The End of Legitimacy

On August 4, 2017, the most hated person in the world was sentenced to seven years in prison.

You may remember the case: his name is Martin Shkreli.

Shkreli had quite infamously taken over a pharmaceutical company and jacked up the price of a medication by 50x, practically overnight. Media outrage ensued, and Shkreli– an young, arrogant braggadocio with far more ego than compassion, was summoned to explain himself to angry politicians in Congress.

Shkreli smirked and insulted his way through the Congressional hearing, leading countless people to conclude he was the biggest jerk on the planet.

And, shortly thereafter, Shkreli was raided and prosecuted by the Justice Department on charges of securities fraud.

Now this guy was no Honest Abe. But he wasn’t Bernie Madoff either. And it’s worth pointing out that not a single one of Shkreli’s investors lost money.

I have no doubt that Shkreli stretched the truth with investors; the financial industry is filled with sharks who lie to investors all the time. But those people are rarely charged or prosecuted– including the vast majority of the liars and thieves from the 2008 financial crisis.

You might remember Goldman Sachs bankers referred to their customers as “muppets” and bragged about selling them “shitty deals” and terrible investments. Zero jail time for them.

Shkreli was prosecuted because people hated him… and the government put him behind bars.

I wrote at the time that Shkreli’s arrest and prosecution represented a dark day for the justice system; it proved that you can be prosecuted in the land of the free, simply because people don’t like you.

Bizarrely I received a lot of hate mail from that article from people who accused me of defending Shkreli. I wasn’t. I was arguing that the government shouldn’t put people they don’t like in jail.

Naturally, the passionate ignoramuses cling to their mantra that “no one is above the law”. But that’s complete BS.

The amount of local, state, and federal crimes on the books could fill an entire football stadium. Every single person reading this right now is guilty of violating some rule, statute, or regulation without even knowing it.

How could anybody possibly keep up with all the rules and laws that change every single day and are constantly expanding.

In fact, just last year they added 79,066 pages to the Federal Register. Yet they also claim that ” ignorance of the law is not an excuse”. It’s absurd.

There used to be sacrosanct standards of the justice system. Victims would come forward and allege a crime had taken place. The crime would be investigated, a suspect would be found, then prosecutors would bring charges.

Most importantly, the suspect would then be presumed innocent until convicted by a dispassionate prosecutor and impartial jury.

Now that system is completely distorted.

Politicians run for elected prosecutor offices (like District Attorney or state Attorney General) with the same zeal and vigor as if they were running for President.

They’re funded by fanatical leftists like George Soros, and they make campaign promises to target and prosecute political opponents.

Then, rather than investigate a crime to find an individual suspect, they investigate the individual and find a crime… even if it means inventing a new crime by stretching the law beyond reason.

Then they select the jurisdiction most suitable for their case– where the defendant is the most hated– virtually guaranteeing that there will in no way be a fair trial.

Putting Donald Trump on trial in New York City is like putting Benjamin Netanyahu on trial in Iran and expecting the Ayatollah to issue a fair and impartial judgment.

But this is the justice system now. As I wrote years ago during the Shkreli affair, “it really paints the picture when you realize that a member of the political elite can merely point his/her thumb like Caesar at the Colosseum, and then gun toting federal agents come swarming in with a laundry list of charges.”

And it was the same thing in the recent civil trial brought by New York Attorney General Letitia James– who also campaigned on convicting Trump. She claimed that he overstated the value of his real estate assets to secure favorable loans.

But there was no victim. The banks that gave the loans said they lost no money and would be happy to do business with Trump again.

Again, though he’s neither Bernie Madoff nor honest Abe, such practices are pretty standard in the industry. Bankers know this. They’re not stupid. Of course, borrowers inflate their assets.

The practice is so commonplace, in fact, that the Governor of New York had to assure other real estate developers (who were panicking and fleeing the state) that no one else would be prosecuted for those charges. Only Trump.

The outcome of the case was so lopsided that the judge had to practically invent a new form of mathematics to justify the outrageous penalty he ordered.

In 1998, then President Bill Clinton paid $850,000 to a woman who had accused him of sexual assault. They money was part of a legal settlement which included a nondisclosure agreement to keep the woman quiet. No charges were brought against him.

Hillary, course, wiped her private email servers before handing them over to FBI investigators… which is an obvious crime. She admitted to this. No charges were brought.

No charges have been brought against Joe Biden for illegally storing classified documents. No charges have been brought against anyone on the Epstein client list.

The word justice comes from the Latin word justitia, which means righteousness. And, quite amazingly, the leftists who are cheering the perversion of the justice system right now are full of their bloated sense of righteousness.

They truly believe this is justice.

But they have memories like goldfish and have completely forgotten that the left is a tribe of cannibals: sooner or later, the leftists eat their own kind.

The people cheering right now will inevitably one day say the wrong thing. They’ll use the wrong pronouns. They have the wrong thought. They’ll fail to bend the knee, raise the fist, say the name, storm the university building, or engage in whatever ritualistic virtue signaling comes next.

Then they could find themselves at the business end of the perverted justice system that they’re cheering right now.

Who knows where it goes from here. Will the political opponents on the right ‘turn the other cheek’, or will it be full blown civil lawfare?

(If so, I would humbly suggest that Tony Fauci likely has a laundry list of actual good reasons to be prosecuted.)

The US has crossed the Rubicon.

We saw the preview during the 2020 summer of love riots, and COVID hysteria. People were, canceled, fired, blacklisted, and denounce by loved ones for daring to disagree with the narrative.

But at least it didn’t leverage the full resources of the justice system.

Now, countless people on the woke left are full of bloodlust and cheering for the perversion of the justice system. They don’t realize that one day it might be used against them.

Everybody ought to recognize this is now the legal standard in America. And to think that it ends here is naive.

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Would you pay €1 for this house?

In 2007, Giuseppe Ferrarello found himself facing a monumental challenge as the newly-elected mayor of Gangi, Italy — an incredibly picturesque yet dwindling town nestled in the mountains of Sicily.

Like many rural communities across Italy and beyond, the village of Gangi was grappling with depopulation and economic decline. Once home to 15,000 people, its population by 2007 stood at just 7,000. Young people in particular were leaving to seek job opportunities in northern Italy and elsewhere in Europe, leaving behind aging parents and empty houses.

At first glance, the situation seemed hopeless. Gangi’s inland location far from the coast rendered it unattractive to tourists.

But Ferrarello refused to give up and adopted a bold strategy to revitalize his town through the “One Euro Houses program” — a pioneering initiative aimed at attracting new residents and rejuvenating abandoned properties.

Under the program, buyers could purchase local derelict houses for a symbolic price of just one euro… but with strings attached. New owners had to commit to restoring the properties within four years.

Ferrarello’s idea was successful in attracting foreign investors. And over the next few years, the little hamlet was recognized as the “Jewel of Italy,” and named one of the “The most beautiful Italian villages.”

New residents and tourists from Europe and beyond arrived, to the delight of the local businesses and artisans.

And over the following years, several towns across Italy, Spain, France, and even the UK launched their own projects offering housing at a ‘symbolic price’.

At face value it seems like a stupendous bargain to buy a house in Europe for just 1 euro. But are these offers really worth the strings attached?

Super cheap real estate deals across various EU countries exist because the properties are worthless to their current owners. These often-dilapidated homes are located in small towns far from major population centers and tourist attractions, and many have been abandoned for generations, requiring extensive renovation.

Property taxes, though modest, make these properties a burden. And buyers typically must commit to spending at least €35,000 to renovate the property within two to three years.

If you fail to meet these obligations, you risk losing a €1,000 to €5,000 insurance deposit held by the municipality, losing the property, or both.

Other costs include €1,500 in legal fees, and roughly €3,500 for mandatory civil engineering and architectural plans.

There’s also no guarantee that €35,000 will be enough to complete renovations; many of these properties are “historic,” meaning you can’t do whatever you want. Plenty of local regulations will government what you can and cannot do.

Therefore, renovating a small, 100 square meter (1,076 sq.ft.) home can cost between €60,000 and €160,000 to bring it to a livable and rentable condition.

Engaging in such a project could certainly benefit adventurous souls with ample free time.

But there are other challenges as well. You either need to speak Italian and be prepared for the complexities of southern European bureaucracy, or you’ll have to spend even more money on project managers.

Even if you persevere through the purchase and renovation process, consider the most probable outcome — an illiquid property in a tiny village lacking appeal to both Italians and foreigners alike. Because most of these towns aren’t as successful as Gangi at reigniting their tiny economies.

But if owning a beautiful home in Italy is your goal (and part of your Plan B), it probably makes more sense to just look at the wide selection of regular cheap properties available throughout the country.

After all, owning an Italian home does offer the allure of breathtaking scenery, cultural richness, relaxation, outdoor activities, and even an investment potential… all in one picturesque package.

Even for as low as €60,000 to €160,000, you can find a nice Italian property with no strings attached — no hunting for reliable information, no applying for remodeling and construction permits, no actual renovation, and no time wasted.

Properties almost anywhere in Italy remain remarkably cheap, as the country has, so far, missed the real estate boom experienced by its European neighbors.

As of March 2024, the average Italian property price per square meter stood at €1,850, just 6.6% higher than the nationwide low recorded in February 2020.

Property prices in Spain average €2,098 per sq.m., and €2,596 in Portugal.

And 22 provinces (out of 106) across Italy have current province-wide prices below €1,000 per square meter. That’s definitely cheap.

For example, in Gangi, the original “€1 house” village, this 151 sq.m., 3-story house in the town center offers great views, is in livable condition, and is selling for just €35,000.

(Personally, I’d rather pay 35k for the finished home than have paid 1 euro and gone through all the time, money, and work to renovate it.)

And it’s not just the cheaper southern Italy that has these deals.

Genoa — a famous port city just south of Milan, and the birthplace of Christopher Columbus — is still 47% below its 2012 peak, with plenty of options below €1,000 per square meter.

Biella — less than 90 minutes from Milan and situated right at the foot of the Alps, next to lakes, mountains, and ski resorts — offers this spacious and modern 250 sq.m. apartment located right in the town’s historic area, selling for €155,000 — a very inexpensive €620 per square meter.


Now, believe it or not, this article isn’t really about buying property in Italy. To some people, Italy may be their idyllic retirement dream. Others couldn’t care less. The larger issue is how to think about a “Plan B”.

Remember, the central idea behind a Plan B is to mitigate risks by taking sensible actions — actions which make sense regardless of what happens (or doesn’t happen) in the future.

For a lot of people, a big part of their Plan B is having a second property overseas. A second home abroad, combined with residency or citizenship, is sort of like an insurance policy: you might not ever need it… but in case you ever do, you’ll be damn glad you have one.

A second residence means that you’ll always have a place to go in case, for whatever reason, you need to leave your home country. This could be enormously valuable to you and your family.

But even if that day never comes (and hopefully it doesn’t), it’s hard to imagine you’ll be worse off for owning a nice property in a place where you really enjoy spending time– which you were able to purchase on the cheap and generate modest cashflow while you’re not using it.

For some people, Italy ticks that box. For others, it doesn’t. And for others, buying a second home isn’t the right move either. Everyone has unique, individual circumstances.

The key idea is that we can apply this same logic to other elements of a Plan B, including our finances.

For example, we have long argued why inflation will grow and become a major problem for the US dollar in the coming years; it will be extremely difficult to take on $20+ trillion in new debt in the next decade without serious, serious inflation.

Real assets are a major inflation hedge. And right now, many real assets– including key commodities and the companies which produce them — are historically cheap.

We’re talking about high quality gold or copper miners that generate fantastic profits, have virtually zero debt, and pay 8%+ dividends… yet their shares trade at laughably low valuations.

If our inflation thesis plays out as expected, these types of companies will do extremely well, and shareholders could be richly rewarded.

But even if inflation never materializes (which is highly doubtful), it still makes sense to consider owning a strong, profitable business that pays a great dividend.

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Where the price of oil is just $15/barrel

In the year 1712, an English ironworker and part-time Baptist preacher named Thomas Newcomen finally put the finishing touches on a new invention that had been more than a century in the making.

Newcomen called it the ‘atmospheric engine’, and it was essentially a very crude, rudimentary steam engine that he used to pump water.

The idea had existed since the early 1600s, and a number of inventors had attempted to create something similar. But Newcomen was the first to develop a functioning engine, and his key breakthrough was including a fuel source (wood) to heat up water and create steam.

It’s remarkable that, even to this day, most automobile engines, generators, and electrical power plants still rely on Newcomen’s basic concept: burn a fuel to create heat, then harness that heat energy to generate motion and mechanical work.

Obviously, the design has been much improved since then; James Watt perfected the Newcomen’s invention decades later with the first commercially viable steam engines (which ultimately kicked off the Industrial Revolution).

Inventors also discovered far more efficient fuel sources.

Coal, for example, was found to have more than twice as much heat energy per pound than wood… which is a key reason why coal became the most important commodity of the 1800s. But other commodities like oil and gas were later discovered to be even more fuel efficient than coal.

Today all three are still used in vast quantities. In fact, coal-fired power plants still produce over 2,300 gigawatts of electricity worldwide, which constitutes about 30% of global electricity production capacity.

Natural gas is also responsible for nearly 2,000 gigawatts (in addition to its widespread use in heating). And oil is clearly the most dominant fuel source for internal combustion engines which power global transportation.

Now, at the end of the day, all three commodities serve essentially the same purpose, i.e. they are fuel sources whose heat energy is harnessed to perform work. And because of this, their heat energy should be priced more or less the same.

For example, a barrel of oil contains the equivalent of 5.6 million British Thermal Units (BTUs) of heat energy. So, at a price of roughly $80 per barrel of oil, this is the equivalent of about $14.28 per million BTUs of heat energy.

Oil prices do vary from place to place. But the differences are fairly minor; the West Texas Intermediate price (used primarily in the US) is slightly lower than the Brent oil price (used primarily in the North Sea), but they are within a few percent of each other.

But natural gas is a totally different story.

In Europe, for example, natural gas prices are significantly higher than they are in the US and currently trade for roughly $9.12 per million BTUs. And only a few months ago, natural gas prices in Europe were nearly $14 per million BTUs, i.e. almost equivalent to oil price when measured in dollars (or euros) per million BTUs.

But natural gas prices in the US are dramatically lower than they are in Europe… and it’s easy to understand why: the US has some of the biggest natural gas reserves in the world, while Europe has almost nothing by comparison. (This is why Europe is so reliant on Russian gas).

And since Joe Biden has banned the exporting of LNG (liquefied natural gas) from the US, there’s basically nowhere for all that excess US natural gas to go.

This is why prices in the US are less than $3, versus more than $9 in Europe. If US producers were free to export, prices in the US would rise, prices in Europe would fall, the global natural gas prices would be more or less the same, just like global oil prices.

But, at least for now, LNG exports are banned… and that keeps prices incredibly cheap in the US. How cheap exactly?

Well remember that $80 oil is the equivalent of $14.28 per million BTUs of heat energy. US natural gas prices are $2.77 per million BTUs of heat energy. So, based on the price per million BTUs, natural gas is about 80% cheaper than oil in the United States.

Another way to say it is that US natural gas is priced at the equivalent of $15 for a barrel of oil… which makes US natural gas the most underpriced conventional energy commodity in the world.

Now, I say “conventional” because there is another option that blows natural gas away– and that’s nuclear.

The energy released in a nuclear reaction from just a single cubic foot of uranium is literally FIFTY BILLION times greater than the energy released from burning an equivalent amount of natural gas. So, nuclear is, by far, the cheapest and most efficient energy… which is why China, India, Russia, etc. are all feverishly building nuclear power plants.

The West, by comparison, is shutting their nuclear plants down. It is the dumbest policy imaginable.

So, at least for now, natural gas is America’s cheapest energy source. But it probably won’t stay that way for long.

First, large tech companies, which are building build massive, energy-hungry AI data centers, are also looking at putting in their own power plants… which will most likely be powered by natural gas.

This increased demand will certainly have a big impact on price.

The second catalyst is that the export ban probably won’t last. There are lawsuits, legislation, and an upcoming election, any one of which could reverse the ban and start up LNG exports once again. When this happens, US natural gas prices could quickly rise.

In either case, natural gas producers stand to benefit substantially from higher prices. And it just so happens that shares of many of the best quality producers right now are laughably cheap, with low multiples relative to earnings, book value, and Free Cash Flow.

We’ll talk about this more in the future, but our core view is that it makes a lot of sense to own ‘real assets’, i.e. scarce, high quality, productive assets that the world truly needs (and cannot be conjured out of thin air by central banks.)

Energy commodities like natural gas, and their highest quality producers, definitely fit that description, with the added benefit that they’re dirt cheap right now.

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Why are foreign countries’ borders always the priority?

This morning Spain’s Deputy Prime Minister, Yolanda Diaz, released an announcement to “celebrate that Spain recognizes Palestine State. . . [which] will be free from the river to the sea.”

This comes on the heels of her boss, the Prime Minister of Spain, announcing formal recognition of Palestine as a sovereign nation, alongside his counterparts in Ireland and Norway.

Their joint statement preached that “We believe in freedom and justice” and that “permanent peace can only be secured on the basis of the free will of a free people.”

High sounding language. Too bad the Prime Minister doesn’t apply the same logic to his own country, which is inundated with its own separatist, independent movements from the Basque Country to Catalonia to Galicia.

In 2017, for example, “the free will of a free people” in Spain’s Catalonia region voted overwhelmingly (92% to 8%) to become an independent, sovereign state. Leaders of the movement were soon arrested by the Spanish government and put on trial.

But, hey, governments these days tend to be far more interested with foreign borders than their own.

The US is overrun with migrants at the southern border… yet Congress has spent far more time worrying about Ukraine’s border.

All of these European countries that are virtue-signaling over Palestine’s borders have allowed their own nations to become completely overrun with refugees… who are then coddled at taxpayer expense with free housing, food, and other welfare programs.

In completely unrelated news, crime rates in these same countries have skyrocketed, including sexual assault of children.

But the invasion of their own borders is not a concern. They are only interested in Palestine– which they claim to be a “free people”. This is completely naive.

Palestinians aren’t free. They are hostages of the Hamas, a terrorist organization masquerading as a government.

People in Gaza are obviously suffering immeasurably. Yet for some reason none of these Inspired Idiots in Europe are willing to state the obvious about Hamas.

Hamas hold sham elections to keep themselves in power while deliberately depriving their own people of food, water, and basic services in order to pin the blame on Israel and create sympathy for their cause.

Hamas also notably puts military assets inside of the most inviolable civilian institutions, like schools and hospitals.

Yet there’s not a word about this from virtue-signaling European politicians.

It also strikes me as quite bizarre that, while they now assert that Palestine is a sovereign nation, these same people refuse to recognize Taiwan.

So, what happened to that “free will of a free people” logic? Apparently, for these Inspired Idiots, it doesn’t apply when you’re suckling on that Chinese money teat.

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The Fed is already insolvent. Here’s how we think this plays out

On Tuesday, September 15, 1992, the two most powerful financial officials in the British government held an urgent meeting that night to review their plan for when the markets opened the next morning.

The tone of the meeting must have felt frantic… even desperate… because the value of the British pound had been falling for weeks.

Investors and speculators were rapidly losing confidence in the UK government, mostly due to the ridiculous “Exchange Rate Mechanism” (ERM) which essentially pegged most European currencies to the German Deutschemark.

Rational investors viewed the ERM as an almost comical impossibility.

Germany’s economy was light years ahead of everyone else. Germany had vastly higher productivity, far greater savings, low inflation, high growth, and much more responsible monetary policy.

So, to even pretend that a country like Italy or even Britain could fix its exchange rate to the Deutschemark, i.e. to essentially mirror Germany’s economic performance– was a total joke.

Britain joined the Exchange Rate Mechanism in October 1990. Prime Minister Margaret Thatcher had spent years trying to keep Britain out of the ERM, viewing it as giving up national sovereignty.

But Thatcher was about to retire. And the new batch of leaders insisted that pegging Britain’s economy to Germany was the way forward.

Their experiment didn’t even last two years. By the summer of 1992, inflation in Britain was more than 3x German’s. Plus, Britain had a major budget deficit.

Financial speculators correctly recognized, given the massive disconnect between the British and German economies, that Britain would not be able to maintain its fixed exchange rate with the Deutschemark.

So, traders began short selling the British pound, i.e. betting that the value of the pound would fall because the British government would devalue its currency.

The sell-off reached a crisis on September 15th, when the head of Germany’s central bank suggested to the Wall Street Journal that weaker countries (like Britain) would have to devalue their currencies.

That’s what led the British Chancellor of the Exchequer and head of the Bank of England– the two most powerful policymakers in British government finance– to meet that evening.

They knew that the German central bank’s comments would encourage even more traders to dump the British pound. So, the two men pledged to do ‘whatever it takes’ to defend the pound and defeat the speculators.

It didn’t work.

The following morning on September 16th, the Bank of England did everything it could. They raised interest rates, they bought back pounds, they bought government bonds, they made all sorts of outlandish promises.

But speculators didn’t believe any of it. They could see the numbers, and they knew that the Bank of England simply didn’t have the financial resources to maintain such an unrealistic exchange rate.

One of those speculators was George Soros, who famously bet $10 billion against the British pound… far exceeding the Bank of England’s financial resources.

By the end of that day, the British central bank had exhausted its capital and was essentially bankrupt. The British government had to bail them out to the tune of 3 billion pounds, and then announce that they were formally leaving the ERM– proving the speculators right.

This is an important story to understand, because it’s likely that something similar may happen to the Federal Reserve and US dollar over the next several years.

The Federal Reserve is already insolvent.

According to its most recent annual financial statements, the Fed has just $51 billion in equity, versus a whopping $948 billion in mark-to-market losses. This means the Fed is insolvent by roughly $900 billion.

This is a big problem. Remember that the Fed is still a bank, i.e. it has financial obligations, liabilities, and depositors that it needs to pay.

For example, commercial banks like JP Morgan and Bank of America have deposited a total of $3.4 trillion of their customers’ money, i.e. YOUR money, with the Fed. And the Treasury Department holds another $700 billion deposit at the Fed.

The Fed owes money to foreign governments. They owe trillions of dollars from repurchase agreements to banks and businesses across the global financial system.

So, yeah, the insolvency of the Federal Reserve is a pretty big deal. Yet, at least for now, no one is saying a word about it.

But just like the Bank of England in 1992, sooner or later, someone is finally going to say something… and do something… about the Fed’s insolvency.

There’s a good chance that means betting against the dollar… just like speculators bet against the pound three decades ago. And that would ultimately reduce the value of the dollar, increase inflation, and trigger a new ‘Bretton Woods’ agreement in which the US dollar is no longer the world’s reserve currency.

George Soros became known as “The Man Who Broke the Bank of England”. (Though given his malign proclivity to fund progressive activists, he is known by several other names in my household, none of them reverent.)

Within the next several years there could be some Chinese or Russian financier who becomes known as “The Man Who Broke the Fed”.

This isn’t sensational. The Fed is already insolvent by $900+ billion, according to its own financial statements. Social Security is insolvent. The US government is insolvent by tens of trillions… and they further anticipate the national debt to grow by $20 trillion over the next decade.

These are facts, not fantasies.

And this is why it makes so much sense to hedge these risks by owning real assets which are scarce, valuable, and uncorrelated to the US dollar.

Gold is a great example. And as we’ve argued before, even though it’s already near its all-time high, we believe it can go much higher from here.

More on that soon.

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Civil War… Really?

On July 12, 1648, dozens of angry French politicians gathered at the hallowed Palais de Justice in Paris to draft the final ultimatum that would be sent to their nine-year-old king, Louis XIV.

The politicians were all members of France’s national parliament, and, like most modern politicians, they were almost all lawyers who lived extremely privileged lives at the expense of French taxpayers.

In France, most aristocrats historically came from a group known as the noblesse d’épée, essentially Knights of the Sword. They were warriors who had fought valiantly and had won their power for their dedicated service to France.

This new class of politicians, however, came from a different group known as the noblesse de robe. They had never fought or bled for France, and rather had spent their lives in academia and law school without any understanding of the real world.

And while they claimed that their political crusade was all about ‘the people’, it was obvious that they just wanted more power for themselves.

France was just coming out of the Thirty Years’ War. The King was just a boy. The chief minister– Jules Mazarin– was extremely unpopular. So, these politicians saw an opportunity to take power.

They relied on their friends in the media to create divisions in French society– Catholics versus Huguenots, peasants versus merchants– and before long there was talk of civil war. And it didn’t exactly go as planned.

On August 27, a few weeks after submitting their ultimatum, roughly 160 politicians marched to the royal palace. They were joined by a small crowd of peasants who were dumb enough to believe that these nobles actually cared about commoners’ problems.

The royal court initially decided to placate and respect the crowd, so Louis’ mother took him outside of the city for a while. The politicians and their peasant followers immediately declared victory and turned Paris into a sort of ‘autonomous zone’.

But as months went by and nothing really improved, many of the peasants began to realize that they were just pawns in the noble’s attempt to seize power and turn France into an even worse feudalist state.

Eventually the boy king returned– this time with his army. And suddenly the rebel nobles realized that their civil war was about to get real. Trained, professional fighters were about to march through Paris and vanquish all the sissy elites who had never fought a day in their lives.

Sure, the elites knew how to write angry letters. They knew how to use the media to stoke divisions and call their opponents all sorts of horrible names. They knew how to talk tough. And if they were alive today, they’d probably be really great at making TikTok videos.

But they were ultimately a bunch of cowards who weren’t even willing to get a bloody nose for their so-called beliefs. And France’s ‘civil war’ was over in no time.

This is one of the great lessons from history: it’s easy to pretend that you stand for something when the cost for doing so is absolutely nothing. You only find out what people truly believe when their own blood and livelihood is on the line.

In our modern era, we have equally incompetent, idiotic, wimpy politicians who are devoid of backbone. They have no clue how the real world works, and they live a life of lavish status courtesy of the taxpayer.

They, too, have stoked division and animosity among the population. People used to be able to disagree with one another civilly. Now countless fanatics viscerally hate the other side and call for large groups of people, whether ‘billionaires’ or ‘Trump Supporters’ or ‘oil execs’, etc. to be lined up against the wall and shot.

There is no rational discourse anymore, only shouting matches, angry Twitter feuds, and ‘mostly peaceful’ protests. The takeover of so many college campuses across the Land of the Free is a testament to how far civil discourse has fallen.

It’s so bad that a number of polls suggest up to 43% of Americans think another civil war is coming within a decade. Even Ray Dalio– billionaire founder of the world’s largest hedge fund– recently said the same thing in an interview with the Financial Times last week. Some politicians and vocal social media personalities have also called for a ‘national breakup’.

Given that there’s even a Hollywood production out in the theaters right now literally called Civil War about a future breakdown of the US, we thought it was time to weigh in with a dose of reality.

Let’s be honest: an actual “war”, i.e. shooting, violence against violence, etc. isn’t going to happen.

Just like the French civil war in the mid-1600s, the majority of the hyper-angry progressive rebels in America today are elitist cowards. One need only take a look at the people who have taken over the universities: they’re idiot kids, not terrifying holy warriors.

Sure, it’s easy to look tough and storm an administrative building when your spineless university president tacitly (or explicitly) supports your cause.

But the second there’s any real violence, i.e. someone who fights back, they’ll all run away in an instant. They can’t even take a bloody nose.

Bear in mind, these progressives are the same people who hate firearms and want to ban them. And aside from a handful of Antifa thugs, the leftists are a bunch of wimps who have zero chance in combat.

It’s also worth pointing out that most of them stand for nothing. Remember the ‘defund the police’ politicians who quickly changed their tune as soon as they got carjacked or robbed?

They’re physical and intellectual cowards, worthy of pity… not fear. And that’s why, on the list of risks that I think about, civil war is really, really far down the list.

That energy is far better devoted to real problems– like, how to prevent the erosion of one’s savings from inflation. Or how to mitigate the consequences of the dollar losing its reserve status. Or how to make sure the insolvency of Social Security doesn’t turn one’s life upside down.

These are risks that have actual solutions, so you can control the outcome. The notion of civil war might be provocative and capture headlines, but it’s a waste of time to even think about.

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Inspired Idiot of the Week: The FDIC’s Swamp Man

If you want to understand the complete dysfunction of the federal government, look no further than the case of Marty Gruenberg.

At least for now– and hopefully not much longer– he is the petty tyrant in charge of the FDIC (Federal Deposit Insurance Corporation); he has served in that position for 10 out of the last 13 years and has been on the FDIC’s board since 2005.

In short, Gruenberg is the FDIC, and FDIC is Gruenberg.

This makes him extremely culpable for what a recent investigation into the FDIC describes as a destructive culture of “sexual harassment and interpersonal misconduct” that is “hostile, abusive, [and] unprofessional”.

For example, several FDIC meetings took place at strip clubs while female employees were openly rated on their looks… and expected to have sex with their male supervisors in exchange for promotions and higher ratings.

Senior bank examiners routinely sent dick pics to the women on their teams and spoke openly in the workplace about sex with their subordinates.

Complaints of sexual harassment at the FDIC are off the charts. Yet management seldom disciplined anyone. Quite often, in fact, agency executives ‘solved’ the sexual harassment problem by promoting serial offenders to higher positions, just to get them out of the field.

Meanwhile, black employees were told they were “token” hires to fill a quota. Gay employees were referred to as “little girls,” which led to several employees to pretend to be straight.

All of this occurred under the leadership of Gruenberg– a loyal lieutenant of the Biden-Obama- Lizzie Warren syndicate– all of whom claim to be champions of #MeToo, Black Lives Matter, and LGBTQ+ pride.

But as it turns out, these people stand for absolutely nothing. More on that in a moment.

If these findings weren’t damning enough, the investigation also revealed that Martin Gruenberg is just a terrible human being. He’s a horrific boss with a nasty personality and short temper.

Employees described Gruenberg as “aggressive,” “harsh,” “emotional,” “vitriol[ic],” “prosecutorial,” “disrespectful,” and having a “short fuse.” And it is their belief that it would be nearly impossible to have “a cultural transformation that prioritizes a more positive workplace culture” under Gruenberg.

The investigators also noted that employees across the FDIC had “a great reluctance to deliver bad news to Marty Gruenberg,” because he would explode, and “shoot the messenger” rather than focus on solving the problem.

Remember, the FDIC is the agency that oversees banks. And employees were terrified to tell the boss that banks were in trouble. Gee, what a surprise that a bunch of banks failed!

It’s worth mentioning that Gruenberg’s boss, President Biden, made a promise when he was elected:

“I’m not joking when I say this: If you’re ever working with me and I hear you treat another colleague with disrespect, talk down to someone, I promise you I will fire you on the spot. On the spot. No ifs or buts.”

Yet has Gruenberg been fired? Nope. Why is that?

Because if Biden fires Gruenberg, he’d have to nominate a replacement… who would then have to clear a risky Senate confirmation. And if that confirmation failed, the Vice Chairman of the FDIC would take over the agency.

And since the Vice Chairman is from the other party, Joe Biden is sticking with the swamp creature Marty Gruenberg.

This really just proves how these people stand for absolutely nothing. All they care about is their stupid party. They don’t care about the employees at the FDIC. They don’t care about the safety of the banking system. They don’t care about any of the principles they claim to support, i.e. #metoo, BLM, LGBTQ+, mental health, etc.

All they care about is their party.

Even Elizabeth Warren, who has been outspoken against Wall Street “boy’s clubs” and inappropriate work environments in the financial sector, has been defending Gruenberg and fighting to keep him in his job.

Almost no one is speaking out against the blatant misogyny, racism, and homophobia under Gruenberg’s watch.

Because, again, they don’t actually care. They only pay lip service to these ideas when it benefits them.

By the way, Gruenberg is far from the only case of an incompetent, destructive federal official keeping his/her job.

A recent Congressional investigation also found the FTC to be a “toxic work environment” and “beset by dysfunction and chaos stemming from poor leadership and ideological bullying of its Chair [Lina Khan]”. She, too, remains in her job.

Alejandro Mayorkas, the guy in charge of securing the overrun southern border as head of Homeland Security, also still has his job.

Rachelle Wolensky, who was in charge of the CDC during COVID, was so incompetent that even far-left news outlets wanted her resignation. You probably remember the CDC’s incomprehensible guidance regarding masks, vaccines, social distancing, and more. Plus she infamously tried to commandeer authority to take over the entire $10+ trillion US housing market… before being shot down by the Supreme Court.

She, too, was never fired.

And don’t even get me started on Tony Fauci, who was given a lush retirement with honor and distinction, not to mention a huge pension.

These are just a few of the bigger names which don’t even scratch the surface of countless career bureaucrats who should have been fired a long time ago.

Don’t get me wrong– there are so many amazing people who work for the government. But the bureaucracy has created a system where it’s easier to promote bad apples and keep them around than to fire them. No wonder so many hapless stooges rise to the top.

We talk so much about the trajectory of the US economy. And frankly, the complete dysfunction and lack of confidence in the federal government has a lot to do with it.

Fixing this is no mystery: a private company would eliminate the rot and bring in new leadership to change the culture.

But if the people in charge were going to change anything, they would have done it already. They simply don’t care.

They’d rather accept the incompetence and put the needs of their pathetic political party ahead of the country.

So even though America’s problems can be fixed, I’m not holding my breath. And that’s why it’s so important to have a Plan B.

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Peter Schiff: Don’t buy the Fed’s celebratory gunfire

Did you hear the cheering in the streets? The celebratory gunfire coming from the Federal Reserve? The champagne bottles across Wall Street being uncorked?

What’s got people so excited today is the monthly CPI report— which showed consumer prices increasing by ‘only’ 3.4% year-over-year. And core inflation, which strips out food and energy prices, increased by ‘only’ 3.6%.

That was about 0.1% better than last month, so, of course, both the Fed and the White House are doing a victory lap. Expect Joe Biden to ramble incoherently about his economic prowess any moment now.

This inflation report was all the market needed to jump right back into the fantasy that inflation is licked… and the Fed can quickly and safely start cutting rates again.

But even a quick look at the numbers shows a far less optimistic appraisal.

Month-over-month inflation was 0.3%. Compounded at annualized rate, this means that the current inflation path is HIGHER.

More importantly we can see prices in the real economy… including the prices of some of the most critical commodities and natural resources in the world.

Oil prices remain high. Copper prices are at an all-time high of more than $5 a pound, up over 30% so far in 2024. Neither of these is consistent with falling inflation.

Frankly I don’t really care what the Fed is telling me about inflation. I care a lot more about what copper is telling me. And these all-time high copper prices are telling me that inflation won’t be going down to 2% anytime soon.

Think about it: copper, plus a number of other commodities including energy, are critical inputs. If their prices are surging, then nearly everything we buy, build, and even eat will also rise in price.

Furthermore, think about what really caused inflation to begin with: the Fed printed an absurd quantity of money during the pandemic, and government deficits went through the roof.

What has fundamentally changed since then?

Government deficits are still through the roof. The Fed has barely decreased its balance sheet (and they’re already positioning for another round of quantitative easing).

On top of that, the White House, in keeping with its Marxist traditions, consistently goes out of its way to make things more difficult for people to produce… especially if you happen to be producing some of the most important and critical commodities in the world.

So, the inflation picture still isn’t very pretty.

On top of that, their own recent data including both manufacturing and retail reports, show more economic weakness. Combined with the inflation outlook, signs continue to point to stagflation.

Gold may be trading near an all-time high right now, but I still think it’s the best long-term hedge against inflation (and stagflation), especially for people who are based in US dollars.

And as my business partner James wrote recently, gold will be the most likely replacement for the US dollar as global reserve standard.

That means that central banks around the world will continue to buy it by the metric ton, pushing prices even higher.

I’d also point out the massive disconnect between the price of gold, which is surging higher from central bank buying, versus the price of gold mining stocks.

Central banks buy physical gold bullion. They do not buy mining stocks. As a result, gold prices are surging higher, but gold mining companies have barely moved. So, there’s a lot of good value in that sector right now.

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Why the dollar will lose its status as the global reserve currency

By the early 400s, the Roman Empire was coming apart at the seams and in desperate need of strong, competent leadership. In theory, Honorius should have been the right man for the job.

Born into the royal household in Constantinople, Honorius had been groomed to rule, practically since birth, by the finest experts in the realm. So even as a young man, Honorius had already accumulated decades of experience.

Yet Rome’s foreign adversaries rightfully believed Honorius to be weak, out of touch, divisive, and completely inept.

He had entered into bonehead peace treaties that strengthened Rome’s enemies. He paid vast sums of money to some of their most powerful rivals and received practically nothing in return. He made virtually no attempt to secure Roman borders, leaving the empire open to be ravaged by barbarians.

Inflation was high. Taxes were high. Economic production declined. Roman military power declined. And all of Rome’s foreign adversaries were emboldened.

To a casual observer it would have almost seemed as if Honorius went out of his way to make the Empire weaker.

One of Rome’s biggest threats came in the year 408, when the barbarian king Alaric invaded Italy; imperial defenses were so non-existent at that point that ancient historians described Alaric’s march towards Rome as unopposed and leisurely, as if they were “at some festival” rather than an invasion.

Alaric and his army arrived to the city of Rome in the autumn of 408 AD and immediately positioned their forces to cut off any supplies. No food could enter the city, and before long, its residents began to starve.

Historians have passed down horrific stories of cannibalism– including women eating their own children in order to survive.

Rather than send troops and fight, however, Honorius agreed to pay a massive ransom to Alaric, including 5,000 pounds of gold, 30,000 pounds of silver, and literally tons of other real assets and commodities.

(The equivalent in today’s money, adjusted for population, would be billions of dollars… similar to what the US released to Iran in a prisoner swap last year.)

Naturally Honorius didn’t have such a vast sum in his treasury… so Romans were forced to strip down and melt their shrines and statues in order to pay Alaric’s ransom.

Ironically, one of the statues they melted was a monument to Virtus, the Roman god of bravery and strength… leading the ancient historian Zosimus to conclude that “all which remained of Roman valor and intrepidity was totally extinguished.”

Rome had spent two centuries in the early days of the empire– from the rise of Augustus in 27 BC to the death of Marcus Aurelius in 180 AD– as the clear, unrivaled superpower. Almost no one dared mess with Rome, and few who did ever live to tell the tale.

Modern scholars typically view the official “fall” of the Western Roman Empire in the year 476. But it’s pretty clear that the collapse of Roman power and prestige took place decades before.

When Rome was ransomed in 408 (then sacked in 410), it was obvious to everyone at the time that the Emperor no longer had a grip on power.

And before long, most of the lands in the West that Rome had once dominated– Italy, Spain, France, Britain, North Africa, etc. were under control of various Barbarian tribes and kingdoms.

The Visigoths, Ostrogoths, Vandals, Franks, Angles, Saxons, Burgundians, Berbers, etc. all established independent kingdoms. And for a while, there was no dominant superpower in western Europe. It was a multi-polar world. And the transition was rather abrupt.

This is what I think is happening now– we’re experiencing a similar transition, and it seems equally abrupt.

The United States has been the world’s dominant superpower for decades. But like Rome in the later stage of its empire, the US is clearly in decline. This should not be a controversial statement.

Let’s not be dramatic; it’s important to stay focused on facts and reality. The US economy is still vast and potent, and the country is blessed with an abundance of natural resources– incredibly fertile farmland, some of the world’s largest freshwater resources, and incalculable reserves of energy and other key commodities.

In fact, it’s amazing the people in charge have managed to screw it up so badly. And yet they have.

The national debt is out of control, rising by trillions of dollars each year. Debt growth, in fact, substantially outpaces US economic growth.

Social Security is insolvent, and the program’s own trustees (including the US Treasury Secretary) admit that its major trust fund will run out of money in just nine years.

The people in charge never seem to miss an opportunity to dismantle capitalism (i.e. the economic system that created so much prosperity to begin with) brick by brick.

Then there are ubiquitous social crises: public prosecutors who refuse to enforce the law; the weaponization of the justice system; the southern border fiasco; declining birth rates; extraordinary social divisions that are most recently evidenced by the anti-Israel protests.

And most of all the US constantly shows off its incredibly dysfunctional government that can’t manage to agree on anything, from the budget to the debt ceiling. The President has obvious cognitive disabilities and makes the most bizarre decisions to enrich America’s enemies.

Are these problems fixable? Yes. Will they be fixed? Maybe. But as we used to say in the military, “hope is not a course of action”.

Plotting this current trajectory to its natural conclusion leads me to believe that the world will enter a new “barbarian kingdom” paradigm in which there is no dominant superpower.

Certainly, there are a number of rising rivals today. But no one is powerful enough to assume the leading role in the world.

China has a massive population and a huge economy. But it too has way too many problems… with the obvious challenge that no one trusts the Communist Party. So, most likely China will not be the dominant superpower.

India’s economy will eventually surpass China’s, and it has an even bigger population. But India isn’t even close to the ballpark of being the world’s superpower.

Then there’s Europe. Combined, it still has a massive economic and trade union. But it has also been in major decline… with multiple social crises like low birth rates and a migrant invasion.

Then there are the energy powers like Russia, Iran, Saudi Arabia, and Indonesia; they are far too small to dominate the world, but they have the power to menace and disrupt it.

The bottom line is that the US is no longer strong enough to lead the world and keep adversarial nations in check. And it’s clear that other countries are already adapting to this reality.

Earlier this month, for example, China successfully launched a rocket to the moon as part of a multi-decade mission to establish an International Lunar Research Station.

By 2045, China hopes to construct a large, city-like base along with several international partners including Russia, Pakistan, Thailand, South Africa, Venezuela, Azerbaijan, Belarus, and Egypt. Turkey and Nicaragua are also interested in joining.

This is pretty remarkable given how many nations are participating, even if just nominally. Yet the US isn’t part of the consortium.

This would have been unthinkable a few decades ago. But today the rest of the world realizes that they no longer need American funding, leadership, or expertise.

We can see similar examples everywhere, most notably in Israel and Ukraine. And I believe one of the next shoes to drop will be the US dollar.

After all, if the rest of the world doesn’t need the US for space exploration, and they can ignore the US when it comes down to World War 3, then why should they need the US dollar anymore?

The dollar was the clear and obvious choice as the global reserve currency back when America was the undisputed superpower. But today it’s a different world.

Foreign nations continuing to rely on the dollar ultimately means governments and central banks buying US government bonds. And why should they take such a risk when the national debt is already 120% of GDP?

In addition, Congress passed a new law a few weeks ago authorizing the Treasury Department to confiscate US dollar assets of any country it deems an “aggressor state.”

While people might think this is a morally righteous idea, the reality is that it will only turn off foreign investors. Why should China, Saudi Arabia, or anyone else buy US government bonds when they can be confiscated in a heartbeat?

All of this ultimately leads to a world in which the US dollar is no longer the dominant reserve currency. We’re already starting to see signs of that shift, and it could be in full swing by the end of the decade.

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The ‘Passport Price War’ ends on June 30, 2024

In 1983, the tiny Caribbean islands of Saint Kitts and Nevis were among the last colonies to finally gain independence from Great Britain’s dissolving empire.

The two islands joined to become one country. And with fewer than 50,000 inhabitants, its microscopic economy was almost entirely dependent on sugar production… which can be an incredibly volatile and unpredictable industry.

So, in an effort to diversify and grow the economy, the government hatched a new idea: a “citizenship by investment” program whereby foreign investors could become citizens of St. Kitts and Nevis in exchange for a sizable investment in the country (including an option to purchase real estate).

It was an extremely clever idea. Most small countries who struggle to make ends meet usually end up borrowing lots of money from investors, which is known as ‘sovereign debt’. The Citizenship by Investment program in St. Kitts & Nevis essentially created the concept of ‘sovereign equity’.

This program became highly successful. So, naturally, like all good ideas, the St. Kitts & Nevis Citizenship By Investment program was copied all throughout the region.

By 2016, five different Caribbean countries offered economic citizenship programs— St. Kitts and Nevis, Dominica, Antigua and Barbuda, Grenada, and Saint Lucia.

Then a series of hurricanes (2017), followed by the Covid pandemic, devastated the Caribbean tourism industry. So, these governments began to rely very heavily on their citizenship programs to bring in revenue.

Since there was very little to differentiate one island’s citizenship from another, the governments entered into a full-blown price war. So, whereas $500,000 was once a common price for a Citizenship by Investment program, governments began to slash the price tag down to just $100,000.

(Technically, this $100,000 option isn’t really an investment, i.e. you don’t get your money back. So, it’s really more of a donation.)

Over the years, a total of around 88,000 people have received passports through these programs.

Bear in mind that granting citizenship in exchange for an investment in the country is not some illicit, dodgy scam; these are fully transparent government programs based on legislation passed by their respective parliaments.

Clearly, as sovereign nations, it is up to them to decide how best to raise revenue. Except that the European Union disagreed and threw a hissy fit…

It turns out that the bureaucrats in the EU believe that these Caribbean citizenship-by-investment programs are security threats.

Granted, these same bureaucrats happily ignore the millions of migrants who invade Europe year after year without so much as a background check. But fewer than 100,000 ‘economic citizens’ over a 40-year period? Massive security threat.

You can’t even begin to make up some idiotic logic.

So, these Eurocrats have been making a ton of noise and pressuring Caribbean nations to stop the Citizenship by Investment programs, or, at a minimum, to raise the price in order to reduce demand. Any country who didn’t comply risked losing its visa-free travel to Europe.

So, several weeks ago, the leaders of four Caribbean countries – Antigua and Barbuda, Dominica, Grenada, and Saint Kitts and Nevis – signed a Memorandum agreeing to raise the minimum investment threshold to $200,000, effectively doubling the cost of the cheapest options.

(Saint Lucia did not sign the agreement citing “contractual arrangements” that could open them up to legal action if they raised prices. But said they intend to sign “once it becomes possible.”)

The deadline for the price change is June 30, 2024. This means that anyone who acts swiftly can still qualify under the old pricing.

Single applicants can still grab a Saint Lucia passport for as little as $121,050 including all fees, or an Antigua and Barbuda passport for $149,800 all in. Technically Dominica is a little cheaper, but we don’t recommend the program because Dominica has already lost visa-free access to the UK and Ireland.

Dependents add to the cost; you can use our CBI calculator here to see the best option for your situation.

(Remember that our Total Access members actually pay even lower price for these programs, bringing the cost to as low as $108,050.)

But again, these prices for economic citizenship will go up at the end of June.

Now, economic citizenship is just one way to gain a second passport… and it might not be the right way for you. It’s generally fast and practically guaranteed. But, let’s be honest, it’s expensive for a lot of people.

Some lucky folks can claim citizenship through ancestry, practically for free. Italy, Ireland, Greece, and Poland, for example, each offer citizenship to individuals who can trace their descent through official documentation.

Or you could naturalize in a country to gain citizenship by spending a certain amount of time living there with legal residency. In Argentina it’s as little as two years; five years in Mexico and Portugal, and ten years in Spain, Italy, and Greece.

A second passport is such a valuable part of a Plan B because it is like an insurance policy, protecting you against unknown future risks.

For example, it should be obvious that the US is a deeply divided society that is deteriorating quickly. Think about how much has changed in the past decade alone and try to imagine what society will look like ten years from now.

It’s hard to say… but the trend doesn’t look good.

A second passport is like an insurance policy for all these future risks and uncertainties.

It’s not some magical document that will solve all your problems or take every risk off the table. But having a second passport does mean that, no matter what, you and your family will always have a place to go if you ever need it.

Hopefully you don’t. Hopefully you don’t need your home insurance policy either.

But if the day ever comes that you do need it, then it will be too late at that point to get started.

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