Category: simonblack

In a move almost destined to prove that laws and policies have absolutely zero meaning, the European Union released a list of “tax havens” last week… with a massive, giant, highly conspicuous omission.

The blacklist contains the names of the usual suspects– Panama, United Arab Emirates, etc., along with a few additions like Mongolia and Marshall Islands.

But, again, conspicuously missing from this list is far and away the biggest tax haven in the world– none other than the United States of America.

It’s hard for US taxpayers to imagine the Land of the Free being a tax haven.

Americans are taxed heavily on ALL of their income, no matter where in the world they live.

Americans are taxed when they earn, when they save, when they spend and when they die.

And yet, for non-Americans, the US is a treasure trove of tax-free anonymity.

Non-Americans can register completely anonymous corporations and LLCs in nearly every state in the US, with some of the stronger jurisdictions being Delaware, Nevada, Wyoming, New Mexico and South Dakota.

And their name need never appear, ever, on any of the documents.

They can establish bank accounts and brokerage accounts with those anonymous corporations. They can purchase real estate with those anonymous corporations.

Moreover, non-Americans can easily establish bank and brokerage accounts overseas, and use their anonymous US companies to engage in business all over the world.

And in many cases, non-Americans can generate unlimited capital gains on their stock and bond investments and pay absolutely zero tax to Uncle Sam.

It’s a hell of a deal, far better than what the countries on the EU blacklist offer.

The EU’s list is supposed to call out a handful of nations for refusing to comply with international tax reporting and information sharing agreements– most notably the worldwide “Common Reporting Standards” (CRS) that came into effect last year.

CRS is basically a worldwide information-sharing agreement about taxes, banking transactions, and business activity.

Dozens of countries have signed up for it.

What’s totally bizarre is that a number of jurisdictions on the EU’s blacklist are already reporting, or scheduled to begin reporting, in accordance with CRS.

Panama and Marshall Islands, for example, will begin reporting in 2018. South Korea, which also made the EU blacklist, has already started reporting.

The United States, on the other hand, is not signatory to CRS, and the US government has stated it has zero intention of joining CRS.

And yet South Korea is on the blacklist and the US is not.

These lists are completely meaningless… the whole exercise is a wasteful farce.

Even the premise is deeply flawed. These EU bureaucrats are so terrified that an individual somewhere in the world might actually be able to exercise some financial privacy.

But they can’t handle that. They turn apoplectic at the thought of not being able to know everything you’ve ever done with your money.

They’re also hell bent on taking as much of it for themselves as possible.

Rather than trying to attract talented entrepreneurs, investors, businesses, and workers with low taxes and friendly government regimes, they terrorize everyone with higher taxes and increasingly socialist policies.

It’s not working.

Nearly a decade after the financial crisis, Europe still has appallingly high youth unemployment rates (roughly 40% in Greece, Italy, Spain) and banking systems that teeter on failure.

But a clear track record of failure has never stopped self-aggrandizing politicians from trying the same thing and expecting different results.

The end game of this insanity is that the EU now blames other countries for the failures of its own idiotic policies.

It’s all quite pathetic.

The good news here is that very little will really change.

Some of the countries on the black list may modify their tax codes to appease EU bureaucrats.

But some of the best tax strategies in the world won’t change in the slightest.

Bear in mind, there’s absolutely nothing wrong with taking legal steps to reduce the amount of tax that you owe. On the contrary, it’s just good sense.

US judge and legal philosopher Billings Learned Hand summed it up best when he wrote,

“Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.”

And regardless of the EU’s temper tantrum, there are still countless ways for businesses in the 21st century to slash their tax bills.

One of them is Puerto Rico’s Export Services Act, also known as Act 20.

I’ve written about this a number of times– it’s an incredibly attractive law that allows all sorts of businesses to domicile in Puerto Rico with a corporate tax rate of just 4%.

This applies to industries ranging from various online businesses to consulting services, financial services, marketing services, and much more.

And ANYONE can realize these benefits, regardless of whether or not you’re a US citizen.

As a US territory, Puerto Rico isn’t on anyone’s blacklist.

And even despite all the misfortune the island has endured over the past year, the government there is doubling down on the tax incentives… and recently expanded a number of programs to make them even more attractive.

Puerto Rico may prove to be a fantastic option for your existing or prospective business; I’ve even structured one of my businesses there, and we’re looking at setting up another one there too.

These tax incentives are real… and could legally save you tens of thousands… hundreds of thousands… even millions per year.

That level of savings can have an enormous impact on your life, and it’s worth considering.

If you’re interested in learning more about it, we’ve created a report that explains the tax incentives in greater detail and tells you how to get started reducing taxes in Puerto Rico.

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Recently a group of archaeologists and anthropologists published a really interesting, comprehensive study of prehistoric civilizations and their sources in wealth.

It turns out that the most prosperous people and civilizations across ancient history– and I’m talking 10,000+ years ago before any recorded history– were those who harnessed new technologies to become more productive.

Back then it was all about agriculture.

And while it all seems so simple and obvious to us now, the use of large animals like horses and oxen to plow fields was considered game-changing technology for these prehistoric tribes.

The researchers surveyed data across a number of civilizations and found a much higher level of prosperity in places that used animals, versus places where farmers plowed their fields by hand.

The use of animals was a huge multiple of human labor, so farmers could extend their fields far beyond what was ever thought possible… and hence produce a massive surplus of food.

Moreover, they soon discovered that animal manure was an effective fertilizer that only enhanced crop yields.

More volume, more efficiency, higher yields… precisely the results that great technology produces.

Quite simply, the people and civilizations which embraced and used the technology prospered. Those who didn’t got left behind.

We’ve seen this over and over again throughout history. The printing press. The advent of machinery in the Industrial Revolution. The emergence of the microchip. The Internet.

Now it’s the technology behind cryptofinance which absolutely has revolutionary power to disrupt the existing financial system.

Think about it– every single financial function that banks currently monopolize, from deposits to lending to money transfers and currency exchange, can already be done better, faster, and cheaper outside of the banking system.

Banks take days to transfer funds. Blockchain transactions take an hour, maybe minutes… sometimes seconds.

Banks charge exorbitant fees to change from one currency into another, as if they have to put a ton of work into finding a buyer for their customers’ euros and US dollars. Give me a break.

Online platforms can do it at practically no cost.

Banks also charge exorbitant fees to make loans; it’s pretty standard for borrowers to pay at least a 1% to 3% origination fee up front, before you start paying interest.

Yet Peer-to-Peer sites squash these costs down to almost nothing.

Banks no longer have a competitive advantage in finance, and it’s only going to get worse for them.

The technology is powerful and game-changing. And again, those who don’t adapt will be left behind.

On the flip side, it’s obvious that a lot of people have made a lot of money in cryptocurrency.

And that’s great. Plenty of money has been made… and there may likely be plenty more money to be made speculating in the cryptocurrencies themselves.

But the big money has always been made by the folks who were on the forefront of developing the technology and applying it to bigger and bolder uses… NOT speculating on price volatility.

Back in ancient times, once people discovered that horses and oxen could multiply the labor of human beings, there were probably plenty of traders who made money speculating in animal prices.

But the real wealth was made by people who applied that new ‘technology’ to bigger problems and fundamentally changed the way their societies did business.

This will very much be the case with crypofinance.

The real prosperity isn’t in chasing the Bitcoin price higher, and certainly not in the latest ICO craze.

The real prosperity will be for the visionaries, entrepreneurs, and investors who back them– those who develop this technology and apply it in ways that fundamentally change the way we engage in finance and commerce.

So if you feel like you ‘missed’ Bitcoin, don’t worry: we’re just at the beginning of this phase… you haven’t missed anything.

In fact we haven’t even begun to scratch the surface of those application opportunities.

And the wealth and value that will be created from them will absolutely dwarf all the gains made in crypto so far. We haven’t seen anything yet.

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My colleague, Sean Goldsmith, just returned from a tour of the Caribbean.

He met with several local governments about their ‘citizenship by investment’ programs – a way to receive a passport by donating money or investing in local businesses or real estate.

If you have the means, this is probably the quickest and easiest way to obtain a second citizenship.

We’re exploring ways for Sovereign Man readers to get a special deal on these citizenships… and hope to make a major announcement on that front early next year.

In today’s podcast, Sean updates us on his travels and discussions with the government. And we discuss why everyone should want a second passport… especially today.

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It’s that time of year again– the time when everyone seems to be channeling his or her inner Nostradamus, peering into the crystal ball, and making predictions about what we’re going to see next year.

There’s a great quote that’s often mis-attributed to Mark Twain: “Predictions are hard, especially about the future.”

(The source of the quote is actually an old Danish proverb… though like a number of witty sayings, Twain somehow manages to get credit for it.)

It’s absolutely a true statement; the best we can do is look at big picture trends to understand the direction of where things are headed. But the detailed outcome and timing are anyone’s guess.

Having said that, I do tend to enjoy Saxo Bank’s annual “Outrageous Predictions”, if nothing else for the sheer entertainment value. It also tends to be quite thought-provoking.

Saxo just published its 2018 edition, and I thought I’d share a few with you:

1) Bitcoin collapses to $1,000

I thought this one was interesting, first and foremost, because Saxo hit the proverbial nail on the head last year in its “Outrageous Predictions for 2017,” in which they said

“we could see Bitcoin easily triple over the next year going from the current $700 level to +$2,100.”

Well, they were almost right. Bitcoin not only reached $2,100, but ripped past four figures entirely and is now hovering around $14,000 as I write this.

Saxo now predicts that, in 2018, Bitcoin will peak at $60,000 with a market capitalization of more than $1 trillion, after which a number of governments will engage in a coordinated attack to prohibit all cryptocurrencies.

Simultaneously, governments launch their own blockchains and cryptocurrencies, and Bitcoin crashes to $1,000.

2) The Federal Reserve loses control

Saxo predicts that the US economy begins to suffer in 2018, and the bond market begins to melt down. This results in a massive spike in interest rates, which the US government cannot afford.

Fearing for its own solvency, the Treasury Department assumes emergency powers to cap interest rates at 2.5%

Meanwhile, “[t]he hapless Fed will be scapegoated by politicians for the economy’s weak performance, a bond market in vicious turmoil, and the aggravation of already worsening inequality brought on by years of post-global financial crisis quantitative easing.”

3) China launches its own “petro-renminbi”

You may have noticed that oil prices, almost everywhere in the world, are quoted in US dollars.

Whether you’re talking about a barrel of oil drilled off the coast of Brazil, Saudi Arabia, Canada, or Norway, the price is nearly invariably quoted in US dollars.

This means that anyone who buys and sells oil– from foreign governments to multinational corporations– transacts in US dollars.

Given that oil is the #1 most traded commodity in the world, this relationship is an ENORMOUS boost for the US dollar. It effectively forces most of the world to hold and use US dollars if they want to use oil.

In economics this idea is known as the petrodollar. And the US has even gone to war to protect it.

But Saxo predicts that in 2018, China will launch its own Petro-renminbi (doesn’t have quite the same ring to it…) meaning that the Chinese government will establish an oil contract that’s quoted and settled in their own currency, not US dollars.

This would be an enormous deal… a major departure from decades of precedent and a huge blow to the dominance of the United States.

Saxo has a number of other predictions for 2018, some of them highly entertaining. You can read the full list here.

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Last weekend while I was in Denver, I had the opportunity to speak with a young man from the Netherlands who was attending our charity event.

It was his first trip to the United States, and I’m always interested to hear people’s first impressions.

He told me he was really overwhelmed with the size and scale of everything. China is about the only other country in the world that does everything as big as the US.

He also told me he couldn’t get over how much stuff there is to buy in the US… and how easy it is.

He’s absolutely right. The US is an amazing place for a number of reasons; it’s modern, generally safe, and boasts a high standard of living.

And, yes, as a consumer, it’s one of the best places in the world.

(Though I would suggest that there are parts of Asia that are even better; Hong Kong, for example, has a similar selection of goods and services from all over the world, yet ZERO tax.)

You can buy just about anything you want in the US, and with so many retailers competing for your business, the service, ease, and efficiency of buying anything is nearly unparalleled.

The US economy is almost DESIGNED for consumption. And, while convenient, this is a pretty bad thing over the long term.

Real wealth is created, and sustained, through production. Not consumption.

This isn’t exactly rocket science– our ancient ancestors figured this out 10,000+ years ago during the agricultural revolution.

They learned that, in order to survive and prosper, they had to produce more food than they could consume.

I call this the Universal Law of Prosperity. And if our ancestors hadn’t followed this principle, none of our modern civilization would exist today. We’d still be cave men, hunting and gathering for survival.

But the Universal Law of Prosperity is no longer the law of the land in the US.

Any high school economics student knows that 70% of US GDP is comprised of consumer spending. The common refrain that ‘the US consumer drives the economy’ is absolutely true.

Early in its history, the United States was a producer economy. Americans made stuff. Exported it. Saved their money. And reinvested.

Most of the country’s wealth and economic dominance was established in those early years.

Things started to change after World War II.

The US dollar had just become the global reserve currency under the new Bretton Woods system, and the US economy had become the world’s most dominant and powerful.

Americans began spending their newfound wealth, and soon the rest of the world grew to depend on the insatiable appetite of the US consumer.

Entire nations began basing their economic models on exporting to the US.

US consumption kept growing… at all levels. Individuals started spending far more than they earned.

The US savings rate plummeted, and even reached NEGATIVE territory for a number of years. Household debt ballooned as Americans borrowed money at record levels to buy more stuff.

The government did the same. The national debt exploded as bureaucrats squandered the public’s savings in almost legendary exploits, from that infamous $2 billion Obamacare website to the 6+ trillion in fake accounting at the Defense Department.

Ultimately it’s all consumption; the entire economic system is effectively milking the wealth and prosperity that was created in the past, like a trust fund baby that blows through his family’s fortune.

And while it’s really great to be a consumer in the US, it’s becoming more difficult to be a producer.

Case in point– according to a recent study by the Institute for Justice, about 1 in 4 workers in the US now requires some special government license. That’s up from 1 in 20 workers back in the 1950s.

Many of these are in low income, blue collar professions. And much of the time the requirements are totally irrational.

The average time required to qualify for a barber’s license, for example, is 415 days. For an interior designer, it’s an unbelievable 2,190 days.

These licenses don’t exactly make the world a better place; they’re mostly just bureaucratic obstacles that make it more difficult for lower-income workers to be productive.

We’re also seeing worrying trends with consumer debt, which is now at an all-time high.

This essentially means that Americans are borrowing from the future in order to buy stuff today, and doing so at record levels.

Credit card debt is at an all-time high. Auto loans are at an all-time high. Delinquencies (i.e. people who aren’t paying their loan balances) are RISING.

And the savings rate is once again plummeting, down to its lowest level in more than a decade.

On top of that, the US trade deficit continues to grow, all while the federal government massively outspends its income.

The national debt is now $20.5 trillion, and overall debt growth far exceeds GDP growth.

Oh, and the government is staring at yet another debt ceiling / government shutdown debacle in just 48-hours.

This time is not different. History is full of examples of formerly wealthy, prosperous nations which fell into terminal crisis because they favored a system built on debt and consumption, rather than savings and production.

I don’t want to suggest that this is an imminent crisis. It’s not.

But it is a troubling, high-impact, long-term trend. And it’s worth ensuring that you have a backup plan.

If all of your assets and all of your income depend exclusively on a heavily indebted nation with a bankrupt government continuing to persist forever without any consequences, you’re probably taking some unnecessary risks.

A good plan B involves simple, rational, legal, cost-effective (or often FREE) steps to ensure that you’ll always have a good option, no matter what happens (or doesn’t happen) next.

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While I was off at an annual charity event over the last several days, a few members of my team were dispatched through the Caribbean to meet with government officials at various island nations about their passport programs.

These programs are known as economic citizenship programs, and they allow a person to obtain official citizenship, along with a passport, by donating money or making a financial investment in the country.

One of my senior analysts wrote me from St. Kitts today.

If you haven’t been, it’s an island in the West Indies nestled between the Caribbean and Atlantic Ocean. He’s there looking to secure special terms for Sovereign Man readers.

St. Kitts has the most established citizenship program in the Caribbean.

It began in 1984 and has never been suspended (unlike some other Caribbean nations).

Although it hit a rough patch in 2014 when the Financial Crimes Enforcement Network (FinCEN) warned US banks not to work with individuals holding passports from St. Kitts and neighboring Nevis.

FinCEN essentially labeled St. Kitts as a harbor for terrorists because several Iranian nationals were granted citizenships.

In addition to those accusations, there was also lots of fraud surrounding the part of the program that deals with real estate investment.

One of the options in St. Kitts is that foreigners can buy real estate, which will qualify them for a passport.

And in the past, a number of developers would often skip town with escrowed funds before the project was completed.

Back then, I predicted the government would implement some serious reforms to shake the reputational damage. And that’s exactly what happened.

This morning my team met with a high-ranking government official who explained how much the program has changed since then.

There are a number of due diligence procedures to ensure that citizenship won’t be granted to criminal types who could tarnish the program.

Plus there are stricter controls to safeguard investors’ funds.

Most importantly, though, St. Kitts citizenship has also become a lot cheaper.

St. Kitts used to charge a non-refundable $250,000 donation to its Sugar Industry Diversification Foundation (or a $400,000 investment – plus fees – in an approved real estate project).

Sugar used to be St. Kitts’ main export, but the government stopped producing it in 2005 due to declining profitability; the donation helps plug the financial gap left by the closure of the sugar industry.

But in September, the island announced the Hurricane Relief Fund and lowered the price of citizenship to $150,000.

(Several other islands also lowered the cost of citizenship because of the hurricane, and my team is visiting all of them to arrange the best deal.)

The real estate investment in St. Kitts remains at $400,000 plus fees… and you’re allowed to sell your real estate after five years.

Most of the qualifying real estate in St. Kitts costs a LOT more than $400,000, though.

My team visited one project where the minimum price for a lot (excluding a house) runs $750,000.

It’s extremely nice, and there was a giant super-yacht parked in the marina.

But these types of projects seem quite expensive if the primary goal is to obtain a passport… which is why we’re excited about the major discounts these governments are offering on citizenship.

Of course, economic citizenship is only one way to obtain a second passport.

You can also get one at almost no cost if your ancestors came from certain countries – like Italy or Ireland, for example.

As a travel document, a European Union passport is much stronger than just about any Caribbean passport.

Plus it gives you the right to live and work in 28 countries. You might never want to, but it’s always nice to have a free option.

And if you’re unable to find any ancestors in your family tree, another path to a second passport is to obtain legal residency in a foreign country and apply for naturalization after a few years.

Note that obtaining legal residency isn’t the same as actually moving there.

In some countries, it’s possible to maintain your residency status by only visiting once every year or two.

We have a full report on the best ways to get a second passport right here.

I’ll continue to update you about my team’s travels through the Caribbean.

And I hope to share some exciting news regarding second passports with premium members soon.

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Over the weekend in Denver, my friends and I hosted an annual charity event– a sort of business and investment bootcamp that ended with around $100,000 worth of toys being donated to kids in low-income families.

It was a lot of fun, and I really want to thank the dozens and dozens of our Total Access members who came and participated.

At the bootcamp portion on Friday, we covered a number of different business and investment topics ranging from marketing, execution, tax structuring, intellectual property development, hiring key employees, and cryptocurrency.

As you can imagine, the cryptocurrency lecture received the most interest– it seems to be on everyone’s minds right now.

After walking the crowd through the basics (what are cryptocurrencies, where do they ‘exist’, how does ‘mining’ work, how do you store them, are they secure, etc.), we turned to the obvious issue: value.

How can a string of digits generated from a piece of software possibly be worth $12,000?

The answer lies in basic economics: supply and demand.

The value of anything, whether it’s a piece of art, high rise condominium, ounce of gold, expensive watch, etc. is based on supply and demand.

This goes for conventional currencies as well– which, by the way, are almost entirely digital.

To give you an example, the current supply of US dollars is around $13.7 trillion. Yet only about 10% of that amount consists of paper currency and physical coins.

The rest of the US dollar money supply exists merely as digits in electronic bank databases.

When you log in to your bank’s website and check your account balance, for example, it’s not like there are a bunch of pieces of paper sitting in the bank vault with your name on it.

Dollars, euros, yen, renminbi, Swiss francs– they’re all essentially digital currencies. They just happen to be controlled by central banks.

As such, the supply of these currencies goes up and down on a regular basis based on whether or not the central bankers want to create more money.

They could wake up tomorrow and decide to conjure trillions of dollars into existence– which is pretty much what happened during the 2008 financial crisis.

A currency’s demand, on the other hand, is based on several factors: the number of users, the number of ‘nodes’ where the currency can be used to pay for goods and services, confidence in the currency, etc.

The US dollar has hundreds of millions of users, and hundreds of millions more places where you can use them, from the coffee shop next door to the government tax office.

Dollars also have an unparalleled reputation as the world’s dominant reserve currency, plus it’s viewed internationally as a major safe haven.

In a sense, it might seem silly that these green pieces of paper (or the digital representations of those pieces of paper) have any value…

… that we can trade digital or paper dollars that can be created at will by unelected bureaucrats for products and services that we dearly need or desire.

And yet, dollars have value.

It’s similar with Bitcoin (and other cryptocurrencies), but with a few key differences.

Most importantly: Bitcoin supply is FIXED. There is no central bank of Bitcoin that can conjure more out of thin air.

There will only be 21 million total bitcoins… ever.

So, over the long-term, Bitcoin’s value fundamentally has to be about its demand.

Will there be more cryptocurrency users in the future, or fewer? Will there be more businesses that accept payment in cryptocurrency, or fewer? Will there be more transactions in cryptocurrency, or fewer?

If you believe the answer to those questions is ‘more’, it stands to reason that future demand will drive the price higher over the long-term. And there’s certainly a good case to be made that this will happen.

But bear in mind that nothing goes up or down forever in a straight line, including cryptocurrency.

Bitcoin has been extraordinarily volatile. And this is also about supply and demand.

As the price rose this year from $1,000 to $2,000 to $5,000 to $10,000, a lot of people who missed out started to buy Bitcoin in a panic.

Coinbase, the world’s largest crypto brokerage, added more than 100,000 new accounts on Thanksgiving alone, and nearly 10 million new accounts over the last 12 months.

But at the same time, the number of people willing to sell Bitcoin is pretty low.

Think about it: if you own something that seems to be going up 10% per day, would you sell?

Maybe a little bit.

But a lot of folks are tempted to keep their Bitcoin, believing that, with such incredible momentum, the price will double again by next month– why sell today when you can sell later at twice the price?

With this view in mind, there are few sellers… combined with a LOT of buyers.

This is the primary reason why the price has been soaring higher.

It’s reflexive: The higher the price goes, the more people want to buy it… and the less people want to sell it… which drives the price even higher… and the cycle continues.

We concluded the remarks by encouraging the audience to stay rational. If you want to buy Bitcoin at $12,000 (or any price), it should be based on a rational, objective assessment of the long-term demand.

Don’t buy because you’re in a panic that you missed out.

I hear this from people who feel that they missed a ‘once in a lifetime opportunity.’

That’s baloney.

Speculators like Kyle Bass made billions shorting the housing market in 2008.

Investors who used conservative leverage to bet against the British pound prior to Brexit in 2016 made a 10x return in less than a month.

Crypto has been a great opportunity, and may continue to be so.

But if you feel like you missed it, and/or you’re not willing to speculate at this price, never forget that there will ALWAYS be other great opportunities out there.

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The same day Bitcoin cracked its all-time high above $11,000, the government dealt its first blow to the crypto world…

On Wednesday, a federal judge in San Francisco ordered the popular Bitcoin exchange, Coinbase, to provide the IRS with information on over 14,000 account holders.

The taxman noticed that only 800-900 people reported gains related to Bitcoin in each of the years between 2013-2015. It seemed unusual given Bitcoin’s meteoric rise.

So the IRS went for its pound of flesh.

Initially, the government wanted complete data on every Coinbase user that transacted between 2013 and 2015. The exchange’s website says it has 13 million users (more than the number of Schwab brokerage accounts).

But Coinbase pushed back… and the government agreed to only take limited data (including name, date of birth, address, tax ID number, transaction statements and account logs) for accounts that have bought, sold, sent or received at least $20,000 worth of Bitcoin in a given year.

Don’t say I didn’t warn you about Coinbase. I told Sovereign Man: Confidential readers last month:

If you’re tempted to purchase Bitcoin from the popular Coinbase exchange, don’t bother.

They’ve sold out to regulators.

The IRS is calling this a “partial win.”

But you can be sure, there will be a public beheading. This is something governments almost always do.

They’ll find a prominent Bitcoin person, someone that’s polarizing to the public – like “pharma bro” Martin Shkreli.

It will be a very public trial… and they’ll throw his ass in the slammer.

Government’s always do this because they want to scare people.

Kim Dotcom is the perfect example. Kim founded the popular file-sharing site Megaupload.

The government wanted to stop illegal downloads, so they raided his guy’s house in New Zealand for violating US law.

The government also does this for taxes… everything, really.

Look at Wesley Snipes. The IRS accused him of felony tax evasion. He spent three years in jail.

They had to take a celebrity and throw him in jail to scare everyone else.

Back to Bitcoin…

Now that it’s at all-time highs, the government wants its piece.

I read the 400+ pages of the proposed tax code. How many lines in there do you think deal with cryptocurrency? ZERO.

How many lines deal with e-commerce? ZERO.

The government had every opportunity to set the rules for the 21st century. And they failed miserably.

So the rules remain as clear as mud.

Instead of trying to make it clear, their tactic is intimidation, force and coercion.

This is just the beginning. There will be more.

And my advice is don’t be one of those guys.

Every transaction that you make in Bitcoin is potentially a taxable event.

Let’s say you bought Bitcoin for $1,000 and after it went to $10,000 you buy a business class trip to Australia for $10k. When you pay the airline with one Bitcoin, you’ve just triggered a taxable event.

The IRS would say that you essentially sold your Bitcoin, have a $9k gain and used those proceeds to buy the ticket.

Which means you owe the IRS capital gains tax on $9k, which is 20% plus the Obamacare surcharge.

So, don’t be that guy. If you’ve been doing this, trust me, you don’t want the IRS find out.

You’d rather come forward yourself and disclose it and pay taxes… Rather than be the next Martin Shkreli.

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As a world traveler and investor, I always try to find markets where there’s a huge difference between the ACTUAL risk and the PERCEIVED risk.
And this risk assessment applies not only to investing, but also to entire countries.

Mexico is a great example.

Sure, Mexico has some serious problems. Crime. Gangs. Drugs. Corruption. Tensions with the US over illegal immigration and American jobs.

But did you know that more Americans applied for residency in Mexico than vice versa over the past few years?

Do these Americans know something others don’t?

Maybe they know a foreign residency opens opportunities you otherwise wouldn’t have. A foreign residency gives you more options for work, business, investments, travel and living. It’s one part of a Plan B… in a location where you like spending time.

And residency in Mexico could be a solution for you.

Mexico’s story is more complex than what’s presented in the news. The country offers a lot more than its northern states where the drug war rages… and where the US media focuses all its attention.

The situation in the Yucatan peninsula – my favorite place to visit in Mexico – is different. The state of Yucatan has the same violent crime rate per capita as peaceful Wyoming.

If you feel safe living in Wyoming’s capital of Cheyenne, you should be comfortable living in Merida, a charming colonial city and capital of the Yucatan state.

And the neighboring state of Quintana Roo (the home of Cancun) is nearly as safe. The violent crime rate per capita here is comparable to Alaska.

So, with safety largely a non-issue in this part of Mexico, the Yucatan’s rich culture and great weather offers Americans another benefit: Inexpensive living. Today you can cut your cost of living at least by half after moving from the US to Mexico… and much more if you’re abandoning high-cost, high-tax New York or California.

And in the past two years, this inexpensive Mexican lifestyle reached a new level.

Since 2014, the Mexican peso depreciated ~50% versus the US dollar, making those spending US dollars there much richer.

During my recent trip to the Yucatan peninsula, I paid $7.50 for a delicious brunch in trendy Tulum. And I spent less than $10 in the best restaurants of Merida. A room at the Merida Hyatt only cost about $85 a night.

Car rental prices are almost a joke. I paid $50 for a four-day rental for a mid-sized car, insurance included. I imagine the car’s value depreciated more than that during my relentless driving spree.

And Mexico always has a strong US-feel. You see full-size SUVs and pickups everywhere. They have Walmart and Home Depot, where you can buy the exact same stuff as in the States.

For Americans, there’s more than Mexico’s combination of familiarity, inexpensive living, and proximity.

Gaining Mexican residency is also easy. It especially makes sense if you are already retired.

In most countries, the process of obtaining residencies (and eventual citizenships) looks like this:

1) Temporary residency
2) Permanent residency
3) Citizenship

But Mexico is one of the few places in the world where you can skip the first step entirely and go straight to the second (permanent residency) if you are officially retired and can demonstrate your creditworthiness.

The key is to prove you are retired. You can do it with a letter from US Social Security office, retirement letter from your job, etc.

And the most amazing part? You complete ~95% of the process in a Mexican consulate near your home. You won’t even have to set foot in Mexico until you know you are approved.

(Not retired yet? You will be fine too – there is a more conventional way to obtain temporary residency that’s available to just about anyone.)
And Mexican permanent residency is a great asset.

As a permanent resident, you can come and go without any restrictions. You don’t need to apply for additional permissions to invest and work in Mexico.

Also, your permanent residency card does not expire, and there is no need to renew it. Once you have it, it’s yours to keep.

Your permanent residency is indeed permanent, unlike in many other places (Chile, Panama…), where the government expects you to visit the country occasionally to maintain it.

And yes, this short-cut permanent residency can lead to Mexican citizenship.

Today, Mexico is a tremendous residency opportunity that should be on your radar.

Due to the pesos’ depreciation, prices in Mexico remain very low today. But I don’t expect it to last – the peso already gained back more than 10% versus the dollar in the last few months.

Don’t let your dreams of an ultra-cheap residency disappear.

It’s best to act now.

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Another day, another major banking scandal. It’s getting to the point where you can practically set your watch to these things.

The latest once again involves our old friend Wells Fargo. The Wall Street Journal reported last night that Wells has been screwing its customers on foreign currency exchange rates.

According to the Journal, Wells Fargo conducted an internal review of its fee arrangements and found that they had massively overcharged 88% of the sampled customers.

For example, the bank might have signed a contract with a customer to charge 0.15% on foreign currency transactions, but instead charged as much as 4%… about 26x higher than agreed.

It’s absurd to begin with that a bank would charge even a small percentage-based commission on foreign currency transactions (much less 4%), especially given that most of the transactions were to exchange euros and US dollars.

Sure, commissions are common in many industries.

When you list your house for sale, for example, your real estate agent receives a commission when s/he finds a buyer and closes the deal.

Real estate commissions often range between 2% to 6%. But agents earn this money because houses are big, illiquid assets, and it often takes a lot of time and work to close a sale.

But Wells Fargo has been charging huge commissions on buying and selling MONEY.

The foreign exchange (FOREX) market trades around $5.3 trillion each day (compare that to about $200 billion for US equities). That makes the US dollar / Euro trade literally one of THE most popular financial transactions in the world.

Billions upon billions of dollars and euros are exchanged every single business day of the week, around the clock, through electronic trading platforms.

It’s not like some currency trader at Wells Fargo ever had to lift a finger trying to find a buyer for his customer’s euros.

Anyone who has ever traded FOREX knows that it takes a fraction of a second to buy/sell major currencies.

There’s zero work involved on Wells Fargo’s end. Yet they charge a steep commission as if they have to put in all sorts of time and effort to buy and sell currency. It’s ridiculous.

But even worse, the bank formally agreed with its customers to charge a set fee. And then they totally violated those promises simply because it suited their interests.

How utterly, completely pathetic.

Bear in mind, this is the same bank that was caught creating fake accounts and charging fees to unsuspecting consumers without their consent, also because it suited their interests…

… and that this is an industry that has a track record of constantly violating their customers’ trust.

These banks have been caught red-handed illegally colluding to fix interest rates and exchange rates.

They have manipulated asset prices and knowingly sold their customers toxic assets.

They have invested their customers’ hard-earned savings in astonishingly stupid, no-money down loans to borrowers who had no hope of repaying the debt.

They use every accounting trick in the book to misstate their true financial condition, including the utter farce of carrying Volker Rule assets on their books at 100 cents on the dollar… or mysteriously reclassifying their bond portfolios in a way to hide losses.

They reward themselves the most magnificent bonuses when times are good.

And when the house of cards begins to fall, they go to the public with hat in hand, claiming that they’re too big and important to lose any money.

Despite taking the public’s bailout money, these banks treat their customers with such contempt and suspicion. They make you feel like you’re committing a crime when you request a cash withdrawal of your own money.

It’s truly remarkable that this industry has any credibility left.

The good news is that it won’t last.

Banks no longer have a monopoly on finance. Technology already makes it possible to conduct just about any transaction you need outside the banking system.

You can deposit and withdraw funds, borrow money, exchange currency, invest your savings, pay bills, send funds transfers, make online payments, etc. with cryptocurrencies, Peer-to-Peer platforms, and various blockchains.

And these technologies are often better, faster, and cheaper than the traditional banking system.

History tells us that technology almost invariably puts entrenched industries out of business.

E-commerce is obliterating traditional retail. Digital media is destroying print media.

And it’s only a matter of time before cryptofinance displaces the banking system.

Whether or not you think Bitcoin is a bubble at $10,000, it’s still worth understanding the enormous potential (and opportunities) of what these technologies can provide.

Because the alternative of dealing with Wells Fargo isn’t that attractive.

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