strategy and its naval modernization efforts stands in stark contrast to pro-active performance of prior generations of admirals from World War II through the Cold War with the Soviet Union. Leadership needs to prioritize rebuilding the U.S. Navy to meet the PRC threat.

The U.S. aided the rise of its enemy. Now the Kremlin and Iran are operating in the strategic space that the PRC provides them. That space and Beijing’s aggression will only increase if the U.S. does not act to end its threat deflation, break the chokehold of the engagement school on the U.S. foreign policy establishment, and defeat the CCP by evicting it from power.

The Space Weather Prediction Center of NOAA warned on Friday night about an “extreme” G5 geomagnetic storm impacting Earth, which lasted into the early morning hours. While there have been disruptions in communications, no significant failures in the US power grid have been reported. Intense solar storms can disrupt the digital economy. 

G5 represents the highest level of a geomagnetic storm on a scale from G1 to G5. This intense space weather event led to disturbances in some satellite orientation and operations, as well as deterioration in radio communications that rely on ionospheric transmission. Additionally, there were some outages in GPS networks. 

“The solar storm has knocked out almost all long-distance shortwave radio,” Captain John Konrad, CEO of Captain, wrote on X. 

The solar storm has knocked out almost all long distance shortwave radiopic.twitter.com/ZTqIUEFRza

— John Ʌ Konrad V (@johnkonrad) May 11, 2024

Yet, no significant impacts on the power grid have been reported. 

Elon Musk reported hours ago, “Major geomagnetic solar storm happening right now. Biggest in a long time. Starlink satellites are under a lot of pressure, but holding up so far.” 

Major geomagnetic solar storm happening right now. Biggest in a long time. Starlink satellites are under a lot of pressure, but holding up so far. pic.twitter.com/TrEv5Acli2

— Elon Musk (@elonmusk) May 11, 2024

The last G5 storm to hit Earth this strong was in October 2003, which sparked power outages across Sweden and damaged transformers in South Africa. Since then, the economy’s digitalization has dramatically increased, which means there’s an increasing risk of grid failures and disruptions in communication networks. 

We’ve outlined this in space weather notes over the years: 

Digital Economy Disruption Possible As “Terminator Event” Suggests Strongest Sunspot Cycle On Record Imminent

The Next Big Geomagnetic Storm Poses An Astronomical Risk To Modern Man

 Solar Storms Can Devastate Entire Civilizations.

Solar Storms Present Danger Of Blackouts For Major East Coast Cities

Last year, we pointed out that the current solar cycle (Solar Cycle 25) is expected to peak sometime in 2025. 

Solar Cycle 25’s Maximum Might Arrive Earlier And Hit Harder

This means the solar maximum is nearing or has already arrived. 

Even the federal government has started to prepare the nation for a space weather event with the 2016 executive order signed by the Obama administration titled “Coordinating Efforts to Prepare the Nation for Space Weather Events.”  

Two decades ago, the Federal Reserve Bank of Atlanta wrote a paper titled “Playing the Field: Geomagnetic Storms and the Stock Market,” outlining that “people affected by geomagnetic storms may be more inclined to sell stocks.” However, stocks are mostly traded by algos in today’s market… 

Northern lights were reported across the country last night by X users:

Northern lights over NE Ohio. pic.twitter.com/FrdW1pR9M5

— Michael Collier (@MikeACollier) May 11, 2024

northern lights in upstate NY 🤯 pic.twitter.com/N68FFiaelp

— 𝖇𝖊𝖓 𝖋𝖆𝖛𝖗𝖊𝖆𝖚 (@bfav_) May 11, 2024

North Georgia reporting in: WE HAVE NORTHERN LIGHTS 💖🤩 pic.twitter.com/tsfSH7Bn69

— Kate 💫 (@katebomb) May 11, 2024

Northern lights in Garrett County .. #deepcreek #home pic.twitter.com/ffRcOE64C3

— Richann Rodeheaver (@pudrodeheaver) May 11, 2024

The most powerful solar storm to rock Earth in recorded history, the Carrington Event, occurred in September 1859. It sparked fires in telegraph systems across Europe and North America. 

Via The Cradle

A US State Department report on Israel’s conduct in the Gaza Strip will be submitted to Congress on Friday and stop short of concluding Tel Aviv has “violated terms for the use of US weapons,” according to US officials who spoke with Axios. 

The report, based on a months-long probe that assessed whether or not Israel has violated international law or stifled Gaza aid efforts, has triggered “contentious internal debate in the State Department.”

Image: Associated Press

President Joe Biden agreed in February to issue a national security memorandum to examine the use of US weaponry by Israel in Gaza. The report set out to examine the use of weapons by Israel and six other states, according to Axios. 

US Secretary of State Anthony Blinken has been pressured by the US ambassador to Israel, Jack Lew, and the outgoing US humanitarian envoy to Gaza, David Satterfield, to conclude that Israel is not hindering aid efforts, despite recommendations to do so by USAID and the Bureau of Democracy, Human Rights, and Labor. 

The two told Blinken in a memo that while Israel restricted aid in the past, it has since changed its policy after pressure from Biden. “Blinken’s report is going to list a series of incidents that took place during the war in Gaza and note that they raised serious concerns about violations of international law by Israel,” three US officials told Axios. 

They added that the report will be “very critical” and state that the State Department is still investigating specific incidents; however, “at the same time, Blinken will stop short of concluding that Israel has violated international law in the context of the national security memorandum.”

“Blinken’s report also adopted the conclusions of Lew and Satterfield and certifies that Israel isn’t currently violating the national security memorandum when it comes to facilitating the delivery of US-supported humanitarian aid,” another official confirmed. 

Some Republican lawmakers have criticized the national security memorandum and the upcoming report. Last week, 88 Democratic lawmakers wrote to Biden saying there is “sufficient evidence” of Israeli restriction of aid into Gaza. 

Politico reported earlier this week that the release of the State Department report was delayed by several days at the last minute. Friday’s report comes a day after Biden warned that his government would not support or provide weapons for an expanded Israeli assault on Gaza’s southernmost city of Rafah. 

Back in November, there was a scathing 5-page ‘dissent memo’ circulated in the State Dept:

“The memo — signed by 100 State Department and USAID employees — urges senior U.S. officials to reassess their policy toward Israel and demand a ceasefire in Gaza” | Scoop: Internal State Dept. memo blasts Biden, U.S. policy on Israel-Hamas war https://t.co/V5MbZrWWsP

— David Doel (@daviddoel) November 13, 2023

Israel seized control of the Rafah border crossing on Tuesday morning and has been relentlessly bombarding the east of the city, killing dozens of civilians, including children. 

A US arms shipment to Israel has already been delayed over concerns about Rafah. Had the report corroborated the overwhelming evidence of Israeli war crimes and hampering humanitarian aid efforts, US military aid for Tel Aviv was at risk of drying up. As a result, supporters of Israel in Washington have pressured the State Department against such a conclusion. 

The battle started a decade ago with conservative parents in the eastern areas of Baton Rouge, Louisiana seeking the right to send their children to better public schools.  Their requests for a redistricting to build a new school in their area was denied by the city.  Year after year Louisiana public schools have been rated some of the worst performing schools in the US, not just in education but also in safety. 

Then there was the ongoing threat of rising crime combined with persistent Democrat controlled leadership; the policies of progressives directly contributed to repeat offenders being released onto the streets.  Conservative residents, feeling that Baton Rouge leaders had no intention of representing their interests or listening to their concerns, decided they had to take drastic measures to make a change.

The result was an effort of citizens in the east to break away from Baton Rouge entirely and create their own city, called St. George.  The problem for Democrats was that citizen proponents of the new city would be taking away access to their money, their businesses and their children.  This was apparently unacceptable.

The corporate media and elements of the Democratic Party immediately launched a propaganda effort to paint the breakaway community (and other movements like it) as “white flight” and a new form of segregation.  Their argument was that the petitions for St. George were racially motivated and a return to the Jim Crow era of Louisiana politics. 

Keep in mind, the St.George movement started in 2014, well before the full bore institution of woke propaganda in Democrat run public schools districts.  In hindsight, the people in eastern Baton Rouge timed their efforts perfectly and there are a lot of reasons to leave, as the city has only become worse in the past ten years.

Advocates for St. George argue that the move was never racially motivated, only policy motivated.  Everything Democrats touch eventually turns to rot.  This has been consistently proven with the top most violent cities in the US being managed by Democrats and the top worst cities for school safety in the US managed by Democrats.  Progressives have tried to deny this for years but they can’t argue with the numbers; their only retort is that the issue is “more nuanced” than conservatives believe.

Racially speaking (if Democrats really want to go there), it’s fair to point out that the worst hit areas for crime in cities like Baton Rouge are consistently in neighborhoods with a black demographic.  It’s not racist to say this, it’s just a reality.  Politically speaking, it makes sense that conservatives would want to protect their children from far-left ideological narratives now permeating public schools within progressive areas, as well as keep them safe from random violence.  The leftist position is essentially this: 

“You aren’t allowed to shield your children from Diversity, Equity and Inclusion training.  To try is bigotry and you must be stopped.  Woke ideology is not optional, it’s a requirement.” 

In other words, separation based on preference is considered “wrong” by Democrats.  This has been the underlying motivation for the progressive war on school voucher programs and public choice across the country.  Leftists are only able to survive when they can force people to participate in their systems.  Whenever individuals are given an alternative and an option to walk away most of them do.  Leftists don’t like it because it makes them look bad and it moves delicious tax dollars out of their reach.  Democrats see taxes as a form of wealth redistribution rather than communities investing in their own infrastructure, and this often leads to egregious mismanagement of city funds.   

Let’s not forget, these are the same people that constantly cry about conservatives supposedly threatening democracy, yet they are quick to criticize when democracy doesn’t work to their benefit.  

Luckily, a majority in the Louisiana Supreme Court has ruled in favor of the creation of St. George and the residents there have been given a chance to go their own way.  The media is calling it an attempt at “secession” and maybe it is, but is that really a bad thing?  Shouldn’t different communities and people with different ideals be allowed to break away if they want and manage their own affairs in the way they prefer?  As long as they follow basic constitutional principles then there’s no reason for Democrats to object, unless the issue is really all about control.  

Authored by Eric Worrall via Watts Up With That,

h/t Dr. Willie Soon; Who could have predicted acres of fragile floating structures would be vulnerable to bad weather?

Madhya Pradesh: Summer Storm Damages World’s Largest Floating Solar Plant at Omkareshwar Dam (Watch Video)

Indore: A summer storm on Tuesday damaged a floating solar plant at Madhya Pradesh’s Omkareshwar dam. The floating solar plant, situated in the backwater of the dam, is the biggest of its kind in the world. A joint venture between  Madhya Pradesh Govt and National Hydroelectric Power Corporation (NHPC), the project was nearly completed and ready for its launch. A part of the project became operational last week.

The project near the village of Kelwa Khurd, aimed at generating 100 MW of electricity, with additional capacities of 88MW at Indawadi and 90 MW at Ekhand village. However, on Tuesday, summer storms with the speed of 50kmph hit the project and threw the solar panels all around the place. No employee was fortunately injured.

…

Read morehttps://www.lokmattimes.com/national/madhya-pradesh-summer-storm-damages-worlds-largest-floating-solar-plant-at-omkareshwar-dam-watch-video-a514/

A video of the disaster;

AL GORE please pick up the red emergency phone.

Storm destroys the world’s largest floating Solar Panel Farm.

What Valedictorian engineer signed off on this stupidity.pic.twitter.com/zRBOREibGi

— Citizen Free Press (@CitizenFreePres) May 5, 2024

Anyone who has ever owned a boat, particular a large boat which gets left in the water, knows what a harsh environment the sea can be. Some kind of failure was inevitable. If it hadn’t been a storm, there are plenty of other things which could have gone wrong.

Greens keep telling us we can expect more frequent and extreme superstorms – so what is the point of building vulnerable floating structures?

Plastics tend to disintegrate under tropical sunlight, especially when in contact with water or water spray. Ultraviolet from the sun drives exotic chemical reactions, which leads to chemical breakdown.

Metal sitting in water is difficult to manage, even stainless steel is not immune to corrosion. All metal structures in contact with water need to be protected with sacrificial anodes or comparable protective measures. Electricity and metal are an especially bad combination, any electrical fault which causes a current to run through metal in contact with water can cause corrosion to occur thousands of times faster than normal.

Let us hope developers and politicians take the hint, and stop throwing our money at inherently flawed ideas like floating solar arrays.

We’ve asked the question: 

Ready For IPO? Starlink Achieves Cash-Flow Breakeven

Followed by:

SpaceX Prepares For Starlink IPO In 2024, Report Says

A new report from Quilty Space, first reported by SpaceNews, shows SpaceX’s Starlink could be closer than ever to an initial public offering. The space internet company’s 2024 forecasted revenue will top $6.6 billion. 

“Starlink’s achievements over the past three years are mind-blowing,” the report said, adding,  “We’re projecting a revenue jump from $1.4 billion in 2022 to $6.6 billion in 2024.”

To give you an idea of scale, SES and Intelsat, the two biggest geostationary satellite operators that just announced a merger, have a combined revenue of about $4.1 billion.

In 2019, SpaceX launched the first 60 Starlink satellites on the company’s Falcon 9 rocket. Fast-forward to today, and Starlink has a constellation of nearly 6,000 satellites, over 5,200 operational, and nearly 3 million terminals across 75 countries. 

In November, Elon Musk posted on X, “Excited to announce that @SpaceX @Starlink has achieved breakeven cash flow!” 

Excited to announce that @SpaceX @Starlink has achieved breakeven cash flow! Excellent work by a great team.

Starlink is also now a majority of all active satellites and will have launched a a majority of all satellites cumulatively from Earth by next year.

— Elon Musk (@elonmusk) November 2, 2023

Quilty expects “Starlink to achieve positive free cash flow for the first time in 2024.” 

Achieving positive free cash flow could be one of the major milestones Musk needs before debuting a Starlink IPO. He previously stated in 2022, “I’m not sure exactly when that [IPO] is, but maybe it will be like — I don’t know, just guessing — three or four years from now.” 

Last year, billionaire investor Ron Baron told CNBC’s Andrew Ross Sorkin that SpaceX plans to IPO Starlink in 2027. 

Baron said, “We think that by the time they go public with SpaceX, with Starlink … in 2027 or so, four years, the company will be worth $250 billion to $300 billion.”

CNBC reported that the latest valuation figure for SpaceX was around $180 billion in December. 

Authored by Nick Corbishley via naked capitalism,

At a time when the dominant narrative around cash is that its demise is all but inevitable, as well as broadly desirable, the 2024 payment report by Sweden’s Riksbank may offer a cautionary tale. 

In October last year, in More Good News for Cash in Europe, More Bad News for Digital Dollar in US, we reported that recent developments suggest that the trend away from cash and toward purely digital-only payment systems may not be quite as smooth or as seamless as some may have wished or expected. One of the developments we highlighted in that report was growing concern among central bankers and politicians in Sweden, one of Europe’s most cashless economies, about the unintended consequences of driving cash out of the economy:

Even by late 2020, Sweden had less cash in circulation than just about anywhere else in the world, at around 1% of gross domestic product, according to the latest available data. That compares with 8% in the U.S. and more than 10% in the euro area. As a recent piece in Interesting Engineering notes, Sweden is already “officially cashless”:

Cash is never needed, not even for small purchases like hot chocolate at a Christmas market in Stockholm. All vendors have a mobile payment chip-and-PIN card reader like the one offered by Stockholm-based mobile payments company iZettle, or they accept payments through the mobile application Swish. Swishing is perhaps the easiest way of payment for everyone.

The Risks of Going Fully Cashless

But now the country is beginning to realise that an almost exclusively digital payments system comes with significant risks, especially at a time of heightened geopolitical tensions. In time-honoured fashion, the article in the UK Telegraph began with a spot of fearmongering about Vladimir Putin.

“People started to realise that it is very easy for Vladimir Putin to switch everything off,” Björn Eriksson, a retired police chief, former head of Interpol and leading cash advocate, told the Telegraph.  “At first we were arguing for vulnerable people, the elderly, women in abusive relationships who rely on cash… Now we are talking about national security. And it’s not only Putin, it could also be organised crime.”

In 2021, the Riksbank, Sweden’s central bank (and the world’s oldest), introduced a new directive obliging the country’s six largest credit institutions to continue providing their customers with certain basic cash services.

But while that may have meant that people in Sweden can continue to access cash from their local branch, it is becoming increasingly difficult to use it as fewer and fewer retail businesses accept notes and coins.

This is partly due to the greater convenience of handling digital payments while the card processing fees are substantially lower than the US. But it is also because most Swedes, including many pensioners, prefer to use cards or mobile payments. As a baker in Stockholm told the Telegraph, “the only people who bring cash to the shop are tourists. I feel bad for them because they just take the krona home, where it is useless.”

But even that trend may be reversing. According to Eriksson, a growing number of young people are joining the pro-cash movement — and mainly over privacy concerns.

Rediscovering the Benefits of Cash

Earlier this week, Heise Online, a German online news service that covers IT, telecommunications, and technology sectors, published a long, in-depth report about the Riksbank’s apparent rediscovery of some of the benefits of cash. The article also explores some of the Riksbank’s concerns about the potential fragility of a fully cashless payment system, as outlined in its 2024 Payments Report, published in March.

At a time when the dominant narrative around cash — as espoused by senior bankers, central bankers, big tech and fintech executives, politicians and economists, and of course, their ever-faithful servants in the media — is that its demise is all but inevitable, even in countries where cash is still King (Germany, Spain, Austria, Mexico, Thailand, Japan…), the Riksbank’s report may offer a cautionary tale. From the Heise Online piece (machine translated):

“The Swedish payments market has been digitized rapidly,” states the Riksbank. Cash and manual payment services have been replaced by cards, mobile phones and internet services. “As a result, payments have become faster, smoother and cheaper overall,” which the institute points out is “a positive development.” However, there are groups in society “who do not have access to digital payment services or find it difficult to use them and are therefore marginalized”. There are also “serious fraud problems that could undermine trust in the payment system.”

Digitalization also makes payments “more vulnerable to cyber attacks and disruptions to the power grid and data communication,” the bank points out. At the same time, the geopolitical developments of the past few years required “Sweden to have strong civil defense.” The developments suggested “that we should concentrate more than before on the challenges of digitalization.”

Put another way, cash does not crash. It does not fail in a power cut or seize up during a cyber attack (though, of course, ATMs might). By contrast, digital payment systems need a stable and continuous internet connection to process transactions. When these connections fail, the result is often chaos. Digital payment outages have caused significant disruption in a host of countries in recent years, including the US, the UK, Australia, Indonesia, Germany, Canada, Spain and Norway. Generally speaking, the more cashless the country, the greater the disruption.

Sweden’s Cashless Journey

Sweden is one of the world’s most cashless economies. In large part, its abandonment of cash was the result of technological and generational shifts. As payment technologies began to change in the first two decades of this century, most Swedish citizens began to prefer the speed, ease and convenience of digital payments.

They were also nudged heavily in that direction by commercial banks, which by 2016 had made 60% of their branches cashless, as a 2019 Riksbank working paper documents. This made it much more difficult for citizens to access cash and for businesses to deposit it, which in turn accelerated the uptake of digital payments and the abandonment.

Sweden’s legal tender laws also made it possible for the Riksbank to withdraw many of Sweden’s large denomination notes in circulation. For instance, the value of 1,000-krona notes (worth just over $90) in circulation declined gradually from SEK 48.4 billion in 2001 to SEK 21.4 billion in December 2012. Beginning in 2013, this decline accelerated, plunging to SEK 9.7 billion by December 2013.

After playing a part in the wholesale removal of cash from Sweden’s economy, the Riksbank is now trying to reverse some of the damage it has caused. It is not the only Scandinavian central bank to have flagged up the fragility risks of exclusively digital payment systems. In 2022, the Bank of Finland recommended that the use of cash payments be guaranteed by law. Like all Nordic countries, Finland is a largely cash-free economy. But like Sweden, it has begun to see the risks of going too far, too soon.

In March 2022, the central bank initiated a proposal for legislation to ensure a minimal level of cash-paid services. In October of that year, the Head of the Payment Systems Department and Chief Cashier at the Bank of Finland, Päivi Heikkinen, even advised households to make sure they have some cash on hand, just in case the country’s payments system were to go down. At the time, Finland had just applied to become a NATO member and the government was fretting about the risk of cyber attacks from Russia. In an interview with the national broadcaster, Heikkinen said her intention was not to ”fabricate catastrophic scenarios” — before saying that in the worst case scenario, the payments system could go down for a period of weeks.

In Sweden, the Riksbank is already taking countermeasures to try to guarantee a steady supply of cash, the Heise Online article notes:

It is improving the cash supply by setting up new offices where companies can collect and deposit cash. Having such cash depots in more locations across the country would reduce both the costs for businesses and the risk that cash would no longer be usable in the event of a disruption.

This is the only way to ensure “that everyone can pay”. In general, “stronger legal protection for cash” is necessary. Banks should be required to “accept cash deposits, including coins, from individuals.”

The Riksbank supports its demands with reference to an annual representative survey on the payment habits of Swedes. According to this, “cash is being used more frequently than before”. Almost half of respondents reported using cash in the past month, an increase of 15 percentage points compared to 2022.

This pro-active approach to bolstering the cash system contrasts sharply with what some central banks and governments are saying and doing in other Western or Western-adjacent countries. As we reported in August, Brazil’s Chamber of Deputies is mulling a number of legislative proposals calling for an end to the printing, minting and circulation of physical notes and coins. As the World Economic Forum trumpeted in 2022, Brazilians are adopting digital payments faster than anyone else.

In Australia, the government refuses to legally protect the use of cash in retail settings. The Governor of the Reserve Bank of Australia, Michele Bullock, has even warned that as the running costs of processing cash for banks and businesses mount as a result of the declining share of consumer payments made using cash, it may become necessary to begin charging people for using cash in retail settings.

Granted, Australia is significantly larger and more sparsely populated than Sweden, making it much harder and more costly to transport money securely to all parts of the country, including remote parts of Queensland, Northern Territory and Western Australia. But whereas the Riksbank is talking about taking on a proactive role, together with other authorities and banks, to ensure that cash can be transported to and from retail outlets at reasonable prices, the RBA is talking about making consumers pay for the privilege of using cash. Meanwhile, Armaguard, Australia’s largest currency transport business, servicing around 90% of the cash-in-transit market, is warning of bankruptcy — unless the banks agree to pay more for its services.

Predictably, Bullock’s suggestion that citizens may one day have to fork over extra fees for the privilege of paying with cash — to protect the banks and retailers from the exorbitant costs of maintaining cash infrastructure — did not go down well with many Australians. While most citizens are using digital payments for most, if not all, of their purchases, millions still depend on cash in their daily lives.

What’s more, the very same Big Four banks Bullock wants to protect from having to part with extra money to fortify Australia’s cash network have posted record or near-record profits in recent times, in part because of surging interest rates but also because of the rising fees they charge on card payments. Those same banks received huge sums of cheap debt to tide them over during the COVID-19 pandemic while at the same time closing hundreds of branches and ATMs across the country.

In Sweden, as Heisse Online notes, more and more Swedes see the decline in cash consumption as a negative development — 44 percent in 2023 compared to 36 percent in the previous year:

The proportion of respondents who believe that they cannot get by without cash in today’s society has also increased compared to 2022. This could also be “an effect of increased crisis awareness due to the war in Ukraine,” the bankers speculate.

The need to pay in cash in certain situations such as at clubs, in corner shops and at flea markets is also mentioned, the report goes on to say. Some also emphasized that using cash made it easier for them to keep track of their finances. Older people generally find it much more difficult to get by without cash than younger people. In the 2023 survey, half of respondents said they wanted to pay cash but the store did not accept it. In 2022 the corresponding value was only 37 percent…

These numbers suggest that cash may be experiencing a mini-renaissance in Sweden, which would echo similar trends seen in other heavily cashless economies. For example, a recent survey down under by fintech company Waave revealed that as many as 71% of Australians are worried about the economy becoming completely cashless. Those most concerned include Baby Boomers (82%), regional Australians (77%), and lower income households earning less than $100k (75%) — a reminder of the oft-ignored class-war element of the War on Cash.

It’s not hard to see why concerns about the future of cash are on the rise down under. In recent months, three of Australia’s Big Four banks have removed over-the-counter cash withdrawals from some of their branches while increasing numbers of businesses, both large and small, are choosing to reject cash payments altogether. In Australia, it is perfectly legal for businesses to refuse to accept cash as long as they inform consumers of their stance before any “contract” for the supply of goods or services is entered into.

Aussie cash lovers recently expressed their displeasure with these trends through a “Draw Out Some Cash Day” on April 2. According to news.com.au, hoards of people were seen lining up to withdraw cash:

The movement, led by the Cash is King Facebook group, aimed to show banks and retailers there is still a demand for cash amid warnings the country will be “functionally cashless” by 2025.

Social media posts show “massive queues” of people, both young and old, lining up at various banks around the country, with one woman sharing she waited for up to an hour to get her hands on bank notes.

“All banks I passed today had queues out the door,” one person wrote on Facebook alongside a picture of people lining up outside a Commonwealth Bank branch.

Governments in other countries, including Ireland, Spain, Slovakia and Austria, are taking pro-active steps to protect the use of cash. Even the European Central Bank has called for a regulatory crackdown on all businesses and public bodies in the Euro Area that refuse to accept cash. At the same time, the ECB is proceeding in its digital euro project from the “investigation phase” to the “preparation phase.”

As I noted at the time, cash is still the most frequently used payment method in the Euro Area, though it is losing ground to cards. Even if, or when, the digital euro is launched, it will presumably coexist with cash for some time, at least until the digital euro gains a strong enough foothold. ECB President Lagarde has said that “cash is here to stay,” adding that European citizens “will have both options: cash and digital cash.” How long it stays that way will remain to be seen. My guess is that if the digital euro does gain a strong foothold, the ECB will begin financially incentivising its use while decentivising the use of cash.

In the UK, meanwhile, cash may even be staging a comeback of sorts after ten consecutive years of falling use. According to both UK Finance, the country’s largest bank association, and the British Retail Consortium Group, the most influential retail lobbying group, cash use increased in 2022, for the first time in a decade. Whether this rebound represents a genuine trend reversal or merely a dead cat bounce (apologies, as always, to feline lovers) remains to be seen. But the mere fact that cash use is growing at all despite concerted efforts by the government, banks and retailers to reduce its use is noteworthy.

So, too, is the fact that Sweden’s Riksbank is expressing reservations about the resilience of a fully cashless society. After all, the Riksbank was one of the first central banks in Europe to begin aggressively undermining the role of cash in the economy. That said, its U-turn on cash it is not as novel a development as is suggested by the Heise Online article. The Riksbank, the article claims in its introduction, “is suddenly emphasising the indispensable role of cash in secure, widely available payment systems. This is a change in strategy.”

That is somewhat misleading. As the German financial journalist Norbert Häring notes (in German) on his blog, while there has definitely been a sea change in strategy at the Riksbank, that change did not begin just now but rather eight years ago, “after the central bank, together with Sweden’s commercial banks, had done everything they could to undermine the use of cash.” Since early 2016 Sweden’s central bank has slowed the march towards a cashless society, as Häring reported at the time.

Now, the Riksbank is not just questioning the wisdom of moving to a fully cashless economy at this current moment in time; it is explicitly warning about the potential risks such a move might entail. At the same time, it is working on developing a CBDC — the so-called e-krona, now in its fourth and final pilot phase, looking at “how an e-Krona can be used offline for payments if electricity and telecommunications are not working.” Which begs the question: once the e-krona is ready to launch, which will presumably be sooner than most other CBDCs in the West, how will it co-exist with cash? That will have to be the subject of a future article, though readers’ suggestions are more than welcome in the meantime.