After all, we have been predicting that people in the US and most of the western world will soon find themselves living in a Terminator-esque world where they will be tracked every moment of the day (US Government Builds World’s Biggest Domestic Spy Complex), 1 the US Government can jail indefinitely and even kill its own citizens (NDAA Bill Can Send Americans to Prison Indefinitely Without Trial), that the assets of westerners will be taken and consumed by their vampire overlords (France mulls 100% tax rate), they will be restricted in their ability to travel outside the country (Congress about to pass a bill that restricts travel and revokes passports with no trial) and it will be impossible to get your money outside of the country to protect it from confiscation (capital controls).

On the topic of capital controls we had predicted what is now happening. We’ve been writing about it for some time. The only thing that has surprised us is the speed in which it is all happening. We are rarely shocked but we have been surprised at the speed with which the world’s banks have stopped accepting US citizens as clients.

It was only a few weeks ago that we penned, “International Banking Options for Americans Closing Down Fast” and stated that our sources had notified us of at least one bank (in Latvia) which has stopped accepting US clients because of the rules put in place by the IRS in the Foreign Account Tax Compliance Act.

That was then, this is now. Here is just one man’s recent statement:

“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”

The phone has been ringing off the hook at TDV Media and Service’s headquarters. Nearly hourly word has come in of another bank that has stopped accepting US clients. Some have even started closing accounts for US clients… a trend we definitely expect to continue.

Don’t believe us? Check out this article from the San Francisco Chronicle. They only got one thing wrong. The title of the article is “U.S. Millionaires Shunned by Banks as Tax-Evasion Law Looms”. But, it’s not just millionaires. It’s all US citizens with a foreign bank account.

BLOODBATH

It’s a bloodbath. People who make their living off of helping US citizens set-up foreign bank accounts to diversify some of their assets outside of the country are closing shop… all in the last few weeks. They are walking away from their honest, often decades-old business like victims of a bomb blast… in shock.

We feel very bad for them but we knew this was coming and have been hiring people almost daily to help out with the demand. If you are a US citizen and have money in a foreign bank account that you would like to keep there, expect a call any moment. It’ll be the bank and they’ll tell you that you have 72 hours to close your account and to tell them where to send the funds. If you don’t want to send it back to the US where Barack O’Bomber already has grand plans for how to spend it then your options are seriously limited.

But, here’s the good news, there is still options. Here are just a few options that are still on the table:

• There is at least one bank in the Caribbean that is still willing to accept US clients. If you get a call from your bank that you must move funds immediately and do not want to repatriate them then you can open an account with them. We have already identified the bank and have set-up relationships to get your account opened and processed all via the internet within 24-48 hours . Contact info1@tdvoffshore.com for more information
• You may still have a few months before your bank contacts you. In that time, we have found a number of ways to get a second, foreign passport inside of 30-60 days. Once you have a passport other than a US passport you can then convert your foreign bank accounts to your new citizenship and avoid having your accounts closed or reported to the IRS. Contact info1@tdvpassports.com for a consultation on the best solution for you.
• You can also convert a significant portion of your cash into precious metals… which is a very smart move to begin with… you can easily buy and/or transport these assets to a number of international destinations where property rights are respected and the governments are not in massive debt and in need of confiscating your assets. This includes Singapore, Switzerland, Hong Kong, Uruguay and many more. See “Getting Your Gold Out Of Dodge” for specific, detailed actionable info on doing this.

Even if you don’t need any of these types of services at this time, but it is finally dawning on you that the fiscal cliff is approaching very quickly and want to be prepared for what is to come, all of this type of information is the main focus of The Dollar Vigilante newsletter. Subscribers are regularly updated with news, analysis and info for how to survive the coming western financial system collapse.

SELF INTERESTED SCARE MONGERING?

You may be thinking, “this guy just seems to be trying to scare us and promote his own products”. If you’ve followed my writing for any length of time you will know that I’ve been writing about these events for years. And, up until recently we didn’t even offer products. We began writing The Dollar Vigilante two years ago because the writing on the wall had become clear and we wanted to help as many as possible to survive the coming western nation-state and financial system collapse… but we were inundated with emails asking us, “Ok, we agree with your prognosis but what can we do to protect ourselves?”

It was then that we began scouring the world looking for second passport and offshore bank account services and found them lacking. We looked for other information such as is included in Getting Your Gold Out Of Dodge and came up empty. That’s when, as good entrepreneurs and capitalists, we decided to offer the products ourselves. That’s what good capitalism is about… finding ways to help people in need.

The monetary system that the world has lived under for the last 41 years, since the US went off the pseudo-gold standard in 1971, is entering the end game. And we are sorry if we need to be so abrupt in trying to wake you up to it. But, to show you the kind of brainwashing and psychological issues we are regularly up against, here is a conversation we recently had from a woman who had called us to see if she really needed to make her move to protect herself ASAP:

Jane: I just don’t believe it is that urgent. There is nothing on the nightly news about this… and my financial advisor says there are green shoots and we are in recovery.

TDV: What would it take you to realize that it was time to get out of the US?

Jane: I’m not leaving until they shut down the border.

We sat there speechless for about a minute after that one. She has normalcy bias. And, normalcy bias is very dangerous in times like these when everything is about to change.
We suggest you don’t wait until the borders close to get out. And, this is not just a US phenomenon. The entire west will follow in its footsteps… and other nationals as well, such as the Chinese, also should see the need to internationalize themselves (and they do, “China’s Millionaires Looking For Way Out”). There is already a wall around China, don’t wait until there is one around you before you start taking the steps necessary to protect yourself from leviathan.

Regards,

Jeff Berwick

Hear That? It’s The Sound Of The Doors Closing For Americans was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Not to be outdone, Buffet’s partner in crime Charlie Munger recently declared “gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.”

And now, Bill Gates went on CNBS today to try and explain the great error in investing in the barbarous relic. It’s like they’re trotting out the billionaire boys club to scare people back into Berkshire and Microsoft stock.

As they should. Bill’s Microsoft has been absolutely decimated vis-a-vis gold for 12 years straight and running.

Both Buffet and Gates concede that paper money will continue to be debased as long as central banks hold the legal monopoly to print it. What they won’t mention is that such blatant fraud is conducted to finance government deficits and prop up a virtually zombified banking sector.

Gates in particular tries to tie his bumbling rant together by declaring gold has a kind of psychological value to it. That those who buy it are motivated by it because “people in the future will think it’s worth more than it’s worth today.” Gates goes on to point out that as more people flood to the gold market, the more the gold mining sector will develop which will subsequently increase the supply and put downward pressure on prices.

Congratulations Bill, you have stumbled onto some of the most basic lessons of economics.
First, since the value of all goods and services are determined solely by the purely subjective perceptions of utility amongst market participants, gold is no different from any other investment. Many perceive it is a viable currency alternative to the current state of affairs.

Those who put their money in equities do so because they believe it will yield them a return. “Psychological” factors play just as much of a part in this thinking than they do in those who purchase precious metals.

Second, if an investor’s marginal profit is exceedingly high, this is a signal to other market participants that there is money to be made in whatever sector in paying out at such a rate. People move to where they can make a profit. They don’t sit idly by making negligible returns. Supplies increase, prices adjust, and so does the market.

None of that diminishes the purpose of gold which not only acts as an investment but a hedge against the profligacy of governments. The pressure on central banks to flood the world with liquidity is enormous. The practice of fractional reserve banking has left much of the world’s major financial institutions insolvent. Central bankers know of no other solution from their Keynesian instruction guide than “print, print, and print some more.”

If Gates really wants to speak to psychological factors, why not say a word on why inflationary monetary policies are employed to begin with? Indeed, if money printing actually created just one iota of wealth, then Emperor Diocletian (whom Paul Krugman looks to for policy advice) would have led Rome into a period of material abundance rather than wreak havoc on a once thriving market economy.

But of course inflation is purposefully resorted to in order to both aid the first receivers of money and create the perception of prosperity. With some prices boosted relative to others, there is the appearance of ‘feeling richer.” The overall supply of goods hasn’t increased; only the amount of pieces of paper with dead Presidents in circulation. The short term boost in confidence comes at the cost of long term stability as capital is consumed with little savings being accumulated for replenishment. The inevitable bust, as Ludwig von Mises showed, cannot be avoided.

THE END OF THE MONETARY SYSTEM AS WE KNOW IT (TEOTMSAWKI)

As governments continue to binge on endless servings of liquidity financing, there is little threat to gold’s price in the long term. Short term fluctuations are an inherent feature of a market system based on the ever-changing value judgments of billions. There is no conceivable end in sight to inflating currency supplies. If central banks were to stop inflating the house of cards that is the global banking system would collapse.

The question is where you put your trust? In the promises of highway robbers who climb their way into public office through lies and vicious personal attacks? Or in a commodity that has thousands of years of historical usage to prove its functionality as a means of exchange?

Bill Gates puts his faith in the goodness of scoundrels.

IMITATOR, FOLLOWER AND SEARCHING FOR A PURPOSE

The fact of the matter about Bill Gates is that he has never innovated. The only thing he has ever done that paid off incredibly well is this: he finagled his way decades ago into the position of being the sole accepted computer operating system at the very start of the personal computing revolution. Since then he has lived off of having that incredibly powerful position.

He was incredibly slow to realize the power of the internet, he was always second to the party with inferior products like Internet Exploder, Zune and countless other copycat, failed products. He installed a completely insane man to manage Microsoft after he left. And now that he has some extra time on his hands he has decided that

a) the planet needs to be depopulated and

b) he will use a significant amount of his time and power to help depopulate it.

He is pathetically searching for a purpose. And, since he has no idea how economics works, nor money, as he shows in his interview on gold above, he has decided to make depopulation his purpose as he shows in this awkward, ridiculous speech given at TED where he uses all kinds of incorrect premises such as manmade global warming being real to come up with this unbelievably absurd “mathematical” formula:

CO2 = People x Services x Energy Per Service x CO2 Per Energy Unit.

Then he adds that in order to get CO2 to zero, “probably one of these numbers is going to have to get pretty close to zero.” And given that he is spending much of his free time with famous misanthropes such as Ted “A total population of 250-300 million people, a 95% decline from present levels, would be ideal,” Turner, it is pretty clear which one will be the top priority.
It’s the most absurd premise based on the most absurd assumptions I think I have ever heard in my entire life. And his understanding of gold is just as flawed.

Bill Gates, Warren Buffet and Charlie Munger may have once had some sort of relevance. But, today they are globalist shills pathetically trying to keep an immoral and violence/theft based system alive by which their importance and life’s work are tied. The world is leaving them behind… and they will work to enslave it (the Buffet Rule) or genocidally kill it if they have to in order to maintain their sense of self-importance.

Buy gold, sell MSFT and Berkshire Hathaway and fiat dollars, sit tight and be right. The fact they are all running to CNBS in the last few days must mean they are getting desperate.

Regards,

Jeff Berwick

Stick to Depopulating the Planet, Bill Gates was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

You’ve been told that nation-states, democracy and socialism are good. You’ve been told our monetary system prevents instability. And — while the government and central banks put your unborn children or grandchildren into debt for life — they’ve been telling you that there will be a socialist safety net to protect you and that the “American dream” includes retiring in your 50s or 60s to a wonderful life of golf and lying on the beach.

As part and parcel with the bill of goods you’ve been sold telling you that you need to go to 16 years of indoctrination training (school and college), work forty years in a cubicle and not ask questions, they needed to come up with something that made it all seem worthwhile. That carrot is the concept of “retirement”.

You see, if you can get through the nearly 20 years of child slave camps and 40 years of slavery where the majority of your income is taken and the rest is eaten up in interest costs for mortgages and loans so you can have a house and car, then you need a reason to do it all.

It even appeared to work for a short while thanks to demographics and the greatest advances in human history.

The baby boom was ultimately caused by the nation-state (which created World War II). Central banking (which created the Great Depression and funded World War II) was truly a boom that created a once-in-a-lifetime chance to make it appear as though some of these inane socialist theories could actually work.

A look at the number of workers per retiree in the US shows this plainly.

And, with the advent of the internet, productivity also increased massively in the 1990s and 2000s, further obscuring the collapse to come. And it is coming. In fact, it’s already started. So, if you are basing your future retirement plans on what has happened in your living memory you better snap out of it.

SOCIALIST SECURITY – THE ULTIMATE PONZI SCHEME

A ponzi scheme is defined as “a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation”. By this definition, the Socialist Security system in the US is a ponzi scheme.

The end of a ponzi schemes always end when net payments outstrip net income. This occurred in 2010 and there is no end in sight even under the US Government’s own heavily massaged and always underguesstimated projections.

There is only one reason it and the US Government hasn’t gone bankrupt yet. It’s because they can still print dollars to cover all these deficits. But how much longer can that realistically last before hyperinflation sets in and the dollar becomes worthless? We can’t see any way it goes more than five more years from here… and that’s pushing it.

IF YOU DON’T HAVE TO PAY, DON’T

Obviously, you are forced at gunpoint to pay into the Socialist Security system so long as you are a worker (entrepreneurs can avoid payments) or live/work in your home country in the Western world. So, as long as you live and work in the West this is unavoidable.

Other tax-sheltered retirement plans can sometimes be avoided, however. IRA’s (Individual Retirement Accounts in the US) are usually optional. In Canada, plans called Registered Retirement Savings Plans (RRSPs) are also optional. If you have the option, do not bother paying into these type of plans.

Your government registered financial advisor (at least the great majority of them) will try to persuade you to do so. But he is running on the premise under which he was trained which states things like “stock markets always go up in the long run” and the belief that the current fiat monetary system is a permanent fixture for eternity. He is wrong.

Under his thinking it makes sense to shelter some of your income now to get a tax break in the present and to delay paying those taxes in the future. But, with the coming bankruptcy of socialist styled fascist democratic nation-states and the collapse of the entire fiat monetary system this plan makes no sense. In fact, what is the most likely thing to happen is that as western governments collapse they will look at funds in accounts like IRAs and RRSPs as lucrative spoils by which they can confiscate or tax to stay alive a little while longer.

As well, most retirement savings plans (not all, see below) restrict you on your choice of investments and so you are limited and not able to invest in things like gold or silver bullion held abroad… so by putting funds into these accounts you are often stuck with investing in asset classes that will collapse in the coming years, such as the entire bond market.

And, even in the off chance that somehow these nation-states and their currencies can stay alive for another decade or two until you “retire” they will be in such a tattered state of affairs that the tax rate will be extraordinarily higher than it is today… so paying less tax now at lower rates in order to pay a higher tax rate in the future also makes no sense.

So, if you have yet to contribute to these kind of funds and have the choice to not participate, don’t do it.

WHAT IF YOU ALREADY HAVE FUNDS IN IRA’S or RRSP’s?

Every country is different and has different plans and tax laws so it is difficult to get into exact details for each. But, let’s take the US as an example.

In the US there are two main types of tax-sheltered retirement plans: 401k’s and IRA’s. Often with a 401k there are severe penalties if you withdraw the money while you are still working for the company in which you were employed when the funds were contributed or before a certain age. Depending on the penalty, each individual needs to make their own decision on whether to withdraw the funds. Keep in mind that many of these funds are invested in assets that can and will go to zero so even a severe penalty may be worth getting the funds out and invested into something safer such as precious metals or other hard assets that will not become worthless in a fiat currency system collapse.

In the case you wish to keep the funds in the plan then sometimes there are options to have ownership and control over what the funds are invested in. In the US this is called a Self-Directed IRA (see TDV’s Self-Directed IRA here). This enables you to invest the funds in almost any asset on Earth so it is much better than the majority of IRA plans where you are severely restricted as to what asset class and what geopolitical region you can invest in. Once you have a self-directed IRA set-up you can get:

(a) your assets outside of your home country to make it difficult to seize them and

(b) can invest in asset classes like gold bullion which will survive your country’s financial and monetary system collapse.

A BETTER WAY

So ignore that mouldy carrot state propaganda has been using on you. Forget the idea that once you hit 65 you can stop going to work and can lie on the beach everyday. (Of course, most people soon find out that lying on the beach everyday is fairly boring… and the lifestyle change is so great that many people have heart attacks in the weeks and months after “retirement” anyway.)

A much better way to live is to realize that all of this apparatus built up around us is mostly false. So avoid public schools (home school or unschool) and socialist colleges (all info is freely available on the internet with no massive student debts or being pepper sprayed) as much as possible. Start up your own business or become an independent contractor – preferably in one of the dozens of countries that has no noticeable taxes, regulations, and licenses that squeeze the incentive out of everyone. And, with all the money you make and the millions you will save from not having to pay egregious amounts of tax in the Western world you can afford to do whatever you want whenever you want.

Here’s the thing. You’ll probably never want to “retire” because you’ll be having such an enjoyable time doing what you are doing.

Regards,

Jeff Berwick

Forget Retirement And Retirement Savings was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Nobody knows what the future will bring. I don’t know what will happen to the gold price in the next week, the next month or for the rest of this year. I don’t even know what 2013 will bring. But please remember, neither do all the ‘experts’ out there who are much less squeamish about giving investment advice than I am.

When you invest your wealth you are alone. You have to make up your own mind. And accept the consequences of your decisions.

Having said this, I can assure you that, personally, I remain a big fan of gold. I consider it the number one asset out there. It remains head-to-shoulder above anything else.

Gold has not been trading that well recently. Measured in the world’s number one paper money the precious metal reached an all-time high of slightly more than $1,900 per ounce in September of last year but then retreated and has mainly been trading sideways in a wide range since. Considering the ongoing tensions in European debt and banking markets and considering that the global financial system seems forever dependent on super-low policy rates, one could have reasonably expected gold to do better.

The reasons for the somewhat disappointing ‘price action’ of late are not quite clear but could be manifold. Maybe it is a bit of rally fatigue. Don’t forget, gold traded below $300 ten years ago and had just been through a decade-long, unprecedented bull run. In one of gold’s biggest markets – India – the government recently introduced new taxes and regulations to discourage investment in gold (surprise, surprise), and international central banks are not believed to match their healthy buying of recent years.

But the optimists will say it is something else: things are getting better so there is less need for a crisis-asset.

This is how the Wall Street Journal put it:

“Gold is still benefiting from the view the global economy is fragile, but the idea has been shaken by signs that conditions are stabilizing in the U.S.”

Naturally, the financial and political establishment is rejoicing at the prospect of gold losing its luster. After all, the phenomenal ten-year bull market was the equivalent of a raised middle finger in the face of the international paper money bureaucracy. Ben Bernanke, the money-printer-in-chief, famously answered Ron Paul’s question if gold was money by saying he thought it wasn’t…

“I think the reason people hold gold is as a protection against what we call ‘tail risk’ – really, really bad outcomes…To the extent that the last few years have made people more worried about the potential of a major crisis, then they have gold as a protection.”

–Ben “Helicopter” Bernanke

And this is precisely why the establishment hates gold so much. The modern policy elite, people like Bernanke and his fellow central bankers, are tasked with avoiding bad outcomes, and they have at their disposal a body of theories (in large part faulty) and an interventionist tool kit that did not exist through most of gold’s three-thousand year history as the entire world’s monetary asset of choice.

This tool kit, not least of which is the printing press, is supposed to enable the policy establishment to run the economy smoothly and efficiently and save us from depression and crisis. For the public to turn back to the “barbarous relic” of gold certainly means a major vote of no-confidence for the modern financial architecture and all its supposed safety-valves.

The brilliant Jim Grant calls our post-1971 unrestricted paper money system astutely the “PhD-Standard”: We are asked to no longer rely on the apolitical and disinterested firmness of a precious metal to anchor the monetary system and to thus prevent financial extravagance and excess. Instead we are to put our economic fate in the hands of a bunch of self-confident and proactive intellectuals and bureaucrats who learnt how the world works by shuffling academic papers in the MIT economics department.

Understandably, many people have more trust in gold.

(By the way, this explains why the Financial Times, which adores and celebrates the policy establishment like no other media outlet I know of, only writes about gold when it goes down, when the gold ‘bubble’ is once again ‘bursting’, providing the FT with another opportunity to remind you that gold does not pay a dividend.)

Funny how Bernanke puts it with his “really, really bad outcomes” and “tail risk”. He makes it sound as if you have to be a pessimist of biblical proportions to buy gold. Things must get “really, really bad” because for anything else we have the Federal Reserve. Relax!

Limited understanding meets unlimited power to print

But the problem runs deeper than Bernanke implies. Much deeper.

While Bernanke’s quote contains some truth it also reveals an embarrassing misunderstanding of the nature of the problem, a misunderstanding that he shares with the majority of his policy-buddies.

He implies that these “really, really bad outcomes” are just random and uncontrollable events, unquantifiable statistical outliers, freak occurrences that simply happen, that capitalism in its mysterious unpredictability occasionally throws at us. This is nonsense. But this distorted worldview also shone through clearly in Bernanke’s recent lecture series.

According to Bernanke, inflations, recessions, depressions, asset “bubbles” – all these things come over us like acts of God, like droughts and hailstorms, and Bernanke & Co. are charged with dealing with them on our behalf. The rising gold price is merely an indication that some folks fail to appreciate the establishment’s good work. Hell, can nobody get any respect any more?

No, the problem runs much deeper than Bernanke seems to grasp, and that is precisely why gold is such a great asset in this environment. His limited understanding coupled with his unlimited power to produce paper money is indeed the number one argument for owning gold.

The present crisis is not an accident of capitalism but the inevitable product of the fiat money system and the faulty theories and counterproductive policies of Bernanke & Co. The present crisis is not just another business cycle (and business cycles are, of course, also created by central banks) but the unavoidable consequence of the political decision to abandon a gold standard and to adopt a system (as of 1971) of unrestricted fiat money creation.

As I explain in detail in my book Paper Money Collapse – The Folly of Elastic Money and the Coming Monetary Breakdown such a system, while appearing stable for a long time, inevitably accumulates imbalances as it systematically distorts capital formation and asset pricing.

Though central bankers and their crony economists falsely deem moderate inflation to be good, the constant artificial cheapening of credit through ongoing money injection must culminate in the present horror show of bloated banks, inflated asset prices and an unsustainable debt load.

The really, really bad outcome is entirely home-made and the fully guaranteed by-product of decades of mild to medium inflationism, i.e. the modus operandi of modern central banking. The crisis is built into the system; it is part of the game.

Bernanke still believes that his ongoing money printing is saving the world when it is indeed the root cause of this entire disaster. While Mr. Bernanke poses confidently (and I believe sincerely) as a firefighter, he is really an arsonist. His “stimulus” is adding ever more fuel to the fire.

We should not buy gold because Bernanke’s policy (and that of other central bankers) is ineffectual but because it is so very effective. This policy preserves the accumulated imbalances. It sabotages their dissolution and liquidation, and it constantly funds new imbalances.

Bernanke’s policy is guaranteeing the never-ending crisis. Well, I should say almost never-ending, as it will end in a currency catastrophe when the public begins to shun his fiat money and when paper money becomes a hot potato.

We do not own gold because we fear that Bernanke may stop his policy of saving the government and Wall Street. We own gold because we think he won’t stop saving them.

Could Bernanke derail the gold bull market? Sure! But he would have to abandon his policy activism and become passive. Bernanke may want to look at how Paul Volcker successfully ended a gold rally (or, more accurately, put it to rest for 20 years). It wasn’t by by using the printing press to bail out the world a la Bernanke & Co.

Au contraire, Volcker did it by stopping the printing press altogether and allowing high real interest rates to cleanse the system of the imbalances from previous money production. That is what ended the last gold bull market and it is still the major threat to today’s bull market.

Bernanke, alas, is no Volcker, and stopping the printing presses today will create bigger challenges than in 1979.

The financial crisis is not the reason people seek safety in gold. It is central policy response to the crisis that they seek protection from.

If gold is retreating for now, it is because the investing public sees less need for it with monetary and fiscal stimulus presently sustaining the impression – the illusion, really – of stability and sustainability. So this is a great opportunity to buy gold.

In defense of “hoarding”

Let’s look at the logic of investing in gold. When doing so we immediately are confronted with widespread antipathy towards it founded on ignorance and misunderstanding: We gold bugs are not only pessimists who want to make money when the world goes to hell in a handbasket. We even remove our spending power from the markets for consumer and producer goods and invest our wealth in “barren” and “unproductive” monetary assets. Shame on us!

I use the term “monetary asset” as I do not want here to go into the debate about whether gold is presently money or not. I know that you cannot buy a bus ticket with a gold coin but that is not what we are discussing here.

For the purpose of this investigation gold is (almost) equivalent to physical paper money, i.e. to cash under the mattress. The person who invests in bullion does so for the same reason that somebody may hold a large pile of banknotes in a safe, namely to not commit this part of his wealth to consumer goods that may fulfill his present consumption needs or to producer goods that promise an investment return (dividends and interest).

He is holding money – that is, gold or physical cash- because he wants to conserve his purchasing power. He wants to retain the flexibility of spending that purchasing power on consumer and producer goods some time later but still at the drop of a hat (i.e. remain “liquid”).

Money is the most fungible good, the one that can most easily be traded for goods and services. People hold money because they value that flexibility and the maintenance of their purchasing power higher than what they can get for their money at present prices, including what they can get for it in terms of investment goods at present prices.

There are, of course, important differences between gold and cash. The latter is presently slightly more fungible. Remember the bus ticket. On the other hand, there is no limit to how much paper money central banks can produce today. For the paper money holder debasement is not only a risk it is almost a certainty as it is the declared goal of those in charge of the money franchise. (I come back to that later.)

Keynes had a keen eye for widespread prejudices (against the rentier class, against saving and against money hoarding) and was not above providing pseudo-scientific justifications for these prejudices. Thus, his silly “liquidity preference theory” in his General Theory (in particular chapter 15), according to which it is okay to hold money to be ready for immediate transactions but not okay to hold money because you simply want to sit on the sidelines and retain purchasing power.

This is, of course, complete nonsense. Money, like any other asset, is only an asset because it fulfils the needs of its owners. Consumer goods fulfil consumption needs, investment goods promise monetary return, and money provides flexibility and security (at least honest money does) in an uncertain world.

As Henry Hazlitt has pointed out so well in his critique of Keynesianism, the “hoarder” of money does not speculate in money, as Keynes alleges, but simply refuses to speculate in bonds and stocks and other assets at prevailing prices. He has absolutely nothing against investing in “productive assets”; he just does not want to buy them at the current inflated and artificial prices.

Concerns about the stability of the overall economy and the sustainability of high asset prices are most prevalent at the end of credit booms when cheap money has created a false sense of prosperity and economic vitality, and when the prices of bonds, stocks and real estate are elevated by years of easy credit.

In a system of inelastic money, such as a gold standard, growing demand for money at that late stage of the cycle will cause money’s purchasing power to rise and the money-prices of goods and services to fall (deflation). At the new and lower prices demand shifts back from money to other, non-monetary assets. “Hoarding” ends naturally; it is self-correcting. When money’s purchasing power rises, the opportunity costs of holding wealth in the form of money rise, and so does the attraction of spending that money on consumer or producer goods.

["Deflation" is also just money becoming more valuable...which happens naturally in an expanding economy when money is a real commodity whose supply doesn't grow at a central bankers whim. Prices fall over time and savings are rewarded. Ain't nothin' wrong with that.--Ed.]

That money is not an unproductive asset has been argued by W.H. Hutt in his seminal essay “The Yield from Money Held” from 1956. For an excellent exposition of this view see this speech by Hans-Hermann Hoppe on the same topic. Holding money – and in particular inelastic money proper – is a sensible, legitimate, rational and by no means destructive strategy.

We have had an “on-and-off” but mainly “on” fiat money boom for 40 years. Capital misallocations and asset price distortions have become massive as a result. How big they are and where precisely they are located, nobody can tell. We would have to stop printing money and let the market expose the dislocations and then liquidate them but that is the one thing that authorities do not want to let happen.

Be that as it may, the public’s desire to step back from inflated and systematically manipulated asset markets is understandable and entirely justified and naturally translates into demand for money. Not the “flexible” kind under control of the central planners, but the honest kind, i.e. gold.

But Bernanke & Co., just likes Keynes in his time, does not want you to disengage from speculation in bonds and stocks and real estate. Moving to the sidelines is strictly verboten. You have to keep playing – with your own hard earned savings.

The policy establishment believes that it can manipulate the economy by manipulating your desire for assets through the manipulation of interest rates via the printing of money. These manipulations have to be ever more blatant, direct and heavy-handed.

Manipulation used to be conducted in a roundabout way by just administratively easing the refinancing conditions for banks and then waiting for the ‘stimulus’ to play out in the wider capital markets and the economy. Now that this policy has brought us the aforementioned imbalances, the central banks have to manipulate asset prices openly and ever more directly via ‘quantitative easing’.

Here is Bernanke defending the practice in 2010:

“This approach (quantitative easing) eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

If you believe that this brazen manipulation by the paper money bureaucracy is going to work and that it will restore and then guarantee stability and prosperity, you can do without gold. Jump right back in. Put your savings at the mercy of the Great Manipulator! Good luck!

I would only feel comfortable participating in these asset markets if I were confident they were not rigged. It is not a good idea to invest in assets whose prices are artificially inflated for political reasons. The biggest danger, in my view, presently exists in bond markets, in particular in government bonds. As to equity markets, where would they trade without zero interest rates? Where will they trade when inflation picks up?

Sitting on the sidelines makes a lot of sense to me. I want to hold money but it cannot be paper money or bank deposits, as both represent state fiat money that the policy establishment will continue to create like confetti. Additionally, a bank deposit may be your asset…but it is equally the bank’s liability. And let me remind you that banks everywhere are on life-support. Therefore, you have to go back to the eternal and international form of money: gold, which is not anybody’s liability but just your asset.

What about other ‘real assets’, such as property or farmland? Well, I guess you have to have considerable wealth to invest meaningfully in farmland. Also, the yield on farmland in places like Europe is very low and often dependent on state subsidies. With governments everywhere going bankrupt you have to expect those subsidies to be cut at some point with potentially adverse consequences for the value of that land.

Be that as it may, I think it is generally a bad idea to invest in a way that makes you dependent on government spending. Additionally – and this is something that applies to all forms of real estate – you have to expect the level of property taxes to rise. This is low-hanging fruit for the taxman as things are getting desperate for him, too.

All major central banks are in pretty much the same sticky position. None of them have an exit strategy. The Fed has not expanded the monetary base since June of last year. That is not because monetary prudence has set in but because the steroids from the last round of QE are still working. Banks are doing the money creation themselves again. M1 has expanded by 14 percent since last summer, non-annualized. No deleveraging here. Additionally, the myth of Treasurys as safe assets is still alive and kicking, against all evidence to the contrary and probably thanks to the present fixation with Europe. When banks and sovereigns come under pressure again the monetary floodgates will be opened. Just look at the ECB and their recent €1 trillion-plus money injection.

“We’re on crack,” as John Hathaway, the manager of the Tocqueville Gold Fund put is so astutely in the Wall Street Journal. The financial community is completely addicted to cheap money and ongoing stimulus. Just wait for the withdrawal symptoms to set in and you can rely on another round from Bernanke & Co. Unless I see a Volcker-like figure emerging, the avenger of the paper standard, I am happy to sit with eternal money.

Regards,

Detlev Schlichter

Why Gold Is Still My Favorite Asset was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The U.S. government is looking to plug up leaks on its tax slave ship. From CBS…

LOS ANGELES (CBS) — A bill authored by a Southland lawmaker that could potentially allow the federal government to prevent any Americans who owe back taxes from traveling outside the U.S. is one step closer to becoming law.

Senate Bill 1813 was introduced back in November by Senator Barbara Boxer (D-Los Angeles) to “reauthorize Federal-aid highway and highway safety construction programs, and for other purposes”.

After clearing the Senate on a 74 – 22 vote on March 14, SB 1813 is now headed for a vote in the House of Representatives, where it’s expected to encounter stiffer opposition among the GOP majority.

In addition to authorizing appropriations for federal transportation and infrastructure programs, the “Moving Ahead for Progress in the 21st Century Act” or “MAP-21″ includes a provision that would allow for the “revocation or denial” of a passport for anyone with “certain unpaid taxes” or “tax delinquencies”.

Section 40304 of the legislation states that any individual who owes more than $50,000 to the Internal Revenue Service may be subject to “action with respect to denial, revocation, or limitation of a passport”.

The bill does allow for exceptions in the event of emergency or humanitarian situations or limited return travel to the U.S., or in cases when any tax debt is currently being repaid in a “timely manner” or when collection efforts have been suspended.

However, there does not appear to be any specific language requiring a taxpayer to be charged with tax evasion or any other crime in order to have their passport revoked or limited — only that a notice of lien or levy has been filed by the IRS.

Source

We love the name! Before we delve into how insidious this measure is, we have to congratulate lawmakers on the moniker:

“Moving Ahead for Progress…in the 21st century!” It sounds like a cross between an empty corporate memo header, cheesy political campaign pablum and a Saturday morning science fiction cartoon. Well done, Congress!

Of course the tax net isn’t the entire point of the bill. From the Official Blog of the American Society of Civil Engineers:

The reforms included in MAP-21 allow for the nation’s surface transportation program to move forward. Consolidating the 90 programs into 30, creating a National Freight Network Program, expediting project delivery, creating reasonable performance measures, and enhancing the TIFIA program are all steps that will allow for a stronger, more results-oriented transportation program.

The legislation also reduces the core highway programs from seven to five, which include three new core programs and two existing programs. The new programs include a National Highway Performance Program, a Transportation Mobility Program, and a National Freight Network Program; while the remaining programs are the Congestion Mitigation and Air Quality Improvement Program and the Highway Safety Improvement Program. Other positive reforms include a new title, called “America Fast Forward”, which strengthens the TIFIA program by increasing funding to $1 billion per year; while Title 1 takes steps to improve the existing highway bridge inspection program and authorizes a national tunnel inspection program. The bill also establishes an outcome-driven approach that tracks performance and will hold states and metropolitan planning organizations accountable for improving the conditions and performance of their transportation needs, which ASCE has supported in the past.

Source

Hmmm…D.C. needs money to fix America’s failing infrastructure. And so lawmakers are turning the screws on its delinquent tax cows.

It is just us…or isn’t this a lot like debtors’ prison?

It’s as if all the country is one big jail. Those who owe the taxman won’t be allowed to leave. Right now, the coming legislation — and we see no reason this one won’t become law — only targets those who owe fairly large amounts. Over $50,000.

So to start, they’re restricting travel on the easy targets, the people that most honest and dutiful citizens can agree are not doing their “fair share.”

Before you know it, however, those travel restrictions will start to expand. It’s almost written in the stars. This is the sort of behavior a declining, bankrupt empire has to engage in as it fights the dying of its light.

This current legislation would also reduce the risk of tax dodgers dodging their burden forever by skipping town. And country. But don’t be too surprised if new reasons for being trapped in the U.S. start to become law.

Expect currency controls to ramp up, too. It won’t just be tax delinquents who won’t be allowed to leave U.S. borders. Funds may find themselves as forbidden to see other lands as tax debtors. Any money you haven’t already squirrelled away in a foreign account may also find itself tied inescapably to the Homeland.

Best find an escape route while you still have the chance. One of our favorite routes is spelled out in a report we send every new subscriber to Apogee Advisory. It’s called “How to Move Your Money Safely out of Harm’s Way”. This report describes “offshore gold storage programs” that are completely legal. And they’re truly accessible. No matter how much or how little wealth you have to stash away, this is definitely something you want to explore.

When we read the news about restrictions on tax debtors our own palms began to sweat.

We’d just done our taxes and found that we will owe our stern Uncle more than we can pay on the date due. Our own fault for spending the money we’d earned as an independent contractor as if it were our own. We will behave better next time.

Uncle Sam and his leg-breaking IRS men know we’re good for it and will surely give us some time to pay. We had no worry about that.

But when we saw the headline about travel restrictions for those with tax debt, we blanched. Then we read further and realized it was only for those who owed over $50,000. Then we remembered…we don’t even have a U.S. passport!

We’ve been in the U.S. almost as long as we’ve drawn breath. But we weren’t born here. So our citizenship and our passport are both from our tiny country of origin.

Often we’ve been questioned about our lack of U.S. citizenship after spending over 95% of our life within U.S. borders. And just as often we’re urged to rectify the situation.

But we can’t help but feel that we’ve been right about putting off attainment of our U.S. citizenship. We always figured that when the time came, the U.S. would just revoke the U.S. citizenship of anyone it didn’t like. Just when we thought we’d be waiting forever, along came Charles Dent (R-PA) and Joe “Where’s My New Death Star?” Lieberman (I-CT)…

…and their Enemy Expatriation Act. We stopped looking quite so paranoid.

Mind you, this bill isn’t anywhere near being a law yet. And it only targets those who take up arms against U.S. citizens in the service of other armies…but like all government actions, this act is the proverbial camel nose under the tent. It’s the seemingly necessary but restricted draconian measure that will be expanded and wielded in creative ways down the road.

Better, we always thought, to hold onto some other citizenship and some other passport. We suspected it would become all the rage among the smart money one day.

And so it has! From the New York Times Economix blog:

The number of (wealthier) Americans who are renouncing their citizenship has been climbing in recent quarters.

Take a look at the chart below, courtesy of Andrew Mitchel, an international tax attorney who has been manually tallying the lists of expatriates (defined for this purpose as people renouncing their American citizenship or terminating their long-term United States residency) published in the Federal Register. The chart is taken from his blog:

The figures appear to refer primarily to those Americans wealthy enough to warrant notifying the Internal Revenue Service of their change of status, rather than all expatriates. A total of 499 Americans fell into this expatriate category during the first quarter of this year. The number during the first quarter in each of the previous seven years averaged 115.

Now I’m sure a few readers are going to blame “ObamaCare” for this burst of expatriation. Mr. Mitchel, however, suggests that two technical tax-related changes inspired more people to give up their citizenship.

He writes in an e-mail:

First, in 2008 the expatriation rules were changed. There is no longer the 10 year U.S. tax return filing requirement. Although there is now a mark-to-market regime triggering gains upon expatriation, up to $636,000 of gain can generally be excluded for individuals expatriating in 2011 (the amount is annually adjusted for inflation). Further, non-U.S. citizen, nonresidents can now annually visit the U.S. for 120 or more days without becoming taxed as U.S. residents (under the pre-2008 rules, visits to the U.S. for more than 30 days during any of the 10 years following expatriation caused the individual to be treated as a U.S. resident for that year).

With the $636,000 exclusion from the mark-to-market gain, many individuals can expatriate without paying any U.S. tax. It is important to note, however, that some individuals, especially those with assets in foreign pension plans, may unexpectedly pay more tax than they realize. The circumstances of each individual considering expatriation must be closely analyzed to determine the amount of U.S. tax that will be due upon expatriation.

The second reason for the increase in expatriations, I believe, is the recent publicity regarding the penalties and voluntary disclosures for failing to report offshore bank and other financial accounts. The U.S. tax rules for U.S. citizens living overseas can be quite complex. The increase in awareness of the penalties has caused many individuals with dual citizenship to conclude that their U.S. citizenship is not worth the stress and hassle of the U.S. tax filing rules. The U.S. is almost the only country in the world that requires its citizens that live permanently in another country to continue to file tax returns in the country of citizenship. Combine the U.S. tax return filing complexities with the potentially bankrupting penalties for failing to report certain items, and many individuals conclude that their lives would improve by shedding their U.S. citizenship.

Source

According to Mr. Mitchel, a lot of folks are effectively throwing their hands up in the air because of the complexity — and “potentially bankrupting penalties” — of U.S. tax law and saying “Screw it…I’m outta here!”

Expatriation and renunciation of citizenship are both sorely tempting, good patron. What liberty-loving person wouldn’t want to toss their slave papers at their federal masters and tell them to go pound sand…And to keep their grubby claws off their money?

But it is not for everyone. Notice that your non-U.S. citizen editor hasn’t permanently cut ties with the U.S. so he can continue to live here indefinitely.

This is despite the fact that he already has citizenship elsewhere. And a career (of sorts) that can generate income anywhere on the globe that there is a reliable Internet connection.

Even if you are like us and want to stay in your U.S. home as long as it’s not suicidal, you should have some insurance…and maybe even a “bug out” plan or two…

We’ve got foreign citizenship and a non-U.S. passport. We’ve also got a couple safehouses in the Caribbean and Latin America where we hope to be able to hide from drone attacks.

Getting a second passport would not be a bad idea for you at all. And we know it’s a stretch — and a bit of a hassle — but you may want to start looking into other possible citizenships. We here the Bahamas and the Dominican Republic are good places to look. Or maybe you could claim a place like Ireland based on your recent Irish citizen forebears.

Consider these things what they really are. Not extreme or paranoid actions. But smart, forward-looking geopolitical insurance during volatile times. It’s like stashing a parachute in your carry-on luggage if you know the plane you’ll be flying hasn’t been serviced in a decade or two.

An equally smart but far easier step is getting your money safely out of harm’s way. Both you and your money will likely be facing increasing restrictions on your movement. Best to get things moving right now.

You don’t have to up and leave the country quite yet (Though who could blame you for wanting to?). You don’t even have to get a second passport yet. But learning more about getting your money out of harm’s way is something you could do right now. Before you even get up from your computer screen. Just click here now to get started.

Regards,

Gary Gibson

U.S. to Become Tax Debtors’ Prison was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Federal subsidies are never free. One way or another, their costs are extracted out of the private sector. Yet policymakers are acting in a manner that assumes the private sector is working its way back to the economy we saw in 2006-07. The idea goes as follows: Stimulus spending is supposed to kick-start household spending. Zero interest rates are supposed to kick-start another wave of bank lending.

But this isn’t happening because many have misdiagnosed the reality we’re facing: Too many balance sheets need to de-lever, and if policy tries to stop this process, it will fail. And in the end, the public-sector balance sheet will be strained to the breaking point, which will have its own disastrous consequences for the private sector. The consequences of the attempt to “keep consumer spending up” to unsustainable levels will ultimately be disastrous.

The most-glaring recent example of the market drawing conclusions from misleading economic data is in the recent surge of stocks tied to the U.S. housing market. Investors are all of a sudden convinced that a recent blip up in seasonally adjusted housing starts will last. Mark Hanson, a widely cited expert whose opinion I’ve respected since first reading his work in 2007, summarized his view on housing in an early February note to clients:

“In the past several months (the slow season), the housing sector has no doubt benefited from a major stimulus of sorts…record-low rates; artificially low inventory; the most-favorable weather conditions in recent history; an epic backlog in foreclosure completions; [year-over-year] comps against the 2010 tax-credit hangover period; and a near-record volume of stale MLS listings being pulled off the market in order to ‘refresh’ them for the spring — right when seasonal adjustments are at their peak. In order words, a confluence of transitory factors has, in fact, caused some incremental and significant pulled-forward demand — and increased general housing- and consumer-related activity — during a time of the year when this type of activity is generally slow. But many of these factors have a high probability of reversing into the spring, meaning the payback will be much slower activity when conditions are generally busy… never lose sight of the fact that U.S. housing suffers from a narrow and finite demand foundation, which we continually focus on.

“When this housing recovery theme falls apart, the bull cases across a number of sectors will have their legs cut off over a three-month period, just like last year. And the gap between the consensus (further improvement into springtime) and the more-than-likely realization that the double dip continues is extremely large.”

In many areas of the U.S., low-end home prices are competitive with rentals. Mortgage rates are near all-time lows, and prices have already crashed. But high-end home prices will continue to drop for years to come. One’s primary residence is increasingly being viewed as a slowly consumed durable good, rather than an “investment.” Financing for more-expensive houses is also scarce. Banks aren’t interested in writing jumbo mortgages; even if they were, the traditional “move up” buyer is hard to find. If he can’t sell his existing house, he likely won’t have the down payment for a larger, more-expensive house.

This disappearance of the move-up buyer is important, especially because Wall Street is now under the mistaken belief that in early 2012, housing is in the early stages of a strong recovery.

“The next phase to the U.S. housing crisis is house price compression,” Hanson writes, “the upper price bands [will compress] on the lower. It’s already happening. The data we watch closely every day are clear. This adds an entirely new dimension to the U.S. housing crisis, one that pushes out an ultimate “recovery” a lot further into the future than anybody is forecasting, or can model.”

The excess supply of housing — especially at the middle and higher end of the market — will take several more years to clear. Prices will fall as this unfolds. After slowing foreclosure activity in 2011, most banks are set to accelerate sales of repossessed houses in 2012.

Regards,

Dan Amoss

The Future of Higher End Housing Prices was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The Boy Scout motto — Be Prepared — is probably considered evidence of terrorist (or at least extremist) inclinations in the USSA Today. I won’t even get into the parts about hiking in the woods, carrying knives and practicing “survival” strategies. In my day, we even had a merit badge for marksmanship with a gun.

But, weekend camping expeditions aside, how to be prepared in situ? In your home? For when the SHTF?

Guns (and ammo) are obviously good things to have. And every person who wants to be prepared for a possible fecal-flinging scenario ought to have them. So also food supplies and medicine. Check.

Then I got to thinking about related stuff that is arguably just as essential which some “be prepared” people may not have taken into consideration — but really ought to.

A heat source, for example.

Not just for cooking, either. What if the SHTF in winter? If the utilities go down, and stay down, how will you keep from freezing? How will you keep the pipes in your house from bursting? Imagine three or four months, potentially, of freezing winter weather on your own. Some people heat with natural gas, propane or oil — the latter two of which, not being dependent upon a grid pipeline, can supply you for a few months if need be. I however prefer old school.

I prefer wood.

For one, it is free (provided you have some land — which you ought to, if you took steps to Be Prepared) and doesn’t require you to leave your place to obtain it — or even to deal with the outside world at all. For two, it is simple and (if you get a good wood stove/insert) extremely efficient. You might even look into something that’s very popular in my neck of the woods: An outdoor wood stove. It heats your home and your water, too. The other advantage to these puppies is you only have to feed them wood twice a day. They’ll slow-burn all night. And they run on other fuels, too — such as pellets. (<a href="” target=”_blank”>See here for an example.)

Provided you planned ahead and bought a least one top-drawer chain saw (I recommend Stihl) stored up a few spare chains and a sharpening tool for it, plus plenty of chain lube and treated gas (two five gallon jugs will last along time) you’re covered — and won’t freeze or have to eat cold food. Since we bugged out to the Deep Country, I have made it policy to cut and split wood at least one year in advance. So right now, I am working on wood for the winter of 2013-2014. I already have the winter of 2012/2013 covered.

You should, too.

Next, illumination. Lighting that’s independent of the grid.

Ordinary candles are ok (and cozy) for a normal, short-lived blackout. But what about a more severe scenario? Regular candles don’t last very long — or those that do (like those nice-smelling Yankee candles your wife probably likes) cost a fortune. Propane/gas lights (i.e., camping lights) are not a good idea indoors. I bought a case of 100 hour (four days’ continuous use each) liquid paraffin, smokeless and ordorless emergency candles. Used prudently to provide a few hours of necessary light at night, a case of these should keep you out of the dark for six months or more. If you shop around, you shoud be able to find them for about $5 each — which is a deal compared with something like those $25 a piece Yankee candles. (See here for some more details about this.)

Next item, dihydrogen monoxide. You know… water. If the poo flies, you will need a steady source of safe water. In suburbia, where people are dependent on the grid, the water could be turned off — or worse, contaminated. This worry was among the many reasons why we fled to the country, where our water is in fact our water — literally ours. It comes from underneath our land, from our private well. So long as we have power to operate the pump (for which we have a generator, which with a manageable amount of stored, treated fuel — say 20 gallons or so — will run the pump as necessary for six months or longer) we will have reliable — and known safe — water. Storing a few gallons for Just in Case is fine, short term but if you haven’t got the ability to provide you and your family with safe drinking (and cooking; freeze dried food is not much good without it) water for several months, you ought to be thinking about how to do that.

Sooner rather than later.

Finally, cheap preps. It’s fine to talk about buying large cans of freeze-dried food or cases of MREs — if you can afford to spend a couple grand on that. Not everyone can. But quick oats are cheap; pasta, too. You can buy large quantities for almost nothing (example, I just added another “two pack” of Quaker Oats — 4.5 pounds each, 9 pounds total — enough to keep your belly full for 10 days or more — for less than $10).

For a protein supply, think about chickens. Live ones. A small flock of 15 or so birds will give you 6-10 fresh eggs a day on average. Do not eat the birds themselves until they are no longer productive (about two years). If you have land enough for them to forage, they are nearly self-sustaining. (You’ll need to buy feed for winter, or at least, feed them something). But they are very inexpensive and easy to keep and will keep you supplied almost perpetually with high-quality protein to supplement your stocks.

All this is surely far from perfect or all-inclusive. But it’s a good start — and that’s what being prepared is all about, ultimately.

Regards,

Eric Peters

<a href="” target=”_blank”>EPAutos.com

The Other Things (Needed for Preparedness) was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Just how committed should you be to holding gold (and silver)? Are you holding too much gold as it is…and not enough U.S. dollars?

Or should you be holding anything BUT gold (and silver)? Beyond the cash you need to pay your monthly living expenses, should you hold cash at all? Should every bit of your savings be held in ounces of precious metals? And every bit of your investments be in shares of the companies that drag those precious metals out of the ground?

It might have seemed like an extreme position a few years ago. Heck, it may seem extreme now! But Jeff Berwick is here to explain why it could be the most sensible, most conservative thing in the world to do…

The Fear of Gold

I was on a panel at the recent California Investment Conference in Palm Springs and the question was asked, “What percentage of your portfolio should be in gold bullion?”

The first panelist answered 20%. The second panelist said, up to 30%. Then it came to me.

“I have no problem with someone having 100% of their portfolio in gold,” I stated bluntly. Many in the crowd laughed. Their laughter confused me. What’s so funny about that, I thought?

I went on, “I think it’s weird that people find my answer weird.”

GOLD IS REAL MONEY

After all, we are talking about time tested and true money. The only money that has lasted for thousands of years and is still fully accepted worldwide as a store of wealth. Even Warren Buffet had to recently admit that “Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”

And that from a man who hates gold the way Whitney Houston fans hate Bobby Brown. So, by stating that I have no problem with someone having 100% of their portfolio in gold I am making an ultra conservative statement. I am stating that I’d have no problem with someone having their entire portfolio in “cash”. In real money.

What would you rather hold “for eternity”? US dollars? A paper debt obligation of a bankrupt nation state?

The fact that so many found that to be a shocking statement says a lot about where we are in this current process of the collapse of the fiat currency system.

THE FEAR OF GOLD

There is such a “fear of gold” amongst most people that it must be due to statist indoctrination and propaganda. It makes no rational sense to have such a fear of such a time tested and true store of wealth.

The same people who fear gold seem to have no problem holding a significant amount of their assets in euros in a European bank as Europe burns around them, both figuratively and literally. The euro might not exist 12 months from now but no one seems too concerned. They act like its been around forever and always will be, but it only was dreamt up by globalists in 1999.

YOUR BROKER FEARS GOLD

Near the end of 2007 a good friend of mine who had been wanting to sell her house called me. I had been telling her for a few months to sell her house and buy gold because a big housing crash was coming.

She said she had received a good offer for her house and checked with me to make sure I was certain about her selling, buying gold with the proceeds, and renting for a few years. I told her, emphatically, yes.

So she sold her house. At the time gold was around $750 per ounce. We fell out of touch for a few years and she contacted me last year around when gold was near $2,000 per ounce. I smiled when she called, waiting for her to tell me about the fortune she made.

“So?” I asked, waiting for the exaltation.

“What?” she also asked, confused.

“How’d that trade work out for you?” I asked.

“Oh. Well I sold the house. And I put the funds into my brokerage account with my (government registered) financial advisor,” she responded.

My heart sank. I knew what she was going to say.

Her financial advisor had talked her out of it. He said putting all her assets into gold was far too risky. Where in the government training manuals does it tell you to even own any gold!

She got worried too and less than a year after selling, under pressure from her old Chinese parents, bought another house. It was a bit cheaper but after transaction and moving costs it was a loss.

GOLD IS IN A BUBBLE

Of course, now, with gold over $1,700, it is nearly impossible to get anyone from the general public to buy gold. It’s gone too high, they cry! CNBC says it was a bubble, they repeat like trained seals.

It’s gone from near $300 to nearly $2,000 in the last decade. Surely that is a bubble and if it hasn’t already popped it soon will, right?

No. That’s not right. This is the problem with watching the value of anything in terms of constantly depreciating US Federal Reserve Notes. In the following chart, when looking at the price of gold in nominal dollar terms it looks like an insane rocket ride of epic proportions. But, when adjusted by the US Government’s own, heavily massaged inflation statistic (the Consumer Price Index, or CPI), the price of gold has just finally reached nearly the same level it was at in 1980 and looks far less spectacular.

PORTFOLIO ALLOCATIONS

Getting back to the initial question posed on the panel as to what percentage we recommend people hold gold bullion as a percentage of their portfolio. While I stated I’d have no problem with 100%, we actually recommend to our subscribers is to hold 30% of their portfolio in bullion – both gold and silver.

We also recommend, at this time holding 20% of your portfolio in gold mining juniors and 15% in gold mining major stocks amongst other things. That’s because we are expecting all the monetary printing going on with abandon in the western world to foment a true bubble, not only in the price of gold but even moreso in the price of the mining shares, especially the juniors. We are expecting a mania for the ages in these stocks. And, how will we know when to sell? When I am asked what percentage of their portfolio should be held in gold bullion and I say 100% and no one laughs.

Best,

Jeff Berwick

The Dollar Vigilante

P.S. The tech bubble is dead. The housing bubble is dead. And the bubble in government debt is in its death throes. What will be the final bubble? It will be in gold and silver mining stocks.
But even if you are wisely invested in these stocks, are you sure that YOU really own “your” share?

It is one of the dirtiest little secrets in the brokerage business. And 99.9% of people have no idea it is even being done to them. It’s called “street name registration” and it’s how the brokerage where you hold your stocks “registers” your shares. To save money and time, and to allow your shares to be included as assets that THEY can use to do what they want with, your brokerage never actually registers you as an owner of the shares.

Street name registration allows your broker to lend your shares to short sellers, thereby driving down the price of your own stocks. Additionally, this method allows your broker to “re-hypothecate” your assets–meaning it allows your broker to borrow money against your shares and speculate in the derivatives market!

These hidden risks are planting the seeds of tomorrow’s ultimate collapse — In which there may be a system-wide collapse of broker dealers, taking down millions of investors, and ensuring permanent non-recoverable losses to an entire generation!

So how can we safely invest in gold and silver mining shares and avoid the collapse brought on by the coming broker dealer crisis?

There are two methods of owning stocks your broker-dealer will never tell you about. These two methods completely remove the broker dealer counter party risk attached to your shares — effectively removing them from “the system.”

These two methods deprive your broker dealer the abilities to sell your stocks short and to “re-hypothecate” them. Your broker dealer will never willingly tell you about these methods – because they make more money when your shares are in their hands – precisely where risks are greatest to you.

These methods are so safe, that even if your broker dealer collapsed tomorrow, and stole every penny from every client investment account you would be able to sleep safe and sound, knowing your stocks are far out of reach, and legally unavailable to access by your broker-dealer.

This means everyone — all brokers in the Unites States and Canada. If every broker collapsed tomorrow due to waves of bankruptcies, these ownership methods will protect you 100%. You will be able to sleep safe and sound at night, knowing your shares are carrying zero counter party risk.

We’ve put together a complete research paper outlining the process to register your shares and giving you all the info you need to know to do it easily, quickly and properly. We’ve spent hundreds of hours dealing with broker dealers, transfer agents, public companies, and the SIPC in researching and finding out all the details on how to get your shares outside of the system.

We’ve put all his research together into a Special Report called “BulletProof Shares”. To find out more… and to get your copy… just click here.

A Parting Shot:

We have a tale of woe similar to Jeff’s story about his home-buying friend…

We told both our mother and our sister to sell their homes back throughout 2005 and 2006.

“Sell your homes. Buy silver…please!” we urged. We might as well have been asking them

Mom ended up taking out a second mortgage on her existing home, while Sis and her boyfriend kept their old home to rent out even as they bought a bigger place.

Neither of those proved to be particular good ideas. Unless the intention was to lose as much money as possible.

The value of those homes is between a quarter and a half lower. Meanwhile silver multiplied in price. Even after tumbling from its 2011 highs, silver is still about five or six times as much in dollar terms than it was seven years ago.

And of course, our loved ones still won’t buy a single solitary ounce of silver. Even after seeing how much ignoring our advice cost them. They still impressively rationalize their staying in the Fed-goosed real estate market…and they somehow sleep well at night while continuing to ignore precious metals.

We are a little offended. It seems that they’d rather listen to the bobbleheads on news than listen to us and to our Austrian school friends about the dangers inherent in saving in the currency of a bankrupt empire.

Today we’d like to leave you with a few words from our friend Mac Slavo of SHTFPlan.com:

“Over the last half decade or so, as the price of gold and silver have steadily risen, financial experts, advisers and pundits have often argued that gold is a bubble. They said it in the spring of 2008, as gold approached $900 per ounce. Likewise, as gold surpassed its nominal 1980′s high and went above $1000, those same analysts were screaming sell recommendations. To this day, with gold nearing $2000, they are still all marching to the same tune.

“Headlines for the last three years have been heavily weighted against gold, with every price spike being met with bubble talk. When George Soros said in January of 2010 that gold was the ultimate bubble, the media pounced on it as evidence that precious metals were through. Of course, Soros had been acquiring millions of dollars worth of gold assets (and continues to do so today). His message was completely misconstrued. Gold, like any other asset that involves a buying frenzy, will eventually become a bubble. And given the reasons for why people buy gold — inflation protection and as a hedge against the loss of confidence in government stability — we can be fairly certain that gold and precious metals in general will eventually reach exorbitant levels and ‘pop.’

“But, as Daniel Ameduri of Future Money Trends points out in the following micro-documentary, we’re nowhere near bubble territory yet.

“It’s important to note that 1980 was the end of the gold run that started when Nixon closed the gold window in 1971. That was roughly a ten year run up in the price from $35 to over $800 per ounce.

“This, however, isn’t 1980. Our debt-to-GDP ratio [Tuesday] morning hit 101% and is going much higher. We’ve added more federal debt in the last 7 months of 2011 than all of the years from 1776 to 1980 combined. The policy of our government is not to curb inflation is it was in 1980, but rather, to stimulate it, as evidenced by 0% fed funds rates (in the 1980′s it was in the teens!) and the massive monetary printing over the last few years.

“1980, even though the end of the recessionary environment was still a couple years away, is when the people felt confident that crisis of the past decade was coming to a close.”

Back in 1980 Fed Chairman Paul Volcker’s actions curbed — and then killed — the rise in gold and silver prices. Today Ben Bernanke’s actions are just adding fuel to the rocket ship that will carry gold and silver prices to undreamed of highs…and the dollar to unspeakable lows.

While the best time to start buying gold would when it was under $300 (and silver back when it was under $6) just a few years ago, that doesn’t mean you shouldn’t be adding to your gold and silver holdings.

It also doesn’t mean that you’ve missed out on getting in at a great time to make gains from gold’s (and silver’s) rise…

The gold price still has much, much further to go. The price of silver may have even further to go! To see how much…and to set yourself up for even bigger gains based on the rise in precious metals… just click here.

Or don’t click. After all, you may believe the mainstream reports about gold being in a bubble. You may believe that the price of gold has nowhere to go but down. You may want to sell your gold and gold-related investments right now. As Mac continues…

“If you feel like our current economic, financial, monetary, and social crises are wrapping up, then by all means sell your gold.

“But we urge you to consider what Future Money Trends has to say about it before you do.

Micro Documentary: Gold 1980 Vs. Today

We hope you watch the video, good patron. And we hope you can agree with us — and with Mac on this one. Again Mac Slavo:

“Despite what the experts in the media and on television tell us, there is no bubble in gold — not yet, at least.

“You see, bubbles require emotionally driven buying (just like bubble pops require emotionally driven panic selling). When all of those family members, neighbors and acquaintances you know who still reject the notion that our economic and social paradigms are shifting; when they start buying gold and silver at rapidly rising premiums and prices (as opposed to their current selling of precious metals to rip off outfits that include ‘We Buy Gold’ shops) and when they all become experts on inflation, safe haven assets, and gold investing, then it’s a bubble.

“Look around. We’re not even close.

“Gold is going up so long as the governments of the world keep printing money and so long as the public’s confidence continue to deteriorate.”

From SHTFPLan

Regards,

Gary Gibson

Managing editor, Whiskey & Gunpowder

ggibsonagora@gmail.com

The Fear of Gold was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

It is their explanation for why things go wrong, however, that I find most illuminating. Both Schumpeter and Sowell write about “intellectuals” who have academic credentials of some sort but are lacking in knowledge that would make them particularly valuable to the market. Incapable of commanding significant wealth and status through voluntary market mechanisms, these intellectuals resent the wealth of more-successful people. As a result, they envy and resent the entire market system that has failed to reward them as they believe they deserve to be rewarded.

Others have also explored this theme. Another Austrian, Helmut Schoeck, wrote the book that is widely considered a masterpiece of sociology, Envy: A Theory of Social Behavior (Der Neid: Eine Theorie der Gesellschaft). You can go back even further, if you like, to the Tenth Commandment’s proscription on “coveting.”

Intellectuals who consider inequalities in wealth evidence of injustice often seek political remedies. These take the form of legislation and, more often, regulation. In the process, of course, they are able to portray themselves as heroic opponents of injustice. If they have sufficient support, they are also able to acquire significant power, wealth and status. We know from experience, however, that these intellectuals rarely consider their own wealth evidence of injustice.

In Europe, these intellectuals have been far more successful in the past than in America. For this reason, American intellectuals in academia, politics and media have for decades told us that the U.S. is woefully unsophisticated and behind the times. In fact, economists have shown consistently that quality of life is higher for Americans at all income levels than it is in most European nations. It is difficult, however, to compete with a movement that has had, until recently, a near monopoly on pulpits, podiums and programming.

That’s all changed. Not only has the United States seen Keynesian policies on steroids crash and burn, but the European model has been revealed as the house of cards that it is. For decades, governments have propped up living standards by borrowing to appease voters. In effect, nations have consumed at artificially high levels by sending their children the bill.

Naturally, governments run by these intellectuals have tried to raise taxes to support their habits. Many succeeded, but then discovered the reality of the Laffer curve. Taxes necessarily transfer resources from the private tax-generating sector to the public tax-consuming sector. At some point, taxes depress economic growth, which reduces government revenues. This point is usually much lower than the critics of capitalism assume. Moreover, their targeting of the wealthiest individuals is most damaging to the economy. The wealthiest are also those with the most money to invest in the innovations that create all net new jobs.

So we’re seeing tax recipients rioting in Greece and elsewhere. These riots will spread, but it will do no good. The money doesn’t exist to support the intellectuals’ schemes, no matter how bloody their tantrums. Times will get hard enough to create a generation that hates the intellectuals who promised that everybody would be able to retire young with no worries.

We are in the midst of a historic transition. The intellectuals got their way. Now the consequences of their ideologies are going to be painful enough to allow market reforms. That’s how self-equilibrating market mechanisms work.

This is all very good news for North Americans. Canada, by the way, is way ahead of America in learning the limitations of government. America, however, is learning quickly. Three years ago, the intellectuals were gloating that they could use the forthcoming economic downturn for their advantage. The public, they predicted, would blame free markets and give even more power to the planners.

That, as you know, has not happened. Despite the orchestrated efforts of the Occupy Wall Street crowd and other fans of socialism, the American public is far more wary of government than it is of business:

An overwhelming 64% of people surveyed said big government was the biggest threat to the country, compared with just 26% who said big business is their gravest concern and 8% who picked big labor.

Government debt schemes are failing. This is creating remarkable opportunities for investors. It amazes me, in fact, that more people don’t understand this.

On those rare occasions when I watch financial shows, I’m always surprised by the never-questioned assumption that up markets are good and down markets are bad. This is nonsense.

The name of the game for investors is “Buy low, sell high.” Given the inevitable fluctuations of the market, we know that markets have always gone through this sort of big cycle. They always will.

If this were not the case, “Buy low, sell high” would be nearly impossible. Sure, selling high is more fun, but you can’t do it if you haven’t bought low. This seems awfully obvious to me, but it’s clear that most people just don’t get it.

We are at an incredible historic juncture. The world is, once again, realizing it has been duped by fast-talking political scam artists. This is not a new story. In fact, we’ve actually gotten off pretty easy this time. By necessity, market-killing programs will be cut back, freeing investors and innovators to create wealth once again. This liberation of capital will come just as the greatest scientific revolution in history swings into high gear, delivering extended healthy life spans and new levels of wealth. I know it doesn’t always feel like it, but these are wonderful, extraordinary times.

Someday, some younger investor is going to say something to you like this: “You were so lucky to be investing back then, when prices were at rock bottom but the whole world was changing for the better. I’d be rich too if I were investing in those days.”

In fact, they will probably be wrong. Most people never see the big picture while it’s happening. This type of once-in-a-lifetime situation is always easy to see in hindsight. When you’re living through it, though, it takes real character and vision to grasp the opportunities.

Regards,

Patrick Cox

The Ongoing Recovery from the Folly of Intellectuals was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

What happens to high-spending credit-dependent states when the market loses confidence in them has been evident in cases such as Ireland, Portugal and Greece? Among the big financial calamities of 2011 were notably government bond markets. Perversely, some of the big winners of 2011 were also government bond markets.

Market participants have so successfully been conditioned to believe in state bonds as safe assets that when some sovereigns go into fiscal meltdown it only serves as reason to buy even more bonds of the sovereigns that are still standing, even though their fiscal outlook isn’t much better. While the fate of Greek and Italian bonds should have cast serious doubt over the long-term prospect for Bunds, Gilts and Treasuries, it only propelled them to new all-time highs. Strange world.

All policy efforts are now directed toward keeping the overextended credit edifice from correcting. After decades of fiat money fuelled credit growth, the financial system is in large parts an overbuilt house of cards. The system cannot cope with higher yields and wider risk premiums. Those would accelerate the pressure toward deleveraging and debt deflation and default. “When they stop buying bonds, the game is over.”

They still bought bonds in 2011

2011 was another strong year for gold. Despite a brutal beating in the last month of the year, the precious metal produced again double-digit returns for the year as a whole if measured in paper dollars: up 10 percent. I believe that gold will continue to do well, as it remains the essential self-defense asset.

Amazingly, Treasuries did almost as well as gold (+9.6%) and TIPS (inflation-protected Treasuries) did even better. German Bunds benefited from the disaster in other euro bond markets. They pretty much matched Treasuries in terms of total return (currency-adjusted they did less well as the euro declined slightly versus the dollar). This is entirely unjustified because the EMU debt and banking woes will put considerable additional strain on Germany’s public finances. UK Gilts did better than gold and Treasuries, despite rising inflation in the UK, weak growth and a public debt load that is only ever going up.

This cannot go on for long. Bonds are fixed rate investments with finite maturities. The price gains of 2011 have lowered the yields to maturity, in some cases markedly so, and thus diminished the chance of additional gain. Does that mean reversal is imminent? No. Maybe the notion, or better the myth, that the bonds of the United States, the United Kingdom and Germany are risk-free assets can somehow be maintained. Maybe yields can decline even further. Who knows? Personally, I doubt it.

In the case of the US, the fiscal situation seems beyond repair. The Congressional Budget Office publishes its own projections on the long-term fiscal outlook. These are based on some overly rosy economic assumptions and still make for rather grim reading – hundreds of billions of dollars in deficits every year forever. The true path for the U.S.’s public accounts will certainly be much worse. The U.S. has now acquired a habit of running budget deficits to the tune of 10 percent of GDP year after year (more than $1.5 trillion in 2011) and there seems to be no end in sight. There is presently no deflation in the U.S. Neither does the TIPS market expect any. Yet, investors seem happy to hold U.S. government paper at what are certainly negative real yields. Investors are practically paying the U.S. government for the privilege of funding its out-of-control spending.

I have long maintained that government bonds are a bad investment because the endgame for them will either be outright default or inflation. In both cases, as a bondholder, you lose. The outcomes are either default or default. The idea that these debt loads could be elegantly inflated away is nonsense. They are already too big for that. So either you face outright default or, if authorities try to inflate, hyperinflation and currency disaster, and then default. In either case, you will not be repaid with anything of real value.

“Let them eat bonds!”

But are default or inflation and then default really inevitable? What if the present scenario continues forever? This seems to be the new “hope”. It is not a pretty scenario in that it involves the ongoing confiscation of wealth from bondholders but it seems to be less drastic than default or hyperinflation. Could we not work off the excessive stock of debt by suppressing bond yields below (moderate) inflation rates for an extended period of time? Of course, we cannot rely on the self-sacrifice of the bondholder, although he appears rather willing of sacrifice at present. So the government will have to use all its might to force bond-investors into accepting zero or negative returns for an extended period of time. After all, the state is the territorial monopolist of coercion and compulsion. It makes the laws. And controls the banks.

In a state fiat money systems banks must ultimately cease to be private, capitalist enterprises. Many banks have already been fully or partially nationalized. The remaining private ones are under tight, and ever tighter, regulation by the state. Should it not be easy for the state to force banks to invest more in government bonds, even at low or negative real returns? Should it not be possible to redirect whatever saving and credit there is from the private to the public sector?

Such a strategy has been outlined – not advocated- by Russell Napier of CLSA. He calls it ‘repression’. It ultimately involves rather draconian market intervention in order to continuously force the diversion of capital from private use to public use at artificially low levels of compensation. At some stage it will require capital controls.

But let’s face it: most of what we have experienced over the past three years in terms of government intervention would have been simply unimaginable only five years ago. We should therefore not be surprised if market intervention becomes ever more heavy-handed and is used increasingly to favour the funding of the public sector.

That such a policy will be implemented, and ever more boldly, I have no doubt. In fact, I predicted it in my book. See chapter 10 of Paper Money Collapse – The Folly of Elastic Money and the Coming Monetary Breakdown, in particular pages 226 -228. I called it ‘the nationalization of money and credit’. It is a phase in the crisis but it is not an endgame. Where I disagree with the above mentioned writers is the following: Repression, to the extent that it works, will not reduce government debt, and besides, it won’t work.

Consider the recent environment: Certain governments have been able to borrow directly from their central banks via quantitative easing and in the bond market at low or even negative real interest rates. Does that mean they have reduced the amount of outstanding debt? Are such hugely advantageous conditions used to cut back the debt load?

No. The opposite is the case. Access to cheap credit, whether that credit was provided by the printing press, obedient bond investors or hyper-regulated banks, has allowed states to run larger budget deficits and accumulate more debt. Remember, we are not talking here about the workout of a debt-situation resulting from a war, a natural disaster, or some other one-off event. We are talking about the modern welfare state with its ever-growing commitments and increasingly out-of-control spending. Only cutting off the state from cheap funding will ever constrain it, not giving it access to more resources more cheaply.

We do not live in Paul Krugman’s parallel universe of Keynesian fiscal stimulus, where every dollar spent by the government magically translates into 2 dollars of real GDP growth. Here, on planet Earth, the constant shift of resources from private markets to the state bureaucracy weakens the economy. Shrinking the private sector and growing the public sector kills economic growth. In the perverse logic of the modern welfare state. This then requires even more state spending in the next period. As the economy continues to struggle, public sector outlays will grow while tax receipts will shrink.

‘Repression’, to the extent that it succeeds in shifting resources from the private market to the state, makes the crisis worse. It must lead to more debt, more capital misallocation and a weaker economy. We will not save our economy by trampling on the remaining bits of functioning capitalism and by confiscating more resources from the private sector. ‘Repression’ is self-defeating.

Additionally, it won’t work. Private wealth-holders will not sit on their hands forever while their hard-earned savings are being confiscated by the state. If banks become mere tools to fund the state and thus provide zero or negative real returns to shareholders and depositors, shareholders and depositors will pull their money from the banks.

But there is no alternatives for the depositors, is there? Of course, there is: Gold.

As the enemies of gold in the establishment financial press never tire of reminding us, gold pays no interest and no dividend. Because of storage and insurance costs, it is a ‘negative carry asset’. But in an environment of ‘repression’, so are government bonds and bank deposits.

With zero or negative returns guaranteed on supposedly ‘safe’ government bonds and bank deposits, ever more investors, including small savers, will turn toward gold which has the additional advantage that its upside is practically unlimited – its price can double, triple or quadruple (all of which I expect) as long as paper money debasement continues (which I consider a near certainty).

Of course, a determined state will counter any evasion of controls with more controls. Maybe we will see taxes on gold investment or even restrictions on trading and owning gold. Via capital controls the country could be locked down. All of this is, of course, hugely destructive for the economy and ultimately self-defeating. I expect that we will see quite a bit of this stuff in coming years. Try and be prepared!

But this will not be part of the solution. It will make matters worse. And it means that the endgame is still either voluntary default or hyperinflation and default. ‘Repression’ or ‘nationalization of money and credit’ is a policy of desperation. It is not a solution. It won’t be the endgame.

Regards,

Detlev Schlicter

Paper Money Collapse

When the Bond Buying Stops, the Game Is Over was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.