Being a sovereign man is not just about diversifying and internationalizing your assets across national borders.

It’s as much about your mindset and the way you view the world and the events that are happening around you.

Your worldview is heavily dependent on the knowledge and ideas that you are exposed to, but as demonstrated some people don’t want to learn, neither from books nor from history.

Take Ben Bernanke for example.

Is it surprising that the economy is on the brink of collapse when he and so called leading economists have based their whole worldview on faulty Keynesian economic theories?

The consequences might be surprising to them, but not to us, because we know better. We’ve learned from history.

Albert Einstein said, that “any man who reads too much and uses his own brain too little falls into lazy habits of thinking,” but to make the best use of your brain it helps first having an accurate understanding of reality, and of where the world is heading.

So to that end, here are some books to get you started:

The Road to Serfdom
by Friedrich A. Hayek

The Godfather of the Austrian School of economics, Hayek explains the vitality and necessity of economic freedom better than anything else I’ve read.

Read/Download for free at the Mises Institute

Atlas Shrugged
by Ayn Rand

This book teaches you the basic principles of reward being in proportion to the value you add to other people’s lives. It also helps you to step out of the victim frame and start to realize that nobody else owes you a goddamn thing and you have to build/contribute something that other people want before you have a claim to anything.

Anatomy of the State
by Murray N. Rothbard

You might have heard me mention the concept of reducing your sovereign risk before, i.e. not trusting any one government with your money or your safety. When you diversify to protect yourself against the state, it helps first knowing the true nature of the state. This book will help you with that.

The state is not the same as society, and the state is certainly not “we.” As the book description says, Murray shows “how the state wrecks freedom, destroys civilization, and threatens all lives and property and social well being.”

Read/Download for free at the Mises Institute

Read the rest of the article

Recently by Simon Black: Expect These Eight Steps From the Government's Playbook

Being a sovereign man is not just about diversifying and internationalizing your assets across national borders.

It’s as much about your mindset and the way you view the world and the events that are happening around you.

Your worldview is heavily dependent on the knowledge and ideas that you are exposed to, but as demonstrated some people don’t want to learn, neither from books nor from history.

Take Ben Bernanke for example.

Is it surprising that the economy is on the brink of collapse when he and so called leading economists have based their whole worldview on faulty Keynesian economic theories?

The consequences might be surprising to them, but not to us, because we know better. We’ve learned from history.

Albert Einstein said, that “any man who reads too much and uses his own brain too little falls into lazy habits of thinking,” but to make the best use of your brain it helps first having an accurate understanding of reality, and of where the world is heading.

So to that end, here are some books to get you started:

The Road to Serfdom by Friedrich A. Hayek

The Godfather of the Austrian School of economics, Hayek explains the vitality and necessity of economic freedom better than anything else I’ve read.

Read/Download for free at the Mises Institute

Atlas Shrugged by Ayn Rand

This book teaches you the basic principles of reward being in proportion to the value you add to other people’s lives. It also helps you to step out of the victim frame and start to realize that nobody else owes you a goddamn thing and you have to build/contribute something that other people want before you have a claim to anything.

Anatomy of the State by Murray N. Rothbard

You might have heard me mention the concept of reducing your sovereign risk before, i.e. not trusting any one government with your money or your safety. When you diversify to protect yourself against the state, it helps first knowing the true nature of the state. This book will help you with that.

The state is not the same as society, and the state is certainly not “we.” As the book description says, Murray shows “how the state wrecks freedom, destroys civilization, and threatens all lives and property and social well being.”

Read/Download for free at the Mises Institute

Read the rest of the article

The Best of Simon Black

Reporting From Sovereign Valley Farm, Chile

To anyone paying attention, reality is now painfully obvious. These bankrupt, insolvent governments have just about run out of fingers to plug the dikes. And history shows that, once this happens, governments fall back on a very limited playbook:

1. Direct confiscationAs Cyprus showed us, bankrupt governments are quite happy to plunder people’s bank accounts, especially if it’s a wealthy minority.Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.
2. TaxesJust another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, it’s more socially acceptable. We’ve come to regard taxes as a ‘necessary evil,’ not realizing that the country existed for decades, even centuries, without an income tax.Yet when bankrupt governments get desperate enough, they begin imposing new taxes… primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).
3. Inflation

This is indirect confiscation – the slow, gradual plundering of people’s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. They’re also adept at fooling people with phony inflation statistics.

4. Capital ControlsGovernments can, do, and will restrict the free-flow of capital across borders. They’ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued.We’re seeing this everywhere in the developed world… from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesn’t help when everyone from the IMF to Nobel laureate Paul Krugman argue in favor of Capital Controls.

Read the rest of the article

Recently by Simon Black: Reality Check: The Dow Jones Industrial Average vs. Bananas

Reporting From Sovereign Valley Farm, Chile

To anyone paying attention, reality is now painfully obvious. These bankrupt, insolvent governments have just about run out of fingers to plug the dikes. And history shows that, once this happens, governments fall back on a very limited playbook:

1. Direct confiscation

   As Cyprus showed us, bankrupt governments are quite happy to plunder people’s bank accounts, especially if it’s a wealthy minority.

   Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.

2. Taxes

   Just another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, it’s more socially acceptable. We’ve come to regard taxes as a ‘necessary evil,’ not realizing that the country existed for decades, even centuries, without an income tax.

   Yet when bankrupt governments get desperate enough, they begin imposing new taxes… primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).

3. Inflation

This is indirect confiscation – the slow, gradual plundering of people’s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. They’re also adept at fooling people with phony inflation statistics.

4. Capital Controls

   Governments can, do, and will restrict the free-flow of capital across borders. They’ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued.

   We’re seeing this everywhere in the developed world… from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesn’t help when everyone from the IMF to Nobel laureate Paul Krugman argue in favor of Capital Controls.

Read the rest of the article

The Best of Simon Black

Reporting From Santiago, Chile

The Dow Jones Industrial Average, one of the key benchmarks of the US stock market, has soundly surpassed its all-time high. And most of the investing world is toasting their collective success and celebrating the recovery.

It’s a funny thing, really. Most investors only think in terms of ‘nominal’ numbers, i.e. Dow 14,000+ is 40% higher than Dow 10,000 (back in November 2009). But few think in terms of ‘real’ numbers… inflation-adjusted averages.

Everyone knows that inflation exists. We can all look back on prices from the past and realize instantly how much more expensive things have become. Conversely, though, most people don’t think about the stock market like this.

The reality is, though, that when you adjust for inflation, the Dow is well below its highs from over a decade ago.

I thought I’d put this into a bit of perspective.

Take beef, for example. Based on USDA retail price data, today the Dow will buy you 3,332 pounds of beef in the supermarket. This sounds like a lot. But it’s actually about 20% less than the 4,046 pounds of beef the Dow would buy back in December 1999.

And if beef’s not your thing, let’s look at fruit. Based on the wholesale price of bananas, the Dow currently buys you a whopping 15.35 tons of the tropical fruit.

But this is exactly the same amount of bananas the Dow would buy back in February 2008, when the Dow was just 12,266. And it’s a massive 60% drop from June 1999 when the Dow bought 38.51 tons of bananas.

Read the rest of the article

Recently by Simon Black: Trust Me, This Time Is Different…

Reporting From Santiago, Chile

The Dow Jones Industrial Average, one of the key benchmarks of the US stock market, has soundly surpassed its all-time high. And most of the investing world is toasting their collective success and celebrating the recovery.

It’s a funny thing, really. Most investors only think in terms of ‘nominal’ numbers, i.e. Dow 14,000+ is 40% higher than Dow 10,000 (back in November 2009). But few think in terms of ‘real’ numbers… inflation-adjusted averages.

Everyone knows that inflation exists. We can all look back on prices from the past and realize instantly how much more expensive things have become. Conversely, though, most people don’t think about the stock market like this.

The reality is, though, that when you adjust for inflation, the Dow is well below its highs from over a decade ago.

I thought I’d put this into a bit of perspective.

Take beef, for example. Based on USDA retail price data, today the Dow will buy you 3,332 pounds of beef in the supermarket. This sounds like a lot. But it’s actually about 20% less than the 4,046 pounds of beef the Dow would buy back in December 1999.

And if beef’s not your thing, let’s look at fruit. Based on the wholesale price of bananas, the Dow currently buys you a whopping 15.35 tons of the tropical fruit.

But this is exactly the same amount of bananas the Dow would buy back in February 2008, when the Dow was just 12,266. And it’s a massive 60% drop from June 1999 when the Dow bought 38.51 tons of bananas.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: RED ALERT: World's Biggest Gold Storage Company Dumps USCitizens

Reporting From Santiago, Chile

By 1789, a lot of French people were starving. Their economy had long since deteriorated into a weak, pitiful shell. Decades of unsustainable spending had left the French treasury depleted. The currency was being rapidly debased. Food was scarce, and expensive.

Perhaps most famously, though, the French monarchy was dangerously out of touch with reality, historically enshrined with the quip, “Let them eat cake.”

The Bourbon monarchy paid the price for it, eventually losing their heads in a 1793 execution. But it took the French economy decades to finally recover.

Along the way, the government tried an experiment: issuing a form of paper money. It didn’t matter to the French politicians that every previous experiment with paper money in history had been an absolute disaster.

As French Assemblyman M. Matrineau put it in 1790, “Paper money under a despotism is dangerous. It favors corruption. But in a nation constitutionally governed, which itself takes care in the emission of its notes [and] determines their number and use, that danger no longer exists.”

Translation: This time is different. We’re different. We’re smarter. We won’t suffer the same fate. TRUST US.

Within a few years, hyperinflation had taken hold in France. A measure of flour that sold for two francs in 1790 was selling for 225 francs by 1795. Everything soared. Carriage hires. Butter. Sugar. Everything.

Naturally, the French government decided to fix this problem by printing even more money, doubling the money supply from 7 to 14 billion units in a six-month period.

When these measures also failed, the French government imposed every control in the book– price controls, capital controls, information controls, people controls. They confiscated lands, they filled the prisons, they waged genocide against their own people.

History shows there are always consequences to entrusting a paper money supply to a tiny handful of men. The French experiment is but one example. Our modern fiat experiment will be another.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Why a Banking Insider Says ‘It's Time To Be Very Worried’

Reporting From: Sovereign Valley Farm, Chile

ViaMat, a Swiss logistics company that has been safeguarding precious metals since 1945, is literally the gold standard in secure storage.

They have vaults from Switzerland to Hong Kong to Dubai, and they count among their clients some of the largest mining companies in the world. They know what they’re doing.

And now they’re dumping US citizens.

ViaMat does a great deal of business within the United States. As such, the company is heavily exposed to the insane US regulatory environment.

As an example, the 2010 Foreign Account Tax Compliance Act turned into more than 500 pages of regulation! The costs and risks associated with compliance simply became too much for ViaMat to bear.

This matter-of-fact letter from ViaMat management explains their decision:

“We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the US to private customers with potential US-tax liability.”

This is huge. I can’t possibly overstate the potential ramifications.

For one, the big gold depositories like Gold Money and Bullion Vault ALL use ViaMat as a primary secure storage provider. So it’s only a matter of time before ViaMat’s decision cascades across these other firms.

I have written extensively about this to subscribers of our premium service, Sovereign Man: Confidential; most gold storage firms are all essentially different varieties of the exact same product. They are retail marketing channels that ultimately use ViaMat to store their gold bars. If ViaMat has US exposure, THEY have US exposure. It’s the same risk.

Now, if you’re in the United States in particular, one of the most important (and cost effective) steps you can take in international diversification is to store precious metals overseas.

Gold remains the most effective ‘anti-currency’ out there, a bet against a corrupt financial system and debt-laden sovereign governments. But remember – governments have an unblemished track record of plundering their citizens’ wealth. So if you store your gold in the US, you might as well ask Barack Obama to keep it under his mattress.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Five Tools To Protect Your PrivacyOnline

Reporting from Santiago, Chile

Apparently the Latino version of Jusin Beiber is in town.

I have no idea who this kid is, but as I was walking into the W Hotel last night for a meeting, there were hundreds and hundreds of adoring prepubescent girls lining the metal cordon that had been set up outside of the building.

Then he walked outside, flanked by hotel security. He couldn’t have been more than fifteen, a bit pimply-faced and gangling at that awkward age. But the crowd couldn’t have cared less. The screaming persisted for ten minutes… just like those old black and white reels of teenage girls losing their minds at Beatles concerts fifty years ago.

Despite all the commotion outside, I met up with my colleague, and we dove immediately into a conversation about international banking and the state of the global financial system. As a senior executive of a large international bank, he is the ultimate insider. And I was floored by what he told me.

He openly acknowledged, for example, that banks are frauds. Most banks, particularly in the developed west, only hold a tiny fraction of their customer’s deposits in cash. The rest is gambled away on whatever the popular toxic security du jour happens to be.

This entire system rests upon a very thin layer of confidence, reinforced by the occasional taxpayer bailout. Yet it struck him as incredible that people still had confidence in banks, especially given that most of the investment products promoted to their customers are “crap”.

He told me how destructive central bankers are, creating untold amounts of inflation that only serves to make people poorer, while enabling governments to go deeper into debt.

Most of all, he told me that very few of the banking sector’s underlying deficiencies have been addressed since the 2008 meltdown. Many western banks are still insolvent, with the key difference that their governments are now also insolvent.

He believes that in the coming years, this confluence of risk will finally burst, most likely induced by the effects of the currency wars and competitive devaluation.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: How I Reached My Breaking Point TenYearsAgoToday

Reporting from the 6th Region, Central Chile

We’ve discussed many times before – hardly a month goes by without some major action against Internet users… from Obama’s ‘kill switch’, to ACTA, SOPA and PIPA, to stasi tactics against people like Kim Dotcom.

Online privacy is becoming more important by the day. And nobody is going to give it to you, you have to take steps yourself to secure it.

Below are five different tools and services that will get you started:

1. Tor Browser

Tor is a great weapon in the fight for online anonymity as it allows you to surf the web without giving up your location and other personal data to the websites you visit.

The Tor Browser Bundle is the easiest and most secure way to get started; simply download it, and start surfing the web with the Tor Browser. It’s available for Windows, Mac, and Linux.

Learn more about and download the Tor Browser Bundle here

2. Duck Duck Go

If you want privacy, don’t search with Google.

Google store all of your searches to customize ads for you, but even worse, they can hand over the whole list of searches to any government agency that are curious about what you’ve been looking at for the last couple years.

A better alternative is Duck Duck Go, a completely anonymous search engine that does not store any information about you or your searches. The search results are essentially identical to Google’s, so there’s no loss of quality.

Search with Duck Duck Go here

3. HTTPS Everywhere

HTTPS Everywhere is a plug-in for Firefox and Google Chrome that tries to force a website to connect in secure mode, thus encrypting your traffic with the website you are visiting. This makes your browsing more secure because it prevents eavesdropping thieves or state-mafia from intercepting your unencrypted Internet traffic.

Download HTTPS Everywhere here

4. Cryptocat

Cryptocat is an encrypted chat that beats Facebook and Skype when it comes to security and privacy. If you want to chat in private then this is one simple solution. It’s also open source, which means you can see the full code and be sure there are no government “backdoors” built in.

Read more about and download Cryptocat here

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: US Bank Rejects Silver Quarter as u2018BadMoney'…

Exactly ten years ago to the day, I was in the Kuwaiti desert waiting for George W. Bush to ‘make his decision’.

You may remember the circumstances. Ever since labeling Iraq, Iran, and North Korea the ‘Axis of Evil’ in January 2002, the President had been gradually advocating war with Iraq based on the threat of nuclear weapons.

We knew it was going to happen. At the time, I was a rising intelligence officer, my head still filled with ideals of national duty from my time at West Point.

One of the generals that I served under gathered together his officers in early 2002 and said, “We’re going to war. It’s not a question of IF, but WHEN.”

By late summer of that year, my unit was ordered to Kuwait to pre-position assets and begin gathering boots on the ground intelligence. So every time Mr. Bush would say “I haven’t made a decision yet,” I winced from the heavy stench of his BS.

But still, I held out hope.

It all came crashing down ten years ago today. On February 5, 2003 Colin Powell, four-star general turned US Secretary of State, made a case to the United Nations that Saddam Hussein had weapons of mass destruction.

Now, I won’t bother delving into the inaccuracies of the intelligence he presented. In Powell’s own words, making that presentation to the UN was “the lowest point in [his] life” and a “lasting blot on his record.”

For me, it was pivotal. At that instant, I knew without doubt that my government had reprehensibly lied through its teeth. And if they were lying about this… what else were they lying about?

Everything, it turned out.

The event set me down a path on which I never looked back. The fraud of the Iraq War soon led to the frauds of previous wars, our monetary system, taxes, the global banking system, the national balance sheet, the police state, etc.

It all unraveled so quickly, and I soon realized that I was not living in a free country… that all the loud, bombastic nonsense and pledges of allegiance were illusions masking modern day serfdom.

The subsequent ten years have only reinforced this trend. The political and banking elite have given us more war, inflation, and epic financial crises. They’ve turned Western civilization into a giant police state. And they’ve managed to brainwash the great masses so effectively that the people are crying out for more.

And yet, there are solutions.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: When Priced in Gold, the US Economy Is at Depression-Era Levels

Just a quick note today… a funny story to end the week.

Like you probably do, my friend Larry keeps a large change bucket. Every night, he drops in a few coins that he might have picked up throughout the day… and gradually, it accumulates.

Every now and again, Larry takes his change bucket to the bank to use its automated coin machine. You put in the coins, and the machine spits out bills (or deposit slips).

Now, Larry is a worldly guy, and he travels frequently. So occasionally a coin from Canada or Europe will have made its way in to the coin bucket. But these machines have a very sensitive tolerance, and any ‘bad’ coin is rejected.

Larry emailed me the other day telling me about his most recent bout with the change machine:

“As expected, it kicked out a Canadian penny, a coin from the Netherlands, even one of those souvenir fake pennies that people pay to get inscriptions on. Then, a US quarter as well. And I laughed, because it was from the early 1960s back when quarters were made from real silver.”

The machine rejected Larry’s silver quarter as “no good”… a very perverse example of how far our society has devolved from the concept of real money.

Reprinted with permission from Sovereign Man.

The Best of Simon Black

Recently by Simon Black: Squatting on the Shoulders of Midgets

As we slide into the end of yet another year in which the nominal price of gold has posted a positive return, I thought it would be interesting to take a look back on history to get a better understanding of where we are today.

It’s obvious that, for many reasons, the size of the global economy is far greater than it was decades ago. We learn in any basic economics course that, over the long run, enhanced productivity and increased technology drive long-term production gains.

Certainly, an economy can produce more widgets if you’re a lean, mean, automated machine… as opposed to a blacksmith with a hammer and forge.

But there are other factors as well. Population growth. Accounting standards. And of course, the continued inflation of the currency. $1 today buys a whole lot less today than it did a century ago, so when comparing, it’s important to find a better standard of measurement.

There are a number of pricing yardsticks we could use… like the cost of a New York City cinema ticket (25 cents in 1935, $20 today). But it would be awkard to calculate GDP in terms of billions of cinema tickets.

Gold is a much more appropriate (though still imperfect) long-term standard of pricing, with its history as a store of value dating back to the ancients.

With this in mind, I collected the appropriate data on gold prices, population, and GDP in the United States since 1791 and plotted GDP per capita denominated in ounces of gold.

This measurement smooths out changes in economic growth due to currency inflation and changes in the population, making it much easier to compares apples to apples.

The results are rather startling. In its earliest days, US GDP per capita was a mere 2.6 ounces of gold per person per year. But this grew quickly, effectively doubling in the 20 year period from 1791 to 1811.

Most of the 19th century proved difficult for growth, as it took another seven decades (over three times as long) for GDP per capita to double again. This makes sense given that the 19th century was marked by several costly wars (War of 1812, Mexican War, Civil War, etc.)

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Tell Me Again… Which of These Nations IsCommunist?

Isaac Newton, the father of classical mechanics and progenitor of nearly every technology we use today, was easily one of the top 10 most influential minds in all of human history…so much so that even Albert Einstein kept a picture of Newton in his study.

Newton’s achievements were so momentous that when he died in 1727, he was buried with the honors normally reserved for a king. His body lay in state for four days at Westminster Abby, and his pallbearers included two dukes, three earls, and the Lord Chancellor.

Yet as accomplished as he was, Newton credited the brilliant scientists and philosophers who came before him, acknowledging that his insights would not have been remotely possible without the foundations laid by great thinkers– Archimedes, da Vinci, Descartes, etc.

In a personal letter to a colleague in 1676, Newton famously remarked “If I have seen further it is by standing on [the] shoulders of giants.”*

No doubt, all great ideas flourish by expanding upon the works of others. Unfortunately, so do terrible ones. And one of the worst ideas in history that continues to play out today is the grand experiment of fiat money.

The idea is simple. Rather than allowing money to be scarce and have intrinsic value, our fiat system grants power to a tiny elite to conjure money out of thin air. Presumably, if the ones in control are smart, honest guys, then everything should be fine.

Fiat was a total failure right from the beginning. When unbacked paper currency was originally introduced in the 11th century by Emperor Renzong of the S’ung dynasty, nasty inflation quickly followed.

The Yuan dynasty later adopted the same tactic of printing paper money without restriction, and they, too, suffered severe hyperinflation.

In fact, upon visiting China from Europe, Marco Polo remarked in his writings with incredulity how ‘[a]ll these pieces of paper are issued with as much solemnity and authority as if they were of pure gold or silver… and indeed everybody takes them readily. . .”

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Guess What They're NOT Cutting in the FiscalCliff…

Reporting from: Santiago, Chile

Tax policy really tells you a lot about a government… what politicians’ values and priorities are. People can SAY anything, but in a way, tax policy is putting their money where their mouths are.

For example, politicians like to talk about technology, efficiency and transparency. But just take a look at the tax code to see where they really stand. Estonia’s Taxation Act of 2002, which form the preponderance of that country’s tax code, is 43,370 words.

In Canada, the tax code is close to 1 million words. And in the US, the tax code is so daunting that simply the INSTRUCTIONS for form 1040 shatter the record books at 178,096 words… over four times the entirety of Estonia’s tax code.

US tax code is so massive, in fact, that the Government Printing Office charges $1,028 just to print a copy of it!

And for most taxpayers, it’s still virtually impossible to file online. It’s 2012 already, yet taxpayers in most ‘advanced’ western nations still have to carry around reams of paper as if we’re still using the telegraph.

Then there are the rates themselves. In places like France, Belgium, and Germany where the government confiscates the majority of what people earn, the message those governments are sending is quite clear: citizens are nothing more than dairy cows for the government to milk.

As I wrote yesterday, tax rates across the board in the United States are set to increase dramatically in 2013. For example, if you happen to kick the bucket on or before December 31st, the government will charge a 35% tax on the value of your estate that exceeds $5 million.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: ‘Renounce Citizenship’ Is Now One of the Fastest-Growing Search Terms inGoogle

Santiago, Chile.

In his farewell address to Congress this week, Ron Paul blasted the dangers of what he called ‘Economic Ignorance’:

“Economic ignorance is commonplace. . . Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber.”

He’s dead right. Around the world, economic ignorance abounds. And perhaps nowhere is this more obvious today than in the senseless prattling over the US ‘Fiscal Cliff’.

Here’s the deal: You may remember the Debt Ceiling debacle of 2011. At the time, the US government was about to breach its debt ceiling, and there was an embarrassing standoff between Congress and President Obama.

As part of their eventual compromise, the debt ceiling increased by $400 billion in August 2011… then again by another $500 billion five weeks later… and finally by another $1.2 TRILLION twenty weeks after that.

In return, President Obama signed into law the Budget Control Act of 2011. The law stipulates that, unless another compromise is reached, a series of tax increases and budget cuts will automatically take place on January 1, 2013, including the expiration of the Bush tax cuts and the temporary 2% payroll tax holiday, plus new taxes related to Obamacare.

They call this the ‘Fiscal Cliff’ because everyone is terrified that all the budget cuts and new taxes will bring the US economy to its knees once again.

I’ve spent days analyzing the bill… and frankly, it’s a joke. You can read the 200+ pages yourself if you like, but here are the important points –

As we’ve discussed before, US government spending falls into three categories.

Discretionary spending is what we normally think of as ‘government.’ It funds everything from the military to Homeland Security to the national parks.

Mandatory spending covers all the major entitlement programs like Social Security and Medicare.

Then there’s interest on the debt, which is so large they had to make it a special category.

The latter two categories are spent automatically, just like your mortgage payment that gets sucked out of the bank account before you have a chance to spend it. The only thing Congress has a say over is Discretionary Spending. Hence the name.

But here’s the problem – the US fiscal situation is so untenable that the government fails to collect enough tax revenue to cover mandatory spending and debt interest. In Fiscal Year 2011, for example, the US government spent $176 billion MORE on debt interest and mandatory spending than they generated in tax revenue.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Singapore Bank to Uncle Sam: u2018Stick It Where the Sun Don't Shine…'

Santiago, Chile.

According to Google’s trend analysis, keyword searches for terms like “renounce citizenship” have soared in the past week.

Is it any wonder? Millions of people are disconcerted, dismayed, or outright disgusted at President Obama’s victory, and they sense a continued decline of civil liberties and economic opportunities.

The frustration and apprehension is understandable. I can’t begin to tell you how many emails we’ve received over the last few days, mostly from US citizens who reached their breaking points, asking “where can I get a second passport?”

A second passport feels like a way out – a solid insurance policy. And that’s true to a degree. But let’s talk about what a second passport is… versus what it isn’t.

Most importantly, a second passport is like an insurance policy. Rather than protecting you from risks of fires, floods, and fender benders, though, a second passport helps protect against sovereign risks.

Throughout history as once powerful empires have slid into terminal economic decline, political leaders have routinely resorted to plundering their citizens. Capital controls, exchange controls, price controls, and even direct confiscation of savings.

From Argentina to Greece, these same tools are being applied throughout the world today. A second passport gives you the means to defend yourself against these measures.

Predominantly, a second passport ensures that you ALWAYS have a place to go in case you need to leave your home country. Plus, it opens up new financial opportunities, making it much easier to establish foreign bank accounts to move your savings away from your home government’s thieving hands.

Again, it’s a great insurance policy. But a second passport should not be viewed out of context as a panacea. There are drawbacks.

With a second passport, you may be subjecting yourself to new taxes or reporting obligations to another country. Or potentially even military service. Not to mention, it can cost a LOT of money.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: In Case You Trip Over YourShoelaces…

Singapore

I never thought I’d see the day. Two years since the HIRE Act, FATCA, and Dodd-Frank became law and threw global finance into a tailspin, two foreign banks have finally stood up to Uncle Sam. Let’s review briefly.

The HIRE Act was originally drafted in the early days of the post-Lehman crisis. Official unemployment (before they just stopped counting people) was the highest in decades, and politicians had to ‘do something’ to get the economy moving.

Of course, what better way to boost the economy than to pass more laws? It’s genius!

HIRE ended up being a bunch of bizarre tax rules and pet infrastructure projects… the usual stuff. Of course, they have to pretend to pay for all of this. So they invented FATCA, which stands for ‘Foreign Account Tax Compliance Act’.

In short, FATCA requires-

(1) All US taxpayers must annually disclose foreign financial accounts to the IRS if the values exceed a particular threshold (starting at $50,000). This requirement began last year.

(2) All foreign banks must enter into a blanket information sharing agreement with the IRS. If they don’t, the banks are subject to a 30% withholding penalty on US-sourced funds.

Then there’s the Dodd-Frank legislation… over 2,000 pages of unmitigated economic destruction which makes it tremendously difficult for foreigners to do business in the United States, or with US citizens.

The rules which were proposed in Dodd-Frank are so obtusely complicated, nobody can begin to understand them. Even the agencies which are responsible for implementing Dodd-Frank have continually missed their own deadlines because they don’t understand the law.

Bottom line, it’s more reporting, more registration, more paperwork, more hassle.

Understandably, foreign banks have been in turmoil over the last two years as a result of all this legislation. Nobody wants to crawl in bed with the US government, and some banks have taken action by shuttering US citizens’ accounts. Americans are even being dumped from foreign corporate boards.

Yet just yesterday, DBS Bank in Singapore stood up to the US government, indicating that they would not be registering with US authorities for at least for one Dodd Frank provision pertaining to swaps. Nordea Bank in Sweden made a similar statement.

This is an interesting turn of events which could evidence a bigger trend.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Let's Talk About Facts, Not Fear

Pattaya, Thailand

I’m one of those idiots who pays into a health insurance plan month after month, year after year, and never goes to the doctor.

In fact, I’ve had my current plan for years without ever filing a claim. The only reason to have it is the unlikely event that I trip over my shoelace while visiting the US and end up with a $200,000 emergency room bill.

Everywhere else, insurance isn’t necessary; the price of healthcare in most places is reasonable enough to pay cash.

Perhaps nowhere is this more true than in Thailand… home to one of the most advanced, highest quality, and cheapest private healthcare systems on the planet.

Every time I’m here, I visit a hospital just to try things out; my experiences have always been stellar. And speedy.

Just yesterday I dropped in (without an appointment) to Bangkok Hospital’s Pattaya branch to check my cholesterol. There was zero paperwork upon check-in… no stupid forms, no clipboards. And I went straight to the back. No waiting around.

Afterwards, one of the staff physicians came over to chat. His English was perfect, and it seemed as if I was his only patient of the day.

That’s perhaps one of the most important points about healthcare here – the staff/patient ratio is astoundingly high, so you get a tremendous amount of personal attention.

The whole experience is also very private. I use an assumed name at the hospital. I’ve never given them any ID. And obviously there’s no insurance company or government agency demanding my records.

The biggest benefit, though, is cost. Or lack thereof. The amount I paid for my visit yesterday wouldn’t buy a beer in some countries. And the sticker shock applies universally to all tests and procedures, from imaging to chemotherapy to fertility treatments to elective surgery.

The physicians here are excellent. But for those who can’t get over the idea of a foreign doctor, one approach is hiring a specialist in your home country to consult and be the ‘quarterback’ of your care. You get all the expensive tests, imaging, and labs done in Thailand, then send the results back home.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Is the IMF Now Recommending CapitalControls…?

Let’s step away from the noise for a moment and look at the big picture. This isn’t about doom and gloom, or fear, but objective facts.

Undoubtedly, the Western hierarchy dominated by the United States is in a completely unsustainable situation. Across the West, national governments have obligations they simply cannot meet – both to their citizens and their creditors.

In the UK, national government borrowing is already 22% higher than at this same point last year, a record year for borrowing. Meanwhile, the UK’s budget deficit for August hit a record high.

In France, the new government of Francois Hollande passed a ‘historic’ and ‘austere’ budget that is still posting a deficit of 3% of GDP. That’s including a 75% tax on incomes exceeding one million euros.

In Japan, the government is mulling legislation that will fund 40% of the budget with ‘deficit-financing’ bonds.

In the United States, the government recently hit $16 trillion in debt about six weeks ago, after reaching the $15 trillion mark last November. It took 200 years to accumulate the first trillion in debt and 286 days to accumulate the most recent trillion.

Each of these countries has a debt level that exceeds 90% of GDP– the historic point of no return. More importantly, each of these countries also has to borrow money simply to pay interest on money they’ve already borrowed.

This is important because it makes the problems multiple. At the beginning of the 1780s, the French monarchy was spending around 30% of tax revenue to service its debt. Eight years later when the revolution began, they were spending 62%.

The next 26-years in France were filled with internal civil war, external war with Austria and Prussia, hyperinflation, crime, social unrest, and Robespierre’s genocidal dictatorship.

In the 19th century, the Ottoman Empire faced an even steeper financial decline. In just 11-years, the Ottoman central government went from spending 17% of its tax revenue on interest payments to spending over 52% of its tax revenue on interest payments. Then came default, in just eleven years.

In the US, debt service is also rising. According to the Government Accountability Office’s figures, the US government was spending 9% of revenue to service the debt in 2002. Throughout most of the last decade, in fact, the US government spent roughly 9% of its tax revenue on debt service.

But in 2009, the figure hit 9.75%, then 10.5% in 2010, then 11.5% in 2011. For the fiscal year that just closed on September 30, the Bureau of Public Debt reported cumulative interest expense of $375.8 billion on income of $2.45 trillion. This is a rate of 15.3%. See the trend?

But it’s not just debt burdens that are problematic. ‘Rich’ countries in the West are also rapidly debasing their currencies, spawning tomes of regulatory impediments, restricting the freedoms of their citizens, aggressively expanding the powers of the state, and engaging in absurd military folly from Libya to the South China Sea.

Once again, this is not the first time history has seen such conditions. In our own lifetimes, we’ve seen the collapse of the Soviet Empire, the tragi-comical hyperinflation in Zimbabwe, and the unraveling of Argentina’s millennial crisis. Plus we can study what happened when empires from the past collapsed.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Why Is the US Government Planning for ‘MassFatalities’?

It takes all of three seconds on the ground in Spain to realize that this country is hurting. Big time.

I was just here three months ago, eight or nine months before that. Each time it seems worse – more strikes, more homeless, more unemployed, more unrest, more storefront vacancies. It’s amazing what the combination of debt, deceit, and a bona fide banking collapse can do to a nation.

In a most intellectually disingenuous statement, European leaders recently announced that Spain is A-OK and would not require a bailout. I suppose it’s true to a degree. Spain doesn’t really need a bailout. More like an exorcism. Or at least last rites.

After all the debt, austerity, government collapse, riots, etc., there’s a new crisis du jour here: the banking system. Individuals, businesses, and institutions are all predicting a breakup of the eurozone, and nobody wants to have cash in this country on the day they introduce a new currency (and then immediately proceed to devalue it.)

Consequently, depositors are moving money out of the country en masse, often to the tiny principality of Andorra next door – a highly capitalized, low tax banking jurisdiction. This leaves the already thinly-capitalized Spanish banks in an even weaker position.

As you probably know, the way the banking system works in most of the world is a complete fraud. Most banks only hold a tiny percentage of their customers’ deposits in cash. The rest is ‘invested’ (gambled) or loaned to a bankrupt government.

This is a high-risk model that only works well when people have tremendous confidence in the system. The moment there are more than a handful of depositors wanting their money back, the bank has a big problem.

This is happening nationwide in Spain, so the entire banking system has a problem. Nearly every bank here is technically insolvent… and yet they have droves of customers trying to withdraw funds that aren’t there.

Read the rest of the article

The Best of Simon Black

You just can’t make this stuff up.

Late last week, a bill HR 6566 was introduced on the floor of the US House of Representatives. I couldn’t believe my eyes when I read it.

The bill is entitled the “Mass Fatality Planning and Religious Considerations Act,” and its stated purpose is “[to] amend the Homeland Security Act of 2002 to require the Administrator of the Federal Emergency Management Agency to provide guidance and coordination for mass fatality planning…”

Hmmmm. Homeland Security. FEMA. Sounds like a fun party.

The bill was introduced a week ago, but it took the US Government Printing Office until this morning to actually make the text available to the public.

It turns out that my weeklong wait was for nothing. The bill itself is just a handful of paragraphs that merely reiterates the title… that the cracker jack team over at FEMA should be prepared to respond to mass fatalities in the United States, and to account for religious burial differences.

This is just one of those things that makes the stomach turn: the people who brought us the National Defense Authorization Act (authorizing the detention of US citizens on US soil) now deem it prudent to prepare for mass fatalities on US soil… Moreover, they’re outsourcing it to one of the most failed government agencies in history.

FEMA, as you may recall, is the same organization that couldn’t get bottles of water delivered to New Orleans after Hurricane Katrina… and held up hundreds of seasoned volunteer emergency service workers from entering the city for several days of mandatory sexual harassment training.

Read the rest of the article

The Best of Simon Black

“Corruptissima republica plurimae leges. [The more numerous the laws, the more corrupt the state.]” ~ Tacitus, the Annals ca. AD 69

The nature of what is “legal” has become a truly bizarre concept these days. Developed nations of the west have hundreds of thousands of pages of rules, codes, regulations, laws, decrees, executive orders, etc., many of which are contradictory, archaic, and incomprehensible.

Across these “free” nations, the law is selectively enforced, selectively applied, and completely set aside whenever it pleases the state. As such, even the most harmless of activities (operating a lemonade stand, collecting rainwater, etc.) can be cast as illegal… while the direct theft of people’s wealth through taxes and manipulation of the currency is considered legal.

There is no morality anymore in the law. And even still, whatever few activities may still be considered “legal” are subject to consequences if the enforcers simply decide they don’t like it.

I have a good friend you might like to hear from on the subject; his name is Jake Lawless (an assumed pen name for reasons which will become obvious), and he is a bit of a master when it comes to skirting the line between what’s legal, and what they just don’t like.

In Jake’s words:

I’m a beneficiary of mortgage brokers who believed that housing prices would rise forever. The US real estate crash, plus high gas prices, forced a lot of people to sell their luxury vehicles… and the sudden glut caused prices to fall dramatically.

I didn’t think much about the market for pre-owned luxury cars until one day an engine fire from a cracked turbo manifold in my truck left me stranded. After a day’s search, I found a beautiful car for sale in Nevada, and the asking price was a fraction of the pre-crash peak.

I then contacted the dealer, wired a $500 deposit, and bought a ticket to Las Vegas… all after explaining that I wanted to purchase the vehicle with pre-1965 US quarters.

You may know that, before 1965, many US coins had a very high silver content. As such, they had intrinsic value… real worth, completely independent of “faith” or “because we decree it thus.”

I put roughly 4,000 of these quarters (~$1000 of face value) in a carry-on bag and headed to the airport. The quick math is this – 4,000 pre-1965 quarters contains 715 ounces of silver. At the time, silver was about $35/ounce, so 715 ounces was worth $25,000. In other words, every single quarter had a silver content worth about $6.25.

At the airport, I played my part in security theatre, dutifully removing my shoes after heaving my luggage onto the conveyor. There was a flurry of activity on other side of the x-ray machine. A crack TSA operative stormed up, indignant. “WHOA sir…I have to inspect your luggage.”

Mind you, there is no law against transporting 54 pounds (24.5 kg) of quarters onto an airplane, but that didn’t seem to matter. He just didn’t like it. The TSA guy opened my luggage to find a ziptied cloth bag labelled “$1000?”

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Another Example of Why Central Planning Is a BadIdea…

They call it “The Most Serene Republic of San Marino”. That’s actually the official name. And with good reason… because it’s easily one of the most ideal places on the planet to be.

Perched atop limestone cliffs overlooking the Adriatic coastline, San Marino is the oldest surviving sovereign state in the world. It was founded in 301 by a Christian stoneworker from Dalmatia (modern-day Croatia) who was fleeing persecution under Diocletian.

The country remains to this day, in many ways, the same bastion of political and economic refuge that it was nearly 2,000 years ago.

Tax rates are comparatively low. Regulation is limited. The government is tiny. San Marino has a long history of budget surpluses and zero debt.

It is no coincidence that this diminutive nation boasts among the highest per-capita GDP, greatest wealth, lowest unemployment, and highest life expectancy in the world.

To boot, San Marino is also gorgeous, safe, clean, friendly, and shockingly inexpensive. The weather is near-perfect with plentiful Mediterranean sunshine, yet you’re an easy drive to the Italian Alps.

It’s also a place where you feel very free. You don’t see legions of jackbooted thugs wandering around town toting automatic weapons at the ready. There are no agents of the government shutting down lemonade stands, fondling travelers, wiretapping phone calls, conducting UAV reconnaissance of citizens, etc.

In San Marino, people peacefully coexist in a beautiful, quintessentially Italian setting. Everyone is expected to act like a grownup and be responsible for themselves without the state intervening.

Read the rest of the article

The Best of Simon Black

Recently by Simon Black: Why Dost Thou Whet Thy Knife SoEarnestly?

Oxford, England – I’ve noticed something strange over the past few weeks, maybe you have too. It seems that every ‘contrarian’ website out there has joined together to collectively bash the Olympics and anyone who tunes in to watch.

This seems nuts. Nobody should feel guilty for wanting to see athletes in peak condition push the boundaries of human performance. I certainly don’t feel guilty about it. In fact I came to the UK several days ago specifically to catch some of the Olympics live.

Unfortunately it turned out to be much more difficult than I had expected.

As it turns out, the British government has centrally planned Olympic ticket issuance in a way that’s so remarkably inefficient it would make Karl Marx look like Steve Jobs.

There’s only one way to buy London Olympic tickets – through the ’official’ office that’s controlled by the government. They’ve even solidified their monopoly by making it a CRIMINAL OFFENSE for individuals to resell Olympic tickets.

The concierge at my hotel, an affable Italian named Paulo, explained to me that the police even came around to warn (i.e. threaten) him against helping hotel guests find tickets.

Paulo directed me to the government’s official website so I could buy tickets the legal way. I quickly found out how Byzantine it is – there are all sorts of ridiculous hoops to jump through; if you’re a resident of the UK, you follow one procedure. If you’re a resident of the EU, you follow another. If you’re a resident of other countries, you follow yet another.

Then after creating an online profile and giving them all sorts of personal information, they’ll actually MAIL (i.e. snail mail) the physical tickets to the address you give them in your profile… and only to the address of your legal residency. It doesn’t matter if you’re traveling.

The alternative is that you could spend a couple of hours going to one of the ticket offices, all of which seem to have been strategically chosen for being in the most inconvenient locations possible.

Even if you can get through that maze, they’ve really screwed up their inventory management. Nobody seems to have any idea what tickets are available at any given time. An event may be ‘sold out’ at 10am, then have hundreds of seats available by noon.

The government’s central planning of Olympic ticketing has been a complete failure, perhaps best evidenced by the THOUSANDS of empty seats at many of the events.

Another example of why central planning is a bad idea…

Annoyed beyond belief, I asked the concierge at my hotel if there were any alternatives. He said, ‘maybe’, told me to write down my phone number, and wait.

Within a few minutes, my phone started ringing off the hook with calls from ticket brokers; since the government made it illegal for these guys to sell tickets, they’ve been pushed into dodgy underground boiler rooms for the past two weeks as if they’re Prohibition-era bootleggers trying to move a shipment of hooch.

Read the rest of the article

The Best of Simon Black

Oxford, England – Oxford is about an hour west of London by train, and if you’ve never been, I highly recommend it. On a per-capita basis, it’s one of the most cultured cities in the world, right up there with Vienna, London, New York, Paris, San Francisco, Chicago, Budapest, and Austin.

Walking down Cornmarket Street on a beautiful summer day, it’s common to pass opera singers and concert pianists plying their trade for crowds of tourists (which have become increasingly Chinese over the past few summers…)

Yesterday evening I attended an outstanding performance of Shakespeare’s Merchant of Venice; if you’re unfamiliar with the play, the story is about a young Venetian nobleman named Bassanio who needs 3,000 gold ducats to woo a beautiful heiress. Having squandered his wealth, Bassanio approaches his friend Antonio for a loan.

Antonio is cash poor but asset rich, so he arranges to borrow the sum that his friend requires from a local Shylock. The Shylock agrees on the condition that he collects a pound of Antonio’s flesh in the event of default.

Needless to say, Antonio’s fortunes turn for the worst and he defaults on the debt owed – 3,000 ducats. The play climaxes with a court scene in which the Shylock seeks to enforce his bond and collect the pound of flesh from Antonio. (“Why dost thou whet thy knife so earnestly?”)

Why dost thou whet thy knife so earnestly?

In the middle of the performance, I got curious about the sum. How much is 3,000 ducats in today’s money? A quick check on my phone gave me the answer.

A ducat’s weight is roughly 3.5 grams, or .11 troy ounces of gold weight… so 3,000 ducats is roughly $530,000 at today’s gold price.

In the context of the play, this amount makes sense; in other words, if one were to write an updated version of the play to today’s standards, substituting half a million dollars for 3,000 ducats would definitely fit the plot.

It’s an interesting example of how well gold has held its value; the play is over 400 years old, written decades before the first colonists arrived to the New World, and centuries before the introduction of the US dollar.

During this time, the gold ducat coin was an internationally accepted medium of exchange, widely used in trade across Europe, the colonies, and the Ottoman Empire until the early 20th century.

The ducat began circulating in earnest in the late 1200s, so the coin’s status as a global reserve standard lasted nearly three-quarters of a millennium… a remarkable track record! Before the ducat, the Byzantine solidus gold coin held that status for the previous 800-years.

The reason for such unparalleled longevity is simple – throughout the centuries, these coins maintained their gold weight, and hence the purchasing power for those who held them. When governments began playing games and debasing the coins, they were quickly dropped as an international standard.

Read the rest of the article

The Best of Simon Black

Last Friday, US Congressman Dennis Kucinich introduced HR 6357, a bill which aims to ‘prohibit the extrajudicial killing of United States citizens’ by the federal government. In other words, in the Land of the Free, they need to pass a law to prevent the government from indiscriminately murdering its own citizens.

Now if this doesn’t give one reason to pause and consider the distortions of liberty that have taken place in western civilization, I don’t know what will. Think about it:

Does a free society send government hit men to eliminate anyone they perceive to be an enemy of the state?

Does a free society have hundreds of police agencies, each with the authority to deprive a man of his life, liberty and property in their sole discretion?

Does a free society have hundreds of thousands of laws, codes, rules, regulations, and policies which effectively criminalize nearly every aspect of one’s existence?

Does a free society lead the world in prison population?

Does a free society hunt down criminals and terrorists by treating its citizens like criminals and terrorists?

Does a free society tell its citizens what foods they are / are not allowed to consume?

Does a free society steal your money at gunpoint to buy bombs that they drop by remote control on brown people in faraway lands?

Does a free society debase its currency and plunder the purchasing power of its citizens?

Does a free society saddle unborn generations with obligations they never signed up to bear?

Does a free society award near total control of the economy, the money supply, and everything tied to it, to a tiny elite few?

Read the rest of the article

The Best of Simon Black

High up above Scandinavia about 75 degrees north latitude is an obscure archipelago that few people in the world know about, and even fewer have been to.

It’s called Svalbard, population ~3,000. And while the islands are technically part of Norway, they come with some incredibly unique benefits that I’ll explain in a moment.

For centuries, Svalbard was completely lawless, devoid of any government authority. It attracted whalers, hunters, merchants, and fishermen from all over the world– the UK, Russia, France, Netherlands, North America, and Scandinavia.

Amazingly enough, they were all able to co-exist for hundreds of years without a sovereign authority or central government telling them what to do or how they could live.

Of course, it all got screwed up eventually. In time as word got out about Svalbard, a number of countries tried to claim the islands. Peace turned to conflict very quickly.

Various nations began sending their navies to fight other navies. It was absurd. When they discovered substantial coal deposits, even more conflict ensued.

Svalbard’s fate was ultimately decided because of World War I. The utter devastation that was wracked across Europe led many war-weary politicians to consider a compromise.

Obviously the option of simply pulling out of Svalbard and letting the islands go back to being governmentless was off the table. So in 1920, a group of 14 nations got together and signed the Spitsbergen Treaty, effectively awarding Svalbard to Norway.

Over time, over forty nations (including the US, Canada, Japan, Australia, New Zealand, India, and most of Europe) became party to the treaty, recognizing Norway’s authority over the territory.

Read the rest of the article

The Best of Simon Black

Exactly
three years ago, we launched this daily e-letter… and needless
to say, it’s been eventful.

It should be
clear by now that the topics we routinely discuss in our daily conversations
are actually happening:

• The grand
  fiat experiment is unraveling.
• Governments
  are, in fact, going bankrupt.
• And they’re
  turning the heat up against their own citizens in a desperate
  attempt to maintain the status quo.

Here in Europe,
bank runs are becoming commonplace, and depositors are being frozen
out of their accounts without warning. Politicians in many countries
have seized private pensions and are once again touting capital
controls as the panacea.

Meanwhile,
privacy continues to be stomped out in the worst possible way. Western
governments have made coordinated assaults on everything ranging
from banking privacy to Internet usage. It never stops.

To boot, Google
just reported an alarming increase in government requests to block,
censor, or obtain user data; this year’s requests are on course
to quadruple last year’s 3.3 million requests.

And then there’s
the printing… the endless expansion of sovereign debt and silly
pieces of paper that are being passed off as money by handful of
morally bankrupt individuals who control the whole game.

These politicians
and bureaucrats still haven’t figured out that nations don’t
become wealthy by printing paper currency… or by raising taxes,
or through big entitlement programs, or by going into debt.

Going into
debt and consuming does not create wealth. It temporarily creates
the illusion of wealth… until the house of cards collapses.

Just like individuals,
nations become wealthy by being productive and saving.

None of
this is rocket science. And yet, the guys controlling the system
don’t seem to get it. They’re doing all the wrong things,
worrying much more about their own electability rather than getting
the hell out of the way.

In Europe,
a lot of people have finally started waking up to this reality;
they at least understand that they’re dealing with serious
problems that aren’t going away.

In the United
States, I’m not so sure.

I just spent
about a month on the ground in the US, and I came away with a feeling
of tremendous discomfort. Never before have I seen such a massive
disconnect between sentiment and reality.

Everywhere
I went – Dallas, Los Angeles, Reno/Lake Tahoe, Denver, New York,
and San Francisco, everything appeared to be fine. Shops and restaurants
were full, the mood was light, and people seemed fairly optimistic
that things were OK.

There was definitely
no air of doom and gloom like there is here in Europe.

And yet, the
real story in the US is disastrous:

• There has
  been no meaningful growth in years.
• The true
  rate of unemployment is a postwar record high.
• Foreclosures
  and bankruptcies are on the rise once again.
• The average
  American’s income and net worth are both much lower than
  4-years ago.
• The federal
  government is totally insolvent, as are most state and
  local governments.

The numbers
don’t lie. They have no sentiment, they don’t feel optimistic
or pessimistic. They just are what they are. And they’re terrible.

Read
the rest of the article

June
21, 2012

The
Best of Simon Black

There are consequences
to being flat broke.

There are consequences
to investing any level of confidence in a financial system underpinned
by debt and the creation of paper currency.

There are consequences
for ignoring reality and pretending that everything is normal.

This is one
of them: European officials yesterday flat out admitted that they
were discussing rolling out a series of harsh capital controls across
the continent, including bank withdrawal limits and closing down
Europe’s borderless Schengen area.

Some of these
measures have already been implemented sporadically; customers of
Italian bank BNI, for example, were all frozen out of their accounts
starting May 31st upon the recommendation and approval of Italy’s
bank regulator. No ATM withdrawls, no bill payments, nothing. Just
locked out overnight.

In Greece,
the government has taken to simply pulling funds directly out of
its citizens’ bank accounts; anyone suspected of being a tax
cheat (with a very loose interpretation in the sole discretion of
the government) is being releived of their funds without so much
as administrative notification.

It’s no
wonder why, according to the Greek daily paper Kathimerini,
over $125 million per day is fleeing the Greek banking system.

European political
leaders aim to put a tourniquet on this wound in the worst possible
way.

So what are
capital controls?

Simply, capital
controls are policies which restrict the free flow of capital into,
out of, through, and within a nation’s borders. They can take
a variety of forms, including:

• Setting
  a fixed amount for bank withdrawals, or suspending them altogether
• Forcing
  citizens or banks to hold government debt
• Curtailing
  or suspending international bank transfers
• Curtailing
  or suspending foreign exchange transactions
• Criminalizing
  the purchase and ownership of precious metals
• Fixing an
  official exchange rate and criminalizing market-based transactions

Establishing
capital controls is one of the worst forms of theft that a government
can impose. It traps people’s hard earned savings and their
future income within a nation’s borders.

Read
the rest of the article

June
14, 2012

The
Best of Simon Black