Category: zerohedge

While Pfizer and several drugmakers have loudly touted their decision to roll back some price hikes on popular drugs following pressure from President Trump and the rollout of a new California law designed to discourage drug companies from raising prices, others have continued hiking prices of thousands of drugs. According to Raymond James & Associates drug companies have raised prices 3,653 times on 1,045 different drugs so far this year (drug companies often do one round of price hikes in January and another in the early summer). And according to the Wall Street Journal, the biggest price increases have been reserved for so-called “Cadillac” drugs like a new spray form of the sleeping medication Ambien.

Some of the price hikes impacted life-saving drugs like Ampyra, which is used to treat multiple sclerosis. Its owner, Acorda, hiked its price by 20% this year.

As for the sleep medication mentioned above, a small Colorado-based company called Aytu Bioscience recently raised the price of the spray formulation sold under the brand name Zolpimist by more than 800%, according to WSJ. 

The median price increase is 8%, but some specific increases have been far greater. Aytu BioScience Inc. raised the list price of a 7.7 milliliter bottle of its sleep aid Zolpimist to $659 from $69.88, while increasing the price of a 4.5 milliliter bottle by 747% to $329.50, according to RELX PLC’s Elsevier Gold Standard Drug Database. The drug is a spray version of zolpidem, the key ingredient in Ambien, which is widely available as cheap generic pills.

In a tactic reminiscent of Valeant Pharmaceuticals and Martin Shkreli’s Turing Pharmaceuticals, Aytu bought the rights to sell Zolpimist in the US from a Canadian firm called Magna Pharmaceuticals, then jacked up the price.

Aytu, of Englewood, Colo., raised the price of Zolpimist on Tuesday, about a month after buying the rights to sell the drug in the U.S. and Canada from Magna Pharmaceuticals Inc. The practice of buying rights and then raising the price, by companies including Valeant Pharmaceuticals under then-CEO Michael Pearson and Martin Shkreli’s Turing Pharmaceuticals AG, has drawn criticism from public officials and others because the companies didn’t invest in developing the drugs.

Asked by the paper for his company’s reason for hiking the price of the drug, Aytu CEO Josh Disbrow said the company was just bringing the price of Zolpimist in line with other comparable drugs. He added that people who can’t afford the spray version can buy the generic pill form instead. The drug, he said, was designed for the small number of wealthy patients who prefer the oral spray over lower priced pills.

Chief Executive Josh Disbrow said Aytu raised Zolpimist’s list price to bring it in line with the cost of other brand-name sleep drugs. He said Zolpimist was for the small number of patients willing to pay more, often out of their own pockets, for the oral spray than for lower-priced pills.

“For those people who want a Cadillac, they can pay for it,” Mr. Disbrow said in an interview.

Aytu’s increase in the list price of Zolpimist was among the biggest increases taken in the middle of this year, according to Elsevier’s data on the wholesale-acquisition cost of prescription drugs. Bloomberg earlier reported the Zolpimist increases.

[…]

Mr. Disbrow said Aytu’s increases for Zolpimist were different than other examples because the drug is for a lifestyle condition rather than a life-threatening disease, and generic options are available.

“It’s a luxury item. Patients can choose to be on the generic. We want to have it out there for patients who value their rapid sleep,” Mr. Disbrow said. He added that Aytu, which sells a drug for low testosterone, doesn’t depend on the Zolpimist price increases to raise sales. Aytu reported $2.7 million in revenue for the nine months ending March 31.

Mr. Disbrow said he expected most sleep-aid patients would buy the generics, and health plans would require people to try the generics before looking at other options. Doctors write more than 30 million zolpidem prescriptions a year, though fewer than 2,000 of them for Zolpimist, he said.

Still, the thousands of price hikes on Zolpimist and other drugs show that presidential pressure isn’t enough to stop drug companies from raising prices and for engaging in tactics like buying selling rights and then hiking prices.

“These types of increases indicate that public criticism, even from President Trump, are not enough to change the trajectory of drug costs,” said Michael Rea, chief executive of Rx Savings Solutions, which sells software to help employers and health insurers lower their drug spending.

Then again, when drug companies can sell one drug in the US for nearly $40,000 – and the same drug in Europe for $8 – there’s quite a bit of incentive for the gangster capitalists who run the world’s pharmaceutical firms to simply submit without a fight.

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Authored by Mac Slavo via SHTFplan.com,

Police in New Jersey have officially crossed the [thin blue] line and literally attempted to confiscate guns from an army veteran without a warrant.  But it didn’t go as planned, because  Leonard Cottrell Jr. refused to comply with the orders of the cops.

Eventually, all gun confiscation will be carried out by the police; who “don’t make the laws, they just enforce them,” and Cottrell found this out the hard way.  After serving two tours in Operation Iraqi Freedom overseas, Cottrell found himself at end of the state’s tyrannical oppression and gun elimination scheme.

Troopers came to take dad’s guns without a warrant. He said ‘no’ https://t.co/Tw9ylyLqg1 pic.twitter.com/FfhUNB6sip

— NJ.com (@njdotcom) July 12, 2018

According to The Daily Wire, two police officers were given orders to go to Cottrell’s home to confiscate his guns.  The order followers complied, and “because [Cottrell’s] 13-year-old son had made a comment at school about the Millstone Middle School’s security, and the officers wanted to confiscate Cottrell’s firearms as part of an investigation,” NJ.com reported. But Cottrell disobeyed and defied the orders of the police.

Cottrell legally owns a shotgun and a handgun (not quite a cache of weapons by any stretch of the imagination) but based solely on comments made by his 13-year-old son, police demanded all his guns.  According to the report by The Daily Wire, Cottrell says that his wife let the officers into their home and let them search their sons’ room where they did not find any weapons. But the search didn’t end there. The officers then made attempts to try to take his firearms, which “he has all the correct permits to own.”

“No one from the state was going to take my firearms without due process,” Cottrell said, according to NJ.com.  According to New Jersey law, signed into law Cottrell’s disobedience is “illegal.”  Democrat Governor Phil Murphy a bill that makes it incredibly easy for law enforcement to confiscate firearms without due process and for seemingly any reason the state deems.

Cottrell said that his son is also very upset by the situation.

The teenager did not do anything wrong and the entire situation is being misconstrued and blown up.

“He didn’t do anything wrong, and he doesn’t understand why it happened — he was just having a conversation with nothing as far as threats,” Cottrell said. “It shouldn’t have blown up the way it did. But he understands it happened, there are consequences and there’s fallout from his actions.”

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The New York Times has published an exclusive look at just how a small group of Israeli Mossad agents pulled off what surely constitutes the most daring secret raid behind enemy lines in recent history which successfully netted tens of thousands of secret Iranian nuclear documents.

It begins spectacularly as if a James Bond spy thriller: “The Mossad agents moving in on a warehouse in a drab commercial district of Tehran knew exactly how much time they had to disable the alarms, break through two doors, cut through dozens of giant safes and get out of the city with a half-ton of secret materials: six hours and 29 minutes.” And yes, the story does make an explicit appeal to Hollywood: Last year, the spies began planning a heist that one senior Israeli intelligence official said bore a strong resemblance to George Clooney’s adventures in “Ocean’s 11”, parrots the NYT.

Times journalists detail the story they received from Israeli intelligence officials (who else?) after being invited to view select documents said to have originated from the theft, which involved less than a dozen Israeli operatives hauling the “half-ton of secret materials” said to be the smoking gun proving Iran has continued to pursue nuclear weapons in spite of agreeing to abandon the program as part of the 2015 JCPOA brokered under Obama.

Last April, Israeli Prime Minister Benjamin Netanyahu made precisely these charges in a televised address in which he unveiled the stolen cache of about 55,000 pages of documents and 183 CDs that he claimed comprises Iran’s alleged “atomic archive” supposedly proving the existence of an illegal and ongoing secret program to “test and build nuclear weapons” called Project Amad.

Days after the usually colorful and prop-laden Netanyahu presentation, President Trump announced he would follow through on prior threats to pull out of the Iran nuclear deal. Observers noted at the time that Netanyahu’s address had a single audience in mind in the person of Trump during the very week the White House was intensely mulling a final decision over whether to finally pull the plug on the JCPOA.

‘Papers stolen in a daring Israeli raid (by Mossad Intelligence Agents) on Tehran archive reveal the extent of Iran’s past weapons research’. https://t.co/VNtNwJuXPR pic.twitter.com/DdX1vKrx5y

— Livier I Gonzalez Cordero (@livier_i) July 15, 2018

Thus we might consider this latest NYT piece, which reads like a spy hagiography with few critical questions asked of what at first glance sounds like impossible logistics of an operation that placed Mossad agents deep into Iranian territory, a propaganda victory lap of sorts meant to further bolster Mossad’s reputation for far-reaching high-risk operations abroad.

After casing an inconspicuous warehouse for two years in a commercial district which had no official ties with Iran’s past nuclear development sites or with the Ministry of Defense, Mossad agents, who Israeli officials now confirm had inside help, planned to penetrate the facility which had since 2016 become a single collection point for “thousands of pages spread around the country documenting how to build a weapon, how to fit it on a missile and how to detonate it.”

The Israelis say that because authorities were trying to keep the building completely off the radar of noticeable activity, “There were no round-the-clock guards or anything else that would tip off neighbors, or spies, that something unusual was happening there.”

So the team of Israeli agents planned the break-in during night hours when the facility was left unguarded, according to The New York Times:

The agents arrived that night, Jan. 31, with torches that burned at least 3,600 degrees, hot enough, as they knew from intelligence collected during the planning of the operation, to cut through the 32 Iranian-made safes. But they left many untouched, going first for the ones containing the black binders, which contained the most critical designs.

The unusual and perhaps most daring aspect to the operation was that files were physically hauled out of the country and not merely copied or photographed. When it was first revealed in April, one senior Israeli intelligence official was widely quoted as saying of the covert operation, “We didn’t take everything because it was too heavy.” 

According to the latest Times report:

In most Mossad operations, spies aim to penetrate a facility and photograph or copy material without traces. But in this case, the Mossad chief, Yossi Cohen, ordered that the material be stolen outright. That would drastically shorten the time that the agents — many, if not all, of them Iranians — spent inside the building. But the Israelis wanted to be able to counter Iranian claims that the material was forged and offer it up for examination by international groups.

And the Ocean’s 11 level of planning, as the unnamed Israeli intelligence official put it, came into play in circumventing the alarm system and cracking nearly three dozen safes:

Clearly, the Israeli spies had inside help. They had learned which of the 32 safes held the most important information. They watched the habits of the workers. They studied the workings of the alarm system, so that it would appear to be working even though it would not alert anyone when the agents arrived around 10:30 p.m.

Notably, the raid was so successful in terms of not tipping off the normally paranoid and security-focused Iranians that the Mossad agents were able to make a seemingly effortless and quiet escape out of the country, as the NYT details further based on Israeli accounts:

For all the cinematics of the raid, the immediate aftermath was absent much drama. There was no chase, said Israeli officials, who would not disclose whether the documents left by land, air or sea — though an escape from the coast, just a few hours’ drive from Tehran, appears the least risky.

Fewer than two dozen agents took part in the break-in. Fearing that some of them would be caught, the Israelis removed the materials on several different routes. At exactly 7 a.m., as the Mossad expected, a guard arrived and discovered that the doors and safes were broken. He sounded the alarm, and the Iranian authorities soon began a nationwide campaign to locate the burglars — an effort that, according to an Israeli official, included “tens of thousands of Iranian security and police personnel.”

Though the journalists don’t attempt to poke holes in the over the top sounding heist narrative itself, the Times does throw the captured archives into doubt, noting that “There is no way to independently confirm the authenticity of the documents, most of which were at least 15 years old, dating from the time when an effort called Project Amad was ordered halted and some of the nuclear work moved deeper under cover” and further that “The Israelis handpicked the documents shown to the reporters, meaning that exculpatory material could have been left out.”

Secret raid: Israeli agents extracted documents detailing Iran’s nuclear program in a dramatic 6½-hour operation in Tehran in January, removing a trove of materials that included partial designs for a nuclear warhead, Israeli officials said. https://t.co/VjGjvs48Wp

— Tim Hanrahan (@TimJHanrahan) July 15, 2018

The Iranians say that the entire trove is fraudulent and called Netanyahu “an infamous liar” who “can’t stop crying wolf” after his unveiling the documents in the televised address, and have previously pointed out that PM Netanyahu was personally instrumental in selling the Western public on Iraq WMD claims in the lead-up to the 2003 invasion. 

The NYT ultimately concludes:

From what the Israelis showed to the reporters in a secure intelligence facility, a few things are clear.

The Iranian program to build a nuclear weapon was almost certainly larger, more sophisticated and better organized than most suspected in 2003, when Project Amad was declared ended, according to outside nuclear experts consulted by The Times. Iran had foreign help, though Israeli officials held back any documents indicating where it came from. Much was clearly from Pakistan, but officials said other foreign experts were also involved — though they may not have been working for their governments. 

Thus the new Times report is interesting for what’s revealed in terms of Israel’s testimony of how it came into possession of the nuclear archive, but still lends credence to the IAEA’s official position, reiterated immediately following Netanyahu’s April 30th speech, of there being “no credible indications” supporting Netanyahu’s claims of a continued Iranian nuclear weapons program after 2009. 

Nothing really new in @netanyahu Iran speech. Confirms that Iran closed down nuclear weapons program in 2003. Continued technology efforts. In principle all of this well known. No allegation that Iran cheats on 2015 nuclear deal. https://t.co/IJElnZ3JmM

— Carl Bildt (@carlbildt) April 30, 2018

Indeed one Iran specialist in a previous op-ed for the New York Times written in the wake of Netanyahu’s dramatic presentation called the supposed Israeli Mossad intelligence haul a big “nuclear nothingburger” full of things already well-known to the world, with the further implication that the intelligence operation that netted the files itself appears hokey and untrustworthy.

Middle East analyst Steven Simon noted in the prior Times piece that:

The archive had been stored in what Mr. Netanyahu described as a derelict warehouse in Tehran. The photos he displayed indicated that there did not even appear to be a lock on the door. One wonders how important the Iranians thought these documents were, given the slapdash approach they took to storing them. In any case, the Mossad operation that netted this haul apparently took place in January and President Trump was briefed on it shortly afterward.

Also at the time, former Israeli National Security Advisor Uzi Arad in response to Netanyahu’s claim that Iran lied about its nuclear program, said that “at no point was there any indication that Iran violated the agreement.”

“At no point was there any indication that Iran violated the agreement”, says former Israeli National Security Advisor Uzi Arad in response to @netanyahu‘s claim that #Iran lied about its nuclear program. pic.twitter.com/e1ZqNAAuJ2

— i24NEWS English (@i24NEWS_EN) May 1, 2018

The Israelis have reportedly shared the documents with allied intelligence agencies, specifically the CIA, and are said to be continually translating the trove of tens of thousands of Persian language documents, which also include photographs and video of sensitive nuclear facilities. 

It will be interesting to see if a true and irrefutable “smoking gun” document does eventually emerge from the trove as so far not even the Times seems fully convince, despite the jaw-dropping account of the heist.

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Submitted by Keith Decker of IceCap Asset Management

Similar to volcanic lava flows, financial contagions start slowly at first and then end by destroying many things in its path. Inbetween the beginning and the ending, is a baffling experience that can only be understood from afar. Once the eruption begins, people everywhere want to look, see and feel this infrequent experience.

Yet by the end, few actually recognise how the crisis spreads before subtly engulfing everything in its path and ending in a full-on, blow-out contagion. The financial lava flow has started.

Emerging market bonds and currencies are already experiencing the scorching effect of a capital outflows. Next up will be the European experience.

The culmination of the end of ECB money printing, the end of Angela Merkel’s grip on power, and the end of strict German austerity policies will see the financial lava flow first through Italy, then Spain and then before you realise it – France too. From there, the contagion spreads far and wide. Few bond markets will be spared and few interest rate sensitive equities will be safe.

All investors, including pension funds, bank owned mutual funds and individual investors have a tremendous opportunity – anticipate and proactively embrace the financial lava, or do nothing and claim ignorance.

We know which action we are taking.

It Happened

Well, it has happened. IceCap made a significant strategy change to our portfolios – we INCREASED our allocation to equities. Those that know us well, are fully aware of our cautious, meticulous, and OBJECTIVE approach to managing clients’ hard earned wealth.

Those that are just getting to know us, will come to understand, embrace and look forward to hearing, and reading our rationale for our long-term view, and how it reconciles with short-term market fluctuations. Whereas descriptions and announcements of strategy changes will be included in our IceCap Global Outlook, clients benefit from these changes immediately in their portfolios.

When we make a strategy change it is always based upon objective decisions driven by data dependent analysis – we check subjectivity at the door.

One thing we are very proud of here at IceCap is that we have unequivocally demonstrated an ability to change our mind, change our view and most importantly, change our portfolio strategies. In other words – we do not stick our heads in the sand. We never dig in our heels, and it would be absolutely shocking if we ever refused to entertain the thought that maybe our strategy, outlook and perspective is wrong.

Back in 2011, our portfolios held a 20% allocation to gold bullion. The reasons for holding gold were astonishingly clear, and when prices tipped $2000/oz, these reasons seemed even more clear. For those that remember, gold hit the $2000 ceiling and started a sharp, excruciating and painful decline to $1280 levels.

Recognizing trend and technical support levels were broken we quickly sold all of our positions with the last sale at $1648. Even though the fundamental reasons for holding gold had not changed – the technical/market reasons for holding gold had changed.

We share this with you to demonstrate that although all investment managers have long-term views on various markets, many do not have the ability, or the inclination to re-wire their brains and produce independent thoughts to enact significant change. Unfortunately, “same-old-same-old” actually is a very popular investment philosophy. But not at IceCap.

We haven’t been back into gold since. Yet we have a very clear vision as to how the gold re-entry path will look, and until the time when markets guide us in that direction, we’ll sit on the sidelines. During the same time frame (2011-2012) our portfolios were positioned to protect client capital from the potential of a sharp decline in equity markets.

Again, the fundamental reasons for expecting this event to occur were quite strong – and today, many bearish managers continue to shout and scream the same fundamental reasons as to why stocks should collapse. But they haven’t.

Back around that time, our thinking and perspective changed to better understand not why stock markets were avoiding collapse, but instead to understanding why they were going higher.

Now, there is a subtle difference in what we just said. And our approach to solving the riddle was to change our perspective. Instead of beginning with a thesis that all bad things in the world eventually create a crisis, which is then always reflected in a stock market crash – we took a different perspective. And this perspective led us to understand two crucially important things:

1. the risks in the world today are not in equity markets – instead they are in sovereign debt markets;
2. the reason few have correctly diagnosed this disease, is due to no one in our (limited) lifetime ever having the displeasure of experiencing a crisis in government bond markets.

Put another way, all the bads that we experienced over the past 50 years have always been a result of excess largess from companies and individuals.

And every single time, governments and central banks have come running to the rescue of financial markets.

Which have culminated in the rather odd and peculiar situation the world finds itself in today. One turned upside down by zero and negative interest rates. One pushed offsides by preventing bad banks from going under. And one dominated by 180 degree turns in the political arenas. From our perspective, it is crystal clear that the majority of investors, are completely uneducated towards the current global financial environment.

In some ways, you can’t blame them. After all, for many, their informational world is completely monopolized by domineering media, big banks, and perhaps, most harmful of all – social values which force and expect you to behave, eat, sleep and breath “correctly.”

And this brings us to today and our latest decision to increase equities.

We’ve been very transparent and very consistent with our view that we expect the US Dollar and equities to go higher due primarily to a growing crisis in bond markets. We’ve also been very transparent and very consistent with our view that corrections will occur and unless serious technical support has been broken, we’ll continue with our holdings and strategies.

As an investor, you are well aware that equity markets declined sharply in January 2018 and have largely remained range-bound ever since. In our February 2018 IceCap Global Outlook we wrote that none of our models were indicating a serious downturn was unfolding and it was very likely that the bottom has been reached and if it was confirmed by our research – we would add to our equity positions.

Well, over the last few weeks our models did in fact turn positive which provided us with a green light to do exactly as we indicated – buy more stocks.

As a global investment manager, we absolutely reserve the right (and expectation) to change our views and strategies.
At this point in time, our market view remains completely on track.

This means that anyone who is bearish on stocks, bearish on the US Dollar and believes the bond markets will provide safe footing are about to be hit with a major dose of reality.

Reality

A few years ago, I had a conversation that not only caused my head to turn and eyebrows to rise, but it also confirmed my suspicions towards the pension investment industry. And the conversation was with an 8 year old kid.

Me: “How’s your Dad these days?”

Kid: “Great. Did you know he’s a pension lawyer and pension lawyers can charge higher rates than other lawyers.”

Me: “Well, it is a faceless client”

Kid:

As we know, kids do say the darndest things. And we also know, kids know very little about the pension investment industry.

Hence, when I hear the pronouncement about various vendors being able to charge higher fees to pension funds, it only further affirms the inherent dangers and risks within the pension industry. And it is all due to culture.

Culture is everywhere. It’s in countries. It’s in specific regions of countries. It’s in languages. And it’s in organizations, industries and companies too. As well, culture is never right or wrong – it is what it is.

Yet, recognizing culture and objectively understanding the pros and cons within a culture is absolutely vital to correctly (and objectively) developing a projection of what will happen.

Although many investors do not have significant direct exposure to the pension industry – especially Defined Benefit Pension plans, everyone has indirect exposures as to how these extraordinarily large pools of money are invested.

The best way to understand how and why, you will be affected by the pension industry’s culture, look no further than the “greater fool theory”. The greater fool theory is quite simple – it means the price of something is determined not by its intrinsic value, but rather by the irrational beliefs and expectations of other buyers.

Because we do not live in a risk-free financial world, the moment the pension industry was born, sharp people with sharp pencils and sharp calculators came out of the wood work. After all, when you’re dealing with pension monies, you’re talking about a pool of money that is suppose to last for a very, very long time.

And when you combine a very long time period with a very large number of other moving parts – it has been decided that a very large number of smart people need to be involved to ensure monies are always available to meet retirement payment commitments.

And whenever you have a large group of people bandied together, with the same cause and with the same training and pedigrees – you get group-think, and this is bad, very bad.

This is where culture comes into play. And those who know culture, knows it is extremely difficult to change, move or alter.

And understanding this culture will help you see exactly why the bond market is going to completely blindside the majority of pension plans and turn those happy retirement years into ones of bitter resentment towards those entrusted with keeping everything in-line.

Yes – these are harsh words but they are absolutely needed to be heard, read and then re-heard and re-read. The best way to explain why the culture of the investment industry will prevent itself from seeing beyond its nose, is to understand how it is structured.

To start with, the pension fund is created by an employer for its employees and the employer is either a company or a government entity.

Next, you must completely understand there is always a risk that the pension assets (investments) will not be enough to make all of the promised future pension payments. And, all of this shortfall (deficit) must be made up by the company/government entity.

This is where the risk part comes into play, and this is also where and why all of the consultants, actuaries, pension lawyers, investment committees, trustees and board of directors enter the picture.

As you’ll agree, the future is sometimes tricky to predict – especially when you’re dealing with how long people live, how healthy they remain while living, and financial market returns.

Yet, the number 1 item that affects all of the above is actually NOT that hard to predict – long-term interest rates.

Yes, long-term interest rates directly or indirectly drives all of the above factors including health and longevity (medical research and discoveries are significantly impacted by funding available which in return is affected by long-term rates).

Therefore, simply understanding where long-term rates are going is really the key to solving the looming pension crisis. And as we’ve detailed in our previous IceCap Global Outlook publications, long-term interest rates are on the verge of exploding higher which will create significant losses for everything affected by long-term interest rates – including pension funds.

The reason for this is twofold.

First, practically all pension funds hold anywhere between 15% to 100% of their investment assets in bonds and/or other investments directly affected by interest rates. The vast majority of the professional investment management industry theorizes that the future cannot be predicted.

The investment industry also lectures that stock markets produce higher returns and than bond markets, and stock markets also contain greater risk than bond markets.

And since pension funds are suppose to be professionally and conservatively managed – they will always err on the side of caution and therefore hold a combination of stocks and bonds.

Which presents us with the voila moment!

The preferred mandate for pension funds (as well as the most common strategy for most individual investors) – the balanced fund, or a similar version of the same including life cycle funds, and target dated funds.

The key part here is that the culture of the industry whole-heartedly believes that the future cannot be predicted.

Naturally, there’s a little bit of truths and untruths in this statements. Yes, the future is difficult to predict – especially during a mid-cycle period. No, the future is not difficult to predict – especially during an end-cycle period.

Today, in the land of interest rates – we’ve reached the end of the mother-of-all interest rates cycles.

And because the pension industry is so tightly wound and wrapped-up in its culture, the majority of those fiduciaries are unable to see the future.

It simply isn’t in their genes, and chromosomes and it certainly isn’t reflected in the most important make-up of all – their assumptions for the expected long-term rate of return and the discount rate for liabilities.

Let’s start first with the Rate of Return Assumption. This number is provided to pension funds by actuaries and it is simply a number used to smooth out return expectations over the life of a pension fund.

The error with these numbers is that it is using past performance to predict future performance.
As any investor will tell you – this is the first disclaimer stamped all over any performance data from every investment fund.
But not the pension fund.

The error with this expected return number lies in the assumption used for fixed income returns. As fixed income returns are completely dependent upon the directional movement of long-term interest rates, historical data from the past 36 years has completely skewed the average performance returns for the bond market.

Chart below shows the historical yield of the US 10-year Treasury Bond, which is the proxy for global bond markets.
Put simply, when long-term interests are increasing (red line 1960 to 1982), bond funds are horrible investments.

The opposite is also true. From 1982 to 2018, long-term interest rates (green line) declined, creating the most incredible period ever for bond market returns. And this simple observation, creates another voila moment.

Virtually everyone working within the industry today either worked during this green arrow period or were trained by mentors who worked during this green arrow period. In other words – all everyone has ever known is a period of declining long-term interest rates.

This unintentional happenstance is going to produce a lot of angst.

Today, long-term interest rates are at 3%. Which means, the only way possible for bond strategies to return greater than 3% is for long-term interest rates to remain at 3% or lower forever. We can assure you this will not happen. And anyone who is using bond return estimates greater than 3% will be disappointed.

To demonstrate that there are pension groups that have been blinded by culture, spend a few minutes with the table on the next page. This public data is from one of Canada’s largest private sector pension funds and shows the expected long-term rate of returns. There are several items that jump off the page, with the most significant being:

1) The 55.2% allocation to Nominal Bonds
2) The +3.4% expected return from Nominal Bond strategies

IceCap can assure you that there is zero probability of this pension fund’s nominal bond strategies producing a return  +3.4% or greater. In fact, as long-term rates surge higher, the assets in this pension plan will decline -20% or more.

When this occurs, the culture of the pension industry reveals itself with board room whispers and proclamations that “no one saw this coming.”

We are telling you that it is coming.

Read on in the full presentation below (link)

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With its internal probe into suspected insider trading ahead of its listing of bitcoin cash still ongoing, Coinbase, one of the most popular cryptocurrency marketplaces in the US, has gotten the green light to move forward with a trio of acquisitions that will give the company the licenses it needs to list and trade federally-regulated securities, something that’s expected to significantly broaden the number of cryptocurrencies that will be available on the platform, according to Bloomberg.

The U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority approved Coinbase’s purchase of Keystone Capital Corp., Venovate Marketplace Inc. and Digital Wealth LLC, a company spokesman said Monday. The acquisitions enable the firm to offer so-called security tokens, and also place the businesses under federal oversight. Coinbase has primarily been regulated by a patchwork of state authorities.

The move provides Coinbase licenses to operate as a broker dealer, an alternative trading system and a registered investment adviser, the San Francisco-based company said in June. Alternative trading systems operate outside traditional public stock exchanges.

With these newfound licenses, Coinbase could soon begin listing hundreds of ICO tokens and other cryptocurrencies. Right now, Coinbase customers can only buy bitcoin, bitcoin cash, ethereum and litecoin. Coinbase said Friday that it’s looking into letting users trade five new digital currencies, Cardano, Basic Attention Token, Stellar, Zcash and Ox, but couldn’t say for certain that it would list them. The company said it’s possible some coins might only be available in certain regions.

It’s reportedly still working on adding ethereum classic, which was excluded from being beholden to securities laws last year. 

As Bloomberg points out, regulated trading platforms could eventually host hundreds, possibly thousands, of ICOs. Despite a crackdown by the US, China and other countries, ICOs have already raised more than $12 billion in 2018, more than triple what they did during all of 2017. The SEC has said most of the coins are securities, which means issuers must register and comply with federal securities laws, as must exchanges that list the tokens.

The federal government has every reason to support Coinbase’s expansion. The company has a reputation with regulators, and it has already willingly handed over information on its customers to the IRS, which suggests it might also be willing to cooperate in the future.

Though regulators will no doubt be watching closely after the rollout of bitcoin cash trading on Coinbase appeared to provoke what looked like insider trading in the bitcoin cash market.

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Via KingWorldNews.com,

As the world edges closer to the next crisis, today the man who has become legendary for his predictions on QE and historic moves in currencies, told King World News that the global reset will come like a thief in the night.

Where have all the dollars gone? Long time passing
Where have all the dollars gone? Long time ago
Where have all the dollars gone? Uncle Sam has spent them everyone
When will he ever learn? When will he ever learn?

The Global Reset Is Coming

Egon von Greyerz:  “When Pete Seeger wrote the famous song “Where have all the flowers gone” back in 1955, little did he know that the total US debt, which was a few hundred billion dollars at the time, would, 63 years later, be almost $70 trillion. 

But there is no reason why Seeger should have known. He was a singer-songwriter and his legacy will last a lot longer than Nixon’s, Greenspan’s, Bernanke’s, and all the other players that have contributed to this massive growth in credit and destruction of the dollar. While Seeger’s song – a work of art – is likely to be around for at least another 50-100 years or longer, all the opportunists that have destroyed the US economy, and thus the world economy, will soon be forgotten…

Egon von Greyerz continues:  “It is absolutely unreal how the world pays so much respect to mediocrity or even incompetence when it comes to running the financial system. Central banks and their heads have created this monster balloon which is now waiting to be popped. They have given the world the impression that they have been instrumental in saving the world economy. The central bank chiefs that managed to retire before the balloon burst can count themselves lucky. In my view, the luck is now in the process of running out for the present ones.

These chiefs believe so much in their own ability as saviors of the world that they don’t understand that all they are doing is creating a much bigger monster by printing and printing and printing. They are so arrogant that they can’t even call their actions by an honest name. What they are doing is sheer Money Printing or MP. But instead they call it QE or Quantitative Easing. What an absolutely ridiculous name that is designed to hide their own inadequacies as well as cheating the people. Nobody understands what QE means and that is, of course, deliberate. They simply confuse the people and mislead them into believing that their hocus pocus is actually some alchemistic formula that creates eternal prosperity. 

These central bank heads are now so confident of their control of the situation that they are turning the QE to QT (Quantitative Tightening). That is, of course, utter and sheer arrogance. QE hasn’t worked. All it has done is to turn a fragile financial system into the biggest bubble in history. Even with zero or negative interest rates combined with massive MP, real GDP is not growing (measured with real inflation). Also, several dollars, euros or pounds of credit expansion are required in order to create just one dollar, euro, etc, of GDP growth.

Since QE, MP, or whatever you call it, hasn’t worked, why the hell does anyone think that QT will work? This is like taking away the punchbowl from a chronic alcoholic who will die from his drink or die due to lack of drink. And it is exactly the same for the global economy. It will collapse with more QE and and will collapse from QT. So QE / QT = TE (THE END). 

“When will they ever learn, when will they ever learn” that you can’t create prosperity by printing money? And remember that money printing is not just what central banks do directly. Money printing also means credit expansion by banks, credit card, and finance companies, etc. All of these lend out 10-50 times the deposits or capital they receive. There is, of course, only one way to learn a lesson properly, which is the hard way. And the hard way in the case of the world economy is that the monster bubble pops. And like with many bubbles, this one only contains hot air.

Thus, the $2.5 quadrillion monster bubble contains just empty promises that all disappear when the bubble is popped. These promises are not only words, but also $2.5 quadrillion of monetary promises or IOUs. To keep the bubble from deflating, central banks have had to constantly pump it up bigger and bigger. So more and more debt will fill the bubble together with inflated assets and even more empty words from bankers and politicians to make it all look plausible. 

The debt explosion is not just a US disease. It is a US-led global phenomenon that has infiltrated most nations around with a central bank that can print money. Just look at the chart below illustrating how global debt has tripled since 1999 from $80 trillion to $240 trillion today.

GLOBAL DEBT: The $240 Trillion Nightmare

When the global debt and asset bubble pops, the world will find out that there was nothing inside. Of course, there are real assets and real wealth, but the problem is that when the bubble pops, all the debt will implode because no one can repay it, and with that, a lot of the assets will become worthless. 

The only question is if stocks, bonds, property, and other assets, will go down by 75% or 95%. In my view, the biggest bubble in history will lead to the biggest collapse. There is no one that can save the world from the biggest financial calamity in history. MP (QE) will have zero effect except for causing temporary hyperinflation. A lot of assets will decline by 100%, such as money in the bank, bubble companies which are heavily leveraged – like Tesla – and many others. Even very valuable assets will be able to be purchased (in today’s money) for pennies on the dollar, euro or pound. 

Paper money has always come and gone throughout history since no fiat currency has ever survived. For 5,000 years gold has represented stable purchasing power and the only money that has lasted for thousands of years. This is why countries that understand the importance of physical gold continue to accumulate, countries such as Russia, China and India. In the meantime, the rest of the world has invested less than 0.5% of world financial assets into physical gold. 

Just look at China’s astonishing gold accumulation in the chart below. Another 140 tonnes was purchased in June, taking the total up to 16,000 tonnes with virtually all of it acquired since 2007.

China’s Gold Purchases Since 2007 Exceed 16,000 Tonnes!

Like A Thief In The Night

When the monster, ‘everything’ bubble pops, so will the paper markets in gold, silver, and other precious metals. The size of this market is at least 100-times bigger than the physical market. The rise of this market is very much linked to manipulation of the precious metals by central banks, the Bank for International Settlements (BIS), and bullion banks. When the paper metals markets pop, there will be no gold (or silver) offered at any price. This is the time when overnight or over a weekend the price will go from $1,250 to $10,000 or even $100,000. This might sound totally unreal to some, but this will be the most likely consequence of the monster bubble popping and everyone in markets running for the exit. 

Most people believe that the status quo can go on forever and that central banks will continue their ridiculous game of pretending that air is real money that can create wealth. The few people who believe that there is a serious risk that the system will not survive in its present form, and that their assets — be it cash, bonds, or stocks — could decline substantially in value, must seriously consider insurance. 

The next decline in financial markets is likely to start in late 2018 or early 2019. And this will not be an ordinary decline or normal correction. Instead, it will be the beginning of the biggest global bear market in history. And this time central banks and governments will fail in their attempts to save the system. They will, however, certainly print a lot of money and try to reduce interest rates. But as global bond markets collapse, rates will go up rapidly. This means that bonds and stocks will both crash along with most assets.

The only real insurance against what is coming is physical gold and some silver, obviously held outside the banking system. There is absolutely no argument against holding precious metals to protect against the risks in the financial system. The only question is, should you hold 10% of your financial assets in gold or more than 50% as some of our wealth preservation clients do? In my opinion, this is the time in history that you need to be fully protected. The reality is that each individual needs to decide for themselves what full protection means. Just remember that this time it will be costly to underinsure. Hopefully no one reading this will ask when it is too late:“When will we ever learn?” 

For those who would like to read more of Egon von Greyerz’s fantastic articles CLICK HERE.

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A series of identical letters signed by different individuals were sent to newspapers across the country in protest of President Trump’s Monday nomination of Judge Brett Kavanaugh to the Supreme Court – a technique known as “astroturfing” designed to appear as a genuine grassroots effort against the pick. 

In total, 21 newspapers across 12 states printed the identical letters – each signed with a different name, as first noted by the website Liberty Headlines and further investigated by the Daily Mail‘s David Martosko. 

At least one person didn’t even know her name was being used to sign the letter. 

At least 21 papers were duped last week, including big-market brands like the Dallas Morning News and The Washington Times. They ran identical letters over a four-day period, each signed by a different person.

The effort is an example of public-relations ‘astroturfing,‘ a technique meant to simulate genuine grassroots support for an idea or cause.

The form letter is one small piece of the message minefield erupting around Kavanaugh as he prepares for a brutal confirmation process that will end with scant support from Democrats. –Daily Mail

The letter begins with a declaration that “Brett Kavanaugh is the wrong choice to replace Justice Anthony Kennedy on the Supreme Court. If he is confirmed to the Supreme Court, everything that we hold dear as a nation will be at stake.” It goes on to warn that there could be a swing-vote that “takes away our rights” while giving “mega-donors with extreme agendas even more influence in our democracy.” 

The Washington Times and Colombus Dispatch in Ohio both published the same letter – signed by two different people. 

Delaware’s largest newspaper – the Wilmington News Journal – was successfully targeted as part of the “astroturfing” scheme: 

During the course of their reporting, three of the newspapers contacted by the Daily Mail later removed the letters from their websites. Two of them – the Union Democrat of and Morning News of Sonora, California explained why: 

White House Deputy Press Secretary Raj Shah shrugged off the letters when the Daily Mail reached out, writing in an email: “I suppose that’s a clever way to ensure message discipline,’ he said, ‘but we think most Americans will see through these tactics and be impressed with Judge Kavanaugh’s sterling record and qualifications.”

One of the so-called authors of the letter didn’t even know her name was being used: 

Richard Lodge, editor of The Eagle-Tribune in North Andover, Massachusetts, said Friday after hearing from DailyMail.com that he called the apparent ‘signer’ of the letter his paper ran, and ‘[s]he said she didn’t send it.‘

The woman recalled receiving a phone call from an anti-Kavanaugh activist asking her to sign an online petition against him days before the letter was sent in her name. –Daily Mail

‘I got duped, which is embarrassing and frustrating,’ said Lodge. Martosko notes that it is standard practice for opinion page editors to call the writers of the letters. He also points out that “astroturfing” – creating the illusion of popular support by littering newspaper opinion pages with fake letters is nothing new.

In 2004 the liberal group MoveOn.org launched a website tool that generated editorial letters for its members promoting the Michael Moore film ‘Fahrenheit 911.’ All it required was a name, hometown and ZIP code.

The program provided users with sample sentences and a salt-to-taste text editor. Many left the stock message the way it was and clicked ‘send.’

The USC Annenberg School for Communication and Journalism’s Online Journalism Review reported that the Republican National Committee had the technique down a year earlier. 

Using a website called ‘GOP Team Leader,’ the party offered ‘points’– redeemable for merchandise – when their letters were actually published.

Both the George W. Bush and John Kerry campaigns used the technique during the 2004 presidential election cycle. –Daily Mail

National Review Online contributing editor Quin Hillyer told the Daily Mail that the “rather transparent astro-turfing shows that the Leftist intensity against Kavanaugh is not naturally widespread, but instead is manufactured by paid agents.“

While it is unclear who exactly those organizations are, the usual suspects on the left have denied involvement – including DemandJustice, Protect Our Care, and MoveOn.org. 

‘While millions of MoveOn members oppose Brett Kavanaugh‘s nomination, the organization did not generate these letters to the editor,’ the spokesman said Sunday after this story was first published.

Who exactly ran the letter (via the Daily Mail)

Large outlets that have run the letter since July 11 include The Washington Times (DC), the Boston Herald (MA), The Columbus Dispatch (OH), the Dallas Morning News (TX) and the San Antonio Express-News (TX).

The Grand Junction Sentinel (CO) was a victim, along with The Wilmington News Journal (DE), the Coeur d’Alene Press (ID), The Forum (Fargo, ND) and the Beaumont Enterprise (TX) .

Smaller newspapers that published the letter included the Santa Monica Daily Press (CA), The Union Democrat (Sonora, CA), the Daily News (Newburyport, MA), The Eagle-Tribune (North Andover, MA), the Daily Hampshire Gazette (Northampton, MA), The Times Herald-Record (Middletown, NY), the Daily Reflector (Greenville, NC), The Express Times (Easton, PA), the Republican Herald (Pottsville, PA), The Herald-Zeitung (Brownsville, TX) and the Martinsville Bulletin (VA).

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Authored by Andrew Korybko via Oriental Review,

Riotous unrest broke out in Haiti after the government suddenly declared that it’s dramatically hiking fuel prices in order to comply with an IMF restructuring demand.

There was an explosion of violence in the Western Hemisphere’s poorest country immediately after the news was announced, with gangs of machete-armed thugs rampaging through the streets, looting business, burning vehicles, and setting up roadblocks.

It’s understandable why people would be upset that gas and diesel prices would jump by 38% and 47% respectively, especially because this would lead to cost increases for pretty much everything else, but the outbreak of instability that this caused surely caught the authorities off guard, which is why they shortly thereafter declared that the decision would be temporarily suspended. Still, this didn’t quell the disorder, and US airlines even cancelled their flights to the country as a security precaution while the State Department ordered its citizens to shelter in place.

Evidently, the Haitian people’s long-brewing discontent with their country’s many socio-economic and political problems might have finally boiled over, with some of them intending to seize the moment in sending the message that they will no longer tolerate their nation being treated as a neo-colonial outpost by transnational corporations and NGOs, though unconstructively not offering any apparent solution to improve their situation.

The crisis is made all the more acute by the state’s inability to forcibly respond to the unrest because it simply lacks the means to do so when considering that the UN withdrew late last year after a decade-long mission and the National Police are utterly incapable of keeping the peace in their place.

Furthermore, the country’s military was dismantled in 1995 and the sitting government has yet to replace it despite controversially pledging to do so.

It’s difficult to predict what comes next, but a few lessons can still be drawn from the latest events. The first is that fragile states such as Haiti are extremely vulnerable to destabilization whenever they’re pressed into so-called “structural reforms” by the IMF, just like Jordan recently was under similar circumstances.

If the chaos isn’t contained, then it could also possibly trigger a limited military intervention by regional states in order to protect their citizens and/or respond to any perceived threats from so-called “Weapons of Mass Migration”, which is a scenario that the US could possibly undertake if the situation doesn’t soon stabilize.

The cycle of underdevelopment, debt bondage, destabilization by dint of so-called “structural reforms”, and military intervention is therefore very difficult for countries to break free from, and Haiti unfortunately has next to no realistic hope to ever do so in the near future.

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A handful of liberals are preparing to take on Donald Trump in 2020, though the pool of candidates leaves much to be desired, reports the New York Times.

[A]bsent, at least so far, is either an obvious political phenom like former President Barack Obama or an establishment-backed juggernaut in the mold of Hillary Clinton. –NYT

Leading the pack, at least according to the Times, is none other than Senator Elizabeth Warren of Massachusetts. While she hasn’t announced a run for the White House, has been actively campaigning across the country ahead of midterms to help key Democrats in their races, while her emissaries have been reaching out to officeholders in Nevada, South Carolina and Iowa – three states in the presidential primary calendar.  

Altogether, her moves are among the most assertive steps taken by any Democrat to prepare for 2020

“I want a party strong enough to take on the hard job of cleaning up the mess they’ll leave behind once they are gone,” Ms. Warren declared, “all but volunteering for the task” as the Times puts it. 

Aside from Warren, 69, Former VP Joe Biden, Senators Cory Booker (NJ) and Kamala Harris (CA) have all been making the rounds along with Senator Bernie Sanders of Vermont – who has been “acting like a candidate as he considers another race.” 

All five have been traveling the country, raising money for Democrats and gauging the appeal of their personalities and favorite themes. As a group, they are a strikingly heterogeneous array of rivals for Mr. Trump, embodying the Democratic Party’s options for defining itself: They are distinguished by gender and race, span three decades in age and traverse the ideological and tonal spectrum between combative Democratic socialism and consensus-minded incrementalism.

Unfortunately for Democrats, none of these candidates really send a thrill up anyone’s leg. Unlike the last few Democratic primaries, “the unsettled race evokes the sprawling nomination fights of earlier decades – lacking a dominant figure and seemingly inviting new leaders to rise,” notes the Times. 

“The opportunity for somebody to emerge and catch a wave hasn’t been this high since 1976,” said veteran Democratic strategist Anita Dunn, referring to another unpredictable primary featuring a multitude of candidates as Democrats wrestle with their party’s identity.

Emphatic Uncertainty was the phrase used to describe interviews with nearly 50 lawmakers, consultants and party leaders, as senior Democrats see their party in an extraordinarily volatile state, while remaining weary of attempting another “Clinton-style coronation.” Clinging to hope, many believe that the Democratic party’s sharp left turn during recent elections has paved the way for progressive women such as Warren. 

Warren told Democrats in Salt Lake City recently that they had to close ranks in 2018 in order to recapture the White House.

“She was saying, ‘Look, we all have to come together,’” recalled Democratic SLC Mayor Jackie Biskupski. She paraphrased Warren’s pitch as: “We need to show this year that change is what the people want.”

Perhaps most appealing to Democratic leaders, Ms. Warren might please their activist base while staving off a candidate they fear would lose the general election.

Who’s the second favorite to take on Trump, according to the Times? None other than 76-year-old Democratic Socialist Bernie Sanders – who has a huge following and a proven ability to raise millions of dollars online. 

Having pushed policies like single-payer health care and free public college tuition into the Democratic mainstream, Mr. Sanders could be a powerful competitor for the nomination — and a daunting obstacle to Ms. Warren and other economic populists.

That said, “many in the party are skeptical that a fiery activist in his eighth decade would have broad enough appeal to oust Mr. Trump.” 

Joe Biden, 75, is “not committed to running,” but will still be campaigning this fall for up to four days a week afer labor day, according to people familiar with his strategy. So far Biden has “struck a gentler chord” than Sanders and Warren, more calmly suggesting that Democrats need to rise above Trump’s taunts. 

Mr. Biden, who has run for president twice before, has been seeking out a younger cohort of Democrats: During a trip to New Orleans in June he arranged a visit with Representative Cedric Richmond, the 44-year-old chairman of the Congressional Black Caucus, and this month he will travel to Arizona to help Representative Kyrsten Sinema, the Democrats’ 41-year-old Senate candidate, and to address a gathering of the Latino advocacy group Lulac.

 Biden is trying to gather support and install allies in key states, such as South Carolina. 

“The vice president has a lot of long and deep relationships in South Carolina, and they’re substantive relationships,” said Steve Benjamin, Democratic Mayor of Columbia, South Carolina’s capital. 

Biden, according to the Times, realizes that his party is drifting from his institutionalist style and relative moderation, according to people who have spoken with him. He’s thrown support behind two possible presidential candidates for 2020; Mayor Eric Garcetti of Los Angeles and Governor Steve Bullock of Montana – both of whom he advised to make their 2020 decisions without concern for his own. 

Then there’s Kamala Harris and Cory Booker  – the two younger democrats in the 2020 vanguard. 

The two younger Democrats in the 2020 vanguard have been campaigning for fellow senators, and at times intervening in contested primaries to support like-minded candidates. Both also sit on the Senate Judiciary Committee — the panel that will scrutinize Judge Brett M. Kavanaugh, Mr. Trump’s Supreme Court nominee, in the coming months — giving them a high-profile platform to challenge the president.

That said, Democrats expect many other candidates to emerge, “unless the midterms become a chilling disappointment.” 

In short; Democrats are likely looking at Warren, Biden or Sanders for a 2020 run – but without a phenom like Barack Obama, they may need to wait until 2024 to take another bite at the apple. 

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Authored by Simon Black via SovereignMan.com,

About two and a half years ago, I told you about a particularly nasty piece of legislation that President Obama quietly signed into law towards the end of his administration.

They called it the “FAST Act”, which stood for Fixing America’s Surface Transportation.

Yet despite $300 billion earmarked for infrastructure repairs, they didn’t manage to fix very much of America’s surface transportation.

The legislation did, however, have two major effects:

1) The FAST Act authorized the US government to plunder excess capital from the Federal Reserve… which is about as stupid as thing as anyone could possibly do.

The Federal Reserve is America’s central bank; they control the value and fate of the US dollar… which is still the most dominant currency in the world.

You’d think that having some excess cash on the Federal Reserve’s balance sheet would be viewed as wise and conservative.

But not Congress.

These guys are so broke, they’ll grab every penny they can get. Even from their own central bank.

So they buried a provision into the FAST Act demanding that the Federal Reserve hand over any excess capital to the Treasury Department at the end of every calendar year.

They started doing that almost immediately, in December 2015. And in 2016. And in 2017.

This is one of the reasons why, to this day, the Federal Reserve is borderline insolvent… which hardly inspires confidence.

Now, I could go on for quite some time about what an idiotic idea this was.

But believe it or not, there was an even worse section of the FAST Act– one they only started implementing recently:

2) Section 32101 of the FAST Act required the US State Department to revoke or deny the passport of any taxpayer that the IRS deems to have “seriously delinquent tax debt.”

They define seriously delinquent tax debt as owing $50,000 or more.

Well, it took them a couple of years, but the IRS has finally started enforcing this law.

Earlier this month the IRS acknowledged that they had sent at least 362,000 names to the State Department to start revoking or denying passports.

And that’s just the beginning.

The IRS is sending these names out ‘in batches’, so there will be many more to follow. They hope to be finished by the end of the year.

Now, there are so many things wrong with this.

For starters, it’s pretty clear there’s no due process here. It’s purely an administrative matter. Which means there’s limited oversight.

Your name could accidentally end up on some list because the IRS couldn’t keep its own records straight. Or there was a problem with the data integrity. Or someone simply mismatched one John Smith for another.

The IRS literally has billions of records being managed by antiquated technology that’s prone to data breaches.

The idea that they could come up with a list of hundreds of thousands of people without making a single mistake is just farcical.

But, again, there are few real checks and balances. You end up on a list… at which point you’re arguing with an entirely different agency about why your passport has been revoked. It’s a bureaucratic nightmare.

The larger point, though, is what this really means about citizenship.

Think about it– a passport is the most common document to evidence an individual’s citizenship.

And… poof… they can take it away from you with the click of a button.

To me, if they can take something away so easily, then it wasn’t really yours to begin with.

It’s like property.

If you own your home… think again. Even if you have your mortgage fully paid off, you still have to pay property tax.

This means that it’s ultimately the government who really owns your property. You’re just renting it from them.

And if they believe (in their sole discretion) that you owe them property tax, they’ll take the property away from you.

Likewise, the enforcement of the FAST Act shows that you’re not even really a citizen. You’re just renting your citizenship from the government.

And if they believe (in their sole discretion) that you owe them income tax, they’ll take it away from you.

And to continue learning how to ensure you thrive no matter what happens next in the world, I encourage you to download our free Perfect Plan B Guide.

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