UK uses Feudal System law to seize £150 million from bank accounts

During the summer of 1215 in a riverfront meadow near London, some of England’s top barons gathered to confront King John and force him to sign a contract guaranteeing their rights and freedoms.

The contract became known as the Magna Carta. And one of its key provisions (#43) gave the Barons protection against something called ‘escheat’.

In medieval times, ‘escheat’ referred to the property being forcibly passed to the King if its original owner died without heirs.

So if a Baron passed away without a son, his domain would pass by escheat back to the crown.

Over time, kings vastly expanded the use of escheat; anyone convicted of a crime would have their property seized by escheat. Occasionally someone’s son or daughter could be pressed into servitude by escheat.

It was like a medieval version of Civil Asset Forfeiture: the King took whatever he wanted, for any reason, and people had no rights.

By 1215, England’s noblemen were sick and tired of it, and they successfully forced King John to sign the Magna Carta.

Unfortunately for the other 99.9% of England’s population, most of the Magna Carta’s guarantees only applied to Barons and other noblemen.

Plain ole’ regular serfs still had their meager property plundered by the King, and by the noblemen themselves who had just fought to preserve their own rights at the expense of everyone else’s.

So if a feudal serf in England died without an heir, or was convicted of a crime, all his property was escheated to the local Lord, or to the King.

This became such big business in England that the government appointed special agents called ‘escheators’ in every single English county to oversee property confiscation every time someone passed away.

If there was any doubt at all whether or not the deceased had valid heirs, the escheator would seize the property immediately.

Amazingly enough, this ridiculous feudal custom still exists. And not just in England– in many countries around the world.

In just about every state in the Land of the Free, for example, your possessions, real estate, etc. are forfeited to the government if you die without heir.

Even bank accounts that are left dormant for some period of time– usually a few years– can be confiscated by the government.

But this is totally bizarre, because ‘dormant bank account’ rules can be incredibly loose. In many jurisdictions, for example, simply having some savings stashed away in a bank account that doesn’t have any other activity can put your funds at risk of being seized.

They actually still use the same word– escheat. So money in dormant bank accounts is escheated to the state.

To be fair, this practice has been relatively rare… until Covid. But now governments are starting to look at every source of funding they can get their hands on, including the medieval ones.

The British government recently announced that they had “unlocked” £150 million from dormant bank accounts, with cooperation from some of the biggest banks in the UK, all to help fight World War Covid.

And now the UK is looking to expand the practice beyond bank accounts; they’d like to be able to seize unclaimed financial assets (including stocks and bonds), insurance proceeds, and even dormant pension accounts.

As one UK government official put it, “I look forward to the potentially millions more we can unlock for good causes through expanding the Dormant Assets Scheme.”

This is a practice that literally dates back to the feudal system. And it reinforces a simple truth: you don’t really own anything if the government has the authority to take it.

I have no doubt the bureaucrats who came up with this idea have very good intentions.

After all, what nobler cause is there in this bizarre world of ours but to wage an endless crusade against the Coronavirus, no matter the cost?

They’re willing to do whatever it takes, spend whatever it takes, print as much money as it takes, and yes, even confiscate people’s private property, to rid the world of the virus.

This is our new reality: medieval serfdom.


from Sovereign Man

How many companies are worth less than zero?

By 1920, former New York Yankees outfielder George Halas’s baseball career was finished.

Halas had only played 12 games as a professional when a hip injury abruptly ended his dream of making it big.

Being a baseball player was all Halas really knew, and with his career finished, he had limited prospects.

Eventually he was able to find steady work in Decateur, Illinois, a small town about 3 hours from Chicago, where he took a job with the A.E. Staley Company.

The company’s founder, Augustus Staley, loved sports, and he recruited some of his employees to play on a company team that competed in a regional gridiron football league.

The team was known as the Decateur Staleys, and Halas became the manager.

Halas didn’t have much football experience, but he did well as team manager. The Staleys earned a 6-1 record in their first season and won the central Illinois Football Championship.

But Augustus Staley lost a ton of money.

Game attendance was pitiful, so his football team brought in almost zero revenue. But he had to pay the players, pay for the equipment, pay for team travel, etc.

Staley knew if things continued that way that he’d lose a fortune. He didn’t want to shut down the team that he loved, but he didn’t want to continue losing money.

So in 1921, Augustus Staley PAID George Halas $5,000 (which was a lot of money back then) to take the team off his hands.

George Halas jumped at the chance. He took the team (and the money) to Chicago, and eventually renamed it the Chicago Bears.

Today the team’s estimated worth is nearly $3.5 billion. But its remarkable to think that a century ago the team actually had NEGATIVE value.

This isn’t incredibly common, but it does happen from time to time: businesses can be worth less than zero. And most of the time they don’t have such a remarkable turnaround story.

Case in point: Hertz, the rental car company, has $14.4 billion worth of vehicle loans according to its most recent financial statements.

But the company estimates that its vehicles are actually worth LESS than the debt they owe. This means that Hertz’s rental cars have negative equity.

Including the company’s other assets and liabilities, Hertz has NEGATIVE $2.8 billion in net tangible assets… so the entire company is worth less than zero.

They’re also quickly burning cash with no end in sight. Unsurprisingly, Hertz filed for bankruptcy a few days ago.

Similarly, the retail chain JC Penny also recently filed for bankruptcy. According to its financial statements, JC Penny has an accumulated deficit of MINUS $3.7 billion, and negative net tangible assets (including interest rate derivatives).

WeWork hasn’t declared bankruptcy (yet). But the company barely has any assets at all despite having an unbelievable $47 billion in lease liabilities.

So WeWork is probably also worth far less than zero.

Frankly it’s not unreasonable to think that a LOT of companies are in this position right now.

Stock markets around the world are surging higher because investors are looking for any excuse to believe that everything is about to be back to normal.

That’s human nature; our ‘normalcy bias’ warps our brains into completely ‘misunderestimating’ obvious threats and full-blown disasters.

Right now as I write these words, in fact, the US stock market is worth roughly the same amount as it was in early 2019.

That strikes me as completely ridiculous.

In early 2019 there weren’t tens of millions of unemployed, countless businesses shuttered, and unfathomable looming bankruptcies.

Plus today we have to contend with the obvious risks of subsequent virus outbreaks, more shutdowns,  travel and trade barriers, the looming Cold War between the US and China, and higher tax rates to pay for all the bailouts.

It’s fair to say that economic conditions and earnings prospects today are completely different (and a lot uglier) than they were in early 2019. So how can stocks possibly be worth the same amount?

And again, if you dive a little bit deeper, you might find that a number of big companies are actually worth less than zero.

In normal times, investors typically value a business based on a certain multiple of its cashflow… or at least its future cash flow.

But these aren’t normal times. And valuing a business based on pre-Covid projections is just silly.

A lot of companies will have a long-term hit to their revenues and profits. Some might not be able to operate at all.

So a safer bet is to value a company based on its assets; in other words, how much are the company’s business assets worth, minus the liabilities?

If the answer (like Hertz) is less than zero, then you might just want to consider avoiding the investment altogether.

Hertz is definitely not going to be the last big company to file for bankruptcy. There are a lot more retailers, travel companies, etc. that are on the brink.

At this point, any highly leveraged (i.e. heavily indebted) business might just be worth less than zero. So be cautious before following the crowd and rushing back in.

Remember this if you’re thinking about buying an index fund; there are literally hundreds of companies in that index, many of which might be worth less than zero.

Longer term, great businesses, both public and private, will do very well and be in much better shape than before Covid; economic downturns and financial crises actually help solid businesses rise to the top.

Companies with high quality products or services, talented management, and sensible finances are able to navigate the challenges and emerge stronger than ever. They eventually consolidate market share from weaker competitors who don’t make it, and they end up becoming even more profitable.


from Sovereign Man

The UN wants you to stop using these 14 “offensive” words

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, risks to your prosperity… and on occasion, inspiring poetic justice.

The United Nations takes a page from 1984 with a list of offensive words

According to the United Nations, the word “wife” is apparently offensive to some people. So is “husband”.

Their reasoning? Those words are not gender-neutral. So to “create a more equal world,” the UN has published an initial list of 14 words they want you to stop using… as well as the acceptable substitute.

The word manpower is offensive, naturally, because it relies on the base “man”. And anything that has to do with a man is offensive and terrible in this new world of ours.

So instead of “manpower”, the UN wants you to say “workforce”.

Same with congressman. Though frankly the word ‘congress’ should be far more offensive than ‘man’. But nevertheless, the UN wants you to say ‘legislator’.

Instead of husband or wife, the UN wants you to say “spouse.”

In regards to this website, somehow “Sovereign Gender Fluid Homo Sapien” doesn’t exactly roll off the tongue.

Click here to see the UN’s ridiculous tweet.

Oregon lockdown lifted… for a few hours

A judge ruled that Oregon Governor Kate Brown’s lockdown order could only go so far.

After 28 days, emergency decrees in Oregon require legislative approval. But Governor Brown did not receive that approval.

So a group of Oregon churches who were forced to close due to the shelter-in-place order sued the government. And the judge ruled in their favor– the entire state lockdown was ruled illegal, and the judge ordered that it be immediately lifted.

But that only lasted a few hours.

Governor Brown immediately appealed the ruling and took it to the state’s Supreme Court.

While the lower court’s ruling wasn’t overturned, the Supreme Court did cave to the Governor’s emergency motion to keep the lockdown in place while the lawsuit continued.

Of course, the Governor could have just called the legislature back to approve her lockdown order… or perhaps she was too afraid that the voters’ representatives would take her newfound power away?

It was a safer bet to let the Supreme Court decide, since Governor Brown appointed five of the seven justices.

Click here to read the full story.

Connecticut hires $2 million ‘reopening consultant’

There’s a lucrative new business opportunity in the Land of the Free: consulting state and local governments about how to re-open their economies.

How lucrative, you ask?

Well, the State of Connecticut has hired a consulting company to advise them on how to reopen the state after lockdown ends.

The state will pay a target of $2 million, which means it could end up being more.

But don’t worry, says Connecticut’s governor, because the state will likely be reimbursed by the federal government.

And why not?

The Fed is printing trillions of dollars worth of magic money.

What’s a measly $2 million to pay consultants to tell politicians how to stop being dictators?

Click here to read the full story.

New York tax revenue down $8 billion, or 68% compared to last April

Weird how when you shut down the economy, somehow the tax revenue stops flowing.

Tax revenue is down 68%, or almost $8 billion, compared to last April.

New York is now facing a yearly budget gap of $13.3 billion.

But New York did receive over $5 billion from the federal government’s CARES Act, and the city is already whining for more federal money.

Why did anyone ever work at all, when we could have just been printing money this whole time?

Click here to read the full story.

Restaurants are starting to collect customer info for contact tracing

Many American cities are considering forcing restaurants to collect information from patrons to assist in “contact tracing.”

That way, if someone who visited the restaurant is diagnosed with coronavirus, authorities can contact people who may have been exposed.

Customers must provide information like their name, phone number, address, and other contact information.

This is already required in some places, like Auckland, New Zealand. And it has already turned creepy.

One said she thought nothing of leaving her phone number, email address, and physical address at a Subway restaurant she visited.

Then she received a Facebook message, an Instagram request, and a text from a Subway staff member who wanted to take her on a date.

She was especially concerned because her home address was also available to the overzealous man.

And as creepy as that is, this is just one aspect of the privacy issues.

The government will also be able to track your whereabouts.

And unlike the creepy man from Subway, the government won’t let you ignore its advances.

Click here to read the full story.

Kansas City churches forced to keep records of attendees

It’s not just restaurants being forced to collect information on customers.

Churches in Kansas City, Missouri are now required to keep a list of church attendees.

That way, the state can look at the list for contact tracing if someone from the church tests positive for coronavirus.

The rule requires churches and synagogues to “record the names, contact information, and approximate entry/exit time of all customers who are on premises for more than 10 minutes.”

If a not-so-deadly virus can erase all the most basic rights– from assembly to religion– were we ever really free to begin with?

Click here to read the full story.


from Sovereign Man

Social Security will run out of money in 2029 because of Covid

The CDC’s National Center for Health Statistics released some alarming data earlier this week that surprisingly had absolutely nothing to do with Covid for a change.

The report showed that the birthrate in the United States last year declined to its lowest level on record ever since the government began collecting data more than 110 years ago.

This new record low birth rate breaks the previous record set in 2018, which broke the previous record set in 2017, which broke the previous record set in 2016. . .

You get the idea. This has been a long-term issue: people just aren’t having babies anymore. And it’s not just in the Land of the Free.

Fertility rates are low all over the developed world– far below the ‘population replacement level’ of around 2.2 children per mother.

(This is the number of children that demographers say will maintain a steady population.)

In the United States, the average number of births per mother is currently about 1.7. In Australia it’s also around 1.7. In Spain, it’s just 1.5. In Japan, 1.44. In Italy, 1.31. In South Korea, 0.92. And in Singapore, just 0.83.

This list goes on and on. And the fertility rates in most of these countries are hovering near record lows.

Even many large, developing countries have low or declining fertility rates.

In Brazil, for example, the average woman has 1.74 children, which is below the population replacement level. And the rate has been falling steadily for decades.

Even India’s birth rate has been declining, down to just 2.24– less than half the level from the 1980s.

And these statistics were pre-Covid. It certainly stands to reason that with all the economic uncertainty and virus fears, people will delay having children, and potentially have fewer.

This is pretty normal in any economic crisis; according to IMF data, birth rates worldwide plunged following the Great Recession of 2008/2009.

Now, it’s not like a low fertility rate means that some country is going to vanish into the history books.

In Spain, the population declines by an average of just 0.21% per year. And Japan’s population declines by roughly 0.12% per year.

These are trivial numbers… unless you’re thinking about Social Security and national pension funds.

The idea behind most social security programs around the world is that everyone with a job gives up a portion of his/her wages to pay monthly benefits to people who are currently retired.

We do this for our entire careers, with the promise that, when we reach retirement age, the younger generations will pay for our benefits.

This scheme clearly requires a steadily rising population in order to be sustainable:

If you have 1 person receiving benefits today, you’d need 3-4 people paying taxes to support that single beneficiary.

After a few decades, those 3-4 would be retired, requiring around 10-15 workers to support them. And when those 10-15 people retire, you’d need 30-50 workers to support them.

It’s easy to see why low birth rates and declining populations can cause these social security programs to fail.

But Covid is having an even deeper impact on these programs. Because in addition to making the fertility problem worse, Covid has also vanquished tax revenue.

In the US, for example, Social Security is funded almost exclusively by payroll taxes. So when tens of millions of people lose their jobs, payroll tax revenue declines, and Social Security runs a big deficit.

I’ve been writing about this for years: Social Security is already in deep trouble.

The program’s Trustees (which include the Treasury Secretary of the United States) write in their most recent annual report that Social Security’s trust funds will run out of money by 2035.

Again, though, that was pre-Covid. Financial crises tend to make these things a lot worse.

Back in 2007, the last year before the Great Recession, Social Security projected it would run out of money in 2041.

But the financial crisis took such a toll that, after it was over, they revised their projected insolvency date down to 2035.

Social Security hasn’t updated its projection yet to incorporate the Covid impact, and they probably won’t until next year.

But the Bipartisan Policy Center ran the numbers using Social Security’s own financial model. And according to their analysis, Social Security is now set to run out of money in 2029.

That might seem like a long time from now, but from a retirement prospective, it’s just around the corner.

And options for Social Security are extremely limited; the government will either have to (a) radically increase payroll tax rates, and/or (b) make drastic cuts to the monthly benefit they’ve been promising people for decades.

Neither option is good, and most likely they’ll end up doing a combination of both. But not yet.

As this pandemic has proven, they’ll wait until it becomes a major catastrophe before even acknowledging the problem, and then they’ll overreact with worst Draconian measures imaginable.

But any rational person who thinks long-term, however, still has time to plan.


from Sovereign Man

House Cats or Human Beings?

One of the more flummoxing aspects about living in Puerto Rico is that the political leadership is never-ending parade of highly corrupted, certifiable idiots.

The latest Governoramus of Puerto Rico seems hellbent on destroying every remaining scrap of prosperity on this island, all in an effort to indulge her ego-maniacal God complex.

Puerto Rico was the first places in the US to order a full lockdown, and it may very well be the last place to open up; the governoramus ordered everyone to shelter in place starting March 15th, and the order is still in effect.

The rules have been completely ridiculous, too. Going to the beach was outlawed. But it’s perfectly acceptable to stand in a crowded line at the grocery store.

One of the great things about Puerto Rico, though, is that nobody cares.  People here happily ignore their idiot politicians.

Puerto Ricans naturally distrust their government– local politicians and bureaucrats have been robbing and stealing longer than anyone can remember.

For example, the FBI recently came down here and arrested a number of top government officials for stealing federal aid that was supposed to have gone to Hurricane Maria recovery efforts.

Earlier this year when the island suffered a series of earthquakes, the US government sent emergency supplies. But as soon as those relief supplies ended up in the Puerto Rican government’s hands, they mysteriously disappeared.

Just last month, Puerto Rico’s government entered into a contract to buy faulty, overpriced Covid test kits from two companies that have personal and financial ties to the current administration.

Basically it was tens of millions of dollars (which is a lot of money for this place) of BS contracts that went into the pockets of friends of the ruling party.

The list is really never-ending. And people here know it. Puerto Ricans have no illusions that the government is on their side. They know that many of the people in charge are either incompetent, or criminals, or both.

And that’s why nobody here cares what the government says.

A friend of mine sent me a video from a local beach on Sunday showing thousands of people out enjoying the sun and sea in open defiance of the lockdown rules.

I really hope this attitude spreads worldwide.

And to me, that’s one of the many silver linings of this pandemic: more people may finally wake up.

At this point there are realistically two groups– the human beings, and the house cats.

The human beings are sick and tired of these lockdowns. They understand that the world is a scary place, that there are risks.

But they’re still willing to live their lives.

It’s not about taking unnecessary risks or being reckless; they just want to be treated like human beings who are free to make their own decisions without insane government overreach.

The other group just wants to be house cats.

House Cats love being locked down and want more of it. They like government intervention. They love endless money printing and free benefits. They love being taken care of and suckling from the maternal teet of government.

They love cowering in fear in their homes and being told what they can/cannot do.

The biggest difference, though, is that Team House Cat thinks everyone else should live by their rules… and their hysteria.

Team Human thinks that everyone should be free to make their own decisions. Anyone who wants to stay home can stay home, nothing wrong with that. Anyone who wants to go out and take a risk should be able to go out and take a risk.

But most governments are on the side of Team House Cat. And it’s probably going to stay that way for the foreseeable future.

China is experiencing a second wave of outbreaks and has reacted aggressively to lock down more than 100 million people already.

Sadly, nearly the rest of the world seems to want to copy the Chinese government.

(The Chinese central government has also told local housing officials that they will be ‘removed’ if there are Covid outbreaks in their sectors, though it’s unclear whether ‘removed’ means ‘fired’, or ‘disappeared.’)

But the silver lining here is that Team Human is growing by the day; tens of millions of people are starting to see first hand just how disgusting government overreach can be.

So by the time the dust from this pandemic settles, there might just be enough human beings to restore a sense of sanity in this bizarre world of ours.


from Sovereign Man

Another week, another $3 trillion bailout

At precisely 9:26pm this past Friday night, May 15th, the House of Representatives in the United States passed the “Health and Economic Recovery Omnibus Emergency Solutions Act.”

For short, they call it the HEROES Act.

And yes, it’s as ridiculous as it sounds.

Bear in mind that Congress passed the first bailout bill– the “Families First Coronavirus Response Act” on March 14th. That set the taxpayers back $1.3 trillion.

Less than two weeks later, Congress passed the “Coronavirus Aid, Relief, and Economic Security Act”, or CARES, which cost a hefty $2 trillion.

A few weeks after that, they passed another half-trillion dollar bill, the “Paycheck Protection Program and Health Care Enhancement Act,” which, sadly, did not come with a catchy acronym.

Are you keeping score? In total that’s around $3.8 trillion in federal bailouts.

And now on top of that, the House just passed the HEROES Act, which adds another $3 TRILLION to that total.

If the HEROES Act becomes law, that will bring the total bailouts in the Land of the Free to nearly $7 trillion, more than 30% of the entire US economy!

The HEROES Act itself is extraordinary. At 1,815 pages and nearly 300,000 words, it’s more than twice as long as the New Testament.

And I spent several hours this weekend reading it.

With a high-sounding name like “HEROES,” I naively thought the focus of the bill is to take care of front-line healthcare workers.

But I was wrong.

HEROES hands over taxpayer money to everyone from the Fish and Wildlife Service to the National Endowment for the Humanities.

There’s money for school lunches, broadband Internet access in rural areas and tribal lands, prison phone calls, “environmental justice grants,” and pretty much anything else you can think of.

There’s a phrase they use in this bill over and over again: “to prevent, prepare for, and respond to coronavirus. . .”

For example, they’re giving the General Services Administration (GSA) $1 billion to modernize their technology… leading a rational person to wonder,

“Hey wait a minute– what does that have to do with Covid?”

Nothing. And that’s why they include those magic words– The GSA will receive $1 billion “to prevent, prepare for, and respond to coronavirus.”

Oh gee, then I guess it makes sense.

It reminds me of right after 9/11, nearly two decades ago. Back then the government could get away with anything they wanted. They just had to use the magic words “for your safety and security,” or “in the interest of national security.”

They were able to pass the most insidious laws and say the most ridiculous things. But as long as it was for your safety and security, it was all OK.

Today it’s the same thing.

If this HEROES bill passes, for example, the National Endowment for the Humanities will receive a bunch of taxpayer money “to prevent, prepare for, and respond to coronavirus.”

Wait, what? What does one thing have to do with another?

Nothing. It’s just empty justification to spend all the money they ever wanted.

But astonishingly, even this doesn’t seem to be enough.

Last night the news show 60 Minutes aired an interview with the Chairman of the Federal Reserve, who expressed clear concern that all the government spending and all the federal reserve money printing so far might not be enough:

Reporter: “In terms of stimulus, has Congress done enough?”

Fed Chairman: “. . . I don’t think we know the answer to that. It may well be that the Fed has to    do more. It may be that Congress has to do more.”

The interview was pretty extraordinary– the Fed Chairman didn’t bother sugarcoating what they’re doing–

Reporter: “Fair to say you simply flooded the system with money?

Fed Chairman: “Yes. We did. That’s another way to think about it. We did.”

Reporter: “Where does it come from? Do you just print it?”

Fed Chairman: “We print it digitally. So as a central bank, we have the ability to create money   digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.”

Reporter: “In terms of size, Mr. Chairman, how does what the Fed is doing right now compare     to the unprecedented action it took in 2008?”

Fed Chairman: “So the things we’re doing now are substantially larger. The asset purchases that we’re doing are a multiple of the programs that were done during the last crisis. . .

That pretty much sums it up–

The government is on track to have a nearly $7 trillion bill for Covid so far, while the Federal Reserve has already expanded its balance sheet by nearly $3 trillion.

And even with that bonanza of money, they’re still not sure if it’s enough.

They acknowledge that they’re simply [digitally] printing money, and that the size of the problem is MUCH bigger than the last crisis.

He then acknowledges later in the interview– sure there will be consequences to all the debt and money printing, but we’ll worry about it later: “This is not the time to prioritize that concern.”

So, on top of everything else, they’re flat-out telling you that there are going to be problems down the road… but they’re going to keep printing and going into debt regardless.

No one here is being subtle.

And you’re not some wild conspiracy theorist to think that there might be consequences down the road. The Federal Reserve is telling us that this is the case.

And they’re also telling us that they’re going forward with their plan to print money and facilitate government debt regardless of the long-term damage.

If that’s not a reason to own precious metals and real assets, I don’t know what else could be.


from Sovereign Man

Another week, another governor with a God complex

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, risks to your prosperity… and on occasion, inspiring poetic justice.

Police arrest surfers for standing still on the beach

Like most of the world, Cape Town, South Africa is on lockdown to stop the spread of the virus.

The city does allow residents to walk along the beach during an “exercise window” every morning from 6am to 9am, as if everyone is an incarcerated felon.

But you aren’t allowed to go in the ocean to surf, or to paddleboard.

Surfers have pointed out that while the walkways get crowded, the open ocean has practically limitless space… so it’s clearly a lot easier to maintain social distancing while in the ocean, rather than being packed together on the boardwalk.

Unfortunately government orders are not known for being logical.

To push back, surfers went to the beach and simply stood there with their surfboards and protest signs.

Police came along and told them to keep moving. After all, this was an “exercise window,” not a “stand at the beach window.”

Those who ignored the orders were arrested for standing still when they should have been exercising.

Click here to read the full story.

Barber has license revoked for re-opening

Karl Manke, a 77 year old barber, had his license suspended because he opened his shop in defiance of Michigan’s lockdown order.

The state suspended the license without due process– they simply revoked his right to earn a living.

But Karl Manke kept on cutting hair.

There has been no shortage of customers for the week he’s been open. Some waited for two hours for a haircut, just to support a man who is standing up for himself.

“I’m not trying to be a scofflaw. I’m trying to make a living,” said Manke. “I tried for the unemployment. I was denied twice on unemployment.”

Manke is facing a $1000 fine and two misdemeanor charges.

But a judge refused to sign an order to stop Manke from operating until he has a hearing on June 23. The local Sheriff also said he will not enforce the Governor’s orders.

It’s unclear if the Governor’s orders even hold legal weight, since the state legislature did not authorize the lockdown extension.

But regardless of the legal consequences, Manke vowed to stand up against violations of his rights. And he has plenty of support.

Click here to read the full story.

Colorado restaurant license revoked after opening for Mother’s Day

A Colorado restaurant had its license revoked by the county health board after it opened for Mother’s Day.

The restaurant opened in defiance of the statewide lockdown order, prompting the Governor of Colorado to criticize the restaurant owner at a press conference:

“Customers will return en masse when they feel safe. When people see videos of people packed into a restaurant with no social distancing and no masks, people feel less safe and the widespread economic pain will only be prolonged.”

Wait… doesn’t a packed restaurant mean that people feel safe enough to return en masse? Everyone in that packed restaurant was there voluntarily. They were all willing to be around other people, and hence felt safe enough to do so.

The Governor continued, “I love my mom far too much to put her at risk by visiting a busy restaurant operating illegally just to take a selfie with omelets and a mimosa.”

That’s great, dude. Then you and your mom can stay at home cowering in fear while grown adults who are willing to take a chance go out in the world and live their lives.

It is not about haircuts or mimosas. It is about basic freedoms, and the overreach of a government authority. No one authorized this person to play God with other people’s lives.

Click here to read the full story.

Four plans in Congress to forgive varying amounts of student debt

Jubilee is coming! There are now FOUR different plans in Congress to forgive student loan debt.

They all have distinct features and forgive varying amounts of debt for different groups of people.

For example, one plan would forgive up to $25,000 worth of student loans for essential workers, such as healthcare workers, first responders, postal employees, and grocery store workers.

Another proposal would forgive ALL student loan debt for any medical workers caring for Covid-19 patients. Keep in mind that many of these doctors and nurses have six figures of debt.

Another bill would forgive federal student loans for everyone, but only up to a limit of $10,000.

And another version of that same bill would go further, forgiving up to $30,000 worth of government-backed student loans.

There’s actually a fifth plan, put forth by Joe Biden’s team, which would forgive federal student loan debt for anyone who attended either a public university or a historically black college.

We’ve been predicting a debt jubilee for years. It might not be one of these plans, but you can see the writing on the wall. Debt forgiveness is coming… and so are the economic consequences that go with it.

Click here to read the full story.

National debt hits $25 trillion without fanfare

Speaking of debt, total US National Debt surpassed $25 trillion on May 5.

That is a whopping 117% of the USA’s Gross Domestic Product. The debt has only been higher, as a percentage of GDP, just after World War II.

But we’re just at the very beginning of World War Covid-19– or rather, the economic devastation caused by the government response to the pandemic. So just wait, because we’ll see $30 trillion soon.

Click here to see the Treasury’s numbers.


from Sovereign Man

Infinite money printing: Fed now buying ETFs

Just when you thought they couldn’t come up with any more crazy ideas, the Federal Reserve announced last night that they will start buying Exchange Traded Funds, effective immediately.

Just to be clear, this means that the Fed is going to conjure money out of thin air, and then use that new money to buy ETFs.

But not just any ETF. The Fed is specifically targeting ETFs that own corporate bonds.

The key idea here is that the Fed is trying to bail out bankrupt companies across the Land of the Free.

Under normal circumstances, most medium and large businesses regularly issue corporate bonds (which is a type of debt) to help fund their companies.

This is pretty normal; even very strong and healthy businesses regularly go into debt by issuing bonds.

For example, Apple has been wildly profitable for years. But the company has about $90 billion in debt according to its most recent financial statements, plus they just issued another $8 billion in bonds last week.

Companies all over the world do this, and the total size of the global corporate bond market is absolutely enormous– tens of trillions of dollars.

The obvious problem is that there are countless businesses around the world, both big and small, that simply aren’t going to make it through this economic crisis.

Airlines, hotels, restaurant chains, factories, shipping companies, retail stores, daycare facilities, construction companies, etc. have all been devastated by the pandemic.

Most of these companies have borrowed extensively. And without any revenue, there’s likely going to be a giant wave of defaults in the corporate bond market.

American Airlines, for example, has $21 billion in debt. There’s practically zero chance they’ll be able to make interest payments, which will trigger a default of their corporate bonds.

Thousands of other companies are in a similar position; they won’t be able to make their payments.

The even bigger problem is that, eventually, bonds mature and need to be paid back.

Unlike the mortgage on your house, whose principal balance is slowly paid down over 20-30 years, most corporate bonds are interest-only.

They pay what’s called a ‘coupon’, which is a regular interest payment, and then the entire principal balance is paid back when the bond ‘matures’ after perhaps 7-10 years.

Usually when their corporate bonds mature, most companies simply issue new bonds. It’s sort of like a refinance; so instead of paying back $1 billion worth of bonds that are about to mature, the company will issue $1 billion in new bonds for another 10 years.

In this way they keep rolling over their debt. And in normal times, that approach typically works just fine.

But these are not normal times.

Right now the bond market is frozen solid. And very few investors want to buy bonds of, say, an airline or cruise operator.

But a lot of those companies have billions of dollars worth of bonds that are about to mature.

And without a way to roll over those bonds and refinance the debt, they’ll be in default… meaning most investors who owns those bonds will suffer major losses.

This is a huge problem because it can cause a chain reaction across the entire financial system.

Let’s imagine “Rude Airways” has $10 billion worth of bonds that are about to mature.

But Rude Airways is out of cash and has no hope of generating revenue while the lockdowns are in place.

So instead of paying back the $10 billion, Rude Airways defaults.

“Big Ego Capital Partners” is a hedge fund that owns billions of dollars worth of Rude’s bonds. So when Rude Airways defaults, Big Ego is also wiped out.

Big Ego owes a lot of money to “Liars Bank”. So when Big Ego goes under, Liars Bank also takes a huge hit.

You get the idea. If thousands of companies constituting trillions of dollars worth of bonds don’t pay, then the chain reaction across the entire financial system will be nothing short of cataclysmic.

This is what the Fed is trying to prevent… with the only tool they have available: PRINTING MONEY.

So, again, the Fed is going to conjure money out of thin air, and use that money to buy corporate bonds and bond ETFs.

Their plan is to help companies like Rude Airways roll over their debts, and hopefully prevent a chain reaction of defaults across the entire financial system.

According to yesterday’s press release, the Fed estimates spending $750 billion initially, though it’s clear they could easily blow past that number.

That, of course, is on top of the trillions of dollars worth of other commitments they’ve already made, the $2.6 trillion they’ve already printed, and the trillions of dollars of other facilities they’ll create in the future.

I’ve been writing about this a lot lately, but at the risk of beating this horse to death, I believe it’s worth repeating:

There is so much we don’t know about the economic consequences of this pandemic. Will we see major inflation? Depression? Stagflation?

No one really knows for sure.

But one thing that has become totally obvious is that central banks around the world are going to continue printing incomprehensible sums of money– this is ‘whatever it takes’ monetary policy.

I won’t bother opining on whether what they’re doing is right or wrong. It doesn’t matter.

The reality is that it’s happening; they’re printing ridiculous quantities of money, and that’s that. Nothing we can do will change that fact.

Our only decision is how we choose to react.

Again, there’s no playbook here, and every possible scenario is on the table.

But historically speaking, whenever central banks devalue their currencies by printing vast amounts of money, real assets (and especially gold and silver) generally tend to be safe havens from the monetary consequences.


from Sovereign Man

A brief history of the last crisis

The last time the economy blew up was back in 2008. Most of our readers probably remember it– the global financial system almost collapsed.

Just prior to the 2008 crisis, housing was in a major, worldwide bubble. Central banks around the world had cut interest rates to near-zero levels, making it incredibly cheap to borrow money.

By 2005, lenders offered mortgages with teaser rates as low as 0.9%. And demand was furious. Buyers gobbled up homes as quickly as they came on the market, and housing prices reached all-time highs.

The housing market was so hot in the early 2000s that lenders stopped requiring borrowers to make a 20% down payment, and even extended these terms to borrowers with terrible credit.

Soon, banks were lending more than 100% of a home’s value, at ridiculously low mortgage rates, to borrowers who had a track record of not paying their debts, at a time when housing prices were at record highs.

What could have possibly gone wrong?!!?!??

Eventually the housing market went bust, and millions of people around the world stopped paying their mortgages.

Suddenly the homes were worth less than their mortgages, and banks were sitting on trillions of dollars worth of losses.

Several banks collapsed, and the whole financial system almost went down with them… triggering one of the biggest financial crises in history.

Asset prices everywhere crashed. Real estate prices fell. Global stock markets sank; the S&P 500 in the  United States shed 57% of its value, losing more than a decade worth of gains.

And most major commodities fell too– from oil to copper to cotton. Even gold and silver fell. Investors were in a panic, and many of them were forced to sell everything to raise cash.

Due to all the panic selling, silver fell by roughly 50%, and gold about 30%.

But by October 2008, governments and central banks around the world announced unprecedented stimulus programs. Government debt surged to levels never before seen in the history of the world, and central banks conjured trillions of dollars, euros, pounds, and yen out of thin air.

It was at this point that both gold and silver began rising rapidly.

You might also recall that inflation began to increase as a result of all this new debt and money printing.

In particular, food and fuel prices soared. In just six months from September 2010 to March 2011, for example, gasoline prices in the US rose 50%, from $2.61 to nearly $4. It was painful.

But the people responsible for creating such havoc were totally clueless.

In March 2011, the President of the Federal Reserve Bank of New York held a press conference to downplay everyone’s concerns and insist that inflation wasn’t a problem.

As proof, he told the audience that the price of an iPad 2 was lower than the price of an iPad 1… therefore (in his view) prices were actually falling.

It became known as the “Let them eat iPad” speech, and prompted one reporter to ask, “When was the last time, sir, that you went grocery shopping?” And another to exclaim, “I can’t eat an iPad!”

Real assets performed very well during this period. Though there were some exceptions.

The housing market bust was so severe that residential real estate prices in most of the world declined for several years.

The median home price in the United States, for example, didn’t start to rise again until 2012– more than four years after the crisis started.

But raw land, and especially farmland, performed very well.

Precious metals also rose dramatically. Even though they both fell in the early days of the crisis, the price of gold would more than double in value, and the price of silver increased more than 5x.

We can’t say, of course, that this is exactly the scenario that will unfold this time around. The circumstances are obviously different.

But one key similarity between the financial crisis of 2008 and today is the tidal wave of debt and money printing.

Today they’re printing far more money than they printed back in 2008, because, frankly, the scope of the crisis is much greater.

By the end of 2019 there was a record $250 trillion worth of debt worldwide; that amount includes the value of all government debt, corporate debt, consumer debt, home mortgages, etc. worldwide.

If even a small percentage of that debt ends up going to money heaven, the losses will completely dwarf the 2008 financial crisis.

That’s why the Federal Reserve has already printed $2.5 trillion in the last two months alone. They’re trying to print money to cover the losses and less the economic impact of the pandemic.

They’ve also slashed interest rates to zero, and the futures market expects that rates will turn NEGATIVE by January.

It seems clear that central banks will print whatever it takes to ease the crisis.

And that could mean a lot of things. Perhaps we’ll see a return to the 1970s style stagflation (which we talked about last week.)

Or perhaps we’ll see a conditions similar to what happened in the last financial crisis.

There are plenty of possibilities, and no one knows for sure exactly what will happen next.

But if history is any guide, real assets typically perform very well when central banks print incomprehensible sums of money.


from Sovereign Man

California county launches snatch-and-grab program

Are you ready for this week’s absurdity? Here’s our Friday roll-up of the most ridiculous stories from around the world that are threats to your liberty, your finances, and your prosperity… and on occasion, poetic justice.

Ventura County, CA to hire dozens of Covid spies

19 residents of Ventura County, California have died so far from Covid. That’s 0.002% of the population.

Most places would consider this a rounding error. But in Ventura County, it’s 19 too many.

So the county government has now launched a ‘contact tracing’ initiative to hire 50 investigators, and perhaps more later, to track down people who might have Covid, “immediately isolate them,” and then “find every one of their contacts” to isolate those people as well.

They also state that, if someone has Covid and is living in a home with other family members, “we’re not going to be able to keep the person in that home. . .”

This is a mass surveillance apparatus that effectively amounts to a snatch-and-grab. You get a knock at the door and are forcibly removed from your home and taken away from your family because some county bureaucrat traced you to someone who might have the virus.

It’s like “pre-crime”, but even more ridiculous… I mean, look at the words they’re using– it’s up to the government now to decide who gets to stay in their own private property with their families.

Click here to watch it yourself.

Seattle City Councilmember calls for nationalizing Amazon

Kshama Sawant is a member of the City Council of Seattle, and a proud Socialist.

She recently took to Twitter to criticize Amazon, one of the most popular whipping boys of the Bolsheviks:

“The super-rich are out of touch with the reality they inflict on the majority of humanity. They will ruthlessly extract the price of this pandemic recession from workers, unless we fight back. #TaxAmazon.”

When a Twitter follower under the handle @KarlMarxJunior suggested, “How about #NationalizeAmazon?” Sawant responded:

“Yes, corporations like Amazon need to be taken into democratic public ownership, to be run by workers for social good. We will need militant mass movements, strike actions at workplaces, to begin to fight to win this. Because it will be a political strike against billionaires.”

Click here to see the Twitter thread.

Undercover cops arrest women for working from home

Recently we told you how police departments in many cities across the Land of the Free were adopting new policies to NOT arrest people for petty or victimless crimes. 

The idea was to keep jails from being overcrowded petri-dishes which would spread Covid-19.

And some Texas cities were among those easing up.

But not Laredo, Texas.

Officers received an anonymous tip that two women were committing a heinous crime: doing nails and eyelashes from their homes.

In an undercover sting operation, police officers caught the two women attempting to market and sell their services.

Police charged the women for a violation of the lockdown order, and held them in jail on $500 bond each.

This is the new criminality in 2020: women painting nails in their own homes.

Cities with strained budgets are wondering how they are going to get through the economic devastation caused by the lockdowns. Revenue is drying up.

And THIS is how cities use their scarce resources– to stake-out and arrest women for giving pedicures.

Click here to read the full story.

Nashville Mayor wants to hike property taxes 32% in “crisis budget”

The “crisis budget” plan of the mayor of Nashville is to cut spending, and raise taxes.

Now that the hard times have hit, governments will take more, and give you less.

Nashville was overspending and racking up debt in the best of times. And now that the economy is locked down, the city expects to miss out on $470 million of tax revenue over the next year or so.

For homeowners, that means a property tax increase of about $625 per year on a $250,000 house.

“In the end, hard, hard decisions have to be made,” the Mayor said. “Everybody is sacrificing in this budget.”

But it’s hard to see where the city is making sacrifices.

The new budget doesn’t lay-off any city employees, and in fact increases spending from last year by $115 million.

Click here to read the full story.


from Sovereign Man