The Machine

Meanwhile in the rest of the world were all still wondering why some Americans seem to think they have some Devine relationship with God and why he only works through America. God was around long before America

February 23, 2016 Santiago, Chile Last week the FDIC released its annual financial statements, giving the public a glimpse into the financial condition of the organization responsible for backing up the entire US banking system. The numbers are pretty incredible. The FDIC maintains the Deposit Insurance Fund (DIF), which is the emergency stash for nearly all bank deposits in the Land of the Free. DIF financial statements show an incredible 54% drop in cash equivalents since last year. This means the DIF’s immediate liquidity is now just 1.2% of its total assets. In other words, nearly 99% of the insurance fund is tied up in various investments that may lose substantial value in the very financial crises that they’re meant to insure. The FDIC has stuffed much of the DIF funds in an expanding bond portfolio. Yet by its own admission, this portfolio is down $10 billion, or roughly 14%. Plus, a good chunk of that bond portfolio has been invested in securities that earn negative interest. It’s incredible; the organization insuring the US banking system has actually purchased bonds that yield negative interest! Now, including the losses, the fair market value of the DIF is about $62 billion. That might sound like a lot of money. But total bank deposits in the US exceeds $13 trillion, according to the Federal Reserve. This means that the DIF has net assets available to cover less than 0.5% of all bank deposits. In fairness, the FDIC’s insurance fund doesn’t need to maintain a 100% cash backing of all bank deposits; that’s not how insurance works. If your home is covered against fire damage for $300,000, the insurance company won’t set aside $300,000 specifically for your home. Their actuarial tables suggest that the risk of loss is much less than 100%. So they’ll only set aside a fraction of that amount. And admittedly, the risk of a 100% loss in the banking system is almost zero. They don’t need anywhere near $13 trillion to properly insure it. But even the FDIC itself acknowledges that their insurance fund is totally insufficient. For starters, the fund doesn’t come close to meeting the minimum legal reserve requirement that was established by law following the Global Financial Crisis several years ago. Even more, the FDIC states in its own report that they need TWICE the current reserve balance as “the minimum level needed to withstand future crises of the magnitude of past crises.” Bottom line, the FDIC has stated in black and white that they are not equipped to deal with another bank crisis. This is where the government is supposed to come in, with an explicit guarantee to bail out the banks. The real irony, of course, is that the government doesn’t have any of its own money. They only have your money. Taxpayer money. So in essence, the government is guaranteeing your bank deposit with your own money. It’s mind boggling. The larger problem is that the government hasn’t done a good job hanging on to any of your money. With the Treasury Department’s financial statements showing the US government’s net worth at negative $60 trillion, Uncle Sam is in no position to bail anyone out. Deposit insurance may have been a well intended idea. But the hard facts show that this blanket guarantee of bank safety is ultimately a ruse. None of the institutions involved has the financial resources to back up their promises. So instead of blindly depositing money in a dangerously illiquid banking system and expecting an insolvent government and undercapitalized insurance fund to fix everything, a rational person ought to consider other options. There are other jurisdictions in the world (like Norway) where the banks are far more liquid and more capitalized, backed up by well-capitalized insurance funds or governments with minimal net debt. Holding physical cash is an even easier option to reduce this banking system risk; just make sure to avoid high-denomination notes like 500 euros or $100 bills. Until tomorrow, Simon Black Founder, SovereignMan.com

$64,000 per ounce sounds good to me, git her done China.

February 22, 2016 Santiago, Chile This Saturday, I’m holding a webinar for Sovereign Man subscribers. It’s something I’m very excited about because it gives us a special platform to share our solutions and opportunities with you - much more effectively than we can in a short email. This webinar isn’t free. To be clear, there is no cost to attend. But it is an investment of your time. My goal for the webinar is to make sure that the return on your investment will be extraordinary. This won’t be like turning on the nightly news where you’ll just hear about the problems. It’s going to be uplifting, actionable, optimistic, and focused on solutions. These solutions aren’t just for the ultra wealthy. There are many things you can do to increase your freedom and prosperity that are totally free. By the end of the call, you’ll come away with a ton of actionable information to take advantage of the opportunities and solutions out there. And, if you’re busy on Saturday February 27th, that’s no problem. We’ll be sending everyone who registers for the webinar a replay link. Plus, if you sign up, we’ll also send you our Plan B checklist absolutely free, plus lots of other free material that will be really helpful in developing your own Plan B. This is important. And you won’t want to miss it. Click here to get complimentary access to the webinar. Until tomorrow, Simon Black Founder, SovereignMan.com

It's a just law in my opinion, only let those migrate here who can support themselves, it actually works better for everyone, there's less burden on the state therefore taxs don't have to be hiked up even more to cover all the economic migrants. I'm a migrant in the UK.... I'm Irish, I've been here almost a decade now and never been a day out of work or claimed a single penny of income support from the government. These people know the rules before they come here then complain the UK government is splitting up their family. If they can't afford to live here and want to leave where they are right now then they should go somewhere where they can be together ...... But no they'd rather whine about discrimination and racism etc etc. And how unfair the world is. Why does everything think the world owes them something.

ha ha I like the closing line ..... I worked on the design for those boats, and the new aircraft carriers ....... currently working on something a little more destructive ......

ha ha ha is this another rumor lol ......... I'd believe luigi's dinar post's more than this, there is no way the US is bombing their proxy army lol

[EDIT] were not the highest in Europe, Norway is @ $10.80 per gallon

99c would be nice, we pay the equivalent of $9.15 (£6.31) a gallon here for "super unleaded" which is a 98 octane. our gas is priced in litres so it looks cheaper lol ....... £1.39/ L ($2.01) ....... 4.546 litres per gallon 61% of our fuel prices are government tax ......... the highest in Europe

Earlier this week the State Department released its latest statistics for people who have renounced their US citizenship. 2015 was another record year, with 4,279 people divorcing themselves from the US government and heading to greener pastures elsewhere. This was the third year in a row that broke the previous year's record, showing that this is obviously a growing trend. The number one reason for which is quite simple: tax. Many of these individuals were Americans already living overseas who are still subject to the pay taxes to the IRS on their worldwide income. For 2015, the first $100,800 in earned income for Americans living abroad is generally tax free. However, higher income earners are still forced to pay their “fair share” of all the bombs, drones, and federal folly even though they don't live in the United States. Most countries don't do this. If you're Canadian, or French, or even Chinese and you move abroad you're no longer subject to taxation in your home country presuming you earn your income overseas. Americans living overseas are also subject to additional reporting requirements and IRS scrutiny due to the Foreign Account Tax Compliance Act (FATCA). FATCA is an insane, extraordinarily narcissistic law that requires reporting both from individuals with foreign assets as well as from every financial institution on the planet. Individuals living abroad are more likely to have foreign assets, so they're disproportionately affected by the additional compliance. For financial institutions abroad, the cost of implementing FATCA has been estimated by various foreign governments, banks, chambers of commerce, and financial media, at anywhere between $200 billion and more than $1 trillion. Yet despite FATCA’s trillion-dollar price tag, the Wall Street Journal reports that the US government has taken in just $13.5 billion in revenue from hidden foreign accounts that FATCA is supposed to eliminate. Obviously the cost vastly exceeds the benefit. It’s insane. Plus FATCA has driven nearly 15,000 Americans to renounce the citizenship since President Obama signed it into law in 2010. These former Americans are often criticized for taking such a controversial step, one that is derided as being “unpatriotic”. This criticism makes no sense when you take a larger view of history. The State Department estimates that there are up to 6 million Americans living abroad. Given the average size of a Congressional district at roughly 700,000 citizens,there should theoretically be eight members of Congress representing the interests of Americans living abroad. Yet expats have no representation. There is not a single person in Congress fighting for expats, even though they are still subject to pay tax. More than 240 years ago, residents of the colonies had a term for this. They called it “Taxation without Representation”. This idea is as old as America itself. And in 1776, American colonists divorced themselves from the British government. Much of this was tax motivated. In the Declaration of Independence, Thomas Jefferson expressly writes that among the reasons for independence is “imposing taxes on us without our consent.” Former US citizens are following in these footsteps. This is appropriate to point out, especially this year as voters in the Land of the Free delude themselves into believing that they're going to choose their next leader. This is total nonsense. As we discussed in this week's podcast, the US electoral system is completely anachronistic, just like the monetary system, the banking system, etc. This idea of having delegates, super-delegates, and the electoral college probably made sense in the election of 1788, when less than 2% of the US population was able to vote. Today it no longer makes sense. It is an illusion of Republican Democracy. In reality your vote doesn't count. Let's be honest about the world we're living in. Particularly in politics, money counts more than anything. If you really want to change anything, the most important ballots you can cast are with your money and with your feet. By divorcing yourself from a government bent on indebting future generations in order to drop bombs by remote control on brown people across the world, you're taking a conscious step to reduce their resources. Your hard work and sweat no longer support debt, war, and freedom-killing regulations. Renunciation is one step that many former Americans have taken to affect this change. Understandably the idea is far too radical for most people. But there are still many completely legitimate steps that anyone can take to reduce the amount that you owe and starve the beast. It’s a far more powerful option than punching a chad in a voting booth. It's a far more effective way to create “real change” than punching a chad in a voting booth.

Über confidence reset the picture, nullified the lessons of 2008... A PICTURE is worth 4-plus years and thousands of words, and the picture below has a lot to say, writes Gary Tanashian in his Notes from the Rabbit Hole. I'll say some words as well, since I have kept them bottled up for years in an effort to make sure we operate with discipline as opposed to "gold bug" style emotion. The bear market in stocks and subsequent inflation-fueled credit bubble early last decade was when I first started paying close attention to macro markets (as opposed to stock trading, which I had done for a few years prior) and how they operate. Having seen well paid professionals lose half of my IRA in 2002, I took over all of our finances and never looked back. But I needed to understand how markets worked and that has been a challenging and rewarding endeavor, not to mention an ongoing learning experience. I use talky charts like the one below because I need to be talked to, or coached. But I need this coaching to be 100% honest and accurate, not the ranting of some biased lunatic who would have me buy in to his world view. The chart below honestly shows exactly what gold did vs. the S&P 500 during the 2007-2009 US crisis, the Euro crisis and subsequently, the aftermath of unprecedented policy interference in financial markets. Why care about what gold did when measured against the S&P 500 index? Because it is perhaps the best macro signpost I know of when trying to determine what sort of macro phase we are in. Conventional economists and analysts advise riding out the correction, imploring people to remain calm and hold stocks for the long-term, while this chart is opening the prospect of a cyclical change, as in a counter cyclical change. Gold was preeminent as a "risk off" asset during the resolution of the excess. That is the counter-cycle. But the 2007-2009 risk 'off' phase went too far and even a person as negative on the methods used by policy makers as your letter writer had to become bullish in the face of Time Magazine's The New Hard Times headline, complete with a soup line of displaced workers. The point is not to brag about being a successful contrarian. Honestly, that is how I am wired anyway and it has not always worked to my benefit. For instance, I was unable to get contrary to my own belief system and take significant advantage of the massive stock bull market that I believe was created out of unsound policy. But I do have the patience of an elephant and I have kept charts like the above, and especially its message, in mind every step of the way. The chart goes on to say that Operation Twist successfully "sanitized" (the Fed's word) inflation signals, just happened to coincide with a global deflationary phase, a 'best of all worlds' Goldilocks phase in the US and best of all, for those revived conventionalists now operating with the public's confidence once again, put risk 'off' gold on the outs. The chart says gold may be coming back relative to the S&P 500 after an unprecedented phase of über confidence reset the picture and nullified the lessons of 2008 for a vast majority of market participants. We've come full circle.

GOLD PRICES shot higher yet again Thursday, surging 4.1% to hit 12-month highs near $1250 per ounce as world stock markets fell hard yet again, and the US Dollar hit fresh multi-month lows on the FX market following Fed chair Yellen's comments on delaying further interest-rate hikes. Hong Kong's first trading day of the new Year of the Monkey earlier saw the Hang Seng index drop over 3.8%. Shanghai's markets re-open Monday. Crude oil meantime sank 3.5% towards new 14-year lows at $26 per barrel. Major government debt prices jumped as the cost of insuring European banks' bonds leapt, driving 10-year US Treasury yields down to their lowest since August 2012 at 1.57%. Five-year CDS insurance on the debt of German financial giant Deutsche Bankjumped to all time record highs. "We continue to view the [gold] market as a base from a longer term perspective," says weekly technical analysis from German bank Commerzbank, pointing to "a large falling wedge pattern which offers an upside measured target to $1450 longer term." Short term, "One shouldn't rule out a $100 move either way," said a bullion-bank's trading note Thursday morning. "If so, the gold selling from miners might recede – although we still see some chunky volumes trading at the [London benchmark] gold auction." Thursday morning's LBMA Gold Price auction opened with the largest volume of sell orders in more than a week, some 70% above the daily average of Q4 2015, when gold prices stood 10% below today's level. The size of those offers then fell – and demand rose to meet them – as the suggested price was lowered to find a balance at $1223.25 per ounce, the highest morning 'fix' since mid-May 2015. The afternoon auction – held at 3pm London time – then drew the heaviest bid volume to buy gold for at least 3 months, totalling 2.6 times the Q4 2015 average at a price of $1241, a new 12-month high. Gold priced in Euros meantime hit its highest level since May 2015, jumping 4.1% from last week's finish to hit €1095 per ounce – a price first seen in June 2011 amid the worsening Greek, Portugal and Ireland debt crisis. "I believe that in the Eurozone, structurally, we are in a much better place than we were a few years ago," said Eurogroup chief Jeroen Dijsselbloem before a meeting of finance ministers from the 19-nation currency union on Thursday. "That also goes for our banks." Italy's prime minister and finance chief were set to complain about the new 2016 regime for so-called banking "bail ins", the Financial Times reports, describing the rules – requiring a minimum 8% write-off of a bank's unsecured creditors and larger depositors before any state aid can be given – as "an increase in instability, rather than stability." Chinese banks may suffer losses 4 times the size of US banks' during the 2006-2011 crisis, reckons hedge-fund manager Kyle Bass, with non-performing loans threatening $3.5 trillion of equity. London-based trust fund provider ETF Securities said Wednesday it has seen "a surge in demand" for exchange-traded products backed by gold, with inflows totalling $720 million so far in 2016.

Gold prices are surging because big investment, not jewelry demand, is jumping... GOLD INVESTMENT showing on your radar? asks Adrian Ash at BullionVault. You couldn't ask for clearer proof of what drives the metal higher or lower. New figures today show gold jewelry demand worldwide hitting 11-year highs in the back half of 2015. Prices were falling, hitting new 6-year lows against the Dollar. Today's market action, in contrast, sees gold enjoying its strongest start to a year since the blow-out of 1980, while global stock markets fall harder than...well, than ever. Who's buying gold, in other words, matters far more than how much they buy. And gold of course matters most when big money-managers are buying a lot. Compare Indian households, for instance. Famously the 'sink of the world' for bullion since ancient Rome complained about the drag it created on the empire's balance of trade, they bought their third heaviest total on modern records in 2015. That's according to this morning's new Gold Demand Trends report from mining-backed research and market-development organization World Gold Council. The data come from specialist analysts Metals Focus. Jewelry demand in India, the world's No.1 consumer market, "rebounded in the second half of the year," they say, taking annual demand to its highest level since 2010. World gold prices also reached 2010 levels last year, but only by falling, not rising. Indeed, "November and December were particularly upbeat" for Indian gold demand, the World Gold Council says, "as Dhanteras (the first day of the 5-day Diwali festival, which heralds the start of the wedding season) was immediately preceded by a drop in the gold price. "Price-sensitive consumers therefore took the opportunity to make their purchases at lower levels." Over in China – now vying with India as the world's heaviest consumer-gold market – last year's drop in jewelry demand was slowed by the late-year drop in prices. Fourth-quarter demand slipped only 1% compared to the last 3 months of 2014. US households meantime – the world's third heaviest jewelry buyers – raised their gold necklace and bracelet demand once again, up by 3% from the approach of Christmas in 2014 to mark the 8th consecutive quarter of growth. Again, that came on the lowest quarterly-average gold price since the end of 2009. You get the picture. Gold jewelry demand does help support prices, of course. The price crash of Spring 2013, for instance, found a floor at $1180 per ounce as Western investor selling met a surge in Asian household buying. The global market did clear. Only, it cleared a few hundred dollars per ounce below where those Western money managers would have preferred. Investment demand also features in today's new Gold Demand Trends report for the end of 2015. And looking at gold bullion bars and coins, it shows a 1.1% annual rise, increasing to 1,011 tonnes on Metals Focus' data to account for almost one ounce in every four of total demand worldwide. That compares with just one ounce in every eight back when gold's first 21st century bull market really got started in 2002. The return of retail investment demand remains a key feature of the global market. But one other key component of gold investing – demand from money managers using proxy vehicles such as the SPDR Gold Trust (NYSEArca:GLD) – continued to slide from its record peaks of 2010-2012. Whereas now, amid the financial turmoil of early 2016...? "I spent last week in the US," says a note from Swiss investment and bullion bank UBS's global head of precious metals strategy, Edel Tully, "and the topic of conversation was gold, gold and more gold – from current clients, clients that haven't been active since the tail end of the bull run, clients of my FX/equity/rates colleagues, and potential clients. "In other words, everyone wanted to talk about gold. I haven't seen such interest in years." Investment trading in gold derivatives also counts, by-passing physical demand and supply almost entirely but clearly impacting the price of actual metal day-to-day. Because if the price of futures contracts referencing gold is rising, then the current price for physical metal will surely rise too, even though those paper bets almost always settle for cash, never for metal itself. The opposite happened in 2015. Money managers, as a group, turned "net negative" with their gold-price bets for the first time since at least 2006, when these figures from US regulator the CFTC were first gathered. Add this to 2015's continued loss of interest in gold-backed ETFs, and – as the World Gold Council put it today – "The Western speculative investor-led price drop...spurred consumer demand for gold." That consumer demand included all those retail bars and coins picked up at 6-year discounts by private investors and savers. Today that looks a smart move, jumping ahead of the money managers now panicking into gold after withdrawing and then fleeing since the price top of 2010-2012. Early bird investors can, if they wish, now sell at the highest prices in over 12 months if they wish. Provided they chose to buy the right kind of gold in the right, market-ready location. Coin and small-bar owners, in contrast, will have to shop around for the best offer from retail outlets, physically travelling to hand over their property – or mail it insured (if they can) – and accepting the below-market prices which the retail end of the industry pays. Looking at current prices, however, doesn't say for sure which they're now headed. For that, a better indication comes from asking yourself what the players who matter are likely to do. Gold prices aren't driven by consumers or savers buying gold because it is gold. What counts is demand from people who buy gold because it isn't anything else. Gold isn't debt. It isn't equity, and it certainly isn't cash. Nor is it particularly useful to industry (technology demand fell 5% in 2015 to account for less than one ounce in every 13. Demand from dentists for gold fillings fell the same amount, hitting new modern-era lows). In a world glutted with debt, equities and industrial commodities, that makes gold suddenly look very useful for doing what people everywhere have always used to do – storing value when other things fail. Worsening volatility and losses are forcing money managers to reconsider their exit from gold since it peaked with the last global financial crisis in 2010-2012. What matters most to gold’s direction from here is what happens to other asset prices.

Looks like today is going to be a good day for gold bugs Gold up another 3% Silver up 2% Gold $1,235 Silver $15.60

well if the rest of the year goes as well as the past month of so we'll be laughing. since Jan 1st 2016 Gold ---- up 12% silver --- up 10.5%

thanks

Or maybe don't. Because what kind of strategy is that...? TALK about an inauspicious start, The market stumbled out of the gate this year like a drunk leaving his favorite saloon at closing time. Virtually every sector is down. So are most overseas markets. Many market pundits now claim this is it, the beginning of the long-awaited bear market. Is it time to panic? Of course not. Panicking is for when a toddler in your charge suddenly darts into the street. It has no place in portfolio management. Let's do a reality check here. Trees don't grow to the sky and stocks don't rally in perpetuity. History shows that every bull market is followed by a bear market. And that's okay, because every bear market is followed by another bull market. The market's long-term trend is higher highs and higher lows. As for all those confident market prognosticators, recall what Peter Lynch, the legendary manager of the Fidelity Magellan Fund, wrote in his investment classic One Up on Wall Street: "Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed's policy on money supply, foreign investment, the movement of the constellations through the heavens, and the moss on oak trees, and they can't predict the markets with any useful consistency, any more than the gizzard squeezers could tell the Roman emperors when the Huns would attack." Almost without exception, the folks proclaiming the end is nigh have a long history of making similar predictions. And all they have to show for it – aside from a complete inability to feel embarrassment – is the yolk running down their faces. As Vanguard founder John Bogle often notes, there are two types of market timers: Those who don't know what they're doing and those who don't know they don't know what they're doing. Remember that the next time you hear some CNBC contributor confidently pronouncing what the market is likely to do next. Given the uncertainty inherent in financial markets, what does a sophisticated investor do? Make a workable plan in advance; Respond unemotionally to market volatility; Stick to using discipline. Take a long-term investor, for example. He knows that bull and bear markets are a fact of life. So he sets an asset allocation and sticks with it. That means every year he sells down the assets that have appreciated the most and adds to those that lagged the most. (Again, I'm referring to asset classes – equities, bonds, real estate investment trusts, Treasury inflation-protected securities, etc. – not individual stocks. You most definitely should NOT add to the worst stocks in your portfolio.) Rebalancing doesn't just reduce portfolio volatility. It forces you to sell what's high and buy what's low. That gooses annual returns. A short-term trader, on the other hand, uses a different sell discipline. He uses trailing stops. Trailing stops protect your profits in the good times and your principal in the bad. However, you must actually implement them rather than simply imagining you will. Some investors so detest taking small, short-term losses that they end up with big, long-term losses instead. Not good. Occasional losses are a fact of life. That means you must be capable of acting resolutely and unemotionally. If you can't do this, you may need to turn your portfolio management over to a trustworthy, low-cost investment pro. (As the old saying goes, "A man's got to know his limitations.") Understand that I'm not suggesting you shouldn't feel emotional occasionally. That's too much to ask of flesh-and-blood human beings when financial markets come unbound from time to time, as they will. But you can't act on those emotions and expect to prosper. It may seem simplistic to some that you need only have a workable plan, respond unemotionally, and stick with your discipline. But history demonstrates that the key to long-term investment success is not doing something absolutely brilliant. It's not doing something terribly foolish.

Basket case no more, Argentina just elected a serious president... SOME YEARS ago I came to the conclusion that it would be wise to have a permanent footprint outside the US, writes Doug Casey for his International Man newsletter. It was a wise decision from many points of view. Because frankly, living in just one country is not just limiting. It's potentially dangerous. The question is, which of the world's countries is "best"? There are a lot of possible answers to that question, and they change over time. When my grandparents left the Old World, there was no question that the US was the best choice. I'm extremely happy they chose to move there and not act like potted plants, rooted to the soil where they were born. But things change. For decades, America has been changing...in the wrong direction. There's too much fear. Too much force. Too many taxes. Too much regulation. Too much debt. It's become as homogenized as an endless field of genetically engineered Monsanto corn, and is becoming just as unpalatable. The system itself has become unstable. I've been to over 145 countries, many of them numerous times, and lived in ten of them. I see the world as my oyster. All that travel has given me the opportunity to make some interesting comparisons. That's led me to Argentina. I came here for the lifestyle. But now I expect to make a bundle. Here's why. I've spent about half of each year in Argentina since about 2006. I admit that a major draw for me was polo; I was an avid player for over 20 years. That sport reflects the culture of the country. The whole place could easily be featured in a Ralph Lauren ad. I love the sophistication of Buenos Aires (it's a lot like Paris, but at a fraction of the price). But I like the wide-open spaces even more. Argentina is the eighth-largest country in the world but with only 40 million people, and most of them are in and around BA. That means most of the country is empty. The huge expanses of land mean there have never been movements for "agrarian reform" which have plagued the rest of the continent. Title to property is actually more secure than in the US, with none of the eminent domain, frivolous lawsuits, and confiscations that now plague the US. The Argentines like to make jokes about their origins, and they're funny because they're true. One goes, "The Mexicans came from the Aztecs, the Guatemalans from the Mayans, the Peruvians from the Incans, and the Brazilians from the jungles. We came from the boats." Of course that's true. Argentina is, by far, the most European country in Latin America, both ethnically and psychologically. It's an outward-looking country; all of the others are insular and inward-looking. The other Latin countries tend to resent the Argentines, who are perceived as elitists. Another popular joke is, "What is an Argentine? He's an Italian, who speaks Spanish, lives in a French house, and thinks he's British." That's true too, although it doesn't give enough credit to all the Irish, German, and Jewish immigrants. In other words, Argentines are more like Americans or Canadians than, say, Ecuadorians or Venezuelans. At many dinners and parties English, Spanish, French, German, and Italian are spoken interchangeably by everyone at the table. That doesn't happen in too many places in the world. The place is more like Europe than Europe itself, but lacks the destructive EU and millions of highly problematical migrants. So I came to Argentina for the lifestyle. But value made it a great place to combine business with pleasure. And I'm not just talking about the low cost of living and high standard of living. For years, my friends thought I'd gone off the deep end, putting millions of Dollars into the "country where money goes to die." But they forgot that the time to buy is when you're afraid to, when things look grim. Everybody understands – intellectually – that you should "buy cheap and sell dear," but they act according to their emotions. They talk the talk, but they don't walk the walk. The same people who have been afraid of Argentina, because they hear terrible things about its government's finances, are currently unafraid to buy a $700,000 500-square-foot "crap shack" in LA's Compton ghetto. Over the years I've become accustomed to being paid to live in places that I like: Aspen, Marbella, Hong Kong, Palm Beach, Vancouver, and Auckland, among others. They were all great values when I wrote about them. All of those cities have done vastly better than the average, even while the average has done very well. But the great post-WWII real estate boom is at its peak and coming to an end for many reasons. Now there are only pockets of value – anomalies – left in the world, where appreciation of property will, in effect, pay you to live there. Argentina is one of the very few places where it's great to live, and you're going to be paid for just being there. The opportunity has been created by the chronic mismanagement of the Peronist Argentine state. There are many bad things about a disastrously managed economy, currency, and banking system...for locals. But, from a foreigner's point of view, they're a blessing in disguise. For one thing, a total lack of mortgage money means that the prices of property are real, not inflated by borrowed money. What that means is, in Argentina, prices for equivalent houses and land are 10-20% of those in North America. That's about to change; one's going up, and the other is headed down. I've said for years that the country would boom if it only had a government that was simply not insane. That's not asking much. But in the sixty years since Peron first took control it hasn't had one. Until now. I admit to being not only delighted but surprised by the election of Mauricio Macri last month. It seemed people had been so corrupted by 60 years of Peronism that it could only get worse, at least until a real crisis pushed the reset button. But not only has the terminally corrupt and mentally unbalanced Cristina been deposed, but polls now show that the new Macri government has 70% popular support. It could amount to a sea change in populist thinking. When I first came here in 1980, I felt like I was stepping back into the '50s. I rather liked the way the culture was in a time warp; in many ways, the '50s were a mellow era. But the '50s-era technology was annoying; it's now as good as that in the US. Politically, however, the Argentines were about twenty years ahead of the US in doing stupid things. Now, they may still be about twenty years ahead of us politically, but they've finally stopped being stupid. The US, however, seems to be imitating Argentina, with a time delay. That may mean the US still has to go through the meat grinder. While Argentina, isolated and largely insulated from the rest of the world's problems, could do well as the Greater Depression deepens. It's a big deal that Macri has huge popular support. That's despite (or more likely because) not just thousands, but scores of thousands, of "gnocchis" are being fired by the new government. Right now. Fans of Italian food (which includes most Argentines) will recall that a gnocchi is a fat little piece of dough that just sits on your plate looking inert. It's a term Argentines use to describe most government employees. But now the gnocchis are being released into the real world. They'll necessarily go from being a drain on the economy to finding actual work. There will be lots of whining and protests, of course, but reality will win out. Everybody, even those that had one, resented the make-work jobs, the featherbedding, and the blatant theft. As an example, take Aerolineas Argentinas, the national airline. At a time when almost every other airline in the world is coining money, Aerolineas is losing over a billion Dollars a year. The airline was essentially used as a slush fund to employ thousands of gnocchis from La Campora, the totally corrupt Kirchnerite youth group. That's going to end. As you know, I approve of Argentina's famous $100 billion debt default. That's not because I approve of stiffing creditors; to the contrary. But those who were stupid enough to lend money to a profligate fascist government deserve to be punished. And, even after things are settled with holdout creditors, the market will be loath to lend to the new government. Excellent; they'll be forced to live within their means. Most of the money was either stolen or frittered away, anyway; at best, it was misallocated. The default keeps the next generation of Argentines from becoming indentured servants to pay it off. It's too early to tell, but this election has the potential to be as radical a change as the rise of Deng was in China, overthrowing decades of Maoist stagnation. It seems unstoppable. During the Kirchner years, agricultural production collapsed because of "retenciónes". This was a tax, ranging from 10-40%, depending on the product and its current price, payable to the state before grains, meat, or what-have-you was allowed to be loaded on a ship. Then farmers paid income tax on any leftover profit. Now that the retenciónes are gone, exports could easily double. Billions of Dollars will flow into the country. Under the new regime, foreign companies will develop Argentina's massive shale oil reserves as well; they should become a major oil exporter. Even more important, Argentines (the smart ones) are said to have over $200 billion abroad. Now that the climate has changed and assets are very cheap, they're going to bring a lot of that home. That will be compounded by scores of billions more in new foreign investment. And more production in every area as the economy is liberalized because, right now, everything that isn't price-controlled is subsidized. The past government wound up making almost everything uneconomic as a result. Three years ago, for instance, the country was actually importing milk. That's about as nonsensical as Arabia importing sand. Will investors have to worry about Argentina's chronic currency inflation, now at about 25%? The new government is quite conscious that this makes them look like a banana republic. They also know that it makes it impossible for the lower and middle classes to save. Every indication is that they're going to stop printing money. This will add to the new prosperity in many ways. For one thing, it's going to allow corporations to plan and act rationally. Despite the fact I'm bearish on most world stock markets, Argentina's is a buy. Will the trend hold? Again, I'm fairly optimistic. It's not just that the strength of the coming boom is likely to get a lot of people to put two and two together at last. But Argentina has always had – by far, there isn't even a remote competitor – the strongest classical liberal/libertarian tradition in Latin America. And, after the US, one of the strongest in the world. It's been quashed since Peron, but it's making a comeback. The free market reforms that Pinochet made in Chile transformed that country from a backward socialist-oriented mining province into the best economy on the continent. But the Chileans have been backsliding because they never had the right philosophical underpinning. The Argentines do, and they're going to rediscover it. One last thing. You may be (or certainly should be) thinking about getting a second citizenship and passport. The Argentine passport is quite useful, with visa-free travel to 129 countries (for comparison, the US passport has 147, Chile 124, and St. Kitts 113). Citizenship is available after only a two-year residence requirement. Most countries require five years, unless it's an economic citizenship. I suggest you take advantage of the cold weather in the Northern Hemisphere to come down here and take a look. For the lifestyle and the diversification, of course, but since prices haven't really started to move yet, for the financial opportunity. Spend some time in BA. Consider going to Patagonia, and seeing San Martín de los Andes. Mendoza is worth a visit. And definitely come to Cafayate, in Salta Province. I'll be there, at our Harvest Event, and will be happy to share a glass of wine with you. And a cigar, if you're also an aficionado. If you've been looking for a chance to play a big trend and buy at the bottom, this is it. Don't let the boat sail without you.

Look what magic HIGH interest rates can work... BEIJING last month unleashed a new weapon in its war to curb speculation against the Chinese Yuan, writes Gary Dorsch at Global Money Trends, by secretly purchasing billions of Yuan in the offshore market in Hong Kong. The People's Bank of China is seeking to foil a burgeoning speculative raid against the Yuan, by driving up the cost of borrowing Yuan to extraordinary heights, and causing maximum pain to currency carry traders, betting on a Yuan devaluation. The Hong Kong Interbank Offer Rate (Hibor) for overnight loan soared to as high as 68% on January 12th, and one-week deposit rates rose to 34%, as the PBoC's suprise attack caused a panicked scramble to cover short Yuan positions in the offshore market. The amount of deposits denominated in Chinese Yuan, in the offshore Hong Kong market, is relatively small, at CNY 864 billion ($130bn) at the end of November, a small fraction of the US Dollars available to the PBoC for intervention from its $3.33 trillion stock of foreign exchange reserves. That means that interventions of $20 billion or more in the offshore market can have a major impact on the Yuan's exchange and short-term interest rates. Within minutes of the heft intervention, the US Dollar fell to 6.60 offshore Yuan (CNH). That was down from a five-year high as CNH 6.75 on the Friday morning, Jan 8th. The People's Bank of China, acting through state-owned banks in Hong Kong, is expected to hold on to its purchases of Chinese Yuan traded in Hong Kong, thus depleting the supply of CNH available for interbank lending. By jacking up short-term borrowing costs to 34% for 1-week loans, the PBoC put a massive short squeeze on carry traders, who sought to profit from a weaker Yuan. Last year Daiwa Research estimated the "carry trade" into China could be some $3 trillion. Mid-January it was revealed that China's foreign reserves fell by a record $108 billion in December, reinforcing worries that capital outflows are worsening as spending by the central bank to support the Yuan increases. While China still has $3.33 trillion of foreign reserves, the concern is how long it can continue intervening if capital outflows stay elevated. To give some idea of the strength of capital outflows, they have come despite China still running surpluses on its balance of payments and foreign direct investment. The problem for policy makers is outflows are hard to control, as it let so much foreign capital in during the good times when the policy-driven Yuan pegged to the greenback was a safe-haven.

GOLD INVESTING prices took their sharpest dive in a week Friday lunchtime in London, dropping $15 per ounce from new 3-month highs as the Dollar rallied – and bond yields rose – despite the weakest reading on US jobs creation since September. Prices held on track for a third weekly gain however, the longest run of investing gains since April last year. Non-farm payrolls expanded by only 151,000 in January, the US Department of Labor said as the start of New York trade drew near – well below consensus forecasts of 190,000. December's growth was also revised lower. But the overall jobless rate edged down near an 8-year low at 4.9%. "The notable 0.5% monthly increase in wages [and] the reduction in the unemployment rate...serves as a caution to markets that it is too early to take a Federal Reserve March hike completely off the table," says Mohamed El-Erian, chief economic adviser at investing services giant Allianz. But "we see no compelling reason for more than a normal retracement [in gold]," said an earlier note from investment and bullion bank HSBC. "The rally is underpinned by risk off sentiment, a weaker US Dollar and a shift in global monetary policy." US stock futures turned lower as US bonds prices fell following Friday's jobs data, nudging the interest rate offered by 10-year Treasurys up 3 basis points from Thursday's new 12-month low of 1.84%. Having touched a fresh 14-week high at $1161 per ounce as the US jobs data came in, gold dropped $10 over the next 15 minutes. That cut gold investing gains to 2.9% for the week. Silver also slipped, but held 3.5% weekly gains – its third Friday-to-Friday rise on the run – at $14.77 per ounce. "Gold [has been] currently living up to its reputation as a safe haven in uncertain times," said a note on investing flows from commodity analysts at Commerzbank in Germany early Friday. The giant SPDR Gold Trust (NYSEArca:GLD) grew again on Thursday, swelling 8% since New Year and now going 20 trading days without a single outflow of bullion. The GLD last saw a 4-week stretch without any outflows in July 2014. Meantime in key consumer market China, however, "For the better part of February it will be a quiet time for precious metals business," Reuters quotes one Shanghai bank trader, as next week's Chinese New Year holiday marks the peak season for retail sales. "Domestic retail demand for bullion has been an important but secondary factor" in China's bullion demand, counters bullion-dealing ICBC Standard Bank's Tom Kendall in a note. Instead, the Chinese gold market "has been more about financially-driven flows in response to interest rates and spreads," Kendall says, noting that gold has proved "a very efficient vehicle to convert onshore RMB into US Dollar-denominated hard assets parked off shore. That's neither bullish nor bearish for gold investing, Standard concludes. "But it is a rather different narrative to those that the market is more frequently fed."

On October 22, 1981, the national debt in the United States of America hit $1 trillion for the first time in history. It had taken the US federal government over two centuries to reach that mark. And in that period, America had won its independence and built a nation from scratch. They created an army and a navy, and used them both to aggressively expand the nation’s domain. They fought an incredibly bloody civil war in dispute over the most fundamental concepts of freedom. They engaged in worldwide imperialism, stretching the country’s influence to faraway overseas colonies. They suffered through the Great Depression and introduced one of the most expensive public spending programs in history. They fought two world wars and defeated the Nazis. They developed nuclear technology. They sent people into space. And all of that-- across over two centuries of US history-- collectively registered one trillion dollars in debt. (More than half of that period was an era devoid of any income tax whatsoever!) Yet despite taking two centuries to hit $1 trillion in debt, it took just a few decades to add another $9 trillion, growing the debt ten fold. On September 30, 2008 the debt crossed the $10 trillion mark for the first time. And it’s never looked back since. Now, in that 27-year period from 1981 ($1 trillion in debt) to 2008 ($10 trillion in debt), one could argue that the US had defeated the Soviet Union making the world “safe for democracy”. They waged war in the Middle East multiple times on multiple fronts. They waged the War on (of) Terror. And when financial crisis struck yet again, they bailed out the US banking system. Look, I disagree with the vast majority of this spending. It turns my stomach to think about all the debt that was accumulated to bail out irresponsible banks, wage wars, or engage in genocide. But even though I don’t agree with all of it, it’s at least clear where the money went. For the first $1 trillion in debt, there were some pretty tangible results. Independence. Defeating the Nazis. Etc. Big stuff. There was some return on that investment. For the next $9 trillion, you could at least argue that there were some actual results, like vanquishing the Soviet Union. Today, less than eight years after hitting $10 trillion, the US government reports that it hit the $19 trillion mark (which technically happened on Friday). But what do they have to show for it? It’s not like anyone defeated the Nazis or Soviet Union over the last 8 years. By 2008 the banks had been bailed out, and the world had supposedly been saved. Where did all the money go? What real, tangible results do they possible have to justify the last $9 trillion in debt? Even more strikingly, compare the first trillion dollars in debt (which took two centuries to accumulate) versus the most recent trillion (which took 14 months). What grand act took place in the last 14 months to justify another trillion dollars in debt? Nothing. Yet in the past 14 months, both the Disability Trust Fund and the Highway Trust Fund ran out of cash. And the Federal Reserve became insolvent on a mark to market basis. It’s extraordinary. They have reached such diminishing returns now that they can manage to squander a TRILLION dollars and have absolutely nothing to show for it. To me, that’s the scariest part of the debt story. It’s not the total amount of the debt. It’s how quickly and easily they can fritter away $1 trillion dollars on absolutely nothing without any trace of benefit. It doesn’t take a rocket scientist to see where this is going. In fact, even the government knows where this is going. The Congressional Budget Office recently reported that government debt will reach $30 trillion within a decade. Given that it took them just 9 years to rack up the last $10 trillion, I’m sure that’ll happen much more quickly than they expect. But whether you decide to believe me or the government, either way it’s clear that this is only going to get much worse. This leaves you with essentially two options: 1) Stick your head in the sand (or somewhere else) and pretend like this can go on forever without consequence; or 2) Recognize how ludicrous this situation is, and prepare for the obvious consequences.

I think we should send them a message ....... Everyone go to the bank tomorrow and withdraw all of your savings in cash. only leave in the bank on a monthly basis what you need for your bills etc. Pay off your credit cards if you can, as credit creates 10 times more money in their ponzi scheme that they can gamble with Dont spend cash on a daily basis unless you have to, just hold on to it ...... take it out of circulation. buy Gold, Silver, food, guns, ammo ...... or better yet barter for them, bypass the system altogether.