Do You Hear Alarm Bells Ringing? Neither Do I. And That’s A Huge Problem.

Do You Hear Alarm Bells Ringing? Neither Do I. And That’s A Huge Problem.

Notes From the Field By Simon Black  January 15, 2024

Do you hear alarm bells ringing? Neither do I. And that’s a huge problem.

It’s clear that just about everyone is ignoring what should be the biggest news of the day… an ominous milestone that may just signify the point of no return. I’ll explain--

Recent data published by the Congressional Budget Office show that, last year, “Discretionary Spending” in the Land of the Free totaled $1.7 trillion dollars.

Remember, “Discretionary Spending” is one of the three broad categories of federal spending; the other two are interest on the debt and mandatory spending.

Interest on the debt and mandatory spending (which includes programs like Social Security and Medicare) are like your monthly mortgage payment-- they get sucked out of the Treasury’s Department’s bank account every month. Congress doesn’t even debate or discuss those categories.

All of the haggling and bickering and politicking in Congress is purely over discretionary spending. And it includes almost everything else we think of as ‘government’, i.e. military, national parks, homeland security, embassies around the world, etc.

So, here’s what’s remarkable:

Again, discretionary spending totaled $1.7 trillion last year-- which includes US military expenditures.

However, the other spending categories-- mandatory spending (Social Security, Medicare, etc.) and interest on the debt-- were so vast that the federal government still had an enormous deficit for the year.

How enormous? $1.7 trillion enormous.

Look at those numbers again: Discretionary spending for the year was $1.7 trillion. The fiscal deficit for the year was also $1.7 trillion.

Conclusion? The government needed to eliminate ALL discretionary spending last year-- including the military-- in order to balance the budget.

Think about that. US spending is now so high that nearly everything we think of as government-- from the United States Marine Corps to Yosemite National Park-- needs to be completely eliminated in order to make ends meet.

Alarm bells should be ringing everywhere. But they’re not. Hardly anyone in power has even noticed.

Now, the US government has obviously been running huge deficits for decades. But it was rarely this bad.

In Fiscal Year 2018, for example, discretionary spending was $1.3 trillion. But the budget deficit was much less-- about $700 billion. Sure, that was bad. But not like 2023.

Going back even further, to 2007, discretionary spending was about $1 trillion. But the budget deficit was $162 billion that year-- i.e. bad, but manageable.

This problem has clearly become MUCH worse over time. And the government’s own projections show the trend will continue.

White House and Congressional Budget Office estimates forecast that this current fiscal year (FY24) may be slightly better; they’re projecting $1.6 trillion in discretionary spending… but ‘only’ a $1.425 trillion deficit.

But within about six years, the federal budget deficit will exceed ALL discretionary spending… every year.

In other words, by 2031, the US could permanently cut all discretionary spending, including the military, and STILL have a budget deficit.

As I’ve discussed many times before, there are very few options in this scenario.

One option is to default on the debt. But this is extremely unlikely given that it would cause a catastrophic financial crisis around the world.

A second option is to dramatically slash (and eventually eliminate) key programs like Social Security, Medicare, etc. But few politicians have the willingness to do so.

A third option would be an enormous asset sale, i.e. selling off Yellowstone National Park to China and other foreign investors. I will give you a lot more detail about this soon and show you exactly what the US owns… and why even such a radical approach still wouldn’t solve the problem.

Most likely the US will resort to the same tactic that bankrupt governments have relied on for centuries: inflation.

Septimus Severus was Roman Emperor in the 190s AD and found himself in a similar position; Rome’s fiscal deficit was massive, and he didn’t have enough money to pay his troops. So, over a four-year period, he debased the Roman denarius coin from 81.5% silver, down to 54% silver.

Debasing the coinage meant that he could produce more coins with less silver… and hence pay his soldiers with increasingly worthless money.

The United States will likely do the same thing but updated for modern times; the Federal Reserve will step in with a new ‘quantitative easing’ program that creates trillions upon trillions of dollars out of thin air.

This money will be used to finance US government deficits at artificially low (perhaps even negative) interest rates.

But just like the debasement of Roman currency, this approach will eventually create serious inflation in the US.

Remember-- I’m talking about a few years from now, not today. Inflation has fortunately been falling over the past several months, and I certainly hope that trend continues.

But if you look at the government’s own forecasts, it’s clear that there are very few options other than inflation after about 4-5 years from now, if not sooner.

This isn’t some wild, pessimistic conspiracy theory. I’m talking about the actual results from the last fiscal year, and the government’s own forecasts which project a terminal fiscal crisis by 2031.

That means it’s absolutely critical to look at these problems rationally… because politicians certainly aren’t doing that.

But there are solutions. If the data show that inflation could be a major problem down the road, then you still have a few years to plan for it and reduce its impact on your life.

And one of the best ways to do that is to own high quality real assets, i.e. scarce, critical, valuable resources that cannot be conjured out of thin air by central bankers or politicians.

We’ll have a lot more on this soon.

Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/do-you-hear-alarm-bells-ringing-neither-do-i-and-thats-a-huge-problem-148640/

Avoiding The Next Inflation May Now Require A Zombie Apocalypse

Avoiding The Next Inflation May Now Require A Zombie Apocalypse

Notes From the Field By Simon Black  January 10, 2024

Earlier this week, leaders from both major parties in the Land of the Free announced a grand bargain that, in theory, should avoid a government shutdown later this month.

According to their agreement, Congress will supposedly cap its ‘discretionary’ spending at $1.6 trillion for Fiscal Year 2024. That’s down from about $1.7 trillion in FY23.

So, yes, technically this $100 billion reduction represents about a 6% decrease over last year. And if we want to be even more cheerful about it, we could call it a 9% decrease on an inflation-adjusted basis.

If we’re being intellectually honest, that’s a step in the right direction for the US. A tiny, tiny, tiny step in the right direction.

How tiny, you ask?

Well, pretty much non-existent; the agreement to cut spending is an almost entirely symbolic gesture that won’t do much good.

Before we go further, it’s important to understand that government spending is generally categorized into three distinct buckets.

The first bucket is interest on the debt. And, at least for now, this is non-negotiable. It has to be paid.

And I don’t mean it ‘has to be paid’ in the moral sense that “America always pays its debts.”

I mean, legally, interest on the debt is automatically paid. Just like your monthly mortgage, interest payments on the US national debt get automatically sucked out of the Treasury Department’s bank account.

The second bucket is what’s known as “Mandatory Spending”, which includes programs like Social Security and Medicare. Just like the interest bucket, Mandatory Spending gets sucked out of the Treasury Department’s bank account every month.

Those two buckets-- Interest payments and Mandatory Spending-- constitute the vast majority of US federal spending.

The third bucket is known as Discretionary Spending… because it’s at Congress’s discretion.

Discretionary spending is what results from all their debates and arguments over annual appropriations, for everything from the military to the national parks. It also includes supplemental spending for pandemic bailouts, Ukraine, Hunter Biden artwork, etc.

So, the announcement this week was about a $100 billion reduction to Discretionary Spending.

But consider that Mandatory Spending (which Congress doesn’t touch) on Social Security alone surged $281 billion last year… and will likely increase by a similar magnitude this year.

So that single increase to Mandatory Spending will more than wipe out the entire $100 billion Discretionary Spending reduction.

Easy come, easy go.

Then there’s interest on the debt, which increased by $177 billion last fiscal year. It will probably increase by at least that much this year… which, again, more than wipes out the entire $100 billion in Discretionary Spending reduction.

If you drill down into the numbers, you’ll see pretty clearly that there are very few credible paths forward for the United States.

One path is to drastically… and I mean almost entirely… slash Discretionary Spending.

Look at it this way-- last year’s Discretionary Spending was $1.7 trillion. The government is claiming that their annual budget deficit last year was also $1.7 trillion.

This means that, in order to balance the budget, they would have to almost completely eliminate ALL discretionary spending. No more military. No more Homeland Security. No more government.

In other words, one of the only ways to balance the budget would be a Zombie Apocalypse in Washington DC.

The second path forward is to make major cuts to Mandatory Spending… which would involve politically unpopular overhauls to Social Security and Medicare.

Few politicians have the courage to do so. And given that they can’t even agree on basic priorities for Discretionary Spending, it seems unlikely that they’ll come together for more difficult cuts to Mandatory Spending.

This leaves the third path forward: to prioritize economic growth and productivity... by slashing regulations and actually make it easy once again for people to do business.

And this approach would really work. If real (i.e. inflation-adjusted) economic growth were 3% or even 3.5%, instead of 2%, then America’s fiscal woes would be over within a decade. And this is totally achievable.

With just 3% real growth, tax revenues would soar, the budget would be balanced, and the national debt would be trivial in comparison to the size of the US economy.

Seems like the obvious approach, right? Except that they’re doing the opposite… foisting even more regulatory burdens onto small business.

It’s no surprise that tax revenue last fiscal year was down 9% from the year before; that’s a testament to not only a weakened economy, but the Byzantine regulatory state that they’ve created over the past few years.

The most recent example is the Corporate Transparency Act (CTA), the completely idiotic and destructive piece of legislation that I discussed last week.

The CTA exists because the government thinks that its tax revenue should be higher. And they’re right-- federal tax revenue SHOULD be higher.

But the government never points the finger at themselves. They never conclude that dwindling tax revenues are the result of their criminal mismanagement of the economy, including all the excessive regulations which debilitate business.

No, to them, the only possible reason why tax revenues are down is because of criminal tax evasion. So, their solution is to create even more regulation which forces business owners to file information reports to the government.

The even more pathetic part is that US businesses already must provide this information to the IRS.

But Congress doesn’t care. Instead, they demand that taxpayers provide the exact same information-- but in a different format-- to a separate agency within the Treasury Department.

Saddling small businesses with more paperwork is hardly the sort of thing that is going to make the US economy more productive.

So, they’re not going to eliminate Discretionary Spending. They’re most likely not going to find the courage or wisdom to cut Mandatory Spending.

And it sure as hell doesn’t look like they’re going to prioritize growth and productivity.

That leads to the fourth and final option: inflation… which, from a historical perspective, is what almost ALWAYS happens in these scenarios.

We’ll talk a lot more about this soon. 

Simon Black, Founder     Sovereign Man

https://www.sovereignman.com/trends/avoiding-the-next-inflation-may-now-require-a-zombie-apocalypse-148624/

Introducing the ‘Church of the Holy Deficit’

Introducing the ‘Church of the Holy Deficit’

Notes From the Field By Simon Black  January 8, 2024

When Edward Winslow and his fellow passengers aboard the Mayflower set sail from England on September 16, 1620, they probably weren’t thinking about taxes or Social Security.

Most likely they were just hoping to stay alive long enough to enjoy their new-found religious freedom. Tragically, most of them did not. Many of the Mayflower passengers were adherents of a religious group known as the Separatists, who believed that that everyone should be free to pursue their own spiritual journey without interference from the church or state.

But that belief was literally illegal in England back then.

The Act of Uniformity from 1558-- which remained on the books for more than three centuries-- required everyone in the country to attend state religious services every week… or else face hefty fines and possibly jail time.

Passengers on the Mayflower were sick of having the government interfere in something as personal as religious beliefs. And they desired freedom so much that they were willing to take the huge risk of sailing across the Atlantic to an unknown land.

This is why the concept of religious freedom became such an integral part of America’s DNA, enshrined in the First Amendment of the Constitution. And over time, the freedom of religion has served as a useful counterweight against overzealous government bureaucrats.Religious freedom, for example, was one of the most important Constitutional arguments against many Medieval public health policies during the Covid-1984 hysteria.

The Supreme Court struck down several lockdown orders on the grounds that they violated Constitutionally guaranteed freedom of religion, including Tandon vs. Newsom (California) and Roman Catholic Dioecese of Brooklyn v. Cuomo (New York).

But one of the most interesting religious exemptions in the United States has to do with taxes… and it goes back to the year 1965.

Congress passed the Social Security Amendments Act that summer-- which created the Medicare program-- and it was signed into law by President Lyndon Johnson on July 30th.

But buried deep in the legislation is an obscure section carving out a special tax exemption for religious groups who are opposed to insurance.

This exemption still exists today under section 1402(h)-1 of the Internal Revenue Code; there’s even a tax form-- IRS Form 4029-- to apply for an exemption of Social Security and Medicare taxes.

Once an application is approved, the filer is no longer subject to the 15.3% payroll tax that funds those programs. At the same time, obviously, you renounce your rights to receive Social Security and Medicare benefits in the future.

(You also forfeit any taxes that you’ve already paid into the program… so you won’t receive a refund.

I’ve written at length that both of these programs are doomed. And it’s not even my own analysis; the Boards of Trustees for Social Security and Medicare each conclude that their trust funds are quickly running out of money.

Medicare’s primary trust fund (known as the Hospital Insurance, or HI fund) is scheduled to be fully depleted in 2031; this is according to the trustee report from last year which states, “Medicare still faces a substantial financial shortfall” and “is not adequately financed over the next 10 years.”

And Social Security forecasts that its biggest trust fund, known as Old Age Survivor’s Insurance (OASI), will be fully depleted two years later, in 2033.

It’s hard to say exactly what the impact will be on retirees when these trust funds run out of money. But it won’t be good.

Social Security claims that they would still be able to pay 77% of scheduled benefits, at least for a little while. But they’ve been so notoriously wrong with their projections in the past that it’s difficult to accept this number at face value. The reality could be much worse.

Younger people in particular are the most threatened. If you’re 20 or younger, you will spend your entire working life paying taxes into a retirement system that simply will not be there for you in 40-50 years.

Opting out of the Social Security and Medicare system is the equivalent of a 15.3% raise. That money could be invested-- even in something as simple as an index fund-- and compound for decades. And the math is very favorable.

With a $50,000 salary, for example, the Social Security / Medicare tax savings would be $7,650 per year. Investing that savings for ~40 years would result in a retirement nest egg of over $1 million, conservatively assuming an average inflation-adjusted return of just 5% per year.

And that’s $1 million in today’s money… which is worth a hell of a lot more than the present values of dwindling Social Security and Medicare benefits.

Naturally, though, the government has no intention of offering such a deal to the general public. They want as many people as possible paying into their hopelessly insolvent programs.

Even more bizarrely, despite the programs’ administrators screaming for action, politicians intend to do absolutely nothing. In his 2023 State of the Union address, Joe Biden famously goaded Congress into promising that Social Security and Medicare reforms were off the table.

So, at the moment, the religious exemption is one of the only ways to avoid this train wreck.

The original exemption back in the 1960s was for groups like the Amish, Christian Scientists, Mennonites, etc. who have well-known and long-standing religious objections to such programs. But in theory, other religions and denominations could qualify as well.

Obviously, the belief system has to be real and bona fide. Form 4029 requires the applicant to swear under penalty of perjury that they are “conscientiously opposed” to programs like Social Security and Medicare.

But something tells me that if a financially pious young person were to one day establish the Church of the Holy Deficit, and win its inclusion as an exempt religious group, it would quickly have millions of devoted followers.

Simon Black, Founder   Sovereign Man

https://www.sovereignman.com/trends/introducing-the-church-of-the-holy-deficit-148574/

A Brief Recap Of America’s 2023 Fiscal Train Wreck

A Brief Recap Of America’s 2023 Fiscal Train Wreck

Notes From the Field By Simon Black  January 3, 2024

Jacques Turgot must have cried himself to sleep the night that he reviewed the French government’s annual financial report in early 1775.  The numbers were gruesome; France was so heavily indebted by the mid-1770s that the entire nation was on the verge of a major financial crisis.

But Turgot was smart. Borderline brilliant. So, if anyone could turn things around and restore France to its former glory, it was him.  Turgot was born in the 1720s when France was still the clear, dominant superpower in the world… wealthy, admired, and strong. But decades of overspending had created a massive national debt.

By the time he took over as Controller-General in the summer of 1774, the French public debt was so high that just making interest payments consumed most of the tax revenue.

This meant that the government had to go even deeper into debt every year just to fund its most basic operations, thus making the problem exponentially worse.

Turgot knew how to fix it. And then had the balls to do it.

He advocated for major reforms, including steep budget cuts and free trade. He demanded the church and nobility to pay taxes (workers, artisans, and merchants already did).

He wanted to dismantle the medieval version of unions, known as guilds, to allow French citizens the freedom to work without regulation.

And he wanted to abolish the remnants of the feudal system, enabling freedom and opportunity across the country.

These were all logical proposals that could have solved France’s debt crisis. So naturally they were all rejected.

In fact, Turgot’s proposals, as sensible as they were, made him the most hated guy in France.

The royals hated him for curtailing their lavish lifestyle. The parliament hated him for his budget cuts. The church and nobles hated him for demanding they pay taxes too. The unions hated him for reducing their power.

Honestly, it’s kind of amazing that Turgot didn’t get suddenly suicided like Epstein. Though he did find himself thrown out on his keister and out of a job by the spring of 1776.

Coincidentally, 1776 was also the year that Benjamin Franklin formally requested financial support from France to support the American Revolution.

Turgot would have rejected that request flat-out. France simply didn’t have the money to fund someone else’s war.

But with the former-minister now in his forced retirement, the French government happily obliged Franklin’s request and shoveled billions of dollars out the door-- money that they didn’t have.

We all know how the story ends: the French Revolution, the Reign of Terror, Napoleon, etc. And this is far from an isolated tale; history books are filled with stories of once-dominant superpowers who indebt themselves into weakness and decay.

I am not a pessimistic person. In fact, I consider myself wildly optimistic about the future; our species has seen its share of horrendous crises… yet we always manage to ascend higher.

This time is not different. Despite the challenges that the world faces, and despite the complete idiots who run the show, humanity will continue to surpass its previous peaks.

But at the same time, it would be completely naive to ignore the obvious lessons of history about how excess debt ultimately destroys a nation’s economic power.

I’ve been spreading this message for years: many of the world’s most advanced nations are in this position-- like Japan, Italy, etc. And of course, the United States.

The US national debt actually reached a new milestone of $34 trillion on the very last day of the year (2023).

Bear in mind that the national debt at the beginning of the year was $31.4 trillion. So, the debt increased by a whopping $2.6 trillion over the course of the 2023 calendar year.

Now, back in 2020 and 2021, the US government could borrow money at just 1% interest.

But interest rates surged throughout 2023 to 4%, 5%, and more. This means that the $2.6 trillion in new debt that the government borrowed will cost taxpayers AT LEAST $100 billion in additional interest… PER YEAR. ($2.6 trillion x 4% = $104 billion annually)

It’s no wonder that 2023 saw a record $900 BILLION in gross interest paid on the US national debt. And this year’s interest on the national debt will likely surpass $1.2 trillion.

2023 was one for the record books in many other ways as well.

There was the debt ceiling crisis at the beginning of the year-- in which the guy with five decades of experience refused to negotiate with the other side, leading the country to the brink of default.

Naturally they didn’t actually solve the problem. So, at the last minute they kicked the can down the road to January 1, 2025-- just 364 days from now.

This was followed by a downgrade of the US sovereign debt rating, and then another downgrade of the US sovereign debt outlook (which are technically two different things).

The guy with five decades of experience reacted with genuine confusion… which is understandable considering he doesn’t know where he is half the time.

But even those around him, including Treasury Secretary Janet “Expert” Yellen, and the eminently articulate Secretary of Doublespeak, Karine Jean-Pierre, rejected the downgrades as “puzzling” and “entirely unwarranted”.

The voice of reason last year came from the Congressional Budget Office, which seems to at least have some grasp of the situation.

Whereas in mid-2022, the CBO had forecast a 10-year deficit of $15.7 trillion, by early 2023 they had to revise their projection downward to an $18.8 trillion deficit.

It probably didn’t help that US federal tax revenue declined significantly in 2023, down to $4.4 trillion from $4.9 trillion the year before.

A decline in tax revenue is hardly a surprise given the never-ending onslaught of new regulations that make it more difficult for people to work and do business.

Yesterday I wrote to you about the nearly 100 pages of regulation that requires small business owners to file a new report to the federal government each year.

Never mind that businesses already must file the exact same information to the IRS. No, they want to double your compliance burden by requiring you to send the same information-- in a different reporting format-- to a second government agency.

If that weren’t enough, in December the Labor Department published a new proposal to heavily regulate apprenticeship programs; the proposal went on for nearly EIGHT HUNDRED PAGES and includes rules about body-positive PPE (personal protective equipment) and mandating bathrooms that correspond to gender identity.

So, if you have interns who identify as polygender, demiflux, and autigender (all real terms), get ready to build three new bathrooms for they/them.

Naturally this whole situation is a complete train wreck. At least France in the 1770s had someone with the brains and the balls to raise the red flag… even though he was summarily dismissed.

Today the ‘experts’ in charge seem willfully, blissfully ignorant… which gives rational, thinking people every reason to have a Plan B.

Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/a-brief-recap-of-the-americas-2023-fiscal-train-wreck-148554/

Get Ready To Spend Two Years In Prison

Get Ready To Spend Two Years In Prison

Notes From the Field By Simon Black  January 2, 2024

If you happen to be a small business owner in the Land of the Free, you are looking at potentially two years in prison if you don’t comply with a new law that just took effect yesterday.

It started nearly five years ago, in the spring of 2019.

Back then, a member of Congress from the state of New York-- a career politician with five decades of experience named Carolyn Maloney-- introduced a new bill to the House of Representatives called the Corporate Transparency Act, or CTA.

At first her bill didn’t go anywhere.

But the following summer, during the peak Covid insanity of 2020, the CTA was jammed into the nearly 1,500-page National Defense Authorization Act (NDAA), i.e. the military budget that Congress is required to pass each year.

The NDAA (and hence the CTA along with it) were passed on January 1, 2021. And now, three years later, the CTA has formally taken effect.

Now, the whole premise behind the Corporate Transparency Act is the classic boogeyman premise that evil criminals and terrorists use US corporations and LLCs to conduct their illicit activities, so therefore the government wants more rules, regulations, and reporting for US companies.

This is the same simple-minded hysteria that we always hear about how criminals and terrorists use BTC, therefore it should be tightly regulated by hapless government bureaucrats.

Obviously, it’s true that criminals can and do use it -- or US business entities like Delaware LLCs-- to commit their crimes.

Criminals also use iPhones, Facebook, Gmail, Dell laptops, JP Morgan Chase bank accounts, Ford F-150 pickup trucks, Amazon gift cards, and Verizon Wireless to commit their crimes.

But in this case, in the infinite wisdom of Congress, it’s business entities that are being singled out for additional scrutiny.

So, because criminals sometimes use US business entities to launder money, every law-abiding US citizen with a completely legitimate business now must jump through all sorts of hoops and reporting requirements.

And if you fail to report, you’re looking at two years in prison.

There are so many things about this that are completely stupid.

First off, the United States legal code already has dozens of anti-money laundering laws and regulations on the books. Seriously, dozens.

Yet clearly if Congress saw the need to pass a NEW anti-money laundering law (the CTA), then it stands to reason that those existing laws are ineffective… and hence should be repealed.

But that’s not how the government operates. They don’t strike off ineffective laws. They just keep piling more laws and rules on top of the old ones, creating a mountain of regulation for small businesses to navigate.

And I’m saying “small business” on purpose because that’s who is specifically targeted by the CTA.

Large, publicly traded companies are specifically exempt from reporting under the CTA. So are hedge funds, banks, and other large financial entities. Curiously, tax-exempt charities are also exempt.

So the Corporate Transparency Act deliberately goes after the little guy. Goldman Sachs, Black Lives Matter, and Facebook/Meta are exempt. Bob’s Hot Dog Stand is not.

And this is where it gets really ridiculous. One of the big requirements of the CTA is that small business owners must file a new report to the federal government each year to disclose the company’s shareholders.

But current federal law already requires LLCs to provide this information to the IRS each year. So, the CTA has essentially created a double-burden to send the exact same information-- but in a different format-- to multiple agencies within the Treasury Department.

You can’t make this stuff up.

And exactly what agency does Bob’s Hot Dog Stand have to report to? It’s called FinCEN, which stands for the Financial Crimes Enforcement Network.

Think about the message they’re sending here; it’s as if owning a business in the United States of America is now some sort of f*ck!ng crime that needs to be reported.

For its part, FinCEN issued nearly ONE HUNDRED PAGES of  regulations about how to comply with the CTA. Yes, I’m serious. The Corporate Transparency Act itself was ‘only’ about 20 pages. FinCEN’s rules are five times as long.

And, once again, failure to comply carries steep monetary and criminal penalties, including up to two years in prison.

Even this penalty is idiotic. Think about it-- is some guy who launders money for some criminal gang or drug cartel really going to be deterred by the prospect of a two-year prison sentence? Probably not.

It’s far more likely that some completely innocent small business owner has his/her life turned upside down for non-compliance… because, as they always say, “ignorance of the law is not an excuse.”

Look, no one is arguing that criminals don’t often rely on US-registered businesses to conduct illegal activities.

The point is-- what is the priority here?

The United States government is in an extremely precarious financial condition; calendar year 2023 saw the national debt increase by a whopping $2.5 trillion, totaling roughly $34 trillion as of today.

The debt is so large that annual gross interest payments are about to reach $1 trillion, which takes up a huge chunk of federal tax revenue. And this interest expense keeps growing at an alarming rate.

Forecasts from both the White House and the Congressional Budget Office show that, by 2031, interest expense, along with mandatory entitlement spending like Social Security, will consume the entirety of federal tax revenue.

Everything else we think of as the US federal government-- from military spending to non-existent border security-- will have to be funded by more debt… which just makes the problem worse.

That fiscal cliff is just seven years away. Then, two years later in 2033, Social Security’s primary trust fund will run out of money and require a multi-trillion-dollar bailout.

The ONLY way out of this mess is to have an economic renaissance in the United States which prioritizes productivity and growth.

It’s simple math; if real (i.e. inflation-adjusted) GDP grows by 3% instead of 2%, all of these problems will melt away over time. The federal government will be swimming in tax revenue, Social Security will be properly funded, and the US could re-assert itself as the global economic leader.

The solution is straightforward, and the US private sector has the capability to do it.

But then the government passes bonehead legislation like this that makes it more difficult, more cumbersome to own a business in America.

Hunter Biden will likely never see the inside of a prison cell. But if you’re one of the millions of small business owners that are critical to US economic growth, you’re now officially at risk if you do not comply.

Simon Black, Founder   Sovereign Man

PS.: If you own a business, the first report isn’t due until the end of this year. Premium members-- we’ll soon be releasing a comprehensive guide about how/when/where to report to help make it as easy as possible for you. Stay tuned.   https://www.sovereignman.com/blog/

Why This Boring, 5,000 Year Old Metal Could Become the Next Hot Commodity

Why This Boring, 5,000 Year Old Metal Could Become the Next Hot Commodity

Notes From the Field By Simon Black December 14, 2023

Over four thousand years ago in the early 2200s BC, the most dominant superpower in the world was the Akkadian Empire.  The Akkadian Empire had conquered all of ancient Mesopotamia and brought the neighboring kingdoms under its control.

And the Emperor at the time, a man named Rimush, wanted to demonstrate to the world just how wealthy and powerful his Akkadian Empire truly was.

So he commissioned a statue to be built— a statue of himself, obviously. And he had it made from the most valuable substance in the world.  But Rimush’s monument wasn’t made of gold. Or even silver.

Thousands of years ago, the most valuable resource in the world was actually tin... as in tin foil.

This was a period in history known as the Bronze Age, a point where ancient civilizations had grasped a basic knowledge of metallurgy.

Rather than use stone tools, people discovered that they could smelt copper with tin, and the resulting metal— bronze— was a very sturdy fit for tools, weapons, and building material.

Copper was incredibly abundant, and many copper mines existed in the ancient world. But tin was scarce, especially among proto-European and near-East civilizations.

Miners had to travel a very long way— to the mountains of Afghanistan, or across the British Isles, to find tin. And its scarcity made it extremely valuable.

Tin mines became critical assets. Tin trade routes became strategic resources worth fighting over. In fact it’s possible that the legendary Trojan War may have actually been fought over the tin trade.

So you can understand why it was such a tremendous show of wealth when Emperor Rimush chose to make a statue of himself out of tin.

Human civilization obviously progressed beyond the Bronze Age and eventually learned how to forge iron and steel, so tin became almost forgotten.

Yet surprisingly tin is still quite a critical metal today. In fact its most important use is in solder on electronic circuit boards. Literally every circuit, whether in an iPhone or standard kitchen toaster, contains tin; tin is effectively the glue that binds electron pathways and circuit components together. 

But we’re talking very small amounts; every single iPhone, for example, contains just a couple grams of tin— which costs only a few pennies.

Think about that – in order to sell a $1000+ product, Apple requires a few pennies worth of tin. This makes tin extremely important… yet very cheap relative to its importance.

It also means that tin prices could skyrocket 5x, and Apple probably wouldn’t even notice.

Yet for tin producers, a 5x increase in prices would have them ROLLING in profits.

And this is what’s so interesting about tin. It’s not sexy. It’s a mostly forgotten metal. And as a result, there are only a handful of companies in the world that mine it.

Yet with so many more electronics being produced... much of this as a result of the AI revolution... tin supply is actually starting to dwindle.

Back during the Cold War in the 1950s, the US government actually stockpiled tin in an attempt to corner the market and prevent the Soviets from making advanced electronics.

The US didn’t really need all that tin at the time... so for the past several decades, the electronics industry has been slowly drawing down that stockpile.

Tin production also slowed down; after all, why bother with the expense of mining tin when the US government was selling off its stockpiles?

But now the stockpiles are almost gone. And yet tin production is still down... while demand (because of the booming electronics industry) is soaring.

All these conditions create a strong likelihood that tin prices could rise dramatically.

In fact a study conducted by MIT showed that tin was the metal most likely to be impacted by the advent of new generation technologies such as robotics, electric vehicles and AI.

It’s crazy to think about that a forgotten metal that hasn’t been ‘important’ for literally thousands of years since the end of the Bronze Age could stand to benefit the most from the AI boom.

And again, there are only a handful of tin suppliers in the world who mine the stuff. So they could really make a killing.

We recently sent some research to our premium members, for example, about a tin producer that already generates solid profits based on where tin prices are right now. They also pay a great dividend, and could even turn a profit if tin prices were to plummet.

But if tin prices soar, this company (which also has a great balance sheet) could see a dramatic rise in its profitability and value.

I write a lot about the importance of owning real assets, i.e the most important resources that the world truly needs, and the companies that produce them. Food. Energy. Productive technology. And, yes, certain metals like tin that play a prominent role in a coming boom.

Uranium is another great example— I’ve been talking about the importance of nuclear energy and uranium scarcity for quite some time, and saying that eventually the supply/demand imbalance will send uranium prices soaring.

That has now happened. Uranium prices are up more than 50% this year, and at their highest levels since 2008.

I think the same thing could happen to boring old tin, as it once again becomes an incredibly important resource.

Simon Black, Founder   Sovereign Man

https://www.sovereignman.com/blog/

A Rational Guide To America’s Exasperating Inertia

A Rational Guide To America’s Exasperating Inertia

Notes From the Field By Simon Black   December 11, 2023

Rene Descartes probably wasn’t thinking about gargantuan budget deficits and a $34 trillion national debt when he published Principles of Philosophy in the year 1644. But his ideas absolutely fit the scenario today.

Up until that point in history, much of science and mathematics was still based on the 1,500+ year old theories of Aristotle and other ancient Greek intellectuals-- many of which were totally wrong.

Aristotle, for example, believed that a moving object required constant force to remain in motion. And this erroneous theory remained conventional wisdom well into the Middle Ages.

But Descartes challenged Aristotle’s view. Building upon the works of other minds like Galileo and Avicenna, Descartes declared that an object in motion will remain in motion… and an object at rest will remain at rest… unless acted upon by an external force.

Isaac Newton borrowed this conclusion when he published his famous ‘Laws of Motion’ four decades later; and today we call the concept ‘inertia’.

But inertia is not just a principle of physics. It applies to human beings too-- our lives tend to take on a momentum of their own, naturally gravitating in a particular direction… unless we take deliberate action to reverse course.

Nations are subject to the same forces as well. In fact, history is full of examples of empires that rode a wave of negative momentum into terminal decline.

Analysis shows that their problems were almost always fixable. Ancient Rome, the French monarchy of the 1700s, the Ottoman Empire, etc. all declined from challenges that could have easily been solved: primarily, stop spending so much money.

Powerful nations tend to get in serious, serious trouble when they habitually overspend beyond their means. They go into debt, they inflate the currency, they raise taxes and plunder from the private economy-- all of which make the problem even worse.

This is inertia: the object in motion-- an empire in decline-- remains in motion unless there is deliberate and timely action to reverse the decline.

Honestly this isn’t a particularly difficult concept to understand: if overspending is gradually (then suddenly) propelling your decline, then cut spending. Duh.

Yet history shows that this almost NEVER happens. And it’s astonishing that people in power have consistently failed to understand this simple concept for more than 5,000 years.

We’re witnessing the same thing today-- the US is plagued by massive challenges of its own making. Or at least, the making of inept politicians.

The biggest problem is the government’s addiction to spending. Last year the annual budget deficit was nearly $2 trillion. Again. And there is no end in sight.

Right now, this very day, the US Treasury Department is set to issue a whopping $230 billion in debt. And tomorrow they’ll issue another $91 billion… for a total of $321 billion in just TWO DAYS.

I’ve written about this extensively, but I’ll keep repeating it because it bears repeating: spending is completely out of control.

Think about it: last fiscal year (which just ended on September 30, 2023), the US government took in $4.4 trillion in tax revenue.

Now, that would have been just enough tax revenue for the government to run a balanced budget-- as recently as 2019, i.e. pre-Covid-- when all federal expenses totaled roughly $4.4 trillion.

But today, $4.4 trillion is nowhere NEAR enough tax revenue to fund the government anymore. Over the past four years, these people have ballooned federal expenses to roughly $6.3 trillion. And this number is not going down.

The President’s proposed budget for this current Fiscal Year (2024) raises federal spending to $6.8 trillion, $7.1 trillion next year, and to $10 trillion by 2033. Plus, none of these projections considers the possibility of another national emergency, crisis, bailout, etc.

The net result of these somewhat rosy budget forecasts is that the national debt will continue its rapid increase… which means that interest payments will continue rising as well.

This is a big deal, because the increased interest payments end up consuming more and more of the federal budget.

In fact, the White House’s own forecast shows that interest on the debt, plus mandatory entitlement spending (Social Security, Medicare) will consume 100% of federal tax revenue by 2031.

This means that, in 7 years, the entire discretionary budget of the United States government, including the military, will have to be borrowed.

(See for yourself on Table S-3 of page 137 of the President’s plan.)

They’re obviously aware of the problem-- it’s in their own budget forecast. And this is clearly a solvable problem: cut spending. Go back to the 2019 spending levels.

But that’s an incomprehensible idea to the people in charge. So is another rational solution: optimize tax revenue. After all, if you can’t cut spending, then you might be able to make ends meet by raising revenue.

But they’re not doing that either.

In fact, Fiscal Year 2023 saw a 9% decline in tax revenue from the previous year. That’s not exactly a surprise, given that the people in charge are on the warpath to make things more difficult for productive people and businesses.

They’ve demonized the energy companies, driving up the cost of doing business for everyone. They have created an almost hilarious level of regulatory compliance-- green compliance, woke compliance.

I read a story in the Wall Street Journal about a moving company that hires young college athletes to haul people’s furniture. They’re now under scrutiny from federal regulators for age discrimination.

Again, this is the opposite of what they should be doing. A healthy, vibrant economy where people are free to produce will deliver greater tax revenue, helping offset their outrageous spending addiction.

But instead, they’re strangling the economy, which reduces tax revenue.

Social Security is in a similarly terrible predicament; the program’s trustees project that Social Security’s key trust funds will run out of money in 2033.

If no action is taken, then retirees will face substantial cuts to their monthly benefits. Or the federal government will have to bail out Social Security to the tune of trillions of dollars-- just as a down payment.

Again, this isn’t a terribly complicated solution; at the moment, Social Security is legally obligated to invest all of its money in very low-yielding US government bonds.

But the US has some of the most talented money managers in the world. And if they turned over management of Social Security’s funds to the private sector to boost annual investment returns, they could really close the funding gap and prevent a catastrophe.

Yet no one wants to touch the program. No one even wants to talk about it.

Based on this momentum, what’s most likely to happen is that the Federal Reserve will have to conjure trillions of dollars out of thin air down the road in order to bail out the government and Social Security.

This action will most likely spark another nasty bout of inflation, and most likely the end of the US dollar’s dominance as the global reserve currency. This would be disastrous for the US economy.

Again, America’s problems are not unsolvable. The solutions are actually fairly simple when you think about it. But, just like inertia and the Laws of Motion, a country in decline will remain in decline until leaders make deliberate, responsible decisions.

Unfortunately, that’s not happening. And I don’t see anything on the horizon to suggest that it will happen anytime soon.

This is an obvious reason to have a Plan B. And in my view, owning ‘real assets’ ought to be a major part of that.

More on this soon.   Simon Black, Founder   Sovereign Man

https://www.sovereignman.com/trends/a-rational-guide-to-americas-exasperating-inertia-148522/

Shocker: World’s Biggest Bank CEO Hates Crypto

Shocker: World’s Biggest Bank CEO Hates Crypto

Notes From the Field By Simon Black  December 7, 2023 

Yesterday Senator Elizabeth Warren used a Wall Street oversight hearing to whine about cryptocurrency.

At one point, almost as if a well-choreographed football play, she passed the ball to Jamie Dimon — CEO of JP Morgan Chase, the biggest bank in the world — to “explain why crypto is such an attractive financial tool for terrorists, drug traffickers, and rogue nations?” It’s hard to imagine a more loaded question.

Mr. Dimon gleefully caught the pass and said:

“I've always been deeply opposed to crypto, Bitcoin, etc. You pointed out the only true use case for it is criminals, drug traffickers, anti-money laundering [sic], tax avoidance... because it doesn't go through, as you mentioned, all these systems built up over many years — Know Your Customer, sanctions, OFAC [Office of Foreign Assets Control] — they can bypass all of that.”

What an astonishing display of complete and total ignorance on the part of Mr. Dimon and Ms. Warren.

This notion that Bitcoin is great for criminals is one of the most worn out, naive tropes about cryptocurrency that exists. Criminals can (and do) use virtually ANYTHING to launder money, conduct transactions, and extort their victims.

Fine art. Baseball cards. Government subsistence vouchers. Rare coins. Amazon gift cards. Popular consumer merchandise like iPhones. Sports betting. Prepaid credit cards. And yes, the US banking system.

At least with Bitcoin, every single transaction is publicly recorded on the blockchain, which means that government entities can track the movement of funds.

Frankly criminals are much better off using JPMorgan Chase for their illicit transactions.

Perhaps that’s why JPMorgan Chase was the bank of choice for Bernie Madoff, the man who ran one of the most infamous Ponzi schemes of all time. JPMorgan Chase facilitated decades of suspicious activities related Madoff’s fraud.

But that only scratches the surface of the bank’s involvement in criminality.

In 2020, JPMorgan Chase paid a $920 million criminal penalty for market manipulation, involving tens of thousands of fraudulent orders in precious metals and bond futures markets, which were placed and then canceled before execution.

And according to “the FinCEN files,” investigative reporters uncovered that JP Morgan “moved money for people and companies tied to the massive looting of public funds in Malaysia, Venezuela, and Ukraine.”

In total, JP Morgan may have facilitated over half a TRILLION dollars of money laundering between 1999 and 2017.

And you can find similar misdeeds across the banking industry.

For example, Wells Fargo’s rap sheet includes: forging customer signatures to open accounts in order to boost sales goals; selling unnecessary car insurance leading to 20,000 vehicle repossessions; a “software glitch” resulting in over 500 wrongful home foreclosures; overcharging 26x on foreign currency transactions; illegally repossessing military members' vehicles; and actually selling customer Social Security Numbers to identity thieves.

It’s also interesting to note that Jamie Dimon was the “personal banker” of Adam Neumann, WeWork's outrageously unethical founder.

Remember that Adam Neumann borrowed money from his company to buy office space, only to lease that office space back to the company at a profit, and bilk shareholders in the process.

He even changed the name of WeWork to We, then sold the rights to the word We to his own company for $6 million.

When WeWork tried to go public, JPMorgan Chase was its lead IPO advisor, but conveniently sold its $100 million stake just before the IPO crashed and burned.

Jamie Dimon was involved in all of this. But now he wants to take the moral high ground about crypto.

Do criminals use crypto? Of course, some criminals use crypto. Some criminals also use iPhones and fly on Delta Airlines. And some criminals have accounts at JPMorgan Chase.

Yet Dimon and Warren single out crypto, absurdly claiming that criminality is the “only” use case.

I doubt they’ve ever bothered to read the original white paper, in which the clearly stated intent of Bitcoin was to be a medium of exchange for online transactions — a common currency of the Internet.

Over time, however, Bitcoin has become a more speculative instrument... which is probably its biggest use case to date; plenty of people buy Bitcoin because they think it will go up in price. Or they use it as a long-term store of value.

Another major use case of crypto, of course, is the tokenization of financial contracts which eliminates middleman bankers like Jamie Dimon. So it’s no surprise that Mr. Dimon hates crypto.

But perhaps the most ridiculous thing he said at that hearing was, “If I was the government, I'd close it down.”

He seems to think that the government could simply ban cryptocurrency, and, poof, demand would vanish.

Because that worked so well during alcohol prohibition, or the never-ending war on drugs, or prohibiting illegal downloads of movies on the Internet.

Crypto would be even harder to control.

Cryptocurrency offers a decentralized, peer-to-peer currency which can travel across borders in seconds. That governments can’t control it is a feature, not a bug.

That means a future where people can’t be de-banked by Justin Trudeau for protesting against his vaccine mandates. It means keeping personal custody of your funds, without having to trust third parties like JPMorgan Chase who treat you like a criminal (when they aren’t too busy acting like criminals).

Jamie Dimon is supposed to be a sophisticated banker and business leader. Yet his words are steeped in so much irony, drenched in so much hypocrisy... and he doesn’t even realize it.

It is so obvious that significant elements of cryptocurrency are here to stay; even the Federal Reserve is toying with crypto.

So for Jamie Dimon to say “close it down” sounds like a guy shouting at windmills. Or worse — like a scarcity-minded medieval ruler in the Ottoman Empire banishing the printing press.

We’ll see what happens if Bitcoin continues rising; my guess is that JP Morgan will eventually start recommending their private clients buy crypto again... and Dimon will act like he knew it all along.

Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/shocker-worlds-biggest-bank-ceo-hates-crypto-148511/

Charlie Munger’s Final Analysis Of America

Charlie Munger’s Final Analysis Of America

Notes From the Field By Simon Black  December 6, 2023

It’s my sincere hope that I’m able to live both the quantity and quality of life that Charlie Munger had.

Even at age 99, he appeared vivacious and energetic-- as one Wall Street Journal reporter remarked after interviewing him back in September. Their session went four straight hours with Munger going nonstop the entire time without so much as a bathroom break.

I was reading that interview recently, and there was one thing in particular that Munger said which really stood out to me.

When discussing the United States and its colossal political, social, and economic problems, Munger remained optimistic and said, “a great nation has a lot of collapse in it.”

He’s right. And history is very clear on this point. Empires and nations wouldn’t qualify as great if they collapsed in the blink of an eye.

Truly strong, dominant superpowers are able to survive pandemics and natural disasters. They’re able to fend off foreign invaders. They’re able to withstand economic crises. And, even after a major catastrophe, they have the savings, the unity, and the cohesion to rebuild.

This is why the declines of nations and empires throughout history typically take a long time, until, after years or even decades of accumulated bad decisions, they finally reach a tipping point.

Put another way-- to borrow from both Munger and Hemingway-- great nations collapse gradually, then suddenly.

The best book I’ve ever read on the subject is anthropologist Joseph Tainter’s The Collapse of Complex Societies, which examines the common factors of how different societies throughout history-- from ancient Ur in Mesopotamia to Western Rome to the Olmec in Mexico-- declined and collapsed.

(Tainter’s definition of collapse doesn’t necessarily mean a civilization ceases to exist, but that it experiences a steep decline in political, social, and economic structure.)

And his analysis shows that one of the key culprits in collapse is the decline of a society’s ability to solve problems.

This pretty much describes the US federal government in a nutshell. They don’t solve problems. They can barely talk about problems in a civil and rational manner. And quite often they refuse to even acknowledge problems.

Earlier this year when the US sovereign debt rating was downgraded, for example, the White House reacted with genuine confusion; they couldn’t understand why they were being downgraded and said the decision was “bizarre” and “puzzling”.

This reaction demonstrates a total lack of awareness about the problems-- i.e. a nearly $34 trillion national debt, $2 trillion annual deficit, etc.

Even when they do manage to ‘solve’ problems, they usually wait until the last minute and then just kick the can down the road.

Earlier this year, the government was facing yet another crisis over the debt ceiling; mature adults would have gotten to work to negotiate a compromise. But the President insisted he would “refuse to negotiate” over the debt ceiling, sparking tremendous uncertainty about the government’s finances.

The 11th hour bargain just punted the problem into the future and didn’t actually solve anything.

Most of the time politicians resort to petty name-calling and histrionic virtue signaling, without any rational discussion of problems or priorities, let alone informed conversation about viable solutions.

And the problems continue piling up.

On the rare occasion when there is consensus (like multi-trillion-dollar COVID bailouts), there’s rarely any rational, long-term thinking to weigh the costs and benefits. They just spend like drunken sailors and increase the national debt without regard for the consequences or the future.

The national debt is growing so rapidly that, according to the Congressional Budget Office, interest on the debt, plus mandatory entitlement spending (like Social Security), will consume 100% of federal tax revenue by 2031.

It’s pretty hard to imagine the US continuing to be the dominant economic and political power in the world when the government has to borrow money just to fund the military.

But that reality is seven years away.

Then, two years later in 2033, Social Security’s primary trust fund will run out of money and require a massive multi-trillion-dollar bailout.

All of this will probably cause foreign nations to abandon the US dollar as the world’s reserve currency, further accelerating the fiscal and economic decline.

Now, this outcome is not inevitable. Every country has challenges, and there are solutions to the problems that the US faces.

But the clock is ticking, and it doesn’t look like there is any political or social will at the moment to prioritize and rationally compromise to solve problems.

Munger was right; great nations do have a lot of collapse in them. But only to a certain point. And that point increasingly looks like it may be less than a decade away.

Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/trends/charlie-mungers-final-analysis-of-america-148503/

Some Clear Thinking About The Riots In Ireland

Some Clear Thinking About The Riots In Ireland  SB

Notes From the Field By Simon Black  November 27, 2023

On Sunday March 10, 1793, in the village of Pin-en-Mauges in western France, a prominent local textile vendor named Jacques Cathelineau was peacefully enjoying his Sunday afternoon, when five men suddenly appeared to deliver urgent news. Cathelineau could probably read their faces and knew what happened before anyone said a word.

By the spring of 1793, the French Revolution had been in full swing for nearly four years, and the entire nation was in chaos.  King Louis XVI and his family were executed two months prior, and the country was now being run by a faction of left-wing radicals under Maximilien Robespierre.

Robespierre spent money like a drunken sailor, and his extreme spending binge resulted in massive government budget deficits. So, he and his allies concocted an absurd paper money scheme… which predictably resulted in skyrocketing prices. Full-blown hyperinflation would strangle France soon after.

Robespierre’s pitiful leadership also managed to spark a war against Prussia, Britain, Spain, and the Holy Roman Empire.

And with so much pressure from rising prices, war, and political instability, the French economy crashed. Industrial and agricultural output plummeted. And there were shortages of key resources, including food.

In short, France was a complete disaster.

Yet despite such horrendous conditions, there was an even worse problem lurking: French society was deeply divided-- between those who ardently supported the revolution, and others those supported the church and return to monarchy.

This ideological polarization was so extreme that violence became a foregone conclusion.

And that’s what the men had come to tell Jacques Cathelineau on March 10, 1793: the social uprising had begun.

Hours before, violence had broken out between revolutionary forces and a local group of royalist teenagers… and it was time for people to pick sides once and for all.

Jacques Cathelineau knew exactly where he stood: he was loyal to Church and King, just like most people in the region. So, he comforted his terrified wife, promised that God would protect them, and departed to assemble the villagers.

Cathelineau started with just 26 men from his tiny hamlet. But by the time he reached Jallais Castle some 7 kilometers away, his ranks had swollen to over 3,000.

This event marked the start of what’s known as the Vendée War-- a civil war within the French Revolution. It was an ideological conflict pitting pro-monarchy, pro-Catholic peasants against the forces of Robespierre… as well as against ordinary French citizens who supported the revolution.

The violence was brutal. The following day, for example, on March 11th, 1793, hundreds of pro-revolution Frenchmen were massacred in the town of Machecoul. And the pro-revolution faction carried out its share of massacres as well.

It was French-on-French violence, and no one was spared. Men, women, and children participated in the killings, and they were victims as well.

This is an obviously extreme, nightmare scenario. But it’s a cautionary tale worth examining given the number of warning signs we can see in our own time.

France in the 1790s was a major superpower in decline. In fact, it had fallen so much from its peak that it was hardly recognizable.

The people in charge were incompetent fanatics who believed that they (and they alone) were enlightened enough and had the properly aligned moral compass to tell everyone else how to live their lives.

In fairness, some of their ideas were good. Others were highly destructive.

But the Vendée War did not arise because of policy ideas. People erupted because they were tired of an all-knowing group of elitists force-feeding their belief system onto everyone else.

Those same leaders in government fanned the flames of societal polarization. They persecuted their political opponents. They censored ideological and intellectual dissent. And they claimed that any opposition to their ideas constituted a threat to the Republic.

These conditions are similar to our own time. Fanatical elitists lead a major superpower, and the West in general. Both are in decline. They attack ideological dissent and insist that democracy is under attack. Opponents are labeled “Right Wing Extremists”.

The polarization is so strong that publications from the New York Times to Politico seem to think that a “New Civil War” is already upon us.

Now, ‘war’ is a very strong word… typically used by people who have never experienced it in person. Twitter feuds do not constitute war. Even violent protests do not constitute war.

But it’s clear there is an extreme divide upon Western Civilization that may very well be the greatest threat that we face.

External war, whether against China, Russia, Iran, or all three, would be horrendous. But winnable. And at the moment, despite all the woke histrionics from the US Defense Department, there is not a nation in the world that wants to test the resolve of the United States Marine Corps.

Deeply rooted internal conflicts, on the other hand, are hardly ever winnable.

At the moment it’s too dramatic to suggest that there’s a New Civil War upon us, or even coming. But we are already at the point of “Civil Divide”, capital C capital D.

And we can see it all over the West, from all sides of the political spectrum, in all shapes and sizes. The BLM Summer of Love in 2020. January 6. The absurd “Queers for Palestine” marches.

Then there’s Ireland… which on Friday was shocked by the brutal stabbing of several children.

All it took to send people into an absolute frenzy was the rumor that the attacker was a Muslim foreigner, and rioters took to the streets.

The fires, the looting, etc. were clearly stupid. And illegal. But that doesn’t invalidate the anger that people feel, even if their reaction was immoral and based on unsubstantiated rumor.

Migration in Europe is an obvious crisis, and people are justifiably angry.

Europe’s delusional elitist leaders threw open the doors, allowed people in by the shipload, showered them with outrageous taxpayer-funded benefits, then force-fed “multi-culturalism” down everyone’s throat whether they wanted it or not.

Two decades of this ridiculous policy has resulted in marches of tens of thousands of Muslims in the streets shrieking “Allahu Akhbar” and “White Trash” while they waive Hamas, Taliban, and al-Qaida flags.

People are fed up with it. They’re fed up with rising crime, violence, and rape. They’re fed up with being told to respect others’ culture while no one respects them or their own culture.

Arson and looting are obviously wrong on so many levels, and the rioters in Dublin should be prosecuted just like any other criminal.

But the government response has been very telling.

Rather than talk about the underlying problems in their society, the Irish parliament has immediately taken action to update hate crime and hate speech legislation; Senator Pauline O’Reilly said today that if Irish people’s anger over migration policy causes foreigners “such discomfort that they cannot live in peace,” then it is “our job, as legislators, to restrict freedom for the common good.”

No one seems to care about the discomfort of Irish people fed up with the government’s multiculturalism fantasy.

The Irish rioters’ looting, violence, and arson was totally wrong on so many levels. But the anger over failed policy and bad ideas is understandable: multiculturalism has been a disaster. In fact, nearly everything these delusional elitists have come up with has been a disaster.

It’s not just in Europe, either. Lockdowns, mask mandates, decriminalized shoplifting, cashless bail, non-prosecution of crime, the southern border crisis, etc. came from the same types of delusional elitists in the US.

New York City probably embodies this delusional elitism the best. It’s a ‘sanctuary city’ which ignores federal immigration law. And soon-to-be Mayor Eric Adams said proudly (on June 3, 2021) that “people from every nation seek refuge” in New York.

The city practically rolled out the red carpet for illegal migrants… and now it’s a full-blown crisis. Mayor Adams now whines to the federal government to bail out his poor judgment and has asked New Yorkers to open their homes to migrants.

Naturally, there are very few people who do so. It’s easy to support a policy idea when you don’t have to bear the cost.

(When I was in New York City two months ago, city officials had just evicted a 95-year-old Korean War veteran from public housing... to make room for migrants.)

Naturally, immigration only scratches the surface of the tip of the iceberg. Cities across the country are seeing the destructive results of their idiotic policies about homelessness, business regulation, woke prosecution, etc.

Yet despite the mountain of evidence that their ideas don’t work, the delusional elitists still want to plow ahead with their ideas… and label the opposition as right-wing extremism.

Even more astonishing is the millions of passionate ignoramuses who believe them… who still buy into this progressive nonsense.

But Friday’s violence in Ireland is another clear example that there are plenty of people who have had enough.

The Civil Divide is very real. And the temperature is rising.

This is not a problem that can be easily solved, if at all. And without a solution, it will be virtually impossible to fix all the other problems-- economic, geopolitical, etc.

It took France nearly three decades to finally settle down, during which period they went through the Reign of Terror, Napoleon’s dictatorship, and more.

One can hope that cooler heads will prevail. But in the meantime, it makes sense for rational heads to strongly consider a Plan B.

To your freedom,  Simon Black, Founder   Sovereign Man

https://www.sovereignman.com/trends/some-clear-thinking-about-the-riots-in-ireland-148474/

Another Central Banker Admits The Truth About The US Dollar

Another Central Banker Admits The Truth About The US Dollar

Notes From the Field By Simon Black  November 28, 2023 

On March 20, 1602, after a few years of painstaking negotiations, a deal was struck amid the cobblestone streets and legendary waterways of Amsterdam that changed the world of finance forever.

The Dutch Republic (as it was known back then) was already a major economic power in the early 1600s; Dutch merchants boasted enormous fleets of thousands of ships and lucrative trading posts around the world. Money was pouring in to the economy.

But at the same time, competition was fierce. England, Spain, Portugal, etc. all wanted in on the vast wealth that Dutch merchants were minting from the spice trade.

So in an effort to fend off international competition, Dutch traders unified their operations; merchants in Amsterdam merged in 1601. And, the following March, the remainder of the country’s prominent merchants joined.

They called their new venture the Verenigde Oostindische Compagnie (VOC); it is known to history as the Dutch East India Company.

What made VOC so innovative is that investors could buy shares in the company, and hence enjoy a piece of the profits proportionate to the number of shares they owned.

But on top of that, they also launched a stock exchange… creating a secondary market where investors could buy or sell shares of VOC.

This was game changing.

These innovations by themselves were not new; other ‘joint-stock’ companies had been formed in the past. And other rudimentary financial exchanges had already been in existence.

But the Dutch put the two together, combining a major business enterprise with a formalized stock exchange. It had never been done before… and the idea marked the beginning of the country’s economic dominance, known as the Dutch Golden Age.

Naturally, as the Dutch Republic became Europe’s most powerful economy, its currency-- a gold coin known as the guilder-- became the unofficial reserve currency around the world.

From Eastern Europe to Japan, Indonesia, and parts of India, traders often exchanged goods and services for Dutch guilders because they had confidence that the coins would be universally accepted.

And the guilder’s status as a de facto reserve currency lasted for centuries.

But history is very clear that no empire, and no reserve currency, lasts forever.

Eventually the dominance of the Dutch republic was displaced by the British Empire, and the guilder by the British pound. Britain, in turn, was eventually displaced by the United States and the US dollar.

But only someone willfully ignorant of history would believe that America’s and the dollar’s dominance will last forever.

And this should hardly be a controversial assertion anymore.

Politicians within US government have routinely demonstrated an outrageous level of pettiness, incompetence, and the inability to solve even the most basic problems.

They have absolutely no control over abhorrent deficit spending. They go into debt to pay people to NOT work. They ignore downgrades of their sovereign credit rating. And they actually cheer themselves when the deficit is “only” $2 trillion.

America’s central bankers, meanwhile, conjured trillions of dollars out of thin air without any clue of the repercussions. They failed to predict inflation. They failed to diagnose it. They failed to do anything about it.

And when they finally did take action, they failed to anticipate any negative consequences of raising interest rates so quickly.

Literally two days before Silicon Valley Bank went bust earlier this year, the Chairman of the Fed told Congress that “nothing about the data suggests we’ve tightened [raised interest rates] too much.”

These people are clueless. And everyone has noticed.

Confidence in the dollar is waning, and foreigners are starting to diversify to other assets. Data from the IMF showed that the US dollar’s share of foreign exchange reserves had fallen to a multi-decade low.

Similarly, foreigners’ appetite to own US government bonds is dropping rapidly. A decade ago, foreigners happily owned 43% of all US government bonds. Today foreigners’ share is 30%, and falling.

These trends show very clearly that the dollar is simply not as dominant as it used to be.

In a recent interview, Aerdt Houben, a senior official at the Dutch central bank, said the quiet part out loud, and explained that the Netherlands was already preparing for a world in which gold (and NOT the US dollar) is the primary global reserve currency.

“The beauty of gold is that it’s stable in value, it retains its value. That's one of the reasons why central banks hold gold... Gold is like solidified confidence for the central bank... If we ever unexpectedly have to create a new currency or a systemic risk arises, the public can have confidence in [the Dutch central bank] because whatever money we issue, we can back it with the same value in gold.”

The Dutch understand this concept very well; after all, they once held the world’s #1 reserve currency position… and then lost it. So they know the same thing will happen to the dollar. It’s inevitable.

I agree entirely with this view and have written about it extensively: I believe there is a very high likelihood that the dollar loses its reserve dominance within the next 10-years, and probably sooner.

The Congressional Budget Office has already forecast (rather optimistically) that interest on the debt, plus mandatory entitlements like Social Security, will consume 100% of US federal tax revenue by 2031.

This means that everything else, including the military, will have to be financed by debt.

Two years later in 2033, Social Security’s primary trust fund will run out of money, according to the program’s annual trustee report.

These are not conspiracy theories; rather, these are the government’s own forecasts. And I believe that either event could trigger a reset of the global financial system in which the US loses its dominance over the rest of the world.

Personally I don’t think that anyone trusts China enough to anoint its yuan as the new global reserve currency.

But gold is an asset that has a 5,000+ year history of trust and confidence.

And if gold does become the global reserve once again, you can likely bet that gold prices will go to the moon.

Simon Black, Founder  Sovereign Man

https://www.sovereignman.com/international-diversification-strategies/another-central-banker-admits-the-truth-about-the-us-dollar-148479/