Is This Why The Status Quo Disdains Bitcoin? - The "Wrong People Are Getting Rich"

Authored by Charles Hugh Smith via OfTwoMinds blog,

The wrong people--rebels, outsiders, nerds and techies-- got on the cryptocurrency boat while their insider/rentier "betters" blew it and are now raging bitterly onshore.

The psychology of money, wealth and speculative manias is endlessly fascinating. Most of what"s written on these subjects focus on the process of building wealth as if it were a quasi-science rather than a psychologically driven process. Only speculative manias attract a psychology-based analysis, usually characterized as some variant of the madness of the herd running off the cliff en masse.

But money and wealth are nothing but more sedate reflections of the same dynamics that drive speculative manias. Much has been written about cognitive biases and thinking fast and slow, but these explorations do not exhaust the psychology underpinning money, wealth and speculative manias.

Few things have unleashed the Monster Id of wealth and money quite like bitcoin and the cryptocurrencies. Compare the speculative manias of the dot-com era (1995 - 2000) and the housing bubble (2002 - 2007) with the crypto-mania: in the first two manias, the status quo embraced the mania as rational and justified: the Internet would continue growing for decades, housing never goes down, etc.

But the status quo has not embraced cryptocurrencies with the same ardor--why? Instead of endless justifications for valuations, the status quo is filled with reports that 97% of all economists view bitcoin as a bubble, and endless articles decrying the bitcoin bubble as a fools game that will deservedly burst, and soon.

Why did the status quo embrace irrationally exuberant bubbles in the 1990s and 2000s, but views the exuberance of cryptocurrencies with disdain? I think this is a fruitful topic to explore, largely because nobody seems to be asking this question.

Here are my suppositions:

1. The status quo reviles cryptocurrencies because the wrong people are getting rich.

2. The status quo reviles cryptocurrencies because the usual insiders (Wall Street and its politico leeches) didn"t get on board early, and they"re deeply offended that they missed the boat.

3. Until the advent of bitcoin futures trading, the usual insiders had no means to skim profits from the exuberance.

To me, these dynamics go a long way in explaining the 97% of the status quo"s visible loathing of bitcoin and the cryptocurrencies.

In other words: why embrace some manias but not all manias? Answer: some manias make the usual insiders filthy rich, others don"t. The dot-com mania generated billions of dollars in profits for Wall Street and the rest of the financier-politico leeches (i.e. the rentier class) via IPOs (initial public offerings), insider deals and vast fees generated by trading the mania with other peoples" money.

The housing bubble generated billions of dollars in profits for Wall Street via the issuance of mortgage-backed securities (MBS), CDOs and other exotic financial instruments based on mortgages and related securities, and realtors (and the rest of the housing industry) banked billions in commissions, fees and other skims.

In both cases, Average Joe and Jane reckoned the manias were their ticket to untold wealth. A relative few Average Joes and Janes did strike it rich, usually by being early employees of companies that went public, and a few others managed the impossible, i.e. buying low and selling high and then exiting the casino with their winnings.

But the vast majority of the Average Joes and Janes were fodder for the chipping machines of Wall Street and the FIRE (finance, insurance, real estate) insiders and elites. Far more people lost money in the period between 1997 and 2003 than won big and kept their winnings. Millions of people gambled on the housing bubble expanding forever and lost everything.

Now compare that to the cryptocurrency mania: Wall Street and the rest of the financier-politico leeches (the rentier class) have virtually no insider skims in the cryptocurrencies--is it any wonder they hate bitcoin with a passion that correlates to their inability to rake in billions of low-risk fees from the mania?

The psychology of FOMO (fear of missing out) is well known; the indignation of those who didn"t get on board before the ship sailed is less well noted. The financier/rentier class has a very high opinion of its own moxie and intelligence, and the fact that they missed the boat entirely on bitcoin et al. is like a knife of wounded pride plunged directly into their greedy hearts.

Those who can see past their own wounded pride are busy investing in blockchain applications and cryptocurrency funds, while those who cannot let go of their wounded pride are raging daily against the bitcoin bubble, and praying nightly to their evil gods for its collapse, to prove themselves right after all.

Every day that bitcoin doesn"t crash to zero is a day of pain for those whose pride was wounded by missing the cryptocurrency boat.

Even worse--if that"s possible for those whose greed is insatiable--the wrong people have gotten rich--techies, nerds, outsiders, rebels, etc.

It"s as if the crypto-rabble rebels just blew up the Financial Empire"s Death Star and got away with it.

Interestingly, few balk when privileged insiders mint fortunes for doing essentially nothing but exploiting their privileges. The corporate media heaps fatuous praise on insiders who reap billions of dollars from others" labor and ideas via IPOs, leveraged buyouts, etc. because of course these rentiers are our bosses and overlords.

It"s dangerous for a mere peasant in the Corporate-State Feudal System (i.e. the status quo) to speak truth to power against the Financial Aristocracy that issues the paychecks.

You can bet that if a Wall Street insider had bought bitcoin in size for $100 each, said insider would be justifying today"s valuations and arguing for higher valuations ahead, just as he/she did in the dot-com and housing manias.

So it all boils down to this: the wrong people--rebels, outsiders, nerds and techies-- got on the cryptocurrency boat while their insider/rentier "betters" blew it and are now raging bitterly onshore, not just resentful but indignant that this mania didn"t enrich insiders like it should have.

So sorry about your Death Star. I guess this doesn"t bode well for your bonus and promotion in the Imperial hierarchy.

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I"m offering my new book Money and Work Unchained at a 10% discount ($8.95 for the Kindle ebook and $18 for the print edition) through December, after which the price goes up to retail ($9.95 and $20). Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

"Wealth Effect" = Widening Wealth Inequality

Authored by Charles Hugh Smith via OfTwoMinds blog,

Note that widening wealth and income inequality is a non-partisan trend.

One of the core goals of the Federal Reserve"s monetary policies of the past 9 years is to generate the "wealth effect": by pushing the valuations of stocks and bonds higher, American households will feel wealthier, and hence be more willing to borrow and spend, even if they didn"t actually reap any gains by selling stocks and bonds that gained value.

In other words, the mere perception of rising wealth is supposed to trigger a wave of renewed borrowing and spending.

This perception management only worked on the few households which owned enough of these assets to feel wealthier--the top 5%, the top 6 million out of 120 million households. This chart shows what happened as the Fed ceaselessly goosed financial assets higher over the past 9 years: the gains, real and perceived, only flowed to the top 5% of households earning in excess of $200,000 annually.

Spending by the bottom 95% has at best returned to the levels reached a decade ago in 2007.

By focusing on boosting financial assets to the moon as a means of goosing spending, the Federal Reserve has widened wealth and income inequality to the breaking point. Perception management doesn"t actually boost the inflation-adjusted wages of the bottom 95%, which have stagnated for decades. Nor does boosting assets do much good for the vast majority of households which have modest holdings of stocks and bonds, usually in IRA or 401K retirement accounts they can"t touch without paying steep penalties.

As the charts below illustrate, the Grand Canyon between the top 5% and everyone else is widening. Let"s say a househould has $12,000 in retirement funds and $5,000 in a savings account. (Many households have less than $1,000 in savings, so this example-household is doing pretty well to have $17,000 in cash and financial assets.)

Thanks to the Federal Reserve"s Zero Interest Rate Policy (ZIRP), savers have lost ground after adjustments for inflation. The stock market has more than doubled, and most bond funds have appreciated, but precious metals and other commodities have not performed as well. So let"s say the household"s retirement portfolio rose by a hefty 75%, or $9,000, to a total of $21,000.

Does this modest gain actually change the financial foundation of the household to the point that the household can now afford to buy a new vehicle, college tuition, etc.? The short answer is no; the gains are simply too modest as a percentage of income to make any difference.

Compare this to a top 5% household with hundreds of thousands of dollars of financial assets: gains registered in the hundreds of thousands do indeed move the needle on household wealth and perception management. The top 5% haven"t just reaped outsized gains in Fed-goosed assets; they"ve also reaped the vast majority of any wage gains generated in the past 9 years of "recovery."

As this chart shows, the bottom 90% lost ground, and the really substantial gains have accrued only to the top 1%.

Note that widening wealth and income inequality is a non-partisan trend. The political and financial elites have feathered their own nests while the bottom 95% have lost ground.

The Federal Reserve"s perverse policy of perception management has exacerbated wealth and income inequality: "wealth effect" = widening wealth inequality.

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I"m offering my new book Money and Work Unchained at a 10% discount ($8.95 for the Kindle ebook and $18 for the print edition) through December, after which the price goes up to retail ($9.95 and $20). Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

The Endlessness Of A Temporary Tax

Authored by Jeff Thomas via InternationalMan.com,

Governments regularly claim that they favour tax reform. When this claim has been repeated so many times that virtually no one believes them anymore, they announce a tax reform, to show that they really mean it. They then reshuffle the existing taxes to give the appearance that taxation will actually be lowered.

When it becomes apparent that the reform is a sham, they often pull a rabbit out of a hat in the form of a “temporary” tax, that’s pre-legislated to end sometime in the future.

Sounds promising.

So, let’s have a look at one such temporary tax and see how things worked out.

The US government introduced the War Revenue Act of 1898—a tax on telephone use—under the claim that it was necessary to pay for the Spanish American War.

In what way does telephone use pertain to a government invading another country? Well, actually, one has nothing to do with the other. But, let’s leave that discussion for another day and see how this temporary tax played out.

The Act was repealed in 1902 but was reinstated, this time as the Emergency Internal Revenue Tax Act of 1914. The justification then given was that another war was on the way and increased taxation to pay for it couldn’t begin too soon. Telephone users needed to cough up.

It was decided by both parties to increase the tax on telephones and the War Revenue Act of 1917 was created. It hadn’t passed the debate stage until the war was over, but they decided that they’d implement it anyway, as the work had already been done. In the bargain, they introduced not only increased rates, but graduated rates.

This act was also repealed, in 1924, but was reinstated with the Revenue Act of 1932. Since that date, it has been reauthorised 29 times.

In 1941, an increase was put in place to pay for (you guessed it) another war—World War II. This was increased again in 1943, but people complained and the new law contained a provision that the increased rates would end six months after “the date of termination of hostilities in the present war.” However, the Excise Tax Act of 1947 was passed to assure that the tax would continue indefinitely.

Over the subsequent years, periodic changes were made. Although the rates went up and down like a bride’s nightie, most, not surprisingly, were upward.

As further (undeclared) wars came and went, taxation on telephone calls repeatedly needed to be increased and, regardless of the party in power, increases continued.

At long last, on 14 September, 2000, the House of Representatives took up legislation which included the repeal of the telephone excise tax. This measure passed both houses, but the fix was in. President Clinton vetoed the repeal. (The legislative branch and the executive branch have to take turns playing the bad cop, but the outcome is the same: increased taxation.)

Then, in 2006, a case was made (in the words of the Treasury Secretary), to amend the Internal Revenue Code “of an outdated, antiquated tax that has survived a century beyond its original purpose, and by now should have been ancient history.”

Finally, American citizens could wash their hands of a one-hundred-year theft of their earnings that, even at the start, was based upon a ludicrous concept.

Unfortunately… it didn’t happen.

The repeal was never enacted and Americans continue to pay for the Spanish American War today.

So, what’s the takeaway here?

Well, first off, this little history serves as a reminder that there’s nothing so permanent as a temporary government measure.

Second, although not a month goes by without one politician or another, from one party or the other, rising up in righteous indignation that a new tax or an expanded tax is absolutely necessary to continue the welfare of the American people, there is, in truth, no sincerity in their claim. They simply want more money.

Third, no amount of money is ever enough. Even if Washington, D.C., is the only part of the US that is enjoying prosperity, even if no congressman leaves office without more zeroes behind his net worth than when he went in, virtually every legislator will vote for increases in taxation.

And, fourth, there’s no such thing as tax reform. From time to time, legislators will need to trot out the idea of tax reform, and be seen to be arguing over the details, but will ultimately always do the same: the deck will be reshuffled, but somehow, taxes will rise once again.

But the overall lesson to be learned is that Government is, and has always been, a shell game. Its purpose is not to serve the electorate; it is to separate them from the fruits of their labours.

Full stop.

As former US Chief Justice John Marshall stated,

The power to tax involves the power to destroy.

More recently, Ron Holland offered the following:

Since the beginning of recorded history, the business of government has been wealth confiscation.

However, both these individuals were conservatives, and it would only be fair to ask for commentary from the liberal side. One such liberal political leader is none other than Vladimir Lenin, who stated,

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.

Of course, the reader may wish to consider relocating to a jurisdiction where the taxation is far lower, but if he chooses to remain in the US, EU, Canada, or other jurisdiction where the tax level is already oppressive, his plans should include temporary taxes that are unlikely to end in his lifetime.

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Few people realize this, but it is possible to escape the US government’s “power to destroy.” Find out how in The American Expatriation Guide: How to Divorce the US Government. Click here to download your free PDF copy now.

Charles Hugh Smith Explains "Why I"m Hopeful"

Authored by Charles Hugh Smith via OfTwoMinds blog,

A more human world lies just beyond the edge of the Status Quo.

Readers often ask me to post something hopeful, and I understand why: doom-and-gloom gets tiresome. Human beings need hope just as they need oxygen, and the destruction of the Status Quo via over-reach and internal contradictions doesn"t leave much to be happy about.

The most hopeful thing in my mind is that the Status Quo is devolving from its internal contradictions and excesses. It is a perverse, intensely destructive system with horrific incentives for predation, exploitation, fraud and complicity and few disincentives.

A more human world lies just beyond the edge of the Status Quo.

I know many smart, well-informed people expect the worst once the Status Quo (the Savior State and its corporatocracy partners) devolves, and there is abundant evidence of the ugliness of human nature under duress.

But we should temper this Id ugliness with the stronger impulses of community and compassion. If greed and rapaciousness were the dominant forces within human nature, then the species would have either died out at its own hand or been limited to small savage populations kept in check by the predation of neighboring groups, none of which could expand much because inner conflict would limit their ability to grow.

The remarkable success of humanity as a species is not simply the result of a big brain, opposable thumbs, year-round sex, innovation or even language; it is also the result of social and cultural associations that act as a "network" for storing knowledge and good will--what we call technical and social capital.

I have devoted significant portions of my books--

Survival+

An Unconventional Guide to Investing in Troubled Times

Resistance, Revolution, Liberation

Why Our Status Quo Failed and Is Beyond Reform

A Radically Beneficial World: Automation, Technology & Creating Jobs for All

Money and Work Unchained

to an explanation of how community and self-reliance have atrophied under the relentless expansion of the dominant Savior State.

The social capital and "return on investment" earned from investing time and energy in community and other social networks has been replaced by a check from the Savior State--a transfer payment that surely beats the troublesome work of investing in community in terms of risk and return.

The net result of the Savior State dominating society and the economy is the rise of a pathological mindset of entitlement and resentment--the two are simply two sides of the same coin. You cannot separate them.

Once self-reliance has been lost, so too has self-confidence been lost, and the Savior State dependent--individual and corporation alike--soon distrusts their ability to function in an open market.

This is a truly sad, self-destructive state of affairs, and deeply, tragically ironic. The calls for "help" quickly lead to dependence on the Savior State, and that dependence quickly breeds complicity and silence in the face of repression and predation by the State and its corporate partners.

In a very real sense, citizens relinquish their citizenship along with their self-reliance and self-worth once they accept dependence on the State.

I often mention that the U.S. has much to learn from so-called Third World countries that are poorer in resources and credit. In many of these countries, the government is the police, the school and the infrastructure of roadways and energy. Many of these countries are systemically corrupt, and the State is the engine of enforcing that corruption.

Rather than something to be embraced and lobbied, involvement with the State is something to be avoided as a risk. In everyday life, people rarely encounter the government except in law enforcement or schooling.

As a result, people depend on their social capital and community for sustenance, support, work and connections.

This is not altruism, it is mutually beneficial.

Once a community dissolves into atomized individuals who each get a payment from the Central State, then they no longer need each other. Rather, other dependents on the State are viewed as competitors for the State"s resources.

These atomized, isolated individuals have a perverse relationship with the State and what remains of the community around them: lacking the self-worth earned from work or engagement/investment in a community, then their only outlet for self-identity is consumption: what they wear, eat, drink, etc. as consumers.

This dependence on the State also serves the State"s goal, which is a passive, compliant populace of dependents, and distracted, passive workers who pay their taxes. Thus dependence on the State and a hollow consumerism are ontologically bound: one feeds the other.

The era of debt-based consumption as the engine of "growth" and "prosperity" is coming to an end. Adding debt via credit no longer creates growth; it actually takes away from the economy by expanding debt service (interest payments).

The vast majority of developed-world people have had the basics of life since the late 1960s -- transport, food, shelter and utilities. The "growth" since then depended on cheap, abundant oil and a consumerist mentality in which one constantly re-defines and renews one"s identity not from social investments in others or the shared community but from consumption.

Not coincidentally, this dominance of consumption as the only metric for "growth" (as opposed to, say, productive activity) has been paralleled by the dominance of the Central State.

The end of credit-based consumption will be a very positive development, as will the devolution of the Savior State. The Savior State is like oil--both are at their peaks and are starting their inevitable slide down the S-curve. The world they created was not as positive for human fulfillment and happiness as we have been told.

Indeed, study after study has found that people with the basics for life, a higher purpose that requires sacrifice and a tight-knit community are far and away happier than isolated, atomized, insecure consumers, regardless of their wealth and consumption.

This potential to re-humanize our economy is why I am hopeful.

 

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I"m offering my new book Money and Work Unchained at a 10% discount ($8.95 for the Kindle ebook and $18 for the print edition) through December, after which the price goes up to retail ($9.95 and $20). Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Doug Casey On What Happens After The Next 9/11

Authored by Doug Casey via InternationalMan.com,

Is a police state in the US possible? Absolutely.

That’s because people are essentially the same the world over, regardless of their culture, religion, race, or what-have-you. A certain percentage of them are sociopaths.

There is a standard distribution of sociopaths across time and space. It’s a function of Pareto’s Law, better known as the 80-20 rule. 20% of the people do 80% of the work. Another 20% are responsible for 80% of the crime. 20% of the population always winds up with 80% of the wealth. And so forth, through all areas of human endeavor. This observation can be represented by a bell-shaped curve—a “standard distribution”—with a small minority at each extreme, but the large majority in the middle. The people who will take us to a police state are sociopaths—criminal personalities who don’t respect the liberty or property of others. And sociopaths gravitate towards government, and eventually come to control it.

My view is that 80% of human beings are basically decent, get along, go along types. 20% are what you might call potential trouble sources, that can go either way. But then you take 20% of that 20% and you’re dealing with the sociopaths.

When social conditions reach a certain stage these really bad guys come out from under their rocks and take advantage of the situation. We’re seeing that right now in the US, across the political spectrum. Just as we’ve seen in the past in hundreds of places throughout history.

A major tipping point occurred sixteen years ago, on September 11, 2001, with the attacks in New York and Washington. They were disastrous. But not nearly as disastrous as the government’s reaction to them.

Among them the creation of the Department of Homeland Security. Anybody that speaks German knows that a reasonable translation of Homeland Security is Geheime Staatspolizei, which is usually abbreviated to Gestapo. Anybody that goes through airline security these days should ask themselves, “Where the hell did they find these people? Didn’t they have jobs before they went to work for this moronic agency?” The answer is that there are people out there who like wearing costumes, are willing to boss, herd, interrogate, and go through the dirty laundry of their fellow citizens. They take their jobs seriously and you better not even look at them sideways. There’s no reason to believe it’s going to get better as they groove into their jobs, and their employer cements itself into place. More likely the trend will accelerate.

Is America currently a police state? Well, let’s see. You can still get in your car and go anywhere, although you might be stopped by the police and you might be detained if your papers aren’t in order. Or the officer thinks you’re not properly respectful. Or you have “too much” cash.

Was there any particular day that Germany became a police state in the 1930s? I’m not sure you can put your finger on any one particular day, even after Hitler was legally and democratically elected. It was a progression, with new laws, new regulations, new taxes every day. While more fear and hysteria were worked up among the populace. Kristallnacht didn’t occur the day after the National Socialists took power.

It’s a case of the frog being put in a kettle of water where the temperature is gradually raised to a boil. That’s what’s occurring in the US. After 9/11, in addition to Homeland Security, we got the Patriot Act, with, among other things, its suspension of habeas corpus. That means that the government can lock anybody up for any reason and not even have to tell them why. Accuse them of being an “enemy combatant”—a neologism that justifies anything, and is robotically and thoughtlessly accepted by Boobus americanus—and anything is possible. Including a trip to a CIA black site in some Third World hellhole. This is something I thought was settled in Western Civilization with the Magna Carta and King John. But we’re going backwards in most areas of personal freedom. And America, of all places, is leading the way—even while falling behind economically.

I don’t know if I can put my finger on exactly when we’re going to go over the edge, but if I was going to guess I would think the real catalyst is going to be the next 9/11-type event. And I don’t doubt it’s going to happen.

How are we any different than the Germans in the 1930s? This was one of the most civilized, best educated countries in Europe and they fell into the abyss. I suppose we’re a bit different. Americans are addicted to welfare, anti-depressant drugs, food, and electronic devices. That should certainly give us a better outcome…

There’s a joke I like to tell. Let me ask you this: Which is the gravest danger? Is it the ignorance, or is it the apathy of the average American today? Stumped? Here’s the answer: I don’t know and I don’t care.

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When we do tumble over the political edge—which will likely happen sooner rather than later—complete economic collapse is sure to follow. That’s why we’re sharing our field guide to Surviving and Thriving During an Economic Collapse. Click here to download your free PDF copy now.

 

A Radical Critique Of Universal Basic Income

Authored by Charles Hugh Smith via OfTwoMinds blog,

This critique reveals the unintended consequences of UBI.

Readers have been asking me what I thought of Universal Basic Income (UBI) as the solution to the systemic problem of jobs being replaced by automation. To answer this question, I realized I had to start by taking a fresh look at work and its role in human life and society. And since UBI is fundamentally a distribution of money, I also needed to take a fresh look at our system of money.

That led to a radical critique of Universal Basic Income (UBI) and an outline for a much more sustainable and just system of money and work than we have now. To adequately explore these critical topics, I ended up writing a 50,000 word book, Money and Work Unchained.

Universal Basic Income (UBI) is increasingly being held up as the solution to automation"s displacement of human labor. UBI combines two powerful incentives: self-interest (who couldn"t use an extra $1,000 per month) and an idealistic commitment to guaranteeing everyone material security and reducing the rising income inequality that threatens our social contract--a topic I"ve addressed many times over the past decade.

UBI"s goals - guaranteeing material security and reducing income inequality - are not just worthy; they are essential. The question then becomes: how do we achieve these goals?

The conventional critiques of UBI focus on the practicalities of funding such a substantial universal entitlement. Where will the trillions of extra dollars required come from? Can we pay for UBI by "taxing the robots" or borrowing/ printing more currency?

But a radical critique must go much, much further, and ask: is UBI the best that we can do? If we provide the basics of material security--the bottom level of Maslow"s hierarchy of human needs--what about all the higher needs for positive social roles, meaningful work, and the opportunity to build capital?

This critique reveals the unintended consequences of UBI: rather than deliver a Utopia, UBI institutionalizes serfdom and a two-class neofeudalism in which the bottom 95% scrape by on UBI while the top 5% hoard what every human wants and needs: positive social roles in our community, meaningful work that makes us feel needed, and the opportunity to build capital in all its manifestations.

UBI is the last gasp of a broken, dying system, a "solution" that institutionalizes all the injustices of serfdom under the guise of aiding those left behind by automation. We can do better--we must do better--and I lay out how to do so in this book.

A radical critique must also examine the widely accepted assumption that automation will destroy most jobs. Is this assumption valid? It turns out this assumption rests on a completely false understanding of the nature of work, the economics of automation and the presumed stability of an unsustainable global economy.

Read the first section for free in PDF format.

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I"m offering Money and Work Unchained to my readers at a 25% discount ($7.45 for the Kindle ebook and $15 for the print edition) through Saturday, December 9, after which the price goes up to retail ($9.95 and $20). If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Goldman: The Last Time This Happened Was Just Months Before The Start Of The Great Depression

Ah Goldman, never change.

One week after Goldman"s chief equity strategist David Kostin predicted a three-year bull market of "rational exuberance", lifting his 2018 S&P price target from 2,500 to 2,850 rising to 3,100 in 2020, and stating that should the exuberance turn "irrational", the S&P could rise as high as 5,300 by the end of 2020, another Goldman strategist, Christian Mueller-Glissmann, has decided it may be a good idea to play bad cop and cover all bases.

And so, in a report released on Tuesday "The Balanced Bear - Part 1: Low(er) returns and latent drawdown risk" this now bearish Goldmanite warns that in the medium-term, the two likely scenarios are either i) a "slow pain" deflation scenario of low yields and high valuations "which persist as macro is stable but there are less windfall gains from rising valuations and less carry - as a result, returns are likely to be lower across assets", or ii) a "fast pain" drawdown scenario in which there is "either a material negative growth or inflation/rate shock, or a combination of both, which drives a drawdown in 60/40 portfolios."

For those confused, don"t worry - you read it right. While on one hand Goldman is predicting nothing but blue skies for the "medium-term" of the next three years, predicting no recession and double digit equity upside, at the very same time, the very same Goldman is also forecasting either a "slow" or "fast" pain scenario, which while different, share one thing in common (as the name implies): "pain."

No surprise, Goldman talking out of both sides of its mouth, the only question being while the client-facing "research" is obviously crap and meant to get clients to do the opposite of what Goldman"s prop traders are doing, it remains debatable on what side Goldman"s prop is axed. Is the bank pulling a CDO and shorting everything it sells to its clients, or has the bank assured further S&P upside, even as valuations no "longer make sense" to quote, well, Goldman?

We don"t know the answer, nor do we care. For those who do, here is Mueller-Glissmann summary:

We think a period of low(er) returns (scenario 1) is more likely than a full-fledged bear market in 60/40 portfolios (scenario 2), at least in the near term. But there will likely be a balancing act with slowing growth and rising inflation. And at current low yield levels and with the ‘beginning of the end of QE’, bonds might be less effective hedges for equities and are likely a larger drag on balanced portfolios. And rising inflation could move the central bank put ‘more out of the money’, requiring a larger ‘growth shock’ for central banks to ease policy. Also current easing options are more limited for central banks as rates are still low and QE purchases have only just been reduced.

 

And once the balanced bear comes, it might be larger and faster. Duration risk in bond markets is much higher this cycle and vol of vol in equities has increased since the mid-80s. While we think investors should lower duration and run higher equity allocations in scenario 1, they should consider hedging at least the risk of smaller equity drawdowns in the near term. We like shorter-dated S&P 500 put spreads. In part 2, we intend to explore different strategies to enhance balanced portfolio returns while managing drawdown risk in case of a bear market.

Ultimately, like every other forecast to come out of Goldman, it"s garbage: want bullish, read Kostin; want bearish - either a little or lot - stick to Glissman. Just remember to use your friendly, Goldman salesperson who will gladly collect the trade commission whatever you do.

That said, there was one useful data point in the 26 page pdf: a chart showing that not only are we nearing the longest 60/40 bull market without a 10% return drawdown, but that the last time we were here was sometime in the late 1920s... and the Great Depression would follow in just a few months.

As Goldman observes: "we are closing in on the longest 60/40 bull market in history - there has been no 10% drawdown in real terms since 2009. A passive long-only balanced portfolio has delivered attractive risk-adjusted returns since the 90s. A favourable ‘Goldilocks’ macro backdrop, supported by the ‘Great Moderation’ and the central bank put, has boosted returns in both equities and bonds. However, after the recent ‘bull market in everything’, valuations across assets are as expensive as they have been this century, which reduces the potential for returns and diversification in balanced portfolios.

Some more statistics:

We are nearing the longest bull market for balanced equity/bond portfolios in over a century - a simple 60/40 portfolio (60% S&P 500, 40% US 10-year bonds) has not had a drawdown of more than 10% since the GFC trough (8.7 years) and has delivered a 143% return (11% p.a.) since then.

And when was the last time a balance portfolio had such a tremendous return? Goldman answers again:

"The longest run has been during  the Roaring 20s, ending with the Great Depression. The second longest run was the post-war ‘Golden age’ in the 50s - the 90s Boom has been in third place but is now fourth, after the current run.

In other words, one would have to go back to some time in early 1929 to be looking at the kind of returns that a balanced "60/40" portfolio is generating today.  In fact, the current period of staggering returns without a 10% total drawdown is now 8.7 years. How long was the comparable period in the 1928s? 9.1 years. Which means that if history is any guide, the second great depression is just around the corner.

What Will Push Them Over The Edge?

Authored by Jeff Thomas via InternationalMan.com,

Recently, the people of two of Italy’s most prosperous regions voted in a referendum, on whether they wished to have greater autonomy from Rome.

The referendum is non-binding, but that’s not what’s most significant in the results.

What is significant is that over 95% of those who voted in Lombardy did so in favour of greater autonomy. In Veneto, the number in favour of greater autonomy was even higher, at 98%.

Roberto Maroni, president of Lombardy, said, “I now have a commitment… to go to Rome and give concrete actualization to the mandate that millions of Lombards have given me.”

It may appear on the surface that Mister Maroni intends to make an appeal for independence, but this is not what will occur. He’s a politician and won’t invite Rome to jail him for sedition. His goal will instead be to demand that a greater amount of the national income that’s generated by Lombardy and Veneto (about 20% of the total) remains within those regions.

This will not mean that he wants his people to be taxed less; his goal will be to retain a larger portion to be absorbed by the regional governments—to be in his own hands.

So much for the politicians’ agenda. But what does the referendum say about the people of the regions? Well, the extraordinarily high numbers in favour of greater self-determination demonstrate that virtually all the people in the regions have figured out that Rome is bilking them of their earnings and they’re getting pretty cheesed off.

In prosperous times, a population tends not to complain too much about being robbed through taxation. They grumble a bit, but tolerate it. However, in more stringent times, when people are finding it more difficult to make ends meet, they become more resentful of governments that are chronically both overreaching and wasteful.

Since 2008, we’ve been living in such a time, and the longer people go on without a true recovery, the more resentful they’re going to be.

Independence movements have been afoot in many countries in Europe, every state in the USA, and elsewhere on the globe, but, until recently, they’ve been minor issues, attracting primarily fringe support.

Brexit changed all that, as the people of one of the illustrious G7 countries voted to remove themselves from the parasitical EU.

This, of course, inspired the voters of “lesser” countries to consider the possibility of independence more seriously.

Some of these movements have been efforts by largely dependent entities such as Scotland to express the resentment of being the poor step-sister to a more prosperous central government, but others have been the result of the growing resentment that the province or region that’s producing the lion’s share of the national revenue is routinely having it siphoned off by the central government.

It’s predictable that any regional political leader will like the idea of independence, so that he can create his own country and become its president. However, in the present environment, we’re seeing the people of Lombardy, Veneto, Kurdish Iraq, and Catalonia voting overwhelmingly in favour of either full separation, or at least, greater autonomy.

Of course, this can’t be tolerated by the central governments, as it means that they’ll be losing all that revenue and, in many cases, this would collapse their economy.

But, at present, we’re looking at only the thin end of the wedge. There are countless other provinces and regions out there that have a similar desire to secede, and justifiably so.

After all, much of Europe, until the last century or so, was not made up of large countries. It was made up of lots of little tribal areas that sometimes worked collectively. Even the Roman Empire began as a collection of provinces.

Whilst we, today, are accustomed to a world map that’s remained largely the same throughout our lifetimes, there’s actually nothing sacred in the borders that were drawn on maps decades ago, often by people who had never been to those locales (in the case of former colonies and conquered areas). The smaller, tribal areas made more sense and actually worked more in favour of the inhabitants.

But, since World War II, the world has been headed in the direction of über states. The Unites States had already led the way in the late 18th century, but in recent times, the EU was formed and repeatedly expanded. In addition, many organisations have joined groups of countries together (ASEAN, Mercosur, Caricom, etc.).

In each case, the über states were created without the expressed majority interest of the voters. (In EU countries, referenda were sometimes held, but, in no case did a majority of voters vote in favour of joining the EU. The leaders did it in spite of the lack of support.)

Invariably, the über states were created by the political leaders and for the political leaders.

Not surprisingly, in each case in which the people of a province, state, or region have expressed a desire to secede, the central government has forcefully opposed secession. (The Americans fought their civil war, not over slavery, but over secession.)

Today, states such as Texas, which have repeatedly stated both their right and interest in possible secession, have been advised that, if they make such an attempt, they’ll be met with whatever force is required to stop it.

In Catalonia, we’re watching a standoff build between the leaders in Barcelona and Madrid, as each event unfolds.

And Catalonia is a good example of a further reason for a central government to resist the departure of a province: Should Catalonia succeed, there’s the likelihood that the adjoining regions of Valencia and the Balearic Islands might also be inspired to make an exit from Spain, and for the very same reason—because they’re the revenue producers and are having Madrid siphon off their earnings, to be spent on less-productive regions.

Governments have had a long history of claiming, “If we don’t all stick together, we’ll be doomed.” However, historically, the aggressors, more often than not, have been the empires. The smaller a country, the more likely it is to mind its own business.

In addition, the smaller a country, the more closely its leaders are to their people and, correspondingly, the more responsive they are to the people’s needs and goals.

The great majority of the armed conflict that exists today exists either in the larger countries, or, more often, due to the aggression of larger countries.

Brexit has most certainly been the cause of a trend for smaller entities to get up the courage to back away from the parasitical central governments. The hope would be that this trend will expand dramatically.

There can be no doubt that there are those who believe in and are doing their utmost to create a New World Order (they’ve been stating their intent for over a hundred years). Yet, just as we seem to be moving headlong in this direction, a reversal has begun to take place at the same time.

There can be no doubt that the reversal will be resisted strenuously; however, as the voting described above attests, this is a ground-up trend, not a government-generated trend, and, historically, strong ground-up trends have had a healthy track record of success.

*  *  *

Even “successful” independence movements never go smoothly. Extreme economic turmoil is simply built into the game. However, some people always manage to come out the other side much wealthier. We’re sharing how in our Guide to Surviving and Thriving During an Economic Collapse. Click here to download your free PDF copy now.

Is This What You Call Being Prepared?

Authored by Jeff Thomas via InternationalMan.com,

In talking with American clients about their need to prepare themselves for the upcoming socio-economic/political upheaval in their country, my advice to them primarily revolves around the concept that, if you’re living in a bad neighbourhood, the obvious solution is to leave.

Many choose to do just that. Those who have limited funds seek out employment in a country that’s less likely to be dramatically impacted than their home country. Those who are a bit more well-heeled generally liquidate what they can in their home country and forward the proceeds to one where the economy and socio-political situation are more stable - and one where the rights of the individual are more greatly respected.

They then convert their wealth into a more protectable form, by buying real estate in such countries and, particularly, by converting wealth into precious metals and storing it in a top-rate facility in the chosen country.

If they can afford it, they additionally rent or purchase a home and acquire the right to residency in such a country so that, if their home country suddenly becomes less liveable, they can simply pack a carry-on and be on a plane that day.

However, far more individuals say something to the effect that “I’m too invested in where I am. I’ll make a stand right here. Let the bastards come and get me if they want to. I’ve got plenty of guns and ammunition.”

This position is, of course, very manly. It smacks of the protection of home and family. And, like John Wayne in his role as Davy Crockett at the Alamo, it has a truly patriotic ring to it.

Of course, it’s also true that Davy Crockett died at the Alamo, along with all those who fought alongside him. (Not at all a positive outcome.)

So, let’s have a realistic overview of this commonly stated “plan” to “make a stand.”

What if the authorities arrive without aggression?

It’s entirely possible that authorities will go door-to-door, neighbourhood to neighbourhood, to confiscate provisions and weaponry. If you see personnel carriers loaded with SWAT teams, who then approach your door quietly, but armed, are you really going to throw open the door and start blazing away, or are you going to recognize that giving up your weapons is better than certain death?

Do you possess adequate weaponry?

When I’ve visited the US, I have, on quite a few occasions, been shown the gun collections of those who described themselves as “armed and ready.” They’ve shown me a wide variety of weapons, from AK-47’s to crossbows. (The former might be a good choice to fight off an assault, but the latter would be a very poor choice.) The “defender” invariably has weapons of a variety of calibres—an assortment of handguns and rifles.

Unfortunately, as any combat veteran will advise, having racks of weaponry in differing calibres is a very poor approach to defence. Instead, a semi-automatic long weapon with plenty of clips of ammunition is the way to go, possibly backed up by a spare, plus a handgun or two, holstered. This should be the outfit for each defender within the home. Not an interesting but ineffective gun collection.

And, even if you’re more combat-ready, with, say, a dozen M-16’s, if you don’t also have a dozen trained defenders living in your home, they’ll do you little good.

Do you have adequate troops?

Some defenders assume that they’ll put the wife and kids in the cellar, while they alone take on the invaders. Others train the wife and kids to fight. If the latter, the defender should first ask himself if the wife and kids are capable of coping with a combat situation. And, in either case, he should face the fact that, once the shooting has started, if he’s not the victor, his wife and kids are also likely to be killed.

Can you man the ramparts 24/7?

Historically, if invaders are repelled, they tend to bear a grudge and, if possible, return again. When they do so, they’re likely to have a better plan and be more determined. Consequently, once your home has been hit once and you’ve survived, the war isn’t over. From that day on, constant vigilance will be needed if another attack is to be survived.

Can you remain at home for months at a time?

Once the fighting begins, it’s not possible to arrange to have battles occur when it’s convenient. There can be no trips to the supermarket or the doctor, as it’ll be too dangerous. It’s essential that you and your family can remain in your “fortress” for an extended time. It may be weeks or months before you can go out the door, and you’d need to be entirely self-sufficient during that period.

Can you actually bring yourself to kill others?

Combat veterans and ex-cops have had the training that allows them to shoot another human being without question. There are also those with sociopathic tendencies who have no qualms about shooting someone who’s facing them. Most other people will not know if they can pull the trigger until they’re facing another person with a gun in his hand. Many hesitate, which is likely to be fatal. Training the wife and kids may therefore be a death sentence for them.

Are you prepared to sacrifice your life and that of your family?

Regardless as to whether you may be visited by the authorities, in riot gear and with automatic weapons, or whether one or more bands of raiders attack your home, what you’re essentially accepting by saying that you’ll stay and defend it is that you’ve made the decision to live in a potential war zone. Given the choice to either put yourself and your family in harm’s way, or move to a safer place (perhaps a country that’s not experiencing conflict), which do you think is the more responsible choice?

Would you not rather be lying on a beach somewhere?

Without being overly alarmist, it seems increasingly evident that the US and possibly some other countries are not so far away from dramatic civil unrest. Whether it be the National Security Agency, the Department of Homeland Security, state or local police, raiders from a nearby city who have become opportunistic, or simply a neighbour who’s run short of food and has become desperate, literally millions of Americans are of the belief that invasion by one group or another is in the cards and are arming themselves as a result. Certainly, their anger is understandable, but their conclusion may not be.

Some of these people will take to the streets, but many more simply want to protect their homes. This is a noble sentiment, but if you and your family are at great enough risk that you’re planning to face being under siege, would it not be more responsible to leave before the bullets start to fly?

Most people, in the course of their lives, move from time to time. In most cases, when they do, it’s because they’d like to live in a better neighbourhood. In this case, the “better neighbourhood” means one where your family’s lives are not in imminent danger.

If this means moving to another jurisdiction entirely - one that’s less likely to be under siege - would that not be the best preparation of all?

*  *  *

There’s a sensible, level-headed way to avoid civil unrest and safely protect your family and wealth from any government run amok. Click here to download your free PDF copy of our new special report, Getting Out of Dodge.

Future Headlines...

Authored by Jeff Thomas via InternationalMan.com,

The following is a random assortment of headlines that we may see in the future.

However, they’re not fanciful; they’re based upon historical, political actions taken by past empires when they were in decline.

The wording, however, has been modernised to reflect current media presentation.

“President Announces Executive Order to Keep US Dollars at Home”

The accompanying article then goes on to describe that a financial crisis could be on the horizon, as US dollars are exiting the country. This is due to those people who are retired and who receive Social Security courtesy of the government but live overseas, where they spend America’s money. In order to ensure that a crisis doesn’t occur, the president declares that those who “threaten the country’s solvency” in this way will have their cheques ceased until they return to US soil, so that they can reinvest in the Greater Good of all their countrymen.

“FBI Warnings Come to Pass—Domestic Terrorist Attacks in Five States. President Announces Emergency Measures”

Shootings occur in several states, all within a brief time period. The president orders martial law, citing the already established authorization under the Patriot Act and National Defense Authorization Act, which allows the suspension of habeas corpus. Although it’s initially announced as a temporary emergency measure, the country becomes a permanent police state.

“Recent Domestic Terrorism Incidents Linked to Inadequate Control of International Travel”

The accompanying article describes what FBI and CIA intel has “revealed”—that domestic terrorists travel in and out of the country at will and that, therefore, terrorist incidents could have been prevented if international travel were curtailed.

Most people today would agree that governments are becoming more restrictive and many of them are fearful that, in the future, there’s a danger that their liberties will be increasingly removed - a development they say they wouldn’t accept, were it to happen.

Yet, each time another liberty is impaired or removed, these same people shrug their shoulders and accept that the latest loss of liberty is “necessary” for the safety of all.

Why does this occur?

Well, each time a government seeks to curtail a freedom, the spin doctors devise a plausible explanation that suggests that the new restriction is being imposed for the good of the public.

This technique has worked well throughout history. Whenever a government chooses to oppress its people beyond the level that they’d normally accept, one of the most popular solutions is to capitalise on an existing event that instils fear in the people. If no such event occurs, it’s created, often as a false-flag incident—one where the government itself stages a threat to the security of the people, blames it on others, then offers to remove the threat by removing freedoms.

As John Adams said on many occasions, “Those who trade liberty for security have neither.” Quite so.

Whenever a country implements capital controls, migration controls, or any other significant loss of freedom, it’s a sure bet that that government is slipping in its ability to hold on to the customary cooperation of its people. Any government that’s steadily robbed its people of their ambition and/or prosperity finds that, at some point, those people begin to vote with their feet. They tend to first move their money to a jurisdiction that’s less restrictive. At some point, they tend to move themselves to a jurisdiction that allows them greater freedom and opportunity.

The US was built upon this principle. Originally, colonists who were prepared to be hard-working and self-reliant left England, Holland, Germany, etc., willing to accept the hardships of frontier life for the hope of greater self-determination. Later, in the 19th century, millions of similarly minded people from all over Europe migrated west for the same reason. These people became the backbone of the industrial revolution, turning the US into the world’s most productive nation.

But, today, the shoe is clearly on the other foot. America has become grossly over-regulated and both money and people are quietly migrating elsewhere. As this trend becomes more prominent, we shall surely see greater restrictions on such people, who have inherited the pioneering spirit and are now seeking other countries where there’s greater opportunity for self-determination.

Again, none of the above is anything new. This scenario has played itself out time and again, throughout history. And, always, there have been warning signs, if the people were able to read them.

Invariably, the justification of greater restrictions, such as in the above hypothetical headlines, means the removal of freedoms. In every case, the spin used is that the removal is for “the greater good.”

Morris and Linda Tannehill, in The Market for Liberty, phrased it this way:

“Enslaving men ‘for the good of society’ is one of the most subtle and widespread forms of slavery.”

And again, historically, such restrictions are typically a last-ditch effort on the part of a declining country to trap their citizens like sheep in a pen, to be available for a final shearing before the collapse. Ayn Rand described it as follows:

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.

Should we at some point in the near future see headlines like those above, we would be wise to take it as a warning (if we have any vision) that dramatically increased controls are, in fact, the death-knell of freedom.

The choice then will be whether to accept subjugation or vote with our feet.

This by no means suggests a change in our ideals. On the contrary, it means making a move in order to continue to live by our ideals, as exemplified in this final quote, from Thomas Paine:

“My country is wherever liberty lives.”

(Mister Paine was born in England, but moved to America in 1774 and never regretted his flight to freedom.)

Throughout history, there have always been countries that were in decline at the same time as there were countries that were opening up. The present time is no different. The principle remains the same; only the names of the countries change.

*  *  *

Wealth confiscation and shrinking personal liberty are virtually inevitable as an economy collapses. They go hand in hand. That’s why we put together the Guide to Surviving and Thriving During an Economic Collapse for our readers. Click here to download your free PDF copy now.

"Are They Really Out To Get Me?"

Authored by Jeff Thomas via InternationalMan.com,

Libertarians and others who seek to be left alone to run their own lives habitually ask themselves the above question regarding their government.

So, what’s the answer? Are they out to get you? Well, unfortunately, the answer isn’t a simple “yes” or “no.” In fact, it’s “yes” and “no.”

The secret to understanding a government’s intentions is that there’s no unified overall objective, sentiment, or approach to dealing with the private sector.

Quite the opposite. With any government, it couldn’t be more fragmented or dysfunctional.

At the very lowest level of any government is the civil service, which is, in any country, a catch-all for all those people who are so lacking in ability and imagination that they’d be unlikely to hold down a job in the private sector. Moreover, their level of motivation is likely to be so low that their dysfunction tends to coincide with extreme inefficiency.

To test this out, one only has to visit the local Department of Motor Vehicles, or a similar agency that does little except charge fees and waste time in order to provide you with a permit, which, were it not required, you could happily do without.

Most anyone, in observing the individual behind the counter, would observe the glassy stare and recognize that, even though this person spends each working day behind this counter and may have been doing so for years, he or she takes virtually no interest in your personal concerns and, if you have questions, tends to find them a nuisance and an interruption in the endless drudgery of issuing paperwork.

Hence the image above. Here we have a pilot in Canada who, when being presented with a computer-driven list of tail letters that were authorized for him to choose from, immediately laughed when he saw the above letters on the list. He then went up to the counter, having circled the ones he chose, and the clerk processed the application brainlessly, without it even registering in his head what the letters suggested.

Later, when the pilot had had the letters emblazoned on his fuselage, it might not have been unlikely that an airport supervisor, seeing them 10 inches high on the side of the plane, raised an objection, at which time the pilot proudly produced his paperwork.

As most anyone in the private sector can attest, as soon as paperwork is presented, the civil servant in question simply says, “Oh,” then nods and lets you go on your way.

But, looking at this more deeply, what we’re witnessing is that that percentage of the population who are (once again) lacking in ability and imagination are easy to programme by the government to become automatons - that even if something strikes them as being somehow incorrect, as long as it has the State stamp of approval, it’s just fine.

And, so, at the lower level of government, we have those who are not “out to get us”; they are merely borderline useless and have ended up with jobs in which that deficiency will not get them fired. They are, therefore, merely “in the way.”

As we go up the chain, however, where those in government are somewhat more ambitious, we find a greater desire to control.

The closer we get to the higher echelons, the more they truly are “out to get you.”

Why should this be? And why should it be that those the higher-ups tend to hate the most are those who are self-motivated, responsible, self-reliant, and imaginative?

Well, unfortunately, the answer is simple. It’s because those are the character traits that they lack. I’m sorry to have to say that in my many years of working directly with politicians and heads of governments, virtually all of them were highly evolved civil-servant types. They had more drive, more guile, and larger egos than the lower-level bureaucrats but were just as parasitical and just as lacking in character traits that would make them productive people.

With these individuals, yes, they are out to get you.

First, if they recognize that you possess the traits that would make you productive, they will be highly jealous and suspicious of you.

Second, they will understand that since you are productive and they are not, they must find a means by which they can use you as a cash cow, to be milked as much as possible and as often as possible.

Their purpose, therefore, is to regulate, control, and tax you in every way possible, and in this they are, quite simply, predators. They may be Tory or Labour, Republican or Democrat, but they are predators nonetheless and, as such, are a genuine threat to both your freedom and your well-being.

Of course, all politicians play the game of party politics, doing all in their power to convince the electorate that they and their party are dramatically different from the opposing party, presenting their own party as “the good guys,” and the opposing party as “the bad guys.”

However, they are, as Judge Andrew Napolitano has repeatedly stated, merely “two wings of the same bird of prey.”

Significantly, as both the bottom level and top level are separated by many other layers of bureaucracy, and as their common character traits are inability, dysfunction, etc., there is no cohesive set of principles upon which a government operates. Its purposes are control and usurpation, and they’re backed by an imbroglio of confused and self-contradictory legislation and an increasingly large body of enforcement agencies.

Although the individuals within these agencies tend to be incompetent and dysfunctional, they do tend to remain loyal to the whole. They may not get along with each other, or work toward a unified set of goals, or even have the same beliefs. They do, however, tend to do as they’re told and blindly support the State, above all else.

Once all the above is understood, the individual may do as this pilot has done. He has grasped the dysfunction and parasitical nature of his government and has used their own computer-generated registration code to express his reaction to “authority.”

More to the point, he has used their laws, their bureaucracy to express it legally.

This is an important point. Each individual, essentially, has three choices.

He can either go along with those lesser beings who seek to control his life,

...or he can rebel and possibly be incarcerated for his efforts,

...or he can become creative and recognize that the laws and regulations of his country are a confused mess, written by incompetent people, and do all he can to assert his independence, legally.

He can and should do everything in his power to operate his life as though he’s not owned by the government of his home country, or any other government, for that matter.

Wherever a government tries to control the ownership of his real estate through taxation, he might seek out a jurisdiction that has no property tax. If they try to tax his income, he might seek out a country that has no income tax. If they try to restrict his migration, he might seek a second citizenship that does not restrict him.

Freedom is not merely a vague historical idea, or an excuse to celebrate with firecrackers once a year; it’s a lifetime pursuit and should be taken on as such. The pilot in question has made an initial stab at it. Hopefully he, along with you, the reader, will make it a central facet of his life’s work.

*  *  *

A second passport is one of the most practical and effective ways to assert your independence. Find out how you can get one in our special report, The Easiest Way to a Second Passport. Click here to download your free PDF copy now.

"The End Is Nigh"

Authored by Jeff Thomas via InternationalMan.com,

Recently, US Secretary of the Treasury Steve Mnuchin stated, "If China doesn"t follow these sanctions [against North Korea], we will put additional sanctions on them and prevent them from accessing the US and international dollar system."

By this, he meant that the US would shut China out of the SWIFT system, through which the great majority of international settlements are facilitated. In stating this, the US government is doing nothing less than threatening economic warfare against China, which would unquestionably prove catastrophic to the global economy.

This is astonishingly shortsighted, as the US can no more do without trade with China than China can do without trade with the US. Further, the US will unquestionably pressure its other trading partners (particularly the EU) to endorse and follow the sanctions. This they will not comply with, as it would serve to cut their own economic throats. The relationships between the US and their partners have been wearing thin in recent years, and the present threat against China is very likely to prove to be the final straw. The net effect would be to place the US out on an economic limb, alone.

There may be those who disagree with this premise, under the assumption that, to cut China out of the SWIFT system would destroy China"s ability to make international transactions, forcing them to cave to US demands.

However, China, Russia, and others have seen this day coming and have created their own SWIFT system, world cable network, and world banking system. All that"s needed to kick it all into gear is a major international need to bypass SWIFT. The US government has just provided that need with this threat. There would certainly be teething pains in getting the new system running on a massive scale, but the sudden worldwide need would drive the implementation.

This threat by the US at a time when it"s broke is, in effect, economic suicide.

But, just as the ink is drying on this announcement, the increasingly impetuous US president has cracked a deal with Democrats to permanently abolish the US debt ceiling. As the debt ceiling was the last safeguard in governmental fiscal responsibility, he"s effectively chosen to assure that the US will experience economic collapse.

Again, economic suicide.

It could be argued that the insatiable ego of “The Donald” has driven him to recklessness. Indeed, it"s been his habit, when opposed on anything he wishes to do, to lash out, often creating far more dangerous deals, and saying, effectively, "So, there. I showed you. I"ll do as I please, no matter the damage." This would suggest that he"s the "Lemming in Chief," leading the US over a fiscal cliff.

It could also be argued that he is, instead, the "Patsy in Chief," and is being cleverly played by those who understand his personality weaknesses and repeatedly goad him into unwise decisions that will benefit them, but will ultimately be disastrous for the country.

Either way, what we"re witnessing is a train wreck about to happen, and we"re all, to a greater or lesser extent, on that train.

For many years, in predicting the economic collapse of what was once known as the “free world,” I"ve stated my belief that, whilst we cannot predict the actual dates when the primary events will occur, we can observe the lead-up events—that they"ll increase in both frequency and magnitude the closer we get to the collapse. We"ve recently been in the stage where lead-up events have become weekly. We now appear to be entering the stage where lead-up events become daily. Once we"ve reached this stage, it"s time to fasten our seat belts.

So, in returning to the image above, is this the end of the world? In a word, no. Those who profess the coming end of the world have been with us for, literally, thousands of years. They"re just as misguided and incorrect today as they"ve always been.

It is true, however, that the world as we know it is about to undergo the most dramatic change that we"ll witness in our lifetimes. Most certainly, we"re presently in the greatest economic bubble the world has ever seen, which assures us that, when it breaks, the damage it causes will be correspondingly great.

But let"s have a second look at the image above. It seems apparent that the three men in it are part of a religious group, recommending that mankind repent. As can be seen on the placard in the middle, "Ye must be cleansed."

Regardless of any religious connotations to this placard, there"s accuracy in its economic connotations. A collapse is inescapable at this point. The system must be cleansed, much in the way an alcoholic must dry out, or an addict must get the drugs out of his system, before the recovery can begin.

When a crisis of these proportions occurs, it"s not possible to simply acknowledge the collapse, then begin anew the next day. Just like the alcoholic or the addict, we can"t just hit the reset button and start anew. After a collapse, a long and painful process must begin to cleanse the system. In a collapse of the severity of the one we"re facing, the cleansing promises to be quite long and quite painful.

Twenty years ago, in predicting the coming collapse, Harry Schultz predicted, “ten years down; ten years up.” It may well be that his prediction was actually conservative, and we"re now looking at a longer period, as so much additional damage has been done since his prediction.

But, before we leave this topic, it"s important to look at one more factor. Historically, economic wars have a habit of becoming shooting wars.

It"s not commonly known that the US war with Japan was precipitated by the US repeatedly putting the squeeze on Japan economically.

President Roosevelt froze Japanese assets in the US. He subsequently succeeded in cutting Japan off from three-quarters of their international trade. Finally, he cut them off from almost 90% of their oil supply.

It could be argued that, at that point, Japan had no choice but to go to war, however badly it might turn out for them.

Could it be that the US government imagines that similar tactics will force China into a war, so that, when that war ends, the US would control China as it did Japan after 1945?

If that"s their intent, the outcome would be unlikely to turn out as they imagine. Although the sabre rattling by US political leaders and retired generals is heard daily on the American news programmes, and the American people are clearly being indoctrinated to believe that war might be necessary, America has never been less ready for a war.

The US is a very different country from what it was in 1941. It does possess a sizable military; however, that military is no match for the combined forces of China and Russia. Moreover, the US is not the industrial giant it was in 1941. Its factories have largely closed and moved overseas. What remains is not sufficient for wartime production. The American people as a whole are heavily in debt and the government itself is broke.

By any standard, the actions being taken by the US are therefore reckless indeed. The end of the world is not nigh, but the end of the world as we know it most certainly is.

If there"s a light at the end of the tunnel, it may lie in the fact that, in previous world wars, there were always countries that simply didn"t take part. They sat it out in peace, while the rest of the world went mad. This is still true today.

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The Sandcastle: Decline From Democracy To Tyranny Is Inevitable

Authored by Jeff Thomas via InternationalMan.com,

The decline from democracy to tyranny is both a natural and inevitable one.

That’s not a pleasant thought to have to consider, but it’s a fact, nonetheless. In every case, a democracy will deteriorate as the result of the electorate accepting the loss of freedom in trade for largesse from their government. This process may be fascism, socialism, communism, or a basket of “isms,” but tyranny is the inevitable endgame of democracy. Like the destruction of a sandcastle by the incoming tide, it requires time to transpire, but in time, the democracy, like the sandcastle, will be washed away in its entirety.

Why should this be so? Well, as I commented some years ago,

The concept of government is that the people grant to a small group of individuals the ability to establish and maintain controls over them. The inherent flaw in such a concept is that any government will invariably and continually expand upon its controls, resulting in the ever-diminishing freedom of those who granted them the power.

Unfortunately, there will always be those who wish to rule, and there will always be a majority of voters who are complacent enough and naïve enough to allow their freedoms to be slowly removed. This adverb “slowly” is the key by which the removal of freedoms is achieved.

The old adage of “boiling a frog” is that the frog will jump out of the pot if it’s filled with hot water, but if the water is lukewarm and the temperature is slowly raised, he’ll grow accustomed to the temperature change and will inadvertently allow himself to be boiled.

Let’s have a look at Thomas Jefferson’s assessment of this technique:

Even under the best forms of Government, those entrusted with power have, in time, and by slow operations, perverted it into tyranny.

Mister Jefferson was a true visionary. He knew, even as he was penning the Declaration of Independence and portions of the Constitution, that his proclamations, even if they were accepted by his fellow founding fathers, would not last. He recommended repeated revolutions to counter the inevitable tendency by political leaders to continually vie for the removal of the freedoms from their constituents.

Around the same time that Mister Jefferson made the above comment, Alexander Tytler, a Scottish economist and historian, commented on the new American experiment in democracy. He’s credited as saying,

A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.

So, was each of the above gentlemen throwing a dart at a board, or did they each have some kind of crystal ball? Well, actually, neither. Each was a keen student of history. Each knew that the pattern, by the end of the 18th century, had already repeated itself time and time again. In fact, as early as the fourth century BC, Plato had quoted Socrates as having stated to Adeimantus, 

Tyranny naturally arises out of democracy, and the most aggravated form of tyranny and slavery comes out of the most extreme form of liberty.

Today, much of what was called the “free world” only half a century ago has deteriorated into a combination of residual capitalism, which has been largely and increasingly buried by socialism and fascism. (It should be mentioned that the oft-misinterpreted definition of “fascism” is the joint rule by corporate and state—a condition that’s now manifestly in place in much of the former “free” world.)

Today, many people perceive fascism as a tyrannical condition that’s suddenly imposed by a dictator, but this is rarely the case. Fascism is in fact a logical step. Just as voters succumb over time to the promises of socialism, so a parallel decline occurs as fascism slowly replaces capitalism. Fascism may appear to be capitalism, but it’s the antithesis of a free market. As Vladimir Lenin rightly stated,

Fascism is capitalism in decline.

Comrade Lenin understood the value of fascism for political leaders. Whilst he retained a close relationship with New York and London bankers, and a healthy capitalist market was tapped into for Soviet-era imports, he was aware that his power base depended largely on denying capitalism to his minions.

So, from the above quotations, we may see that there’s been a fairly erudite group of folks out there who have commented on this topic over the last 2,500 years. They agree that democracies, like sandcastles, never last. They generally begin promisingly, but, given enough time, any government will erode democracy as quickly as the political leaders can get away with it, and the progression always ends in tyranny.

We’re presently at a major historical juncture—a time in which much of the former free world is in the final stages of decay and approaching the tyranny stage.

At this point, the process tends to speed up. We can observe this as we see an increase in the laws being passed to control the population—increased taxation, increased regulation, and increased promises of largesse from the government that they don’t have the funding to deliver.

When any government reaches this stage, it knows only too well that it will not deliver and that, when the lie is exposed, the populace will be hopping mad. Therefore, just before the endgame, any government can be expected to ramp up its police state. The demonstrations by governments that they’re doing so are now seen regularly—raids by SWAT teams in situations where just a small number of authorities could handle the situation just as well. Displays of armed forces in the street, including armoured vehicles, in instances of disruption.

In London, Ferguson, Paris, Boston, etc., the authoritarian displays have become ever-more frequent. All that’s now necessary is a series of events (whether staged or real) to suggest domestic terrorism in several locations at roughly the same time. A state of national emergency may then be declared “for the safety of the people.”

It’s this justification that will assure the success of tyranny. Historically, the majority of people in any county, in any era, choose the illusion of safety over freedom. As John Adams was fond of saying,  

Those who would trade freedom for safety will have neither.

From this point on, it would be wise for anyone who lives in the EU, US, UK, etc. to watch events closely. If a rash of “domestic terrorism” appears suddenly, it could well be the harbinger that the government has reached the tipping point—when tyranny under the guise of “protecting the safety of the people” is inaugurated.

The most essential takeaway here is that, although some may object (even violently), the majority of the people will trade their freedom for the promise of safety.

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We’re much closer to the tipping point of tyranny than most people would ever admit. That’s why we just released a PDF guide to show you how to safeguard your freedom. Click here to download it now.