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How a 17-year old made a fortune in Chile

Sovereign Man - Wed, 01/15/2014 - 10:36

January 15, 2014
Santiago, Chile

In 1892, 17 year old Pascual Baburizza stepped off the boat in what looked like an unwelcoming, arid landscape in the north of Chile.

Baburizza had just spent several weeks on a boat travelling from his home island of Koločep, Croatia, which was then part of the dying Austro-Hungarian empire.

Austria-Hungary was once one of the most powerful empires in the world… replete with grandiose palaces, monuments, and a huge army. It no longer exists.

And by the late 19th century, an unpromising future back in his homeland had forced Baburizza to leave and seek better prospects on the other side of the planet.

He quickly found a business opportunity as the region was going through a potassium nitrate boom. Rather than get into potassium nitrate, though, he sold fish and meat to prospectors in the desert… something like selling shovels to gold miners.

The business went so well that he soon began acquiring property and other companies, and eventually expanded into agriculture.

In 1929, at the age of 54, he retired to live in his palatial Italianate villa in Valparaíso on Chile’s beautiful Pacific coast.

Baburizza’s story wouldn’t be much different today, especially in Chile.

There are legions of enterprising, talented, and ambitious young people out there who have realized that they cannot fulfill their dreams back home in Europe or North America.

They’re looking elsewhere, and Chile is receiving a number of them.

Down here, it’s possible for foreigners to obtain a job, start a business, or invest, all with relative ease. And the immigration laws make it easy for any productive foreigner to move here.

The government’s funding program, Start Up Chile, has been a huge success in attracting talented people and innovative businesses here. And with more talent, innovation, and crosspollination the opportunities are expanding.

Just as in Baburizza’s time, this place is still brimming with business and investment opportunities. I come across them every day.

For example, there are enormous problems to be solved (and money to be made) by catering to the needs of Argentine nationals across the Andes, who are once again getting hosed by their government.

That’s why Bitcoin-related services are taking off here.

Satisfying the appetites of the growingly affluent Chileans is another substantial opportunity. Large parts of Santiago provide a pleasant, first world standard of living.

And yet, the offerings here in the consumer, retail, service, culture, and hospitality businesses still lag behind other places in the world with a similar standard of living.

The high-end service space is waiting to be exploited—anything from fine dining restaurants, private schools, boutique hotels, sophisticated bars, etc.

Across the board, the level of service is something that can be greatly improved upon by anyone coming from a more service-oriented environment.

Every week I meet new foreigners who have arrived and are overwhelmed at the business opportunities here. Back home, the competition (and regulation) would be suffocating.

But here, the startup costs are lower, the competition is almost nonexistent, and the opportunities to excel in a thriving economy are abundant.

Pascual Baburizza didn’t wait for things to get better. In his case, they got worse… until the Austro-Hungarian Empire disappeared altogether.

Today, the leap of faith to be made by changing your geography is much smaller than it was in his time. It’s possible for anyone to do who has the courage and the vision to try.

Check out the IRS’s stunning admission of its own mafia tactics

Sovereign Man - Mon, 01/13/2014 - 11:32

January 13, 2014
Santiago, Chile

In the 3rd century AD, Emperor Caracalla famously remarked of Rome’s tax policy:

“For as long as we have this,” pointing to his sword, “we shall not run out of money.” (Of course, Rome did run out of money. )

At the time, Roman taxation was so extractive that it drove people into poverty and desperation. Yet the government continued to forcibly plunder wealth at the point of a sword.

Not much has changed.

The Taxpayer Advocate Service, which is an independent office within the IRS, has just released a two-volume report describing the mafia tactics that are being employed by the tax collectors in the Land of the Free.

The Executive Summary alone is 76 pages. And believe it or not, it’s a real page turner.

On page 37, for example, the report states that the IRS largely assesses tax penalties improperly.

Specifically, the Office of the Chief Counsel admonished the IRS that it was not legally authorized to impose accuracy related penalties on certain taxpayers, and that the service should abate those penalties already imposed.

Yet the IRS declined to follow its own Chief Counsel’s legal advice, and it has refused to abate penalties for nearly 90,000 taxpayers.

In the words of the agency’s own Taxpayer Advocate Service, “The IRS’s failure to abate inapplicable penalties signals disrespect for the law and a disregard for taxpayer rights.”

Page 34 discusses how the IRS has abandoned its own checks and balances.

When a taxpayer is deemed to owe the US government money, the IRS is supposed to have a “collection due process (CDP) hearing” to verify that the IRS agent followed the law and consider whether the intrusion on the taxpayer was warranted.

Yet the report states that this has become nothing more than a rubber stamp formality, and that current practices “do not provide the taxpayer a fair and impartial hearing.”

In fact, among the most litigated issues at the IRS, the report states that “taxpayers fully prevailed only about two percent of the time.”

Two percent. If you go up against the IRS, you have a 2% chance of winning. Give me a break. You have more than a 2% chance fighting against the mafia.

Moreover, the byzantine US income tax code, which runs to an incredible 72,000+ pages, “disproportionately burdens those who [make] honest mistakes”, especially as it relates to offshore disclosures.

In fact, the report acknowledges that “tax requirements have become so confusing and the compliance burden so great that taxpayers are giving up their U.S. citizenship in record numbers.”

It’s not exactly Emperor Caracalla pointing to his sword… but IRS’s policies and tactics are not so far off from a police agency.

They disregard the law and the advice of their own counsel. They disproportionately burden honest individuals. They flout due process. And they push people to abandon their citizenship.

These are mafia tactics, plain and simple. And like the Romans, Ottoman Empire, and French monarchy before, the tax system in the Land of the Free has become a desperate farce marked by fear and intimidation.

This is one of history’s obvious marks of a nation that has reached its terminal decline. We cannot seriously expect this time to be any different.

The safest currency in the world… selling for a big discount

Sovereign Man - Fri, 01/10/2014 - 07:38

January 10, 2014
Sovereign Valley Farm, Chile

There’s no doubt that one of these days (hopefully very soon), our current monetary system will be viewed as one of the most absurd financial experiments in history.

Consider the monetary system for what it really is– politicians award unelected central bankers with the power to conjure money out of thin air… a power that they are not shy about using.

In the US, for example, the Federal Reserve’s asset base is now roughly $4 TRILLION, constituting over 25% of US GDP.

When Lehman Brothers went bankrupt a few years ago, the Fed had less than $900 billion in assets. So that’s over a 400% increase in five years, all because they simply willed trillions of dollars of new money into existence.

Of course, the Fed is not alone.

The Bank of Japan and People’s Bank of China among others have printed so much money they make the central bankers at the Fed look like a bunch of amateur hacks.

And while it is my fixed opinion that such destructive behavior will soon drive these paper currencies to their intrinsic values in British Thermal Units, it’s clear that not all paper currencies are the same.

The Norwegian krone is one obvious outlier.

For starters, Norway’s government has ZERO net debt owing to its massive oil wealth. This means that the government’s balance sheet has more financial assets than debt.

The Norwegian government is so cash rich, in fact, that its net financial position is over +100% of GDP. By comparison, the ‘net worth’ of the United States is MINUS 102% of GDP as of the last fiscal year.

More important, however, is the Norwegian Central Bank’s financial position. This is critical to look at.

Just about every currency in the world is issued by that nation’s central bank. The US dollar is issued by the Fed (the US central bank). The British pound is issued by the Bank of England. Etc.

So if you want to understand the health and safety of a currency, it’s imperative to analyze the fundamentals of a central bank. And the most important fundamental to look at is the bank’s net financial position.

Central banks are like any other bank… or any other business for that matter– they have assets and liabilities.

The difference between the two is called the bank’s equity, or capital. And the greater the equity, the healthier the bank.

This makes sense– you want a bank that has a pristine balance sheet with ample, strong, stable assets… and very few liabilities.

This way, when times get tough, the bank has a tremendous margin of safety to ride out the storm. And with central banking, this means a very low likelihood of a currency crisis or any other financial shock.

The best way to make an apples to apples comparison is by looking at a central bank’s equity expressed as a percentage of its assets.

The Fed right now has a paltry $55 billion in equity to support $4.02 trillion in assets. So the Fed’s equity is just 1.36% of its equity.

In Norway, on the other hand, the central bank’s equity is a massive 32.9% of its total asset base. This means Norway’s central bank is 24 TIMES STRONGER than the Fed.

It’s an astounding difference. Between this, and the government debt position, it’s obvious that the Norwegian krone is a MUCH stronger currency.

But here’s the funny thing. Right now, the krone is trading near a multi-year low… around 6.2 krones per dollar.

This isn’t to say that another global financial shock couldn’t temporarily push the krone past 7/dollar. But longer term, it’s a much safer bet than the US dollar. And right now it’s at an attractive entry point worth considering.

How to get a retirement visa in the Philippines if you’re over 35

Sovereign Man - Thu, 01/09/2014 - 20:00

If you’re over 35, a refundable bank deposit of just $20,000 – or, in some cases even less – buys you residency in the Philippines.

If you’re over 50 and have a pension income of at least $800 a month, a bank deposit of as little as $10,000 will suffice.

Even “ailing retirees,” those who have a non-contagious, pre-existing medical condition, which means they need close medical supervision and extra care, are catered for on the ailing retiree visa option.

No other country in the world that I know of will explicitly and gleefully accept ailing retirees on an official residency program.

The Philippines may be relatively poor, but from my experience, there’s a lot more money around than one might think.

Another thing I’ve always loved about the Philippines is that, when compared to most other Asian countries, it is very welcoming of outsiders.

Filipinos themselves share a mixed heritage, which is a product of the original Malay people who settled in the islands, and the Chinese, Spaniards, and Americans, who came in waves for trade, and as colonizers, and stayed. In terms of its racial mix, the Philippines is a lot more like Brazil than it is like Japan or South Korea.  

How to obtain a retirement residency visa in the Philippines

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You won’t believe this award they give out to Central Bankers

Sovereign Man - Wed, 01/08/2014 - 06:39

January 8, 2014
Sovereign Valley Farm, Chile

The “Ig Nobel Prize” is parody of the Noble Prize that is awarded every year for the most trivial scientific achievement. (‘ig’ is short for ‘ignoble’)

For example, the 2007 recipient for the ‘Ig Nobel Peace Prize’ went to the United States Air Force Wright Lab in Ohio, for proposing the development of a ‘gay bomb’ that could be dropped in hostile territory and make enemy troops sexually attracted to each other. Make love, not war?

(This actually happened. The proposal was part of a $7.5 million funding request in 1994 to develop non-lethal weapons, including one that would create “severe and lasting halitosis”, and “could be used on mixtures of enemy personnel and civilians.” Your tax dollars at work.)

So when I opened my email yesterday and saw the subject line: “Central Bank Governor of the Year”, I immediately presumed it was a similar satire. It wasn’t.

It’s bad enough that our modern society considers the hoodoo of economics to be “science”.

And that we award our most esteemed prizes for intellectual achievement to its master practitioners like Paul Krugman who tell us how bountiful our national wealth could be if we would only conjure more paper currency out of thin air.

These ‘scientists’ have managed to convince the entire world that it’s a good idea to award a tiny banking elite with supreme, totalitarian control over the money supply.

Frankly this idea is even dumber than the Air Force’s. And perhaps the framework of modern central banking will one day receive its own ‘Ig Nobel Prize’.

But for now, it’s taken very seriously. So seriously, in fact, that the Financial Times’ “Banker” intelligence service recently announced the aforementioned ‘Central Bank Governor of the Year’.

Guess who won?

Nope, not Ben Bernanke. You see, while Mr. Bernanke has spent the last several years aggressively expanding the balance sheet of the US Federal Reserve, he has been handily out-printed by some of his peers.

No, this dubious honor goes to Haruhiko Kuroda of the Bank of Japan (BOJ).

Mr. Kuroda’s claim to fame is pushing to double the BOJ’s monetary base within just two years, and joining Japanese Prime Minister Shinzo Abe to create more inflation.

He’s off to a hell of a start.

Since assuming office in March 2013, Mr. Kuroda has printed enough money to inflate his balance sheet by 35.5% in just 9-months. And the Japanese yen has plummeted along with it.

Despite obliterating his currency, the FT absurdly claims that Mr. Kuroda has “restored credibility to the Bank of Japan and inspired confidence in Japan’s economy.”

Bear in mind, the Japanese government is already in position where the NET government debt is over 140% of GDP.

And they’re spending a full 25% of its tax revenue just to make INTEREST PAYMENTS… at a time when interest rates are effectively ZERO.

If interest rates rise to just 1%, the Japanese government will go bankrupt. Yet this is exactly the direction that Mr. Kuroda is going.

His goal is to create inflation of at least 2%. But if inflation is 2%, who in his right mind would loan money to the government at 0.3%? You’d be losing money.

Interest rates will HAVE to rise. Investors will demand it. So Mr. Kuroda’s path will either bankrupt the Japanese government… or he will create a currency crisis by devaluing his currency to nothing.

It’s extraordinary how dire the situation is. Yet Mr. Kuroda is now considered by the grand wizards of the financial system to be the BEST IN THE WORLD. Incredible.

This surprise investment has outperformed Google for the past 10-years

Sovereign Man - Tue, 01/07/2014 - 07:51

January 7, 2014
Sovereign Valley Farm, Chile

Later this year, Google will celebrate its 10th anniversary as a publicly-traded company. And the conventional wisdom is that GOOG has been one of the best performing investments of the last decade.

If you had invested $85 in the Google IPO back in 2004, your investment would be worth over $1,100 today… a 13x return.

Over the same period, the S&P 500 has returned just 66%. And if you had taken the plunge into US Treasuries back in 2004, you would have been paid 4.15% per annum for the last ten years.

In light of all this, Google’s stock performance has been undoubtedly stellar.

But there’s an entirely different asset class that few people ever consider which has beaten the pants off of Google’s long-term performance. It’s agriculture.

I thought about this yesterday as I was walking around the orchard here picking fresh, ripe plums off the tree. We’ll be starting our harvest soon, and the workers are getting everything ready.

The average plum tree can easily produce over 100 pounds of fruit, starting a few years after you put a well-developed seedling in the ground.

And even on a standard-sized residential lot, you can plant 20+ fruit trees.

Assuming a long-term average price of just $0.50 per pound and a 2004 plant price of $4, investing $85 in plum trees 10-years ago instead of Google stock would have yielded well over $6,000 so far.

Even if you’re not a Do-it-yourselfer and allow for harvest costs, loss, pruning, water, and other expenses, you’d still be up more than GOOG. Plus you’d still be grossing $1,000 per year… not to mention the increase in your home’s market value.

More importantly, you would be owning (and producing) REAL assets instead of paper assets– something that can be traded, sold, stored, or if need be, eaten.

And best of all, you wouldn’t have had Ben Bernanke and his central banking ilk as your silent partner for the past decade, manipulating stock prices and causing asset bubbles.

The soon-departing Mr. Bernanke may be the all-powerful grand wizard of financial markets, but he has absolutely no bearing on the fruit production of well-maintainined trees in your backyard.

It’s not just plums, either. Or even fruit trees for that matter.

You could have bought $85 worth of organic tomato seeds in 2004 and grown thousands of dollars worth of organic tomatos over the last decade from your backyard.

Of course, this sort of notion makes most serious investors laugh. They can’t think past their own noses and only know how to follow the investment herd off the proverbial cliff.

And while this missive isn’t intended to convince our astute readers to rush out and plant trees, it’s at least worth pointing out that there are always profitable options far from the mainstream investment mentality.

More to follow on this soon.

Inside Anglo: the secret recordings – Irish Bank Scams the People

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.independent.ie/business/irish/inside-anglo-the-secret-recordings-29366837.html

Mr Bowe’s comments in the audio recording reveal that Anglo’s strategy was to lure the State in, leaving taxpayers with no choice but to continue to provide loans to “support their money”.

The recording also shows Mr Bowe and Mr Fitzgerald laughing as they say how there is no realistic chance of ever repaying the loans

Inside Anglo: the secret recordings – Irish Bank Scams the People

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.independent.ie/business/irish/inside-anglo-the-secret-recordings-29366837.html

Mr Bowe’s comments in the audio recording reveal that Anglo’s strategy was to lure the State in, leaving taxpayers with no choice but to continue to provide loans to “support their money”.

The recording also shows Mr Bowe and Mr Fitzgerald laughing as they say how there is no realistic chance of ever repaying the loans

The Men’s Rights Movement Is No Place For Men

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.returnofkings.com/7877/the-mens-rights-movement-is-no-place-for-men

The Men’s Rights Movement Is No Place For Men

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.returnofkings.com/7877/the-mens-rights-movement-is-no-place-for-men

Mt. Gox publishes ad in G8 magazine

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.coindesk.com/mt-gox-publishes-ad-in-g8-magazine/

Someone should follow up this cartoon of a naive Bitcoin walking into this world powers that be boardroom with another second image of the bitcoin character getting tied up, gang bang raped in the most brutal way then dismembered, served up and eaten on silver platters raw and uncooked. Because this is exactly what the response is going to be to Bitcoin or any other system that offers a decentralized anonymous digital cash system. It is the only response possible to a system that is an existential threat to their power and control.

Mt. Gox publishes ad in G8 magazine

J. Orlin Grabbe - Mon, 06/24/2013 - 11:40

http://www.coindesk.com/mt-gox-publishes-ad-in-g8-magazine/

Someone should follow up this cartoon of a naive Bitcoin walking into this world powers that be boardroom with another second image of the bitcoin character getting tied up, gang bang raped in the most brutal way then dismembered, served up and eaten on silver platters raw and uncooked. Because this is exactly what the response is going to be to Bitcoin or any other system that offers a decentralized anonymous digital cash system. It is the only response possible to a system that is an existential threat to their power and control.

Conspiracy and Cover-Up

Lew Rockwell - Sun, 06/23/2013 - 17:23
Top 10 facts you need to know about TWA Flight 800.

Stasi in the White House

Lew Rockwell - Sun, 06/23/2013 - 17:23
Paul Craig Roberts on tyranny.

Dr. Doom Gets Some Laughs

Lew Rockwell - Sun, 06/23/2013 - 17:23
Marc Faber takes on the Fed's propagandists and gold bears.

What They've Learned From the Long, US Massacre of Afghans

Lew Rockwell - Sun, 06/23/2013 - 17:23
Nothing, nada, zippo, zilch. Article by Ron Paul.

Unasked and Unanswered Questions

Lew Rockwell - Sun, 06/23/2013 - 17:23
About diversity. Article by Walter Williams.

Who's Bringing 'Injury to America'?

Lew Rockwell - Sun, 06/23/2013 - 17:23
It's the secret, unaccountable surveillance state, not Edward Snowden, says Glenn Greenwald.

The Era of Fiat Currency Crony Capitalism

Lew Rockwell - Sun, 06/23/2013 - 17:23
Welcome to the consequences, says Paul Rosenberg.

Apple-Cofounder Is Sorry

Lew Rockwell - Sun, 06/23/2013 - 17:23
That he helped create the tools the state uses to spy on us. But he still doesn't get the state. Article by Chris Rossini.