Congress Gives America A Special Christmas Present: Higher Taxes

Congress Gives America A Special Christmas Present: Higher Taxes

Notes From The Field By Simon Black

December 26, 2019  Bahia Beach, Puerto Rico

You’ve got to hand it to these people-- Congress really knows how to bring out the holiday cheer.

They have some sort of pathological need to pass the most absurd legislation at the VERY END OF THE YEAR giving people very little time to react.

Two years ago, for example, they passed comprehensive tax reform in late December 2017… and the new tax code went into effect only a few days later.

Taxpayers had no time to even understand the new law, let alone plan around it.

That’s the funny thing about taxes-- people plan their entire lives around the tax code.

They set up special structures, invest in particular assets, and go through all sorts of legal and accounting work, to make sure they’re following the tax code while they take care of their families.

And then, poof, Congress changes the rules overnight.

Well they just did it again.

A few days ago they passed a 643-page spending bill. And, buried deep within that legislation are provisions that were originally part of the SECURE Act.

I told you about this a few months ago-- the SECURE Act was intended to ‘help’ Americans save for retirement. And there are certain sections which are great.

For example, they removed the age limit for contributing to an IRA. It used to be that you could no longer contribute to your retirement after the age of 70 ½.

That limit has been lifted… which should prove useful for many people.

They also increased the age for Required Minimum Distributions to age 72, up from age 70 ½. So you have an additional 18-months before you’ll be required to start taking distributions from your retirement account.

On the other hand, they also passed new rules which are really bad for inherited IRAs.

Under the old laws, your IRA could be bequeathed to your heirs when you pass away. And while your heirs were required to take distributions from your IRA over time, they had the option of stretching out those distributions over the course of their entire lives.

This was a really great way to give your heirs a tax-efficient safety net.

If they suddenly needed a lump some of money, for example, to buy a new house, pay for university, or offset a major medical expense, they could tap into the IRA that they inherited from you.

But if they didn’t need the money, they only had to take a small distribution each year, and keep the tax consequences to a minimum.

Those rules have now been torn up.

Under the new rules, almost all inherited IRAs must be fully distributed within 10-years, whether your heirs need the money or not. And that’s going to trigger significant tax consequences for them.

Again, in fairness there are plenty of provisions in this law that many people will find helpful. And other provisions that people will find terrible.

But that’s not really the point. It’s not about whether the law is good or bad. The issue is that Congress doesn’t give people any time to react.

Responsible people plan around their taxes… especially when it comes to retirement and estate planning. People have to plan literally DECADES in advance and think through generational impacts.

So it’s a pretty nasty surprise when Congress tears up the rules at the very end of the year. They’re basically saying, “Unless you die by Tuesday at midnight, everything you’ve planned over the last several decades won’t work anymore. Merry Christmas.”

This highlights a very important reminder: these people can and will change the rules at any time, with no warning whatsoever. And they couldn’t care less how their changes impact you.

Now, all that said, I’m always an optimist-- where there’s a will, there’s a way. And there are definitely ways to dull the negative consequences of this new law.

We can explore these in more detail another time. But to give you an example, transferring your IRA to a special type of trust called a charitable remainder unitrust could still ensure that your heirs receive lifelong favorable tax treatment on an inherited IRA.

To your freedom & prosperity, Simon Black Founder,

To continue reading, please go to the original article here:

  https://www.sovereignman.com/tax/congress-gives-america-a-special-christmas-present-higher-taxes-26996/

One Of The Easiest Places In The World To Obtain Residency

One Of The Easiest Places In The World To Obtain Residency

Notes From The Field By Simon Black

December 16, 2019 San Juan, Puerto Rico

In late 2002, about 17 years ago at this time of the year, I was a young Army officer deployed to the Middle East.

It was just a few months before George W. Bush gave the order to invade Iraq, though all my fellow officers and I knew with 100% certainty that we would be going to war.

That turned out to be an extremely formative experience for me.

It was clear that Saddamn Hussein did not have any weapons of mass destruction, and that the pretext for the invasion was total bullshit. And at 23-years old, I was naive enough to be appalled that politicians would do something so irresponsible.

But it led me down a life-changing rabbit hole: if they were so irresponsible and cavalier about starting a war and putting people’s lives on the line, what else was rotten?

As I later learned-- quite a bit.

I started studying everything I could get my hands on about so many things I had taken for granted.

I learned about our system of money, and how unelected central bankers (who are primarily appointed by big Wall Street banks) manipulate interest rates and create financial bubbles.

I learned about the national debt, and the enormous Ponzi scheme of Social Security.

I also learned that it was a big world out there with incredible opportunities in places that I had never even considered.

One of those places was Panama.

Because of the all-important Panama Canal, the US military had established military bases in the country for most of the 20th century. And one of the Soldiers in my unit had been stationed there in the 1990s.

And he would NOT stop talking about how great Panama was, like it was some sort of Shangri-La earthly paradise.

Finally, I promised this guy I would go to Panama if he would only just shut up about it. He did. And I kept my promise. The following year I took my first trip to the country.

It was 2003. And when I landed at the main international airport, it looked and smelled like an old garage. It was about as small as a garage too… the main arrivals hall was tiny, cramped, and swarming with mosquitos.

There was no highway into town, and the streets were dimly lit. In fact, it seemed like the place was generally lacking electricity. All around it just looked like chaos.

But after meeting with lawyers and entrepreneurs, I found out that there was investment pouring into Panama.

To continue reading, please go to the original article here:

https://www.sovereignman.com/international-diversification-strategies/one-of-the-easiest-places-in-the-world-to-obtain-residency-26908/

Gold Has Outperformed The Stock Market Over The Last Year

Gold Has Outperformed The Stock Market Over The Last Year

Notes From The Field By Simon Black

December 4, 2019   En route to Saint Lucia

For more than a year, I’ve been strongly encouraging readers to consider buying gold.

In fact, almost exactly one year ago to the day, I wrote that gold was cheap relative to just about every other asset class in the world.

Since then, gold has been one of the best performing investments in the world.

Over the last 12 months, the price of gold is up 21.1%, handily outperforming everything from the S&P 500 index in the US to stock markets in China, Europe, and Canada, plus bonds, real estate, and even major commodities like oil.

Gold has even outpaced the stock prices of many of the world’s most popular tech investments like Netflix, Tesla, Amazon, etc.

(One of the more interesting exceptions has been Bitcoin, which has more than doubled in value over the last 12 months. We’ll talk about that another time.)

But while gold’s investment performance has been great, I want to tell you today why that doesn’t matter one bit to me.

According to data published by the World Gold Council (WGC), in the last quarter alone, both retail investors and a number of large hedge funds have been piling into gold.

That’s certainly been one factor driving prices higher. But to be frank, that sort of demand is extremely fickle.

The WGC data show that most small investors are buying into gold ETFs (which as I’ve explained previously is probably the dumbest way to own gold.)

Gold ETF buyers are NOT long-term investors. They’ll most likely sell the minute gold prices start to fall.

Hedge fund managers won’t hesitate to sell either, especially if they need to boost their quarterly returns.

So, long-term, gold prices won’t be driven higher by fickle investor demand.

The real demand that’s worth watching comes from foreign governments and central banks-- institutions with such a heavy appetite that they buy gold by the metric ton.

In the third quarter of this year, Turkey bought 71 metric tons of gold. Serbia bought 9 metric tons of gold in the month of October alone.

Poland doubled its gold reserves last year. And China has been gobbling up not only gold, but gold miners too.

It’s critical to understand that foreign governments and central banks tend to be buyers of gold. They’re rarely sellers.

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/gold-has-outperformed-the-stock-market-over-the-last-year-26760/

Who Knew 2 Cents Could Go So Far?

Who Knew 2 Cents Could Go So Far?

Notes From The Field By Simon Black

November 21, 2019  San Juan, Puerto Rico

About a week and a half ago I had a terrible sinus infection… I’m talking -really- bad. My sneezes were so ferocious that I half-expected the US Geological Survey to register them on the Richter Scale.

In the midst of all that misery, I became acutely interested in the health care plans of leading US Presidential contenders… and stayed up late at night when I couldn’t sleep combing through their solutions.

Most of all I was curious how they intended to pay for everything.

Now, because I graduated from the Third Grade, I apparently have an unfair advantage when looking at the numbers.

2 + 2 = 4 in my world. But with this BS monkey math that passes as legitimate public policy, they make the numbers whatever they want them to be.

And their fantasy arithmetic was on full display in last night’s Presidential debate.

Elizabeth Warren claimed that her “2 cent” wealth tax would pay for universal child care, universal pre-school, funding for historically black colleges and universities, funding for public schools, free university education, the cancellation of student debt, and of course, Medicare for All.

Wow. Who knew that 2 cents could go so far?

Now here’s the cost of those programs over ten years, according to her own website:

Child care and pre-school: $700 billion

Historically Black Colleges and Universities: $50 billion

Public school funding and wage increases: $800 billion

Cancellation of student debt: > $1.5 trillion

Free tuition at public universities: $700 billion

So, before we even get to Medicare for All, the total bill is already more than $3.75 trillion over the next decade.

But Warren herself claims that her Ultra-Millionaire “2 cent” wealth tax would raise only $2.75 trillion over the next decade. That’s a trillion dollars less than what she needs to pay for just a handful of proposals.

Then there’s the “Medicare for All” proposal, which she also acknowledges would cost $50 trillion over ten years. It dwarfs the cost of all of her other plans combined.

Clearly the $50 trillion program cost vastly exceeds the projected $2.75 trillion wealth tax revenue.

But not to worry! In addition to the ‘2 cent’ ultra-millionaire tax, she also claims that she would pay for Medicare for All by increasing the corporate tax.

This is probably the biggest logical fallacy of all.

Back in 2017 when the government slashed the corporate tax from 35% to 21%, the stock market SOARED in response.

So guess what’s going to happen if they raise the corporate tax back up to 35% or more? The stock market is going to drop. Duh.

And if the stock market drops, the amount of wealth held by ultra-millionaires will drop too.

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/who-knew-2-cents-could-go-so-far-26580/

Why Gold And Silver Have Plenty Of Room To Rise

Notes From The Field   By Simon Black
Spoleto, Italy

From the Recaps Archives originally posted on August 12, 2019

Peter Schiff and I talk gold [Podcast]

Why Gold And Silver Have Plenty Of Room To Rise​

I thought in this age of insanity that we are living in, nothing would surprise me anymore. But sure enough, there was a headline in the Financial Times the other day, “Central banks should consider giving people money.”

It seems almost impossible that someone could believe in something so ridiculous. And yet this is the world we are living in. The path to prosperity is now based on unelected central bankers conjuring millions of dollars out of thin air.

Bankrupt governments are issuing bonds with negative yields, meaning they are being paid to go deeper into debt. And there are more than $13 trillion of these negative yielding bonds in the world.

If anything this makes a compelling case for why people should consider owning gold.

It’s a store of value with a 5,000 year track record of withstanding inflation, political crisis, and monetary stupidity.

I’ve been suggesting people consider buying gold for quite some time, especially over the last year. I argue that the supply of gold, is actually declining, yet the demand will increase in large part due to all of this central bank lunacy.

And that has absolutely been happening. The price of gold is up more than 25% over the last year, and just surpassed $1,500 per ounce. But unlike most other assets like real estate, stocks, bonds, etc, gold is still far from it's all time high.

There could still be plenty of gains ahead.

And silver would have to triple before it reaches it’s all time high.

Every summer for the past eight years, I’ve enjoyed a week or two in the italian countryside at a 400 plus year old villa. Here I relax with friends, family, business colleagues, and some of our Total Access members who fly in from around the world, to break bread and enjoy really stimulating and entertaining conversations.

This year Peter Schiff has been one of my guests. He’s an old friend who shares many of the same beliefs. And when our conversation this morning turned to gold, I thought it appropriate to record it, and make a Podcast out of it.

LINK

In our conversation we talk about why gold and silver have plenty of room to rise, and a number of different ways to invest.

Until tomorrow,

To your freedom and prosperity, Simon  Black,  Founder, SovereignMan.com

The Five Scary New Rules Of Upside-Down Capitalism

The Five Scary New Rules Of Upside-Down Capitalism

Notes From The Field By Simon Black

November 20, 2019  San Juan, Puerto Rico

Roughly 23,000 years ago in modern-day Israel, a small tribe of ex-cave dwellers built a tiny village near the Sea of Galilee that may have been one of the earliest agrarian societies in human history.

Archaeologists discovered the site more than thirty years ago.

And they found tens of thousands of well-preserved seeds and agricultural tools, suggesting that the people who lived there planted a great deal of food in the fertile lands nearby.

As historian Will Durant once wrote, “the first culture is agriculture.” And he was right. Civilization as we know it has its foundations in agriculture.

When human beings came out of caves, stopped roaming the wild, and began planting seeds to feed their families and tribes, they were able to produce more food than they consumed for the first time in the history of our species.

And because it only took a handful of people to feed an entire village, everyone else was able pursue other vocations like architecture, science, mathematics, medicine, etc.

Freed from the daily toil of survival, our ancestors invented trade, commerce, writing, and everything else that fueled progress over the next 10,000 years.

And this simple concept of producing more than you consume has been the foundation of human prosperity for millennia.

It’s also one of the basic principles of capitalism. People who produce and save are supposed to be rewarded. People who irresponsibly go into debt to consume are supposed to be punished.

But not anymore.

Back in 2014, the European Central Bank made history when they pushed interest rates into negative territory.

Literally never before in the history of the world had interest rates been negative. And little by little, those negative rates have been spreading.

A recent report published by the Financial Times showed that 60% of German banks are now passing on that negative interest to their customers.

In other words, if you save money, you have to pay the bank interest. And many banks are now starting to pay customers to borrow money.

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/the-five-scary-new-rules-of-upside-down-capitalism-26555/

They’re Building A Wall, But Not The One You Think

They’re Building A Wall, But Not The One You Think

Notes From The Field By Simon Black

November 13, 2019  San Juan, Puerto Rico

Bernd Lünser was by all accounts a popular, promising student.

He was studying civil engineering at the State Engineering School of Architecture in West Berlin in 1961.

Unfortunately, he lived in East Berlin. And during the summer break of that year, the Berlin Wall was completed, shutting off access from Western administered West Berlin from Soviet controlled East Berlin.

Suddenly the 22 year old Lünser found his prospects for a good education and prosperous life dashed.

In a desperate attempt at freedom, Bernd Lünser attempted to escape over the wall; he was one of the first East Berliners to do so.

Lünser climbed over some buildings that were part of the wall, and planned to scale down the other side with a clothesline.

But he was discovered and chased by guards on the East German side. Lünser ran, and ended up at a very high point on the wall.

Jumping from that height would kill him. But so would the East German guards in pursuit.

Luckily, firefighters from the Western side noticed his escape attempt, and they raced towards the wall with a net to assist Lünser. But they were fired upon by the East guards. West guards returned fire.

When Bernd Lünser finally got the chance to jump, he missed the net, and fell to his death. East German authorities did not allow his mother to attend the funeral.

Last weekend marked the 30th anniversary of the fall of the Berlin Wall-- the literal barrier which cut off the free world from the dystopian hell of socialist rule.

Countless people died trying to regain their freedom. For East Berliners, free speech, freedom of expression, the freedom to get a good education, was just over the wall.

Yet today, many Westerners are ready to flush these freedoms down the toilet.

For instance, a recent survey from Campaign for Free Speech found the majority of American respondents think the First Amendment is outdated.

And it was especially pronounced among younger people. 57% of Millennials agreed with this statement:

To continue reading, please go to the original article here:

https://www.sovereignman.com/international-diversification-strategies/theyre-building-a-wall-but-not-the-one-you-think-26390/

The Treasury Department is in Desperate Need of A Sucker

The Treasury Department Is In Desperate Need of A Sucker

Posted in Dinar Recaps Archives on 7/30/2019

Notes From The Field By Simon Black
July 30, 2019 Vilnius, Lithuania

The Treasury Department is in desperate need of a sucker

Ten years ago, at the peak of the global financial crisis, the Board of Trustees which oversees Social Security in the United States issued a stark warning:

They projected that Social Security’s enormous trust funds would completely run out of money in 2039.

Naturally nobody paid attention. Back in 2009 the economy in shambles, so focusing on a future economic crisis that was more than three decades away was a low priority.

And for the past decade, the US government has continued to ignore its Social Security problem.

But it’s become much worse.

Ten years later, the Board of Trustees now projects that Social Security’s primary trust fund will run out money in 2034.

That’s five years earlier than they projected back in 2009. And it’s only 15 years away.

Now, 15 years might seem like a long time. But take a minute to grasp the magnitude of this problem:

According to the US government’s own estimates, Social Security and Medicare combined are underfunded by $100 TRILLION.

$100 trillion is literally more than FIVE TIMES the size of the entire US economy. And this giant fiscal chasm is actually growing.

The big problem for Social Security is that tax revenue is no longer enough.

Every worker who is legally employed in the United States currently pays roughly 15% of his/her wages each month to help fund Social Security and pay benefits to retirees.

But there are now so many people receiving Social Security benefits that all the payroll tax revenue is no longer enough.

Social Security also derives a portion of the income it needs to pay benefits from the investment returns on its $3 trillion worth of assets.

Problem is-- Social Security is forbidden by law to invest in anything EXCEPT United States government bonds.

Most countries who have large Sovereign Wealth Funds or Pension Funds have the latitude to invest that capital in a variety of asset classes.

I personally know several national pension fund and sovereign wealth fund executives in Europe and Asia, and they typically buy a wide variety of assets-- real estate, private equity, stocks, bonds, etc., with a target annualized return of between 6% to 8%.

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/the-treasury-department-is-in-desperate-need-of-a-sucker-25425/

To your freedom and prosperity, Simon Black, Founder, SovereignMan.com

Completely Legal Tax Strategies

Completely Legal Tax Strategies

Notes From The Field   By Simon Black

From the Recaps Archives, originally posted on July 23, 2019  

Sovereign Valley Farm, Chile

Completely Legal Tax Strategies

The easiest (and safest) return on investment you’ll ever achieve

In 1993, William Kurt Hauser, a San Francisco investment analyst, presented his results from an incredibly interesting study.

Hauser had analyzed tax revenues in the United States over time and came to the conclusion that tax revenue as a percentage of GDP had remained around a narrow band of 19% since 1946.

That was astonishing. After all, over that same period, tax rates had been all over the place.

The top marginal tax rate was as low as 28% in the 1980s and as high as 94% right at the end of WWII.

But despite those extreme variations, overall tax revenue had barely changed.

To better understand why, try and imagine the economy as a giant pie. Hauser’s data shows that the government’s slice of the pie is always around 19%– no matter how big the pie (or how high or low taxes are).

That means that the obvious solution to increasing tax revenue is to grow the pie itself.

While a few places in the world (like Singapore) have figured this out, this productive mindset completely escapes nearly every major western government.

And in the Land of the Free, the cries for higher taxes are getting louder and louder.

In the US, almost every candidate supports a government-run healthcare and university system, and claims it should all be “free”.

Their solution to everything is more government, more regulation, and of course higher taxes– all things that shrink the pie instead of increasing it.

Some of the presidential candidates now support income tax rates of 70-90%.

Elizabeth Warren wants to go as far as taxing not just income, but also wealth (a policy that’s been dropped by virtually every “socialist” country in the world, by the way).

Some want higher estate taxes and some want an investment sur-tax… But they ALL want higher taxes.

The Bolsheviks simply don’t understand that their higher tax rates won’t actually increase tax revenue.

Again, the numbers undeniably show that the size of the government’s piece of the economic pie always remains 19% of GDP– no matter how high the tax rates are.

But that’s a concept they will never bother to consider.

Instead, they’ll just keep riding their Bolshevik high horses.

Of course, they tell you not to worry because their higher taxes will only hit rich people who earn over $400,000– you know, those greedy dentists and small business owners.

But taxing just the top 1% will barely make a dent in the budget required to fund all of these socialist programs. 

So then they’ll start talking about taxing the top 5%. Then the top 10%. And soon these higher taxes will end up slamming right into the middle class.

The much-despised “Alternative Minimum Tax” is a great example; it was originally passed back in the 1960s specifically to tax the very wealthy. But today millions of people are ensnared by the AMT.

Even the US federal income tax itself is a great example.

When it was originally passed in 1913, federal income tax targeted wealthy people, and was only paid by the top 3% of income earners. 97% of Americans paid no federal income tax.

Today tens of millions of people in the middle class pay income tax.

Fortunately, there are simple steps you can take to dramatically reduce your tax obligation.

This is something that makes sense no matter what happens next.

Think about it like this… if you can eliminate capital gains tax, you’ve essentially earned a RISK-FREE return of 23.8%.

Reducing your taxes is the easiest and SAFEST way to generate a significant return on investment.

And there are MANY legal strategies to do just that.

If you are a business owner or a self-employed professional, such as a consultant or dentist, then you know the pain of crippling taxes and regulations all too well.

Fortunately you also have access to some of the greatest opportunities to drastically slash your taxes (potentially to nearly ZERO).

These legal tax-reduction strategies used to be available only to giant mega-corporations with armies of lawyers at their call, but globalization has changed the game.

Now, even small business owners can take advantage of them– if they have the right knowledge and tools.

Even regular employees can still take advantage of a little-known opportunity to slash your taxes and boost your retirement savings at the same time.

Here’s a small selection of strategies to legally pay minimal taxes…

Anyone can stash away up to $56,000 in 2019, TAX-FREE, for their retirement through a solo 401(k) with a small side hustle (such as driving Uber or renting out a room on Airbnb)

Business owners and self-employed professionals can slash their business’ corporate tax to just 4% (and pay NO tax on dividends) by moving to Puerto Rico…

…or they can earn up to $2 MILLION per year and legally not pay corporate tax by using a captive insurance company (without moving their business)

Investors and day traders can legally cut their capital gains tax to 0% by moving to Puerto Rico

Location-independent individuals can earn upwards of $150,000+ per year, nearly TAX-FREE by taking advantage of the Foreign Earned Income Exclusion

Investor’s who are sitting on capital gains can take advantage of Opportunity Zones, an overlooked tax incentive, that could save them $279,996 (or more) over the next ten years

And much, much more…

And all of these strategies are completely legal.

For example, captive insurance is in section 831(b)(2), the Foreign Earned Income Exclusion is in section 911, Puerto Rico’s incentives are in section 933(1) and Opportunity Zones can be found in section 1400Z-2.

These aren’t hidden loopholes. They’re right there in the tax code.

I encourage you to learn more about them because reducing your taxes is the easiest and SAFEST way to generate a significant return on investment.

Until tomorrow,
To your freedom and prosperity, Simon Black, Founder, SovereignMan.com

Three Things You Didn’t Know About The Crash Of 1929

Three Things You Didn’t Know About The Crash Of 1929

Notes From The Field By Simon Black

October 28, 2019   San Juan, Puerto Rico

October 28, 1929-- 90 years ago today-- is known as ‘Black Monday’ in financial circles.

The US stock market had peaked the previous month, on September 3, 1929, with the Dow Jones stock index reaching a record high of 381.

But throughout September and October, nervous investors began pulling their money out of the market.

And over a three day period in late October (including Black Monday), the market lost more than 30% of its value.

Ninety years later, I thought it would be prudent to look at three key insights from that historic crash, starting with:

1) Stocks are more overvalued today than they were in 1929

Back in 1929, the price/earnings ratio of the average company trading on the New York Stock Exchange was about 15.

In other words, investors were willing to pay $15 per share for every $1 of the average company’s profit.

That’s not high at all. In fact, a Price/Earnings ratio of 15 is completely in line with historic averages.

Coca Cola’s Price/Earnings ratio back in 1929 ranged between 15 and 18. Today it’s 30… meaning that investors today are willing to pay roughly twice as much for each dollar of Coke’s annual profit.

Coca Cola is actually quite an interesting case study.

If we just go back a few years to 2010, Coca Cola’s annual revenue was $35 billion. By 2018 the company’s annual revenue had fallen to less than $32 billion.

In 2010, Coca Cola generated $5.06 in profit (earnings) per share. In 2018, just $1.50.

And Coca Cola’s total equity, i.e. the ‘net worth’ of the business, was $31 billion in 2010. By 2018, equity had fallen to $19 billion.

So over the past eight years, Coca Cola has lost nearly 40% of its equity, sales are down, and per-share earnings have fallen by 70%.

Clearly the company is in far worse shape today than it was eight years ago.

Yet Coke’s share price has nearly DOUBLED in that period.

Crazy, right?

To continue reading, please go to the original article here:

https://www.sovereignman.com/investing/three-things-you-didnt-know-about-the-crash-of-1929-26123/

Four Lessons From The Biggest Riots In Decades

Four Lessons From The Biggest Riots In Decades

Notes From The Field By Simon Black

October 22, 2019  San Juan, Puerto Rico

If you’re been following the news, you might have seen reports about civil unrest in Chile-- the worst in decades.

I lived in Chile for more than seven years before moving to Puerto Rico; I still have business interests there, along with hundreds of employees (both foreign and local), many of whom I’ve been speaking to over the last few days.

First things first, Chile is ordinarily a quiet, stable, peaceful country.

The last time Chile went to war was 140 years ago back in 1879. They even skipped both world wars.

And while there are occasional protests, Chile is quite tame by Latin American standards.

It’s also the most modern and advanced nation in the region-- this is not a destitute, impoverished country.

Chile has thriving industries and a large middle class that’s in better shape than just about anywhere else in the region.

But just like every other country in the world, there are countless imperfections.

Inflation has eaten away at the purchasing power of workers’ incomes, and a lot of people are struggling to make ends meet.

The proverbial straw that broke the camel’s back was a 3% increase in metro fares.

It’s nothing. But it was enough to make thousands of people become completely unglued, resulting in riots, looting, arson, and all-out mayhem.

Let’s talk about some of the key lessons from this:

1) It Can Happen Anywhere.

It’s not just Chile. Looking around the world right now we can see major demonstrations and even violence in places like Hong Kong, Spain, Haiti, Lebanon, etc.

The ‘yellow vest’ movement in France in late 2018/early 2019 brought hundreds of thousands of people out into the streets to torch cars and destroy property, all apparently in protest of rising fuel prices.

Political tensions, social tensions, economic tensions… they exist everywhere, in rich countries and poor countries alike.

People everywhere are tightly wound, and it doesn’t take much for them to become unhinged. If you think this can’t happen where you live, think again.

2) It Can Happen Faster Than Anyone Realizes.

The weather in central Chile is one of the great benefits of living there; it’s warm, sunny, and dry… southern California climate.

And this past Friday was a particularly beautiful day. By lunchtime, people were out in the parks enjoying the weather. It was calm, peaceful, and joyful.

Within a matter of hours the city had turned into a war zone. Hours.

One of my team members told me on the phone yesterday, “If you had said on Friday afternoon that Santiago would be in chaos by nightfall, I would have laughed... And then it happened.”

To continue reading, please go to the original article here:

https://www.sovereignman.com/trends/four-lessons-from-the-biggest-riots-in-decades-26070/