From the Publisher's Desk
"The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens."
- John Maynard Keynes
We received a letter recently from one of our subscribers to our free newsletter (subscribe free here,) and thought his questions and our reply might be of importance to many. So here they are.
Dear PT Shamrock:
Thank you for your most informative newsletters and web site. <Snip>
You really seem to be down on the US. I agree with you in part, albeit I'm stuck here (USA) for a good
How do you propose and recommend for those unable to expatriate, in order to survive the [financial]
debacle that is coming? Most important, what will be the single most important event to take note of, that will precipitate the financial shock forthcoming?
Your reply will be greatly appreciated. A loyal subscriber for six years.
Dear G. K. in the USA:
Thank you for the kind words.
With all due respect, it's not that we're down on the US, rather we bitterly resent your governments anti-privacy, anti-civil liberty laws and policies that have made our self and hundreds of millions of people around the world unwilling participants in America's policies, wars ad nauseam that we have and want less than nothing to do with.
Point in fact America's monetary policy is causing considerable inflation around the world whilst the worse is yet to come. Why? Simple - it's not possible for the united States [correct spelling] to pay off its national debt, i.e. deficits approaching $2 trillion annually.
Even if the US where to tax its citizens 100% of all their income, there wouldn't be enough funds generated to pay off the remaining horrendous deficit of trillions and trillions of dollars. As the authorities are not stupid and realize this, America has enacted an inflationary policy of printing more money, a lot more money to debase its currency in order to hold the wolves at bay.
Printing money causes inflation and has never worked in the pass. The debasement of any currency only made matters worse, taking longer and causing greater pain and suffering for the people before matters sort them self. So why would it be different this time for America? It won't! Certainly everyone reading this reply has seen the price of everything go up in the past 10 months and the worse is yet to come.
In regards to what to do to protect oneself:
Physical gold (sovereign coins priced near bullion prices) remains the primary hedge in terms of preserving the purchasing power of current dollars. In like manner, silver is in this category. Also, holding stronger major currencies such as the Swiss franc, Canadian dollar and the Australian dollar, likely are good hedges.
There's one investment that might prove to be even better than gold or silver when America's currency crisis hits full tilt. In fact, since 1970, a year before the U.S. went off the gold standard, this investment has easily outpaced both stocks, silver and gold. We're talking about farmland. Gold and silver pays no dividend. The returns from farmland come from two sources. According to a recent edition of Ag Decision Maker, published by Iowa State University, roughly half of the overall returns come from the appreciation of the actual land.
The other half comes from the "rent" you can get by farming your land - or hiring someone else to do it for you. Add these components together, and it's easy to see why the overall returns of farmland have outpaced gold, stocks, and just about any other asset we could name.
We realize purchasing farmland is not practical for everybody. However since you asked we wanted you and our other readers to know about this investment opportunity in the US. However real estate overseas is perhaps the best way of keeping assets abroad and out of the reach of the authorities. The reason is simple. It's not reportable. And if it generates no income, you pay no tax on it either.
Another excellent way to protect, preserve and build your wealth is to create an offshore trust. The right sort of trust offshore can protect assets and provide tax-advantaged income. Trusts can be complex structures but, in a nutshell, they are legal entities that hold assets. They are similar to a company except they only hold securities and assets. For Americans our Mauritius trust is hard to beat. A Mauritius trust is affordable and the source for creating these for our clients has an impeccable record. If interested just send us an email and place "MU Trust" in your subject heading.
Next is something everyone reading this can do. That is to purchase some physical gold and silver coins and place them in a safe place. Silver has increased more in value than gold recently. We recommend that you keep enough coins on hand for immediate use... just in case.
Also be sure to read Dr. Charles Freemen's free report: "Revealed: Where and How to Legally Buy, Move And Store Gold Abroad" by best selling author and second passport expert, Dr. Charles Freeman.
Download your free PDF copy at http://www.ptshamrock.com/gold_report.html
Storing a month's (or more if practical) supply of food, water, day to day necessities plus medicine is another good investment, especially if you live in a big city, i.e. a city over 100,000 people. The recent disaster in Japan is a classic example of why one should stockpile a decent amount of day to day necessities. In addition with the (US) government predicting inflation at 10% for the next 12 months, stocking up on food stuffs now will act as a hedge against future inflation and save you money to boot.
In my opinion the single most important action for you to take is to for you to have a foreign bank account with an ATM card denominated in a currency other than US dollars and place a good portion of your liquid capital in that offshore account. If you need monthly income, you can easily withdraw up to a US$1,000 per day as needed from your ATM card from anywhere in the world that has an ATM machine and live on that money for a while. There is nothing illegal about doing that. As the card would be denominated in a currency other than the USD, it will spew out money in the local (USD) currency, which offers you an excellent inflation hedge.
In fact if you open up a foreign financial account with less than $10,000, you do not have to report the assets to the US authorities. This comes under the Foreign Bank and Financial Authority (FBAR) regulations, and the IRS states you only have to report if:
* You have financial interest in, signature authority, or other authority over one or more accounts in a foreign
* The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
What if you have more than US$10,000 in your account? So what if you report your offshore bank account to the US tax authorities. You are complying with local laws and are 100% legal. More important unlike 99.99% of Americans, you'll have a life-line with your capital safely offshore not so easily grabbed by the government and in a currency other than the dollar when the proverbial doo doo hits the fan!
So long as you conduct yourself accordingly and everything is legal and in a currency other than the US dollar, your money will be safe. You can open a personal account at our recommended Swiss bank and have a multi-currency account in CHF, Euro, AUD, Yen, etc. Americans are more than welcome at this Swiss bank and it costs only Euro 500 or about US$700 as of this writing.
We recommend people open a Swiss personal (or company account if you already have an existing company, - we can create one for you if desired) and obtain a CHF (Swiss Franc) denominated ATM card, with no name printed on the card! If interested just email us and place "CHF" in your subject heading.
Last but not least, and do accept our apology for this lengthy reply, you asked would there be a single event that will trigger the [monetary] debacle we believe is forthcoming.
The currency debasing of the US dollar is already well under way. We're currently experiencing around a 10% rate of inflation as I write these words, at least if you're to believe the government. At the current rate of printing money [USD] a 20% to 25% rate of inflation could be expected, possibly a lot higher.
Although we don't believe there would be any single event that could trigger high or hyperinflation in the US and elsewhere, IMO one event that could trigger very serious problems for the US and the world, i.e. super or hyperinflation, would be when the US dollar is no longer accepted as the world's reserve currency. If that happens, all bets are off as to the rate of inflation. At that point, hyperinflation in the united States [correct spelling] would be a possibility.
Hyperinflation in Zimbabwe, the former Rhodesia, was a quadrillion times worse than it was in Weimar Germany. Zimbabwe went through a number of years of high inflation, with an accelerating hyperinflation from 2006 to 2009, when the currency was abandoned. Through three devaluations, excess zeros repeatedly were lopped off notes as high as 100 trillion Zimbabwe dollars. The cumulative devaluation of the Zimbabwe dollar was such that a stack of 100,000,000,000,000,000,000,000,000 (26 zeros) two dollar bills (if they were printed) in the peak hyperinflation would have be needed to equal in value what a single original Zimbabwe two-dollar bill of 1978 had been worth. Such a pile of bills literally would be light years high, stretching from the Earth to the Andromeda Galaxy.
Don't think that couldn't happen to the USD? Think again. The pound sterling was the world's reserve currency for over 200 years and look what's happened to the now not so Great Britain!
Times change and nothing is forever. There has been serious talk, and secret meetings, going on to change from the dollar to a basket of currencies, i.e. Yen, Yuan, Euro, etc. as the worlds reserve currency.
The USD has been the world's reserve currency since 1944, just 67 years. The U.S. dollar has lost 50 percent of its value since 1986. In fact, since June of 2010 the dollar has shed 11 percent of its value.... [Source: http://www.mybudget360.com/the-federal-reserve-plans-on-exporting-the-u-s-middle-class-abroad-with-quantitative-easing-ii/]
Has the US dollar already lost its status as the world reserve currency? See http://georgewashington2.blogspot.com/2010/11/has-dollar-already-lost-its-status-as.html
If you want to read some articles that caused us considerable consternation, read the following; http://www.globalresearch.ca/index.php?context=va&aid=22402
Getting Closer to Debasing the Currency - http://mises.org/daily/3050
Of concern to anyone who thinks about it logically, when you have the US Treasury Secretary Timothy F. Geithner testifying before the Senate Foreign Relations Committee on March 4th, 2011 saying he "Predicts U.S. Dollar to Remain World Reserve Currency," watch out. Every time a government official makes a statement like that, you can bet your bottom dollar they're hiding something, acting to cover the truth and or in order to prevent a panic, and to try to save a system that is clearly dying! Statements as such often precede a major change in policy, willingly or unwillingly! Govern yourself accordingly.
What if we're wrong about any or all of the above? You know I hope I'm wrong, because if I'm not a heck of a lot of people are going to be hurt badly, very badly. Unfortunately the hard facts prove otherwise. However in the event we're wrong, then you haven't been hurt at all have you? You'll have your money overseas safely tucked away for a rainy day, which you can easily obtain at any time, from anywhere in the world; you have protected yourself and your loved ones with an offshore trust; you'll have some gold and silver coins that can be redeemed at any time [at a higher or lower value than you paid depending on when you buy, sell or trade,] plus you'll have food to eat, purchased most likely at a lot less cost than it will be at the time of consumption.
"How is the US government going to pay off all its debts, if in fact they can? By creating jobs and manufacturing goods to sell overseas, or by printing more money?"
Creating new meaningful manufacturing jobs (not the part time job at fast food outlets)is a good way for the united States to start getting back on track to reduce its deficit and regain its falling status.
However as the US has the highest corporate tax rate in the world, that is discouraging new and existing businesses from setting up shop, expanding, bringing offshore business' to the US whilst generating new jobs and creating healthy exports! Therefore it is my opinion that raising taxes and printing money is not the way for America to regain its status as the greatest country in the world. Clearly the trend is for the US to continue printing more money, a lot more money in order to debase its currency and pay off its debts via inflationary dollars.
However you answer that question, do something to protect yourself and your loved ones.
I'll leave you with the following quote:
"During a period of hyperinflation, normal perspectives about finance and time horizons don't apply to earning a living, spending, borrowing, or investing. In Weimar Germany, for example, prices effectively doubled every 49 hours at the peak of the spiral in 1923. By then, according to a December 1999 report in the Economist, workers were paid twice a day and were given "half-hour breaks to rush to the shops with their satchels, suitcases, or wheelbarrow to buy something, anything, before their paper money halved in value again."
- Michael J. Panzner, Financial Armageddon: Protecting Your Future from Four Impending Catastrophes
See you next issue
"The people never give up their liberties but under some delusion."
- Edmund Burke, 1784
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