Imagine This Scenario And Then Ask Yourself A Simple Question…
My guess is that you would be pretty angry. Yet this is essentially what our central bankers and political leadership are doing right now.
Recently, at a picturesque resort in beautiful Wyoming, Fed chairman Ben Bernanke met with his global counterparts, including Bank of England’s Mervyn King, the ECB’s Jean-Claude Trichet, and Masaaki Shirakawa of the Bank of Japan.
The financial world was attentively looking for indications of what these men are planning after having exhausted every monetary policy tool at their disposal.
These bankers have collectively printed TRILLIONS of currency units, purchased unprecedented amounts of government debt, given handouts to commercial banks, slashed interest rates to record lows, and taken risky assets onto their ever-expanding balance sheets.
Look, I’ll be the first to tell you that there are GREAT OPPORTUNITIES and GOOD NEWS stories around the world; unfortunately, millions of people are having their lives and livelihoods turned upside down whilst Bernanke and his friends toasted themselves to expensive champagne at a luxury resort.
Politicians, meanwhile, are flying around the world on their government jets, praising themselves in front of voters and trying to convince the taxpayers that stimulus programs are working.
They’ve spent TRILLIONS of dollars over the last few years with little result. The ultimate consequence is more debt with little benefit to show for it.
Despite printing and spending trillions of dollars, the world is still faced with the same financial conditions as when this crisis started: huge government debt, and lack of credit availability in the private sector.
Continue cutting interest rates, spending trillions of dollars, and printing trillions more.
Full stop. Something is wrong with this picture.
The first thing that comes to mind is the definition of insanity: “doing the same thing over and over again, but expecting a different result.” This is exactly what’s happening now.
Then again, how do you cut interest rates that are already at zero? How much more money do you print when you have already printed trillions of it? How much more do you spend when the deficit is already beyond $2 trillion?
At some point, even the most insane individual has to question this logic.As we enter this Age of Turmoil, the risks to our capital are only going to increase. The way out, the way to survive and thrive, is to become self-reliant and reject the limiting options that have been force-fed by the old system.
Yesterday we talked about defining your reality as the first pillar of self-reliance. I believe that the second pillar of self-reliance is capital preservation: maintaining the value and purchasing power of the savings that we depend on to feed our families.
In the past, loose central banking and generous government entitlement programs were part of the old system that made a lot of people very rich. It generated huge returns in the market, easy credit for businesses and investors, and a giant safety net courtesy of the taxpayers.There are a lot of people who still cling to it, who put their trust in their governments and central bankers… they’ll keep buying bonds, CD’s, etc., and they’re going to have their lives turned upside down.
Over the next 10-years as the Age of Turmoil rages on, you can absolutely bet on things like rising taxes, capital controls, further erosion of financial privacy, increased regulation, and negative real returns.
Perhaps most importantly, there’s a major debate in finance right now among various camps who are arguing whether we will see significant inflation, deflation, both, or neither.
Wherever you stand on the issue, I would suggest asking yourself one simple question: Will the paper currencies of the largest debtor nations in history continue to be reasonable stores of value in the long-term?
…and this will have catastrophic effects on your savings if it is trapped in a debtor nation’s fiat currency.
Fundamentally, finding suitable alternatives to preserve capital is one of the ways that the self-reliant individual can survive and thrive in the Age of Turmoil.
This includes things like foreign bank accounts, alternative and productive assets, offshore gold storage, high yield financial assets, foreign currencies, etc.
If you think you are living in the “Land of the Free,” think again…
Personal freedom is under attack. The WARNING Signs are ominous. With each passing day the US government (and other governments around the world) are slowly but surely eliminating personal privacy and removing personal liberties we used to take for granted.
1. Financial Privacy is a Fantasy
The PATRIOT Act has put an end to Financial Privacy to fight the “War on Terror” and it also allows the government to tap your phone and listen to your private conversations without a search warrant (oh, and Congress just extended these warrantless surveillance super powers until 2015)
2. Medical Privacy is History too
Thanks to legislation such as HIPPA and ARRA and the creation of electronic medical records easily shared with insurance companies, marketers, and employers, medical privacy has disappeared too.
3. Increasing Government Interference in Our Everyday Lives
Even something as simple as air travel had been made into a major inconvenience by TSA goons so out of touch with reality we routinely hear stories like the one where they demanded to ‘pat-down’ an 11-year old girl. To give you a recent example, a 95-year old woman in a wheelchair who was trying to board a flight to Michigan in order to be with a dying family member in the final stages of leukemia was forced to remove her adult diaper for TSA inspectors— all in the name of the “War on Terror.”
4. LESS Personal Freedom in Favor of MORE Police Power
In a recent case [Barnes v. State of Indiana], the Indiana Supreme Court basically threw out the Magna Carta and the US Constitution when it ruled that Hoosiers (as residents of Indiana are called) have no right to resist unlawful entry by police officers. Centuries of legal precedents were summarily dismissed, and the Fourth Amendment of the US Constitution was gutted in one fell swoop. A government that rejects the right of its citizens to protect private property against unlawful entry – a hallmark of a free civilization – is not far down the road from denying other basic rights, like assembly, criticizing the government, and possession of firearms among others.
5. Increased Capital Controls are Coming
Recent legislation called the Foreign Account Tax Compliance Act (FACTA) requires, in some instances, that foreign banks withhold 30% of payments that -might- originate from the United States. This bill has been signed into LAW and is waiting to take effect; it’s the early stages of capital controls— governments trying to regulate the flow of money in and out of the country.
FACTA is going to make it much harder for people in the US to get money out of the country if they don’t act now…