The Truth About Silver And Inflation

April 19, 2011

Courtesy National Inflation Association

Silver futures surged today to a new 31-year high of $42.80 per ounce. Silver is up 146% since NIA declared silver the best investment for the next decade on December 11th, 2009, at $17.40 per ounce. All we need is for silver to rise by another 15.5% and silver will reach its all time high set in 1980 of $49.45 per ounce.

Keep in mind, silver’s high of $49.45 per ounce in 1980 would equal about $140 per ounce in today’s dollars adjusted to the consumer price index and about $400 per ounce in today’s dollars adjusted to the real rate of price inflation. Despite silver’s huge gains in recent months, we have yet to see silver rise by $2 or more in a single day. When we start to see a true “silver mania” with investors around the world rushing out of their U.S. dollars and panic buying silver, we expect to see silver gain by $5 to $10 in a single day on more than one occasion.

Back in February of last year when silver dipped to below $15 per ounce, we sent out an alert saying, “NIA believes this is a once in a lifetime entry point for those wishing to go long silver at a bargain basement price”. NIA suggested silver call options in February of last year that ended up gaining over 1,000%. NIA’s latest silver stock suggestion is currently up 175% from our profile price.

In NIA’s top 10 predictions for 2010, we predicted a major decline in the gold/silver ratio, which was 64 at the time. The gold/silver ratio declined in 2010 down to 46, and in our top 10 predictions for 2011, we predicted another major decline in the gold/silver ratio and projected for it to decline this year to 38. NIA has been the most bullish organization in the world on silver, yet recent gains in the price of silver have surpassed even our short-term expectations. The gold/silver ratio is now down to 35 and we believe it will decline to at least 16 this decade, and possibly as low as 10.

The artificially high gold/silver ratio of the past century will be looked back at as an anomaly caused by the silver price suppression scheme of the Federal Reserve, which was in cahoots with Bear Stearns and now JP Morgan. NIA’s President Gerard Adams exposed this scheme in NIA’s critically acclaimed documentary ‘Meltup’, which has now been viewed by over 1 million people with an overwhelming 96% of its viewers giving it a thumbs up, a world record for an economic documentary. According to Mr. Adams, the Federal Reserve chose to bail out Bear Stearns and not Lehman Brothers, because Bear Stearns was the holder of a massive naked short position in silver that they were on the verge of being forced to cover.

It is not a coincidence that Bear Stearns failed on the very day silver reached its then multi-decade high of $21 per ounce. Bear Stearns was on the verge of being forced to cover their naked short position, which could have sent silver from $21 per ounce to $50 per ounce overnight. By bailing out Bear Stearns and allowing JP Morgan to acquire Bear Stearns’ assets with the promise to cover any losses derived from them, JP Morgan was able to continue managing the silver short position and orchestrate a manipulative take down in 2008 from $21 per ounce down to $8 per ounce.

Only ten times more silver has been produced in world history than gold and from the years 1000 to 1873, a period of 873 years, the gold/silver ratio remained between 10 and 16. In fact, the Coinage Act of 1834 defined a gold/silver ratio of 16. The gold/silver ratio started to rise after silver was demonetized in 1873. Despite silver being demonetized, we saw the gold/silver ratio return to 16 on three occasions during the past century: in 1919, 1968, and 1980.

It was only ten months ago in June of 2010 that the gold/silver ratio was 70. With the gold/silver ratio now at 35, it means that silver investors have seen their purchasing power double over the past ten months, while those with their savings in U.S. dollars have seen their purchasing power decline by 20%. That’s right, forget about NIA’s silver call option that gained over 1,000% and forget about NIA’s most recent silver stock suggestion that is currently up 175%; the simple act of following NIA’s most basic suggestion of getting rid of your U.S. dollars and buying physical silver means that over the past ten months, your purchasing power has doubled while non-NIA members with U.S. dollars lost 1/5 of their real wealth.

The Federal Reserve can claim all they want that there is no inflation, but as we write this article we are eating Ben & Jerry’s ice cream that we just bought at Quick Chek for $5 a pint. Three years ago, the same pint of Ben & Jerry’s ice cream at Quick Chek cost us $3. Three years ago, one ounce of gold would have bought 295 pints of Ben & Jerry’s ice cream and it still buys 295 pints of Ben & Jerry’s ice cream today. Three years ago, one ounce of silver would have bought 5.7 pints of Ben & Jerry’s ice cream and today it buys 8.5 pints of Ben & Jerry’s ice cream.

Americans with their savings in U.S. dollars can today only afford 3/5ths of the ice cream that they could have bought three years ago, but those with their savings in gold have maintained their purchasing power, and those with their savings in silver have greatly increased their purchasing power. NIA is 100% sure that the gold/silver ratio will decline to at least 16 within the next few years, and that will mean those with silver will once again more than double their purchasing power. Considering that the gold/silver ratio overshot to the upside and was as high as 100 in 1991, we fully expect it to overcorrect to the downside and possibly reach a low of 10 this decade. That would mean a more than tripling of ones purchasing power from the current ratio of 35.

When silver rose to $49.45 per ounce in 1980, the government said that the rise was due to the Hunt brothers “cornering” the silver market. The truth is, silver reached $49.45 in 1980 due to the massive inflation that was created by the U.S. government during the 1970s, and the Hunt brothers were used as a scapegoat. The Hunt brothers were accumulating silver in order to protect themselves from a collapsing U.S. dollar, just like NIA has been encouraging its members to do in a countless number of articles and videos over the past two years.

When the Hunt brothers were accused by the U.S. government of “cornering” the silver market and trying to manipulate silver prices higher, they only owned a concentrated long position of approximately 100 million ounces of silver. JP Morgan today has a concentrated naked short position in silver of approximately 122.5 million ounces, but the U.S. government doesn’t seem to have any problem with it.

The problem with the Hunt brothers’ strategy of accumulating such a large concentrated long position in silver is that after silver prices rose, their position was simply too large for them to ever sell without causing silver prices to crash. With silver reaching $49.45 per ounce in early 1980, the world was about to lose confidence in the U.S. dollar, which would have caused an outbreak of hyperinflation. In a desperate attempt to save the U.S. dollar and prevent hyperinflation, the CBOT raised margin requirements and limited traders’ positions to only 3 million ounces of silver futures. The COMEX also limited traders’ positions to 10 million ounces of silver futures. Not only that, but the COMEX and CBOT only had a total of 120 million ounces of silver in inventory, and the COMEX was likely going to default from futures contract holders requesting physical delivery. The COMEX was forced to go into “liquidation only” mode, ending all silver futures contract buying.

Combined with the Federal Reserve rapidly rising interest rates, silver prices began to plunge and the Hunt brothers were hit with massive margin calls. On one single day in March of 1980 when the Hunt brothers were forced to liquidate a large part of their position, silver lost 1/3 of its value, declining by over $5 to $10.80 per ounce. That represented a total decline of 78% from its high two months earlier.

NIA has been receiving a countless number of emails asking if now is the time to sell silver, and if silver could crash by 78% once again like it did in 1980. The fact is, while the Hunt brothers’ 100 million ounce concentrated silver position was on the long side, JP Morgan’s 122.5 million ounce concentrated silver position is on the short side.

While the Hunt brothers’ long position was impossible to sell without causing silver prices to crash, JP Morgan’s naked short position is impossible to cover without causing silver prices to explode to the upside. Being that the CFTC was so quick in 1980 to support the position limits that were then imposed by the CBOT and COMEX, NIA believes it would only be fair for the CFTC to mandate similar position limits today. This is unlikely to occur because the U.S. government believes JP Morgan’s silver manipulation to be a good thing, since it is giving the phony appearance that the U.S. dollar still has purchasing power. The free market will ultimately win in the end and silver prices will soar through the roof to where they belong based on supply and demand fundamentals.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at:

The Run On US Debt Has Begun

March 12, 2011

by Russell D. Longcore

(Editor’s Note: Yesterday an earthquake of 8.9 on the Richter scale rocked Japan, with a 6.5 aftershock and tsunami waves following that scoured the coastlines. Japan is the third largest economy in the world, and their public debt is three times the size of their annual economic output. Japan’s economy has been in a recession for 20 years! Japan’s government holds $877 billion in US Treasuries, second only to China. And consider what effect this catastrophe will have on worldwide insurance companies as earthquake claims are paid. Insurance companies hold US debt too. I guarantee that some insurance companies will go bankrupt because of this earthquake. And companies that default are forced to sell off their assets.

Could this earthquake…the worst to hit Japan in 140 years, collapse the Japanese economy? And, if Japan’s economy falters, will Japan sell off portions or all of its US debt? It certainly could happen. Stay tuned.)

Anybody out there remember reading any of my articles in which I predicted that the worldwide rejection of US Treasury securities could trigger the collapse of the dollar?

Well, this news story from Thursday is a MAJOR step toward seeing that prediction come true. PIMCO is the world’s largest bond fund. They have just divested themselves of ALL United States Treasury debt instruments. Bill Gross, who runs the fund, urged investors to get out of US debt and get into the debt securities of emerging nations.

Pimco Eliminates Government Debt From Total Return Fund

Friends…How are you doing on your survival supplies and your efforts to change US dollars into gold and silver coins? You may need them sooner than you think.

Secession is the Hope For Mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

The Perfect Business

February 14, 2011

by Richard Russell
Dow Theory Letters

(Editor’s Note: Mr. Russell doesn’t think that a perfect business exists. I, however, own just such a perfect business. And I am on a national talent search for entrepreneurial associates. You may be looking for a business. Or, you may already own a business, and want to add another profitable stream of income to your existing business. To learn more about it, and determine if you could benefit from owning a business like mine, click on the ”Residual Income” tab above.)

AH PERFECTION: Strange, but the most popular, the most widely-requested, and the most widely quoted piece I’ve ever written was not about the stock market – it was about business, and specifically about what I call the theoretical “ideal business.” I first published this piece in the early-1970s. I repeated it in Letter 881 and then again in Letter 982. I’ve added a few thoughts in each successive edition. But seldom does a month go by when I don’t get requests from subscribers or from some publication or corporation to republish “the ideal business.” So here it is again – with a few added comments.

I once asked a friend, a prominent New York corporate lawyer, “Dave, in all your years of experience, what was the single best business you’ve ever come across?” Without hesitation, Dave answered, “I have a client whose sole business is manufacturing a chemical that is critical in making synthetic rubber. This chemical is used in very small quantities in rubber manufacturing, but it is absolutely essential and can be used in only super-refined form.

“My client is the only one who manufactures this chemical. He therefore owns a virtual monopoly since this chemical is extremely difficult to manufacture and not enough of it is used to warrant another company competing with him. Furthermore, since the rubber companies need only small quantities of this chemical, they don’t particularly care what they pay for it – as long as it meets their very demanding specifications. My client is a millionaire many times over, and his business is the best I’ve ever come across.” I was fascinated by the lawyer’s story, and I never forgot it.

When I was a young man and just out of college my father gave me a few words of advice. Dad had loads of experience; he had been in the paper manufacturing business; he had been assistant to Mr. Sam Bloomingdale (of Bloomingdale’s Department store); he had been in construction (he was a civil engineer); and he was also an expert in real estate management.

Here’s what my dad told me: “Richard, stay out of the retail business. The hours are too long, and you’re dealing with every darn variable under the sun. Stay out of real estate; when hard times arrive, real estate comes to a dead stop and then it collapses. Furthermore, real estate is illiquid. When the collapse comes, you can’t unload. Get into manufacturing; make something people can use. And make something that you can sell to the world. But Richard, my boy, if you’re really serious about making money, get into the money business. It’s clean, you can use your brains, you can get rid of your inventory and your mistakes in 30 seconds, and your product, money, never goes out of fashion.”

So much for my father’s wisdom (which was obviously tainted by the Great Depression). But Dad was a very wise man. For my own part, I’ve been in a number of businesses – from textile designing to advertising to book publishing to owning a night club to the investment advisory business.

It’s said that every business needs (1) a dreamer, (2) a businessman, and (3) a S.O.B. Well, I don’t know about number 3, but most successful businesses do have a number 3 or all too often they seem to have a combined number 2 and number 3.

Bill Gates is known as “America’s richest man.” Bully for Billy. But do you know what Gates’ biggest coup was? When Gates was dealing with IBM, Big Blue needed an operating system for their computer. Gates didn’t have one, but he knew where to find one. A little outfit in Seattle had one. Gates bought the system for a mere $50,000 and presented it to IBM. That was the beginning of Microsoft’s rise to power. Lesson: It’s not enough to have the product, you have to know and understand your market. Gates didn’t have the product, but he knew the market – and he knew where to acquire the product.

Apple had by far the best product in the Mac. But Apple made a monumental mistake. They refused to license ALL PC manufacturers to use the Mac operating system. If they had, Apple today could be Microsoft, and Gates would still be trying to come out with something useful (the fact is Microsoft has been a follower and a great marketer, not an innovator). “Find a need and fill it,” runs the old adage. Maybe today they should change that to, “Dream up a need and fill it.” That’s what has happened in the world of computers. And it will happen again and again.

All right, let’s return to that wonderful world of perfection. I spent a lot of time and thought in working up the criteria for what I’ve termed the IDEAL BUSINESS. Now obviously, the ideal business doesn’t exist and probably never will. But if you’re about to start a business or join someone else’s business or if you want to buy a business, the following list may help you. The more of these criteria that you can apply to your new business or new job, the better off you’ll be.

(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market (and today this is more important than ever, since world markets have now opened up to an extent unparalleled in my lifetime). By the way, how many times have you seen a retail store that has been doing well for years – then another bigger and better retail store moves nearby, and it’s kaput for the first store.

(2) The ideal business offers a product which enjoys an “inelastic” demand. Inelastic refers to a product that people need or desire – almost regardless of price.

(3) The ideal business sells a product which cannot be easily substituted or copied. This means that the product is an original or at least it’s something that can be copyrighted or patented.

(4) The ideal business has minimal labor requirements (the fewer personnel, the better). Today’s example of this is the much-talked about “virtual corporation.” The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies.

(5) The ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.

(6) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).

(7) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.

(8) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).

(9) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want – Nevada, Florida, Texas, Washington, S. Dakota (none have state income taxes) or hey, maybe even Monte Carlo or Switzerland or the south of France.

(10) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.

(11) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day (my lawyer wife, who leaves the house at 6:30 AM and comes home at 6:30 PM and often later, has been well aware of this one).

(12) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).

That’s it. If you use this list it may help you cut through a lot of nonsense and hypocrisy and wishes and dreams regarding what you are looking for in life and in your work. None of us own or work at the ideal business. But it’s helpful knowing what we’re looking for and dealing with. As a buddy of mine once put it, “I can’t lay an egg and I can’t cook, but I know what a great omelet looks like and tastes like.”

Copyright © 2011 Dow Theory Letters

When Will The Renminbi Overtake The Dollar?

January 9, 2011

by Simon Black

(Editor’s Note: Simon Black has discovered one of the most frightening risks facing the world today. The dollar is going to meltdown, but no worldwide currency is ready to step forward to become the world reserve currency. This one unknown makes the world economy extremely dangerous and volatile. If the dollar collapsed today, it could be years before the Chinese renminbi could stand alone as the new world reserve currency. However, this danger would be a boon for a newly seceded American state, now a fledgling nation…but only if it has a precious metals money system not controlled by the new Nation. That new nation would be the only place on the planet with sound money. Almost overnight, the wealth of the world would flow to that new nation. I hope that new nation is Texas.)

Without a doubt, the existing global financial system depends on the widespread use of fiat currencies issued by insolvent governments. The wealth of the world’s large financial institutions requires that there be currencies with sufficient size and circulation to absorb massive capital flows.

The current system is based primarily on the dollar; with a $14 trillion economy, the United States was for years the only country in the world with a sufficient money supply and financial infrastructure to take in the preponderance of the world’s wealth.

It is for this reason commercial loans, commodities contracts, international reserves, and cross border settlements have traditionally been denominated in US dollars.

Competing reserve currencies arose with the advent of the euro and Japan’s post-war rise; while the dollar has continued to remain dominant, these three are the only currencies which have the necessary supply and credit rating.

With trillions of dollars floating around the global financial system, managers are constantly making capital allocation decisions, moving funds in and out of various instruments. The reserve currencies play a big role in this because unallocated capital is frequently parked in their bond markets.

For example, large corporations or banks that are sitting on billions of dollars in cash typically purchase short-term US or European government bonds because the low default risk.

The dollar, euro, and yen have bond markets of such size that getting liquid is never a problem, even for billions of dollars. There is always a market for treasury securities, hence they are considered ‘cash equivalents’.

You couldn’t do the same thing in the Kingdom of Bhutan with its tiny $3.5 billion economy. If you tried to move $100 million into Bhutan, its currency (the ngultrum) would spike. In the US, Europe, and Japan, $100 million barely registers a blip.

Over the last few years, though, the confidence has begun to fade quickly, and the reserve currency issuing governments are starting to be viewed with increasing skepticism.

The thing that’s missing right now is an acceptable alternative. There’s really nothing out there in large enough scale to withstand massive capital flows, and as I have written before, the game is now one of judging the ‘least worst’ of these three major currencies.

In what seems to be a 6-month cycle, the dollar and euro have been jockeying for the ‘worst of the worst’ title; markets focus on Greek woes for a few months, then turn their attention back to California and Obamanomics.

With Bernanke’s “100% certainty” and nonsensical economic numbers coming out of the America’s Ministry of Truth (Newspeak: USMiniTruth), we seem to be back in a period where the markets are more concerned with Europe. I think that Japan will be called to the carpet before too long as well.

As such, in an almost ritualistic cycle, financial markets are shifting funds around these currencies… the analogy I like to think of is like a series of buckets.

Imagine three buckets and an increasing volume of water. Capital allocators are essentially dumping the contents of one pail into another– from the dollar bucket into the euro and yen bucket, and from the euro bucket back into the dollar bucket.

Each time this happens, though, a little bit of water spills out into smaller buckets– gold, silver, Switzerland, Norway, Canada, Chile, Australia, etc.

All throughout, central bankers are standing there keeping the spigot at full blast, pumping more water into the system while bankers desperately try to find the least leaky balance.

What’s required is a new bucket that bankers view as strong, sturdy, and large enough to handle the volume. The most likely candidate is the Chinese renminbi… but not yet.

China’s economy is set to be the largest in the world in a matter of years, and it has the money supply to match. While its economic and monetary fundamentals are far, far from perfect, China is arguably in a much better financial position than the west.

It’s going to take several years for the renminbi to overtake the dollar, euro, and yen as a serious contender for the world’s main reserve currency… but it can happen. The major roadblock is that China’s renminbi is not free-floating– the government has imposed severe exchange controls.

I’ve written before that we are seeing the early signs of relaxing controls. China doesn’t do anything overnight, and I think there is a long-term plan in the works.

We have already seen China agree with other sovereign nations to introduce currency swap arrangements, so there are now several countries holding renminbi. Furthermore, the Hong Kong gold exchange recently announced its plans to launch a new gold contract denominated in renminbi.

To be clear, China already has its own gold exchange, but having one in Hong Kong opens up renminbi-denominated gold contracts to the entire world since Hong Kong has no exchange controls.

On that note, the mainland authorized Hong Kong’s banks to establish cross-border settlement accounts in renminbi last year, effectively providing a way for people to open a renminbi bank account. In fact, we have one.

Each of these measures to reduce exchange controls is one step closer to the renminbi being introduced as a global reserve currency.

Perhaps the most obvious step, though, came in just the last few days. Beijing has already allowed several multinational companies like McDonald’s and Caterpillar to issue renminbi denominated bonds. Now the World Bank, that unfortunate staple of the financial system, is issuing its own two-year renminbi bond.

This is a big deal… and I think that we’re going to continue to see bigger and bigger steps like this taken throughout 2011 and the coming years.

China’s government has been very clear that by 2020, it wants Shanghai to be a leading global financial center… and Chinese policymakers know that for Shanghai to be a financial center, the renminbi must be freely convertible.

Make no mistake, my friend, the deadline has been set… and if you haven’t started making decisions to preserve your capital, I strongly urge you to start now.

Simon Black is an international investor, entrepreneur, permanent traveler and free man. Visit his website at

Copyright 2011 International Man. All Rights Reserved.

Thinking About Expatriation? Watch This Video

December 18, 2010

by Simon Black

(Editor’s Note: This is DEFINITELY worth four minutes of your time. Make sure you show this to your kids.)

Professor Hans Rosling has an uncanny ability to take enormous heaps of data, crunch the numbers, and present them in such a fluid way that it would make the most disinterested viewer sit up and take notice, and his focus on developing countries shatters a lot of misconceptions.

In the video below, Rosling charts a moving 200-year history of the wealth and life expectancy of 200 countries. In just 4 minutes, he shows that the gap between developing countries and developed countries is actually rather small, and that places like Shanghai, Taiwan, South Korea, and Singapore have already caught up with the West.

Two of the things that I thought of immediately when watching this video were:

1) The catastrophic long-term effects of government-organized folly (war, central planning, currency debasement, etc.) are very clear when watching the progression of his data set;

2) It’s incredible how fast developing nations can catch up with the West; technology, productivity, and a high savings rate are key drivers, and those are the critical ingredients to look for when assessing the long-term growth capacity of any economy.

I highly recommend the above video, it’s only 4 minutes. If you have time for a more in-depth presentation about the growth rates of developing nations (particularly India and China), check out Rosling’s lecture at a 2009 Ted conference, it’s about 15 minutes.

And finally, if you want to play with the data yourself, you can do so at Rosling’s website.

Anyone considering a move or exploratory trip overseas, might want to consider starting his or her research in some of the developing nations that rank highly in Rosling’s data set. Chile ranks the highest in Latin America, Malaysia in developing East Asia, and Sri Lanka in developing South Asia… 3 of my top picks.

Copyright © 2010 Sovereign Man

The Next World Reserve Currency: The Chinese Yuan?

October 24, 2010

The National Inflation Association has a new video posted below about what China is doing to protect THEIR economy from the destruction of the US Dollar.

Watch this short video. It is only a matter of time before the dollar collapses. Either (a) the nations of the world will cause the collapse, or (b) China will destroy Washington themselves with economic warfare, never having to fire one bullet in anger or place one Chinese army soldier on American soil. Remember…China holds almost $900 Billion in Treasury securities…more than any other entity on the planet. All China has to do is dump 5% of their Treasuries onto the bond market on any given trading day and it’s all over for America.

We hear over and over how our clueless American presidents bluff and bluster to China about revaluing the yuan to make it more “fair.” China takes care of China first. Wouldn’t it be nice if our national leaders did the same for America?

Ladies and Gentlemen, I keep telling you to buy silver. For Christ’s sake, don’t allow peasants in China to be smarter than you.

American hubris will soon be answered by Chinese nemesis.

12 Ominous Signs For World Financial Markets

October 13, 2010

from Economic Collapse Blog

Can anyone explain the very strange behavior that we are seeing in world financial markets right now? Corporate insiders are bailing out of the U.S. stock market at a very alarming rate. Investors are moving mountains of money into gold and other commodities. In fact, there is such a rush towards gold that shortages are starting to be reported in some areas. Meanwhile, some very, very unusual option activity has started to show up. In particular, someone is making some incredibly large bets that the S&P 500 is going to absolutely tank during the month of October. Central banks around the world have caught a case of “loose money fever” and are apparently hoping that a new flood of paper money will shock the global economy back to life. Meanwhile, the furor over the foreclosure procedure abuses of the major U.S mortgage companies threatens to bring even more turmoil to the U.S. housing industry.

There are some very ominous signs that something is just not right in world financial markets right now. Some of the signs listed below may be related. Others may not be. That is for you to decide.

Often, just before something really bad happens, you can actually see the rats leaving a sinking ship if you know where to look. The truth is that if things are going to go south it is the insiders who know before anyone else.

So are some of the signs below actually clues for what we should expect in the months ahead?


Maybe not.

You make your own call.

But it is becoming hard to deny that there are some serious danger signs out there at this point….

#1 Corporate insiders are getting out of the U.S. stock market at an absolutely blinding pace. It is being reported that the ratio of corporate insider selling to corporate insider buying last week was 1,411 to 1, and this week the ratio has soared even higher and is at 2,341 to 1.

#2 Many of the world’s wealthiest people are buying absolutely massive quantities of gold right now.

#3 It is being reported that J.P. Morgan is gobbling up the rights to as much physical gold as it possibly can.

#4 The United States Mint has announced that it has run out of 1-ounce, 24-karat American Buffalo gold bullion coins and that it will not be selling any more of them in 2010.

#5 It is becoming increasingly difficult to explain the unusually high option volume that we are witnessing right now.

#6 Some very large investors are making massive bets that the S&P 500 is going to take a serious tumble during the month of October.

#7 On Tuesday, the Bank of Japan shocked world financial markets by cutting interest rates even closer to zero and by setting up a 5 trillion yen quantitative easing fund.

#8 The president of the Federal Reserve Bank of New York and the president of the Federal Reserve Bank of Chicago are both publicly urging the Fed to do much more to stimulate the U.S. economy, including beginning a new round of quantitative easing, even if it means a significant rise in the U.S. inflation rate.

#9 Nobel Prize-winning economist Joseph Stiglitz told reporters on Tuesday that the loose monetary policies of the Federal Reserve and the European Central Bank are throwing the world into “chaos”.

#10 At the end of September, federal regulators announced a $30 billion bailout of the U.S. wholesale credit union system.

#11 Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures. Now, Texas Attorney General Greg Abbott is actually demanding that all mortgage servicing companies in the state of Texas immediately suspend all foreclosures, the selling of foreclosed properties and the eviction of people living in foreclosed properties until they have completed a review of their foreclosure procedures.

#12 Not only that, but Nancy Pelosi and 30 other members of Congress are requesting a federal investigation of the foreclosure practices of U.S. mortgage lenders. Needless to say, this controversy has the potential to turn the entire U.S. mortgage industry into an absolute quagmire.

So are dark days ahead for world financial markets?

Well, yeah, but it is incredibly hard to predict exactly when things are going to fall apart.

The truth is that there are going to be a whole lot more “crashes” and “collapses” in the years ahead.

The important thing, as discussed yesterday, is to keep your eye on the long-term trends.

The U.S. economy is undeniably in decline. The only thing keeping the economy going at this point is a rapidly growing sea of red ink. Debt is literally everywhere. It is what our entire financial system is based on in 2010.

In the months and years to come, the major players are going to try very hard to keep all the balls in the air and to continue the massive shell game that is going on, but in the end the whole thing is going to collapse like a house of cards.

Unfortunately, we have been destroying the U.S. economy for decades and there is simply not going to be a happy ending to this story.

courtesy The Economic Collapse Blog

Gold and Silver Correction Happening NOW

October 12, 2010

It’s always a pleasure to feature the work of the National Inflation Association…I mean a pleasure to feature such high quality analysis. The message of their work is scary and dire. But they are spot on every time.

Ladies and Gentlemen, you should be converting every spare dollar you have into gold and silver right now. This is not in any way an investment recommendation. It is a recommendation to convert US Dollars into a “wealth preservation” or “store of value” modality. My recommendation is to build up your inventory of silver. Buy it any way you possibly can. Sell off stuff you don’t need. Have a yard sale. Convert all your “junk” to cash and buy silver. I also recommend that when you are making your purchases, you make cash purchases with no paper trail. For example, if you are buying silver online, there is a record with the merchant of your name, address and what you bought. Governments like this, and will use that info if there is ever a confiscation of gold and silver.

Here is the latest video presentation from NIA. Watch it more than once.

Washington’s Next Target: Your Retirement Savings

October 10, 2010

(Editor’s Note: Washington is running out of buyers for its Treasury debt securities. The nations of the world don’t want US Treasuries any more…they’re trying to dump them as fast as they can. So who will finance Washington’s insanity? It might be YOU, if you have retirement savings. Washington wants to nationalize ALL retirement savings…pensions, IRAs, 401(k)s, 403(b)s…ALL OF THEM.

Ladies and Gentlemen, will this be the last straw? Will you sit idly by and allow Washington to steal your life savings? Is there no act of tyranny…no level of serfdom…so grievous that you will finally fight back?)

Will The Government Nationalize Your Retirement Funds ?

by “Da King”

It’s no secret that Obama Hood and his band of merry liberals want to redistribute wealth and centralize power in this country (but don’t call them Socialists!). They don’t trust the American people to handle their own money properly. They view the American people as too ignorant to be trusted with much of anything, and besides, in Liberal La La Land, your wages really belong to the government in the first place. That’s why liberals refer to things like tax cuts as “government spending.” Liberals say things like “why should the government spend $700 billion on tax cuts for the wealthy?,” as if a person’s wages belong to Obama and company instead of to the person who earned those wages. And never mind that the wealthy already pay the highest taxes in the country by far. If you point that out to liberals, they will start reminiscing fondly about the “good old days,” when the highest marginal tax rate was over 90% here in the land of the free-up-to-a-point-to-be-determined-by-liberal-wealth-confiscators. In true Orwellian fashion, liberals call such discriminatory theft “fairness.”

But stealing more money from the wealthy will only take liberals so far. After all, reversing the Bush tax cuts for the wealthy is only expected to bring in about $70 billion per year in additional government revenue, hardly enough to close the $1.3 trillion annual deficit. It’s a drop in the bucket. Liberals need to find a really huge pile of money to steal in order to continue spending America into fiscal disaster implementing helpful governmental policies.

And there is over $7.8 trillion sitting around in private retirement accounts (401K, IRA, etc) that liberals would love to get their grubby mitts on. Think I’m kidding? Consider this from Forbes:

The U.S. Labor Department and the U.S. Treasury Department are holding hearings today and tomorrow on how to annuitize, that is, how to get a lifetime of income, from your 401(k) or IRA, entitled: “Hearing on Certain Issues Relating to Lifetime Income Options for Participants and Beneficiaries in Retirement Plans.”

How would the government go about insuring that our retirement plans provided a lifetime of income ??? Here’s how:

In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called “Guaranteed Retirement Accounts (GRAs)” which would provide protection from “inflation and market risk” and potentially “guarantee a specified real return above the rate of inflation” — presumably at taxpayer expense. …

The Vice President’s comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary — again, with a government subsidy. These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen.

Now, how could the government make 401K’s, IRA’s, etc. free from inflation and market risk?

Easy. Take them out of the market and put them under government control. That’s what the GRA’s would be, government controlled accounts. There have already been hearings on the plan:

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

By “attention and criticism,” that means Ghilarducci’s plan got the attention of liberal Democrats (mo’ money, mo’ money !), and criticism from conservative Republicans.

Of course, the government won’t be able to takeover everyone’s private retirement plans all at once here, like Argentina’s socialist government did a couple years ago. That would have people marching in the streets. For a takeover to occur here, there would have to be several intermediate steps, like….a financial crisis that threatened private retirement accounts (check), followed by a campaign of demonization of the private financial sector (check), followed by the government stepping in with unprecedented new powers over the financial system (check), followed by government proposals to “protect” the citizenry from the scary free market (check), etc, etc.

If would also be helpful if, prior to the government takeover of private retirement accounts, the government found a way to….say….dramatically increase the size of those retirement accounts, in order to allow the government to maximize the amount of money it will eventually steal…

Enter Democratic Senators Jeff Bingaman and John Kerry, and meet SB3760:

Automatic IRA Act of 2010 (S. 3760) enables nearly all employees who work for a private business with more than 10 workers and whose employer does not already offer a retirement plan to contribute to retirement savings through payroll deductions. Worker contributions would be deposited into their own Individual Retirement Account (IRA), ultimately managed by the same banks, mutual funds, insurance carriers, and other institutions that currently provide IRAs. The approach builds on the use of automatic features in 401(k) plans that encourage employees toward sensible decisions (while allowing them to make alternative choices), which has proven highly successful in raising 401(k) contribution rates.

Maybe the government can get those private retirement accounts up to $10-12 trillion before they swoop in and put it all under the control of the Social Security Administration (SSA). We all know what a bang-up job the SSA did with our SS retirement Trust Fund. They spent the Trust Fund and then wrote IOU’s in the form of T-bills back to us, so we can pay for the Trust Fund all over again later. Heck, if they used the same Ponzi scheme with our private retirement accounts, they could screw us all over again, and pay down the national debt at the same time!!! It’s genius, I tell you. Genius!!! It’s also known as monetizing the debt, which will impoverish us all, but why be bothered with such trifles? All the liberals have to do is convince us that the theft is for our own good. They’ve certainly accomplished that before. Stay tuned.

Do I know this is what the Obama administration has planned for us? No, I don’t know it for certain, but I do know they are considering it, and I do know the government is in dire financial straits. Plus, the Obama administration already made a play to takeover the health care industry, made a play to takeover the insurance companies, took over the student loan program, took an ownership stake in General Motors, has implemented financial regulations that enable the government to step in and shut down any financial entity it wishes whenever it wishes, has given the Federal Reserve unprecedented new powers, etc, etc. This has all happened in less than two years. I wouldn’t put anything past them, which is plenty worrisome enough for me.

“Da King” lives in Akron, Ohio.

Copyright 2010

Tick – Tick – Tick: The Economy Bomb Part Three

September 8, 2010

by John Gaver

Intimidation only makes matters worse.

Recent legislative attempts at forcing or intimidating the wealthy into staying have only made matters worse. As mentioned above, in 1996, Congress passed and President Clinton signed into law, two bills aimed at “punishing” those wealthy Americans who had the audacity to leave the United States (rather than creating economic “incentives” for wealthy Americans to stay). Any first year political science major can tell you that historically, disincentives almost never work.

Let’s examine the effect of these two pieces of totalitarian legislation.

I will just touch on the changes made to the Immigration and Nationality Act first, since the only purpose of those changes was to discourage wealthy Americans from leaving and their only effect was to scare more wealthy Americans into leaving. The Illegal Immigration Reform and Immigrant Responsibility Act Act of 1996 included a provision that would permanently bar wealthy American expatriates from ever returning to the United States for any reason, if the expatriate was wealthy, under the afore mentioned government standards, at the time of his expatriation.

Pay special attention to the fact that this law did not apply to ordinary expatriates, but only to the wealthy. Our government obviously doesn’t care if you or I should leave, since it is not our taxes that funds their gravy train.

Obviously, the feds, who publicly claim that native capital flight is not a serious problem, must be privately terrified of the consequences that the continued increase in native capital flight will bring. However, they erroneously believed that those wealthy Americans, who were considering leaving, would ever want to come back to a country that treated them like second class citizens, for no better reason than that they had worked hard and acquired some assets. Instead, the wealthy saw that law for what it was – a harbinger of things to come.

Instead of discouraging expatriation, that law was, in fact, the trigger event that caused even more wealthy Americans to leave. As I mentioned above, I have lived offshore for an extended period. Furthermore, in my business, I have traveled offshore a lot and often to tax haven countries. Both in London and elsewhere, I have routinely had a chance to talk with American “expats.” I was not surprised to find that among the reasons high on the list of recent expats, for leaving the USA, was this change to the Immigration and Nationality Act.

The Health Insurance Portability & Accountability Act of 1996, on the other hand, has much more ominous overtones. So, what does a health insurance law have to do with expatriation? To begin with, the United States government, through this act, has the audacity to claim the right to tax expatriates for 10 years after they renounce their US citizenship, if the expatriate was guess what?… wealthy, under the afore mentioned government standards, at the time of his expatriation. Do you see what this says? Think about this.

The United States government is now claiming the right to tax foreigners!

They want to tax people who live in, work in, hold citizenship in and pay taxes to another country and who no longer hold US citizenship or even US permanent residence and have no assets in the USA. They want to tax people who are, by every reasonable definition, “foreigners”.

The United States long shared with Libya the infamous distinction of being one of only two countries in the world that claimed the right to tax the income of its citizens regardless of where in the world that income was earned or banked. But, even Libya was not so tyrannical as to claim the right to tax foreigners, who had no connection to the country. In fact, even Gadaffi was smart enough to realize that taxing the foreign income of citizens was causing an unacceptable amount of native capital flight and Libya has now dropped its claim to the offshore earnings of its citizens.

If a self-absorbed despot like Gadaffi can understand that, what does that say about the US government?

Granted, a few other small countries have since implemented a similar non-territorial tax. The December 28, 1998 issue of the Wall Street Journal reported that two other countries in the entire world attempt to tax the offshore earnings of its citizens. One is the Philippines. The other is Eritrea. Since that Journal article was published, South Africa has also implemented such a tax regime. But, enough of the sad company that our government keeps…

The real problem is not the abhorrent nature of this law. It is its effect.

When word of the Health Insurance Portability & Accountability Act of 1996 reached the wealthy, they saw this law for exactly what it was – not just another brick in the economic Berlin Wall that our government has been erecting, to keep wealthy Americans from leaving with their wealth intact, but in fact, a large section of that rhetorical wall. Many wealthy Americans, who had been hesitant to leave, saw this provision in the law as the last straw and began making preparations to leave.

The government’s claim of this absurd right to tax ex-citizens for 10 years gave the wealthy no pause at all. After all, they had a solution. For many years, when wealthy Americans chose expatriation, they most often left as much of their wealth as practical in some sort of tax sheltered investments in the United States, so capital flight did not represent as serious a threat, as it does today. The wealthy would leave, but a good portion of their investment capital stayed here. And that portion, though somewhat sheltered, still generated a significant amount of taxes and funded many US jobs.

But since 1996, wealthy Americans who have chosen to leave, have had no choice but to take ALL of their wealth with them when they leave or risk it being confiscated by the IRS, to pay that 10-year tax penalty.

Let me emphasize that word. ALL!

Wealthy expatriates can no longer afford to leave anything behind. To protect what they have earned, they must sell or encumber ALL of their US-based real estate, US stocks and bonds,… EVERYTHING! Over a period of time, they must move all of their wealth into offshore investments or at the very least, create debt against anything that is left here. Then, when they leave, there is nothing left behind for the IRS to confiscate. Unfortunately, it also leaves nothing behind to fund US jobs or the US government.

The government, of course, pouts and claims that these expatriates are being very un-American, just because they had the audacity to protect what was rightfully theirs, from IRS confiscation. The government fails to realize or at least refuses to accept, that it was their own attempts to grab more power that made it impossible for these wealthy Americans to stay or to leave any money in the United States, when they left.

So, instead of preventing wealthy Americans from leaving, that law not only encouraged them to leave at an even higher rate, but it forced them to take ALL of their wealth with them when they leave. And, therein, lies the root of the real problem.

When the wealthy take ALL of their money out of the United States, it has many undesirable effects. The most obvious, as pointed out above, is the loss of tax dollars. But, there are far more serious consequences that lay beneath the surface. Most of the wealth that we are talking about is what we refer to as investment income. Regardless of whether that money is in a passbook savings account, an IRA, mutual funds, stocks, bonds or direct investment, it is almost certainly money that is funding business somewhere in the United States. That money effectively represents JOBS in the United States.

When that investment capital moves offshore, several things happen. Most notably, JOBS that the investment capital funds move offshore, as well. We are already beginning to see this.

Some of that investment capital will be replaced, it might be argued. In fact, some, though not all of it, will be replaced. But, it is the source of that new capital that creates yet another problem. When US based capital is not available, businesses look offshore for investment capital. Since US expatriates can no longer safely invest in US businesses, foreigners move in to fill the gap, temporarily.

Just look at how much Communist China has invested in the US. As more and more wealthy Americans are forced to flee the United States, the remaining Americans will find that they are increasingly the labor force for wealthy foreigners who, by the way, generally pay tax only on what they earn in the US.

But, once the tax rates are forced up, by the lack of wealthy citizens to tax, even that foreign investment capital will dry up.

Add to all of this, the appalling increase in frivolous lawsuits by the greedy, the recent rash of government confiscations (forfeitures*) and the heavy burden upon business, represented by legislation like the Patriot Act and the Sarbanes-Oxley Act and you discover that increasingly, the wealthy are finding that their only choice is to leave. It’s like a snowball rolling down hill. Right now, it’s just a big glob of snow. But if we don’t create some major incentives to keep US capital in the United States, it will soon become an avalanche.

Creating Incentives and Removing Disincentives

The problem is very complicated and there is no single solution. But, there are two issues that, far and away, represent the most pressing problems surrounding native capital flight. Those issues are the abuses of the IRS and the USA Patriot Act.

I mentioned earlier that I have interviewed many American expats about their reasons for leaving. Until six years ago, the number one reason for leaving, cited by EVERY expat that I talked with, had something to do with the IRS – not the Income Tax, but the IRS. When I asked them to be more specific, they cited IRS abuses and witch hunts, lack of privacy in their financial dealings, hundreds of thousands of pages of incomprehensible and contradictory laws, from which the IRS picks and chooses and let us not forget, the Health Insurance Portability & Accountability Act of 1996 and the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, which are nothing more than covert tools of the IRS.

Every last expat that I talked with, prior to 2001, told me that the “principal factor” that pushed them over the edge had something to do with the “not to be sufficiently damned IRS.” (By the way, though not universal, I have found that phrase in quotes to be rather common in the expat community.) Even when I tried to suggest that, since they rated the IRS as the key factor in their leaving, that it all boiled down to taxes, they corrected me. Though taxes may have been a factor, the tax load alone, was not enough to force them to leave. The thing that pushed them over the edge had to do with the IRS, itself.

I should mention that today, there are some who now cite the Patriot Act, as their number one reason for leaving, though the IRS still holds a commanding lead. The point to remember here, is that both the IRS and the Patriot Act represent attacks on personal and business privacy.

So, if we eliminate the deciding factor that is causing these wealthy citizens to expatriate, it would go a long way toward keeping any more wealthy Americans from leaving. Every previous attempt to solve this problem has been aimed at strengthening the power of the IRS and every previous attempt has failed.

It should now be obvious that any proposed solutions to this problem that leave the IRS intact, should be summarily dismissed. One of the most important things that we must do to stop native capital flight, is ABOLISH THE IRS.

That would mean replacing the Income Tax with some system of taxation that does not require such an autocratic organization looking into the personal finances of every individual. The Flat Tax would not work, since it retains the source of the problem, the IRS. There are, in fact, only three tax plans that would fit this requirement – excise taxes on imports, a National Retail Sales Tax and taxing the states according to their productivity, which would allow the states to collect all federal taxes, as their voters choose.

Since broad use of excise taxes have generally been found to have a negative impact upon the economy, they are not a practical solution. Of the three options, taxing the states, instead of individuals, is most in line with the intentions of the Founding Fathers and it would achieve the desired affect of getting the government out of the affairs of individuals. The competition between the states would serve to keep the system efficient. But alas, no such bill has been proposed in Congress.

That leaves the National Retail Sales Tax (H.R.25, in the 111th Congress), that has been proposed in every congress for years and gains supporters every year. It was sponsored by Rep. John Linder, of Georgia and now has 58 cosponsors. Even Tom Delay, before he left office, had announced his support for it, in April of 2004 and set a schedule to push H.R.25 through committee and get it to a floor vote. The Fair Tax was also a major component of Mike Huckabee’s presidential bid. As more in congress learn about the Fair Tax, the more support it gets.

The findings of a CATO Institute Policy Analysis on “The Economic Impact of Replacing Federal Income Taxes with a Sales Tax” predicts that the shift in tax structures will raise the stock of US capital by at least 29 percent and potentially by as much as 49 percent.

Former House Ways and Means Committee Chairman, Bill Archer reported, “A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, ‘If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?’ Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America!”

A National Retail Sales Tax would not only create the incentive for wealthy Americans to keep their assets right here at home, but it would actually have the effect of reversing native capital flight and bring a lot of expatriated capital back into the United States. But, for that to happen, the 10-year expatriation tax on the wealthy, the “Don’t come back” law and the Exit Tax would have to be repealed, as well.

New Disincentives to Overcome

Although a National Retail Sales Tax would serve to slow the flight of the wealthy, that alone, would no longer have the sizable effect on keeping native capital here that it once did. Financial analysts have made many excuses, for why the US dollar is falling and continues to fall against the Euro and other currencies. But, for the most part, they limit their analysis to traditional models and those models just don’t fit here.

The problem that traditional models fail to account for is, since the implementation of the Patriot Act, transferring US dollars internationally, has become extremely difficult. Even transfers of US dollars from one bank in a foreign country to another bank in that same country could be held up in the Fed for weeks.

It is not unusual for US dollar transactions that used to take one to two days, to be held up in Patriot Act compliance for one to two months. Such delays did not exist prior to the Patriot Act and do not exist today, when dealing in Euros, Pounds, Yen or any other foreign currency, if you are not a US citizen. That’s because those currencies don’t move through the Fed and because foreigners, who deal in other currencies, don’t have to meet Patriot Act requirements.

To understand what is happening, you must understand how the US dollar became the currency of choice for investors worldwide. The creation of the Fed made it possible to execute US dollar denominated transactions internationally, in two or three days that previously would have taken six to ten days or longer, with other currencies. That extra few days of interest on, say $100 million dollars, is a lot of money. It was the efficiency of the Fed that made the US dollar the currency of choice in international transactions. But, the Patriot Act has reversed all that.

Today, as a result of technology, foreign currencies can usually be transferred via Euroclear, almost as fast as and sometimes faster than dollars. But until enactment of the Patriot Act, the dollar remained the currency of choice, not only because of the certain efficiency of the Fed, but because there was no reason to change. It was just practical.

But, with the onerous requirements of the Patriot Act, it can now take weeks to transfer US dollars, while the same amount of a foreign currency may only take a few days. Today, when using Euros for such transactions, the interest savings alone, can be significant.

It should be noted here that every US government agency that watches such things, has reported that the terrorists did not and do not use our banks for laundering money, since they have access to Arabic banks that provide untraceable transfers. In other words, the financial provisions of the Patriot Act, that make up almost two-thirds of that bill, had absolutely nothing to do with terrorism, but were instead, aimed at control of wealth and wealthy Americans. But, like previous such attempts at disincentives, to control wealth (HIPAA, IIRIRA, S.1701 and the Heroes Tax Act, mentioned above), the Patriot Act had an effect that was exactly the opposite of what the government desired.

Disincentives don’t work.

Disincentives like those discussed above, along with about two-thirds of the Patriot Act, have had the exact opposite of the intended effect. Disincentives just don’t work. If native capital flight is to be reversed, before it’s too late, we must eliminate all of those disincentives, abolish the IRS and roll back large portions of the Patriot Act (mostly the financial provisions).

Then, we must replace those disincentives with incentives, like a National Retail Sales Tax and a return to a banking system that encourages the use of the US dollar in international transactions, before another currency rises to the top and becomes the de-facto standard for international business.

We also need to implement some serious tort reform laws that include, among other things, “loser pays” and if the plaintiff is indigent and the plaintiff’s attorney is working on a contingency, then “loser’s attorney pays”. This would also significantly reduce healthcare costs and the cost of all types of insurance.

But, here is the important thing. Those changes must be implemented soon, before the US dollar ceases to be the currency of choice in most international transactions and before the expatriation snowball picks up too much speed to be stopped. If other currencies become as common in international transactions as the US dollar, it will be too late, as the dollar will stagnate. If we wait until the economy begins to react to this native capital flight, it will be too late. Time is not on our side.

You saw what happened when the markets reacted to tech stocks being overpriced. Imagine what will happen when the markets take notice of the seriousness of our problem with native capital flight. Once that slide begins, it will be the economic equivalent of the collapse of the World Trade Centers and all that we will be able to do is pick up the pieces of a shattered economy and wonder why our government didn’t do anything to stop it. Unfortunately, few will realize that government disincentives were actually the cause.


It’s no longer simply a matter of equity in taxation nor of the tracking of terrorists’ funds. As a result of recent and continuing legislation aimed at controlling or punishing the wealthy, the economic future of the United States of America is now seriously at risk, since those who can save our economy, are precisely the people who are being forced to leave.

The wealth expatriation snowball is growing, day by day. Nobody can say when it will reach critical mass. But at the rate it’s going, it likely won’t be long.

We urge you to contact your Congressman TODAY and tell him/her that you want him/her to support the Fair Tax Act of 2009 (HR 25) and real tort reform and the repeal of the 10-year expatriation tax, the “Don’t Come Back” law, the exit tax and all of the financial restrictions in the Patriot Act.

The Fair Tax Act will go a long way toward reversing capital flight, eliminating IRS confiscations and getting the IRS out of our personal lives. But, without the roll-back of the Patriot Act’s financial restrictions and the repeal of all of those disincentives, even that bill will give us only limited relief.

There is however, one other alternative. You can start packing your bags.

*To make confiscation seem less severe, the government has taken to calling it forfeiture. The term, “confiscation” connotes taking something that belongs to a citizen. The term, “forfeiture” connotes giving up something that was not the citizen’s property in the first place. This also shows what the federal government thinks of your right to actually own private property.

Copyright 2009 John Gaver, All rights reserved.


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