Category: simonblack

Last week, a group of analysts published an astonishing report about the future of Social Security in the United States, and their remarks were nothing short of damning.

According to their calculations, for example, these analysts claim that Social Security is already running a huge deficit to the tune of tens of billions of dollars each year.

In fact, this Social Security funding deficit has been taking place for several years now, and it’s actually accelerating. So the problem worsens each year.

According to the analysis, the astounding rise in Social Security recipients vastly outpaces any growth in tax revenue received into the program. And this trend will continue for decades.

The report goes on to describe Social Security’s two main trust funds, OASI (for ‘Old Age Survivors Insurance’) and DI (‘Disability Insurance’).

They tell us that DI actually went bust several months ago.

But rather than attack the root cause of the problem and restructure the program, Congress quietly slapped a band-aid on DI by simply diverting funds from OASI, just enough for DI to limp along for a few more years.

So in other words, they robbed from OASI to pay DI, and keep it afloat through the next presidential election. It’s incredibly short-sighted.

Among the other programs slammed in this report, the Hospital Insurance (HI) fund, one of Medicare’s major trust funds, is of particular concern.

Their brutal analysis shows HI is going to completely run out of money in 2028, just twelve years from now (when President Clinton finishes her third term).

2028 is actually two years earlier than they had originally projected.

And they project the entire Social Security program will be fully depleted six years later in 2034.

Like I said, this report is incredibly damning.

But it raises an important question– just who are these crazy, fringe analysts predicting all of this doom and gloom?

After all, the political establishment has been telling everyone for years that Social Security is going to be just fine. And they seem to have a solid grip on the situation, right?

Well, the report was actually published by the Social Security Administration itself, signed by (among other cabinet officials) the Treasury Secretary of the United States of America.

It’s absolutely incredible. The government is publishing this data in black and white.

They’re telling anyone who’s willing to listen that Social Security has dug itself into an impossible hole.

More importantly, they’re telling us there’s a 0% chance that the government will be able to honor its existing commitments.

They’ll either have to radically raise taxes, or simply reduce (or eliminate) the Social Security benefits that they’ve been promising taxpayers for decades.

The younger you are, the steeper the price you’ll pay.

If you’re in your 60s, for example, you may likely see your benefits cut. If you’re in your 40s or 50s, you can count on it.

And if you’re in your 30s or younger, you can not only forget about Social Security, but you can expect to pay more and more taxes to bail out a program that won’t be there for you when it comes time for you to collect.

This is what happens when nations go bankrupt.

History is full of so many examples of dominant powers who think their wealth will last forever… and so they make far too many promises to far too many people for far too many years.

But eventually the reality of simple arithmetic catches up.

(As we discussed yesterday, arithmetic is slowly dying off in the Land of the Free, so perhaps this explains a thing or two).

We’re seeing this now in the US, and we’ll continue to see this problem worsen in the coming years until it becomes a full-blown emergency and people cry out, “Why didn’t anyone see this coming?!?”

Here’s the good news: you have ample time to prepare, and there are plenty of solutions to fix this.

Don’t get me wrong– I don’t mean “fix Social Security”. Oh no. That program is toast.

I’m talking about fixing this for yourself.

Retirement is one of those life events that is completely predictable. We know it’s going to happen.

And with a little bit of education, planning, discipline, and execution, we can vastly influence the outcome and prevent any major catastrophe from interfering with our goals.

You can dramatically boost your own nest egg, for example, and have much greater say over your retirement assets by setting up a structure like a solo 401(k) or a self-directed IRA.

(When structured properly, you can contribute potentially north of $50,000 per year to your retirement.)

It also makes sense to invest in your financial education; learning more about investing will clearly be beneficial in boosting your returns, and this can have a profound effect over time.

Especially if you’re younger, increasing your average return by just 1% over the course of 20-40 years can add up to hundreds of thousands of dollars in additional retirement savings.

You may also want to consider retiring abroad where you can live the lifestyle you’ve always wanted at a fraction of the price, and substantially stretch the time and value of your retirement savings.

Look, I’m convinced that Social Security will become a national emergency some day. Just remember that since its demise is conspicuously predictable, the impact on your life is completely preventable.

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In the year 605 AD, Emperor Yang of the Sui dynasty in China formally established what became known as the ‘imperial examination.’

This was a standardized test that public officials were required to take, covering everything from arithmetic to writing to military science.

The idea was to ensure that all public servants were educated and qualified.

This concept grew through the centuries, from the Sui to the Tang, Sung, Yuan, Ming, and Qing dynasties, with each successive leader further refining the exam.

It even lasted into China’s early days as a republic at the beginning of the 20th century, and still persists today in Taiwan.

China has had a very long tradition of placing substantial social value on education.

There was a brief interruption in the 20th century during Mao’s Cultural Revolution in which 100,000+ intellectuals were persecuted and shipped off to labor camps.

The economic effects of this decision to kill off intellect were disastrous, and China impoverished itself for decades as a result.

But today education is back at the forefront of Chinese culture, as it was for centuries.

The Chinese obsess over core subjects, particularly the all-important science, technology, engineering, and mathematics (STEM).

The West is lagging here. Even the US Department of Education claims “few American students pursue expertise in STEM fields,” and “we have an inadequate pipeline of teachers skilled in those subjects.”

It’s also a question of values.

Case in point: two weeks ago, state-supported Wayne State University in Michigan decided to drop the mathematics requirement from its general education curriculum.

Instead, the university’s General Education Reform Committee proposed replacing the mathematics requirement with a mandatory course on diversity.

(It’s amazing that young people will actually take on tens of thousands of dollars worth of student debt for this…)

Across the Pacific, however, the Chinese haven’t reached the point yet where their society places much educational value on 18th century gender studies or the history of pop culture.

Instead, China celebrates real intellectual achievement.

Chinese movie stars take to their social media accounts each year during the annual “Gaokao”, or national college entrance exam, to cheer on the students.

The Gaokao is such a big deal in China that it receives substantial national media coverage, and top-scoring students often attract worshipful devotees and achieve minor celebrity status.

The same applies to the online math and science tutors who help students prepare for the Gaokao.

Many tutors attract millions of social media followers and are routinely recognized on the street like any ‘real’ celebrity.

[And in peak season they can make up to hundreds of thousands of dollars per month!]

Here’s an even starker example:

Stephen Hawking gained two million followers within 24 hours of signing up at the microblogging site Weibo, China’s equivalent of Twitter.

Now’s he’s up to 4.2 million, and climbing. That’s in just two months.

By comparison, he has 16,000 followers on Twitter versus Kim Kardashian’s 46+ million.

It’s not that Hawking isn’t famous in the US or Europe– they did, after all, make a movie about his life two years ago (which did slightly worse in the US market than 2014’s Sex Tape…)

It’s that he has a cult-like, almost movie star status in China, where students actually spend time learning about his theories.

To be fair, there’s obviously incalculable intellect in the West. And it’s not like the Chinese are immune to puerile fanaticism for their movie stars.

The key difference in China is that the celebration of intellect and human achievement as a core social value is on par with success and entertainment.

It’s no longer this way in the West. But it used to be.

When Sir Isaac Newton died in 1727, he was buried in England with the honor and prestige of a reigning monarch.

This shocked visiting diplomats from the Ottoman Empire, where intellectuals were treated with suspicion and censorship.

Unsurprisingly the Ottoman Empire was by then rapidly falling into history’s wastebasket of former superpowers, and the West was on the rise.

Decades ago in the US, Albert Einstein and Jonas Salk were huge celebrities.

Charles Lindbergh was once the most famous man in the world.

And children idolized astronauts in the 1960s, whose fame was so vast they were showered with endorsement deals from some of the biggest companies in the world.

Today, children in the West idolize reality TV starlets who are celebrated for having a voluptuous ass.

And in university, ‘checking your privilege’ is becoming more important in the Land of the Free than achieving fluency in the language of the universe– mathematics.

Just like a ballooning national debt, it’s not hard to get a sense of where this trend leads…

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I’ve never been so happy to be so wrong.

Britain’s referendum on whether or not to stay part of the European Union was marred by some of the most blatant propaganda we’ve seen in the West in a very, very long time.

But… at the end of the day, the British government at least accurately counted the votes. No shenanigans.

“Leave” prevailed. So the UK will officially be leaving the European Union.

This has led to some unprecedented moves in the financial markets.

The pound is at its cheapest level in decades. High quality British companies are now trading for extraordinary discounts.

Investors are panic-selling because they don’t know what’s going to happen next.

Britain has been part of the EU for four decades, and now that’s coming to an end.

Nothing scares people more than their fear of the unknown.

In fact, for decades, the political, media, and financial establishments have been pushing people along a very clear path that they wanted us to follow.

Elections always represented the illusion of choice between establishment candidates and their establishment policies.

This referendum, just like the surge of candidates like Bernie Sanders and Donald Trump, constitute a major revolt.

Simply put, this wasn’t part of the plan. So the system is in complete panic.

This is a huge opportunity, especially for foreign investors who have an unprecedented chance to pick up high quality British assets on the cheap.

I wanted to dive into this, so I rang up my colleague Tim Price, London-based wealth manager and one of the sharpest investors I know.

Tim and I discuss several options in both stock and the currency markets, and he even highlights what investments to avoid.

You can listen in to our call here.

Note: Tim and I cover the following… and MUCH more:

• Will the UK experience a major financial recession?
• The pound has cratered. Is it a buy?
• Sell this currency instead.
• Why the polls are always wrong.
• Will the US dollar remain strong?
• Avoid this entire industry if you’re buying stocks.
• What you want to think about buying… and when.

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On November 11, 1947, Winston Churchill, then ex-Prime Minister of the United Kingdom, rose to speak at a debate in the House of Commons:

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise.

Indeed, it has been said that democracy is the worst form of Government except all those other forms that have been tried from time to time;

but there is the broad feeling in our country that the people should rule, continuously rule, and that public opinion, expressed by all constitutional means, should shape, guide, and control the actions of Ministers who are their servants and not their masters.”

This may be the perfect summation of what democracy is supposed to be.

And western nations– particularly the US and UK– have been champions of ‘democracy’ around the world (though they typically mean ‘republic’).

Now, today the voters of the United Kingdom go to the polls to decide whether or not their country will remain in the European Union.

This is about as democratic as is gets– direct voting by the people to choose their fate.

Or so they claim.

In reality, each side has had a long, drawn out campaign to influence the outcome.

The ‘leave’ leadership has been scaring voters with horrific stories of evil brown people who will infiltrate the United Kingdom should the country remain in the EU.

I mean, I’ve seen more subtle propaganda coming out of North Korea.

Meanwhile the ‘remain’ side has been threatening eternal economic damnation and financial Armageddon.

Most of the political and media establishment falls in the ‘remain’ camp, so this is where the propaganda becomes painfully obvious.

The IMF, for example, published a report recently suggesting that Britain leaving the EU would permanently lower incomes in the United Kingdom.

Really? Permanently?

So if voters choose to leave the EU, then the UK, which traces its sovereignty back more than 1,000 years and once had an empire so vast they ruled the entire world, will never be able to recover forever and ever until the end of time…?

We’re honestly supposed to believe that a few decades within the European Union has irrevocably thwarted Britain’s 1,000 year history in being able to achieve economic growth independently?

Or that Iceland (not a member of the European Union) can do it, but the UK cannot?

Or that a bunch of IMF bureaucrats can see decades, let alone centuries into the future with 100% certainty?

This is such blatant scaremongering, they’re not even pretending to be professional and unbiased. And this is direct from one of the top financial agencies in the world.

Clearly these people truly love democracy and embrace the idea of voters independently determining their own fate.

The British government (firmly in the ‘remain’ camp) has been using taxpayer funds to support its cause, which is really bizarre when you think about it.

If you’re British, even if you want to vote ‘leave’, the government has been using your money to influence your vote in the other direction.

One of the most absurd scare tactics has been telling people that they’ll lose visa-free travel rights to the European continent if the UK leaves the EU.

This is completely absurd.

Nicaragua has visa-free travel to Europe. Paraguay has visa-free travel to Europe. Are we really supposed to believe that Brits will be shut off from the continent?

They’ve rolled out every possible threat, every human emotion, every celebrity they can find, to influence voters.

In fact, these people love democracy so much they even had Barack Obama fly in to explain to British voters why they should remain in the EU.

(Because, of course, Mr. Obama would willingly hand over US sovereignty to a pan-American political commission based in Mexico City…)

Whichever side wins, it’s clear that no one in power gives a damn what voters want.

Despite having waged wars in foreign lands to ‘make the world safe for democracy’ and despite all the song and bombastic speech about your freedom, they have no respect for your right to self-determination, or even their own electoral system.

All they care about is getting their own way.

And they’re willing to engage in the most vile propaganda and blatant manipulation to do so.

This is a pitiful excuse for the democracy they claim to love so much.

And I’m not sure how long a road it is from here, to how Josef Stalin was quoted in his former secretary’s 1982 memoirs:

“Comrades, you know,” said Stalin, “I think that it’s totally irrelevant who votes, and how they vote. It’s extremely important who counts the votes, and how they’re counted.”

I suppose we’ll find out in a few more hours.

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Nothing quite shocks the senses like the colors, smells, spices, and prices of Asian street food.

Some of the tastiest (and most bizarre) things I’ve ever had in my life were consumed on the streets of Asia, for a cost of almost nothing.

From China to India, Myanmar to Malaysia, street food is a great metaphor for this entire region: exotic, deceptively flavorful, and incredibly cheap.

Kuala Lumpur is no exception. Sure, the street food is great. But the city itself is surprisingly well developed.

In fact Kuala Lumpur boats some of the most advanced first world infrastructure in the region. Yet it remains an incredibly cost efficient place to live.

For example, the fairly new KLIA express train that transports passengers between the airport and city center in just 30 minutes (the airport is a loooong way from town) is just as good as the airport express in London and Tokyo. Yet it only costs about 12 bucks each way.

The quality of medical care is very high in Malaysia. But it’s so cheap that this country has become a major destination for millions of medical tourists.

You can also obtain incredibly fast Internet, speeds of up to 500 Mbps. Blazing. It’ll set you back about $75/month, but 100Mbps is only $25. That’s a bargain.

Real estate in Malaysia has also long been one of the best deals in Asia; it’s far cheaper to buy in Malaysia than in Singapore or Hong Kong.

And in many respects it’s cheaper to buy property here than even in Thailand, even though Malaysia is more developed.

What’s more, it’s also possible for foreigners to actually purchase real estate and own title to the property in Malaysia, which is highly uncommon across Asia.

Starting around 18 months ago, the local currency (the ringgit) plunged 33% against other major currencies like the US dollar, NZ dollar, and Swiss franc. So for many foreigners, Malaysia has become even cheaper.

That’s why it may be a good idea to keep this place on your radar– it’s an excellent balance of quality versus price.

Plus the country is diverse enough to provide a range of options; in fact, just outside this sleek, modern capital city, you’ll find gorgeous beaches, imposing mountains, and just about every landscape to suit your desires.

It’s also helpful that the government welcomes foreigners.

Through the Malaysia My Second Home program, for example, people over the age of 50 can receive a 10-year visa by demonstrating basic financial solvency.

This includes liquid assets of RM 350,000 ($87,500) and income of RM 10,000 ($2,500) per month. Plus you may have to deposit RM 150,000 ($37,500) in an interest-bearing local bank account.

The nice thing about this is that your foreign income is not taxable in Malaysia, so it can be quite a tax efficient choice of residency.

Note: the program is also available for those under the age of 50, though the eligibility qualifications for younger people require financial assets of RM 500,000 ($125,000) and a local bank deposit of RM 300,000 ($75,000).

That said– Malaysia is far from perfect and it’s important to understand the drawbacks.

First off, this place is legendary for its corruption, and it starts at the top.

The current Prime Minister Najib Razak was found by an investigative team at the Wall Street Journal to have funneled $700 million from a state-owned investment firm into his personal bank account, or bank accounts of close relatives.

The government also has a history of targeting political opposition groups and expanding its police and spying powers through special ‘national security’ laws.

(Gee, where have we seen that before…?)

So it’s not all cookies and candy over here. This place definitely has challenges, and I wouldn’t commit any serious investment capital here.

But it’s fair to say that foreign residents largely insulated from most of Malaysia’s domestic issues, so as a place to spend time, the cost vs. quality metric still warrants this place being on your radar.

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I’ve always been pretty bad with birthday and anniversaries. Even my own.

So I didn’t even realize until this morning that Sovereign Man actually turned seven years old over the weekend.

Seven years. I can hardly believe it. But it seems even more incredulous to think about how much has happened over the last seven years.

When I sent out the very first Notes from the Field email in June 2009, the world was at the height of the biggest financial crisis since the Great Depression.

Since then, we’ve seen the US government’s debt soar by 70%, and the Federal Reserve’s balance sheet more than double.

We’ve seen the US government caught red-handed spying on EVERYONE, from citizens inside the United States to even their own allies.

We’ve seen an appalling rise in police violence and Civil Asset Forfeiture to the point that the US government now steals more than every thief in America combined.

We’ve seen over half a million pages of new bills, rules, and regulations introduced in the Land of the Free, including some of the dumbest laws of all time like FATCA.

We’ve seen interest rates held down to near-zero in the US, and even slashed to negative territory in Europe, Japan, and many other countries around the world.

We’ve seen entire banking systems go bust, like in Cyprus back in 2013, when the national government FROZE everyone’s savings and implemented severe capital controls to “bail in” the system.

We’ve seen a meteoric rise in the worldwide use of the Chinese renminbi, as well as major, direct assaults against the US dollar’s global dominance.

We’ve even seen America’s own allies openly question why the dollar is still the primary reserve currency in the world.

History tells us that wealth and power routinely shift. That major superpowers can and do go bankrupt. That dominant financial systems and reserve currencies can be displaced.

And that whenever any of this happens, there are consequences.

Our species has been dealing with these same trends for thousands of years. This time is not different.

History also teaches that for people who ignore reality and pretend that nothing is happening, the impact can be severe.

But for those who recognize obvious trends and take simple, rational steps to reduce the consequences, the opportunities are enormous.

If your country is broke, don’t hold everything that you’ve ever worked for or hope to achieve within easy reach of your bankrupt government.

If your financial system is underpinned by highly illiquid banks and an insolvent central bank, don’t keep all of your savings there.

If you are living in the most frivolously litigious society to ever exist in human history, don’t keep 100% of your assets there.

Simple.

That’s fundamentally why we started this site seven years ago.

No one can claim to predict the future with any certainty, but it’s easy to see the direction that these big picture trends are unfolding.

My objective was to present publicly available data to show that, yes, your country and financial system are bankrupt… plus simple, rational solutions to distance yourself from the consequences.

So much has happened since 2009 to validate that premise, and these trends are only picking up steam.

Back when we started, it was just me and my partner Matt. We were two guys trying to make an impact for an audience of practically zero.

After seven years, hundreds of thousands of people have signed up for this letter.

And today Sovereign Man has more than two dozen employees (mostly out of our offices in Chile) dedicated to helping people become more prosperous and more free.

I’ve had the extreme privilege of building wonderful relationships with giants I’ve greatly admired, like Ron Paul, Robert Kiyosaki, Jim Rogers, Marc Faber, and others.

But more than that, it’s been amazing to have spent time with so many of our readers.

I’ve met thousands of Sovereign Man subscribers over the years at our conferences and events, and I’ve have routinely come away inspired at how many incredible, switched-on people read this letter.

So most of all I just want to say thank you for allowing me to be part of your life.

We certainly live in interesting times. And I look forward to being with you in the coming years as these historic trends continue to unfold.

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[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]

“How foul this referendum is. The most depressing, divisive, duplicitous political event of my lifetime. May there never be another” – Tweet from the novelist Robert Harris.

“Free at last, Free at last, Thank God almighty we are free at last.” – Martin Luther King, Jr.

…Free of further campaigning, for the time being, if nothing else. By the end of this week, the entire British nation will enjoy a collective sigh of relief. If there is any natural justice, the EU referendum will have swung in favour of sovereignty and against totalitarianism but, whatever the outcome, at least the campaigning, from both sides, will be over. For politicians, economists, political hucksters and the various news media, this was not their finest hour.

The European Union has become a slow motion collision between magical thinking and wishful thinking. The project is a mirror favouring selective vision, in which observers of whatever background or political stripe see deeply what they want to see but are blind to the project’s more obvious failings. Pacifists see a social construct that has kept peace between Europe’s various warring factions – notably France and Germany – for over half a century, but fail to notice, or for that matter much care about, the youth unemployment rates in the periphery of the euro zone. Advocates of free movement praise Schengen and turn a blind eye to the bodies of immigrants washing onto the shores of Greece and Italy. Supporters of Big Government see a political union that is already huge and continuing to expand, and pay scant heed to the rising cost of regulation that others must bear. Fans of bureaucracy – typically quasi-monopolistic big businesses and the ever-popular banks – see an integrationist scheme that raises the barriers to entry against smaller competitors and engulfs them in red tape, but they ignore the decline in relative economic power, whereby the EU of 1980 accounted for 30 percent of the world economy, while a much larger EU (by population) accounts for just 17 percent of world trade today. For those at the top of the pile who suckle off the teat of the State or the multinational, life is good. There are apparently 10,000 functionaries in the EC earning more than the British Prime Minister. For those obliged to fund this parasitical class, be they taxpayers, small businesspeople or entrepreneurs, or all three, the commercial ‘success’ of the euro zone looks a good deal more questionable. But in the end, whatever the posturing, it really came down to a simple decision on the part of the electorate: should the ideal State be larger, or smaller ? ‘Leavers’ may have seemed either reckless or romantic, but ‘Remaniacs’ have displayed a chronic lack of self-belief.

And the tone of the debate, of course, has been horribly off-key, and it worsened even before the terrible murder of MP Jo Cox. There has been a constant tide of fatuous self- serving pronouncements from both sides, but if ‘Remain’ do win, it will not be because they staked out the high moral ground. They undermined it. As Bloomberg’s Mark Gilbert points out, the campaign to keep Britain in the EU has continually favoured intimidation over persuasion. Where misinformation has not done the job, mud-slinging has taken over.

Suppose that the Leave campaign, which one might call Project Lie, wins the referendum next week.

wrote Martin Wolf for the Financial Times,

How bad might the economic consequences over the next few years be ? Alas, they might be very bad indeed.

The very same Martin Wolf was the author of ‘The Resistible Appeal of Fortress Europe’ (The Centre for Policy Studies / The American Enterprise Institute, 1994), in the foreword to which the late Keith Joseph wrote,

In this erudite essay, Martin Wolf explores the techniques the European Commission and its subordinate bodies use to inhibit and distort the free movement of goods and services. It is a paradox that an entity conceived in The Treaty of Rome as a liberal force has evolved into being a protectionist one. Supra-national protectionism is not new to the theatre of politics. Imperial Preference was the same illusion based on a different geography.

Mr Wolf is Chief Economics Leader Writer for the Financial Times so we are grateful to him from diverting from his daily demands to take time to explain the manner in which the European Union is wandering far from the ideals of liberal open markets.

Mr. Wolf is entitled to change his mind. As both journalist and ‘economist’ he hardly has a choice but to, on an ongoing basis. Ralph Waldo Emerson advises us that a foolish consistency is the hobgoblin of little minds. Mr. Wolf seemingly prefers the philosophical flexibility of his muse, Keynes, which allows his attitude towards the bigger issues to swing in the wind like a Marxist weathervane.

The Referendum campaigns have stirred up muddy waters that, with hindsight, might have been better left untouched. They have done grave damage to political relations across party lines – and may have scuppered the political futures of numerous members of the Cabinet. With any luck they have also sounded the death-knell for economic forecasting, which after months of ridiculous claim and counter-claim, opinion loudly obliterating fact, now has all the style and credibility of a banshee on crack.

And there are still four days left for those undecided to make up their mind. We recommend two books for those searching for considered answers rather than shrill assertions: Daniel Hannan’s ‘Why vote Leave’ and Roger Bootle’s ‘The Trouble With Europe’. For those in search of hard facts and reasoned arguments as opposed to economic fictions, these two works do not disappoint. The following quotation is taken from the former.

The euro must be maintained, regardless of the cost in higher unemployment and lost growth. Schengen, too, must be upheld, regardless of the impact on security or, come to that, refugee welfare. Whatever the question, the answer is always ‘more Europe’.

Does that have to be the answer for Britain, too ? Having tried and failed to convince our friends to go in a different direction, must we submit ourselves to their project ?

Surely we can do better.. If we cannot lead by persuasion, let us lead by example.

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In our daily conversations, we regularly discuss how important it is to own real assets– especially precious metals.

There’s so much risk in the financial system right now. Just consider your own bank account, for example.

If you’re in the West, more than likely your bank is -extremely- illiquid, meaning that they only keep a small portion of your funds in reserve.

The rest of your money is gambled away in the latest investment fad; and as we’ve reported recently, banks are once again making low-money down home loans to subprime borrowers with YOUR money.

This is the same playbook that nearly causes the entire financial system to collapse back in 2008.

Now, here’s the thing—and a lot of people don’t realize this: the money in your bank account isn’t really YOURS.

Sure, your name is on the bank account. But as soon as you make a deposit, that money belongs to the bank. And you become one of their many, many unsecured creditors.

It hardly seems worth the risk, especially given the paltry 0.1% interest they’re paying you.

We’ve talked a lot about different solutions, like holding physical cash, as well as precious metals.

But when we use the term ‘precious metals,’ most people immediately think of gold.

That makes sense, of course. Gold is the most famous and most widely held precious metal.

But there are three others, namely palladium, platinum, and silver.

Silver in particular may be worth a closer look; we wrote to you several months ago that silver was very cheap on a relative basis, especially compared to gold.

And so far this year silver has been a top-performing commodity.

So today I thought it appropriate to take some time and specifically explore silver.

I sat down this afternoon with the founder and CEO of one of the fastest growing storage and precious metals trading firms in the world, based here in Singapore, and I think you’ll learn a lot from his insights into what he considers the ‘forgotten’ precious metal.

You can listen in here.

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In February 1768, a revolutionary article entitled “No taxation without representation” was published London Magazine.

The article was a re-print of an impassioned speech made by Lord Camden arguing in parliament against Britain’s oppressive tax policies in the American colonies.

Britain had been milking the colonists like medieval serfs. And the idea of ‘no taxation without representation’ was revolutionary, of course, because it became a rallying cry for the American Revolution.

The idea was simple: colonists had no elected officials representing their interests in the British government, therefore they were being taxed without their consent.

To the colonists, this was tantamount to robbery.

Thomas Jefferson even included “imposing taxes without our consent” on the long list of grievances claimed against Great Britain in the Declaration of Independence.

It was enough of a reason to go to war.

These days we’re taught in our government-controlled schools that taxation without representation is a thing of the past, because, of course, we can vote for (or against) the politicians who create tax policy.

But this is a complete charade. Here’s an example:

Just yesterday, the Federal Reserve announced that it would keep interest rates at 0.25%.

Now, this is all part of a ridiculous monetary system in which unelected Fed officials raise and lower rates to induce people to adjust their spending habits.

If they want us little people to spend more money, they cut rates. If they want us to spend less, they raise rates.

It’s incredibly offensive when you think about it– the entire financial system is underpinned by a belief that a committee of bureaucrats knows better than us about what we should be doing with our own money.

So this time around the grand committee decided to keep interest rates steady at 0.25%.

Depending on where you sit, this has tremendous implications.

If you’re in debt up to your eyeballs (like the US government), low interest rates are great.

It means the government can continue to borrow even more money and go even deeper into debt.

Low interest rates are also good for banks, because they can borrow for nothing from the Fed, then earn a handsome profit on that free money.

But if you’re a responsible saver, low interest rates are debilitating.

Banks only pay their depositors about 0.1% interest. Yet according to the US Labor Department, inflation is at least 1.1%, and has averaged 2.23% since 2000.

This means that when adjusted for inflation, anyone who bothers saving money is losing at least 1% every single year.

That might not sound like much. But compounded over a longer period, it can lead to a substantial difference in your standard of living.

Maybe that’s why the government’s own numbers show that wages, when adjusted for inflation, are far lower than they were even 15 years ago.

Or why wealth inequality is now at a level not seen since the Great Depression.

Or why alarming data from Pew Research last year show that the middle class is now no longer the dominant socioeconomic stratum in the United States.

Back during his days as a presidential candidate, Ron Paul used to frequently remark that inflation is an invisible tax on the middle class.

And he’s right.

The combination of inflation and low interest rates benefits certain people, while it causes middle class people’s savings to lose purchasing power.

This constitutes a transfer of wealth from savers to debtors.

In other words, it’s a tax.

Yet unlike a normal tax which is passed by Congress, this inflation/interest rate tax is created by the central bank.

You and I don’t get to vote for the twelve members of the Federal Reserve Open Market Committee (FOMC) who dictate interest policy.

In fact, based on the way the Federal Reserve works, the majority of the committee members are actually appointed by commercial banks.

Here’s the quick version: there are twelve Federal Reserve banks in the US banking system.

They’re located in major cities like New York, San Francisco, St. Louis, Dallas, etc. And each Federal Reserve bank has its own separate Board of Directors.

Yet two-thirds of the board members for each Federal Reserve bank are appointed by big Wall Street banks like JP Morgan and Goldman Sachs.

And oh, hey, what a surprise, the last three major appointments to the Federal Reserve were all former high-level Goldman Sachs employees.

These guys aren’t even trying to hide the fact that Wall Street banks control the Fed.

So, Wall Street banks control the boards of directors at the Fed banks. The Fed bank boards of directors appoint the committee members who set monetary policy.

And the monetary policy they set ends up being a gigantic tax… a transfer of wealth from the middle class to a tiny group of beneficiaries, including the US government and the banks themselves.

This is an unbelievable scam… and it truly is taxation without representation.

Unelected bureaucrats impose their will over the entire financial system in a way that benefits a handful of people at the expense of everyone else.

And we have absolutely no say in the matter.

Well, actually we do.

Even though we can’t vote for the boards of directors at the various Federal Reserve banks like Citigroup and Goldman Sachs can do, we are able to vote with our dollars.

Think about it: every single dollar that you keep in this poor excuse for a financial system is a tacit vote in favor of the corruption.

Every dollar you take out of the system is a vote against it.

And as we’ve explored before, there are substantial options for your savings– precious metals, cryptocurrencies, productive real estate, safe P2P arrangements with strong yields, and well-capitalized banks abroad that actually pay sufficient interest to keep up with inflation.

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Apparently the biggest banks in the US didn’t learn their lesson the first time around…

Because a few days ago, Wells Fargo, Bank of America, and many of the usual suspects made a stunning announcement that they would start making crappy subprime loans once again!

I’m sure you remember how this all blew up back in 2008.

Banks spent years making the most insane loans imaginable, giving no-money-down mortgages to people with bad credit, and intentionally doing almost zero due diligence on their borrowers.

With the infamous “stated income” loans, a borrower could qualify for a loan by simply writing down his/her income on the loan application, without having to show any proof whatsoever.

Fraud was rampant. If you wanted to qualify for a $500,000 mortgage, all you had to do was tell your banker that you made $1 million per year. Simple. They didn’t ask, and you didn’t have to prove it.

Fast forward eight years and the banks are dusting off the old playbook once again.

Here’s the skinny: through these special new loan programs, borrowers are able to obtain a mortgage with just 3% down.

Now, 3% isn’t as magical as 0% down, but just wait ‘til you hear the rest.

At Wells Fargo, borrowers who have almost no savings for a down payment can actually qualify for a LOWER interest rate as long as you go to some silly government-sponsored personal finance class.

I looked at the interest rates: today, Wells Fargo is offering the exact same interest rate of 3.75% on a 30-year fixed rate, whether you have bad credit and put down 3%, or have great credit and put down 30%.

But if you put down 3% and take the government’s personal finance class, they’ll shave an eighth of a percent off the interest rate.

In other words, if you are a creditworthy borrower with ample savings and a hefty down payment, you will actually end up getting penalized with a HIGHER interest rate.

The banks have also drastically lowered their credit guidelines as well… so if you have bad credit, or difficulty demonstrating any credit at all, they’re now willing to accept documentation from “nontraditional sources”.

In its heroic effort to lead this gaggle of madness, Bank of America’s subprime loan program actually requires you to prove that your income is below-average in order to qualify.

Think about that again: this bank is making home loans with just 3% down (because, of course, housing prices always go up) to borrowers with bad credit who MUST PROVE that their income is below average.

[As an aside, it’s amazing to see banks actively competing for consumers with bad credit and minimal savings… apparently this market of subprime borrowers is extremely large, another depressing sign of how rapidly the American Middle Class is vanishing.]

Now, here’s the craziest part: the US government is in on the scam.

The federal housing agencies, specifically Fannie Mae, are all set up to buy these subprime loans from the banks.

Wells Fargo even puts this on its website: “Wells Fargo will service the loans, but Fannie Mae will buy them.” Hilarious.

They might as well say, “Wells Fargo will make the profit, but the taxpayer will assume the risk.”

Because that’s precisely what happens.

The banks rake in fees when they close the loan, then book another small profit when they flip the loan to the government.

This essentially takes the risk off the shoulders of the banks and puts it right onto the shoulders of where it always ends up: you. The consumer. The depositor. The TAXPAYER.

You would be forgiven for mistaking these loan programs as a sign of dementia… because ALL the parties involved are wading right back into the same gigantic, shark-infested ocean of risk that nearly brought down the financial system in 2008.

Except last time around the US government ‘only’ had a debt level of $9 trillion. Today it’s more than double that amount at $19.2 trillion, well over 100% of GDP.

In 2008 the Federal Reserve actually had the capacity to rapidly expand its balance sheet and slash interest rates.

Today interest rates are barely above zero, and the Fed is technically insolvent.

Back in 2008 they were at least able to -just barely- prevent an all-out collapse.

This time around the government, central bank, and FDIC are all out of ammunition to fight another crisis. The math is pretty simple.

Look, this isn’t any cause for alarm or panic. No one makes good decisions when they’re emotional.

But it is important to look at objective data and recognize that the colossal stupidity in the banking system never ends.

So ask yourself, rationally, is it worth tying up 100% of your savings in a banking system that routinely gambles away your deposits with such wanton irresponsibility…

… especially when they’re only paying you 0.1% interest anyhow. What’s the point?

There are so many other options available to store your wealth. Physical cash. Precious metals. Conservative foreign banks located in solvent jurisdictions with minimal debt.

You can generate safe returns through peer-to-peer arrangements, earning up as much as 12% on secured loans.

(In comparison, your savings account is nothing more than an unsecured loan you make to your banker, for which you are paid 0.1%…)

There are even a number of cryptocurrency options.

Bottom line, it’s 2016. Banks no longer have a monopoly on your savings. You have options. You have the power to fix this.

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