The funny thing is that with $40T of public dept US is basically taking money from other countries (in exchange for a pice of paper saying IOU) and then using that money to force these countries to do what’s in US best interests (real or perceived).
And the bigger that pile of debt is the more every government is invested in us not going bankrupt, hence the leverage just gets stronger.
US is basically a private equity typo of global power - getting others to lend them a knife it stabs them in the back.
Wouldn’t that necessarily mean that if the US keeps making enemies of allies, then the premium required for these countries to give US money would be higher? Sure, I’ll lend you some, but I don’t trust you that much, you’ll have to pay me more.
I am not defending the US government but the reason why you hold treasuries is because if you want to buy something in two years, or ten years, etc. there is a good chance you will want to buy something with dollars. Oil, soy beans, New York real estate..
Until you can buy oil without dollars. This was an explicit agreement called the Petrodollar system, which was premised on the US navy securing international trade. If the US navy proves unable to do that (and exhausts its arms and demonstrates unpreparedness for future conflicts) then the whole premise falls apart.
You might also stop buying real estate if the government seems unstable and economy is poised to collapse. Good soybeans also depend on fuel prices and the continued flow of fertilizer...
To nitpick, much of that is probably due to halting refining for export and drawing down reserves. But of course the point stands that they are rapidly electrifying and expanding renewable generation.
Oil will only become more and more volatile. The supply chain is both complex and fragile to geopolitical nonsense. China is betting on stability and reliability, environmental concerns is just a bonus.
China has large coal reserves, enough for many decades.
"China, the world’s largest coal consumer, has domestic reserves of coal to last the next 50 years, according to annual reserves data from the Ministry of Natural Resources cited by Bloomberg.
At current rates of domestic production, China also has crude oil reserves that could last for at least 18 more years, according to the ministry"
Wow. Only enough reserves to be measured in decades? Once it's gone it's gone. Genuine Carboniferous coal, one day a thousand years from now, might be a rare museum item!
I have a habit of thinking about history in very long terms, and that just does not sit right with me. That kind of thinking (oh we have enough for decades, let it rip!) happens, and the decades pass, and time inevitably is less kind to the descendants of such decision makers.
From the point of view of energy. The conversion of solar energy into coal is very inefficient, tree need energy to reproduce, only a part of plant is converted into coal, other organisms consuming plant matter, etc.
growing up (in the 70s/80s), the first time I was shocked at the exponential destructiveness of human civilisation was when I learnt that we had polluted the oceans. the second was when I found out that ubiquitous natural resources like oil could be completely consumed. I feel like either one would have been unthinkable even as late as 1900.
(incidentally the latest such shock was sometime this decade when I learnt that an aquifer could not only be depleted, but that that depletion would compact the soil so that it would thereafter be unable to hold water, and thus never (at least on our timescales) be able to be replenished. I think I'm still not over that!)
There is an interesting passage in Moby Dick where they talk about whether whaling could make whales go extinct, but the concern is brushed away as human hubris. How could humans completely destroy something that God created?
Also, this means that if we let MBAs destroy this civilization, there won’t be any future advanced civilizations as we will have consumed all the easily usable resources they will need to jumpstart their technology tree from zero again. Even if the knowledge survives it could be useless
Until you find a more thrustworthy stewart of the international order. Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse. The russians tried for years to write some replacement fiction into reality (BRICS) even though they would be the first to get shanked if the old great game returned. Its a absurd situation where empire cosplayers long for the times of "greatness" while struggling on even small "to real" acts ..
China's government is "very stable" until it's not. As a society, China has a long history but the central government has essentially collapsed or experienced violent revolution in 1976, 1969, 1949, 1927, 1911, 1850, 1796, 1644, etc. Perhaps we have reached "the end of history" and the Chinese Communist Party will now maintain stable control forever. Or maybe it will all fall apart again in a few decades due to resource shortages or factional power struggles or a foreign war.
That seems to be a recurring theme regardless of the country's economic system. We're two months away from seeing if the US still has a working succession strategy.
> Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse.
The main problem right now is that the US are not the US for which we voted with our feet. They are a worse alternative to the US that created the status quo (to their advantage obviously, but much of the world also benefitted from free trade and the lack of other world wars).
In a way, the bond market tracks international central banks' confidence that this will continue to be true. If they lose some of that confidence, their stock of bonds moves from USD to RMB/EUR/JPY/AUD/CAD/SGD/etc.
True, except you're being way too easy on those other currencies. Currencies need to be issued by groups able to guarantee international trade, otherwise there's no point.
RMB - maybe, but nobody sane trusts China to not immediately change priorities on a dime
EUR - imho (much) less chance than RMB, but they're using a hack: of EUR is a massive entity and internally there's no choice. Literally not allowed (due to tax reasons) (exceptions of course made for favored entities) (I feel that those favored entities exist, and how big they are, should be a huge red flag for anyone considering using EUR)
JPY - can't project force ... and doesn't even try
AUD - no
CAD - no
SGD - no
I don't understand why you're not listing GBP, as they have at least at some point done this. Of course they were a worse steward of international trade than the worst point of the US. Also, you consider AUD, but not CHF?
So what choice is there, really? This is really a way to try to push the US to do more, for less "exorbitant privilege" (especially EUR). Of course, a great many people are very interested in doing just that. It strikes me as an extremely dangerous game to play. Yes, the odds of winning are good, but if you lose, you lose everything.
I was going by foreign currency reserves, which feature CAD and AUD in much greater quantities than CHF. Also I swapped in SGD for GBP, whoops.
Global reserves continue to hold USD in greater quantities than anything else. A movement away from the USD still means a relative loss of faith in the US. If there's nobody who can guarantee trade then you still need to hold reserves, right? You just have to hold a broad and shallow pool rather than going deep on one currency.
Pretty confident it’s going to be EUR, note how they dealt with Trump tariff’s shenanigans. Took it slowly, and decidedly, sure let the countries say words and what not, but at the end of the day it’s decided by the EU. Just one persons opinion.
And you're not terrified that's the situation? The beef the US has with the EUR is simple: the US is what's defending Europe militarily (nuclear and non-nuclear. The Pentagon is the reason Ukraine hasn't been nuked yet, or more likely, that Kiyv didn't surrender because they didn't have nukes). That was never given freely. It was politically impossible to get governments to actually pay for that, so it was decided to trade in USD (this was before petrodollar), giving the US "exorbitant privilege" (which roughly translates to that the US gets to tax most of global trade at something like 2 to 4% and use that for themselves). That the US got that was not an accident, but a policy decision. The Euro takes that away, but of course, no European country is willing to either now start paying, or to defend itself. To say nothing of France, the Netherlands or Denmark defending remote EU territories like Greenland, ABC islands or Polynesia (which would require, for starters, militarily controlling supply lines to those territories).
Given the history of economic sanctions (what the EU is doing) ... of course people don't know that history, but the TLDR is that nearly always economic sanctions are a prelude to war. They don't just not work. In many cases they cause wars. WW1 was caused by economic sanctions (and the scale of EU economic sanctions is 100x bigger than what caused WW1), and often the economic sanctions on Germany after WW1 are generally thought to be the big reason for WW2. It makes sense from a game theory perspective: if a government, whose power is fundamentally based on force, lets economic sanctions convince them, they will be attacked by their own people. So they simply cannot give in, and historically that's what you indeed mostly see: when a country is targeted by economic sanctions, it's government usually decides to attack.
The EUR is imposing very large scale sanctions on ... essentially everyone. Russia and China most obviously of course, but sanctions are so widely used by the EU you can literally say it's being used against everyone from Afghanistan to Zimbabwe, or geographically from Paraguay to North Korea. And why is the EU doing this? Exactly the reason Trump is doing it: sanctions are "power without needing parliament to approve the budget for anything".
The fear is: the historically most likely outcome of what the EU is doing, what EUR is being used for, is another very large scale war.
> Go further with your reasoning... Why would anyone lend the US more...
Because if you don't, you are abducted or killed or "regime changed" or sanctioned to famine-level poverty - all for "freedom & democracy". Kindly remember that the Corporate States of America has the world's most powerful military... well I suppose it is nowadays in the top #3.
The real answer to your question is the US bond market is an auction, and rates are going up and up, with some sketchy tactics being employed to try and keep them down.
What’s happening to US bonds has been compared to using a credit card to pay off your mortgage...
its mostly because the global economy is dollarized so there's a number of benefits store your wealth in dollars as a hedge or point of stability.
If the dollar's dominance wanes, so too will be the appetite for US treasuries.
US capital markets are the largest and most liquid in the world. It's not even close.
There are of course a zillion other borrowers worldwide but they're all much smaller and suffer from a variety of other structural problems. If you need to deploy a huge amount of capital with low risk and high liquidity then US treasuries are still the only realistic option.
Sure, but that premium would still be in dollars; until the world realizes that the US is using the primacy of the dollar as a reason to do whatever they want...
What you point out here is a major weakness in the typical US citizen's understanding of where US wealth and power comes from.
The US prints two kinds of dollars, the regular kind, then the T-bills.
T-bills get exchanged like dollars, investors/governments buy them because they are thought to be as stable as dollars, but also bear a bit of yield. The US benefits by printing T-bills over dollars because merely by changing the current interest rate, they change the dollar supply. Increasing interest rates lower the value of T-bills, decreasing the supply of dollars (as Silicon Valkey Bank found out...). This allows the US currency to remain very stable.
Referring to the $40T of T-bills merely as "debt" is quite deceptive. It's the global currency. You need enough currency out there to represent the actual amount of wealth, otherwise the values of dollars increases, and deflation is the only thing worse than inflation.
The US' $2T budget deficit is basically the rest of the world paying the US for the privilege of using US currency. The US is printing money, and getting the benefits of spending, because the rest of the world needs dollars to transact. They send us goods, we send them printed dollars. And then we get a president who calls this situation bad, because he doesn't understand what a "trade deficit" is. Utter insanity to have such a position and then just throw it all away.
>deflation is the only thing worse than inflation.
In any empirical sense this is absolutely false. The only instance of a significant negative instance of deflation was its contribution to the Great Depression in the early nineteen hundreds, and the effect of that was minor compared to the effects of extreme inflation (hyperinflation) that occurred in places like Weimar Germany and Zimbabwe. Deflation is inherently self-limiting because people have a baseline of goods they must consume for survival (housing, food etc.), and once that baseline is reached spending does not fall further; there's not a single instance in history of 99% deflation, while 99%, 999% and even 999999999% inflation has happened within even just the past few decades.
> people have a baseline of goods they must consume for survival (housing, food etc.), and once that baseline is reached spending does not fall further
Oh boy, do I have news for you. It is in fact possible to run out of money, and in a deflating economy with no jobs you can't just go out and earn more. It puts peoples' collective backs against the wall -- at which point they decide to fight like cornered animals rather than die in a corner, and things get nasty.
Inflation crises are awful, but when you run out of money there are jobs and you can get more and this generally prevents them from turning into bloodbaths. This is why we collectively decided to err in this direction.
Weimar Germany is the perfect example. Did it suck? Yeah. Savings were incinerated, everyday activities became market speculation, the memes are all true -- but it happened under nearly full employment and once the root causes were addressed everything largely simmered down. This is in stark contrast to the deflationary shock of the Great Depression later that decade which propelled the Nazis into power and led directly to WWII.
99% deflation doesn't happen because people start killing each other long before then.
So which do you choose? Yuan carries Chinese geopolitical risk, Yen, probably not enough of it in the world plus Japan keeps trying to devalue, Euro maybe, but there's plenty of geopolitical risk there with Russia on the doorstep and shifting politics...
Plus if everyone doesn't choose the same it's less convenient.
You make sound like we're stuck with it, but the franc and the sterling pound used to have a similar role for a few centuries each... these things change.
Didn't say we're stuck with it, just at this exact moment there's no obvious replacement.
If China ever replaces Xi and the next generation takes a softer stance on a bunch of stuff it'll be a shoe in, but right now they're weirdly belligerent.
They're quite softer in all kinds of stuff. The US is run by an aggressive madman and neocon/MIC combo in comparison (tarrifs, trade blackmail, Greenland, straight of Hormuz, the list goes on).
Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States. Besides, shoveling never-ending piles of cash into the furnace of the War Machine doesn't seem to have hurt the dollar?
As to shifting politics: The EU is famously extremely hard to move.
The European Council decides the political direction and consists of the heads of state of the member countries; the European Commission is the executive cabinet and needs buy-in from the Council of the European Union and the European Parliament; the Council of the European Union is made up from ministers of the member states and each member state has a veto right on all foreign policy proposed by the European Commission; the European Parliament's members are directly elected through independent elections in the individual member states with proportional representation, and any policy proposed by the European Commission also needs a majority here; the Court of Justice of the European Union's General Court oversees this and is composed of two judges appointed by each member state for a renewable six-year period and reviewed by an independent committee.
In other words: nothing gets done fast, and nothing gets done without buy-in from a lot of people with very opposed political goals. Quite different from a country like, say, the United States, where the loser of the popular vote routinely becomes president, is handed God-Emperor levels of power, and is virtually impossible to unseat - leaving the foreign policies of a nuclear superpower to be decided by how a single person felt when he stepped out of his bed this morning.
> Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States.
That's the plan, but under Glorious Leader? Not clear which side he would attack (or possibly neither).
> Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States
Will it? The Russians blew up an ammunition depot in Czechia without consequences. A cruise missile hit Poland and it was swept under the rug. Numerous acts of sabotage and Europe's done nothing. Now a drone attack in Germany and they're again, responding extremely weakly.
The only rational takeaway is that NATO is weak. If Russia attacks Latvia will the US go to war? Not s chance.
Vance is making this idea popular/mainstream again lately, I wonder why? The US will predictably lose reserve-currency status as a consequence of losing all the rest of the trust and good will available to her, so it's time to make it seem like that was the plan all along.
Sure, there was a serious conversation to be had about this at some point, but it was probably before stacking up tons of unsustainable debt that directly depends on that part of the shell game. And there are many things that can/should change, but in a certain way and at a certain time to avoid pain and chaos. Arguing "this was always bad for us, fuck it" is kind of a pattern now, right? When someone wants to change some things, great, everything sucks. But when someone wants to tear down every status quo, and especially the ones that they apparently benefited from while saying "everyone after me doesn't need it", then it's a pretty clear sign.
US is now a lot of crazy old people finding new ways to eat their children and trying to see the world burn before they check out. They created the bulk of the debt, benefited from it immensely, propped it up with collateral that was always kind of imaginary, continue to increase the debt. Not great, but now we are also proposing to just destroy what's left of that thin collateral? I don't know how to explain that with greed or stupidity even, it just seems like spite.
> US is now a lot of crazy old people finding new ways to eat their children and trying to see the world burn before they check out. They created the bulk of the debt, benefited from it immensely, propped it up with collateral that was always kind of imaginary, continue to increase the debt. Not great, but now we are also proposing to just destroy what's left of that thin collateral? I don't know how to explain that with greed or stupidity even, it just seems like spite.
And is your proposal to just hope to be one of the next generation who still can eat their children? Or better yet, the children of those who didn't make it before the ladder was pulled up?
Nothing there explains why it's a bad deal for the middle class.
The middle class actually benefits the most from this situation! More goods, more government services, etc. How much more? Just add up all the trade deficits, that's all benefit accrued almost entirely to the middle class.
It is explained in the Alden piece, section "The Fraying of the Petrodollar System", subsection "The Triffin Dilemma Unfolds".
What I meant was "blue collar working class" as opposed to the neo-artistocrat professional class. The Triffin Dilemma is a contributor to the K shaped economy and rise of populism.
>And from there, the value of the system depends on who you ask. Folks who are often on the higher end of the income spectrum who worked in finance, government, healthcare, or technology benefitted from this system, since they obtained many of the benefits of globalization and none of the drawbacks. Folks who are often on the lower end of the income spectrum, specifically those that make physical things, are the ones that benefitted least and gave the most up, since their jobs were outsourced and automated at a faster rate than other developed countries. But now with China also undermining the structure of the system, even the geopolitical/hegemonic benefits for the political class are subverted as well.
I guess I'm not seeing anything tying the trade deficit to the destruction of unions, to the massive reduction in top tax rates resulting in higher CEO compensation, etc.
The piece puts increasing trade deficits next to lots of stuff about increasing inequality, but it does not make the case that trade deficits are the cause of increasing inequality.
There's a person that had a job making physical things, but they are not inherently a "person that only makes physical things." The idea that bringing back the making of physical things will make these people wealthier is, well, suspicious. Unions? Better taxations systems? Modernizing manufacturing so that each worker is far more productive and we can compete with the world? That may help. But reducing trade deficits will not fix any of the K shaped economy.
A current account deficit is a capital account surplus.
We can pay for imports with things we make or things we own. To a first approximation, making things employs people and owning things does not. If we pay with things we make, our economy employs people. If we pay with things we own, the jobs disappear while stocks/bonds/real estate soar.
If you want the whole story from an actual economist, read "Trade Wars are Class Wars" by Klein and Pettis.
You're missing the third thing we pay with: T-bills. We literally print money. That's it. We didn't give up anything we own. We didn't give up anything we made. We printed money, because there needs to be enough currency to represent the ever growing wealth of the world and the world has chosen the US dollar as the reserve currency, to the great benefit of the US.
> Modernizing manufacturing so that each worker is far more productive and we can compete with the world
How does this not correspond directly to reduced trade deficits? In this scenario the US is either sourcing more of what it needs internally, and thereby importing less, or it is more competitive globally and therefore exporting more, or both.
That would be a necessary condition for manufacturing-based reduction of inequality.
But manufacturing is not a way to decrease inequality unless there's massive massive other sorts of changes going with it.
In fact destroying the higher paying jobs to replace them with lower paying jobs in the US will heighten the inequality. And that's what's happening right now.
It certainly can't be leading to more government services. We get less every year. There might be more spending, but there's fewer results. We can't build trains, our police don't stop crime, healthcare covers less and costs more every year.
The US isn’t taking money from other countries - you clearly don’t understand the scam!
We give money to Israel, Ukraine, and everyone else - we print and print and print and a few people close to the action take some off the top.
That’s it. Maybe some rich kids get their university debt wiped clean (not community college though).
The US and even local governments within have become corrupted to the core - they are like ATMs and havens of various types for the emerging international wealth class.
That class may very well want to promote your idea since the best seat at the table right now is China.
Now everyone wants to be owed by the US à la China, it’s been great for international business. Mexico is the heir to that throne more than Europe - which doesn’t produce anything the world wants.
Is it "level headed" to ignore the concerns of somebody pulling their gold out, even if they are a small country?
Your figures do point out that the Netherlands's amount of gold is small, but it is not level headed to think that they are somehow alone or unrepresentative of far more countries with far more gold.
What is the value of this? Clearly the US won't sell me gold for $42/oz or the arbitragers would own the country, and nobody will sell the US gold for that amount ... so what does the $42/oz "peg" actually mean?
If you're familiar with par value, it's the same thing. It's a measure to account for changes in asset holdings over time while neglecting changes in market value of that asset. They could have just used ounces to do the same thing here. It made more sense when there was a dollar peg.
Interestingly, 59 tonnes of gold was sold in USA and bought in London. So that means perhaps "Somebody" transferred 59 tonnes of their gold holdings to the USA.. who was that?
This is similar to what the French did last year.
The other thing I noticed, is that as the article chose to mention:
> Gold that is held with the Bank of England must meet modern international trade standards
with implication being that the gold it previously held in the USA was not meeting those standards, but is that just journalistic fluff? what are those standards? (could be exact weights in g rather than purity?)
NB the Netherlands still has >200 tonnes of gold held in the USA & Canada.
The standards of purity have changed over time, and most of the US gold dates from before the 1930s; and so a lot of US-domiciled gold have different purities that don't follow the current international standard. The purity requirement has been going up over time. A lot of US gold is 90% gold and 10% copper, but gold traded on the international market needs to be at least 99.5% pure. Here [1] is a good breakdown.
When you buy gold, you purchase based on the amount of gold, not the total amount of alloy. This is true in both markets. This difference in standard is practically not a big deal because you very rarely physically move the gold, as moving gold requires a lot of security and is a risk.
Physical gold bars are transferred via plane between London and New York every day. The gold flies in the cargo holds of regularly scheduled commercial passenger flights. The quantity transferred depends on demand, and could be several metric tons daily.
This is nothing unusual. Dubai is another major gold transfer hub, and it operates via the same mechanism.
Regarding the article highlighting differing international standards for gold, London uses standard 400-ounce bars, while the US uses 100-ounce or 1kg bars. Often, the bars need to be remelted (elsewhere, typically in Switzerland) before they can be added to the vaults.
Is gold really sufficiently fungible to enable daily bidirectional sizable flows across the Atlantic, but not fungible enough to allow somebody to net these flows out and save at least one way of the airfare?
That is the spread which the gold dealers have to make a profit. But bullion is bullion anywhere you turn and no matter to who you sell. No gold dealer will turn down investment grade gold.
Never have a gold dealer anywhere asked me for any laboratory fee when selling bullion to them. They have their spread and that's it. It's their job to recognize bullion and have their own laboratory to quickly check if needed.
Coordination cost maybe. If you're transferring A -> B and C <- D, but A and C or B and D don't know each other or even dislike each other, it's going to be hard to even get them to talk about the fungibility of the actual bars. And I bet airfare is the cheapest part after all the security and paychecks of people arranging the transaction.
Most of this is googleable but there are thousands of traders that make sure the gold price is the same globally so nobody had to “move” their gold in the reverse for this trade to work.
The difference between London and the US is that the bars are of different size (12.5 vs 1kg).
> there are thousands of traders that make sure the gold price is the same globally so nobody had to “move” their gold
Physical versus contract differences are real and require moving the actual gold. What most users do is sell deliverable where they want it out and then buy contracts or deliverable where they want it and then let the market figure out how to move gold around to settle. (It probably won’t involve moving gold from where you had it to where you want it unless you’re in a cohort.)
The price of gold is not equal globally, there is a ‘loco swap’ price differential, reflecting the price of moving the metal, eg flights, security, tariffs that may be attracted, whether the location can service futures delivery etc
> Interestingly, 59 tonnes of gold was sold in USA and bought in London. So that means perhaps "Somebody" transferred 59 tonnes of their gold holdings to the USA.. who was that?
That 59T could have been someone that decided to starting owning gold for the very first time, so 'net-new' holding rather than a 'transfer'. The 59T could have also been multiple parties and not an individual "somebody": we only know that it was 59T from the sell side (NL).
California alone grows about half of the US's nuts, fruits, and vegetables. Both the West Coast and rest of the country could reconfigure production to serve themselves if desired.
We can do more than hope: Move the wall from the southern border to the eastern border (and probably embargo whatever oil rigs and space launch platforms are planned for places like Monterey Bay)
That way, we can get to keep our beaches, and continue to hire migrant labor from the rest of America to help during harvest season.
Their goal isn't only safe storage, it's also being able to sell when needed.
You can't quickly trade with the gold that's in their own safe storage facility in Zeist, because you would need to physically transport it. The reserve at the Bank of England is put there because there is a large market for gold trading there. So you can use the gold immediately to influence the markets.
Putting it in a safe place in another European country wouldn't have added value over storage in Zeist.
> You can't quickly trade with the gold that's in their own safe storage facility in Zeist, because you would need to physically transport it.
More specifically: very few people besides the NL government have any gold stored inside that facility, so intra-facility trade is basically nonexistent.
London has an old school gold exchange. Pretty much you can buy and sell by moving a part between vaults (at least that's how I understood it to work in the past). Now I expect it to be just a spreadsheet but who knows.
I wonder if anyone checks the gold. You could end up with the problem Amazon had, where people were inserting fake items into the supply chain and then it was just getting mixed into the real products and nobody could tell who was doing the fraud.
Because instead of treating each item as an individual thing, they were pooling everything with other items of the same type. So if I send in a brick and say it’s an iPhone 17 and you order an iPhone 17, you might get my brick.
There have been rumours like this about the US gold storage for decades.
Its audits only look at a tiny percentage of the holdings at a time, any kind of weighing or purity inspection is the exception rather than the rule, and third-party auditors or observers are not welcome. They basically look at a handful of bars, see that the seals on the other vaults are intact, and extrapolate that all the gold is perfectly fine.
In other words: the US could be pulling the fraud of the century here, and we'd never find out. But a full audit would be extremely expensive, there's no sign that there's any kind of foul play, and other countries are doing more-or-less the same.
And even if a country does notice that something is off with their US holdings, there's plenty of reason to keep it quiet and just play along.
Tungsten is 1.0015 times denser than gold. A gold-coated tungsten ingot could be adjusted (tiny internal cavity) to have exactly the same mass as a solid gold ingot of the same volume.
I've no idea what checks are done to exclude such artifacts from gold storage. If somebody accepted them and stacked them in a reserve vault, they might go decades without discovery.
I guess it's not something to worry about. It's improbable, and even so, if everybody agrees on the value of undetected bogus W/Au ingots, makes no difference from the real thing.
When it comes to being a financial hub English as a global language is paramount in modern world. You wouldn't expect a C-level executive from other side of the world to speak German. Further, if you've ever been in the financial scene in Frankfurt, it's unfortunately predominantly in German because most of the old people working in the institutions can only speak vacation English and they switch to German as soon possible.
Also from where did you hear that Frankfurt gets the business that's leaving London? What is your source? That was the hope for the Germans with the Brexit, but it never happened. German laws and bureaucracy is still far too hostile and outdated compared to London.
Agree, the younger generation, or at least every young German (mostly millennials/GenZ) I’ve met is completely fluent in English, almost like native English speakers.
Some even with an American accent which they picked up by watching YouTube videos
This post is weird. Finance people who work in Frankfurt and Amsterdam certainly speak English. Yes, they will also speak German, Dutch, and a variety of other langauges, but not speaking English is not the blocker here. I will also say that finance people in Paris under 40 are also (mostly) fluent in English. (Please don't bring up accent; no one in finance cares about your accent when speaking English; they care about your prices.)
That said, I'm not entirely clear how the exchange's market cap should or shouldn't be thought of in terms of the total market cap of assets that the exchange lets you trade. Or indeed the float of those assets, which is a concept I've only learned about due to SpaceX's nonsense IPO, so take my thoughts with an appropriate pinch of salt.
The biggest chunk is in the Netherlands, but you want your gold also in other countries, so that you can still access is (and don't loose it) in case of an invasion. Hence almost half is in North America, a completely different (and (somewhat) allied) continent.
It's also easier to sell in certain markets, such as London.
Not just so that you don't lose it in case of an invasion, but it is proof that you would be willing to help out the host country in the case they were invaded. Also, that you would not invade them.
In the olden days, the local lords would marry their children together, to create familial groups and ensure that for the forseeable future the local areas would not have a conflict. Modern democracies don't have such valuable family members, we use valuable objects instead.
The United States and Canada must have enjoyed that feeling of safety, knowing that the Netherlands would not invade them. And of course, if someone were to invade the United States (or Canada), knowing that the mighty Netherlands would come to their help would be immensely reassuring.
England is definitely a European country. I'm tired of people constantly making this political abuse of language of conflating "the EU" with "Europe".
(And yes, saying "America" for "US of A" annoys me too. First step towards losing an imperialist state of mind is letting people from Canada and Brazil be in America).
The pedantry of being angry at the US for being the only country that actually has the word "America" in its name and yet calling itself American is almost comical in its ineptitude.
Nobody shakes their metaphorical fist at the Central African Republic for daring to use Central African as its demonym. It's simply understood that the surrounding countries are also African, yet simply do not have the name of the continent in its name.
But if you do want to be pedantic, England is not technically a country anymore, it's the United Kingdom.
> The pedantry of being angry at the US for being the only country that actually has the word "America" in its name
That is not the reason.
People say that Columbus discovered America. They don't mean the country, they mean the continent. The people in the continent of America are called Americans. About a century ago, US Americans came to view America as two continents.
Many countries still hold to America being a single continent, but there's no name for the people of America because US Americans stole it. The is very equivalent to how the EU is stealing Europe/European.
That's true in the sense that the Falklands have never been legally part of England. But Britain has exercised control over them since the 1760s, with interruptions, and they’re still a British Overseas Territory today. So saying they've never been British would be inaccurate, but saying they're "part of England" would also be inaccurate.
One of the smart moves the EU has performed is to bring all ideas of Europeanness and European identity and Europe as a continent under its exclusive umbrella. Even places like Switzerland are somehow now defined by their exclusion when you couldn’t get a more European country slap bang in the centre of the continent. Britain has always been an outlier due to being an island hanging off the edge, and is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
Ugh, your concept of EU is closer to the USSR or maybe current Russia than to the actual EU. I sincerely hope that such nightmarish concept will never prevail over the relative sanity that we have now.
As a British person who was born in the EU and spent 35 years of their life as an EU citizen, the treatment of us since Brexit has felt like it. Naturally the standard comeback can be “yes but you all voted for Brexit this is your fault what did you expect” but I’m just reflecting what it has felt like and the difficulties thrown up towards people who even believed in the project of Europe who suddenly found that they were no longer a welcome part of it.
Personally, I am sorry that the British left, but coming from a small nation which had their sovereignty often trampled upon, I believe that consent of the governed matters fundamentally and that there is no project important enough to force people into it if they express their wish to the contrary.
> One of the smart moves the EU has performed is to bring all ideas of Europeanness and European identity and Europe as a continent under its exclusive umbrella.
But only the most imbecille people have fallen for that. Nobody with any kind of sense or basic knowledge considers EU to be Europe or vice versa.
> Britain has always been an outlier due to being an island hanging off the edge, and is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
Just like they were last time, but they won that war in the end.
I don't think that's a problem, and it doesn't mean that Britain is not in Europe, IMO. Comes naturally with human perspective. "Where did you go this summer?" A) "I stayed in England"; B) "I travelled around Britain"; C) "I went to Europe". All perfectly understandable, I think..
And you actually traveled in Scotland and Wales but England was synonymous with UK for you. Technically incorrect of course.
B) "I travelled around Britain"
And in actuality you only traveled in England.
C) "I went to Europe"
As an American (yes, a US-ian) and you start in Poland at the Baltic sea and then via some nice Eastern European countries with other attractions like Kroatia, all the way down to Greece. But without further explanation and context most people would've assumed you probably traveled Spain, France, Italy etc.
But almost invariably in this context they mean "the continent" ie France, Spain, Italy and so on, probably not Scandi and not Ireland. So that's more like how people would say they're going "to the UK" when actually they're travelling to like the Isle of Man or even sometimes Jersey which are not in the UK but like sure, people who speak English live there, if some lunatics attacked them the military forces would work for the UK, and in Man's case it even makes geographical sense (Jersey is basically in France, it isn't French for historical reasons) but these places are not part of the United Kingdom any more than Canada or Australia. Same King, different government.
The British Isles lie on the Eurasian tectonic plate, on the northwestern part of the European continental margin. Going to "the continent" is an incorrect expression. You are already on it.
If you want to be pedantic, then this also wrong: half of Ireland, the Isle of Man, and Scotland are actually on the Laurentian plate, which split apart. The Scottish Highlands used to be part of the same range as the Appalachian. Plates are not continents.
I live in continental Europe, and we also say "going to Europe" when talking about holiday trips abroad. It's just a natural thing to say when you want to stress you're going outside of the border, buy without being overly specific.
In the San Francisco Bay Area, the locals refer to SF proper as “The City” (not “Frisco”.)
So, they may live in Cupertino, Palo Alto, or Oakland, but when they say “we’re going to The City for a concert on Saturday!” we can hear them pronounce those capital letters as an unambiguous reference to the one, true City.
I live in a city (a quite small one) and if I say that I'm going into the city, then it means I leave my neighbourhood (it's in the same city) and I'm going to the city centre.
The city of London literally has a city also named London inside it and yeah, "Where are you going?" "The City" means clearly that tiny part. There is another small older city inside London, Westminster, but if you meant Westminster you'd say "Westminster" never "The City" in general.
What’s the problem? We took nationalist names (Mexico, Ontario) and used the hemisphere appropriate term. If anything we’re more culturally progressive for doing it.
Lake Ontario wasn't a "nationalist" name. It's an anglicised version of the Wyandot name for the lake. The Canadian province is named after the lake, not the other way around.
Americans are from the United States of America in the same way Mexicans are from the United States of Mexico.
When South Americans refer to Americans as "estadounidense" is that imperialist Mexico erasure? The USA is not the only "United States" in North America.
We say "America", because "United States of America" isn't really a name. Just like we say England or Britain, because "United Kingdom" isn't really a name either.
"The Soviet Union" wasn't really a name either, as "soviet" just means a governing council. But since it's a foreign word it sounds like a name.
It's interesting that some of the historically most powerful entities don't have proper names.
As for England being European, is it really? Traditionally people don't always count the Nordic countries as Europe, and I'd assume the same would be true of England? Culturally it is of course, just as much as France or Germany.
> (And yes, saying "America" for "US of A" annoys me too. First step towards losing an imperialist state of mind is letting people from Canada and Brazil be in America).
Hmm, maybe I should be pro-imperialism. I’ll do that before calling a Brazilian, Canadian, or Mexican an American to satisfy the whims of the language police.
But if you want to go to uni and call Americans United Statesians and fight a made up culture war, you’re certainly free to do that (in America at least, wherever that is).
> Hmm, maybe I should be pro-imperialism. I’ll do that before calling a Brazilian, Canadian, or Mexican an American to satisfy the whims of the language police.
The narrative is that the continent is going to be overrun by Russia (at the rate of mile per year like in Ukraine). So the elites think they need the gold in London to pay for their exile government luxury.
The Dutch transfer out of Canada is minimal and pretty much a token amount. Most gold has been transfered out of the USA.
As for why, the American people elected Donald Trump for a second time and the recent trade wars have helped spread the notion that maybe the USA cannot be trusted by its supposed allies as much as it once could be.
My guess is the original title focused just on the U.S., but the editors didn't want to draw attention from the big cheeto, so the headline was changed and now it looks less like the U.S. is the primary target.
Honestly, if quick access to their holdings is a concern, I wouldn't hold it against the Dutch if they moved more gold out of Canada too. Unfortunately, you presently just don't know when a sovereign nation in the Americas might be embargoed by the U.S..
Gotta prepare for the US vs Europe war over Greenland!
see:
>“Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace,” he wrote, adding that the US needed “complete and total control” of Greenland.
Just a reminder: The Netherlands' 612 tonnes represent 0.28% of all gold ever mined and 1.7% of central bank reserves. Because gold is insanely dense (19.32 g/cm³), all the gold mined in human history fits into about ~340 shipping containers
A standard 24,000-TEU cargo ship could hold every ounce of humanity's gold using under 1.5% of its physical volume.
So the Dutch portion is a rounding error of global gold that fits in a single shipping container.
It's interesting that this is reported as Netherlands pulls gold out of US and not Netherlands moves gold to Bank of England, even in the British press
Besides the reasons listed by the others, this also a matter of relationships as there a deep ties between these nations and the Netherlands. Without the Dutch financing the Americans, America would not have been able to become independent from the English. The Dutch were also the first country on earth to acknowledge America's independence [1][2], costing them a war with the pissed England [3].
There are a lot of Dutch people living in Canada.[4]
It's mostly historical and a combination of security from the WW2 and Cold War eras as well as how the gold standard worked before Bretton Woods.
Most countries held gold reserves as their currencies were backed by it. When money needed to move because of trade, the ratios of currencies backed by gold would shift as money got converted to other currencies. However, constantly moving physical gold back and forth with the ebs and flows of trade was impractical, so ownership of gold in central bank vaults usually just had its legal ownership marked on ledgers. Physical gold moving was more part of reconciliation. This description is an oversimplification as in practice, countries didn't always play by the rules of the gold standard (revaluations, going on and off the standard, etc), but you get the general idea.
This mostly ended as Bretton woods came into effect and the new system was basing the US dollars on gold, then other countries held direct US dollars and traded that instead. Countries could then convert those US dollars into gold. This ended when Nixon closed the gold window when he refused to raise interest rates as there started to be a run on gold as countries rushed to convert. The backdrop was that high spending on the Vietnam was and new social programs was driving inflation, but Nixon knew that would cause an economic slowdown he wasn't willing to do. Jimmy Carter then took a lot of the political flack for allowing the central bank to raise rates to kill it. This is why central bank independence is so important.
During times of geopolitical risk, countries would physically move their gold to be held in trust in friendly and/or rule of law countries. The USA was seen as this between ~1914-now.
Don't forget that the European continent has had wars almost non-stop for centuries. It is a good strategy to place your gold in a location that has not seen much action in the past 250 years.
> I'm curious the reason why it was ever held in the US and Canada
Random Educated Guess; Probably part of some show of mutual trust to cement a treaty or other agreement, made way back when allied governments could mostly trust one another to hold to such agreements somewhat reliably?
Eh I don’t think that’s a good guess. More likely is that there are just mechanical reasons to have moved some (they didn’t move all of it by the way) gold to London. Plus it’s not that much money in the grand scheme of things.
Your implication here is something akin to the Netherlands thinks the US will invade Canada - remember the Dutch moved gold from there too, or that the US will decide to seize the Netherland’s gold (again, not that much money, huge irreparable harm to the US financial system, even Europe hasn’t confiscated Russian assets) but if the US felt compelled to seize Dutch assets what makes you think such a dramatic scenario wouldn’t result in the US compelling the UK to also seize those assets?
> dramatic scenario wouldn’t result in the US compelling the UK to also seize those assets?
The US can demand that we seize other people's gold, but if we acceded then it's game over for our financial industry - London is an important financial centre today but if it's actually just New York but on the far side of the Atlantic who cares?
My guess is that the UK would say "No" and since that's presumably a demand from the Orange Buffoon not somebody sane the next thing would be an order to attack us militarily, which is strikingly dumb in this circumstance. Of course the US can destroy Britain though it might not be as easy in practice as it looks on paper - but the bloodshed would be horrific and all the victims speak English and have Internet access.
Bombing a girl's school in Iran looks like a PR master stroke by comparison.
> Bombing a girl's school in Iran looks like a PR master stroke by comparison.
Iran killed more than 30,000 of its own people for peacefully protesting and continues to hang its own citizens to this day. They (along with Hamas, Hezbollah, and more) intentionally set up military assets next to civilian facilities because they know we don’t intentionally strike civilian facilities and they tell you that themselves. Iran intentionally attacks civilians and civilian infrastructure and provides military support to Russia’s invasion of Ukraine. They should be attacked for providing support for Russia alone, let alone anything else they’ve been doing.
Anyway back on topic
> The US can demand that we seize other people's gold, but if we acceded then it's game over for our financial industry - London is an important financial centre today but if it's actually just New York but on the far side of the Atlantic who cares?
The kind of scenarios envisioned in which the US seizes gold from the Netherlands are so catastrophic and crazy that requiring the UK to also seize said gold would seem to be not that big of a deal.
You guys are driving yourself into psychosis about how the world works and creating nonsense scenarios like the US is somehow going to just seize a pathetic $80 billion in gold and completely ruin the credibility of its financial system when Europe won’t even seize Russian assets and it’s practically at war. This shows the kind of bar needed to seize sovereign wealth. And no, Trump can’t and isn’t dumb enough to start seizing assets of another country. If you think he can and he is, you’re wrong and it is further evidence that you’re just whipping yourself up into crazy land.
The entire leadership of the IRGC can burn in hell as far as I am concerned.
But that does not mean that launching an assault on Iran at Netanyahu's bidding was a smart move. Especially if it turned out that US arsenals were half empty. This is what you get when no one can tell "no" to the President and survive in their function.
It is not clear to me yet how this entire Iran thing is going to finish. Now the bet seems to be on strangling their economy, which may not even work, but will probably cause some serious suffering of the same people who already suffer under a gallows-happy totalitarian government.
> But that does not mean that launching an assault on Iran at Netanyahu's bidding was a smart move.
We didn’t launch a war based on Netanyahu’s bidding. This is a nonsensical mischaracterization of the war and belittles the general strategic situation.
> Now the bet seems to be on strangling their economy, which may not even work, but will probably cause some serious suffering of the same people who already suffer under a gallows-happy totalitarian government.
Yes iran is a murderous regime, but thats not a get out of jail free for either failing to do logistics, plan for the enemy you face, or failing to properly vet your targets in a war of choice.
> And no, Trump can’t and isn’t dumb enough to start seizing assets of another country.
I mean Maduro would like a word.
He literally kidnapped a world leader to gain access to a country's oil system.
Then there is the agitation, visits and posturing to invade an ally's fucking land. Its not that difficult to imagine trump confiscating "foreign gold" to even up the "trade deficit". There are no effective controls on trump's actions.
> completely ruin the credibility of its financial system
Besent is doing a good job ruining that trying to shout at the bond market, and pissing about with the Yen.
Then there is the attempts to yeet parts of the Fed it's self.
> Yes iran is a murderous regime, but thats not a get out of jail free for either failing to do logistics, plan for the enemy you face, or failing to properly vet your targets in a war of choice.
Sure, but it’s brought up as though the US is going around arbitrarily bombing children and schools and it’s simply false. In wars, mistakes happen. In the case of the US it was a mistake and we owned up to it on someways (we should do more, IMO) but Iran is doing much worse and we should focus on that primarily. I didn’t bring Iran up here, someone else did, so I can only respond to their characterizations by informing them how they are incorrect.
> I mean Maduro would like a word. He literally kidnapped a world leader to gain access to a country's oil system.
He’s a criminal destroyed the Venezuelan economy, and the results of his and Hugo Chavez’s policies resulted in an exodus of around 1/3rd of the Venezuelan population. Our actions were good there and will be good in the long term. Plus he was helping Russia evade American and European sanctions. That alone is good enough justification to arrest him.
> Then there is the agitation, visits and posturing to invade an ally's fucking land. Its not that difficult to imagine trump confiscating "foreign gold" to even up the "trade deficit". There are no effective controls on trump's actions.
We would lose far more than a whatever the Dutch gold is worth and it’s also an insignificant amount of money so there’s no reason for that to happen. You’re whipping yourself up into psychosis around Donald Trump which is clouding your judgment.
> Besent is doing a good job ruining that trying to shout at the bond market, and pissing about with the Yen.
Read more about European bonds then. If this is your criticism it applies more to France, UK, &c.
yes he is. but since when has US led regime change been positive for the country?
Also trump is also a convicted criminal, so is he ripe for extradition? Thats the point right, it creates a precedent. Rules mean shit all, might is right.
> Read more about European bonds then.
The European countries are not trying to bring up the value of the Yen, or buyback longterm bonds with homeopathic amounts of shortterm bonds. The treasury cannot work against the fed, because the fed has way more control over the money supply.
> We would lose far more than a whatever the Dutch gold is worth
The iran war has already lost far more than the Dutch gold is worth.
(another guess) to convert to dollars, the gold would need to be delivered to the custody of the US Fed, which is easiest when the bars are physically in the Fed's vault. in a low-trust situation, you have all the gold in your own country, but then its so much leas liquid bc you need to physically deliver it to trading partners, or they must trust your accounting of their share in your vault.
It was originally payments owed to Dutch interests in America being converted to gold and stored locally on their behalf, as opposed to having to be transported across the Atlantic back to the Netherlands.
Then later the Dutch moved a lot more of their gold over there before/during WWII in order to keep it out of reach of the Nazis.
Um, the actual violent history of Europe? Plenty of governments ended up in exile during the last 250 years, and it is better if your gold isn't suddenly in hands of someone like Goering or Stalin.
based on the fact that in the past was moved for safety and deals towards US, if it's now moved back to EU is it because it feels safer and less deal dependency?
While there have been calls from economists to consider such a move for months [1], there is currently no need to wonder. The German fed (Bundesbank) has already commented that they believe the US to remain a trusted store. Bundesbank has independent authority over German gold which is NOT legally hard-related to government activity. It could still be influenced by politics, of course [2].
win or lose, November is a giant cliff for the US. Is it going to go full autocracy, or is it going to go full civil war terrorism from the far right christian ethnostate.
Share of gold before relocation:
New York: 31.33%
Zeist: 30.83%
Ottawa: 19.72%
London: 18.12%
Share of gold after relocation
New York: 18.52%
Zeist: 30.83%
Ottawa: 18.52%
London: 32.13%
In other words, if you read the headline and thought the Netherlands was just pulling gold out of the US and it was pulling ALL of its gold out, you're not seeing the whole story.
And if you read the whole article, you'll see that all of the anti-Trump framing comes from "experts", not from the actual people moving the gold.
If you'd like to read the actual statement from the Dutch National Bank, it's here:
You need to read 2.5 sentences into your link to see that it matches the headline of this thread:
De Nederlandsche Bank (DNB) has improved the tradability of its gold reserves by transferring part of the gold holdings from New York and Ottawa to London. This ensures that DNB is better prepared for severe crises.
In view of increasing geopolitical unrest, DNB is strengthening…
Right. But it doesn't say what kind of geopolitical unrest, and it draws a stark contrast to an article that is filled with all sorts of unproven guesses about it (guesses that are quoted as being "inherent").
Of course the bank is not going to make a political statement, they have more important business to do. The article makes it pretty clear right at the top that the bank’s statement doesn’t mention Trump:
> Experts say that rhetoric appears inherently related to the abrasiveness of the Trump administration towards traditional allies.
Also, the “experts” are just right here. Are you gonna say that Trump hasn’t been throwing our allies under the bus?
I mean, if I hear the phrase "geopolitical unrest", I'm far more inclined to think "Iran"/"Russia" than "51st state".
If the point is to get your gold away from the US and its president, why leave ~19% of if there? Why take gold out of Canada? Why is a two-word phrase inherently related to the abrasiveness of the Trump administration towards traditional allies"?
And the bank's stated reason is: "Gold that is held with the Bank of England must meet modern international trade standards and is regarded as the world's most easily tradable gold and will therefore be the most readily available for DNB in a crisis situation. The gold reserves held in New York and Ottawa cannot be utilised as quickly and directly in such a situation." Why is that not the more plausible one, and the basis for the headline?
Iran and Russia can both be tied to the leadership of the USA. Iran directly and Russia less directly.
There may be trading between the USA and the Netherlands that makes 31% too much gold in USA but at 19% more reasonable. Over the past 4 years the price of gold has more than doubled this would effect the amount of gold needed to perform the same transactions.
First paragraph of their statement I think better summarizes their reasoning:
> In view of increasing geopolitical unrest, DNB is strengthening its crisis preparedness. Improving the liquidity and tradability of the Dutch gold reserves is part of these preparations. Moreover, a more balanced distribution of these reserves between North America, the United Kingdom and the Netherlands helps to spread risks and will make them more readily available for use in a crisis situation.
The goal is to make these reserves more liquid in the event of a geopolitical crisis. It’s easy to say that Trump was a factor in this decision given that he has been the cause of one geopolitical crisis after another. That hypothetical crisis doesn’t have to directly involve the Netherlands for this to make sense. For example, the price of oil shot way up because Trump decided to poke Iran and having more liquid reserves could make responding to that easier.
> It’s easy to say that Trump was a factor in this decision
I don't disagree with that. (I mentioned Iran, a crisis that was precipitated by the current administration.)
I disagree with "Experts say that rhetoric appears inherently related to the abrasiveness of the Trump administration towards traditional allies" and "Having those reserves in the United States is a potential vulnerability...You can absolutely imagine a scenario where, for whatever reason, the Trump administration decides to hold onto them" etc.
> If the point is to get your gold away from the US and its president, why leave ~19% of if there?
Not all of the risk is "the USA may literally steal it", some of the risk is "UK may elect Farage who could be just as bad", and there's a non-zero chance that Trump is kicked out come November.
With a diversified portfolio, economic planning can be done in terms of probabilities; this is different from e.g. military planning, because the "portfolio" your military defends is "your nation" and this is somewhat more binary in success-vs.-fail.
> Why take gold out of Canada?
Because Canada is one of the places Trump is directly threatening.
I mean yes, but also there are some rumours about the new york gold vaults themselves.
There is a persistent rumour that there is a physical link between jpmorgan and comex. My understanding is that there is no real way to audit whats in there (unlike the BoE where they have tour guides that show you the gold)
That 40T$s will never be repaid. So what kind of monetary reset are we looking at? nonlinear as Luke says or gradual as Lyn says in the following video
"We're Past The Point Of No Return" | Luke Gromen and Lyn Alden
Has the UK really experienced any issues related to not ever paying back its debt? (IMHO, most of the UK's problems can probably be sourced back to Thatcherism and more recently Brexit.)
The only way for a country to repay its debt, versus refinancing it, is to run budget surpluses, which can work if done in a certain way, but most countries avoid for often good reasons:
A person can be partially wrong; partially right. Focus on what kind of arguments they put forth and decide for yourself. If you watch the video, they give plenty of historical precedents for the things they describe.
Straw man fallacy. There are plenty of people who have been very concerned that both of those categories are weakening the foundations of the US-based financial system. It is likely to contribute to the migration away from the US petrodollar and the US dollar as the world reserve currency, thereby weakening all of the benefits we have because so many people use our currency.
Arguably, though, the US has been "stealing" (in the form of sanctions and frozen assets) from other countries going back more than a few decades, at least as far as Iran in 1979, so your timeline doesn't hold up.
"Stealing" is wordplay when it comes to Russia because they are at war and the things that are "stolen" are assets being frozen to help pay restitution for the war they started. And Russia would deny the oil stolen from their ships was theirs because the entire point of the "shadow fleet" is to obfuscate ownership, mix and match the fluid products, to create plausible deniability to avoid sanctions.
National debt is a public millstone, and war makes it heavier; but just as a reminder, it was the US that has prevented Iran from having nuclear ballistic missiles on short notice (the acquisition of which would have instantly endangered the ME and the rest of the world, at immensely greater cost). Don't be fooled by "economic considerations": under the surface there is a battle going on the importance of which exceeds everything that the media throws at you. Try hard to understand!
The funny thing is that with $40T of public dept US is basically taking money from other countries (in exchange for a pice of paper saying IOU) and then using that money to force these countries to do what’s in US best interests (real or perceived). And the bigger that pile of debt is the more every government is invested in us not going bankrupt, hence the leverage just gets stronger. US is basically a private equity typo of global power - getting others to lend them a knife it stabs them in the back.
Wouldn’t that necessarily mean that if the US keeps making enemies of allies, then the premium required for these countries to give US money would be higher? Sure, I’ll lend you some, but I don’t trust you that much, you’ll have to pay me more.
Go further with your reasoning... Why would anyone lend the US more...
I am not defending the US government but the reason why you hold treasuries is because if you want to buy something in two years, or ten years, etc. there is a good chance you will want to buy something with dollars. Oil, soy beans, New York real estate..
Until you can buy oil without dollars. This was an explicit agreement called the Petrodollar system, which was premised on the US navy securing international trade. If the US navy proves unable to do that (and exhausts its arms and demonstrates unpreparedness for future conflicts) then the whole premise falls apart.
You might also stop buying real estate if the government seems unstable and economy is poised to collapse. Good soybeans also depend on fuel prices and the continued flow of fertilizer...
"$20 Billion Oil Deals Paid in Chinese Yuan, US Dollar Left Out"
https://watcher.guru/news/20-billion-oil-deals-paid-in-chine...
"China and Saudi Arabia Settle First Oil Trade Using Digital Yuan"
https://www.economywatch.com/china-and-saudi-arabia-settle-f...
Or until you don't need to buy oil at all. China has reduced its consumption by 1.5M barrels/day this year alone.
To nitpick, much of that is probably due to halting refining for export and drawing down reserves. But of course the point stands that they are rapidly electrifying and expanding renewable generation.
Oil will only become more and more volatile. The supply chain is both complex and fragile to geopolitical nonsense. China is betting on stability and reliability, environmental concerns is just a bonus.
Also tons and tons of coal. Hopefully just a stopgap.
Yeah, until they run out of coal.
China has large coal reserves, enough for many decades.
"China, the world’s largest coal consumer, has domestic reserves of coal to last the next 50 years, according to annual reserves data from the Ministry of Natural Resources cited by Bloomberg.
At current rates of domestic production, China also has crude oil reserves that could last for at least 18 more years, according to the ministry"
https://oilprice.com/Latest-Energy-News/World-News/China-Say...
https://www.mining.com/web/china-has-enough-coal-reserves-to...
Wow. Only enough reserves to be measured in decades? Once it's gone it's gone. Genuine Carboniferous coal, one day a thousand years from now, might be a rare museum item!
I have a habit of thinking about history in very long terms, and that just does not sit right with me. That kind of thinking (oh we have enough for decades, let it rip!) happens, and the decades pass, and time inevitably is less kind to the descendants of such decision makers.
In addition to this China imports about 10℅ of its coal consumption. Could it increase the imports?
In historical terms, it took about 60 milion years to form this coal layers. Humanity will burn them in few centuries.
https://en.wikipedia.org/wiki/Carboniferous
From the point of view of energy. The conversion of solar energy into coal is very inefficient, tree need energy to reproduce, only a part of plant is converted into coal, other organisms consuming plant matter, etc.
growing up (in the 70s/80s), the first time I was shocked at the exponential destructiveness of human civilisation was when I learnt that we had polluted the oceans. the second was when I found out that ubiquitous natural resources like oil could be completely consumed. I feel like either one would have been unthinkable even as late as 1900.
(incidentally the latest such shock was sometime this decade when I learnt that an aquifer could not only be depleted, but that that depletion would compact the soil so that it would thereafter be unable to hold water, and thus never (at least on our timescales) be able to be replenished. I think I'm still not over that!)
There is an interesting passage in Moby Dick where they talk about whether whaling could make whales go extinct, but the concern is brushed away as human hubris. How could humans completely destroy something that God created?
Also, this means that if we let MBAs destroy this civilization, there won’t be any future advanced civilizations as we will have consumed all the easily usable resources they will need to jumpstart their technology tree from zero again. Even if the knowledge survives it could be useless
This isn’t true. You can buy oil with other currencies. It’s just that dollars are liquid. No pun intended.
Until you find a more thrustworthy stewart of the international order. Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse. The russians tried for years to write some replacement fiction into reality (BRICS) even though they would be the first to get shanked if the old great game returned. Its a absurd situation where empire cosplayers long for the times of "greatness" while struggling on even small "to real" acts ..
China is "trustworthy" in the sense that they have obvious, rational, consistent motivations and very stable government.
China's government is "very stable" until it's not. As a society, China has a long history but the central government has essentially collapsed or experienced violent revolution in 1976, 1969, 1949, 1927, 1911, 1850, 1796, 1644, etc. Perhaps we have reached "the end of history" and the Chinese Communist Party will now maintain stable control forever. Or maybe it will all fall apart again in a few decades due to resource shortages or factional power struggles or a foreign war.
The loss of a succession strategy with an elderly leader at the helm seems like a major issue.
That seems to be a recurring theme regardless of the country's economic system. We're two months away from seeing if the US still has a working succession strategy.
... for everyone, Chinese or not, except the elderly leader in question.
Same for Russia.
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> Everyone yells loudly about how bad the us is, but then you realize that the whole world voted with there feet that every other alternative is worse.
The main problem right now is that the US are not the US for which we voted with our feet. They are a worse alternative to the US that created the status quo (to their advantage obviously, but much of the world also benefitted from free trade and the lack of other world wars).
Are we talking about Russia or the US in that last sentence, or is the ambiguity the point?
In a way, the bond market tracks international central banks' confidence that this will continue to be true. If they lose some of that confidence, their stock of bonds moves from USD to RMB/EUR/JPY/AUD/CAD/SGD/etc.
True, except you're being way too easy on those other currencies. Currencies need to be issued by groups able to guarantee international trade, otherwise there's no point.
RMB - maybe, but nobody sane trusts China to not immediately change priorities on a dime
EUR - imho (much) less chance than RMB, but they're using a hack: of EUR is a massive entity and internally there's no choice. Literally not allowed (due to tax reasons) (exceptions of course made for favored entities) (I feel that those favored entities exist, and how big they are, should be a huge red flag for anyone considering using EUR)
JPY - can't project force ... and doesn't even try
AUD - no
CAD - no
SGD - no
I don't understand why you're not listing GBP, as they have at least at some point done this. Of course they were a worse steward of international trade than the worst point of the US. Also, you consider AUD, but not CHF?
So what choice is there, really? This is really a way to try to push the US to do more, for less "exorbitant privilege" (especially EUR). Of course, a great many people are very interested in doing just that. It strikes me as an extremely dangerous game to play. Yes, the odds of winning are good, but if you lose, you lose everything.
I was going by foreign currency reserves, which feature CAD and AUD in much greater quantities than CHF. Also I swapped in SGD for GBP, whoops.
Global reserves continue to hold USD in greater quantities than anything else. A movement away from the USD still means a relative loss of faith in the US. If there's nobody who can guarantee trade then you still need to hold reserves, right? You just have to hold a broad and shallow pool rather than going deep on one currency.
Pretty confident it’s going to be EUR, note how they dealt with Trump tariff’s shenanigans. Took it slowly, and decidedly, sure let the countries say words and what not, but at the end of the day it’s decided by the EU. Just one persons opinion.
And you're not terrified that's the situation? The beef the US has with the EUR is simple: the US is what's defending Europe militarily (nuclear and non-nuclear. The Pentagon is the reason Ukraine hasn't been nuked yet, or more likely, that Kiyv didn't surrender because they didn't have nukes). That was never given freely. It was politically impossible to get governments to actually pay for that, so it was decided to trade in USD (this was before petrodollar), giving the US "exorbitant privilege" (which roughly translates to that the US gets to tax most of global trade at something like 2 to 4% and use that for themselves). That the US got that was not an accident, but a policy decision. The Euro takes that away, but of course, no European country is willing to either now start paying, or to defend itself. To say nothing of France, the Netherlands or Denmark defending remote EU territories like Greenland, ABC islands or Polynesia (which would require, for starters, militarily controlling supply lines to those territories).
Given the history of economic sanctions (what the EU is doing) ... of course people don't know that history, but the TLDR is that nearly always economic sanctions are a prelude to war. They don't just not work. In many cases they cause wars. WW1 was caused by economic sanctions (and the scale of EU economic sanctions is 100x bigger than what caused WW1), and often the economic sanctions on Germany after WW1 are generally thought to be the big reason for WW2. It makes sense from a game theory perspective: if a government, whose power is fundamentally based on force, lets economic sanctions convince them, they will be attacked by their own people. So they simply cannot give in, and historically that's what you indeed mostly see: when a country is targeted by economic sanctions, it's government usually decides to attack.
The EUR is imposing very large scale sanctions on ... essentially everyone. Russia and China most obviously of course, but sanctions are so widely used by the EU you can literally say it's being used against everyone from Afghanistan to Zimbabwe, or geographically from Paraguay to North Korea. And why is the EU doing this? Exactly the reason Trump is doing it: sanctions are "power without needing parliament to approve the budget for anything".
The fear is: the historically most likely outcome of what the EU is doing, what EUR is being used for, is another very large scale war.
> Go further with your reasoning... Why would anyone lend the US more...
Because if you don't, you are abducted or killed or "regime changed" or sanctioned to famine-level poverty - all for "freedom & democracy". Kindly remember that the Corporate States of America has the world's most powerful military... well I suppose it is nowadays in the top #3.
It's hard to twist the definition of the term in such a way that the US doesn't have the most powerful military.
The real answer to your question is the US bond market is an auction, and rates are going up and up, with some sketchy tactics being employed to try and keep them down.
What’s happening to US bonds has been compared to using a credit card to pay off your mortgage...
its mostly because the global economy is dollarized so there's a number of benefits store your wealth in dollars as a hedge or point of stability. If the dollar's dominance wanes, so too will be the appetite for US treasuries.
There is no alternative.
What? There's an almost limitless supply of other entities you can lend money to.
None that can absorb such enormous capital flows.
Nonsense. The USA is not bigger than the rest of the world.
US capital markets are the largest and most liquid in the world. It's not even close.
There are of course a zillion other borrowers worldwide but they're all much smaller and suffer from a variety of other structural problems. If you need to deploy a huge amount of capital with low risk and high liquidity then US treasuries are still the only realistic option.
Sure, but that premium would still be in dollars; until the world realizes that the US is using the primacy of the dollar as a reason to do whatever they want...
That is exactly why the bond yields keep rising.
What you point out here is a major weakness in the typical US citizen's understanding of where US wealth and power comes from.
The US prints two kinds of dollars, the regular kind, then the T-bills.
T-bills get exchanged like dollars, investors/governments buy them because they are thought to be as stable as dollars, but also bear a bit of yield. The US benefits by printing T-bills over dollars because merely by changing the current interest rate, they change the dollar supply. Increasing interest rates lower the value of T-bills, decreasing the supply of dollars (as Silicon Valkey Bank found out...). This allows the US currency to remain very stable.
Referring to the $40T of T-bills merely as "debt" is quite deceptive. It's the global currency. You need enough currency out there to represent the actual amount of wealth, otherwise the values of dollars increases, and deflation is the only thing worse than inflation.
The US' $2T budget deficit is basically the rest of the world paying the US for the privilege of using US currency. The US is printing money, and getting the benefits of spending, because the rest of the world needs dollars to transact. They send us goods, we send them printed dollars. And then we get a president who calls this situation bad, because he doesn't understand what a "trade deficit" is. Utter insanity to have such a position and then just throw it all away.
>deflation is the only thing worse than inflation.
In any empirical sense this is absolutely false. The only instance of a significant negative instance of deflation was its contribution to the Great Depression in the early nineteen hundreds, and the effect of that was minor compared to the effects of extreme inflation (hyperinflation) that occurred in places like Weimar Germany and Zimbabwe. Deflation is inherently self-limiting because people have a baseline of goods they must consume for survival (housing, food etc.), and once that baseline is reached spending does not fall further; there's not a single instance in history of 99% deflation, while 99%, 999% and even 999999999% inflation has happened within even just the past few decades.
> people have a baseline of goods they must consume for survival (housing, food etc.), and once that baseline is reached spending does not fall further
Oh boy, do I have news for you. It is in fact possible to run out of money, and in a deflating economy with no jobs you can't just go out and earn more. It puts peoples' collective backs against the wall -- at which point they decide to fight like cornered animals rather than die in a corner, and things get nasty.
Inflation crises are awful, but when you run out of money there are jobs and you can get more and this generally prevents them from turning into bloodbaths. This is why we collectively decided to err in this direction.
Weimar Germany is the perfect example. Did it suck? Yeah. Savings were incinerated, everyday activities became market speculation, the memes are all true -- but it happened under nearly full employment and once the root causes were addressed everything largely simmered down. This is in stark contrast to the deflationary shock of the Great Depression later that decade which propelled the Nazis into power and led directly to WWII.
99% deflation doesn't happen because people start killing each other long before then.
> the rest of the world needs dollars to transact
Why? Dollars are currently the most convenient. If that changes the world could easily switch to Euros, Yen, Yuan, etc.
So which do you choose? Yuan carries Chinese geopolitical risk, Yen, probably not enough of it in the world plus Japan keeps trying to devalue, Euro maybe, but there's plenty of geopolitical risk there with Russia on the doorstep and shifting politics...
Plus if everyone doesn't choose the same it's less convenient.
You make sound like we're stuck with it, but the franc and the sterling pound used to have a similar role for a few centuries each... these things change.
Didn't say we're stuck with it, just at this exact moment there's no obvious replacement.
If China ever replaces Xi and the next generation takes a softer stance on a bunch of stuff it'll be a shoe in, but right now they're weirdly belligerent.
They're quite softer in all kinds of stuff. The US is run by an aggressive madman and neocon/MIC combo in comparison (tarrifs, trade blackmail, Greenland, straight of Hormuz, the list goes on).
Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States. Besides, shoveling never-ending piles of cash into the furnace of the War Machine doesn't seem to have hurt the dollar?
As to shifting politics: The EU is famously extremely hard to move.
The European Council decides the political direction and consists of the heads of state of the member countries; the European Commission is the executive cabinet and needs buy-in from the Council of the European Union and the European Parliament; the Council of the European Union is made up from ministers of the member states and each member state has a veto right on all foreign policy proposed by the European Commission; the European Parliament's members are directly elected through independent elections in the individual member states with proportional representation, and any policy proposed by the European Commission also needs a majority here; the Court of Justice of the European Union's General Court oversees this and is composed of two judges appointed by each member state for a renewable six-year period and reviewed by an independent committee.
In other words: nothing gets done fast, and nothing gets done without buy-in from a lot of people with very opposed political goals. Quite different from a country like, say, the United States, where the loser of the popular vote routinely becomes president, is handed God-Emperor levels of power, and is virtually impossible to unseat - leaving the foreign policies of a nuclear superpower to be decided by how a single person felt when he stepped out of his bed this morning.
> Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States.
That's the plan, but under Glorious Leader? Not clear which side he would attack (or possibly neither).
> Russia is going to have a very hard time directly attacking the Eurozone without also hitting NATO home soil - which through Article 5 would also pull in plenty of non-Euro countries, including the United States
Will it? The Russians blew up an ammunition depot in Czechia without consequences. A cruise missile hit Poland and it was swept under the rug. Numerous acts of sabotage and Europe's done nothing. Now a drone attack in Germany and they're again, responding extremely weakly.
The only rational takeaway is that NATO is weak. If Russia attacks Latvia will the US go to war? Not s chance.
Why choose a single currency? Just return to gold standard, values of goods and services denominated in mg, g, kg of gold.
Most international trade is already done electronicaly, so there would not much need to physicaly move gold.
Goverments don't like gold standard because they can't print gold.
That said, it's not necessarily a great deal for the US middle class anymore, due to the Triffin Dilemma:
https://en.wikipedia.org/wiki/Triffin_dilemma
This 2020 piece by Lyn Alden is a great explainer:
https://www.lynalden.com/fraying-petrodollar-system/
(Not that I think anything Trump has done has helped the situation even accidentally.)
Vance is making this idea popular/mainstream again lately, I wonder why? The US will predictably lose reserve-currency status as a consequence of losing all the rest of the trust and good will available to her, so it's time to make it seem like that was the plan all along.
Sure, there was a serious conversation to be had about this at some point, but it was probably before stacking up tons of unsustainable debt that directly depends on that part of the shell game. And there are many things that can/should change, but in a certain way and at a certain time to avoid pain and chaos. Arguing "this was always bad for us, fuck it" is kind of a pattern now, right? When someone wants to change some things, great, everything sucks. But when someone wants to tear down every status quo, and especially the ones that they apparently benefited from while saying "everyone after me doesn't need it", then it's a pretty clear sign.
US is now a lot of crazy old people finding new ways to eat their children and trying to see the world burn before they check out. They created the bulk of the debt, benefited from it immensely, propped it up with collateral that was always kind of imaginary, continue to increase the debt. Not great, but now we are also proposing to just destroy what's left of that thin collateral? I don't know how to explain that with greed or stupidity even, it just seems like spite.
Historian Timothy Snyder has called it "Superpower Suicide".
> US is now a lot of crazy old people finding new ways to eat their children and trying to see the world burn before they check out. They created the bulk of the debt, benefited from it immensely, propped it up with collateral that was always kind of imaginary, continue to increase the debt. Not great, but now we are also proposing to just destroy what's left of that thin collateral? I don't know how to explain that with greed or stupidity even, it just seems like spite.
And is your proposal to just hope to be one of the next generation who still can eat their children? Or better yet, the children of those who didn't make it before the ladder was pulled up?
Nothing there explains why it's a bad deal for the middle class.
The middle class actually benefits the most from this situation! More goods, more government services, etc. How much more? Just add up all the trade deficits, that's all benefit accrued almost entirely to the middle class.
It is explained in the Alden piece, section "The Fraying of the Petrodollar System", subsection "The Triffin Dilemma Unfolds".
What I meant was "blue collar working class" as opposed to the neo-artistocrat professional class. The Triffin Dilemma is a contributor to the K shaped economy and rise of populism.
>And from there, the value of the system depends on who you ask. Folks who are often on the higher end of the income spectrum who worked in finance, government, healthcare, or technology benefitted from this system, since they obtained many of the benefits of globalization and none of the drawbacks. Folks who are often on the lower end of the income spectrum, specifically those that make physical things, are the ones that benefitted least and gave the most up, since their jobs were outsourced and automated at a faster rate than other developed countries. But now with China also undermining the structure of the system, even the geopolitical/hegemonic benefits for the political class are subverted as well.
I guess I'm not seeing anything tying the trade deficit to the destruction of unions, to the massive reduction in top tax rates resulting in higher CEO compensation, etc.
The piece puts increasing trade deficits next to lots of stuff about increasing inequality, but it does not make the case that trade deficits are the cause of increasing inequality.
There's a person that had a job making physical things, but they are not inherently a "person that only makes physical things." The idea that bringing back the making of physical things will make these people wealthier is, well, suspicious. Unions? Better taxations systems? Modernizing manufacturing so that each worker is far more productive and we can compete with the world? That may help. But reducing trade deficits will not fix any of the K shaped economy.
A current account deficit is a capital account surplus.
We can pay for imports with things we make or things we own. To a first approximation, making things employs people and owning things does not. If we pay with things we make, our economy employs people. If we pay with things we own, the jobs disappear while stocks/bonds/real estate soar.
If you want the whole story from an actual economist, read "Trade Wars are Class Wars" by Klein and Pettis.
You're missing the third thing we pay with: T-bills. We literally print money. That's it. We didn't give up anything we own. We didn't give up anything we made. We printed money, because there needs to be enough currency to represent the ever growing wealth of the world and the world has chosen the US dollar as the reserve currency, to the great benefit of the US.
> Modernizing manufacturing so that each worker is far more productive and we can compete with the world
How does this not correspond directly to reduced trade deficits? In this scenario the US is either sourcing more of what it needs internally, and thereby importing less, or it is more competitive globally and therefore exporting more, or both.
That would be a necessary condition for manufacturing-based reduction of inequality.
But manufacturing is not a way to decrease inequality unless there's massive massive other sorts of changes going with it.
In fact destroying the higher paying jobs to replace them with lower paying jobs in the US will heighten the inequality. And that's what's happening right now.
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It certainly can't be leading to more government services. We get less every year. There might be more spending, but there's fewer results. We can't build trains, our police don't stop crime, healthcare covers less and costs more every year.
So good for the middle class they're evaporating at record rates!
The US isn’t taking money from other countries - you clearly don’t understand the scam!
We give money to Israel, Ukraine, and everyone else - we print and print and print and a few people close to the action take some off the top.
That’s it. Maybe some rich kids get their university debt wiped clean (not community college though).
The US and even local governments within have become corrupted to the core - they are like ATMs and havens of various types for the emerging international wealth class.
That class may very well want to promote your idea since the best seat at the table right now is China.
Now everyone wants to be owed by the US à la China, it’s been great for international business. Mexico is the heir to that throne more than Europe - which doesn’t produce anything the world wants.
It’s not other people’s money they just print it out of thin air and say we have a deeper deficit.
For those seeking a more level-headed view, the Fed reports on foreign-owned gold monthly. Going back a couple of decades:
The linked report is talking about a change of 1.5% from the latest-reported total amount in tonnes.Is it "level headed" to ignore the concerns of somebody pulling their gold out, even if they are a small country?
Your figures do point out that the Netherlands's amount of gold is small, but it is not level headed to think that they are somehow alone or unrepresentative of far more countries with far more gold.
Does this mean a net of 13% of foreign gold has been removed from the U.S. since 2006?
July 2021 7,794 5,742 July 2026 7,812 5,755
Gold prices have exploded between these two dates. Am I missing something?
The US government value of gold is hard pegged to $42/oz since 1973. Off by a factor of about 100 from market prices.
What is the value of this? Clearly the US won't sell me gold for $42/oz or the arbitragers would own the country, and nobody will sell the US gold for that amount ... so what does the $42/oz "peg" actually mean?
If you're familiar with par value, it's the same thing. It's a measure to account for changes in asset holdings over time while neglecting changes in market value of that asset. They could have just used ounces to do the same thing here. It made more sense when there was a dollar peg.
The table says book value. So might not be the market value of gold.
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Bruh, this is not about the amount of gold involved.
Interestingly, 59 tonnes of gold was sold in USA and bought in London. So that means perhaps "Somebody" transferred 59 tonnes of their gold holdings to the USA.. who was that?
This is similar to what the French did last year.
The other thing I noticed, is that as the article chose to mention:
> Gold that is held with the Bank of England must meet modern international trade standards
with implication being that the gold it previously held in the USA was not meeting those standards, but is that just journalistic fluff? what are those standards? (could be exact weights in g rather than purity?)
NB the Netherlands still has >200 tonnes of gold held in the USA & Canada.
The standards of purity have changed over time, and most of the US gold dates from before the 1930s; and so a lot of US-domiciled gold have different purities that don't follow the current international standard. The purity requirement has been going up over time. A lot of US gold is 90% gold and 10% copper, but gold traded on the international market needs to be at least 99.5% pure. Here [1] is a good breakdown.
[1] https://www.bficapital.com/blog/what-is-inside-fort-knox
One important detail here.
When you buy gold, you purchase based on the amount of gold, not the total amount of alloy. This is true in both markets. This difference in standard is practically not a big deal because you very rarely physically move the gold, as moving gold requires a lot of security and is a risk.
> requires a lot of security and is a risk
and has a cost
I’m not sure 100% sure, but I imagine the cost of transporting to Europe is probably higher than the cost of refining to the European standard.
Switzerland has 4 of the 15 biggest gold refineries in the world in 2026
https://vinodvsharma.com/top-15-biggest-gold-refineries-in-t...
Yeah, I know most of the gold that goes to Europe from the US usually gets refined in Switzerland.
I have no idea what portion of the total cost that is to move gold from US to Switzerland. I imagine it’s less than the insured carrier service.
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You're reading way to much into this.
Physical gold bars are transferred via plane between London and New York every day. The gold flies in the cargo holds of regularly scheduled commercial passenger flights. The quantity transferred depends on demand, and could be several metric tons daily.
This is nothing unusual. Dubai is another major gold transfer hub, and it operates via the same mechanism.
Regarding the article highlighting differing international standards for gold, London uses standard 400-ounce bars, while the US uses 100-ounce or 1kg bars. Often, the bars need to be remelted (elsewhere, typically in Switzerland) before they can be added to the vaults.
Again, nothing unusual.
Is gold really sufficiently fungible to enable daily bidirectional sizable flows across the Atlantic, but not fungible enough to allow somebody to net these flows out and save at least one way of the airfare?
Yes. Gold is fungible only within the same custodian.
Many people buy (normally small) gold bars only to discover that they can't sell them back by the same price.
That is the spread which the gold dealers have to make a profit. But bullion is bullion anywhere you turn and no matter to who you sell. No gold dealer will turn down investment grade gold.
> No gold dealer will turn down investment grade gold.
For sure. As long as you pay the laboratory fee up front to prove that the thing you have is investment grade...
Never have a gold dealer anywhere asked me for any laboratory fee when selling bullion to them. They have their spread and that's it. It's their job to recognize bullion and have their own laboratory to quickly check if needed.
Coordination cost maybe. If you're transferring A -> B and C <- D, but A and C or B and D don't know each other or even dislike each other, it's going to be hard to even get them to talk about the fungibility of the actual bars. And I bet airfare is the cheapest part after all the security and paychecks of people arranging the transaction.
Most of this is googleable but there are thousands of traders that make sure the gold price is the same globally so nobody had to “move” their gold in the reverse for this trade to work.
The difference between London and the US is that the bars are of different size (12.5 vs 1kg).
> there are thousands of traders that make sure the gold price is the same globally so nobody had to “move” their gold
Physical versus contract differences are real and require moving the actual gold. What most users do is sell deliverable where they want it out and then buy contracts or deliverable where they want it and then let the market figure out how to move gold around to settle. (It probably won’t involve moving gold from where you had it to where you want it unless you’re in a cohort.)
The price of gold is not equal globally, there is a ‘loco swap’ price differential, reflecting the price of moving the metal, eg flights, security, tariffs that may be attracted, whether the location can service futures delivery etc
Where in the world can you buy gold cheaper than anywhere else? Because if you knew that you would become a multimillionaire in a few weeks.
> Interestingly, 59 tonnes of gold was sold in USA and bought in London. So that means perhaps "Somebody" transferred 59 tonnes of their gold holdings to the USA.. who was that?
That 59T could have been someone that decided to starting owning gold for the very first time, so 'net-new' holding rather than a 'transfer'. The 59T could have also been multiple parties and not an individual "somebody": we only know that it was 59T from the sell side (NL).
USA & Canada
I know the above was in the article, but please never mention the US and Canada in the same breath. Please.
That & symbol just irritates.
From a Canadian's perspective, it's like mentioning a sophisticated, decent human being, and a slimy smarmy used car salesman, in the same breath.
Please.
West coast calling:
What if you annexed us? We have beaches and it’d more than double your economy.
East coast:
Oh hey that’s not fair, we have equal amounts of beaches, the water is just a different color. You are going down with us..
Middle America: good luck eating when we cut off both of your food supplies.
Now both of you go stand in a corner until you are ready to work together to take down the government that has us all acting this way.
California alone grows about half of the US's nuts, fruits, and vegetables. Both the West Coast and rest of the country could reconfigure production to serve themselves if desired.
Californian here. I live in hope.
We can do more than hope: Move the wall from the southern border to the eastern border (and probably embargo whatever oil rigs and space launch platforms are planned for places like Monterey Bay)
That way, we can get to keep our beaches, and continue to hire migrant labor from the rest of America to help during harvest season.
Sadly I can't imagine the US letting go of all the Pacific ports and home to Pacific fleet. At best you might draw a line above LA county.
Canadians are not that bad.
I wouldn't call Canadians smarmy, just a bit overly friendly.
We all have shitty neighbors, okay
I am dutch and read the news this week but I found it weird that a part of it went to England. I was expecting a European country.
Their goal isn't only safe storage, it's also being able to sell when needed.
You can't quickly trade with the gold that's in their own safe storage facility in Zeist, because you would need to physically transport it. The reserve at the Bank of England is put there because there is a large market for gold trading there. So you can use the gold immediately to influence the markets.
Putting it in a safe place in another European country wouldn't have added value over storage in Zeist.
> You can't quickly trade with the gold that's in their own safe storage facility in Zeist, because you would need to physically transport it.
More specifically: very few people besides the NL government have any gold stored inside that facility, so intra-facility trade is basically nonexistent.
London has an old school gold exchange. Pretty much you can buy and sell by moving a part between vaults (at least that's how I understood it to work in the past). Now I expect it to be just a spreadsheet but who knows.
My understanding is that it’s on shelves in a shared vault and you relabel who owns that shelf/slot/bin.
I wonder if anyone checks the gold. You could end up with the problem Amazon had, where people were inserting fake items into the supply chain and then it was just getting mixed into the real products and nobody could tell who was doing the fraud.
Because instead of treating each item as an individual thing, they were pooling everything with other items of the same type. So if I send in a brick and say it’s an iPhone 17 and you order an iPhone 17, you might get my brick.
There have been rumours like this about the US gold storage for decades.
Its audits only look at a tiny percentage of the holdings at a time, any kind of weighing or purity inspection is the exception rather than the rule, and third-party auditors or observers are not welcome. They basically look at a handful of bars, see that the seals on the other vaults are intact, and extrapolate that all the gold is perfectly fine.
In other words: the US could be pulling the fraud of the century here, and we'd never find out. But a full audit would be extremely expensive, there's no sign that there's any kind of foul play, and other countries are doing more-or-less the same.
And even if a country does notice that something is off with their US holdings, there's plenty of reason to keep it quiet and just play along.
Tungsten is 1.0015 times denser than gold. A gold-coated tungsten ingot could be adjusted (tiny internal cavity) to have exactly the same mass as a solid gold ingot of the same volume.
I've no idea what checks are done to exclude such artifacts from gold storage. If somebody accepted them and stacked them in a reserve vault, they might go decades without discovery.
I guess it's not something to worry about. It's improbable, and even so, if everybody agrees on the value of undetected bogus W/Au ingots, makes no difference from the real thing.
like moving a file on a drive
England is a European country. Just not EU.
England is a country in Europe.
Geographically, yes, but that's not very important.
London is still the financial hub in the Europe
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What do you mean for now? There is no other alternative in continental Europe due to language barrier
Why would language matter?
Anyway, Frankfurt is the next biggest financial center after London, and it tend to get the business when a firm wants to move out of London .
When it comes to being a financial hub English as a global language is paramount in modern world. You wouldn't expect a C-level executive from other side of the world to speak German. Further, if you've ever been in the financial scene in Frankfurt, it's unfortunately predominantly in German because most of the old people working in the institutions can only speak vacation English and they switch to German as soon possible.
Also from where did you hear that Frankfurt gets the business that's leaving London? What is your source? That was the hope for the Germans with the Brexit, but it never happened. German laws and bureaucracy is still far too hostile and outdated compared to London.
>most of the old people working in the institutions
A problem that will solve itself within the next few years
Agree, the younger generation, or at least every young German (mostly millennials/GenZ) I’ve met is completely fluent in English, almost like native English speakers.
Some even with an American accent which they picked up by watching YouTube videos
Yes but we Germans are too stuck up with our language barriers.
And fax machines. Don't forget the fax machines.
This post is weird. Finance people who work in Frankfurt and Amsterdam certainly speak English. Yes, they will also speak German, Dutch, and a variety of other langauges, but not speaking English is not the blocker here. I will also say that finance people in Paris under 40 are also (mostly) fluent in English. (Please don't bring up accent; no one in finance cares about your accent when speaking English; they care about your prices.)
Why are you excluding Ireland?
Euronext collectively is big, but Euronext Dublin is about 1/27th the size of LSE by its own market cap.
https://en.wikipedia.org/wiki/Euronext_Dublin
https://en.wikipedia.org/wiki/London_Stock_Exchange
That said, I'm not entirely clear how the exchange's market cap should or shouldn't be thought of in terms of the total market cap of assets that the exchange lets you trade. Or indeed the float of those assets, which is a concept I've only learned about due to SpaceX's nonsense IPO, so take my thoughts with an appropriate pinch of salt.
Ireland is a tax-haven, not a financial hub.
London is not a financial center?
Uh? By what metric?
https://en.wikipedia.org/wiki/Global_Financial_Centres_Index
It was apparently important enough for the OP to try and draw a distinction when none was needed…
I’m surprised why they don’t just move it back to their own country and put it in a safe in Netherland.
The biggest chunk is in the Netherlands, but you want your gold also in other countries, so that you can still access is (and don't loose it) in case of an invasion. Hence almost half is in North America, a completely different (and (somewhat) allied) continent.
It's also easier to sell in certain markets, such as London.
Not just so that you don't lose it in case of an invasion, but it is proof that you would be willing to help out the host country in the case they were invaded. Also, that you would not invade them.
In the olden days, the local lords would marry their children together, to create familial groups and ensure that for the forseeable future the local areas would not have a conflict. Modern democracies don't have such valuable family members, we use valuable objects instead.
The United States and Canada must have enjoyed that feeling of safety, knowing that the Netherlands would not invade them. And of course, if someone were to invade the United States (or Canada), knowing that the mighty Netherlands would come to their help would be immensely reassuring.
Just to be a pedant, 18.5 % in the US and same in Canada so 37%.
I wouldn't call that almost half, it used to be about half before the move (NY at 31.3, 19.7 in Canada).
England is definitely a European country. I'm tired of people constantly making this political abuse of language of conflating "the EU" with "Europe".
(And yes, saying "America" for "US of A" annoys me too. First step towards losing an imperialist state of mind is letting people from Canada and Brazil be in America).
The pedantry of being angry at the US for being the only country that actually has the word "America" in its name and yet calling itself American is almost comical in its ineptitude.
Nobody shakes their metaphorical fist at the Central African Republic for daring to use Central African as its demonym. It's simply understood that the surrounding countries are also African, yet simply do not have the name of the continent in its name.
But if you do want to be pedantic, England is not technically a country anymore, it's the United Kingdom.
> The pedantry of being angry at the US for being the only country that actually has the word "America" in its name
That is not the reason.
People say that Columbus discovered America. They don't mean the country, they mean the continent. The people in the continent of America are called Americans. About a century ago, US Americans came to view America as two continents.
Many countries still hold to America being a single continent, but there's no name for the people of America because US Americans stole it. The is very equivalent to how the EU is stealing Europe/European.
England is a country that is part of the United Kingdom.
In contrast to the falklands that isn’t part of england, and never has been.
That's true in the sense that the Falklands have never been legally part of England. But Britain has exercised control over them since the 1760s, with interruptions, and they’re still a British Overseas Territory today. So saying they've never been British would be inaccurate, but saying they're "part of England" would also be inaccurate.
One of the smart moves the EU has performed is to bring all ideas of Europeanness and European identity and Europe as a continent under its exclusive umbrella. Even places like Switzerland are somehow now defined by their exclusion when you couldn’t get a more European country slap bang in the centre of the continent. Britain has always been an outlier due to being an island hanging off the edge, and is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
Ugh, your concept of EU is closer to the USSR or maybe current Russia than to the actual EU. I sincerely hope that such nightmarish concept will never prevail over the relative sanity that we have now.
As a British person who was born in the EU and spent 35 years of their life as an EU citizen, the treatment of us since Brexit has felt like it. Naturally the standard comeback can be “yes but you all voted for Brexit this is your fault what did you expect” but I’m just reflecting what it has felt like and the difficulties thrown up towards people who even believed in the project of Europe who suddenly found that they were no longer a welcome part of it.
Personally, I am sorry that the British left, but coming from a small nation which had their sovereignty often trampled upon, I believe that consent of the governed matters fundamentally and that there is no project important enough to force people into it if they express their wish to the contrary.
> One of the smart moves the EU has performed is to bring all ideas of Europeanness and European identity and Europe as a continent under its exclusive umbrella.
But only the most imbecille people have fallen for that. Nobody with any kind of sense or basic knowledge considers EU to be Europe or vice versa.
> Britain has always been an outlier due to being an island hanging off the edge, and is now a pariah and traitor state which will also be defined by abandonment and disloyalty to the EU project of total integration.
Just like they were last time, but they won that war in the end.
In all fairness, I deal with British tourists a lot and they always talk about "going to Europe" when they refer to their summer holiday in Benidorm.
I don't think that's a problem, and it doesn't mean that Britain is not in Europe, IMO. Comes naturally with human perspective. "Where did you go this summer?" A) "I stayed in England"; B) "I travelled around Britain"; C) "I went to Europe". All perfectly understandable, I think..
In a non-pedantic context, yes. Otherwise, no.
And you actually traveled in Scotland and Wales but England was synonymous with UK for you. Technically incorrect of course. And in actuality you only traveled in England. As an American (yes, a US-ian) and you start in Poland at the Baltic sea and then via some nice Eastern European countries with other attractions like Kroatia, all the way down to Greece. But without further explanation and context most people would've assumed you probably traveled Spain, France, Italy etc.But almost invariably in this context they mean "the continent" ie France, Spain, Italy and so on, probably not Scandi and not Ireland. So that's more like how people would say they're going "to the UK" when actually they're travelling to like the Isle of Man or even sometimes Jersey which are not in the UK but like sure, people who speak English live there, if some lunatics attacked them the military forces would work for the UK, and in Man's case it even makes geographical sense (Jersey is basically in France, it isn't French for historical reasons) but these places are not part of the United Kingdom any more than Canada or Australia. Same King, different government.
The British Isles lie on the Eurasian tectonic plate, on the northwestern part of the European continental margin. Going to "the continent" is an incorrect expression. You are already on it.
I'm being highly pedantic here.
If you want to be pedantic, then this also wrong: half of Ireland, the Isle of Man, and Scotland are actually on the Laurentian plate, which split apart. The Scottish Highlands used to be part of the same range as the Appalachian. Plates are not continents.
I thank you for correcting me! I learned something today.
Geologically speaking, Scotland had a lot more to do with Appalachia than the rest of Europe…
Pedantic maybe, but technically correct.
Which we all know, is the best kind of correct.
yea but that's clear from the context
we use "going to Europe" and "going to the continent" fully aware that the UK is in Europe
I live in continental Europe, and we also say "going to Europe" when talking about holiday trips abroad. It's just a natural thing to say when you want to stress you're going outside of the border, buy without being overly specific.
In the San Francisco Bay Area, the locals refer to SF proper as “The City” (not “Frisco”.)
So, they may live in Cupertino, Palo Alto, or Oakland, but when they say “we’re going to The City for a concert on Saturday!” we can hear them pronounce those capital letters as an unambiguous reference to the one, true City.
I live in a city (a quite small one) and if I say that I'm going into the city, then it means I leave my neighbourhood (it's in the same city) and I'm going to the city centre.
Same. I'm in Berlin, I may say "I'm going to the city/town/village" for different parts of the city-state.
Same with NYC, "going to The City" usually just means going to Manhattan.
The city of London literally has a city also named London inside it and yeah, "Where are you going?" "The City" means clearly that tiny part. There is another small older city inside London, Westminster, but if you meant Westminster you'd say "Westminster" never "The City" in general.
I grew up equidistant from Philadelphia and New York. "The city" was exclusively used for New York regardless of the many cities between us
> In the San Francisco Bay Area, the locals refer to SF proper as “The City” (not “Frisco”.)
Eh, they also say “I’m going to SF”
But agreed definitely not “Frisco”
We are nothing, if not needlessly complex!
Most Americans refer to their country as 'the U.S.'. The people I most hear referring to it as 'America' are Brits.
Too bad that MUSGA never caught on then.
Gulf of America, Lake America, ...
This wasn't done by 'most Americans'
What’s the problem? We took nationalist names (Mexico, Ontario) and used the hemisphere appropriate term. If anything we’re more culturally progressive for doing it.
See? https://news.ycombinator.com/item?id=49575360
Were not Americans, we are United Statesians!
Lake Ontario wasn't a "nationalist" name. It's an anglicised version of the Wyandot name for the lake. The Canadian province is named after the lake, not the other way around.
Don't be a ghoul.
Either way, America is more inclusive. Don’t be a ghoul
Americans are from the United States of America in the same way Mexicans are from the United States of Mexico.
When South Americans refer to Americans as "estadounidense" is that imperialist Mexico erasure? The USA is not the only "United States" in North America.
We say "America", because "United States of America" isn't really a name. Just like we say England or Britain, because "United Kingdom" isn't really a name either.
"The Soviet Union" wasn't really a name either, as "soviet" just means a governing council. But since it's a foreign word it sounds like a name.
It's interesting that some of the historically most powerful entities don't have proper names.
As for England being European, is it really? Traditionally people don't always count the Nordic countries as Europe, and I'd assume the same would be true of England? Culturally it is of course, just as much as France or Germany.
French Guiana is part of America and of European Union.
> (And yes, saying "America" for "US of A" annoys me too. First step towards losing an imperialist state of mind is letting people from Canada and Brazil be in America).
Hmm, maybe I should be pro-imperialism. I’ll do that before calling a Brazilian, Canadian, or Mexican an American to satisfy the whims of the language police.
But if you want to go to uni and call Americans United Statesians and fight a made up culture war, you’re certainly free to do that (in America at least, wherever that is).
> Hmm, maybe I should be pro-imperialism. I’ll do that before calling a Brazilian, Canadian, or Mexican an American to satisfy the whims of the language police.
Sounds like a culture warrior
The narrative is that the continent is going to be overrun by Russia (at the rate of mile per year like in Ukraine). So the elites think they need the gold in London to pay for their exile government luxury.
No, that isn't the narrative.
https://news.ycombinator.com/item?id=49573455
Why are European countries moving their gold out of North America?
The Dutch transfer out of Canada is minimal and pretty much a token amount. Most gold has been transfered out of the USA.
As for why, the American people elected Donald Trump for a second time and the recent trade wars have helped spread the notion that maybe the USA cannot be trusted by its supposed allies as much as it once could be.
It's a bizarre headline.
New York: 31.33% -> 18.52%
Ottawa: 19.72% -> 18.52%
My guess is the original title focused just on the U.S., but the editors didn't want to draw attention from the big cheeto, so the headline was changed and now it looks less like the U.S. is the primary target.
Honestly, if quick access to their holdings is a concern, I wouldn't hold it against the Dutch if they moved more gold out of Canada too. Unfortunately, you presently just don't know when a sovereign nation in the Americas might be embargoed by the U.S..
I mean.. the US has a history concerning gold and duping other countries
I don't follow. I couldn't find anything with a simple Google search. Can you explain more?
Nixon
Gotta prepare for the US vs Europe war over Greenland!
see:
>“Considering your Country decided not to give me the Nobel Peace Prize for having stopped 8 Wars PLUS, I no longer feel an obligation to think purely of Peace,” he wrote, adding that the US needed “complete and total control” of Greenland.
not quite sure what's up with this timeline.
They want to see how much of it is gold plated tungsten, good for them!
Gold-pressed latinum, you say?
It was the latinum that was valuable. Gold could be easily replicated, latinum couldn't.
Nature decays, but latinum lasts forever.
- Rule of Acquisition 102
That only gets discovered when all of it is pulled
If there is dodgy stuff happening in the US it makes sense to keep the grift going as long as possible
Like this?
https://www.businessinsider.com/jpmorgan-bought-nickel-recei...
Dutch central bank moves share of gold from U.S., Canada to London
https://news.ycombinator.com/item?id=49535526
Related: https://news.ycombinator.com/item?id=49573455
This is all about Greenland and reducing leverage Trump might wield to get it, right?
They can't say that, it just gets them into a pissing match with Trump and what good is that but it's not hard to read between the lines.
I also do wonder if the Netherlands knows anything more about CozyBear/FancyBear and the 2016 election than they've let on. ( https://www.aspistrategist.org.au/rare-insight-cyber-espiona... )
Just a reminder: The Netherlands' 612 tonnes represent 0.28% of all gold ever mined and 1.7% of central bank reserves. Because gold is insanely dense (19.32 g/cm³), all the gold mined in human history fits into about ~340 shipping containers
A standard 24,000-TEU cargo ship could hold every ounce of humanity's gold using under 1.5% of its physical volume.
So the Dutch portion is a rounding error of global gold that fits in a single shipping container.
That shipping container could not be easily lifted, right? The bottom would simply rip off under so much weight.
True and the same for the lorry or train. Likely 30 needed but they’d be very empty.
It's interesting that this is reported as Netherlands pulls gold out of US and not Netherlands moves gold to Bank of England, even in the British press
I'm curious the reason why it was ever held in the US and Canada
Besides the reasons listed by the others, this also a matter of relationships as there a deep ties between these nations and the Netherlands. Without the Dutch financing the Americans, America would not have been able to become independent from the English. The Dutch were also the first country on earth to acknowledge America's independence [1][2], costing them a war with the pissed England [3].
There are a lot of Dutch people living in Canada.[4]
1. <https://en.wikipedia.org/wiki/Johannes_de_Graaff>2. <https://en.wikipedia.org/wiki/The_First_Salute>
3. <https://en.wikipedia.org/wiki/Fourth_Anglo-Dutch_War>
4. <https://en.wikipedia.org/wiki/Dutch_Canadians>
It's mostly historical and a combination of security from the WW2 and Cold War eras as well as how the gold standard worked before Bretton Woods.
Most countries held gold reserves as their currencies were backed by it. When money needed to move because of trade, the ratios of currencies backed by gold would shift as money got converted to other currencies. However, constantly moving physical gold back and forth with the ebs and flows of trade was impractical, so ownership of gold in central bank vaults usually just had its legal ownership marked on ledgers. Physical gold moving was more part of reconciliation. This description is an oversimplification as in practice, countries didn't always play by the rules of the gold standard (revaluations, going on and off the standard, etc), but you get the general idea.
This mostly ended as Bretton woods came into effect and the new system was basing the US dollars on gold, then other countries held direct US dollars and traded that instead. Countries could then convert those US dollars into gold. This ended when Nixon closed the gold window when he refused to raise interest rates as there started to be a run on gold as countries rushed to convert. The backdrop was that high spending on the Vietnam was and new social programs was driving inflation, but Nixon knew that would cause an economic slowdown he wasn't willing to do. Jimmy Carter then took a lot of the political flack for allowing the central bank to raise rates to kill it. This is why central bank independence is so important.
During times of geopolitical risk, countries would physically move their gold to be held in trust in friendly and/or rule of law countries. The USA was seen as this between ~1914-now.
Makes it harder to steal.
Don't forget that the European continent has had wars almost non-stop for centuries. It is a good strategy to place your gold in a location that has not seen much action in the past 250 years.
Makes trade easier than shifting currency. It’s also more stable and liquid if you need to make things happen in an emergency.
> I'm curious the reason why it was ever held in the US and Canada
Random Educated Guess; Probably part of some show of mutual trust to cement a treaty or other agreement, made way back when allied governments could mostly trust one another to hold to such agreements somewhat reliably?
Eh I don’t think that’s a good guess. More likely is that there are just mechanical reasons to have moved some (they didn’t move all of it by the way) gold to London. Plus it’s not that much money in the grand scheme of things.
Your implication here is something akin to the Netherlands thinks the US will invade Canada - remember the Dutch moved gold from there too, or that the US will decide to seize the Netherland’s gold (again, not that much money, huge irreparable harm to the US financial system, even Europe hasn’t confiscated Russian assets) but if the US felt compelled to seize Dutch assets what makes you think such a dramatic scenario wouldn’t result in the US compelling the UK to also seize those assets?
> dramatic scenario wouldn’t result in the US compelling the UK to also seize those assets?
The US can demand that we seize other people's gold, but if we acceded then it's game over for our financial industry - London is an important financial centre today but if it's actually just New York but on the far side of the Atlantic who cares?
My guess is that the UK would say "No" and since that's presumably a demand from the Orange Buffoon not somebody sane the next thing would be an order to attack us militarily, which is strikingly dumb in this circumstance. Of course the US can destroy Britain though it might not be as easy in practice as it looks on paper - but the bloodshed would be horrific and all the victims speak English and have Internet access.
Bombing a girl's school in Iran looks like a PR master stroke by comparison.
> Bombing a girl's school in Iran looks like a PR master stroke by comparison.
Iran killed more than 30,000 of its own people for peacefully protesting and continues to hang its own citizens to this day. They (along with Hamas, Hezbollah, and more) intentionally set up military assets next to civilian facilities because they know we don’t intentionally strike civilian facilities and they tell you that themselves. Iran intentionally attacks civilians and civilian infrastructure and provides military support to Russia’s invasion of Ukraine. They should be attacked for providing support for Russia alone, let alone anything else they’ve been doing.
Anyway back on topic
> The US can demand that we seize other people's gold, but if we acceded then it's game over for our financial industry - London is an important financial centre today but if it's actually just New York but on the far side of the Atlantic who cares?
The kind of scenarios envisioned in which the US seizes gold from the Netherlands are so catastrophic and crazy that requiring the UK to also seize said gold would seem to be not that big of a deal.
You guys are driving yourself into psychosis about how the world works and creating nonsense scenarios like the US is somehow going to just seize a pathetic $80 billion in gold and completely ruin the credibility of its financial system when Europe won’t even seize Russian assets and it’s practically at war. This shows the kind of bar needed to seize sovereign wealth. And no, Trump can’t and isn’t dumb enough to start seizing assets of another country. If you think he can and he is, you’re wrong and it is further evidence that you’re just whipping yourself up into crazy land.
The entire leadership of the IRGC can burn in hell as far as I am concerned.
But that does not mean that launching an assault on Iran at Netanyahu's bidding was a smart move. Especially if it turned out that US arsenals were half empty. This is what you get when no one can tell "no" to the President and survive in their function.
It is not clear to me yet how this entire Iran thing is going to finish. Now the bet seems to be on strangling their economy, which may not even work, but will probably cause some serious suffering of the same people who already suffer under a gallows-happy totalitarian government.
> But that does not mean that launching an assault on Iran at Netanyahu's bidding was a smart move.
We didn’t launch a war based on Netanyahu’s bidding. This is a nonsensical mischaracterization of the war and belittles the general strategic situation.
> Now the bet seems to be on strangling their economy, which may not even work, but will probably cause some serious suffering of the same people who already suffer under a gallows-happy totalitarian government.
Same can be said for Russia
Yes iran is a murderous regime, but thats not a get out of jail free for either failing to do logistics, plan for the enemy you face, or failing to properly vet your targets in a war of choice.
> And no, Trump can’t and isn’t dumb enough to start seizing assets of another country.
I mean Maduro would like a word.
He literally kidnapped a world leader to gain access to a country's oil system.
Then there is the agitation, visits and posturing to invade an ally's fucking land. Its not that difficult to imagine trump confiscating "foreign gold" to even up the "trade deficit". There are no effective controls on trump's actions.
> completely ruin the credibility of its financial system
Besent is doing a good job ruining that trying to shout at the bond market, and pissing about with the Yen.
Then there is the attempts to yeet parts of the Fed it's self.
> Yes iran is a murderous regime, but thats not a get out of jail free for either failing to do logistics, plan for the enemy you face, or failing to properly vet your targets in a war of choice.
Sure, but it’s brought up as though the US is going around arbitrarily bombing children and schools and it’s simply false. In wars, mistakes happen. In the case of the US it was a mistake and we owned up to it on someways (we should do more, IMO) but Iran is doing much worse and we should focus on that primarily. I didn’t bring Iran up here, someone else did, so I can only respond to their characterizations by informing them how they are incorrect.
> I mean Maduro would like a word. He literally kidnapped a world leader to gain access to a country's oil system.
He’s a criminal destroyed the Venezuelan economy, and the results of his and Hugo Chavez’s policies resulted in an exodus of around 1/3rd of the Venezuelan population. Our actions were good there and will be good in the long term. Plus he was helping Russia evade American and European sanctions. That alone is good enough justification to arrest him.
> Then there is the agitation, visits and posturing to invade an ally's fucking land. Its not that difficult to imagine trump confiscating "foreign gold" to even up the "trade deficit". There are no effective controls on trump's actions.
We would lose far more than a whatever the Dutch gold is worth and it’s also an insignificant amount of money so there’s no reason for that to happen. You’re whipping yourself up into psychosis around Donald Trump which is clouding your judgment.
> Besent is doing a good job ruining that trying to shout at the bond market, and pissing about with the Yen.
Read more about European bonds then. If this is your criticism it applies more to France, UK, &c.
> He’s a criminal
yes he is. but since when has US led regime change been positive for the country?
Also trump is also a convicted criminal, so is he ripe for extradition? Thats the point right, it creates a precedent. Rules mean shit all, might is right.
> Read more about European bonds then.
The European countries are not trying to bring up the value of the Yen, or buyback longterm bonds with homeopathic amounts of shortterm bonds. The treasury cannot work against the fed, because the fed has way more control over the money supply.
> We would lose far more than a whatever the Dutch gold is worth
The iran war has already lost far more than the Dutch gold is worth.
I would assume WWII and the Cold War?
This is the answer, they moved it out during WWII so the nazi's wouldn't steal it. A number of countries did this, including England.
[flagged]
(another guess) to convert to dollars, the gold would need to be delivered to the custody of the US Fed, which is easiest when the bars are physically in the Fed's vault. in a low-trust situation, you have all the gold in your own country, but then its so much leas liquid bc you need to physically deliver it to trading partners, or they must trust your accounting of their share in your vault.
Could be due to the fact that before 1970s the currency was backed by Gold and they had it in US to easily convert it to USD if needed
Mate look up New Amsterdam
It was originally payments owed to Dutch interests in America being converted to gold and stored locally on their behalf, as opposed to having to be transported across the Atlantic back to the Netherlands.
Then later the Dutch moved a lot more of their gold over there before/during WWII in order to keep it out of reach of the Nazis.
Um, the actual violent history of Europe? Plenty of governments ended up in exile during the last 250 years, and it is better if your gold isn't suddenly in hands of someone like Goering or Stalin.
based on the fact that in the past was moved for safety and deals towards US, if it's now moved back to EU is it because it feels safer and less deal dependency?
The run up in gold last year was due to need for US to obtain enough gold to cover these foreign transfers.
Is this true? Any sources? Been buying a lot of gold over the past year or so.
surely it was due to AI
Alright, seemed like it was a large jump the OP was making. Just was interested in knowing the reasoning for knowing why they thought that.
Germany still has about 1200 t in the US. I wonder if they are going to move it too.
While there have been calls from economists to consider such a move for months [1], there is currently no need to wonder. The German fed (Bundesbank) has already commented that they believe the US to remain a trusted store. Bundesbank has independent authority over German gold which is NOT legally hard-related to government activity. It could still be influenced by politics, of course [2].
[1, paid source] https://www.faz.net/aktuell/wirtschaft/mehr-wirtschaft/marce...
[2, last section is relevant] https://www.t-online.de/nachrichten/ausland/usa/id_101419346...
win or lose, November is a giant cliff for the US. Is it going to go full autocracy, or is it going to go full civil war terrorism from the far right christian ethnostate.
Data from a chart in the article:
In other words, if you read the headline and thought the Netherlands was just pulling gold out of the US and it was pulling ALL of its gold out, you're not seeing the whole story.And if you read the whole article, you'll see that all of the anti-Trump framing comes from "experts", not from the actual people moving the gold.
If you'd like to read the actual statement from the Dutch National Bank, it's here:
https://www.dnb.nl/en/general-news/press-release-2026/dnb-im...
You need to read 2.5 sentences into your link to see that it matches the headline of this thread:
De Nederlandsche Bank (DNB) has improved the tradability of its gold reserves by transferring part of the gold holdings from New York and Ottawa to London. This ensures that DNB is better prepared for severe crises.
In view of increasing geopolitical unrest, DNB is strengthening…
Right. But it doesn't say what kind of geopolitical unrest, and it draws a stark contrast to an article that is filled with all sorts of unproven guesses about it (guesses that are quoted as being "inherent").
Of course the bank is not going to make a political statement, they have more important business to do. The article makes it pretty clear right at the top that the bank’s statement doesn’t mention Trump:
> Experts say that rhetoric appears inherently related to the abrasiveness of the Trump administration towards traditional allies.
Also, the “experts” are just right here. Are you gonna say that Trump hasn’t been throwing our allies under the bus?
This move looks like a nothingburger to me but everyone's invited to treat this as a Rorschach test and see whatever they want to see.
I mean, if I hear the phrase "geopolitical unrest", I'm far more inclined to think "Iran"/"Russia" than "51st state".
If the point is to get your gold away from the US and its president, why leave ~19% of if there? Why take gold out of Canada? Why is a two-word phrase inherently related to the abrasiveness of the Trump administration towards traditional allies"?
And the bank's stated reason is: "Gold that is held with the Bank of England must meet modern international trade standards and is regarded as the world's most easily tradable gold and will therefore be the most readily available for DNB in a crisis situation. The gold reserves held in New York and Ottawa cannot be utilised as quickly and directly in such a situation." Why is that not the more plausible one, and the basis for the headline?
Iran and Russia can both be tied to the leadership of the USA. Iran directly and Russia less directly. There may be trading between the USA and the Netherlands that makes 31% too much gold in USA but at 19% more reasonable. Over the past 4 years the price of gold has more than doubled this would effect the amount of gold needed to perform the same transactions.
I mostly agree with this; your comment paints a far more plausible and level-headed picture than the article does.
> I mean, if I hear the phrase "geopolitical unrest", I'm far more inclined to think "Iran"/"Russia" than "51st state".
Well, they're not putting it there, either.
First paragraph of their statement I think better summarizes their reasoning:
> In view of increasing geopolitical unrest, DNB is strengthening its crisis preparedness. Improving the liquidity and tradability of the Dutch gold reserves is part of these preparations. Moreover, a more balanced distribution of these reserves between North America, the United Kingdom and the Netherlands helps to spread risks and will make them more readily available for use in a crisis situation.
The goal is to make these reserves more liquid in the event of a geopolitical crisis. It’s easy to say that Trump was a factor in this decision given that he has been the cause of one geopolitical crisis after another. That hypothetical crisis doesn’t have to directly involve the Netherlands for this to make sense. For example, the price of oil shot way up because Trump decided to poke Iran and having more liquid reserves could make responding to that easier.
> It’s easy to say that Trump was a factor in this decision
I don't disagree with that. (I mentioned Iran, a crisis that was precipitated by the current administration.)
I disagree with "Experts say that rhetoric appears inherently related to the abrasiveness of the Trump administration towards traditional allies" and "Having those reserves in the United States is a potential vulnerability...You can absolutely imagine a scenario where, for whatever reason, the Trump administration decides to hold onto them" etc.
In addition to what superb_dev's comment says:
> If the point is to get your gold away from the US and its president, why leave ~19% of if there?
Not all of the risk is "the USA may literally steal it", some of the risk is "UK may elect Farage who could be just as bad", and there's a non-zero chance that Trump is kicked out come November.
With a diversified portfolio, economic planning can be done in terms of probabilities; this is different from e.g. military planning, because the "portfolio" your military defends is "your nation" and this is somewhat more binary in success-vs.-fail.
> Why take gold out of Canada?
Because Canada is one of the places Trump is directly threatening.
I mean yes, but also there are some rumours about the new york gold vaults themselves.
There is a persistent rumour that there is a physical link between jpmorgan and comex. My understanding is that there is no real way to audit whats in there (unlike the BoE where they have tour guides that show you the gold)
Good but they should pull the rest too. Not just this small bit.
If only the rest of the world could follow.
How is the situation with Bitcoin?
Do Europeans have options to hold Bitcoin in ETFs, ETPs etc that are not storing the coins in the USA?
> Bitcoin in ETF
yes, but why would you want to? The only thing you would gain is instant trade settling (assuming the exchange is open)
I know it sounds like europe is a financial backwater, but we have all the things the US has, apart from the capitalisation.
When I was still in The Netherlands I could invest my pension in stocks, obligations, ETFs or park it as cash.
I couldn't invest it in Bitcoin directly. It had to be on a special blocked account at a broker to ensure I couldn't touch it till my 73rd birthday.
People still buy BTC (let alone central banks)?
All the time. ETFs are at record inflows.
I love goooooold
[dupe] https://news.ycombinator.com/item?id=49535526
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Isn't lithium the new gold?
The world has plenty of lithium in reserve in many different countries, including the United States, China, Australia, Bolivia, Argentina, and Chile.
I thought it was data
I thought it was Bitcoin.
That 40T$s will never be repaid. So what kind of monetary reset are we looking at? nonlinear as Luke says or gradual as Lyn says in the following video
"We're Past The Point Of No Return" | Luke Gromen and Lyn Alden
https://www.youtube.com/watch?v=xoAuuJyBg6E
> That 40T$s will never be repaid.
Yes, and? A while ago the UK government refinanced bonds from WW1, the South Sea Bubble, Napoleonic and Crimean wars:
* https://www.theguardian.com/business/blog/2014/oct/31/paying...
Has the UK really experienced any issues related to not ever paying back its debt? (IMHO, most of the UK's problems can probably be sourced back to Thatcherism and more recently Brexit.)
The only way for a country to repay its debt, versus refinancing it, is to run budget surpluses, which can work if done in a certain way, but most countries avoid for often good reasons:
* https://en.wikipedia.org/wiki/Austerity:_The_History_of_a_Da...
After reading her book, I can't take Lyn seriously.
A person can be partially wrong; partially right. Focus on what kind of arguments they put forth and decide for yourself. If you watch the video, they give plenty of historical precedents for the things they describe.
When USA stole assets from Cuba and Venezuela, nobody minded. After they stole from Russia, everybody eyes opened.
Straw man fallacy. There are plenty of people who have been very concerned that both of those categories are weakening the foundations of the US-based financial system. It is likely to contribute to the migration away from the US petrodollar and the US dollar as the world reserve currency, thereby weakening all of the benefits we have because so many people use our currency.
Arguably, though, the US has been "stealing" (in the form of sanctions and frozen assets) from other countries going back more than a few decades, at least as far as Iran in 1979, so your timeline doesn't hold up.
"Stealing" is wordplay when it comes to Russia because they are at war and the things that are "stolen" are assets being frozen to help pay restitution for the war they started. And Russia would deny the oil stolen from their ships was theirs because the entire point of the "shadow fleet" is to obfuscate ownership, mix and match the fluid products, to create plausible deniability to avoid sanctions.
Russia is on the hook for a lot of damage done to Ukraine.
National debt is a public millstone, and war makes it heavier; but just as a reminder, it was the US that has prevented Iran from having nuclear ballistic missiles on short notice (the acquisition of which would have instantly endangered the ME and the rest of the world, at immensely greater cost). Don't be fooled by "economic considerations": under the surface there is a battle going on the importance of which exceeds everything that the media throws at you. Try hard to understand!