Category: simonblack

January 23, 2014
Sovereign Valley Farm, Chile

As the saying goes, ‘desperate times call for desperate measures.’

The phrase is bandied about so frequently, it’s generally accepted truth. But I have to tell you that I fundamentally disagree with the premise.

Desperate times, in fact, call for a complete reset in the way people think. Desperate times call for the most intelligent, effective, least destructive measures. But these sayings aren’t as catchy.

This old adage has become a crutch– a way for policymakers to rationalize the idiotic measures they’ve put in place:

• Inflation-adjusted interest rates that are… negative.

• Trillion dollar deficits.

• Endless wars and saber-rattling

• Unprecedented expansion of central bank balance sheets.

• DIRECT CONFISCATION of people’s bank accounts.

But hey… desperate times call for desperate measures. I guess we’re all just supposed to be OK with that.

One of those desperate measures that’s been coming up a lot lately is the re-re-re-introduction of capital controls.

It started in late 2012, when both the European Central Bank and the International Monetary Fund seperately endorsed the use of capital controls.

For the IMF, it was a staunch reversal of its previous position, and Paul Krugman lauded the agency’s “surprising intellectual flexibility” a few days later.

The IMF then followed up in 2013 with another little ditty proposing a global wealth tax. The good idea factory is clearly working ’round the clock over there.

Lately, two more leading economists– Harvard professors Carmen Reinhart and Ken Rogoff– have joined the debate.

In a speech to the American Economic Association earlier this month, the pair suggested that rich economies may need to resort to the tactics generally reserved for emerging markets.

This is code for financial repression and capital controls.

The idea behind capital controls is simple: create barriers to restrict the free flow of capital. And if you’re on the receiving end, capital controls can be enormously destructive.

But for politicians, capital controls are hugely beneficial; once they trap funds within their borders, the money can be easily taxed, confiscated, or inflated.

Historically, capital controls have been used in ‘desperate times’. Too much debt. Too much deficit spending. Wars. Huge trade deficit. Intentional currency devaluation. Etc.

Does any of this sound familiar? It’s no surprise that policymakers have once again turned to this ‘desperate measure’. They’re already here.

Iceland has capital controls, over five years after its spectacular meltdown. We can also see capital controls in Cyprus, India, Argentina, etc.

I’ve been writing for years that capital controls are a foregone conclusion. This is no longer theory or conjecture. It’s happening. And every bit of objective evidence suggests that the march towards capital controls will quicken.

This is a HUGE reason to consider holding a portion of your savings overseas in a strong, stable foreign bank where your home government won’t as easily be able to trap your savings.

Other options including storing physical gold (even anonymously) at an overseas depository. Or if you’re inclined and tech savvy, you can also own digital currency.

But perhaps the best way to move some capital abroad is to own foreign real estate, especially productive land.

Foreign real estate is not reportable. It’s a great store of value. It generates both financial profits and personal resilience. It’s a LOT harder to forcibly repatriate. And it ensures that you always have a place to go in case you need to get out of Dodge.

Even if nothing ‘bad’ ever happens, you won’t be worse off for owning productive land in a thriving economy.

Like I said– desperate times don’t call for desperate measures. More than ever, it’s time for a complete reset in the way we look at the most effective solutions. These options are certainly among them.

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16 de Enero del 2014, Santiago de Chile

Hay un minúsculo parasito que existe en la naturaleza conocido como: Spinochordodes tellinii el cual infecta grillos y saltamontes.

Una vez que ha alcanzado la madures este gusano es capaz de afectar profundamente el comportamiento de su anfitrión; entre lo más destacado, este gusano puede hacer al saltamontes lanzarse al agua sin su consentimiento.

Esto es perfecto para el gusano ya que necesita humedad para reproducirse. Pero para el saltamontes eso significa la muerte.

Otro vil espécimen conocido como Toxoplasma gondii, que de acuerdo a estudios, al infectar a ratones y ratas estas han demostrado una reducción de sus defensas, haciéndolas más vulnerables a ser alimento para gatos.

La naturaleza está llena de esos indeseables parásitos que manipulan a sus anfitriones, causando comportamientos irracionales, destructivos, y suicidas.

Por supuesto también existen estos entre los seres humanos… Especialmente para inversionistas. La verdad la mayoría de las veces el paracito más peligros y que afecta a la mayor cantidad de inversionistas es una emoción peculiar, llamada: Temor.

Específicamente, el temor a perder una oportunidad dorada. Esto se puede convertir en una pesadilla peor que el mismo temor a perderlo todo.

Ahora si todo el mundo está tirando su dinero por el mismo agujero, se vuelve más fácil olvidar el riesgo de perder nuestros ahorros de toda la vida, invirtiéndolas en ridículas acciones sobrevaluadas.

La mejor manera de perder mucho dinero es seguir a las masas.

Muchos de aquellos grandes y exitosos inversores de la historia fueron esos que tuvieron el coraje de ir en contra de la corriente y del pensamiento inversionista común. Conquistaron el miedo de perder su oportunidad dorada, y fueron y compraron aquello que nadie quería, lo odiado… o más aun, pusieron la vista donde nadie se arriesgaría a ponerla.

Hoy en día con el clima en la bolsa donde está, donde los Bancos Centrales están imprimiendo trillones de dólares por año y empujando por todos lados los precios de los bienes activos, es a veces difícil encontrar demasiados de esas playas vírgenes, o “acciones odiadas” Pero aún existen algunas:

1. Metales Preciosos

El mercado de hoy en día ha socavado y menos preciado el oro. ¡Está acabado! o eso es lo que la sabiduría convencional diría. Especulaciones y sentimentalismos hacia un crecimiento de la economía, han llevado inversores a abandonar el oro, la plata, el platino, etc.

2. Compañías Mineras

Con la rápida caída del mercado de los metales y los márgenes en minería declinando, los precios de las acciones en compañías mineras han pasado de feas a terribles… y muchos inversores a largo plazo están literalmente yéndose a la quiebra.

3. Monedas de mercados emergentes

La moneda en el mundo emergente- Turquía, India, Indonesia, Uruguay, etc. Han sido maltratadas y subestimadas en los últimos meses por el temor de una crisis mundial, a pesar de esto, estas naciones demográficamente cuentan con un cimiento económico fuerte.

Ahora, hablamos de dónde va la masa, es fácil.

Las acciones en EE.UU y Europa Occidental están cada vez más altas.

El renminbi Chino está en un alza de varios años. Y inexplicablemente su mercado está mostrando mucha confianza en ambos el dólar y el euro en este momento.

Los Bonos de gobiernos de los gobiernos occidentales, los cuales están muy endeudados, aun son vistos con obviedad refugios seguros.

Los gobiernos de España e Italia, de hecho, solo emitieron recién nuevos bonos en un nivel record en bajo rendimiento… Obviando por supuesto la juventud desempleada que alcanza el 57.7% y ni hablar de la gigantesca deuda o el déficit en gastos.

A pesar del incremento gradual de los interés que adversariamente impactan los precios y el bolsillo de la gente. Los bienes raíces en EE.UU son una vez más aclamada por los medios como una inversión segura.

Por ultimo-¿Que podría no estar en el radar del rebaño de inversionistas colectivo?

De mi punto de vista, muy pocos inversionistas convencionales están siquiera pensando sobre tierras para agricultura fuera de los EE.UU o en capital privado en mercados en desarrollo.

Pronto, mas sobre este tema.

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January 22, 2014
Sovereign Valley Farm, Chile

Dropbox, the popular cloud-based file storage service, has upwards of 200 million registered users.

I doubt many of them have ever read the company’s privacy policy, which states clearly that the company will fully comply with requests from law enforcement agencies.

And while the company does encrypt your files across their multiple data centers, they hold the decryption keys.

Bottom line, just like Google has access to your web history (plus email if you’re a Gmail user), and Facebook has access to huge parts of your personal life, Dropbox has access to every single file that you host with them.

And based on the company’s own policies, all of this can be handed over at any time to any government agency, all without your knowledge or consent.

Just imagine being sued or in a nasty divorce or child custody hearing… and having the opposing attorneys comb through all of your personal files.

They’d be able to humiliate you in front of the jury by presenting every tasteless joke, embarrassing photograph, or questionable financial transaction you have on file.

And we all know the ‘justice system’ has nothing to do with justice; it’s all about convincing a group of strangers that you’re a bad person.

Granted, Dropbox does have its conveniences. That’s why it’s such a popular application; it’s so easy to upload files, synchronize them across multiple devices, and share with your friends and co-workers.

But the cost of these conveniences should be obvious.

One workaround is to encrypt sensitive files before uploading them to Dropbox. You can use a tool like TrueCrypt to create nearly unbreakable file encryption, then upload the encrypted file to Dropbox.

If you need to access those files, you can decrypt them on your local machine. But if Dropbox were to ever turn over the file to law enforcement, all the government agents would see is a bunch of encrypted gibberish.

Another option is a site like MEGA.co.nz, the newest brainchild from Kim Dotcom.

Launched almost exactly one year ago, MEGA provides its users with 50 gigabytes of free storage, all of which is encrypted end-to-end.

This means that your files stored on MEGA’s servers can only be decrypted by you… or anyone you give the keys to.

It’s a very user-friendly platform. Easy to sign up. Easy to use. And tons of free storage.

The major limitation with MEGA is that it does not synchronize files across multiple platforms. Unlike Dropbox where files are instantaneously copied to the server, you have to manually upload and download files to MEGA.

This makes it useful as a storage location, much like a safety deposit box for your digital files.

A third service that you may consider is a blend of the two. It’s called SpiderOak.

And while it’s not yet exceptionally user friendly, SpiderOak has the synchronization convenience of Dropbox plus the end-to-end encryption of MEGA.

Think of it this way: if you use SpiderOak, the files you use on your desktop will be immediately copied and updated to the SpiderOak servers, and across all of your registered devices.

But they will be fully encrypted. No one at SpiderOak will have access to them. Only you, or anyone else you give the password to.

So, like Mega, any data that has to be turned over to law enforcement will just be encrypted gibberish.

SpiderOak was designed for this purpose– file storage and cloud synching for privacy-conscious users.

If you believe that privacy is a right (not a privilege), it’s definitely worth checking out.

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January 20, 2014
Sovereign Valley Farm, Chile

It’s almost exactly like that scene from V for Vendetta.

You know– the part in the end where swarms of people go up against the police with their sticks and Guy Fawkes masks…

That’s what’s happening in Ukraine right now. And with reason.

After weeks of student protests over the government’s failure to sign a European integration and association treaty, the police violently cracked down on protestors, and politicians passed a series of new laws in the middle of the night. Among them:

• Criminal extremist activity is now redefined, broadly and loosely, that effectively criminalizes protest, press reports, or social media that is anti-government.

• Insulting a policeman or judge is now a criminal offense. This includes behavior that “patently offends” or “shows insolent disrespect”.

• Blocking of administrative buildings is now criminalized with a 5-year prison sentence.

• Anyone who organizes an assembly in violation of ‘established procedures’ can be arrested.

• The government has streamlined its ability to force Internet Service Providers to block certain websites it deems harmful in its sole discretion.

• New amendments to the criminal code allow pre-trial and trial proceedings to be conducted, even if the defendant is not physically present to defend himself.

The laws go on and on. It’s Soviet stuff all over again. And people aren’t taking this lightly.

In total defiance of these new laws, the gun-toting police thugs, and the bone chilling winter cold, people are once again out in the streets.

There’s a great video from a few nights ago where the cops were assaulting a few protesters. Then suddenly a swarm of people with nothing more than fists and sticks ran over and began attacking the police.

Watch the video here. (about 60 seconds in length).

Societies, like individuals, have their own breaking points. Citizens can only tolerate so much abuse before enough of them take action. Sometimes that means meeting violence with violence.

I wonder where this line is in the West. Back in the Land of the Free, the government has taken every possible step it can to abuse citizens.

It has enriched banks at the people’s expense. It has robbed the masses of the purchasing power of their savings. It has destroyed liberties, indebted future generations, raised taxes, and regulated the most fundamental aspects of our lives.

All of this has been done shamelessly, unapologetically. For example, President Obama’s “solution” to the NSA spying debacle is to simply outsource the metadata storage to some unknown company.

Pathetically, this is what passes for liberty in the Land of the Free today.

Yet while Ukrainians have clearly reached their breaking points and are fighting it out in the streets for their freedom, it remains unclear where North Americans and Europeans draw the line. Most people don’t seem to care.

Fortunately, anyone who actually values liberty doesn’t need to wait around for Ukrainian-style armed revolution.

The world is a big place, and there are a number of options to reduce our exposure to bankrupt, insolvent, destructive governments.

Every single person who holds dollars in a US bank account, for example, is entirely beholden to the whims of the Federal Reserve Board of Governors.

You can substantially reduce this exposure by moving funds to a place like Norway or Hong Kong, holding krones or Hong Kong dollars.

Or even still, owning precious metals at a foreign depository in a place like Singapore.

You can reduce your exposure to NSA spying by using simple encryption plug-ins for email (see our free report on how to give the NSA the finger…)

You can further reduce your risk and exposure to your home government by obtaining a low-cost second residency in a place like Chile or Panama, to ensure that you always have another option.

There are a plethora of solutions– individual solutions– that anyone can take advantage of. And in doing so, we are relying on ourselves. Not on our neighbors. And definitely not on government.

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January 17, 2014
Sovereign Valley Farm, Chile

I have to give you fair warning, this is truly disgusting.

It’s been over two years since Kelly Thomas, a 37-year old man from Fullerton, California was tased and beaten to death by local police.

Thomas was homeless, schizophrenic, and had a long history of mental illness. He’d also had his share of run-ins with the police.

And on the evening of July 5, 2011, Fullerton police approached Thomas once again, this time on suspicion of vandalism.

According to statements given by the police officers on the scene (and video footage), the conversation went something like this:

Cop: “Now you see my fists?”
Thomas: “Yeah, what about them?”
Cop: “They are getting ready to fuck you up.”

And that’s exactly what happened next. Fists. Beatings. Tasers. Followed by multiple other cops who arrived on the scene to participate.

Bear in mind, Thomas was unarmed and defenseless.

There are a number of videos on the Internet from nearby onlookers who were pleading with the police to stop beating Thomas. He can be heard screaming, totally subdued, facedown, at the hands of a team of Fullerton’s finest.

The most graphic video was captured by a nearby security camera, clearly showing six police officers beating Thomas senselessly. It’s utterly disgusting.

Skip to 17:55 to see it for yourself:

After the beating, it became clear that Thomas was in need of emergency medical attention. He was taken to a local hospital, and amazingly, the police instructed one of the paramedics on the scene to first attend to one of the officers’ minor injuries, instead of Thomas who was lying unconscious in a pool of his own blood.

Thomas never regained consciousness and died five days later. He was literally beaten to death by six police officers.

It took two years, but the issue finally went to trial.

But despite overwhelming evidence of Thomas complying with the officers’ requests, and their savage, excessive, merciless beatings of an unarmed man, all six officers were acquitted earlier this week by a jury of their peers.

They got away with murder.

This is the sort of thing you’d expect in Ukraine, Syria, or Equatorial Guinea. And yet, it happened in the Land of the Free… a.k.a. the United Police States of America.

For almost five years now, Sovereign Man has been discussing these concepts– shining a big spotlight on the destructive forces that free people are up against.

Every day, the police state grows more contemptible. Central bankers print more money and rob the purchasing power of our savings. Politicians increase the debt, pass higher taxes, and create more debilitating regulations. Corruption runs rampant.

The trend is obvious for anyone who is paying attention.

Like the Romans, the French Bourbon monarchy, the Venetians, the Ottomans, etc. who came before, this time is not different. We are not different.

When it’s clear that your country is headed down the tubes, it makes sense to spread your interests around the globe. We routinely discuss this strategy, both in this publication and our premium services.

But news like this really drives the point home.

Yes, it’s certainly beneficial to look abroad in order to protect your assets, broaden your investment opportunities, and safeguard against inflation and capital controls.

But there’s a deep, personal element to this strategy as well.

When cops can beat a man to death and walk away scot free, it certainly begs the question– does it really make sense to risk your family’s safety and security on a place that is rapidly turning into a banana republic?

We can -hope- that things get better. We can wait for all out revolution to spill into the streets. Or we can consider some appropriate options abroad, just in case.

Times have changed. And the latter is a rational, sensible strategy to pursue, especially if you’re living in a country that becomes less free by the day.

If not now, when?

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January 16, 2014
Santiago, Chile

There’s a nasty little parasite that exists in nature known as the nematomorph hairworm (Spinochordodes tellinii) which typically infects grasshoppers and crickets.

Once fully grown, the worm is able to profoundly affect the behavior of its host; most notably, the worm can actually compel a grasshopper to throw itself into water.

This is great for the worm as it needs the moisture to reproduce. But for the grasshopper, it’s deadly.

There’s another vile protozoan known as Toxoplasma gondii. According to a 2007 study, rats and mice who are infected with it demonstrate a marked reduction in natural defenses, making them far more susceptible to being eaten by cats.

Nature is full of these unpleasant parasites which cause their hosts to engage in irrational, destructive, or even suicidal behavior.

Of course, they exist for humans too… especially for investors. In fact probably the number one parasite which affects investors is a very peculiar emotion: fear.

Specifically, it’s the fear of missing out that drives so much irrational investment behavior. Nobody wants to miss a big boom, no matter how baseless the fundamentals.

It’s this fear of missing out that compels people to continue investing in stocks, even though they are near all-time highs and trading at Price/Earnings ratios that are historically dangerous.

Ironically, this fear of missing out is stronger than the fear of loss. But if everyone else is jumping in, it’s easier to ignore the obvious risks of losing our life’s savings investing in ridiculously overvalued stocks.

Following the crowd is a great way to lose a lot of money.

Some of the most successful investors in history have been those who had the courage to go against the investment herd mentality. They conquered the fear of missing out, and they bought what everyone else hated… or looked where nobody else was looking.

In today’s investment climate, though, where central bankers are printing trillions of dollars per year and pushing up the prices of assets everywhere, it’s hard to find too many sectors or asset classes that are ‘hated’. But a few exist:

1) Precious metals

The market has all but stuck a fork in gold. It’s done. Or at least, so says the conventional wisdom. Taper talk and sentiment of stronger economic growth have prompted investors to mostly abandon gold, silver, platinum, etc.

2) Mining companies

With losses in the metals and mining margins declining, share prices for mining companies have gone from ugly to bufugly… and many long-term mining investors are collectively ripping their faces off.

3) Emerging market currencies

Currencies across the developing world– Turkey, India Indonesia, Uruguay, etc. have been battered senselessly over the last few months on fears of a global slowdown despite many of those nations’ stronger economic and demographic fundamentals.

As for what’s not hated– that’s easy. Stocks in the US and Western Europe are at/near all-time highs.

The Chinese renminbi is at a multi-year high. And inexplicably, the market is showing a lot of confidence in both the euro and the dollar right now.

Government bonds of heavily indebted western governments are still viewed as no-brainer safe havens.

The governments of Spain and Italy, in fact, just issued new bonds at a record low yields… nevermind 57.7% youth unemployment or obscene levels of debt and deficit spending.

And, despite gradually rising interest rates which adversely impact prices and affordability, US housing is once again front and center in the media as a safe investment.

Last– what’s not even on the radar of the collective investment herd?

In my view, few conventional investors are even thinking about farmland overseas (ex-US), or private equity in developing markets. More on those soon.

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January 15, 2014
Santiago, Chile

In 1892, 17 year old Pascual Baburizza stepped off the boat in what looked like an unwelcoming, arid landscape in the north of Chile.

Baburizza had just spent several weeks on a boat travelling from his home island of Koločep, Croatia, which was then part of the dying Austro-Hungarian empire.

Austria-Hungary was once one of the most powerful empires in the world… replete with grandiose palaces, monuments, and a huge army. It no longer exists.

And by the late 19th century, an unpromising future back in his homeland had forced Baburizza to leave and seek better prospects on the other side of the planet.

He quickly found a business opportunity as the region was going through a potassium nitrate boom. Rather than get into potassium nitrate, though, he sold fish and meat to prospectors in the desert… something like selling shovels to gold miners.

The business went so well that he soon began acquiring property and other companies, and eventually expanded into agriculture.

In 1929, at the age of 54, he retired to live in his palatial Italianate villa in Valparaíso on Chile’s beautiful Pacific coast.

Baburizza’s story wouldn’t be much different today, especially in Chile.

There are legions of enterprising, talented, and ambitious young people out there who have realized that they cannot fulfill their dreams back home in Europe or North America.

They’re looking elsewhere, and Chile is receiving a number of them.

Down here, it’s possible for foreigners to obtain a job, start a business, or invest, all with relative ease. And the immigration laws make it easy for any productive foreigner to move here.

The government’s funding program, Start Up Chile, has been a huge success in attracting talented people and innovative businesses here. And with more talent, innovation, and crosspollination the opportunities are expanding.

Just as in Baburizza’s time, this place is still brimming with business and investment opportunities. I come across them every day.

For example, there are enormous problems to be solved (and money to be made) by catering to the needs of Argentine nationals across the Andes, who are once again getting hosed by their government.

That’s why Bitcoin-related services are taking off here.

Satisfying the appetites of the growingly affluent Chileans is another substantial opportunity. Large parts of Santiago provide a pleasant, first world standard of living.

And yet, the offerings here in the consumer, retail, service, culture, and hospitality businesses still lag behind other places in the world with a similar standard of living.

The high-end service space is waiting to be exploited—anything from fine dining restaurants, private schools, boutique hotels, sophisticated bars, etc.

Across the board, the level of service is something that can be greatly improved upon by anyone coming from a more service-oriented environment.

Every week I meet new foreigners who have arrived and are overwhelmed at the business opportunities here. Back home, the competition (and regulation) would be suffocating.

But here, the startup costs are lower, the competition is almost nonexistent, and the opportunities to excel in a thriving economy are abundant.

Pascual Baburizza didn’t wait for things to get better. In his case, they got worse… until the Austro-Hungarian Empire disappeared altogether.

Today, the leap of faith to be made by changing your geography is much smaller than it was in his time. It’s possible for anyone to do who has the courage and the vision to try.

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January 13, 2014
Santiago, Chile

In the 3^rd century AD, Emperor Caracalla famously remarked of Rome’s tax policy:

“For as long as we have this,” pointing to his sword, “we shall not run out of money.” (Of course, Rome did run out of money. )

At the time, Roman taxation was so extractive that it drove people into poverty and desperation. Yet the government continued to forcibly plunder wealth at the point of a sword.

Not much has changed.

The Taxpayer Advocate Service, which is an independent office within the IRS, has just released a two-volume report describing the mafia tactics that are being employed by the tax collectors in the Land of the Free.

The Executive Summary alone is 76 pages. And believe it or not, it’s a real page turner.

On page 37, for example, the report states that the IRS largely assesses tax penalties improperly.

Specifically, the Office of the Chief Counsel admonished the IRS that it was not legally authorized to impose accuracy related penalties on certain taxpayers, and that the service should abate those penalties already imposed.

Yet the IRS declined to follow its own Chief Counsel’s legal advice, and it has refused to abate penalties for nearly 90,000 taxpayers.

In the words of the agency’s own Taxpayer Advocate Service, “The IRS’s failure to abate inapplicable penalties signals disrespect for the law and a disregard for taxpayer rights.”

Page 34 discusses how the IRS has abandoned its own checks and balances.

When a taxpayer is deemed to owe the US government money, the IRS is supposed to have a “collection due process (CDP) hearing” to verify that the IRS agent followed the law and consider whether the intrusion on the taxpayer was warranted.

Yet the report states that this has become nothing more than a rubber stamp formality, and that current practices “do not provide the taxpayer a fair and impartial hearing.”

In fact, among the most litigated issues at the IRS, the report states that “taxpayers fully prevailed only about two percent of the time.”

Two percent. If you go up against the IRS, you have a 2% chance of winning. Give me a break. You have more than a 2% chance fighting against the mafia.

Moreover, the byzantine US income tax code, which runs to an incredible 72,000+ pages, “disproportionately burdens those who [make] honest mistakes”, especially as it relates to offshore disclosures.

In fact, the report acknowledges that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”

It’s not exactly Emperor Caracalla pointing to his sword… but IRS’s policies and tactics are not so far off from a police agency.

They disregard the law and the advice of their own counsel. They disproportionately burden honest individuals. They flout due process. And they push people to abandon their citizenship.

These are mafia tactics, plain and simple. And like the Romans, Ottoman Empire, and French monarchy before, the tax system in the Land of the Free has become a desperate farce marked by fear and intimidation.

This is one of history’s obvious marks of a nation that has reached its terminal decline. We cannot seriously expect this time to be any different.

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January 10, 2014
Sovereign Valley Farm, Chile

There’s no doubt that one of these days (hopefully very soon), our current monetary system will be viewed as one of the most absurd financial experiments in history.

Consider the monetary system for what it really is– politicians award unelected central bankers with the power to conjure money out of thin air… a power that they are not shy about using.

In the US, for example, the Federal Reserve’s asset base is now roughly $4 TRILLION, constituting over 25% of US GDP.

When Lehman Brothers went bankrupt a few years ago, the Fed had less than $900 billion in assets. So that’s over a 400% increase in five years, all because they simply willed trillions of dollars of new money into existence.

Of course, the Fed is not alone.

The Bank of Japan and People’s Bank of China among others have printed so much money they make the central bankers at the Fed look like a bunch of amateur hacks.

And while it is my fixed opinion that such destructive behavior will soon drive these paper currencies to their intrinsic values in British Thermal Units, it’s clear that not all paper currencies are the same.

The Norwegian krone is one obvious outlier.

For starters, Norway’s government has ZERO net debt owing to its massive oil wealth. This means that the government’s balance sheet has more financial assets than debt.

The Norwegian government is so cash rich, in fact, that its net financial position is over +100% of GDP. By comparison, the ‘net worth’ of the United States is MINUS 102% of GDP as of the last fiscal year.

More important, however, is the Norwegian Central Bank’s financial position. This is critical to look at.

Just about every currency in the world is issued by that nation’s central bank. The US dollar is issued by the Fed (the US central bank). The British pound is issued by the Bank of England. Etc.

So if you want to understand the health and safety of a currency, it’s imperative to analyze the fundamentals of a central bank. And the most important fundamental to look at is the bank’s net financial position.

Central banks are like any other bank… or any other business for that matter– they have assets and liabilities.

The difference between the two is called the bank’s equity, or capital. And the greater the equity, the healthier the bank.

This makes sense– you want a bank that has a pristine balance sheet with ample, strong, stable assets… and very few liabilities.

This way, when times get tough, the bank has a tremendous margin of safety to ride out the storm. And with central banking, this means a very low likelihood of a currency crisis or any other financial shock.

The best way to make an apples to apples comparison is by looking at a central bank’s equity expressed as a percentage of its assets.

The Fed right now has a paltry $55 billion in equity to support $4.02 trillion in assets. So the Fed’s equity is just 1.36% of its equity.

In Norway, on the other hand, the central bank’s equity is a massive 32.9% of its total asset base. This means Norway’s central bank is 24 TIMES STRONGER than the Fed.

It’s an astounding difference. Between this, and the government debt position, it’s obvious that the Norwegian krone is a MUCH stronger currency.

But here’s the funny thing. Right now, the krone is trading near a multi-year low… around 6.2 krones per dollar.

This isn’t to say that another global financial shock couldn’t temporarily push the krone past 7/dollar. But longer term, it’s a much safer bet than the US dollar. And right now it’s at an attractive entry point worth considering.

from SOVErEIGN MAN http://www.sovereignman.com/finance/the-safest-currency-in-the-world-selling-for-a-big-discount-13376/
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If you’re over 35, a refundable bank deposit of just $20,000 – or, in some cases even less – buys you residency in the Philippines.

If you’re over 50 and have a pension income of at least $800 a month, a bank deposit of as little as $10,000 will suffice.

Even “ailing retirees,” those who have a non-contagious, pre-existing medical condition, which means they need close medical supervision and extra care, are catered for on the ailing retiree visa option.

No other country in the world that I know of will explicitly and gleefully accept ailing retirees on an official residency program.

The Philippines may be relatively poor, but from my experience, there’s a lot more money around than one might think.

Another thing I’ve always loved about the Philippines is that, when compared to most other Asian countries, it is very welcoming of outsiders.

Filipinos themselves share a mixed heritage, which is a product of the original Malay people who settled in the islands, and the Chinese, Spaniards, and Americans, who came in waves for trade, and as colonizers, and stayed. In terms of its racial mix, the Philippines is a lot more like Brazil than it is like Japan or South Korea.  

How to obtain a retirement residency visa in the Philippines

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from SOVErEIGN MAN http://www.sovereignman.com/alerts/how-to-get-a-retirement-visa-in-the-philippines-if-youre-over-35-13373/
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