Decades-Old Investment Wisdom From Albert Einstein

Decades-Old Investment Wisdom From Albert Einstein

Notes From The Field By Simon Black

March 3, 2020 Bahia Beach, Puerto Rico

Albert Einstein is rumored to have said that “Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

These days interest rates are near zero. The average savings account currently pays .09% interest per year, according to the FDIC. So over the course of a decade, saving $100 with compound interest would give you a grand total of $109.37.

But at the same time, the opposite force is working against us. Inflation currently stands around 2.5%. And that compounds too. What $100 can buy now will cost $102.50 next year. After ten years, assuming inflation stays the same, it will cost $128. So just by saving $100 for ten years, you’ve lost $18.63 of real value.

That’s why these days, you have to invest to make money. Luckily stocks, real estate and pretty much every asset class is close to all time highs right now.

But last week's “coronavirus drop” is a good reminder that it’s not going to last forever.

If you have substantial unrealized capital gains, and you’re looking for an exit strategy, there is one available right now. It allows you to compound your current gains for almost six years before paying capital gains tax.

I’m talking about Opportunity Zones. These were created by Trump’s tax reform law to reward investors who fund projects in distressed areas.

One of the major benefits of investing in an Opportunity Zone is the chance to compound your gains BEFORE you pay taxes on them.

For instance, if you bought $100,000 worth of stocks that are now worth $200,000 you have $100,000 worth of capital gains. At current tax rates, you could owe as much as $23,800.

But by investing those $100,000 of gains in an Opportunity Zone, you can defer paying those taxes until 2026. That means the $23,800 that would have gone to taxes instead grows from the new investment.

Let’s say that the new investment increases in value by 10% each year. When the time comes to pay the capital gains taxes on the original investment, you will have earned an EXTRA $18,363 just from deferring taxes.

In addition, after holding the Opportunity Zone investment for several years, you’ll finally pay tax on your original capital gain, but at a discounted rate. (Technically they call this a ‘step-up in basis’, so instead of being taxed on $100,000 you are taxed on a gain of $90,000.)

This can save you even more money.

But there is yet another major tax benefit of Opportunity Zones.

If you keep your funds in the Opportunity Zone for ten years, you’ll NEVER pay tax on the capital gains from your Opportunity Zone investment.

So to continue our example, say that after ten years, your $100,000 Opportunity Zone investment has compounded into $259,374-- a total capital gain of $159,374. Your total capital gains tax bill will be ZERO.

Remember, ALL capital gains are eliminated on Opportunity Zone investments held for at least 10 years. So if you invest in the next Facebook and turn $100,000 into $100 million you still owe ZERO capital gains taxes on that $99,900,000 gain.

But like most good things, this won’t last forever.

And some of the benefits have already expired.

For instance, you could have had a 15% step-up in basis on your original capital gains (i.e. only paid tax on $85,000 instead of $100,000).

But you had to hold the Opportunity Zone investment for seven years. And with the deadline to pay the original capital gains set at the end of 2026, it is too late to hold the investment for seven years.

But you can still get the discount of 10% by holding for five years, as long as you get into an Opportunity Zone by the end of 2021.

It’s worth looking into. And a good place to start is our new in-depth article: Opportunity Zones: Ultimate Guide and My Personal Experience.

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

 https://www.sovereignman.com/international-diversification-strategies/decades-old-investment-wisdom-from-albert-einstein-27401/

About That Coming “Food Crisis”

About That Coming “Food Crisis”

Notes From The Field By Simon Black  May 17, 2022

On Wednesday July 3rd in the year 1315, King Louis X of France-- also know as “Louis the Headstrong”-- issued a groundbreaking edict.

“Whereas, according to natural right, everyone should be born free. . .” he began. “Many persons amongst our common people have fallen into the bonds of slavery, which much displeaseth us.”

“Our Kingdom is called and named the Kingdom of the Franks [which means ‘free’ in old French]. . . therefore I do decree that such serfdom be redeemed to freedom.”

And like that, with the stroke of a quill, Louis X abolished slavery and serfdom in France.

Unfortunately for the serfs, the King’s emancipation didn’t last very long; Louis died less than a year later following a particularly grueling tennis match (true story), and his successors weren’t so liberal.

More than four centuries later, in fact, in the mid 1700s, there were still more than 1 million feudal serfs in France, according to historian Hippolyte Taine. And their plight was even worse than their medieval ancestors.

An 18th century serf in France was subject to feudal dues of at least 14% to his local nobleman.

Plus there were a host of other absurd regulations; a French serf was tied to the land and unable to leave without his lord’s consent. They were required to provide several weeks of free labor to the government. And any serf who died without children had all of his possessions forfeited to the nobility.

On top of this tax, the French serf was required to pay a 10% tithing to the church. And on top of that, the national government also imposed taxes.

There was a 5% national income tax, a national ad valorem tax on personal possessions, and national sales taxes on common goods like salt.

The French government had also created an army of tax collectors who were authorized to forcibly enter people’s homes, search for hidden wealth, and arbitrarily seize their property in the case of any suspected tax evasion.

This is how the word peasant became synonymous with ‘poor person’. Because peasant is derived from the French word paysant, which literally just meant ‘civilian’ in old French.

It wasn’t until the 1700s when French citizens, the paysants, were taxed into destitution, that the term added its impoverished meaning.

Travelers from England who crossed into France at the time were shocked at the poverty they saw; one English traveler, Lady Mary Montagu, wrote of her trip to a French village in 1718 that

“the whole town [came] out to beg, with such miserable starved faces, and thin tattered clothes, they need no other eloquence to persuade the wretchedness of their condition.”

And it was under such wretched conditions that invention and innovation died. French taxes were so high, and people were so miserable, that no one had any incentive to develop technology or become more productive.

French productivity and agriculture were at least a century behind England, which was already using machinery and advanced crop rotation techniques.

The French economy essentially remained in the Dark Ages thanks to the government destroying every incentive to grow.

This is a familiar theme throughout history-- governments have a tendency to create terrible conditions and bad incentives that hold back an economy.

We can see this everywhere today. And one area in particular is this supposed “food crisis” that everyone is talking about.

Bill Gates. Treasury Secretary Janet Yellen. The head of the UN World Food Programme. Germany’s foreign minister. McKinsey & Company. The New York Times. CNN.

They’re all warning of a food crisis. Even the President of the United States said of food shortages, “it’s going to be real.” Just like the 81 million people who voted for him.

Now, reports of a full-blown food crisis are overstated. There’s plenty of food in the world, plenty of production. The sun didn’t stop shining. The soil wasn’t suddenly depleted of its nutrients.

Frankly there are ALWAYS challenges with food production somewhere in the world, every year.

Just this year there was a bird flu that wiped out millions of chickens in the United States. Farmers in southern and eastern Ukraine are obviously struggling.

But what you probably didn’t hear is that Australia had a record wheat harvest this season. Ironically, so did Russia. Brazilian corn production is near a record high 112 million metric tons. Countless fruits, vegetables, and nuts ranging from avocados to olives to walnuts to tomatoes are being produced at or near record quantities.

Plus, even if there really were critical problems with food production, there’s a vast amount of land in the world that could be planted, especially with seasonal cereal crops like wheat.

You might have read a lot about fertilizer shortages over the past few months; however, the three key ingredients in agricultural fertilizers-- Nitrogen, Phosphorus, and Potassium-- are not in short supply.

Nitrogen is one of the most abundant elements in the universe; literally 80% of the air we breathe is composed of nitrogen. Phosphorus, which comes from phosphate mining, is incredibly abundant in the United States, Brazil, and Morocco.

And Potassium comes potash mining, of which Canada has the world’s biggest production and reserves.

Bottom line, the world is NOT lacking any of the ingredients to produce food.

It has definitely become more challenging to move food from farm to fridge, however.

This system-- harvest, packing, inspection, shipping, warehousing-- worked well for decades. The global supply chain only broke down recently, because of the pandemic hysteria, and some of this has undoubtedly affected the food trade.

But, like France’s economic plight in the 1700s, this is mostly a question of bad government.

At its core, there is nothing wrong with the global supply chain.

Need convincing? Consider that Pfizer has been able to produce billions of vaccines, distribute them across the world, and even manage to maintain a temperature of MINUS 90 degrees Centigrade during shipment.

You never hear anyone talk about global supply chain problems when it comes to vaccine distribution. But with respect to baby formula in the United States? Suddenly there’s an insurmountable problem with the global supply chain.

The bottom line is that the global supply chain works, but only when they really want it to work. And their prioritization is utterly disgusting.

They could fix all of it.

If the government is so concerned about high oil prices, why haven’t they fast tracked new production? If they’re so concerned about fertilizer prices, why haven’t they fast tracked permitting for new phosphate mines, potash mines, and fertilizer production plants?

Whether you chalk it up to them deliberately destroying the economy, or it’s just a comical level of incompetence, the results are obvious. And the Baby Formula fiasco is the perfect example.

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

https://www.sovereignman.com/trends/about-that-coming-food-crisis-35386/

Even the Smartest Man In the World Was A Terrible Central Banker

Even the Smartest Man In the World Was A Terrible Central Banker

Notes From The Field By Simon Black   May 9, 2022

By the early Spring of 1696, England was on the brink of a major currency crisis that had been building for decades.  This was back in an era where English money was primarily silver; more than 1,000 years ago, in fact, Britain’s pound sterling was originally struck by Anglo-Saxon kings in the British Isles as one “Tower pound” of sterling silver.

(The ‘Tower pound’ was a medieval unit of measurement roughly equivalent to 0.75 modern pounds.) But over time, of course, English kings heavily debased their coins and reduced the silver content; by the mid-1600s, the pound only contained about 1/3 its original silver content.

This massive debasement, though, wasn’t just a game for kings. People across England realized that they too could reduce the silver content of the coins.

Metallurgy and minting technologies were still in their infancy; most coins in circulation at the time had been hand-made, literally hammered at a forge by silversmiths, so they were riddled with imperfections and irregularities.

People figured out that they could easily clip a few grains of silver off each coin, keep the metal scraps for themselves, and put the shaved coin right back into circulation.

Eventually everyone was stealing silver from the coins, from the mightiest king to the lowliest peasant. Even workers inside the Royal Mint routinely shaved silver from the coins they were striking.

This practice continued until the coins had become laughably tiny; imagine a US quarter that had been shaved and clipped down to the size of a penny.

To make matters worse, the price of silver kept steadily rising. England had been in a nearly perpetual state of war, including its bloody Civil War in the 1640s. Public finances were in turmoil, and chaos was rampant.

People turned to silver as a safe haven, and demand for the metal soared.

But the Royal Mint, which purchased silver from miners and traders in order to produce more coins, refused to pay market price for silver; their official price was well below the prevailing market price.

Naturally this led to a shortage of coins.

In fact, the market price for silver became so high that people used to melt down their coins and sell the metal at a profit to silversmiths.

You can see the problem here: English coins were rapidly disappearing from circulation. And those few coins that remained had been clipped down to a hilariously diminutive size.

Naturally it took decades for the government to finally get serious-- just after King William III suffered a massive defeat in 1690 at the hands of the French navy, and he was desperate to rebuild his military.

But England was heavily in debt. And they had almost no savings, no credit, and very little coin.

The government tried a host of ideas to come up with quick cash, including forced loans, lotteries, and paper money. But the primary debate was about the coinage: how could they fix this problem?

Many people were in favor of a major devaluation, essentially slashing the value of the coins until they were in balance with the actual metal content.  Others pushed for a recoinage, i.e. calling in all the old coins and replacing them with new ones based on the better technology that had emerged.

Some of England’s brightest minds stepped forward to offer their advice, including the philosopher John Locke.

Locke was adamantly opposed to a devaluation, stating that “it will weaken, if not totally destroy, the public faith”.

And Locke had plenty of support-- most notably from his good friend Isaac Newton.

Newton was legendary in England, practically a living god. And with he and Locke both on the same page against the devaluation, Parliament authorized the “Great Recoinage” of 1696.

And to really drive the point home, Isaac Newton himself was made Warden of the Royal Mint, on the 2 May 1696, to personally oversee the program.

Now, the actual central bank, i.e. the Bank of England, had just been created only a few months before, so they didn’t really have much power yet.

This essentially made Isaac Newton the de facto central banker of England, since he was in control of the nation’s money supply.

Newton applied his unparalleled genius to his new post with admirable dedication.

He personally tracked down, interrogated, and prosecuted counterfeiters. And he was a also man of impeccable integrity, having once refused a bribe of £6,000, worth roughly $1MM today.

But, candidly speaking, he sucked as a central banker.

Newton threw himself into studying international markets and metals prices, and routinely reported back to Parliament with recommendations about adjusting the value of the coins.

In a 1701 report, for example, he meticulously calculated what the value of English gold and silver coins should be, based on current market prices in Spain and France.

Newton may have been right at the time. But almost immediately after his report was published, the market prices changed. Market prices always change.

And he never figured out that no man, not even Isaac Newton himself, was smart enough to regulate the price and value of money.

The Great Recoinage ended up being a total disaster. The Mint recalled all the old coins, but replaced them with new coins based on equivalent silver weight.

In other words, people received the same amount of silver from the Mint that they had turned in. But since the silver content in the new coins was higher, they received fewer coins.

This made people feel like they were being robbed… and riots quickly broke out across England.

Plus, markets plummeted. And a massive deflationary spiral caused widespread economic devastation.

Now, it’s not like these consequences were Newton’s fault. He was incredibly well-meaning and clearly did his best.

But even the smartest man in the world at the time-- one of the greatest intellectual giants in human history-- couldn’t manage to properly regulate the price/value of money, or to prevent economic disaster.

This is a really important lesson.

For some bizarre reason, we are made to have unshakable confidence in today’s central bankers. No one questions their wisdom and infallibility, and it’s inconceivable that they would ever make the wrong call.

This is ludicrous. People make mistakes. Even Isaac Newton. Even modern central bankers.

One needn’t look any farther than last week’s remarks by the Federal Reserve, in which the Chairman told the American people:

“Inflation is much too high. . . and we’re moving expeditiously to bring it down. We have both the tools we need and the resolve it will take to restore price stability.”

Yet only moments later he ruled out the possibility of increasing interest rates by more than 0.5% at a time.

So basically they’ll do whatever it takes to fight inflation… except for what it may actually take to fight inflation.

That’s like the Detroit Lions saying they’ll do whatever it takes to win… except for making any changes to their roster, coaching staff, or front office management. Good luck with that.

The Fed seems to have consulted the recently departed Meatloaf for inspiration: “And I would do anything to reduce inflation… but I won’t. do. That.”

Fed officials are walking the ultimate tightrope. Inflation is at a multi-decade high. Government debts and deficit spending has never been higher. Supply chains are in chaos. Covid is still a thing after 2+ years, forcing major world economies to shut down. There’s a war raging, conflict is rising.

Oh, and the US economy shrank last quarter.

To presume they can simply wave a magic wand and engineer widespread prosperity forever and ever until the end of time is a little bit foolish.

Even Isaac Newton couldn’t get it right. You might want to have a Plan B… just in case the Fed doesn’t get it right either.

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

https://www.sovereignman.com/trends/even-the-smartest-man-in-the-world-was-a-terrible-central-banker-35339/

If You Don’t Want an Emperor, Stop Giving Him Your Money

If You Don’t Want an Emperor, Stop Giving Him Your Money

Notes From The Field By Simon Black May 4, 2022

Elon Musk may be the richest man in the world, but he has a long way to go before he catches up with Jakob “The Rich” Fugger — a powerful merchant banker who lived in the 1500s.

Fugger’s name rhymes with ‘cougar’, not ‘bugger’. Fugger was born into a prominent family in the Free City of Augsburg, part of the Holy Roman Empire. But he took his family fortune to unimaginable heights because he understood a critical concept: POWER. Most of Fugger’s competition at the time — traders and financiers across Europe — focused on accumulating wealth. Fugger focused on accumulating power.

He routinely financed the conquests of both kings and clergy; in exchange, they owed him. And Fugger knew how to call in a favor.

In 1488, for example, he used his influence over Archduke Sigismund of Austria to take control of the vast Schwaz silver mines, giving Fugger almost total control of the silver trade. He later used his influence to dominate other industries — copper, silks, furs, spices, citrus, munitions, and more.

And every time Fugger took control of an industry, he would raise prices sky-high. It contributed to a widespread inflation that had never before been seen in Europe.

Fugger used his money to completely reshape European society. He believed in a form of capitalism where big businesses would be protected by government. And he weaponized his wealth to make his vision a reality.

Fugger financed the election of Charles V to become Holy Roman Emperor, which essentially put Europe’s most powerful politician in his pocket.

Even the Pope was beholden to Fugger, who used his influence with the church to override ecclesiastical limitations on interest-bearing loans, and to rewrite regulations governing commerce and trade.

At the peak of his wealth and power, Fugger had amassed a fortune exceeding TWO PERCENT of Europe’s entire GDP at the time.

The equivalent today would be about $500 billion — more than double what Elon Musk is worth.

Moreover, Fugger’s average annual investment return exceeded FIFTY PERCENT, ranking him one of the most successful investors of all time — just behind Nancy Pelosi.

But his lasting impact was the way that he fundamentally reshaped capitalism by modernizing the perverse, symbiotic relationship between politicians and private monopolies.

Today, we politely refer to this as a “public-private partnership”. And the best example of this in our modern times is the case of BlackRock, and its CEO Larry Fink.

Fink’s net worth, compared to Fugger, is a paltry $1 billion. But his firm, BlackRock, controls more than TEN TRILLION in assets.

Incredibly, much of this is through the company’s various exchange traded funds, like the iShares Core S&P 500 ETF; this single fund has $300 billion under management.

Like Fugger, Fink has been aiming to reshape capitalism as we know it. His vision is something called ‘Stakeholder Capitalism’, or ‘ESG Capitalism’, which stands for Environmental, Social, Governance.

In short, Fink’s vision is ‘woke capitalism’, where companies prioritize social justice and the progressive agenda over creating shareholder value and delighting their customers.

This is the sort of nonsense thinking that has big corporations frantically trying to nominate a blind, perigender, pansexual Native American to their Boards of Directors… or force company CEOs to speak out against proposed legislation that no one has even read.

(Naturally, Chinese and Islamic companies are exempt from ESG requirements, because we have to respect their cultures.)

Fink works very closely with Klaus Schwab at the World Economic Forum, whose book The Great Reset details the new way of life that he, Fink, and their ilk have imagined for the rest of us.

The World Economic Forum, mind you, is the same organization that thinks we should all eat insects and weeds, because it’s good for the environment. They love Covid lockdowns, vaccine mandates, propaganda & censorship, and authoritarian governments.

This is a classic case of what I called the Tyranny of the Minority — a handful of people who believe they have the right to dictate how the rest of us should live.

Sadly, Fink actually has the resources to pull it off… and much of it is thanks to us.

BlackRock’s funds collectively contain trillions of dollars of capital. But it’s not BlackRock’s money. It’s your money.

Your company’s 401(k), for example, may be invested with BlackRock. Your personal investment portfolio may contain a few BlackRock ETFs.

Essentially, BlackRock has pooled everyone else’s money and taken it all under their management. They then invest this money in stock and bond markets around the world. And that gives them extraordinary influence.

BlackRock’s equity funds are typically in the top 5 shareholders of every major company on the planet.

For example, BlackRock is the #2 largest shareholder in Apple, Google, Exxon-Mobil, JP Morgan, and more, which means that Fink can practically hand pick these companies’ Boards of Directors.

The Boards, in other words, work for Fink. He has the power to pressure them into accepting his woke ESG capitalism requirements. And if they refuse, he can have them fired.

Reminder — Fink doesn’t have this power because of his own money. He has this power because he’s in control of OUR money. And he isn’t afraid to use it.

Jakob ‘The Rich’ Fugger ruled Europe from behind the scenes. By comparison, Fink’s power has become so vast today that Charlie Munger (Warren Buffett’s business partner at Berkshire Hathaway) called him an emperor:

“We have a new bunch of emperors, and they’re people who vote with the shares of their index funds… and I’m not sure I want [Fink] to be my emperor.”

There’s a pretty simple fix to this: If you don’t want Fink to be your Emperor, stop giving your money to these giant Wall Street firms. There are literally thousands of other small, passive index funds to choose from.

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

https://www.sovereignman.com/trends/if-you-dont-want-an-emperor-stop-giving-him-your-money-35315/

We May Be Entering The ‘Down Phase’ Of The Economic Cycle

We May Be Entering The ‘Down Phase’ Of The Economic Cycle

Notes From the Field By Simon Black  April 18, 2022

On June 29, 1914, Emperor Franz Joseph of Austria-Hungary sat quietly while his ‘experts’ debated what to do next. The Emperor’s son and heir, Archduke Franz Ferdinand, had just been assassinated the previous morning in Sarajevo. And there was still much they didn’t know. 

Some of the Emperor’s ministers suggested they demand a criminal investigation into the assassination in order to gather all the facts. Others recommended immediate military mobilization. Other advisors argued that Austria-Hungary should seek support from its allies, and others suggested they deliver a firm ultimatum.

But the 84-year old Emperor was too distraught to engage in the conversation, so most of the decision-making was left to the ‘experts’.

These were men with decades of experience in diplomacy and foreign relations. Yet most of them were making terrible assumptions and gross miscalculations.

Similar misguided conversations were taking place across Europe, as high-ranking government officials in Britain, France, Russia, and Germany debated how to respond to the assassination.

Some were obsessed with appearing strong, while others fretted about public opinion. And nearly every action they took escalated the crisis further. Experts always know best...

By the middle of July these ‘experts’ had engineered an unavoidable conflict, and war finally broke out on July 28, 1914.

The war itself would last for more than four years; and it was one of the most brutal and hellish ever waged.

But more broadly, the war marked the beginning of a multi-decade era of conflict, suffering, and hardship.

Over the next 30+ years, the world saw the rapid spread of Socialism. Hyperinflation in the Weimar Republic. The rise of Nazism and outbreak of the second war. And the Great Depression-- where ‘experts’ once again did all the wrong things and made a bad situation much worse.

(Even the Federal Reserve acknowledges this; former Fed chairman Ben Bernanke once remarked in a 2002 speech, “Regarding the Great Depression, you’re right. We did it. We’re very sorry.”)

Obviously it wasn’t all chaos; there were ups and downs throughout this period. In the late 1920s, for example, many major economies were booming.

But in general, the period of history from the start of World War I in 1914, until the end of World War II in 1944, was dominated by painful economic conditions.

And then everything started to change. Once World War II was finally over, the US entered a new multi-decade period-- but one that was characterized by growth and prosperity instead of economic pain.

From 1945 through the late 1960s, the US economy grew quickly. The stock market boomed. Inflation was low. Unemployment was low. Interest rates were low.

1952 is a great example. By December of that year, the S&P 500 had posted an annual gain of roughly 12%. The US economy had grown 6.9%. Inflation was just 0.90%. Unemployment was 2.7%. And mortgage rates hovered around 4%.  Those are pretty fantastic economic conditions, and they are indicative of the era.

Certainly there were periods of crisis and instability-- the social chaos of the 1960s, wars in Korea and Vietnam, etc. But, in general, prosperity abounded for roughly 25 years.

Then the 1970s came, and everything changed again. Inflation surged and quickly became stagflation. There were energy shortages. Unemployment soared.

And the stock market performed dismally. In fact, when adjusted for inflation, the S&P 500 lost 42% during the 1970s, and wouldn’t surpass its 1968 record high until 1994!

Even into the 1980s when the US economy started growing again, unemployment remained elevated above 7%. And mortgage rates soared as high as 18%.

It was a difficult time to say the least. But then conditions reversed again.

1995 was the start of the Dot-com boom, and another multi-decade era. Just like 1945-1970, this one was characterized by low inflation, low unemployment, low interest rates, and strong stock market returns.

Obviously there were plenty of ups and downs from this period as well-- including the dot-com bust, 9/11, and the Global Financial Crisis in 2008.

But in general the period from 1995 until ~2020 enjoyed a tremendous amount of good fortune.

What I’m essentially describing here is how economic prosperity tends to move in very long-term cycles. They usually last for decades.

Obviously during each phase in the cycle there are variations; 1914 through 1945 was a period of general suffering, for example, even though the economy boomed in the 1920s.

But overall these cycles alternate between prosperity and hardship, up then down.

We’ve been in the ‘up’ phase of the cycle for several decades. And I believe we are transitioning to the ‘down’ phase.

Just like in 1914, many of our ‘experts’ today have engineered an inescapable situation.

They may be well-meaning, but the confluence of their devastating public health policies, monetary policy, trade policy, anti-Capitalist economic policies, etc. has driven inflation to record levels.

They want us to believe they have everything under control. They want us to believe that if we just sit tight, then they’ll fix it and everything will go back to normal.

This is a total farce. Many key inflation drivers (including conflict, long-term demographic trends, and major shifts in global manufacturing) are chronic issues that aren’t going away anytime soon.

And with inflation lingering, people will start tightening their belts. Many have already begun to do so.

This means that discretionary consumption will decline, which makes recession inevitable. Combined with already high inflation, this ultimately means stagflation.

More broadly, it may signal a new economic era-- the down phase in the cycle-- characterized by tougher conditions: higher interest rates, higher inflation, and slower growth.

These ‘down’ phases are a natural and critical part of the economic life cycle. Boom times cannot last forever. They never have.

Just as mother nature clears its own overgrowth, economies require a natural correction of their excesses. That’s what a down phase really is.

So don’t panic-- the world isn’t coming to an end. And there will always be opportunities to prosper for intelligent, independent-minded people.

In the last down cycle during the 1970s, for example, some of the today’s most formidable companies were founded, including Apple and Microsoft. Employees and investors alike minted millions. The next down phase will be no different.

The important thing for now is to recognize that a major shift may be upon us-- and it could very well last for years to come.

Simon Black,  Founder, SovereignMan.com

https://www.sovereignman.com/investing/we-may-be-entering-the-down-phase-of-the-economic-cycle-35168/

Yes, It Is Possible To Fix This. But Don’t Hold Your Breath

Yes, It Is Possible To Fix This. But Don’t Hold Your Breath

Notes From The Field By Simon Black  April 11, 2022

On the morning of September 2, 1715, Philippe d’Orleans prepared for an impossible task.  King Louis XIV had just died the day before after a painful struggle with gangrene, leaving his five-year old great grandson to inherit the throne.  Philippe had been appointed regent the week prior, meaning that he would rule France until the boy king came of age and could take the throne.

But Philippe knew the situation in France was grim. 

Louis XIV’s lavish spending and penchant for endless warfare had left the kingdom completely bankrupt; the French national debt was so large that its interest payments alone exceeded the government’s annual tax revenue.

Taxes were already high, stifling economic development. Inflation was rising. Food was in short supply. Corruption was rampant. Social divisions were raging.

Most of all, people were angry. The King that had ruled over them for seven decades had ruined their lives, and there was hardly a single household in France that hadn’t lost a loved one to one of Louis XIV’s wars.

They hated him for it. Most French peasants celebrated his death, and some spat at his coffin as the funeral procession passed.

Philippe wasted no time, and he began making widespread reforms immediately.

He started with dramatic cuts in government spending, including pruning the new King’s personal budget to almost nothing. He vastly reduced the size of the French army, and he scaled back public welfare.

He also eliminated many taxes, cut the ones that remained, and greatly simplified the process of paying them.

Philippe fired thousands of government bureaucrats who were getting rich by clogging up the system, and he took steps to stamp out corruption.

He sought peace with France’s former adversaries, traded with everyone, and established new relations with rising powers (like the Russian Empire).

He reversed Louis XIV’s policies of censorship, and he advocated for national unity and tolerance.

It wasn’t just empty words; Philippe released prisoners from the Bastille who had been arrested of political crimes. And he even set a personal example by graciously smiling when he was occasionally lampooned in the press-- something that would have been unthinkable only a few years before.

Philippe’s reforms were far from perfect, and there were a number of terrible ideas (like the ill-fated Mississippi Company bubble of 1720).

But overall the reforms worked. And he didn’t even need to do anything complicated. Rather, his primary strategy was to remove as much government as possible, avoid conflict, and let freedom prevail.

Sadly, though, the prosperity didn’t last. Philippe died in 1723, just a few months after the boy king was crowned Louis XV.

At first the new ministers kept up Philippe’s policies. But in time, France returned to the old ways of corruption, intolerance, persecution, and war… all of which ultimately resulted in a bloody revolution in 1789.

Philippe’s story does show, however, that it’s possible to fix even the worst economic and public finance disasters, as long as the government gets out of the way and stops making the problem worse.

It would be nice to see that approach today in the West, and especially the US. But leadership can’t seem to stop making things worse.

First off, they’re addicted to deficits; even though the US national debt rocketed past $30 TRILLION this year, the government still hasn’t found the motivation to balance the budget and live within its means.

The White House’s most recent budget proposal for next year shows a deficit of “only” $1.8 trillion. And they’re actually bragging about this like it’s a major accomplishment.

And it was only a few months ago that the most senior officials in the federal government, including the Speaker of the House and the President himself, insisted that their multi-trillion dollar ‘Build Back Better’ bill would “cost nothing”.

They even went on TV multiple times to make this ridiculous assertion, almost as if they wanted to leave no doubt of their economic illiteracy.

They clearly have zero understanding of the problems; they blame inflation, for example on “corporate greed”, and have decided to ‘fix’ inflation by having powerful government agencies harass the private sector.

They actually believe they’re fixing high oil prices by depleting the Strategic Petroleum Reserve, as if dipping into your emergency savings is a credible alternative to new production.

And they see every problem as an opportunity to create more regulations.

So, contrary to Philippe d’Orleans, they clearly have no intention of getting out of the way. Quite the opposite-- they’re taking a bad situation and making it much worse. And it’s time to get rational about this.

For starters, inflation will likely continue to rise.

After all, we cannot expect them to fix a problem that (a) they do not understand, and (b) they keep making worse.

And most likely it’s only a matter of time before inflation, along with global supply chain madness, pushes much of the world into recession.

They’re not going to be able to fix that either. They don’t have the tools.

They’re already $30 trillion in debt with a $1.8 trillion deficit in their supposedly ‘scaled-back’ budget. Fighting a recession would mean the government dumps trillions more into the economy-- money they clearly don’t have.

The Federal Reserve, meanwhile, has few options. Interest rates are already near zero, so they don’t have much room to fight a recession by cutting rates. Besides, any interest rate cut would only risk making inflation worse.

It’s not a great situation. But it is fixable; Philippe d’Orleans showed what could happen if you get out of the way and let freedom prevail. It’s not rocket science:

Stop creating disincentives to work, produce, and trade. Stop creating fanatical regulations. Stop dismantling capitalism in the name of social justice. Stop fomenting conflict. Stop trying to invent new taxes.

Just stop. And let people live their lives.

But it’s doubtful they’ll ever take this approach. And that’s why it’s so critical to have a Plan B.

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

https://www.sovereignman.com/trends/yes-it-is-possible-to-fix-this-but-dont-hold-your-breath-34865/

Five Critical Factors Why Prices Will Stay High For Years

Five Critical Factors Why Prices Will Stay High For Years

Notes From the Field  Simon Black  March 14, 2022

At approximately 9am local time on February 21, 1972, a Boeing 707 airplane dubbed Spirit of ‘76 landed in Shanghai’s Hongqiao airport.  The airplane’s main door opened, and out walked US President Richard Nixon.

The trip shocked the world. There had been no formal communication or diplomatic ties between the US and China for 25 years. And Nixon’s voyage not only normalized relations between the two countries, but it kickstarted decades of worldwide economic growth.

Back then, the US was the richest and most powerful economy in the world. But as a consequence of that prosperity, the US was also a very expensive place to produce. 

US companies were on the lookout for inexpensive, foreign manufacturing hubs where they could cheaply produce their products and sell them back to the US market.

China became that cheap manufacturing hub.

Eventually China was producing just about everything from T-shirts to antibiotics. And because the cost of production was so low in China, consumers around the world benefited.

Combined with cheap oil, a functioning global supply chain, and relative peace and stability, cheap Chinese production helped keep prices low and constrain inflation for decades.

But these trends are rapidly coming to an end.

For starters, China is now an economic superpower; many of its largest cities, in fact, have a per-capita GDP that exceeds the United States and Western Europe.

Wages have increased dramatically in China over the years because of this increase in prosperity, which means that it’s no longer cheap to manufacture most lower-end products there.

A lot of manufacturing has already shifted to cheaper places like Vietnam, Bangladesh, etc. But even those countries are quickly becoming more expensive places to produce. And they don’t have nearly enough capacity to keep up with global manufacturing demand.

Some large companies are starting to bring their manufacturing back home. This is becoming more popular now as global stability wanes.

Plus businesses learned during the COVID-19 lockdowns, and the resulting global supply chain dysfunction, that manufacturing at home is more reliable.

That may be true. But manufacturing in a ‘rich’ country is also a LOT more expensive.

So, regardless of whether a business chooses to manufacture at home or abroad, they’re almost guaranteed to suffer higher production costs. And that means consumers will be paying more.

This trend is a massive reversal from decades of cheap foreign production that kept prices low. But it only scratches the surface of why inflation will likely persist for years to come.

(British economist Charles Goodhart, a former central bank official, describes this phenomenon in his new book The Great Demographic Reversal. It’s definitely worth reading to understand this trend.)

Historic shifts in the labor market will also be a major contributor to inflation. 

For example, there have never been more retirees in the history of the world than there are right now. And their numbers are growing.

According to Federal Reserve data, an additional 1.5 million people in the United States retired early during the first year of the pandemic. There will likely be more to come.

Plus US Labor Department statistics show that millions of other individuals, including young people, abandoned the idea of working altogether because of the pandemic.

Traditionally there’s a steady balance between the number of jobs in the economy, and the number of workers in the labor force. Sometimes there are shocks, like during the Great Recession in 2008, when millions of jobs vanished, practically overnight.

Now the converse has taken place: millions of workers have vanished, practically overnight.

The end result is that there are 11.3 million unfilled jobs in the United States-- a record high-- because so many people simply quit the labor force.

Of course, another key labor trend is that younger workers aren’t interested in most traditional jobs.

Countless teenagers aspire to be Instagram starlets, or to live-stream themselves playing video games for a living. They have little interest in construction, transportation, or manufacturing jobs.

So, in summary, we have former ‘low cost’ manufacturing hubs becoming a lot more expensive. Plus a constrained work force back home that limits production and pushes costs higher.

This is all highly inflationary.

And there’s absolutely nothing the government or central bank can do about it. Gen Z 20-somethings aren’t going to suddenly decide to start working traditional jobs just because the Federal Reserve raises interest rates by 0.25%.

Most likely the politicians will make it much worse-- which is another key factor in future inflation.

Nancy Pelosi stated on Friday that inflation was solely Vladimir Putin’s fault and insisted that their multi-trillion dollar deficit spending is “reducing the national debt” and “not adding to inflation.”

The President, meanwhile, has blamed inflation on “greed”, while the Federal Reserve insists that higher prices are a result of supply chain dysfunction.

Not one of these institutions-- Congress, the White House, or the Fed-- seems capable of looking at their own actions.

The Fed refuses to consider that inflation is due to their dizzying expansion of the US money supply-- the largest since 1943.

Congress refuses to consider that inflation is due to their insane deficit spending-- the largest ever in US history.

And the White House refuses to consider that inflation is due to its fetish for anti-competitive regulations and constant attacks on capitalism.

So, when the three key institutions charged with keeping inflation in check refuse to understand why there’s a problem, it’s hard to imagine they’re going to fix it.

There are plenty of other lingering inflation factors as well; geopolitical conflict is obviously inflationary. COVID-19 continues to be very inflationary. Environmental fanaticism is inflationary.

And just like the challenge of increased manufacturing costs, and labor market demographic trends, these issues cannot be magically fixed by politicians or central bankers.

In essence, policymakers are completely powerless to do anything about inflation.

There’s an irrational hope that inflation will quickly reverse, and prices will return to 2019 levels-- just as soon as Putin leaves Ukraine… and the global supply chain dysfunction works itself out.

But this is wishful thinking.

First, both of those resolutions could take a very long time.

But more importantly, the trends I outlined are much larger and could keep prices elevated for years to come.

So, if your “Plan A” is depending on the government for prosperity and price stability, it’s time to take a hard look at your Plan B.

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

https://www.sovereignman.com/trends/five-critical-factors-why-prices-will-stay-high-for-years-34758/

When Ukraine Was Invaded 700 Years Ago… Another Superpower Was in Decline

When Ukraine Was Invaded 700 Years Ago… Another Superpower Was in Decline

Notes From the Field By Simon Black  February 28, 2022

In the autumn of 1362, on the banks of Syniukha River in eastern Europe, General Algirdas of the Grand Duchy of Lithuania was about to do something that would have been unthinkable only a few decades before. He was going to invade Ukraine and take over the Principality of Kiev.  Kiev at the time was a client state of the Mongolian Empire which had long been the world’s dominant superpower. But Mongolia was in obvious decline.

In the early 1200s under Genghis Khan, everyone in the known world was terrified of the Mongols. No one would have dared to antagonize them.  Genghis’s successors, including his grandson Kublai Khan, continued to wield this immense power into the early 1300s, a century after the empire’s formation.

But then things started to change.

Mongolians became extremely divided; they no longer had a common sense of unity, and bitter disputes broke out over who was Mongolia’s rightful leader.

Furthermore, Mongolia’s legendary tolerance began to fade. The Empire under Genghis had once been a place where all faiths, belief systems, and ideologies could flourish.

But by the early 1300s, Mongolians began choosing sides; some parts of the empire became Muslim, others Buddhist. Others adopted Chinese culture and traditions. And some factions became extremely intolerant of the others.

Mongolia also suffered other serious issues. The Bubonic Plague, which may have originated from within the Mongolian Empire before making its way to Europe, devastated trade and commerce.

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Plus, inflation was raging in the eastern part of the empire, thanks to the astonishing amount of paper money that the Mongolian treasury had been printing. Inflation was so bad, in fact, that even the peasants were starting to revolt.

Mongolia’s problems compounded. And by the mid-1300s, rising powers like Lithuania were no longer intimidated.

That’s why Algirdas led a force of 25,000 men into Ukraine in 1362; he wanted to conquer Kiev, essentially stealing one of Mongolia’s vassal states.

The Mongols tried to stop him. They made threats and sent harsh warnings. They even tried to put up a small fight.

But in the end, Lithuanian forces decisively pushed into Ukraine and took Kiev. More importantly, they made the Mongols look weak.

This was an important moment in history; most people already noticed Mongolia’s decline — the infighting, the intolerance, the inflation.

But it took the Lithuanians invading Mongolia’s vassal state of Kiev — something that would have been unthinkable only a few decades prior — for the world to finally realize that the Mongolian Empire was no longer the dominant superpower.

History is full of similar watershed moments where it becomes obvious that a former superpower has declined. The Suez Crisis in 1956 is another great example; the United Kingdom, formerly the world’s dominant superpower, invaded Egypt.

Yet almost immediately the United States (the rising superpower) threatened the UK with financial sanctions if they did not cease the operation and withdraw from Egypt.

Britain complied and pulled their forces out, marking the end of their dominance in the world… and the beginning of US dominance. I’ve written extensively about the many, obvious signs that US dominance is waning. Last year’s disgraceful, humiliating retreat from Afghanistan was one such sign.

Another sign is the woke fanaticism that has infected the US intelligence and defense community, where many policymakers seem to prioritize diversity and inclusion over national security.

But the most recent sign is Putin’s invasion of Ukraine last week. This would have never happened two decades ago; he would have been too afraid of America’s wrath.

Yet today, Putin feels emboldened. The Brandon Administration spent months threatening Putin, hoping to scare him into backing off.

But like the Grand Duchy of Lithuania back in the 1360s, Putin sees the decline — the infighting, the intolerance, the inflation (not to mention weak leadership) — so he’s no longer intimidated… by either the US or NATO.

It’s also notable that China is the most important voice in this conversation; Putin agreed to peace talks with Ukraine ONLY after Chinese President Xi Jinping urged Putin to do so on Friday.

In other words, the US was powerless to prevent the invasion, while China may be instrumental in ending it. I take no pleasure in this conclusion; Putin is acting like a deranged lunatic, and it’s sad that the risk of provoking America is no longer a suitable deterrent. But facts are facts, and it’s important to remain objective.

Future historians will undoubtedly opine about the end of America’s dominance, and precisely when it happened; they may point to the Afghanistan retreat, or the COVID-19 pandemic in which Faucist bureaucrats took over the nation.

Perhaps they’ll point to the day that the US national debt hit $30 trillion. Or Russia’s invasion of Ukraine. Or they may point to some other event that hasn’t taken place yet. But it should be obvious that the decline is happening. And that’s reason enough to have a Plan B. Remember, a big part of having a Plan B is having the courage to use it… to look at circumstances and say, “OK, Plan B is now Plan A.”

I know people in Ukraine who were still consumed with day-to-day trivialities as late as last Tuesday, the day before the invasion. One woman I know fretted about her expiring gym membership. Now she’s stuck in Kiev with a small child.

These are not stupid people; they’re intelligent, educated individuals who assumed “There’s no way he’s going to invade.” And let’s be honest, most people around the world thought the same, and forgot the lessons of Covid-19: everything can change overnight.

You can have the best Plan B in the world. But it won’t matter if you don’t execute.

There are almost always warning signs. With Covid, we could see western European countries imposing lockdowns. With Ukraine, we could see 100,000+ troops massed on the border. With US dominance, we can see obvious indications of decline.

We’re not talking about obscure risks; the signs are clear. It’s just a question of getting over denial and normalcy bias… because it’s better to be comfortable and early than even a second late.

 PS: If you can see what is happening, and where this is all going, you understand why it is so important to have a Plan B.

https://www.sovereignman.com/trends/when-ukraine-was-invaded-700-years-ago-another-superpower-was-in-decline-34690/

Intellectual Freedom Started With The Elon Musk Of The 1600s

Intellectual Freedom Started With The Elon Musk Of The 1600s

Simon Black Notes From The Field February 22, 2022

If Isaac Newton were alive today, he would almost certainly have over 100 million Twitter followers.  He was something like the Elon Musk of his day– a bit controversial, incredibly innovative, and always the topic of conversation. People were obsessed with Newton’s every word and action.  When news spread, for example, that Isaac Newton had invested in the famous South Sea Company, investors clamored to buy the stock… simply because Newton was in it. Sort of like Dogecoin.

The South Sea Company eventually collapsed after barely generating a penny in revenue; it still ranks as one of the biggest stock bubbles of all time, and Newton himself lost a fortune. But the obsession with Newton never stopped. People even paid attention to things that he didn’t say to infer what he might be thinking.

 In some of his earlier works, for example, Newton did not explicitly profess his faith in either the Catholic religion or the Church of England. Of course he didn’t explicitly state that the didn’t adhere to religious faith either.  But people took the omission as a sign that Newton was an atheist. (He wasn’t.)

Bear in mind that England in the 1600s was a highly puritan society; “atheist” was one of the worst things you could call a human being back then.

Yet with so many people assuming that Newton was an atheist, there was a sudden surge of interest in alternative spirituality. It became cool to question mainstream religious beliefs. And a number of philosophers emerged from this new trend that Newton never intended to create.

One of those was Charles Blount, who argued in 1679 that organized religion was not the will of the divine, but the product of human beings seeking wealth and power over others.

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He described clergymen as having a “vain opinion of their great knowledge” and that they “pretended to know all things which were done in Heaven and Earth.”

And he considered most stories of the Bible to be contrived works of men that were “irrational and repugnant”.

Primarily Blount was merely arguing for intellectual independence. He didn’t care what people believed, so long as they reached their own conclusions.

Blount himself was deeply spiritual. Yet he was instantly branded an atheist.

Blount pushed back. He argued that ‘atheist’ was just a word used to defame someone with different ideas.

He compared ‘atheist’ to how ancient Romans used the term ‘barbarian’ to describe Germanic tribes as feral savages, even though many of the barbarian kingdoms were extremely cultured and civilized.

But Blount was effectively canceled. His books were censored, and he was financially and socially ruined. He died by suicide in 1693.

Another writer named John Toland took on the fight for intellectual independence, and published his first book in 1696, three years after Blount’s death.

Toland argued that human beings should not have blind faith in anything without first engaging in discussion, exploration, and intellectual discourse.

Obviously this infuriated the authorities; Toland was immediately labeled an atheist, and his books were condemned.

In Dublin, the Irish parliament went so far as to hold a public burning of Toland’s works on the steps of the capital on September 18, 1697.

Several governments ordered Toland’s arrest. His ideas were simply too dangerous, and they couldn’t have an evil atheist on the loose.

Toland managed to escape to Hanover and remained in the protective care of the much more enlightened Queen of Prussia.

This is still the case today; if one society has totally lost its mind, there’s most likely another one where you can feel safe, free, and unconstrained. Hanover was Toland’s Plan B.

Toland continued his work while in Hanover, secure from all the crazies who wished him harm. He became a staunch advocate for freedom of thought, later writing:

“Let all men freely speak what they think, without being ever branded or punished. . . [only] then you are sure to hear the whole truth.”

It’s notable that Toland is the first person to coin the term “free thinker”, and he lived during an era when being one was a terrible crime.

While in Hanover, Toland was subjected to endless scorn from “experts” back in England; more than FIFTY books were written criticizing his work and demeaning his character as an evil atheist.

Obviously Toland wasn’t an atheist either. Like Charles Blount before him, he simply had a different viewpoint and believed wholeheartedly in everyone’s right to intellectual freedom.

But that was more than enough for the ‘experts’ to censor him.

Another major development during this era was the authorities’ attempts to control information.

At this point in history, the printing press was having an extraordinary impact on social development; new ideas could be published and widely circulated at a speed that had never been imaginable.

Many politicians and religious leaders wanted to restrict this technology in order to prevent the spread of misinformation.

The Archdeacon of Canterbury complained in the late 1600s, for example, that the printing press was making it too easy for the “ignorant and unlearned… plebeians and mechanics… to demonstrate out of The Leviathan that there is no God.”

They didn’t like the ideas that were spreading… so their solution was to control the spread.

Now, if what I’ve written above sounds vaguely similar to our modern world, here’s the good news:

Freedom prevailed. Cancel culture lost.

It took time. But eventually the critics and the censors and ‘experts’ (who were always wrong about everything) faded into obscurity, paving the way for the Age of Enlightenment in which scientific achievement and freedom of thought flourished like never before.

This is true about all forms of totalitarianism, whether you’re talking about the Soviet Union or extreme ideological intolerance. They always fail. Freedom wins.

But it’s a bumpy road to get there… which is why it’s always worth having a Plan B.

PS: Alternative residency or citizenship generally forms the backbone of any robust Plan B. But there are WAY more things to consider. That’s why we created our 31-page Ultimate Plan B report to help you get to grips with this topic, and you can download the full, unabridged report here - 100% FREE.

https://www.sovereignman.com/international-diversification-strategies/intellectual-freedom-started-with-the-elon-musk-of-the-1600s-34676/

One Of The Best Pieces Of Advice I Ever Heard

One Of The Best Pieces Of Advice I Ever Heard

Notes From The Field By Simon Black February 15, 2022

Thursday, November 29, 2001 felt like any other day in Argentina. People woke up, went to work, and lived their lives. There was nothing really unusual about that day, everything seemed fine. Sure, Argentina’s economy had been in a severe recession for three years, so life was difficult. But it was still normal.  By the end of the day, however, a major bank run had started in the country, and life changed forever.

For years, up to that point, Argentina had pegged its currency at a 1:1 rate to the US dollar; this meant that anyone holding local currency could freely convert their Argentine pesos to US dollars.  The government’s goal behind this scheme was to reign in inflation and demonstrate that their currency was strong. And it worked for a few years.

But eventually the convertibility became unsustainable. As more and more businesses and individuals converted their pesos into dollars, the government started running out of dollars.

So they went into debt.

Argentina’s government borrowed a mountain of US dollars from foreign investors, solely to maintain this artificial exchange rate. Nearly every dollar they borrowed was almost immediately exchanged for pesos, forcing the government to borrow even more dollars.

By November 2001 the situation reached its crisis moment; large depositors became spooked that the heavily indebted government was about to break the unsustainable exchange rate and devalue the peso. So they started withdrawing their money and converting into dollars.

Panic quickly set in. The next day, Friday November 30th, everyone in the country was rushing to get their money out and convert to dollars.

Then it happened: the next morning, on Saturday December 1st, the government announced that they were freezing every bank account in the country in order to stop the panic.

Needless to say the bank freeze had the opposite effect. People went out into the streets to riot like never before. Workers went on strike. Looting and crime rates soared. Grocery store shelves emptied out.

The government quickly deployed federal forces to quell violence and restore order, but the ‘mostly peaceful’ protests continued.

By December 20th the situation was so untenable that the President resigned from office and was forced to escape the capital by helicopter.

The new President almost immediately defaulted on Argentina’s $132 billion national debt, and then devalued peso.

The whole episode took less than five weeks-- from November 29, when everything still felt ‘normal’, to early January 2002 when they had blood in the streets, looting, empty grocery shelves, frozen bank accounts, debt default, and a currency crisis.

My friend Marco was there for it. Originally from Argentina, Marco was studying at Harvard at the time, but he flew back to Buenos Aires to help his family.

He once told me a story about how he went with his father to the bank in December 2001, after the national freeze. Marco’s dad was holding his life’s savings in physical cash US dollars inside a safety deposit box at the bank.

They had to bribe a guard to let them in and access the box; Marco and his dad then stuffed bricks of cash down their pants, then escaped by making their way past the violent mob outside.

It’s not a situation anyone ever expects to find themselves in. Again, it had only been a few days prior that everything still felt normal. But then the unthinkable happened.

This shouldn’t be so far-fetched anymore. The last few years should have taught all of us that absolutely anything can happen. And just because something hasn’t happened yet doesn’t mean that it won’t happen.

Marco recently told me the best piece of advice his dad ever gave him. He said, “Son, learn English… and know how to swim. Because by the time you’re going to really need those skills, it will be too late.”

That’s incredible advice. But I would add to that list-- Have a Plan B! Because by the time you need one, it will be too late.

Marco’s father did have a Plan B; he was smart enough to realize that the exchange rate wouldn’t last, and that the government would freeze everyone’s bank account. So he held his savings in US dollar cash.

The flaw, of course, was that the money was still held inside of a bank building, in a safety deposit box. They were lucky to have been able to bribe their way into the bank.

A great Plan B covers a lot of ground. It ensures that, no matter what happens or doesn’t happen next, you’ll be in a position of strength. Critically-- a Plan B is NOT the same as having a bunker mentality.

I know there are a lot of people who are deeply concerned about the risks in the world and the astonishing erosion of individual liberty. And it’s natural that stressing out over those risks can prompt an emotional reaction, often resulting in a bunker mentality where people feel like they need to prepare for the end of the world.

The emotional response is understandable. But, rationally, the world is not coming to an end. And when you have a bunker mentality, you end up spending a lot of time, money, and energy wallowing in negativity and preparing for a very specific scenario that is extremely unlikely.

A bunker mentality is like having a REALLY expensive insurance policy on your home that will pay you out $1 BILLION… but only if your home gets struck by lightening.

Sure, if your house is struck by lightening you’ll clean up. But that specific insurance policy costs you a lot of money and misses 99.99999% of other potential risks.

A great Plan B, on the other hand, enables you to go on living your life with a lot more confidence that your risk exposure is greatly reduced across the board.

For example, if you’re concerned what our public health dictators will do the next time a new virus pops up, you might consider having a second residency in a country that’s more respectful to individual freedom. (You could even have a third, fourth, fifth, etc. residency to increase your options.)

If you’re concerned about the privacy, control, and censorship from Big Tech companies, you can stop using them. There are dozens of different options to set up your digital life in a way that reduces or eliminates Big Tech’s dominance over you.

And sure, if you’re concerned about thinning grocery store shelves and ongoing supply chain dysfunction, it doesn’t hurt to have some extra nonperishable food and water at home. Or even a small generator. But if those risks never really play out, you won’t be worse off for having taken those steps.

If the supply chain magically clears up, you won’t be worse off for having some extra food in your pantry, or tending a small garden. If the Big Tech companies suddenly embrace Free Speech, you won’t be worse off securing your data from them.

And you’ll hardly be worse off having another option where you and your family have the right to live, work, and visit whenever you want.

That’s the key difference in what makes a great Plan B: you’re not planning for the end of the world, or even a specific outcome. It’s about taking a rational view of obvious risks, and finding sensible, cost-effective ways to mitigate them.

And it’s definitely something you want to have as soon as possible. Because, just like knowing how to swim, by the time you need it, it will be too late.

Simon Black, Founder, SovereignMan.com

https://www.sovereignman.com/trends/one-of-the-best-pieces-of-advice-i-ever-heard-34643/

Another Obvious Reason To Hold Crypto

Another Obvious Reason To Hold Crypto

Notes From The Field  By Simon Black

On Monday March 23rd in the year 1668, just one day after Easter Sunday, a group of commoners in the Poplar neighborhood of East London descended upon a local brothel and practically demolished it. The next day, on Tuesday the 24th, thousands of men moved in large groups all over London tearing down every brothel they came across.  By Wednesday, one report estimated that as many as 40,000 ‘mostly peaceful’ protesters had organized into formal regiments, marching through town demolishing brothels.

These men were angry. They had reached their breaking points with the English government and King Charles II, who had issued a royal proclamation outlawing private gatherings for religious worship.

Specifically the King’s order made it illegal for more than five people to congregate and pray outside of the government’s official Church of England; he called any such private gatherings “dangerous” and “seditious”.

So either you submitted to the government’s religious mandates, or you were a criminal.

What really incensed people was that, while Charles II believed independent thinking and spiritual beliefs were immoral, he had absolutely no problem with prostitution. In fact many brothels throughout London enjoyed royal support as the King himself was an infamous womanizer.

So the King felt entitled to enjoy life’s pleasures as he saw fit. But he was not willing to give people the right to make their own personal decisions.

Thousands of people finally reached their breaking points in March 1668, and they specifically attacked brothels to highlight the King’s absurd double standard and to demand an end to the government’s mandates.

It’s worth noting that the rioters only destroyed brothels; there are scant reports of any other property damage, or protesters looting neighborhood grain stores and ye olde tailor shoppes.

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Initially the King did nothing to quell the riots, probably assuming the protesters were a ‘small fringe minority’ with ‘unacceptable views’.

But by the middle of the week with brothels across the city destroyed, the King finally took action to defend his precious concubines, and he dispatched a large number of troops to crush the rioters.

Several protest leaders were arrested and charged with incredibly dubious crimes, including high treason. In effect, the prosecutors were saying that an attack on prostitution was equivalent to an attack on the King himself…

And four of the protest leaders were hanged, drawn, and quartered– the standard punishment for high treason. Just to be clear what this means, the condemned were first dragged behind horses to the place of their execution, then hung almost to the point of death. **** **** **** **** **** **** **** **** **** **** **** **** then their guts were sliced open and removed, and then they were beheaded.

Their headless, lifeless, emasculated corpses were then torn into four pieces each, the remains of which were displayed in prominent locations as a warning to other potential thought criminals.

Now, I doubt the protest leaders of today’s “Freedom Convoy” in Canada will suffer precisely the same fate. But the similarities between the two movements are certainly interesting.

I’m sure you’ve heard about this by now, but as a courtesy to readers who may come across this article in the distant future– a large group of protesters has taken over Ottawa, the capital city of Canada, in protest over the government’s COVID-19 mandates.

It started with truck drivers who thought the vaccine mandates were absolutely absurd; we’re talking about people who sit in a truck by themselves all day, every day. So the vaccine mandate seems to be forcing these truck drivers to protect themselves… from themselves. It’s genius.

Thousands of truck drivers hit their breaking point and staged a convoy last month to drive to Ottawa in protest of the mandates. Tens of thousands of people joined in, and the protest has become a full-blown movement against government restrictions.

Naturally the media has slammed protesters as White Supremacists and insurrectionists; bear in mind, that insurrection means ‘high treason’.

So just in the same way that tearing down a brothel was an attack against the King in 1668, driving a truck to Ottawa is an attack against the government in 2022.

Canada’s government has pulled out all the stops to put an end to this. Ottawa’s mayor declared a state of emergency and requested thousands of additional police officers to smash the protests.

Honking has been outlawed in the city. Police are now arresting people who bring fuel to truck drivers… so apparently it’s now illegal in Canada to possess and give away gasoline.

Remember, we’re talking about a place that is supposed to be one of the freest countries in the world.

But the biggest red flag comes from Big Tech.

Supporters of the Freedom Convoy donated nearly $10 million over the past few weeks via the California-based crowdfunding platform GoFundMe, to help pay for the protesters’ food and fuel.

But GoFundMe doesn’t like the Freedom Convoy. So they unilaterally decided to terminate the movement’s funding campaign.

GoFundMe initially stated that they would redistribute the donations to “credible and established charities” (in their sole discretion), unless donors went through a special process to apply for a refund.

After an online revolt, the company then changed its tune and decided to refund all donations.

But the problem remains– another Big Tech company is force-feeding its political agenda to the world and deplatforming anyone it disagrees with.

We’ve already seen this across social media with Google, YouTube, Twitter, Facebook, etc.

And we’ve also seen other instances of financial deplatforming; banks, credit card processors, and online payment platforms (like PayPal) have closed accounts and terminated relationships with customers who don’t conform to the established political views.

This is yet another obvious reason to hold at least a portion of your savings in cryptocurrency.

As long as your money is controlled by a centralized third party, whether it’s a tech platform like GoFundMe, or a giant financial institution, you don’t really have control over your money.

They can cancel you, and even freeze your funds, whenever they don’t like the way you think.

You don’t have to be guilty of a crime. You don’t have to engage in unethical behavior. You don’t have to violate a single rule.

In order to be canceled, you just have to have an independent opinion. Thoughtcrime is more than enough to be deplatformed, even by financial institutions.

But crypto is different. As long as you’re not using a centralized institution like Coinbase, you can retain 100% control of your crypto assets.

And it’s not 2012 anymore when Bitcoin was incredibly complicated and it was the only game in town.

Owning, buying, and storing crypto is easier than ever. And there are literally thousands of choices, including many ‘stablecoins’ whose values do not fluctuate.

Bottom line, if you’re interested in having true freedom and control over your finances, it’s worth considering to have at least a portion of your savings in crypto.

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

https://www.sovereignman.com/international-diversification-strategies/another-obvious-reason-to-hold-crypto-34563/