Category: simonblack

This is starting to become very concerning.

The momentum to “ban cash”, and in particular high denomination notes like the 500 euro and $100 bills, is seriously picking up steam.

On Monday the European Central Bank President emphatically disclosed that he is strongly considering phasing out the 500 euro note.

Yesterday, former US Treasury Secretary Larry Summers published an op-ed in the Washington Post about getting rid of the $100 bill.

Prominent economists and banks have joined the refrain and called for an end to cash in recent months.

The reasoning is almost always the same: cash is something that only criminals, terrorists, and tax cheats use.

In his op-ed, Summers refers to a new Harvard research paper entitled: “Making it Harder for the Bad Guys: The Case for Eliminating High Denomination Notes”.

That title pretty much sums up the conventional thinking. And the paper goes on to propose abolishing, among others, 500 euro and $100 bills.

The authors claim that “without being able to use high denomination notes, those engaged in illicit activities – the ‘bad guys’ of our title – would face higher costs and greater risks of detection. Eliminating high denomination notes would disrupt their ‘business models’.”

Personally I find this comical.

I can just imagine a bunch of bureaucrats and policy wonks sitting in a room pretending to know anything about criminal activity.

It’s total nonsense. As long as there has been human civilization there has been crime. Crime pre-dates cash. And it will exist long after they attempt to ban it.

Perhaps even more hilarious is that many of these bankrupt governments have become so desperate for economic growth that they now count illegal drug activity and prostitution in their GDP calculations, both of which are typically transacted in cash.

So, ironically, by banning cash these governments will end up reducing their own GDP figures.

What’s really behind this? Why is there such a big movement to ban something that is used for felonious purposes by just a fraction of a percent of the population?

Cash, it turns out, is the Achilles’ Heel of the financial system.

Central banks around the world have kept interest rates at near-zero levels for nearly eight years now.

And despite having created massive bubbles and enabled extraordinary amounts of debt, their policies aren’t working.

Especially in Europe, the hope of stoking economic growth (and even the sickening goal of inflation) has failed.

So naturally, since what they’ve been trying hasn’t worked, their response is to continue trying the same thing… and more of it.

Interest rates across the European continent are now negative.

Japanese interest rates are now negative.

And even in the United States, the Federal Reserve has acknowledged that negative interest rates are being considered.

They have no other choice; raising rates will bankrupt the governments they support and derail any fledgling economic growth.

Look at how low interest rates are in the US– and yet 4th quarter GDP practically ground to a halt. They simply cannot afford to raise rates.

As global economic weakness continues to play out, central banks will have no other option but to take interest rates even further into negative territory.

That said, negative interest rates will be the destruction of the financial system.

Because sooner or later, if banks have to pay negative wholesale interest rates to each other and to the central bank, then eventually they’ll have to pass those negative rates on to their customers.

Many banks have already started doing this, especially on larger depositors.

We’ve seen this in Europe where some banks charge their customers negative interest to save money, and in some extraordinary circumstances, pay other customers to borrow money.

It’s total madness.

There’s a certain point, however, when interest rates become so negative that no rational person would hold money in the banking system.

Eventually people will realize that they’re better off withdrawing their money and holding physical cash.

Sure, cash doesn’t pay any interest. But it doesn’t cost any either.

If you have a $200,000 in your savings account at negative 1%, you’d have to pay the bank $2,000 each year.

Clearly it would make more sense to buy a safe and hold most of that money in cash.

Problem is, the banks don’t have the money.

For starters, there’s literally not enough cash in the entire financial system to pay out more than a fraction of all bank deposits.

More importantly, banks (especially in the US and Europe) are extremely illiquid.

They invest the vast majority of your deposit in illiquid loans or securities of dubious long-term value, whatever the latest stupid investment fad happens to be.

And many banks have been engaging in a substantial balance sheet shift, rotating bonds from what’s called “Available for Sale” to “Hold to Maturity”.

This is an accounting trick used to hide losses in their bond portfolios. But it also means they have less liquidity available to support bank customer withdrawal requests.

The natural side effect of negative interest rates is pushing people to hold money outside of the banking system.

Yet it’s clear that a surge of withdrawal requests would bring down that system.

Banks don’t want that to happen. Governments don’t want that to happen.

But since central banks have no other choice than to continue imposing negative interest rates, the only logical option is to ban cash and force consumers to hold their money within the banking system.

Make no mistake, this is absolutely a form of capital controls. And it’s coming soon to a banking system near you.

PS. Clearly a trend with this much momentum requires some deliberate and measured action if you don’t want your savings trapped.

We’ll discuss this in our upcoming webinar.

I hate to belabor the point, but it should be obvious that these things are happening, quickly, and I can promise that you’ll get a ton of great information and solutions with the small investment of your time.

Sign up here to attend for free.

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It was close to twenty years ago that I sat in my first personal finance class, learning how to invest money I didn’t have for a “retirement” that seemed inconceivably far away.

It was my first year at the academy. And the government thought it appropriate to ensure that its future Army officers had sufficient acumen to manage their finances.

Their sage advice back then was to buy stocks, hold for 40-50 years, and then rotate into bonds.

(Funny how the government’s finance class encouraged us to buy government bonds.)

The idea was to build wealth through stocks, which conventional wisdom tells us will increase in value.

Then, generate stable income from government bonds, which are “safe” and provide much needed supplemental income for retirees.

It’s become clear to me over the years that this story is completely wrong.

The belief in finding safety by loaning your money to a bankrupt government that has no hope of ever repaying its debts is completely ludicrous, especially given that their interest rates are either negative or well below the rate of inflation.

For anyone that has the courage to look beyond the mainstream, there are a number of much more profitable and stable asset classes available to grow your wealth and generate income.

1. Private Businesses

Private businesses are almost unparalleled in wealth creation, and can offer superior risk-adjusted returns to anything out there in public markets.

I’m not talking about investing in tech startups trying to find the next Google (though investing in startups can also provide outsized, risk-adjusted returns).

I’m talking about acquiring shares of more mature, privately held businesses.

These would typically be medium-sized companies that have a 20+ year history of generating profits.

There is a limited market for these opportunities (as there usually is for any great deal). But they do exist.

Business brokers around the world often list these types of companies at between two and four times their annual earnings.

This means that it’s possible to generate a 50% return on your investment. And if you have skills or access to management that can grow the earnings, the returns can be even higher.

Mature businesses with long operating histories may even qualify for bank financing, thus reducing the amount of upfront capital you need to purchase the business.

I’ve been involved in a few of these deals myself where banks have stepped forward to provide most of the financing necessary to buy a mature business based on the company’s long-standing operating history.

In comparison to loaning money to a bankrupt government for a one-percent annualized return, this strikes me as a no-brainer asset class to consider.

2. Royalty streams and intellectual property rights

Royalty streams and intellectual property rights are another unconventional asset class to consider.

This can include anything from patents to songwriter credits, to income streams from privately held mines or oil wells.

Given the weakness in commodity prices this market is starting to become much more attractive from a value perspective, particularly if you have a long-term outlook.

Some friends of mine own the website RoyaltyExchange.com, a platform where royalty owners for film assets, patents, mineral rights, etc. are auctioned off to investors.

In one recent deal for songwriter credits, a $15,000 annual royalty stream sold for less than $29,000.

I have another colleague who holds book copyrights through his Individual Retirement Account to generate tax-deferred royalty income.

3. Agriculture

One of my personal favorites is agriculture.

Understandably most people won’t be able to achieve the size and scale of necessary to run an efficient agricultural corporation.

But even on a small scale, agriculture works. Apple trees have outperformed apple stock for 30+ years.

It’s hard to imagine you’ll be worse off for having a small organic garden or planting some fruit trees in your backyard.

Not only will you be putting real food on the table, but with an investment of just a couple of dollars you could substantially increase your property’s value.

4. Yourself

Last but not least, the most important investment I believe anyone can make is an investment you make in yourself.

For anyone looking to secure greater income and wealth, there is no substitute for real education: business education, financial education, and the development of important skills.

To generate $1,000 in monthly income through conventional investments, for example, you’d have to buy $674,000 worth of US government treasuries based on today’s bond yields.

Or you could invest a tiny fraction of that to learn a skill that makes you more valuable at work or in the marketplace.

This is one of our main focuses in our annual youth liberty and entrepreneurship camp.

Each summer we spend an intense five-day workshop developing critical skills, business education and financial education, guided by some of the smartest, most successful people I know.

It’s free of charge for those who are accepted.

We’re just about to open up the enrollment window, if you’d like to find out more about how to apply to our Liberty and Entrepreneurship camp, click here.

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According to financial research firm ICI, total retirement assets in the Land of the Free now exceed $23 trillion.

$7.3 trillion of that is held in Individual Retirement Accounts (IRAs).

That’s an appetizing figure, especially for a government that just passed $19 trillion in debt and is in pressing need of new funding sources.

Even when you account for all federal assets (like national parks and aircraft carriers), the government’s “net financial position” according to its own accounting is negative $17.7 trillion.

And that number doesn’t include unfunded Social Security entitlements, which the government estimates is another $42 trillion.

The US national debt has increased by roughly $1 trillion annually over the past several years.

The Federal Reserve has conjured an astonishing amount of money out of thin air in order to buy a big chunk of that debt.

But even the Fed has limitations. According to its own weekly financial statement, the Fed’s solvency is at precariously low levels (with a capital base of just 0.8% of assets).

And on a mark-to-market basis, the Fed is already insolvent. So it’s foolish to think they can continue to print money forever and bail out the government without consequence.

The Chinese (and other foreigners) own a big slice of US debt as well.

But it’s just as foolish to expect them to continue bailing out America, especially when they have such large economic problems at home.

US taxpayers own the largest share of the debt, mostly through various trust funds of Social Security and Medicare.

But again, given the $42 trillion funding gap in these programs, it’s mathematically impossible for Social Security to continue funding the national debt.

This reality puts the US government in rough spot.

It’s not like government spending is going down anytime soon; it already takes nearly 100% of tax revenue just to pay mandatory entitlements like Social Security, and interest on the debt.

Plus the government itself estimates that the national debt will hit $30 trillion within ten years.

Bottom line, they need more money. Lots of it. And there is perhaps no easier pool of cash to ‘borrow’ than Americans’ retirement savings.

$7.3 trillion in US IRA accounts is too large for them to ignore.

And if you think it’s inconceivable for the government to borrow your retirement savings, just consider the following:

1) Borrowing retirement funds is becoming a popular tactic.

Forced loans have been a common tactic of bankrupt governments throughout history.

Plus there’s recent precedent all over the world; Hungary, France, Ireland, and Poland are among many governments that have resorted to ‘borrowing’ public and private pension funds.

2) The US government has already done this with federal pension funds.

During the multiple debt ceiling fiascos since 2011, the Treasury Department resorted to “extraordinary measures” at least twice in order to continue funding the government.

What exactly were these extraordinary measures?

They dipped into federal retirement funds and borrowed what they needed to tide them over.

In fact, the debt ceiling debacles were only resolved because the Treasury Department had fully depleted available retirement funds.

3) They’ve been paving the way to borrow your retirement savings for a long time.

Two years ago the government launched a new initiative to ‘help Americans save for retirement.’

It’s called MyRA. And the idea is for people to invest retirement savings ‘in the safety and security of US government bonds’.

Since then they’ve gone on a marketing offensive involving the President, Treasury Secretary, and other prominent politicians.

(Most recently Nancy Pelosi published an Op-Ed in the San Francisco Chronicle a few days ago promoting the program.)

They’ve also proposed a number of legislative reforms to ‘encourage’ American businesses to sign their employees up for MyRA.

Just last week, Congress introduced the “Making Your Retirement Accessible”, or MyRA Act, which would charge a penalty to employers whose workers don’t have a retirement account.

The proposed penalty is $100. Per worker. Per day.

Imagine a small business with, say, 10 employees who don’t have retirement accounts. The penalty to Uncle Sam would be a whopping $30,000 PER MONTH.

There’s a word for this. It’s called extortion.

Obviously when facing a $30,000 monthly penalty, an employer will pick the easiest option.

Given the absurd amount of government regulation on the rest of the financial industry, MyRA is the fastest choice.

This isn’t about fear or paranoia. It’s about facts.

And the reality is that the government in the Land of the Free is moving in the direction of borrowing more and more of your retirement savings.

If you still remain skeptical, remember that last year the government stole more from its citizens through Civil Asset Forfeiture than thieves in the private sector.

Or that just 45-days ago a new law went into effect authorizing the government to strip you of your passport if they believe in their sole discretion that you owe them too much tax.

No judge. No jury. No trial. They just confiscate your passport.

This is happening. It’s a reality that rational, thinking people should plan for.

And yes, there are solutions for now.

For example, it’s possible to set up a more robust retirement structure that protects your savings and gives you much greater influence over your funds.

This is something that may make sense no matter what; it may be a good idea regardless to do some long-term financial planning that increases your influence over your own retirement savings and expands your investment options.

And if you want to learn more about the risks and solutions for your retirement savings, click here to access our free black paper.

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Earlier this week the State Department released its latest statistics for people who have renounced their US citizenship.

2015 was another record year, with 4,279 people divorcing themselves from the US government and heading to greener pastures elsewhere.

This was the third year in a row that broke the previous year’s record, showing that this is obviously a growing trend. The number one reason for which is quite simple: tax.

Many of these individuals were Americans already living overseas who are still subject to the pay taxes to the IRS on their worldwide income.

For 2015, the first $100,800 in earned income for Americans living abroad is generally tax free. However, higher income earners are still forced to pay their “fair share” of all the bombs, drones, and federal folly even though they don’t live in the United States.

Most countries don’t do this. If you’re Canadian, or French, or even Chinese and you move abroad you’re no longer subject to taxation in your home country presuming you earn your income overseas.

Americans living overseas are also subject to additional reporting requirements and IRS scrutiny due to the Foreign Account Tax Compliance Act (FATCA).

FATCA is an insane, extraordinarily narcissistic law that requires reporting both from individuals with foreign assets as well as from every financial institution on the planet.

Individuals living abroad are more likely to have foreign assets, so they’re disproportionately affected by the additional compliance.

For financial institutions abroad, the cost of implementing FATCA has been estimated by various foreign governments, banks, chambers of commerce, and financial media, at anywhere between $200 billion and more than $1 trillion.

Yet despite FATCA’s trillion-dollar price tag, the Wall Street Journal reports that the US government has taken in just $13.5 billion in revenue from hidden foreign accounts that FATCA is supposed to eliminate.

Obviously the cost vastly exceeds the benefit. It’s insane. Plus FATCA has driven nearly 15,000 Americans to renounce the citizenship since President Obama signed it into law in 2010.

These former Americans are often criticized for taking such a controversial step, one that is derided as being “unpatriotic”.

This criticism makes no sense when you take a larger view of history.

The State Department estimates that there are up to 6 million Americans living abroad.

Given the average size of a Congressional district at roughly 700,000 citizens, there should theoretically be eight members of Congress representing the interests of Americans living abroad.

Yet expats have no representation. There is not a single person in Congress fighting for expats, even though they are still subject to pay tax.

More than 240 years ago, residents of the colonies had a term for this. They called it “Taxation without Representation”. This idea is as old as America itself.

And in 1776, American colonists divorced themselves from the British government. Much of this was tax motivated.

In the Declaration of Independence, Thomas Jefferson expressly writes that among the reasons for independence is “imposing taxes on us without our consent.”

Former US citizens are following in these footsteps.

This is appropriate to point out, especially this year as voters in the Land of the Free delude themselves into believing that they’re going to choose their next leader.

This is total nonsense. As we discussed in this week’s podcast, the US electoral system is completely anachronistic, just like the monetary system, the banking system, etc.

This idea of having delegates, super-delegates, and the electoral college probably made sense in the election of 1788, when less than 2% of the US population was able to vote.

Today it no longer makes sense. It is an illusion of Republican Democracy. In reality your vote doesn’t count.

Let’s be honest about the world we’re living in. Particularly in politics, money counts more than anything.

If you really want to change anything, the most important ballots you can cast are with your money and with your feet.

By divorcing yourself from a government bent on indebting future generations in order to drop bombs by remote control on brown people across the world, you’re taking a conscious step to reduce their resources.

Your hard work and sweat no longer support debt, war, and freedom-killing regulations.

Renunciation is one step that many former Americans have taken to affect this change.

Understandably the idea is far too radical for most people. But there are still many completely legitimate steps that anyone can take to reduce the amount that you owe and starve the beast.

It’s a far more powerful option than punching a chad in a voting booth.

It’s a far more effective way to create “real change” than punching a chad in a voting booth.

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[Editor’s note: Our Chief Investment Strategist Tim Staermose is filling in for Simon today from Yangon, Myanmar.]

Since so much of Asia is on holiday for the Lunar New Year, I decided to travel to Myanmar to check out how the economy is developing.

Myanmar was once the wealthiest economy in Southeast Asia. But decades of isolation and military rule have turned it into the poorest.

Myanmar is, no doubt, the Cuba of Southeast Asia.

For the last few years, however, the country has started emerging from this isolation. The military government has begun to relax its stranglehold and play nice with the rest of the world.

Just since my last trip to the country a few years ago, I can hardly believe the extraordinary progress.

A few years ago there was hardly any mobile phone coverage. All bandwidth was strictly controlled by the Army, and we pitiful civilians had no access to the network.

As late as 2013, only 7 in 100 people had a mobile phone. Now every second person in Yangon has one– usually a new Chinese-made smart phone.

A local SIM card, with 1GB of data, valid for one month can be purchased for about $6.

(That might sound cheap, but $6 is expensive in Myanmar compared to local wages. But mobile service prices are falling fast.)

Mobile technology is becoming an indispensable part of the economy.

Yesterday we stumbled upon an enterprising young lady from the Dala district, on the south side of the Yangon River from the downtown area, who offered to take us on a tour of the district.

She was able to line up rickshaws, make appointments, and keep in touch with all the people we met along our route, all from her smartphone while in the pedicab.

This was an impromptu tour, completely unplanned by us, so she had to think quickly and get things done as we travelled along.

Just three years ago, this would have been completely impossible.

ATMs and credit cards also work now.

Before, not even the few 5-star hotels in Yangon could accept credit card payment.

That was partly due to international sanctions against Myanmar (so VISA, AMEX and MasterCard were banned from doing business with the country), and partly due to lack of payments processing technology.

But, that’s all changed, too. My friends and I have been regularly withdrawing cash from foreign bank accounts at the ATMs here.

To be clear, there are still plenty of challenges for the country, as it struggles to emerge from over 50 years of isolation and disastrous economic policies.

Wandering around the derelict shells of what used to be magnificent, colonial style buildings in downtown Yangon, it serves as a clear reminder of how civilization can, and sometimes does decline.

The stench coming from the open sewers next to the pavements was a pungent reminder that the basic infrastructure of the city has not changed a great deal since the 1960s.

(On the positive side, there is a certain old world charm to Myanmar that doesn’t exist in too many other places around the world. In this respect it is very reminiscent of Havana.)

One thing above all is clear to me, though. For all its richness in oil, gas, timber, minerals, gems, soil, water, etc., Myanmar’s greatest asset is its people.

I have found people from all walks of life here to be open, honest, friendly, and, in most cases, hardworking and industrious.

Given the right tools, technology, and sufficient investment capital, this country truly does have an exceptionally bright future.

Fortunes will be made here, both by enterprising locals, as well as foreigners who have the foresight to invest wisely in one of the world’s last great boomtowns.

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Pop quiz: What was the top grossing movie in the world the last time the US tax code was overhauled?

The answer is Top Gun. And the year was 1986.

(Other major hits that year include Karate Kid II, Crocodile Dundee, and Ferris Bueller’s Day Off)

Think about it– this a tax code that was created for a highly industrialized economy. And that might have made sense thirty years ago.

But in the decades since, everything has changed. The world is flat. Globalized. And completely digital. An antiquated tax code based on geography and industrial manufacturing simply doesn’t make any sense today.

Our banking system is in a similar position. Banks today continue to insert themselves in the middle of every financial transaction imaginable, just as they did centuries ago.

Savings, lending, transfers, payments, foreign exchange—all of these transactions are highly centralized (and manipulated) by a private cartel that has no business existing in our modern world.

Today there are so many platforms available where we can send and receive peer-to-peer payments on our mobile phones.

We can hold deposits in the Blockchain. We can raise capital to start a new business on any number of crowdfunding platforms.

Banks are no longer necessary for any financial transaction. And yet they still bully their way into dominating the financial system.

This banking system might have been appropriate centuries ago when Medieval merchants needed a centralized way to extend credit. But it just doesn’t make sense today.

Similarly, global trade continues to be underpinned by a reserve currency issued by the greatest debtor that has ever existed in the history of the world.

This might have been appropriate in 1944 when they created a dollar-based financial system after World War II. But it no longer makes any sense today.

Banking, trade, and even our systems of government and the way we organize ourselves as a society, are all based on anachronistic traditions that don’t belong in the 21st century.

These systems are changing. And it’s already happening. All the alternatives and resources already exist.

This happens from time to time in human history. Kingdoms and Empires gave rise to the feudal system. And the feudal system was ultimately displaced by the nation state.

This time is not different, and it’s foolish to think the nation state will last forever.

Dominant reserve currencies have changed over time, from the Byzantine gold solidus, to the Venetian ducat, all the way to the US dollar today. We cannot expect the dollar to maintain its position forever.

We can see these changes happening already.

Wealth and power are shifting. Central bankers are running out of ammunition. Almost every major western government and central bank is on the brink of insolvency if not already bankrupt.

Developing nations are already creating their own alternatives to the US-dominated financial system. Modern technology is turning the commercial banking system into an endangered species.

And people are finally starting to get sick and tired of their system of government, advocating for the most extreme outsiders they can find.

Isaac Newton told us that an object in motion tends to stay in motion. And these changes are very much in motion.

40 centuries of human history demonstrate that political and banking elite will not simply roll over for financial system 2.0 to take over. They will not go gentle into that good night.

And that’s why these great changes bring both great risk, as well as great reward. Or more appropriately, the potential for both great loss and great opportunity.

Join me in today’s podcast as we discuss these risks and rewards, as well as so many more examples of outdated institutions that you might not have ever noticed before.

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In 578 AD, a Korean immigrant named Shigemitsu Kongo made his way to Japan at the invitation of the royal family.

Buddhism was on the rise in Japan at the time; though it had only been introduced a few decades prior, the Empress consort had been actively encouraging the adoption of Buddhism across Japan.

But since the Japanese had no experience building Buddhist temples, they looked overseas for help.

That’s where Kongo came in.

Shigemitsu Kongo was a renowned temple builder, and the royal family in Japan commissioned him to build the Shitenno-ji temple, which still stands today in Osaka.

Kongo saw an incredible opportunity. Buddhism was catching on fast, and he knew he could be kept busy for decades building temples.

It turned out to be centuries. Over 14 centuries, in fact.

Shigemitsu Kongo formed his construction company Kongo Gumi in 578 AD, and it lasted 1,428 years.

It’s extraordinary that any single enterprise could last so long.

Even as late as 2004, temple building accounted for more than 80% of the company’s revenue, which exceeded USD $60 million.

But ten years ago the company finally went under due to the massive debt burden they had accumulated.

It started back in the 1980s. Japan was in the midst of an epic financial bubble thanks to unconstrained credit growth and expansion of the money supply.

Go figure, central bankers artificially suppressed interest rates, keeping them way too low for way too long. And it created a huge asset bubble.

Asset prices in Japan got so out of control that for a short time during the 1980s, it was said that the grounds of the imperial palace in Tokyo were worth more than all of the real estate in the entire state of California.

As part of this bubble, banks had relaxed their lending standards and were handing out loans to just about anyone.

And many Japanese companies took on vast amounts of debt, including Kongo Gumi.

Debt was like a popular drug. Everyone was doing it.

But when the bubble burst in 1989, asset prices collapsed. And companies that had borrowed heavily were left with nothing but debt.

Kongo Gumi didn’t go out of business right away. The company was able to limp along for more than two decades on basic life support.

Soon they were borrowing money just to pay interest on the money they had already borrowed, even though interest rates were at record lows.

But eventually the company’s revenues were no longer sufficient to service the debt.

And in 2006 Kongo Gumi was forced into liquidation.

This company lasted over 1,400 years.

They survived countless political crises, wars, and natural disasters.

They survived the Meiji Restoration in the 1800s, a period in which the government set out to eradicate Buddhism from Japan, and hence, the temple building industry.

They even survived two atomic bombs.

What Kongo Gumi couldn’t survive was debt.

It doesn’t matter if you’re an individual, a company, a government, or even a central bank; if your balance sheet doesn’t add up, sooner or later you’re going under.

It’s concerning to see consumer debt once again on the rise in the Land of the Free, at the fastest pace since the days of the financial bubble.

Perhaps most appropriate was a Superbowl commercial from Quicken Loans advertising how easy they have made it to obtain a loan.

“Push button. Get mortgage.” says the commercial.

More appropriate would be “Push button. Get into debt. Then buy more useless stuff.”

It’s a blatant snapshot of how far along we are in this latest financial bubble.

Of course, most western governments are in this position as well; they can go further into debt with a few strokes of the pen.

No surprise that many governments must borrow money to pay interest on money they’ve already borrowed, even at a time when interest rates are at record lows!

And yet the leading mainstream economic minds claim that debt (and money printing) are actually CURES to economic problems, and not causes of them.

As my colleague Tim Price points out, medieval doctors used to advocate leeches as a way to cure sick people.

Yet this approach turned out be largely ineffective and tended to kill the patient.

Sometimes the final consequences take years. Even decades.

Old, established institutions have the ability to kick the can down the road, just like Kongo Gumi did.

And even in terminal decline they can even give the appearance of strength.

Just a few years before its demise, Kongo Gumi was still a media darling that seemed strong, fit, and likely to last another 1,400 years.

The LA Times, for example, ran a story in 2003 praising the company for its deft ability to outlast Japan’s tough economic conditions.

Kongo Gumi folded less than three years later.

This is an incredibly important lesson: debt is a killer. And no one is immune to this inevitability.

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

A Shandong 5000 electroglide flatbed currency printing machine named ‘Ted’ has edged ahead in a fiercely competitive fight for the chairmanship of the US Federal Reserve, narrowly in front of its major rival, the Heidelberger Druckmaschinen high speed sheet fed rotary offset press, christened ‘Heidi’.

In an ominous sign for supporters of the Heidelberger Druckmaschinen candidacy, a number of US Senate Republicans are circulating a letter supporting the Shandong 5000 model in its quest to replace Janet Yellen at the head of the world’s most important central bank.

The Shandong 5000 is a six colour high speed flexo letterpress printing machine which can churn out up to $200 trillion in high denomination bills in less than 60 seconds.

In a subtle technical innovation, these bills can then be immediately declared illegal and holders of them instantaneously vaporized.

The only other serious contender, a 70 ton Komori Super Orlof Intaglio based in Tokyo, melted after recent deployment by the Bank of Japan.

Senate Democrats rounded on the nomination of a Chinese printing machine in what critics interpreted as a thinly veiled racial slur that ran the risk of igniting an international trade war.

Supporters of the Shandong 5000 electroglide pointed out that the only domestic US manufacturer of high speed, sheet fed rotary 1-10 Intaglio currency printing machines filed for insolvency 60 years ago after using Alan Greenspan for consulting services.

Some Wall Street analysts were skeptical that a flatbed currency printing machine was really the best fit for the task at hand.

Marti Venal at SalesWeasel GoldFelon pointed out that in the 21st century, digital central bank reserves could be created effortlessly electronically without any resort to the printing press whatever.

His colleague Dwight Craven added that three staffers at the Federal Reserve had recently been crushed to death by the accidental toppling of a two mile high mountain of hundred dollar bills following the January 14th 11:02 a.m. Part 57 iteration of the Fed’s latest 8,000-stage quantitative easing programme.

“The Heidelberger Druckmaschinen boomlet is now looking like a Heidelberger Druckmaschinen backlash,” added Venal.

Republicans seem more welcoming of the Shandong 5000 candidacy, despite some disagreements over the machine’s reliability.

The Shandong 4000 series was prone to overheating, occasional power outages, and sometimes exploding spectacularly showering shards of molten steel at supersonic speed over its support workforce.

This made the Shandong 4000 only slightly less dangerous than a full service investment bank.

The Heidelberger printer has long been a bogeyman for some liberals.

They regard the machine as a close colleague of former Treasury Secretary Robert Rubin whose backing for the financial sector and appetite for unrestrained deregulation has been widely blamed for the banking crisis.

There has also been criticism as to the robustness of the Heidelberger currency printer in light of the near-constant requirement to print money 24/7, 365 days a year, and concern as to whether components of the printer have been ethically sourced.

“It used to take 5,000 Chinese workers to make the cylinder of one of our machines,” said a company spokesman.

“We have since found out that titanium is more hard-wearing.”

Over in Europe, monetary authorities have commissioned 14,000 Wolf-Krugman ultra-speed printing machines in order to prepare for March’s looming currency offensive.

The Bank of England, meanwhile, is preparing to unveil its new currency bazooka, a QE-969 Howitzer railgun capable of shooting money at 5,800 MPH into the economy, rendering it instantly inert.

In other news: The last remaining skeptic of the effectiveness of money printing was fired from the ECB. By a giant cannon. Into Switzerland.

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Thirteen years ago my life changed forever.

Colin Powell, then US Secretary of State and the most credible person in George W. Bush’s cabinet, made the case for war in Iraq on February 5, 2003.

As a young military intelligence officer at the time, watching from a makeshift army base in Kuwait not far from the Iraq border.

Back then I was a true believer, trusting that the government was a force for good “making the world safe for democracy. . .”

But that night it all changed.

Powell told the world unequivocally that Iraq had weapons of mass destruction, an assertion that history has proven categorically wrong.

But within the intelligence community, many people knew the appalling truth immediately.

That night it became clear to me that the government was lying and that the whole case for war was being fabricated.

It was crushing, like finding out everything I’d been told throughout my life was total bullshit.

So for the first time, I broke out of the spell and began questioning. Everything.

I started learning about the extraordinary political power of the military industrial complex that President Eisenhower warned about.

That led me to the fraud of many previous wars going as far as the Mexican War in 1845, one deeply criticized by Abraham Lincoln himself.

That led me to the Constitution, to which all military officers swear an oath to support and defend…

… and it surely didn’t seem like supporting or defending the Constitution in waging an ill-conceived, illegal war.

Needless to say I couldn’t talk to my professional colleagues. Everyone was so gung-ho, I felt like an outcast.

When I returned home, things didn’t improve.

While I was away the country had noticeably turned into a police state.

Yet people seemed oblivious to the change, drinking in the propaganda like a spiked punch bowl.

All the loud, bombastic nonsense and pledges of allegiance were merely illusions masking modern day serfdom.

It was the summer of 2004, I remember hearing on TV that the Libertarian Party’s national convention was starting in Atlanta.

I immediately hopped in the car hoping to find some sympathetic minds.

And at the convention I did meet some wonderful, freedom-minded people.

But the event was an unproductive circus, something like a cross between a high school pep rally and a Star Trek convention.

People in costume ran up and down the aisles chanting for their favorite candidate and getting into impromptu debates about the Constitution and Ayn Rand.

As nice and intelligent as everyone was, it felt like a giant freedom pity party.

I didn’t just want to complain. I wanted to fix it. I wanted to do something about it. And solutions were sorely lacking.

So I started educating myself more.

I dove into the federal balance sheet. I learned about the petrodollar and the debt.

That led me to the complete scam of central banking, fiat currency, and the fractional reserve system.

I realized that the political and banking elite have given us more war, instability, and epic financial crises.

They’ve turned Western civilization into a giant police state. And they’ve managed to brainwash the great masses so effectively that the people are crying out for more.

And after this emotional, gut-wrenching awakening, I spent years traveling to more than 100 countries looking for freedom and opportunity.

Eventually I learned that education, prudent planning, and global thinking can rebuild much of our stolen liberty.

Yes, things are crazy.

Freedom is in decline. Governments are bankrupt. Central banks are borderline insolvent.

The financial system is in precarious condition barely held together by a patchwork of negative interest rates, currency manipulation, and misguided confidence.

We award our most esteemed prizes for intellectual achievement to phony scientists who tell us to spend our way into prosperity and borrow our way out of debt.

We give absolute power to control the money supply (and hence manipulate the price of nearly everything) to unelected bureaucrats who have a track record of failure.

Yet we call ourselves ‘free’.

It’s complete madness. And it gets crazier with each passing month.

But history shows that in any episode of great turmoil, there are always winners and losers.

I learned that by taking some basic, sensible steps, it’s possible to drastically eliminate my exposure to the risks and avoid being a loser.

So no matter what happens or how crazy things get, I know I’ll be OK.

For years I’ve called this my “Plan B”.

I know I won’t be worse off for being able to grow my own organic food, holding some savings in a well-capitalized bank outside of my home government’s jurisdiction, or keeping some physical gold and cash.

Having another passport gives me more freedom to live, work, and travel.

Legally reducing my tax burden helps me vote my conscience with my dollars and put my money where my mouth is.

I’ve learned that all of these steps make sense no matter what happens. Or doesn’t happen.

But should the negative trend in freedom and global finance get worse, I know I’ll be OK.

This confidence has allowed me to focus on all the incredible opportunities I’ve seen.

Institutions that have existed for centuries are now being disrupted by digital technology.

Banking as we know it, for example, is finished thanks to digital technology.

The digital age is even changing the way we organize ourselves as a society.

Geography no longer matters, and nearly everything is global.

A billion people are rising into the middle class in Asia and Africa. Countries are emerging from war and isolation. Wealth and power are shifting.

These extraordinary changes bring extraordinary opportunity.

So as crazy as things are, I think this is an incredibly exciting time to be alive.

I’m grateful to be active in a time that future scholars will likely regard as one of the most tumultuous and revolutionary in history.

And I’m grateful for having started the philosophical journey that began thirteen years ago today.

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