The Best of 2010: A Multiple Flags Overview

by Simon Black

Recently by Simon Black: Young People: Get Ready to Grab Your Ankles

As we’re quickly approaching the end of December, I thought it would be appropriate to republish a few letters from earlier this year. 2010 brought substantial growth for this community– our numbers swelled, and I know that many readers probably missed some important letters from earlier days.

Today I want to repost a letter that I originally sent to you in early January, just after the 2009 holidays. In it, I defined what planting multiple flags is, and why everyone should be thinking about it. As the events of 2010 have unfolded, I think those reasons have only become stronger.

From January 4, 2010 in Malaga, Spain:

Welcome back; I hope you had a relaxing holiday.

I spent 10-days with my family combing through the Italian countryside and drinking some unbelievable wine from a local grape called “Primitivo.” It’s a distant cousin of the California Zinfandel, and is only found in this region. A bottle from the best vineyard will set you back about 9 euro.

For New Year’s Eve, I saw a fireworks show that was simultaneously the most disorganized and explosive I have ever witnessed… so literally for me, the new year began with a bang.

I’m optimistic about 2010. I know a lot of people in the financial community who think that “this is it,” that 2010 shall bear the worst economic cataclysm in history, causing widespread doom and agony.

Sure the conditions are ripe for stock/bond market crashes, a currency crisis, and multiple sovereign debt defaults. But these are a far cry from a gloomy end of human civilization.

It’s not that I have tremendous faith in world “leaders” (as ridiculous a moniker as that is to use); last month’s debacle in Copenhagen only further underscored how perverse and ineffective the existing political process is, and everyone is really starting to see it.

The Social Contract is deteriorating rapidly, and in the end, the one thing that you can count on is that people will ultimately do what they perceive to be in their self-interest. This is what drives markets and trends.

As the protracted effects of government stupidity become more apparent, one such trend that I see emerging this year is the rise of the sovereign individual– the rebirth of the multiple flags approach.

I’ve talked about this before and I wanted to start off the year with a quick primer since it is a recurring theme of this letter. To be more specific, I absolutely implore you to plant multiple flags as part of your New Year resolutions.

The idea, originally conceived by international finance guru Harry Schultz, suggests diversifying different aspects of your identity across multiple “flags,” or geographic jurisdictions.

As an example, Schultz coined the term “three-flags” in the 1960s, suggesting that an individual should have citizenship in one country, residence in another, and businesses in another.

Later authors expanded on this idea by adding other “flags,” including places to bank, places to “play,” places to house electronic assets, etc.

Many writers today talk about “five flags” or “six flags,” but frankly I don’t see a limit on the number of things we can diversify geographically: email, citizenship, residence, banking, brokerages, gold/silver deposits, business registration, e-commerce, customer base, phone/fax, postal mail, etc.

So what’s the point? Why should you do this?

Diversifying geographically increases your freedom, your privacy, your sovereignty, and potentially reduces your tax burden. It protects you against bank failures, market changes, litigation, divorce, overzealous governments, and “NGC’s” (non-government criminals).

Perhaps even more importantly, planting multiple flags expands your existing contact base and opens a lot of doors to new opportunities.

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December 29, 2010

Copyright © 2010 Sovereign Man