Whatever happens, it seems that the long held geo-political paradigm has broken and gold will take a more meaningful role in what comes next. I don't think it is a good idea to look at gold through the lens of a financial practioner with trendlines / patterns / etc. It seems like this is more of a phase transition. For a long time people like Simon Hunt have stated that China has +20k t of gold. More recently Jan Nieuwenhuijs has estimated China has imported c. 5k t discretely, only reporting a fraction of those imports. KSA was recently caught secretly importing gold and CB's from many other countries have been net buyers for some time. We've previously seen countries requesting their gold repatriated and in the last couple of months seen a run on the LBMA. There were calls to audit Fort Knox that have strangely gone silent. Then over the weekend, we get Trump's tweet which I am not sure has any cryptic meaning or not. One this is certain, gold is going parabolic. Cheers John
On the contrary; I think a Global Crash will immediately lift China far ahead of anyone else in the World. This is more about "Living Standards" than about numerical wealth in USD$ terms.
With good infrastructure and an incredibly skilled labour force China can afford to take small numerical loses. So long as the World continues to supply the needs of the Chinese People. I doubt many of them eat "Twinkies"?,
Indeed. It's one thing to have a credit bubble burst with productive assets and infrastructure in place and operating, but much more problematic with huge indebtedness and nothing to show for it. In a debt deflation, all unproductive and uncompetitive investments have to be liquidated. What remains will provide the foundation for a new recovery. It's the west that is in a predicament, as damn little is left to work with, and no real capital for investment to boot.
It wasn't as a result of Government pressure that US Corporations offshored most production. They did it firstly to achieve higher gross margins but secondly, and more importantly, for tax reasons (which decide most major corporate decisions). By being offshore, they were able to direct the higher profits into tax havens through transfer pricing, IP fees, royalties etc. to (at least) defer US taxes.
So there is no guarantee that they will re-onshore now. And even if they did, having decimated the US working and middle classes, the far higher US-manufactured costs would be affordable to most. Which raises another critical issue - unless the wealth and income inequality in the US is addressed, many of these reforms are not going to have their intended effect.
I would argue the West has maintained slave wages for blue collar employees since China camemkntlnthe WTO, and deliberately!
Capping western wages works great when your corporations are exploiting another nation's wages without needing any laws to do it.
To determine which labour is slave, you should compare the wage to the standard of living of the countries involved. For instance, how far does an 80 cent train ride take you in China vs the US (or the EU for that matter)? How much money do you need for a full basket of food in each country? (Far more in the West than in China) What is the cost of drugs in China and the US? How much savings remain in the average household after paying for fixed expenses? Zero in the west Vs 20-30 percent in China.
I don't buy any of this western propaganda about slave wages and the constant sniping at how another country chooses to run its country for the benefit of its own citizens, and no western government wants to have an honest discussion of this nature. i will leave Americans to answer for their own country but for the EU, taking the last 25 years, Chinese citizens are far richer than they were in 2000, while European citizens are poorer in the same period.
That the US and the EU now want to highlight past events out of context to evade accusations of mis-management seems quite normal for politicians to do, but it has to be seen for what it is...IE. excuses to get round the obvious failure of our economic policies, despite enjoying the advantage of consuming 30 percent of global GDP (PPP basis) with a population of roughly 12 percent.
Not exactly. US tax policy tends to extend extraterritorially, both for corporations and individuals. For individuals, it is especially severe because the US claims the right to tax income (1) wherever the income is earned and (2) no matter where the individual taxpayer (citizen or green card holder) is when the income is earned, and (3) whether or not the income is in US dollars. For corporations, the tax code got written (by their lobbyists, of course) so that the tax liability was due when the money was repatriated into the US. This is why the offshore holdings of US companies ballooned to US$1 trillion before the 2017 Tax Cuts and Jobs Act, to avoid incurring tax liability by reshoring the earnings. US companies and individuals don't play the offshore tax haven game nearly as much as Europeans because Uncle Sam shamelessly reaches across borders to pick pockets. So long as corporate lobbyists grease enough palms in Congress, they can stave off taxation of offshore earnings.
Thanks for confirming what I said. I never mentioned personal taxation , only Corporate taxation. I would actually respectfully beg to differ with you regarding Europeans being larger players in the tax haven game. The use of offshore tax havens is employed at scale mostly by the IP industries where the profits are larger - especially Tech and Pharma, where transfer pricing and IP fees are relevant. And it's US Corporations that overall dominate in this space, especially Tech.
You are describing BEPS (Base Erosion and Profit Shifting) for IP, which US tech companies have used. That is all true for IP, but had a lot less to do with the China story hollowing out US manufacturing, which was about (as you noted) improving the profit margins with low cost labor, but not the offshore game. The manufacturing capacity of the US was hollowed out by labor cost arbitrage, not tax arbitrage. Disagree all you want, but these offshore companies are in fact used in deal structuring, particularly in European private equity, where the abstractions of tax law are exploited. Hence in Europe the "double Luxco" [Luxembourg] structure in PE and the use of Channel Islands for UK PE funds; these gimmicks do not work for US tax purposes due to rules on PFICs (Passive Foreign Investment Companies) and CFCs (Controlled Foreign Corporations). Ireland carved out a niche for aircraft leasing and BEPS that you are describing. BVI and Cayman are used in Asia for structuring group companies for tax purposes (BVI usually for personal holdings in listco's and Cayman for listco purposes). Again, these gimmicks do not work under US tax law. I am not denying the effect of BEPS with US tech profits, only pointing out the difference between labor cost arbitrage and tax arbitrage and what is the real cause and effect with China and US manufacturing. The OECD is playing a dangerous game of "race to the top" of tax tables and trying to impose a minimum tax threshold worldwide to underpin their massive government spending.
You're missing several large practical details. Remember that most manufacturing in China is on a contract basis which lends itself to transfer pricing of components in and finished products out through offshore SPVs in tax havens.
We have drifted a long way off the original topic and out of respect for David, should not continue this thread. My original contention was that US Corporations used offshoring more for tax reasons and I stand by that. I respect your views to differ.
I don't see it as losing but a useful discussion. I've been involved personally in many such perfectly legal offshore structures, especially in one of the IP industries but obviously was not at liberty to go into specifics. Thanks for a mutually respectful discussion, it's sad that these days folks can't politely disagree.
Labour arbitrage, pure and simple - must maintain the dollar 's status as king of the hill and keep interest rates down to allow for more debt creation via asset price inflation.
- The sea trade v land trade topic gets into Halford Mackinder Heartland (geostrategy) theory. https://en.m.wikipedia.org/wiki/The_Geographical_Pivot_of_History Very roughly, keep the Eurasian landmass from economically integrating, so Britain can continue to rule via the seas (which evolved into US as an unknowing proxy). Control of Ukraine essential for this strategy.
Rightly or wrongly, one can discern an attack on the globalist criminal apparatus in the transition to the American system of political economy (tariffs, protect domestic manufacturing, unleash human creativity) from the prior free trade paradigm championed by the criminals. Since China appears to have been intended as the manufacturing base for the ancien global regime (a compliant population and powerful government), it will surely undergo significant disruption in transition.
The 'Anglo American Empire' seems to have a real aversion to returning borrowed or stolen gold. The "Export Ban" I mentioned before would justify the Fed, in not 'Returning Deposits'?
Whatever happens, it seems that the long held geo-political paradigm has broken and gold will take a more meaningful role in what comes next. I don't think it is a good idea to look at gold through the lens of a financial practioner with trendlines / patterns / etc. It seems like this is more of a phase transition. For a long time people like Simon Hunt have stated that China has +20k t of gold. More recently Jan Nieuwenhuijs has estimated China has imported c. 5k t discretely, only reporting a fraction of those imports. KSA was recently caught secretly importing gold and CB's from many other countries have been net buyers for some time. We've previously seen countries requesting their gold repatriated and in the last couple of months seen a run on the LBMA. There were calls to audit Fort Knox that have strangely gone silent. Then over the weekend, we get Trump's tweet which I am not sure has any cryptic meaning or not. One this is certain, gold is going parabolic. Cheers John
throw in a London price fixing market for gold that has a fraction of the gold for which claims have been sold and you've got a wild situation.
Or asymptotic, as the case may be.
I guess that means China makes the rules then..
On the contrary; I think a Global Crash will immediately lift China far ahead of anyone else in the World. This is more about "Living Standards" than about numerical wealth in USD$ terms.
With good infrastructure and an incredibly skilled labour force China can afford to take small numerical loses. So long as the World continues to supply the needs of the Chinese People. I doubt many of them eat "Twinkies"?,
Indeed. It's one thing to have a credit bubble burst with productive assets and infrastructure in place and operating, but much more problematic with huge indebtedness and nothing to show for it. In a debt deflation, all unproductive and uncompetitive investments have to be liquidated. What remains will provide the foundation for a new recovery. It's the west that is in a predicament, as damn little is left to work with, and no real capital for investment to boot.
It wasn't as a result of Government pressure that US Corporations offshored most production. They did it firstly to achieve higher gross margins but secondly, and more importantly, for tax reasons (which decide most major corporate decisions). By being offshore, they were able to direct the higher profits into tax havens through transfer pricing, IP fees, royalties etc. to (at least) defer US taxes.
So there is no guarantee that they will re-onshore now. And even if they did, having decimated the US working and middle classes, the far higher US-manufactured costs would be affordable to most. Which raises another critical issue - unless the wealth and income inequality in the US is addressed, many of these reforms are not going to have their intended effect.
It was US policy.
As evidenced by?
Most Favored Nation trading status. Simple history.
Granted to a CCP gov that killed 70M of its own citizens.
All true but, with respect, the MFN status has little in connection with US Corporations offshoring manufacturing?
US mkt was opened wide to China. Importing goods manufactured with slave wages and no environmental laws gives strong short-term profits.
I would argue the West has maintained slave wages for blue collar employees since China camemkntlnthe WTO, and deliberately!
Capping western wages works great when your corporations are exploiting another nation's wages without needing any laws to do it.
To determine which labour is slave, you should compare the wage to the standard of living of the countries involved. For instance, how far does an 80 cent train ride take you in China vs the US (or the EU for that matter)? How much money do you need for a full basket of food in each country? (Far more in the West than in China) What is the cost of drugs in China and the US? How much savings remain in the average household after paying for fixed expenses? Zero in the west Vs 20-30 percent in China.
I don't buy any of this western propaganda about slave wages and the constant sniping at how another country chooses to run its country for the benefit of its own citizens, and no western government wants to have an honest discussion of this nature. i will leave Americans to answer for their own country but for the EU, taking the last 25 years, Chinese citizens are far richer than they were in 2000, while European citizens are poorer in the same period.
That the US and the EU now want to highlight past events out of context to evade accusations of mis-management seems quite normal for politicians to do, but it has to be seen for what it is...IE. excuses to get round the obvious failure of our economic policies, despite enjoying the advantage of consuming 30 percent of global GDP (PPP basis) with a population of roughly 12 percent.
Not exactly. US tax policy tends to extend extraterritorially, both for corporations and individuals. For individuals, it is especially severe because the US claims the right to tax income (1) wherever the income is earned and (2) no matter where the individual taxpayer (citizen or green card holder) is when the income is earned, and (3) whether or not the income is in US dollars. For corporations, the tax code got written (by their lobbyists, of course) so that the tax liability was due when the money was repatriated into the US. This is why the offshore holdings of US companies ballooned to US$1 trillion before the 2017 Tax Cuts and Jobs Act, to avoid incurring tax liability by reshoring the earnings. US companies and individuals don't play the offshore tax haven game nearly as much as Europeans because Uncle Sam shamelessly reaches across borders to pick pockets. So long as corporate lobbyists grease enough palms in Congress, they can stave off taxation of offshore earnings.
Thanks for confirming what I said. I never mentioned personal taxation , only Corporate taxation. I would actually respectfully beg to differ with you regarding Europeans being larger players in the tax haven game. The use of offshore tax havens is employed at scale mostly by the IP industries where the profits are larger - especially Tech and Pharma, where transfer pricing and IP fees are relevant. And it's US Corporations that overall dominate in this space, especially Tech.
You are describing BEPS (Base Erosion and Profit Shifting) for IP, which US tech companies have used. That is all true for IP, but had a lot less to do with the China story hollowing out US manufacturing, which was about (as you noted) improving the profit margins with low cost labor, but not the offshore game. The manufacturing capacity of the US was hollowed out by labor cost arbitrage, not tax arbitrage. Disagree all you want, but these offshore companies are in fact used in deal structuring, particularly in European private equity, where the abstractions of tax law are exploited. Hence in Europe the "double Luxco" [Luxembourg] structure in PE and the use of Channel Islands for UK PE funds; these gimmicks do not work for US tax purposes due to rules on PFICs (Passive Foreign Investment Companies) and CFCs (Controlled Foreign Corporations). Ireland carved out a niche for aircraft leasing and BEPS that you are describing. BVI and Cayman are used in Asia for structuring group companies for tax purposes (BVI usually for personal holdings in listco's and Cayman for listco purposes). Again, these gimmicks do not work under US tax law. I am not denying the effect of BEPS with US tech profits, only pointing out the difference between labor cost arbitrage and tax arbitrage and what is the real cause and effect with China and US manufacturing. The OECD is playing a dangerous game of "race to the top" of tax tables and trying to impose a minimum tax threshold worldwide to underpin their massive government spending.
You're missing several large practical details. Remember that most manufacturing in China is on a contract basis which lends itself to transfer pricing of components in and finished products out through offshore SPVs in tax havens.
We have drifted a long way off the original topic and out of respect for David, should not continue this thread. My original contention was that US Corporations used offshoring more for tax reasons and I stand by that. I respect your views to differ.
No one likes to lose, but I will say that Grok agrees with you as to the use of these companies with the China trade: https://grok.com/share/bGVnYWN5_d19f46d2-8112-45f1-9c5e-b7a118368f7a
In which case, having arbitraged the labor cost, the companies also arbitraged the tax liabilities.
I don't see it as losing but a useful discussion. I've been involved personally in many such perfectly legal offshore structures, especially in one of the IP industries but obviously was not at liberty to go into specifics. Thanks for a mutually respectful discussion, it's sad that these days folks can't politely disagree.
Labour arbitrage, pure and simple - must maintain the dollar 's status as king of the hill and keep interest rates down to allow for more debt creation via asset price inflation.
bring memories of his other tweet prior to Covid pandemic .... Covfee
Meanwhile the GSR just touched 106
https://www.macrotrends.net/1441/gold-to-silver-ratio
David all seems too quiet on the silver squeeze and gold shortages - LBMA front - are we back to normal price manipulation days?
To ask a basic question, why would china secretly import gold to its reserves?
To prepare to be dominant in a future gold monetary exchange system post USD reserve currency.
Reading your wonderfully articulated posts is like reading chapters of a great novel.
I think I am on chapter 20 now, but how many are in the book? Im guessing a lot more!!
Must think of a title for this epic book.... Will ponder on it
That is very kind Nathan - thank you.
The USA is not the same as the „West“.
The West allowed importation of cheap Chinese goods manufactured with slave labor conditions and without limit of impact on the environment.
Some solid insights, David. To add complexity and context:
- Allegation that China’s population is far lower than official figures: https://open.substack.com/pub/forbiddennews/p/leis-real-talk-estimates-an-astounding
- the same London epicenter of gold and silver price suppression is integral to the global criminal money laundering apparatus (drugs, humans trafficking, …) e.g., https://open.substack.com/pub/deanhenderson/p/the-crowns-dirty-canadian-banks
- President Trump passed important EO’s during his first admin, including an EO regarding human trafficking (https://trumpwhitehouse.archives.gov/presidential-actions/executive-order-combating-human-trafficking-online-child-exploitation-united-states/). A drastic decline in container shipping would arguably cripple a significant human trafficking vector. e.g., https://maritimefairtrade.org/from-port-to-port-the-human-trafficking-epidemic-at-sea/
- (Ghislain Maxwell’s ex had a big role in Cargometrics. https://web.archive.org/web/20201022150113/https://www.thedailybeast.com/ghislaine-maxwells-boyfriend-scott-borgerson-resigns-from-his-tech-startup-cargometrics-technologies/)
- The sea trade v land trade topic gets into Halford Mackinder Heartland (geostrategy) theory. https://en.m.wikipedia.org/wiki/The_Geographical_Pivot_of_History Very roughly, keep the Eurasian landmass from economically integrating, so Britain can continue to rule via the seas (which evolved into US as an unknowing proxy). Control of Ukraine essential for this strategy.
Rightly or wrongly, one can discern an attack on the globalist criminal apparatus in the transition to the American system of political economy (tariffs, protect domestic manufacturing, unleash human creativity) from the prior free trade paradigm championed by the criminals. Since China appears to have been intended as the manufacturing base for the ancien global regime (a compliant population and powerful government), it will surely undergo significant disruption in transition.
Thank you Stephen.
Lots to think about.
I wish I knew what was really going on in the world. Still trying to figure it all out.
Which might be why Germany is considering asking for its Gold stored in NY back again, according to reports?
The German right is demanding the return of their gold - gov / bundesbank says nothing.
True but as the old saying goes "if you don't hold it you don't own it". Trump seems to agree ;-)
The 'Anglo American Empire' seems to have a real aversion to returning borrowed or stolen gold. The "Export Ban" I mentioned before would justify the Fed, in not 'Returning Deposits'?
Other countries would not forgive.
It would be extremely destructive for America.
"Forgive"? Haha
Don't you know that 'Being American' mean you never have to say Sorry?
Would Germany attack??????????
I fear that "Isolation" is the new Go-to strategy for the US. Bunker down and lock the hatches. Just like North Korea in earlier times.
The world is in a time of extraordinarily rapid change - it is a surprise to nobody that was watching.
IMO both Japan and Germany have had nuclear weapons programs likely under development for decades.
https://www.nbcnews.com/storyline/fukushima-anniversary/japan-has-nuclear-bomb-basement-china-isn-t-happy-n48976
(NK's Nodong missile could use a more felicitous renaming)
They would proceed to attack their own! Not good