Schiff Sovereign Podcast

At the center of Sovereign Man’s core ethos is the indisputable view that the United States is in decline.

I take absolutely zero pleasure in writing that statement. But it’s incredibly difficult, if not impossible, to objectively appraise the bountiful evidence at hand and not reach the same conclusion.

Consider the following:

US government finances are appallingly bad. The national debt exceeds 100% of GDP, annual deficits run into the trillions of dollars with no end in sight, and major trust funds for Social Security and Medicare will soon run out of money.

Political incompetence is mind-blowing; politicians fail to be able to even identify problems, let alone understand them, let alone reach compromises to solve them.

Ditto for central bank incompetence. These people simply cannot understand how, by keeping interest rates at zero for nearly a decade and conjuring trillions of dollars out of thin air, they engineered record high inflation. And they also fail to understand how their actions to ‘fix’ inflation are causing widespread havoc in the economy and financial system.

Social divisions across the country are extreme. Censorship and cancel culture prevail, and corporations now wag their fingers at their own customers to “be better”.

The education system is in pitiful shape, with many politicians and school board officials turning classrooms into activist training camps.

The population is terribly unhealthy. Obesity and drug addiction are epidemics. Plus there’s an obvious mental health crisis that drives far too many people to commit horrific acts of violence on innocent people, including children.

National security is in decline. Military readiness is down, yet top officials seem more concerned about diversity and inclusion rather than the ability to prevail in war.

The rule of law has been perverted, including for political purposes and self-aggrandizement. We just saw another example of this yesterday.

Even the national fertility rate continues plummeting– an indication of the rising cost of living and social apathy.

The Wall Street Journal recently published a series of polls indicating that most Americans doubt their children will have a better future; pessimism is strong.

They also found that certain values which once defined American culture, including a sense of community, hard work, and civility, are no longer important to the majority of people.

This is all happening at a time when adversaries are circling. And that includes China.

Now, usually whenever I bring up China, there are always people who are quick to assert that China cannot possibly replace the US as the dominant superpower because they have just as many problems.

And it’s true that China has a ton of problems. They have their own debt issues, financial system chaos, and economic problems. They have social challenges, a major demographic crisis, and even a serious issue with childhood obesity.

But no civilization or empire throughout history has ever been problem-free.

Ancient Rome, even during its early republic days, had enormous problems. They had to deal with constant revolts, civil war, the genocidal dictatorship of Sulla, famine, war, plague, and more.

Yet there’s an enormous difference between taking on challenges while you’re on the rise… versus succumbing to them while on the way down.

Rome was able to deal with its challenges and continue its rise to become the dominant superpower. China may be able to do the same.

The US finds itself in a precarious position where they have a mountain of compounding problems… and no ability to even slow them down, let alone solve them.

I’ve written before about what I call the “Four Forces of Decline”, which I define as

1) Forces of History– the inevitable, cyclical nature in the rise and fall of Empire. No empire, no civilization in human history has ever retained the top spot forever, and most tend to experience similar challenges on the way down.

2) Forces of Society– the vicious way in which a society eats itself from within, vanquishing the ability and inclination to solve complex problems.

3) Forces of Economy– the debilitating toll that enormous debts, deficits, and currency inflation take on a nation and its people.

4) Forces of Energy– when energy is cheap and abundant, prosperity reigns. When energy is expensive, prosperity wanes. The relationship couldn’t be more clear.

Today’s podcast puts all of these together, with a particular focus on #4, Forces of Energy.

Part of being the dominant superpower in our modern world means having access to abundant energy. Yet the US government has spent the last few years trying to destroy its energy (oil and gas) industry.

They’ve been pretty successful. The President of the United States hardly misses an opportunity to bash oil companies. Politicians pass new rules and taxes to punish them. The media beats up on them. Investors have pulled funding for them.

So it shouldn’t be a surprise that US oil production, while not in terminal decline, is failing to keep up with growing demand.

Shale oil is especially problematic given that most of the highest quality “tier 1” sites have already been drilled. Many are already in decline.

This is a big deal. Shale oil is the reason why the US achieved near energy independence. With shale in decline, the US will be forced to import a LOT more energy (which, again, is critical for prosperity) from places where they have an increasingly adversarial relationship.

Russian oil is obviously off the table. So is Iranian oil. Saudi Arabia is rapidly becoming cozy with China; in fact the Saudis are now publicly considering to sell their oil in Chinese currency, the renminbi.

This is an enormous threat to the US. Saudi Arabia has been selling oil in dollars for decades; they’ve even had their currency, the riyal, pegged to the US dollar since 1986.

This concept of selling oil in US dollars is known as the petrodollar, and it’s one of the key reasons why the US dollar is the global reserve currency.

Anyone who wants to buy oil needs to own US dollars. And that pretty much includes every country on the planet. So foreigners are forced to stockpile dollars, and by extension, US government bonds… simply because they need dollars to buy oil.

As a result the US government is able to get away with the fiscal equivalent of murder. They can run multi-trillion dollar deficits every year. They can wage expensive wars in foreign lands. They can go into debt to pay people to stay home and NOT work…

… and they’ve always had a bunch of suckers overseas– foreigners who have no choice but to buy US government bonds, simply because oil is priced in US dollars.

But what if Saudi Arabia started selling oil in renminbi?

Most likely a LOT of foreigners would dump at least some of their dollars and start holding renminbi as part of their official reserves.

America’s biggest privilege and benefit– its reserve currency– would vanish, practically overnight.

Suddenly the US government wouldn’t be able to run multi-trillion dollar deficits. It wouldn’t be able to go into debt to pay people to stay home and NOT work.

They’d have to be like almost every other country– act with some fiscal responsibility.

Think about it– if the President of Mexico shook hands with thin air, investors would be rightfully terrified and panic-sell Mexican government bonds. If South Korea ran a multi-trillion dollar deficit, its currency would probably plummet.

Back in September we saw the British pound and UK government bonds practically collapse… and the Prime Minister of one of the world’s largest democratically elected sovereign governments was forced to resign… simply because investors didn’t like her economic revival plan.

These issues are all linked. If the US continues to demonstrate incompetence and weakness… if they continue to subvert and destroy the energy industry… and if Saudi Arabia starts selling oil in renminbi…

… the consequences will be life-changing.

This is one of the biggest stories of our lives. It’s easy to miss because it’s playing out over a period of years. It gets lost in the day-to-day noise and the crisis du jour.

But rest assured this is happening in front of our very eyes; it’s a slow motion crash that’s already started.

The outcome isn’t inevitable yet. But nothing about these people’s actions demonstrate that they have the slightest clue what’s going on.

Join me in today’s podcast as we dive further into this… and I outline my “51st state” theory– a ‘solution’ that I wouldn’t be surprised to see in the near future.

In 1898, a Polish author named Jan Bloch published a 3,000+ page volume on modern warfare entitled Future War and its Economic Consequences.

Bloch had studied military technology and saw the rapid pace with which destructive new weapons and munitions were being developed. And he came to the conclusion that the next war would be absolutely devastating.

Bloch predicted, in fact, that the days of classical warfare– cavalry charges and large troop movements on an open battlefield– were over. And that the next war would entail long, bloody, pointless trench warfare that would be unimaginable in its destruction.

In short, he predicted World War I.

Bloch was even invited to speak at a diplomatic conference in the Hague in the following year in 1899, and he urgently warned the attendees to do everything they could to prevent war.

The experts listened politely… and then completely ignored him. 15 years later Bloch’s prediction came true when the Great War broke out. Millions died. Europe was destroyed.

And yet in retrospect it was all so obvious. The warning signs were there all along. But somehow the people in charge not only managed to NOT avoid war, they managed to steer directly into the path of destruction.

This is often the case with major world events, including wars and major economic catastrophes. They’re seldom accidents, nor do they sneak up without announcing themselves years in advance.

And after the crisis is over, it all seems so obvious in retrospect. Yet the people in charge failed to see it coming, and often contributed to the cause.

Another great example is the Global Financial Crisis of 2008, where banks and financial institutions engaged in high-risk behavior that nearly brought down the entire global economy.

Once again, the people in charge not only failed to notice, but they played a key role in engineering the crisis to begin with.

The Federal Reserve slashed rates to just 1% after 9/11 in the early 2000s, which led to a massive asset bubble. The Fed didn’t seem to notice.

Then when they started aggressively raising interest rates in 2005 (to help fight inflation), asset prices fell dramatically. The Fed failed to predict this too.

Banks lost billions of dollars as a result, and many banks failed entirely. This triggered a chain reaction in the financial system and the worst economic crisis since the Great Depression. And the Fed not only missed the warning signs, they steered directly into the disaster.

We’ve just seen a similar crisis unfold with this month’s bank runs.

The Fed slashed rates to zero, sparking yet another major asset bubble. The Fed failed to notice.

Banks paid record high prices to buy US government bonds using their depositors’ funds. The Fed failed to notice.

Then when the Fed aggressively raised rates, they failed to predict that asset prices (including bonds) would plummet in value, causing widespread solvency problems at banks.

Banks have even reported $600+ billion in unrealized bond losses to the Federal Reserve– one of the banks’ primary supervisors. And yet the Fed still failed to notice.

In fact just three days before Silicon Valley Bank went bust, the Fed insisted to Congress that everything was fine in the financial system.

These experts are consistently wrong. And it reminds me of World War I: the warning signs were obvious, yet the people in charge failed to notice… and steered directly into the path of disaster.

So in today’s podcast, I spend some time exploring an important question: what other key risks are lurking out there which the people in charge have failed to notice?

At this point, frankly, it would be stupid to assume that the government and central bank have everything under control. What are they missing?

I talk about five separate risks today– including further fallout from these aggressive interest rate hikes. We also discuss Social Security (which is a pretty obvious risk), war, energy challenges in the US, and– the biggest flashing red warning sign I see– fading dominance of the US dollar.

You can listen here.

Throughout history, whenever there has been a major shift in the world, it has usually been accompanied by a single iconic event that is associated with that change.

For example, historians often point to 476 AD as the year that the Western Roman Empire fell, when Odoacer and his barbarians forced the abdication of the Emperor Romulus Augustus— even though it was obvious that Rome was in decline way before 476.

People also often associate the start of the Great Depression with the stock market crash of 1929 (even though there were many signs of economic distress well in advance of that).

But these clean, precise dates are only chosen in retrospect. People experiencing the events at the time rarely understand their significance.

I think it’s possible that future historians may look back at Silicon Valley Bank’s collapse as one of those iconic events that signals a major shift… potentially the end of American geopolitical and economic dominance.

I’m not making this assertion to be dramatic; rather I think that anyone who takes an objective look at the facts—

— will reach the same conclusion that the United States is past its peak and in decline.

Now on top of everything else we can add a loss of confidence in the US banking system.

Obviously I take no pleasure in acknowledging the US is in decline. But that doesn’t make it any less true. And this has been Sovereign Man’s core ethos since inception back in 2009.

Back when I started this company it was considered extremely controversial when I said the US was in decline, or that there would be larger problems in the banking system, or that the breakdown of social cohesion would only get worse.

But today these challenges are so obvious that they’re impossible to deny.

You can never solve a problem until you first admit you have one.

And most of the corrupt sycophants masquerading as political leadership are incapable of admitting problems, nor discussing them rationally, let alone solving them.

But you and I do not have that disability. We are free to exercise the full range of human ingenuity and creativity with which we have been fortunately endowed.

So while the people in charge continue to never miss an opportunity to demonstrate their uselessness, we have a whole world of freedom and opportunity at our disposal.

This is the topic of today’s podcast.

First I review the huge issues with the Silicon Valley Bank collapse. Honestly when you look at it from a big picture perspective, it’s littered with mind-numbing incompetence.

The politicians who received donations from SVB’s Political Action Committee missed it. The Wall Street hot shots missed it. The credit ratings agencies missed it. The regulators missed it. The Federal Reserve missed it.

But now the Federal Reserve has launched a new program that exposes the US dollar— and everyone who uses it— to significant risk.

Think about this from the perspective of foreign governments and central banks.

Foreigners bought boatloads of US government debt over the past few years, especially in the early days of the pandemic.

In fact foreign ownership of US government debt has increased by $1 trillion since the start of the pandemic, and now amounts to more than $7.6 trillion.

But thanks to Fed policy, these foreign institutions are in the same boat as Silicon Valley Bank— they’re sitting on huge losses in their bond portfolios. They’ve also suffered from pitiful returns, high inflation, AND exchange rate losses.

In short, any foreign institution that bought US government bonds over the past few years is sitting on huge losses.

Plus now they’re watching with bewilderment as US politicians prove completely incapable of solving their debt crisis.

And on top of everything else they’ve just witnessed multiple bank runs in America, followed by the Federal Reserve’s pledge to put the dollar at further risk.

If you were a foreign government or central bank, would you want to continue buying US government debt? Would you want to continue holding your national savings in US dollars?

Probably not. Rather, they’re probably sick to death of all these histrionics.

We won’t know until years into the future, but SVB’s collapse (and the Fed’s response) may end up being the final nail in the coffin for the US dollar’s dominance.

You can listen to the podcast here.

Last June, during the European Central Bank forum, the host asked the chairman of the Federal Reserve about inflation.

The Fed Chairman responded, “I think we now understand better how little we understand about inflation.”

“Uh, that’s not very reassuring,” the host chuckled.

Talk about an understatement. It’s downright terrifying.

This is the Fed Chairman— the High Priest of finance— who has the power to control virtually everything in the economy.

He can conjure trillions of dollars out of thin air practically at will, raise and lower interest rates, push businesses and banks into bankruptcy, and cause people to lose their jobs.

And here he is acknowledging that they didn’t have a clue about inflation.

Thank goodness that was 8 months ago! Certainly by now they’ve really learned everything they need to know.

Wrong. They still don’t have a clue.

This week Fed officials have been busy giving speeches in advance of their interest rate policy meeting later this month.

And they keep complaining that the unemployment rate is too low. Too many people have jobs!!

The Fed is trying to put more people out of work… under the assumption that if more people are unemployed, there will be less spending in the economy, and therefore inflation will fall.

But this is such idiotic thinking.

They may very well be successful in pushing millions of people into the unemployment line.

But everybody knows that as soon as this happens, the government will step in and bail those people out with generous unemployment benefits.

Think about it— the government did this in the 2008 recession, doling out luxurious unemployment benefits that lasted for YEARS.

And during COVID they paid people to NOT work and stay home.

So it’s practically a given that the government will dish out fresh new benefits to newly unemployed workers.

And where will the government get all that money from to pay unemployment benefits? From the FED! Duh. How do these Fed officials not understand this?!?!?

Another thing the Fed has totally missed is the ‘quality’ of the employment numbers. They fret that there’s too much job growth in the US— because they’re just looking at the QUANTITY.

But if you take even a casual look beyond the headline numbers, you’ll see that most of the job growth is for waiters and bartenders. The US labor market doesn’t have red hot job growth for software engineers, biomedical researchers, or senior investment analysts.

America is essentially becoming a bartender economy now.

This is going on in front of their very eyes, but the Fed can’t see it.

If you look at the official minutes and records from the Fed’s policy meetings, you can see what they actually discuss… and it becomes even more obvious they still don’t understand inflation.

They STILL blame inflation on Putin and the evil virus.

There is ZERO discussion about how the government destroyed the economy and labor market with lockdowns, or how oil companies are being chased out of town (leading to higher energy prices), or all the idiotic new rules penned by the woke capitalism mob.

And of course there’s zero discussion about the Fed’s own role in slashing interest rates to zero (and keeping them there for the better part of a decade), or printing more than $8 trillion since the 2008 recession.

There’s no discussion of the $31+ trillion government debt, or last year’s $4 trillion deficit, or the impact of idiotic legislation like the poorly named “Inflation Reduction Act”.

Ultimately they consistently prove that the people in charge of managing the US dollar have still learned absolutely nothing.

When you think about it, that goes for nearly every major institution.

The White House appears to have learned nothing, the media has learned nothing, the high priests of climate change have learned nothing.

The good news though, is that everyone else— who feel the impact of these destructive policies— is learning very quickly.

And people are finally starting to declare independence from the expert class.

This is the topic of our podcast today.

We start by going back in time more than 500 years ago to another period in history when people were under the thumb of the expert class… which routinely proved itself tone deaf and out of touch.

But a revolution took place. Historians call it the Reformation, and people stood up and declared their own independence from the expert class.

This is one of the reasons why I remain so optimistic… because it was from this independence movement that we saw the Age of Enlightenment, the Scientific Revolution, and more.

I think we’re on the cusp of a new movement… and one that will unfold MUCH faster.

Scientists have already successfully conducted nuclear fusion experiments, the most recent was back in December. It’s no longer a pipedream.

And just earlier this week, a group of researchers claimed they had created a superconductor that works at near-ambient temperature.

This is just the tip of the iceberg. There are real advances that are taking place which can actually solve so many of the problems that the political and media elite have gotten us into.

And in many ways, as more and more people realize this, it’s almost like we’re entering a New Reformation.

You can listen here.

Two weeks ago, I told you that the US government had just published its annual financial report.

The government by its own admission lost $4.1 TRILLION in FY 2022. And this is 34% worse than the the previous year’s $3.1 trillion loss.

And the rest of the financial report only gets worse from there…

They describe Social Security’s extreme insolvency, projecting total unfunded liabilities of the program to be $76 trillion.

And they forecast that US government debt will one day reach 566% of GDP.

I’ve written about this extensively over the years, because history tells us that the consequences of this type of financial mismanagement are severe.

This is not the first time that a country has had a lot of debt, nor the first time incompetent leadership has consistently failed to recognize and solve big problems.

So in today’s podcast episode we go back in time thousands of years to heed the lessons of one of history’s biggest scumbag rulers.

Unsurprisingly, he raised taxes, debased the currency, violated the rule of law, confiscated property, eliminated dissent, vastly expanded the government, and created all sorts of idiotic and destructive laws.

BUT, this is fixable.

And today we actually discuss some common sense ideas to demonstrate how easy it should be, at least conceptually, to take giant leaps in the right direction once again.

Unfortunately, the people in charge seem to have zero interest in doing any of that.

So I wouldn’t hold my breath waiting for politicians and bureaucrats to ride to the rescue.

But at the same time, as I often point out, this is not a bad news story.

The world is not coming to an end.

In fact, I believe the world is still full of abundant and incredible opportunities, despite the trajectory of its largest superpower.

And we close this episode with the core central message of this organization: we have control over our own lives.

Regardless of what they do or how badly they screw up, you do not have to go down with a sinking ship. You have the power to solve these problems for yourself.

You can listen to today’s podcast here.

Imagine if Elon Musk stood up one day and told the world, “My #1 goal is for Tesla stock to lose 2% of its value every year.”

First of all, people would probably rightfully conclude that Elon had finally lost his mind.

And second, everyone would dump the stock. Who would possibly want to own an asset where the management is TRYING to lose 2% every year?

Yet that’s precisely the stated goal of the people who manage our currencies. They tell us flat out that they WANT 2% inflation, i.e. they WANT the dollar, euro, etc. to lose 2% every year.

Obviously these ‘experts’ have completely failed to achieve their goal lately… but the larger point is that incentives are clearly not aligned.

In the case of businesses, managers generally have the same incentives as their shareholders. Elon’s wealth only increases if his stockholders’ wealth increases.

But the people who manage currencies (politicians and central bankers) do not share the same incentives as the people who own the currency (i.e. responsible individuals who save money).

Savers want the currency to be stable. Politicians want it to lose value. It’s a totally perverse incentive structure… but it may get a lot worse– at least for the United States.

And it has a lot to do with the war in Ukraine.

History is full of examples of former superpowers who lose their dominance. Egypt. Greece. Rome. France. The Ottoman Empire. Mongolia.

And quite often there’s a ‘changing of the guard’, a reshuffling of the world order, when a rising power and declining power are involved in a war.

Carthage was once the dominant power in the western Mediterranean. But after losing the Punic Wars, Rome asserted its dominance over the region.

Spain was once the dominant power in Europe. But after the Thirty Years War, it became clear that France was the new superpower on the continent.

The two powers don’t even need to be fighting each other; after World War II, for example, it was clear that the US had surpassed Britain as the dominant superpower, even though both nations were on the same side during the war.

Today we see the same ingredients that may result in another reshuffling of the world order: a declining power (US), rising power (China), and a war.

Today is the first and hopefully only anniversary of the war in Ukraine. And I spend some time in today’s podcast episode exploring the larger implications, specifically focusing on the US dollar.

I think it’s very probable that, whenever this war finally ends, China will emerge as a clear superpower.

That doesn’t mean America will vanish. But it would mark the start of a new era in which the US can no longer do whatever it wants… and quite possibly share the dollar’s ‘reserve status’ with China.

For decades now, the US has enjoyed the exorbitant privilege of being the primary issuer of the world’s reserve currency.

This gives the US the luxury of having endless demand from foreign investors who have to own US dollar assets, and specifically US government debt.

Because of this endless demand from foreigners, the US government has been able to get away with the fiscal equivalent of double-homicide: multi-trillion dollar deficits, a $31.5 trillion national debt, etc.

Yet despite such irresponsible spending, foreigners STILL buy US government bonds… simply because the US dollar is the world’s reserve currency.

Anyone who wants to participate in global trade, buy oil from Saudi Arabia, etc. HAS to own US dollars… and hence hold their noses every time Nancy Pelosi said “it costs nothing”.

But imagine a world where the US dollar is no longer king. Sure, the dollar would still be relevant. But not king. Maybe a duke or viscount.

Without its status as the undisputed king of currencies, suddenly the US government wouldn’t be able to get away with outrageous deficits anymore. The Federal Reserve wouldn’t be able to get away with printing trillions of dollars, or slashing interest rates to zero, while expecting absolutely no consequences.

Suddenly all the debt and all the money printing would trigger inflation… and even a loss of sovereignty.

We may be closer to this reality than anyone realizes.

Again, history is full of examples of global power reshuffling because of a war. History is also clear that reserve currencies tend to change when global power is reshuffled.

So we have all the key ingredients right now for some pretty big implications for the US dollar… and that ridiculous “2%” inflation goal.

I talk about all of this in today’s episode, starting with the story of one of the biggest parties in world history that took place in 864 BC. The dominant superpower at the time was celebrating itself. And they thought their supremacy would last forever.

It didn’t. It never does.

I also walk you through the rise and fall of empires and reserve currencies, and I explain how even a minor decline in reserve status will be really bad for US inflation and sovereignty.

But this is not a gloomy podcast. Remember the words of Marcus Aurelius: focus on the things that you can control. And we can control a LOT.

We talk about simple ways to think about the future, why diversification is so important, and why real assets make so much sense.

It’s not a question of “which is the best currency”. ALL currencies are bad. Remember the perverse incentive structure I talked about at the beginning of this letter?

It’s really a question of which are the right assets to hold that can stand the test of time… including a reshuffling of power.

You can listen to today’s episode here, I hope you enjoy.

There’s hardly anything that POTUS loves to brag about more than his ‘economic success’. He is, after all, a self-proclaimed “capitalist”.

Even in last week’s State of the Union address, he boldly claimed that he “cut the deficit by more than $1.7 trillion– the largest deficit reduction in American history.” And he’s made that same assertion over and over and over again.

Unfortunately it’s a complete lie. And just yesterday the Treasury Department released financial documents proving it.

Every year the federal government publishes an annual financial report; it’s sort of like what big public company like Apple does. The annual report contains financial statements, plus hundreds of pages of discussion, details, and footnotes.

And yesterday afternoon they released the annual financial report for Fiscal Year 2022, which just ended a few months ago.

It goes without saying that the government’s financial condition is completely atrocious.

Their “net financial position”, which is sort of like the net worth of the federal government, fell to MINUS $34.0 trillion… which is worse than the MINUS $29.9 trillion in FY21.

The projected social security funding deficit also got worse… from $71 trillion to $75.9 trillion.

The real headline to me, though, is the budget deficit lie. The President claims that deficit last fiscal year was $1.4 trillion, and that he (and he alone?) brought it down by $1.7 trillion. But that’s not true at all.

It turns out that the “budget deficit” is actually an inaccurate figure that can easily be manipulated. If you’re a finance or accounting type, you might be surprised to learn that the budget deficit is determined on a ‘cash basis’ and not ‘accrual basis’.

This means that officials can easily accelerate certain revenues and push off certain expenses to massage the data and make the budget deficit appear better than it really is.

Businesses aren’t allowed to do this. Nearly every other organization in the country of any reasonable size has to follow strict accounting rules, booking revenue when it’s earned, and accruing expenses when they’re incurred.

This provides a more honest, transparent, and standardized way of reporting financial results.

So whenever they talk about the ‘budget deficit’, this is really just a manipulated number that doesn’t conform to proper accounting standards.

Naturally this raises an important question: how much would the federal government’s annual budget deficit be if they conformed to those proper accounting standards? i.e. the same ones that every major corporation has to follow?

Well, lucky for us, we don’t have have to guess. Because the government actually publishes that number too.

They call it their “Net Operating Cost”. And it essentially represents the REAL budget deficit.

It turns out that the FY22 Net Operating Cost of the federal government was MINUS $4.1 trillion. And that figure was MUCH worse than FY21’s Net Operating Cost of $3.1 trillion.

So this guy did not, in fact, “cut the deficit”. The real deficit, as determined by Net Operating Cost, INCREASED by a trillion dollars.

There’s so much more in this report, though.

One of the other interesting points, in fact, is that the government actually failed its audit. Again. The Comptroller-General states very plainly that there are numerous “material misstatements” in the government’s financial reporting and internal controls.

There are actually laws that are supposed to prevent this from happening. Twenty years ago Congress passed something called the Sarbannes-Oxley Act, which imposed CRIMINAL penalties for company executives who fail their audits.

If the federal government were held to the same standard as the private sector, dozens of officials should be facing jail time right now. Instead they’ll retire to their generous, fully-funded pensions and receive lavish board seats and prestigious awards. They will never be held accountable.

You, on the other hand, will have to bear the costs of their incompetence, in the form of higher taxes, inflation, reduced Social Security, and other broken promises.

Personally I find it extremely unethical and unjust that the irresponsible, criminally incompetent decisions of politicians and bureaucrats should be paid exclusively by the citizens.

It’s just like all the destructive decisions they made during the pandemic. They will never be held accountable for the mental health crisis, the suicides, the substance abuse, the entire generation of children who fell behind.

Nope. There will never be so much as an inquiry. Instead they’ll make millions from their memoirs where they cast themselves as heroic saints who saved the world.

This is the topic of our podcast today.

We start off with another historical example showing that, even though our problems are gargantuan, they are fixable. Good leadership works wonders, and it is possible to put the government’s finances back on the right track.

Unfortunately there is a dearth of real leadership. Instead we have people who are incapable of telling the truth or even recognizing real problems, let alone solving them.

So don’t hold your breath that they’re suddenly going to turn things around.

The Roman Emperor Marcus Aurelius used to write in his works on stoic philosophy that we shouldn’t stress about the things we cannot control… but instead to put our energy into the things that we can.

That’s great advice, and it’s an excellent way to think about these national and global problems.

And in today’s episode, I walk you through a few specific strategies to really move the needle in the right direction for yourself, in ways that you absolutely control.

You can listen in here.

Most people have a peasant mentality.

Throughout human history, in fact, the vast majority of people never thought much beyond their tiny village, let alone traveled.

But there have always been some people who have had the intellectual courage and curiosity to think far beyond their own borders. And they’ve often been richly rewarded for it.

Adopting a global mindset essentially means thinking about the entire world when considering your options. And more options is almost always more beneficial.

If you’re thinking about retirement, more options will greatly increase the chances of finding the right place that has the right weather, cost of living, medical care, and lifestyle that you desire.

If you’re thinking about business, considering your overseas options will greatly increase your chances of finding high quality, cost effective labor… or lucrative new markets to sell your products and services.

If you’re thinking about investments, looking abroad increases the likelihood of finding wonderful, well-managed businesses trading at a steep discount to intrinsic value. Or a trophy property selling for less than the cost of construction.

This is the topic of our podcast today– we discuss WHY it makes so much sense to look abroad, and cite some very specific examples.

We talk about asset protection, for example, and I explain why foreign asset protection structures are so much more effective.

(I also explain why asset protection structures exist to protect against professional criminals who abuse the legal system to steal from law-abiding, hard-working people.)

I cite specific legislation from some of the best jurisdictions to show precisely why they are so much more effective at helping to protect honest people from thieves.

We also discuss taxes… and specific ways that thinking globally can dramatically reduce your taxes. These are all completely legal. We’re not talking about any ‘loophole’ that requires a creative interpretation of the tax code.

I tell you about one international strategy, for example, to slash your tax bill by 50%. It’s no loophole. In fact there’s an entire section of the tax code dedicated to it.

Bottom line, diversifying internationally doesn’t mean you need to go anywhere or do anything exotic. It just means expanding your thinking to consider a wider variety of options… and that can have an enormous benefit in your life.

You can listen in to today’s episode here.

Gold is really an amazing metal when you think about it.

It doesn’t corrode. Coins buried underground or sunk at the bottom of the ocean for hundreds of years are routinely pulled up and brushed off, and they’re good as new.

This strength and durability is precisely what makes gold so interesting as an inflation hedge.

It undoubtedly takes a lot of work to produce a gold coin or bar– so much labor, energy, technology, etc.

A gold coin essentially represents all of the work… all of the effort and labor… that went into producing it.

This is not unique. In the same way, a bushel of wheat represents all the labor that went into producing the grain. An iPhone represents all the labor and effort that went into producing it. Except that wheat doesn’t last. iPhones don’t last. Gold does.

So gold essentially encapsulates all of the resources, including TIME, that went into producing it… in a way that lasts forever.

Right now, for example, it costs major mining companies about $1,270 to mine a single ounce of gold. So if you buy gold today, you’re essentially locking in a $1,270 production cost.

This is the reason that gold does such a great job of maintaining its value against inflation, because, over time, production costs tend to increase. And higher production costs eventually result in higher prices.

This is true with just about any product or industry. We’ve seen companies like Procter&Gamble, Unilever, CocaCola, McDonalds, etc. all increase prices because their production costs are rising.

Again, though, you cannot use a Big Mac as a store of value. It won’t last forever. It won’t even last a day.

But gold lasts. You can buy a Canadian Maple Leaf coin today, and, ten years from now, your 2023 coin will be worth exactly the same as a brand new coin minted in 2033.

And if you anticipate that inflation will push up production costs over the next decade (which tends to happen), you can easily make a case that gold prices will be higher by then.

This is the topic of our podcast episode today; we take a deeper look at why gold has long-term value– a variation of ‘proof of work’ that I call Proof of Time.

We start out in Yap Island, in Micronesia, and discuss how the natives there developed one of the most advanced financial systems in the history of the world based on the concept of ‘Proof of Work’.

Anthropologist William Furness wrote that, despite the Yapese having no understanding of economics, they realized that “labor is the true medium of exchange and the true standard of value.”

I believe this is true. But more than labor, I believe that TIME is real standard of value.

Time is the ultimate scarce resource. No one, no matter how rich or powerful, can create any more of it. And once it is used, it is gone forever.

Labor is one of the ways that we use time. And gold is a rare asset that transmits both time and labor… forever.

We also talk about different BUY signals for gold. We talk about miners’ gross profits– and why it makes sense to think about buying when profits are low… or even when the price of gold falls below the price of production.

In a way that’s like buying a house for less than the cost of construction; it’s a SCREAMING deal and definitely worth considering.

Gold isn’t at that level right now. But it could be soon… and that’s why it’s worth understanding how to think about gold, and many other assets, through this lens of ‘time’.

You can listen to this week’s episode here.

As a member of the Boards of Directors of several companies, I regularly attend board meetings to help oversee and guide businesses.

One company in our portfolio is run by some very sharp and talented young guys who have created one of the first metaverse advertising companies. It’s growing rapidly, and they’re even expanding into video games now.

In a recent board meeting, the management team was telling me about their ‘KPIs’ for this year; KPI stands for ‘key performance indicator’, which is essentially a key metric that a company monitors to get an overall sense of the business.

Apple, for example, probably monitors iPhone sales very closely as a major KPI.

These guys at the metaverse business had a long list of KPIs. And as they were explaining the metrics to me, at a certain point I had to stop them.

I told them that, first of all, you can only focus on so many things at once. You cannot prioritize everything. You have a certain amount of time, money, people, and energy, and leaders need to make deliberate decisions about how to allocate those resources.

And second, you have to focus on things that you control.

I told the guys that they cannot control the number of daily active users in the metaverse, or in the video games where they’re advertising.

But they can absolutely control the number of advertisers they work with, the properties in their inventory, etc.

I’m telling you this story because I think it’s a sensible way to think about a Plan B.

Right now, it feels like the world is chain-smoking crisis after crisis.

Consider inflation, for example, which has remained stubbornly high. I can’t do anything to bring down price levels; there are only a handful of policymakers who have that ability, and they clearly don’t get it.

What I can do, however, is focus on the things that I can control in my own life.

And I can absolutely control, for example, the impact that inflation has on me, because of the decisions that I make with my savings and income.

I can’t control the solvency of Social Security either. But I can make sure that I have plenty of money stuffed away for my own retirement, regardless of what happens to the Social Security trust funds.

But today I really wanted to discuss how the future is far from certain.

We discuss regularly in these letters that the US, and the West in general, have set themselves on a very destructive trajectory. Too much debt, too much spending, too much money printing, too much conflict, etc.

And based on this current, destructive trajectory, if we fast forward 10-20 years, it doesn’t look good.

I also write a LOT about various historical examples of once great empires that fell from glory for many of the same reasons.

But again, the future is not certain. If there’s anything we’ve learned over the past few years, it’s that ANYTHING can happen. The world can change overnight.

And today I wanted to tell you a different story… not one of decline, but really more of a turn-around story.

It’s the story of a country that was on the brink of disaster… heavily indebted up to its eyeballs and about to be invaded. And they also happened to have a head of state with hardcore dementia who reportedly went around shaking hands with trees.

But they fixed it.

They managed to right the ship, turn everything around, and usher in a period of unprecedented peace and prosperity.

So it is possible. But in case this turnaround doesn’t happen… well, that’s why we have a Plan B.

This is the topic of our podcast today; you can listen in here.

Click here to listen in to this week’s episode.