Notes from the Field
Date: May 18, 2010
Reporting From: Undisclosed location
You know by now that I generally don't spend very much time in the US.
I think there are more desirable places out there... and to me, the US is just like any other country in decline like Italy or Spain-- I really enjoy it as a tourist, I just don't care enough for the politics or media to stay for long periods of time.
That's one of the benefits of being a permanent traveler with no fixed home: I have the luxury of not being constantly force-fed propaganda that spreads fear and ignorance.
When I come back to the states, though, I feel like there's a political agenda being thrown in my face everywhere I look. One of the most pervasive, from my outlook, is this notion that the economy is rosy, and that the government has everything under control.
I think this is absolutely ludicrous. The government doesn't have anything under control, including themselves. Instead of putting the country on sound financial footing, they're doing the exact opposite-- spending without limit, borrowing without regard, and furthering a culture of entitlement.
Congressman Ron Paul was on CNBC yesterday talking about these same issues. He criticized the administration and Congress for their reckless spending, and he railed against the Federal Reserve for inflating away the currency and bailing out select banks.
For whatever reason, his ideas don't seem to resonate with the public. Becky Quick even chided the Congressman for his bullishness on gold as a more effective store of value than paper dollars.
In fact, a bit of basic math shows us that, since the dollar became a worthless piece of paper in 1971 when Nixon left the gold standard, gold has generated a 9.2% annualized return in dollar terms, while stocks have only returned an annualized 6.6% and bonds about 8%.
Now, I'm not a gold bug, but I'd rather take my chances on this 'barbarous relic' than on a worthless piece of paper controlled by bureaucrats.
(Actually I prefer ammunition as a store of value, but I'll save that for another time...)
Think about it-- the entire modern financial system is based on a very small group of people having the power to create money out of thin air. It's obvious that this is corrupt and unsustainable.
So is borrowing trillions of dollars each year.
They (the government) think that we can simply grow our way out of debt... that if the economy has a big boost, the size of its debt won't matter very much in relation to the size of our economy and consequent tax revenue.
This is also completely ludicrous. If every single person in the US were to pay 100% of his/her salary for the next year to the federal government in taxes, it still wouldn't be enough to pay off the debt-- the US would still be a few trillion in the hole.
That's just a pipe dream anyhow. The government is going to give the largest voting blocs even more tax cuts and entitlement programs, then stick the bill to (1) future generations; (2) those who are unprepared to deal with inflation; (3) productive citizens who generate wealth and create jobs.
We can see this already happening around the world.
In Portugal, their government has even gone so far as to introduce a special 'crisis tax' to bring down that country's deficit... punishing the entire population for decades of politicians' mismanagement.
In Australia, that government is singling out the resource industry and charging them with a special tax to redistribute mining profits across the rest of the economy.
Sure, that sounds like a great idea, mate. Penalize your most profitable industry that provides ample jobs and wealth, then choke off the profits that they need to reinvest in exploration and extraction technology. That ought to be good for long-term growth.
Unfortunately, this is only the beginning. You can expect even more Draconian measures in the countries with the most desperate balance sheets-- that's the PIIGS, the US, and Japan.
Here's the good news: As an expat, all of these measures are largely meaningless. When you're a 'permanent tourist', governments compete for you rather than try to bleed you dry. They want you to spend your time and money in their country, and they'll do whatever it takes to attract you.
I think there's going to be a massive wave of expatriation over the next few years, and it's already begun. Everyone has a breaking point, and a lot of people are going to be reaching theirs very soon.
The solutions are already out there-- offshore bank accounts, foreign property, tax residency, second citizenship, etc. It's simply a question of will and mental attitude.
Are you seriously considering expatriating or at least planting flags internationally? What's your single biggest question about it? If not, what's holding you back? Let me know by leaving a comment.
Senior Editor, SovereignMan.com
Did you receive this email from a friend? Sign Up to receive Notes From The Field.
Neither this email communication nor content posted to the website SovereignMan.com is intended to provide personal financial advice. Before undertaking any action described in this letter, financial or otherwise, you should discuss your options with a qualified advisor-- accountant, financial planner, attorney, priest, IRS auditor, Tim Geithner... Also, nothing published in this letter constitutes encouragement to avoid or evade tax obligations in your home country.