The Collapse That Never Comes: Don’t Lose Hopelessness!

February 1, 2015 by Liberty

Whoaa?!? Everyone better watch out. I just heard a libertarian commentator say that the big collapse is coming in 2015! That absolutely must be true, right? I mean, this same guy predicted a collapse in 2014, 2013, 2012, and well, 2011, and 2010. He’s been right in the past but it’s kind of like a medium talking to a dead relative whose name starts with bo… or no, no, jo, or no no… Of course, eventually, he’s going to be right.

I may be making fun of this commentator but in reality, this guy is someone I respect greatly. He just has the unfortunate habit of putting dates on everyone of his predictions. He’s in the business of selling and, quite frankly, buy now to protect yourself in the future some time from now doesn’t sell as well as buy now to protect yourself from this collapse this year.

Even after tackling this topic a few times, I still get people asking me my opinion about an economic collapse. I have a bit of a history in the market. I remember realizing this simple fact about the market early on. If someone says they can time the market, ignore them.

Collapse Timing

I feel pretty confident in saying that no one can time the market. I feel completely confident in saying, if anyone can time the market, they sure as hell wouldn’t tell me about it. Of course, if someone did tell someone else how to time the market, they would be interrupting their own ability to time the market.

Putting a timeline on an economic collapse is just a really complicated form of trying to time the markets.

There are too many factors to practically predict collapses. It requires the understanding of hundreds of millions of financial transactions. Even if something big happens like the collapse of a single industry, it doesn’t mean a total collapse is inevitable. It just means more uncertainty to what’s going to happen.

More importantly, what’s actually going to cause the crash is likely to be completely under the radar of what we consider practical possibilities today (but, of course, in hindsight everyone is going to say it was inevitable.)

There is an old story I heard repeatedly from Harry Browne. Harry Browne wrote a book on gold and market collapse decades ago. Within a few years of his book getting published, the collapse took place. He spoke about it decades later. When asked how he predicted the collapse so accurately, he said, I got lucky. If he got published a few years earlier or later (like tons of other authors on the same subject) he would have never got noticed at all.

What To Do In A World You Can’t Time

First of all, what would be the logical thing to do if you could predict the exact timing of the collapse. In most cases, it would be to invest as much money as possible in the markets to get as high a return as possible. Then, right before the collapse, sell those positions and invest it in gold or other sure things in a collapse.

When you can’t predict the timing of a collapse, you need to approach the problem of dealing with that collapse a little differently.

There is one, all to common, attempt to solve this problem that I see from libertarians. A certain segment of libertarians put most of their savings in gold. That means, if there is a collapse, they’ll make a ton of money. That comes with a major risk though. First of all, you better hope gold doesn’t have any problems. Second, until the problems strike, your money isn’t likely to do much. While I’d bet this is safer than all of your money being in the market, there are much better options.

Gold’s price doesn’t grow as predictably as the stock market. Gold doesn’t produce an income. Stocks (partial ownership of a company,) does produce an income. If you’re passing up on stock investing then you’re passing up on a significantly higher return.

The solution that most financial advisors come to is diversification. This is a really simple way to idiot-proof your portfolio from any problems. Harry Browne’s Permanent Portfolio might interest you if that’s what you’re looking for.

There is one more method I feel that’s worth mentioning. By using stock options as an insurance policy on your stock investments, it’s possible to protect the vast majority of your money while investing in stocks. This is definitely not for the average joe but it can produce a relatively safe income. (See My Article “How To Profit From The Bubble Without Risking The Pop”)

The completely proper and legal way to hide your money from the government and set upasset protection is via an Offshore Company Formation combined with an Offshore Banking Account with each created in the proper jurisdiction.

Is Never Soon Enough?

There is a natural urge to want to go to the extremes on this topic. I’m not saying the market is safe (not that the market ever is.) Year after year the government destroys any semblance of certainty with it’s unprecedented behavior. Sure, it looks really bad from a historical perspective but it’s been looking bad for 30 years.

Panic talk is useful for one thing though. It helps motivate you to do something. Is your portfolio completely prepared for whatever happens (to the best of your ability)? If you’re like most people, it’s not. Me saying, it’s been looking bad for 30 years can be comforting to you if you’re not prepared but you need to face reality. 24 hours before the big crash, no one is going to know the big crash is coming. Hell, seconds before it, no one will see it coming. This is not something you can put off another day. Prepare.

The fact that you can’t time a collapse just means you need to be ready for it now instead of later. (I think that’s the worst part about these yearly collapse predictions. They teach people to believe that they’ll have advance notice when it’s actually coming. They won’t.)

Sun Tzu on Value Investing

by Simon Black on August 3, 2015

In 506 BC, the ancient Chinese general Sun Tzu was in command of a vast army of the Wu Kingdom, preparing for battle against the neighboring Chu.

Sun Tzu and his colleagues immediately sensed that the Chu army lacked the will to fight; so the general acted quickly and ordered the main attack to seize the initiative.

His surprise assault spurred a chaotic route of the Chu army, bringing an easy, low-risk victory for Sun Tzu.

This battle exemplifies Sun Tzu’s approach to military strategy, which he later outlined in his book Art of War.

Like all Chinese philosophy at the time (Sun Tzu was a contemporary of Confucius), there’s a beauty in the simplicity of his wisdom, all of which still applies today.

I was re-reading Art of War recently, and I couldn’t help noticing how much the principles apply to investing.

We’re living through some of the most insane financial conditions in modern history.

The Western world is drowning in debt, and entire nations are starting to go bankrupt despite interest rates being at record lows.

A multi-trillion dollar financial bubble in the second largest economy in the world has started to burst.

National pension funds are running out of money. Banking systems are dangerously illiquid and undercapitalized. Even central banks are borderline insolvent.

There’s clearly a tremendous amount of risk in the system.

And yet many western stock markets are crossing all-time highs with historically dangerous valuations, and retail investors are piling in like the good times will last forever.

In Chapter four of Art of War, Sun Tzu wrote that “he who is destined to defeat first fights and afterwards looks for victory.”

This is precisely what most retail investors are doing right now: they throw money at the market and hope that their stocks go up.

Expecting success from haphazard actions is as pitiful an investment strategy as it is a military strategy.

Sun Tzu continues, “The skillful fighter puts himself into a position which makes defeat impossible, and does not miss the moment for defeating the enemy.”

Victory comes from having a completely defensible position… and having the guts to seize the advantage when one is presented.

In investing, a defensible position is a strong, well-managed, highly profitable company with a pristine balance sheet and very little debt, and a stock price that trades at reasonable (or discount) valuations.

Better still, an even more defensible position is staying out of the market entirely, holding cash as you wait patiently to strike at the right opportunity.

(Chapter III- “He will win who knows when to fight and when not to fight.”)

As Sun Tzu wrote, it’s critical to not miss those opportunities to attack.

This happens from time to time when blood is running in the streets– the market presents no-brainer opportunities to buy high quality assets at a discount.

A great general will have the courage to seize the advantage. And a great investor will have the courage to buy assets that are widely despised and incredibly unpopular.

As Sun Tzu wrote in Chapter VI,

“You can be sure of succeeding in your attacks if you only attack places which are undefended.”

We’re seeing this right now with many petroleum and mining stocks, many of which are trading for less than the value of their net assets, yet still paying a dividend.

It’s basically free money– like an undefended enemy position. This is the nature of value investing.

Sun Tzu continues:

“Hence that general is skillful in attack whose opponent does not know what to defend; and he is skillful in defense whose opponent does not know what to attack.”

This is how most retail investors think– like the opponent who does not know what to attack or defend.

People seem to think that a falling stock price means that it will fall forever, or that a rising stock price means that it will rise forever.

We tend to buy what’s expensive and sell what’s cheap, instead of the other way around.

It’s a totally non-sensical mentality.

Sun Tzu again: “It is only one who is thoroughly acquainted with the evils of warthat can thoroughly understand the profitable way of carrying it on.”

True words. There are countless risks out there, and it takes a tremendous amount of experience to not only understand what’s happening, but to safely profit from it.

This is what makes financial education and mentorship so paramount: investing, especially in times of epic crisis, can bring tremendous reward… as long as you have the right knowledge and experience.

The great general opens his treatise by introducing five primary factors in war strategy; and as he has told all the would-be generals for the past 2,500 years, “he who knows them will be victorious; he who knows them not will fail.”

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens. There are some basic tools available we can help you with such asAsset Protection via Offshore Company Formation and Offshore Banking accounts.

Will you be prepared when everything we take for granted changes overnight?

Just think about this for a couple of minutes. What if the U.S. Dollar wasn’t the world’s reserve currency? Ponder that… what if…

Empires Rise, they peak, they decline, they collapse, this is the cycle of history.

This historical pattern has formed and is already underway in many parts of the world, including the United States.

5 Disturbing Facts About the State of the US Economy

Doug Casey August 12, 2015

 America’s Banks in Greater Danger than 2007/2008.

Remember derivatives? The absurdly complex financial instruments that essentially caused the massive bank failures in 2008… and led to the biggest economic collapse since the Great Depression? Well, what if I told you the amount of exposure to derivatives the top five US banks have – right now, today – is 45% LARGER than it was just before the collapse in 2008? That’s not a typo. The very same people who created the 2008 banking crisis are at it again,- having created another, much bigger ($273 TRILLION) derivatives bubble (versus $187 trillion in ’08).

 Even the FDIC Admits It Can’t Handle Another Banking Crisis!

It was recently discovered that the Federal Deposit Insurance Commission (FDIC), the group that insures deposits for US bank accounts, will not be able to properly insure your deposits for at least the next five years! This is according to the FDIC’s own annual report! Currently, the Commission has enough money in its insurance fund to cover just 1.01% of all the money in US bank accounts (or about $1 for every $100 of your money).

 Uncle Sam Wants Your Savings.

Argentina did it in 2008… Portugal in 2010… France and Ireland in 2011… and Poland in 2013. Now Uncle Sam is finally starting to open up to the idea of nationalizing private citizens’ retirement accounts to pay the national debt. Most people don’t know this, but the US Treasury has already raided the pension funds of government workers at least four times since 2011 to plug federal spending deficits. Investing legend Jim Rogers says they’re going after private accounts next. Political insiders Newt Gingrich and Ron Paul agree, having recently revealed that plans are already in the works.

 US Banks No Longer Safest Place to Put Your Money.

According to Global Finance magazine’s annual list of the 50 safest banks in the world, only five are US based, and the highest rank of any of those five is #39.

 American Businesses Dying at a Record Rate.

Earlier this year, in an eye-opening report, Gallup CEO and Chairman Jim Clifton revealed that, “[F]or the first time in 35 years American business deaths now outnumber business births.” Clifton continued, “I don’t want to sound like a doomsayer, but when small and medium-size businesses are dying faster than they’re being born, so is free enterprise. And when free enterprise dies, America dies with it.”.

The bottom line is anyone living in the US or who has assets priced in dollars is at serious risk right now. Your asset protection starts with an offshore company formation and offshore banking accounts in the right jurisdictions.

According to Casey, “We are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.”

The #1 reason why Donald Trump is the chimpanzee America needs

by Simon Black on August 14, 2015

Just a few weeks ago, US talk show host Stephen Colbert was asked if he thought that Donald Trump had a chance of becoming President of the United States.

Colbert responded sincerely. “Honestly, he could. And that’s not an opinion of Trump. That’s my opinion of our nation.”

He’s right. The Land of the Free may very well be ready for something completely different. And Trump certainly seems able to deliver.

He is, after all, unique in his field. Donald Trump has never served in politics, and his blunt style is almost the exact opposite of every other major candidate.

But there’s one thing that really sets him apart, that, in my opinion, makes him the most qualified person for the job:

Donald Trump is an expert at declaring bankruptcy.

When the going gets tough, Trump stiffs his creditors. He’s done it four times!

Candidly, this is precisely what the Land of the Free needs right now: someone who can stop beating around the bush and just get on with it already.

As history shows, a default is inevitable.

The calculus is quite simple: when governments take on too much debt, they start having to divert a huge amount of their tax revenue just to pay interest.

This means that, at a minimum, the government has to sacrifice many of the promises they made to their citizens. They cut other programs in order to have enough money to pay interest.

But that’s not too popular. So instead they typically just borrow more money… until they’re borrowing money just to pay interest on money they’ve already borrowed.

This makes the problem exponentially worse.

Debt skyrockets. And soon the government is spending more on interest payments than national defense. (The US is almost at this point).

Eventually a bankrupt government has no choice: either default on their bondholders, or default on the obligations they made to their citizens. Or both.

This could take the form of a ‘selective default’. For example, the US government could default on the $2.4 trillion that it owes the Federal Reserve.

Or the $1.2 trillion that it owes China.

These are both possibilities.

But the prospect of default on “risk free” US government bonds would throw the global financial system into a tailspin; not to mention it would be the final nail in the coffin for the US dollar’s dominant reserve status.

Fortunately there are easier options for Uncle Sam.

The biggest debts that are owed by the US government are the obligations they owe to you.

Specifically, all the benefits like Social Security and Medicare they promised to American taxpayers.

The US government’s own numbers estimate these obligations at nearly $42 TRILLION, completely dwarfing what they owe China, or anyone else.

Then there’s the obligation they have to preserve the purchasing power of the $12 trillion held by the American people.

That’s the current value of the money supply in the United States right now.

History shows that debasing a nation’s currency is one of the easiest and most effective ways for bankrupt governments to plunder their citizens’ wealth, little by little over time. You may want to learn how to hide your money from the government. An asset protection trust utilizing an offshore company formation and offshore banking accounts is highly recommended at this point.

The hard reality that most people don’t seem to get is that the US government is bankrupt.

This isn’t some wild assertion or conspiracy theory; their own financial statements show that the government’s ‘net worth’ is NEGATIVE $17.7 trillion.

And yes, the US is already borrowing money just to pay interest.

In fact the combined expenses of interest on the debt plus mandatory entitlements like Social Security nearly exceed their entire tax revenue.

In other words, you could eliminate nearly everything we think of as government– the EPA, the IRS, Homeland Security, etc. and it wouldn’t make a dent in the national debt.

When things get this dire, it doesn’t matter who sits in the chair.

You might as well elect a chimpanzee in the hopes that Mister Bubbles might accelerate the decline.

Donald Trump may very well be that chimpanzee. Especially given his unparalleled experience in declaring bankruptcy.

Nations that pass the economic point of no return can’t rebuild until they hit rock bottom.

And the US is way past that point. So let’s get on with it already and hit the reset button.