Onebornfree's Financial Safety Reports

Gerald Celente-The Strange Contradictions of a Fortune-Telling Gold Bug

2012-01-23T08:09:00.000-08:00

[Mr Celente is an interesting character, for a number of reasons. He is one of many in the investment advisor field whose reputation appears to be founded on some kind of supposed natural ability to predict future economic events. However, I find the Daily Bell's interview, titled : "Gerald Celente on Trend Forecasting and the Crisis of Western Civilization" interesting because of how it reveals clear, fundamental contradictory beliefs of a "big name" in the investment/seer world, contradictory beliefs which may well contribute to his anger at the world, and in particular, to the world of markets and market phenomena, and which almost certainly have contributed to his ongoing anger over his recent investment troubles . The complete "Daily Bell" interview can be read at the first link above, while below I reproduce my own response to the article, which I had originally posted on the Daily Bell website. Enjoy -or not :-) ].

Great interview DB, maybe one of you best. Mr Celente comes across as an honest, intelligent and funny [humorous] man, if a little cantankerous at times. He even states at one point " I REALLY GET ANGRY! ".

As a person whose profession mostly consists of examining and deconstructing an individuals personal belief systems, with the goal of enabling them to lead freer, happier lives, , I could not help notice a two glaring contradictions in Mr Celente's statements; contradictions that I believe are probably the source of that expressed anger .

Internal Contradiction [1] : on predicting future events:

Gerald Celente [1a]: "Nobody can predict the future - there's too many wild cards."

Gerald Celente [1b]: "I believe the price is going up so in April I took contracts to take delivery in gold."

Onebornfree: to [1b], I would say, and I quote [1a] "Nobody can predict the future - there's too many wild cards."

The plain fact is that, whether we are talking about gold or some other class of investment, nobody can reliably, consistently predict an investment/ economic future either; there are, as he himself noted " too many wild cards." [Please see "Financial Safety Rule #1".]

Subconcious Prediction?

Whether Mr Celente or his followers care to admit it or not, putting all, [or the majority], of ones personal life savings into gold or other precious metals IS an attempted prediction [maybe a subconcious one]- a prediction of a certain type of economic future that is erroneously believed to be "certain" to occur within their own lifetimes, when the plain fact is, there is simply no way of knowing for certain that an economic future that favors gold to the degree imagined _will_ occur in their own lifetimes, or _ever_ occur [although I would say, as a former gold-bug myself still somewhat sympathetic to the cause, that the odds of his predicted scenario, or something close to it, _never_ occurring, appear slim.]

Summary: Mr Celente on the one hand believes that the future cannot be reliably predicted, and yet he appears to follow a saving/investment strategy that relies on doing exactly that [i.e. attempts to predict future economic events], and his reputation depends mostly on his perceived record for accurate predictions, of course.

I would guess that simultaneously holding such obviously internally contradictory beliefs concerning the predictability or not of future events is probably at least one source of some of his own expressed anger. [ Maybe he can only be really happy when his predictions are correct?].

Internal Contradiction [2] Political Religion:

Gerald Celente: [2a] "I don't believe in anybody's political religion. Knock yourself out. You want to believe in your fairytale, that's okay with me but don't lay it on me. Don't tell me I have to believe in your political garb because I REALLY GET ANGRY! Who are you to tell me I have to believe in your line of crap? Have you been there? Do you know what it looks like? I've been there."

Gerald Celente:[2b] "I want regulations. You need regulations because there would be no minimum wage. People would be paid nothing. The banks would be robbing us even more than they are. So I'm in favor of some... "

Onebornfree: The second statement [2b] here by Mr Celente ["I want regulations " etc.] , is a direct contradiction of statement [2a]: ["I don't believe in anybody's political religion... " ].

Mr Celente apparently believes in _his_ own political religion [i.e. "fairytale"], a "fairytale", fantasy world where wise men oversee/rule everyone else , make sure we all get paid and stop the banking systems screwing us etc., and run things the way he thinks they should, somehow without systemic corruption , despite the fact that there is _no_ record for any time in history when such men, or such a fair system existed.

Mr Celente appears to be unable/unwilling to face that simple, historical fact, and, instead of moving on to better things, appears to be inescapably bound to internal contradictions of major portions of his own belief system- no wonder he gets angry !

Regards, onebornfree.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others far more intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

[Free phone consultations via "Skype". To set a time/date email: onebornfreeatyahoodotcom ]

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

A Simple Plan to Keep Your Assets Safe From an Out-of-Control Government

2011-12-23T01:25:00.000-08:00

More sound advice from Terry Coxon at Casey research:

A Simple Plan to Keep Your Assets Safe From an Out-of-Control Government

by Terry Coxon

"By keeping all your assets in the country where you live, you commit, ahead of time, to ratify whatever policy your home government might adopt, no matter how objectionable, unreasonable or pernicious that policy happens to be. If the next new mandate is "Register today to get a nail pounded into your head," you're already signed up.

Americans, by and large, run all their affairs within the confines of the US. The US economy is so large and so varied that it's easy to assume that everything you want to do with your wealth can be done without crossing any borders. And people in the US, like people anywhere, live with the habits and attitudes developed over generations. They're only human. In the case of Americans, those habits grew out of long experience with a government that was small and that generally practiced the rare virtue of following its own laws. In a happy exception to mankind's experience with rulers, there was little to fear from it.

Stay at home is still the norm for Americans, but it's a norm that is slowly fading. Every billion-dollar tick of the government debt clock, every expansion of the government's regulatory apparatus, every overreaching judicial decision made in the name of a compelling public need, every inversion of protection for citizens into license for the state and every intellectually tortured discovery of a new meaning in the Constitution's 4,400 old words leaves a few thousand more people wondering how prudent it is to consign all their eggs to a single national basket. Encounters with high-handed IRS agents and eager TSA gropers do nothing to ease that concern. And for those who listen thoughtfully, the messages from our designated leaders and their would-be replacements only hurry the dawning sense of unease.

Specific worries include exposure to predatory lawsuits, especially claims that could draw extra go-power by association with politically favored causes or legally favored groups; fear of where income tax rates might climb; the prospect of losing a family business in a regulatory battle or simply through estate tax; the fragility of financial institutions that have operated for forty years with the assurance that the Federal Reserve would rescue them from any folly; the possibility that a government desperate to protect the dollar from collapse might impose foreign exchange controls or capital controls; the memory and precedent of the forced gold sales of 1933; and the thought that a government floundering in deficits might start pilfering from IRAs and other pension plans.

But beyond those particular worries and perhaps more important than any of them is the sense that from here on, anything goes. The politicians will do whatever they find convenient, because there is no longer anything to stop them – not an electorate that is jealous of its freedoms and certainly not the Constitution, which is now just a playhouse for judicial imagineering. No one can know what's coming next from the government and the financial system it has fostered, but for many of us there is an awful suspicion that we are not going to like it.

Most Americans still have yet to stick a single financial toe across the border, but more and more are considering it. Many, perhaps millions of toes are now twitching at the thought. Their owners want to end their absolute dependence on what happens in the US. They want to prepare for whatever is coming down the road, even though they don't know what it will be. They want to be as ready as possible, even though their worries can only guess at what's ahead.

Because internationalizing your financial life means dealing with the unfamiliar, the project can seem more complex than it really is, so it's best to start with the simplest measures, even if by themselves they don't give you all the safety you're looking for. Even from a simple beginning, what you learn with each step will make the next step easier to plan. Start with the first rung on the ladder of internationalization. Then climb, at your own speed, to reach the right level of protection.

Rung 1: Coins in Your Pocket

Gold coins that you've stored personally give you something whose value doesn't depend on the health of the US economy, doesn't depend on any financial institution in the US and doesn't depend on any US government policy. Gold coins are portable and hold their value no matter where in the world you might take them. They're internationalization in a wafer. Safety cookies.

It's best to buy the coins for cash, for maximum privacy. And there is a good reason to favor one-tenth-ounce gold Eagles. Gold coins mean readiness for troubled times; if you ever need to dispose of the gold in an informal market, it will be easier to do so with small-denomination coins that are widely recognizable and whose value matches the scale on which large numbers of people normally trade.

The premium on one-tenth-ounce coins (the price compared with the value of the gold content) is higher than on the larger coins – usually about 15% for the small coins vs. 5% for one-ounce Eagles. But the premium isn't a dead cost, like a commission or bid-ask spread. The premium is a second investment; it's what you pay for the packaging, and you can expect to recover it when you sell or trade. And in the circumstances when you would have the strongest reasons for thanking yourself for having bought some gold, the premium you paid will look like a bargain.

Rung 2: A Foreign Bank Account

On its own initiative, the IRS can freeze any bank account in the US without warning. The action might arise from mistaken identity, from an erroneous filing by some other taxpayer, from your failure to respond to an IRS notice in time or even from a postal error. And that's what can happen without malice. Other government agencies have similar powers to act on their own, without giving you an opportunity to object in court. And any one of them might act against you for any of their specialized reasons – perhaps because someone resents your inattention to the needs of the migratory birds that visit your property or perhaps because someone thinks it would be fun to point to you as a terrorist, drug smuggler, arms dealer or child-porn merchant.

In principle, there are legal avenues for undoing a freeze or a seizure. But you'd need a lawyer, and being suddenly penniless could get in the way of hiring one.

A foreign bank account protects you from being trapped in such a nightmare. The US government can get to your foreign bank account eventually, because it can get to you. But a lightning seizure is very unlikely, because it would require a foreign government to override its own legal processes, which it generally wouldn't be willing to do except in a grave emergency. So if your liquid assets at home were frozen, you would have cash outside the US to fund the legal cost of untangling the problem.

A foreign bank account is also a way to step back from the uncertainties of the US dollar, since the account could be denominated in another currency.

The US government has seen to it that Americans are no longer welcome customers at foreign banks. So forget about opening a Swiss bank account in your own name. However, if you apply in person (not by mail), you still can open a bank account in Canada. Be prepared to show your passport and to give the bank an original utility bill that confirms your place of residence.

Rung 3: Gold Abroad

The forced gold sales of 1933 were the work of an executive order signed by President Roosevelt. The purported legal basis for the order was the Trading With The Enemy Act, a legislative artifact of World War I. I have yet to find an explanation of how the authority for an order requiring Americans to sell their gold to the government at the government's official price of $20 per ounce could be found in the Trading With The Enemy Act, but the fact that the enemy in question had gone out of business 15 years earlier didn't seem to interfere with the legal logic.

The forced sale was a prelude to an increase in the official gold price to $35. The government's reason for wanting that price rise was to gain leeway for a substantial, though limited, inflation of the dollar while keeping the dollar on the international gold standard. The forced sale was a way for the government, which operated in a political environment that still disfavored deficit spending, to capture the profit from the price rise. That profit would be a kitty for more spending without more borrowing.

Today there is no gold standard for the government to stay on. And deficit spending isn't something politicians especially want to avoid; they've promoted it as a civic duty, to stimulate the economy. So the depression-era motives for a gold grab don't seem to apply. Yet you can't listen to a conversation between two gold investors without hearing the seizure topic coming up.

Are they just scaring each other? I don't believe so. There are two potential motives for the government to again treat gold differently from everything else.

If the dollar's slide in foreign exchange markets threatens to turn into a panic, the government might want to use gold sales to foreigners to mop up foreign-held dollars – in which case it might see a need to mop up the gold owned by its own citizens. That's bad enough, but a second motive is a good bit nastier. At a visceral level, people who have centered their lives on government just don't like gold. It's an affront to the government's authority to command and control and an insult to government's supposed aptitude for solving economic problems. So disrespectful. From their point of view, every ounce purchased by an American is another tomato hurled at the political class. And the purchasers still constitute a tiny minority of the voting population. What could be more satisfying and convenient for the politicians than to kick sand in the face of gold investors for being such lousy citizens?

A new attack on gold ownership probably wouldn't be a point-for-point reenactment of 1933. There are many weapons for mugging gold investors. It could be a prohibition on gold ownership coupled with a prohibition on sales of gold to foreigners. The only one left to buy would be the government, and being the only bidder, it would be a very low bidder. It could be a commandeering of privately owned gold, with token compensation like the $15 per day paid for jury duty. It could be a super tax, say 90%, on gold profits, which would get the job done slowly... or quickly if it were accompanied by a mark-to-market rule. Or it could be something none of us has thought of yet.

Not only can't we know the shape of a future gold grab, we can't know whether or how the rules would touch foreign-held gold. Owners of gold stored outside the US would be a minority of a minority. Their gold wouldn't be the low-hanging fruit – it would be higher up in the tree and more trouble to get to. That's why, in a casino sense, gold overseas is a different bet and a better bet than gold at home.

Maybe it will turn out that storing gold overseas won't matter at all, in which case a little effort will have been wasted. And maybe it will turn out to matter a great deal.

Rung 4: A Swiss Annuity

A conventional annuity contract is a device for accumulating investment returns and eventually converting the value into a lifetime income. The investment return on an annuity from a US insurance company is tax deferred until it is paid out to you. If you buy an annuity from a foreign company, tax deferral is available only if the annuity's value is tied to the performance of a pool of investments (a variable annuity).

Swiss annuities have long held a special place in personal financial planning. Such an annuity is denominated in Swiss francs, i.e., it's francs, not dollars, that are owed to you. The Swiss insurance industry has a perfect record; policyholders have never been hurt by a default. And a Swiss annuity comes with an element of protection from would-be lawsuit creditors.

The Swiss franc is, like every other modern-day currency, just a piece of paper. It's not redeemable for anything, not even a piece of chocolate. But the Swiss National Bank has a remarkable record of restraint in issuing new francs, which means that the franc's prospects for holding its value have long been rated better than for any other currency.

I believe that is still the case, despite the Swiss National Bank's current policy of suppressing any further increase in the price of the franc. In September, in order to save export industries from being crushed by the franc's rapid appreciation against other currencies, the Swiss National Bank announced that it would purchase euros without limit to enforce a minimum exchange rate of 1.2 francs per euro – which implies printing enough francs to pay for those euros. By itself, it is an inflationary move, but it's not a suicide pact with the European Central Bank (the issuing authority for euros). If the ECB turns to a policy of rapid inflation, I would expect the Swiss National Bank at some point to decouple the franc from the euro and let the franc's price rise. So owning some Swiss francs, whether directly or through an annuity, is still a good step toward internationalizing your financial life.

Under Swiss law, an annuity is protected from the owner's creditors if the beneficiaries consist of family members or if the owner has made a beneficiary designation that is irrevocable. For an owner in the US, that protection is not an impenetrable barrier to the winner of a lawsuit, but it is a barrier, and it makes the annuity a less-than-ideal prize for an attacker.

Earnings that are accumulating in a Swiss annuity are not eligible for tax deferral for a US taxpayer. The advantages are currency protection, the reliability of Swiss insurance companies and a measure of asset protection.

Rung 5: Foreign Real Estate

Owning real estate in another country gives you a suite of protections that distinguishes it from other steps toward internationalization.

First, the property's value will depend on economic conditions in the country you've chosen, not on what happens in the US. If the economy of the foreign country grows and prospers, there is likely to be a spillover effect on the market value of your house, apartment, farm or patch of land – regardless of what is going on in the US.

Second, a foreign real estate investment would be hard to digest for any future capital controls imposed by the US. New rules could compel you to repatriate the cash you have in a foreign bank; rules forcing you to liquidate your foreign real estate and bring the money home would be another matter. Selling real estate isn't quick or easy. How does the government compel an unwilling citizen to do what an eager seller often finds difficult to accomplish?

Third, as a potential prize for a lawsuit attacker, foreign real estate is a stinker. Even if he wins a judgment against you, foreclosing on your foreign property would be difficult to impossible, since it would require the cooperation of the courts in the foreign country, about whose rules and procedures the attacker's attorney probably knows nothing. But he does know that even if he persuades a court in the US to order you to sell the property, the inherent illiquidity of real estate would give you plenty of opportunities for foot-dragging.

Where to buy? The whole world is open to you... which can be a problem. So many possibilities and no obvious place to start. One approach is to think about where you've been that you'd like to visit again or about some place you've long wanted to see. Plan to spend a few weeks there. Minimize your hotel hours, to maximize your exposure to the rest of the locale. Try to meet Americans, perhaps expatriates, who know their way around the place and who can point you toward a real estate broker who won't try to treat you as an out-of-town sucker.

Buying foreign real estate isn't for everyone. It requires a big investment in time and effort, but it could repay you with an asset that is low on the list of things anyone might try to take from you.

Rung 6: A Foreign LLC for Investments

A limited liability company organized under the laws of a foreign country is easy to set up and not too expensive. To bring the company into existence, you (or a service you hire) would file a simple form with a government office in the country you've chosen and pay a small fee. Then you as the LLC's Manager and you as the LLC's owner would enter into an agreement (the "operating agreement") that would be the company's governing instrument.

As the LLC's Manager, you would open a non-US bank account or brokerage account in the name of the LLC and transfer your personal cash and investments to that account. Again as Manager, you would make all the investment decisions.

For a US person, a foreign LLC can be a powerful door-opener. It is welcome at many banks and brokerage firms where you personally would be turned away. This enables you to keep a wider range of assets outside the US, which puts more wealth beyond the reach of any arbitrary bureaucratic action. It also gives you investment choices that aren't available at home.

Access to foreign investments and overseas financial services is reason enough to consider using a foreign limited liability company. But it can do much more for you, although at the cost of some complexity.

Notice the fundamental difference between a foreign LLC and what is going on at the first four rungs of the ladder of internationalization. With the LLC, you no longer personally own the assets you are trying to protect; the company owns them. This makes the LLC a powerful device for reducing your family's expose to gift and estate taxes. And with the right provisions in the operating agreement, it can provide strong protection against loss to any malicious lawsuit.

If you are the sole owner of a foreign LLC intended for holding investments, you can and almost certainly should file an election for the LLC to be treated as a disregarded entity (indistinguishable from you for income tax purposes). If your spouse or anyone else is going to share in ownership of the LLC, the company can and should elect to be treated as a partnership for income tax purposes.

Rung 7: A Foreign LLC for Business

A business that operates outside the US does even more than a portfolio of foreign investments to give you the benefits of internationalization.

By its nature, a foreign business lives in a different environment than a business in the US. Economic troubles at home might not touch it. If it's a business that depends on your personal efforts, it's even less attractive as a lawsuit prize than foreign real estate. Being foreign, it would be outside the range of capital controls in the US. And many of the financial institutions that might turn away an investment-owning LLC because it is owned by an American will welcome an LLC that makes or sells goods or services.

If you already have a business in the US that has foreign customers or foreign suppliers, you may be able to relocate the business's non-US activities to a foreign LLC. Internet-based businesses are especially amenable to internationalization.

Locating your business in a low-tax or no-tax jurisdiction, if it is practical to do so, can reduce your overall tax burden. In many cases, a foreign LLC that operates a business should elect to be treated as a foreign corporation for US income tax purposes. That can allow the business to reinvest its earnings while it pays little in current taxes and you personally pay nothing.

Rung 8: An International Trust That You Establish

Establishing a trust outside the US is the strongest internationalization step you can take for yourself and your family. Doing so costs more than any other measure, but the costs needn't be prohibitive if your goal is to move $500,000 or more into the safest structure possible. What you achieve is a very high level of protection from aggressive lawsuits, from potential capital controls and from the possibility of a gold seizure. The trust also puts your wealth in a far better environment for income tax planning and for estate planning.

To serve the purposes of protection and tax savings, an international trust is irrevocable (you can't simply call the institution you've chosen as trustee and say you've changed your mind) and discretionary (meaning that the trustee has a responsibility to decide when to send a check to you or to any of the other beneficiaries you've included). Putting assets under the control of a trust company under such an arrangement is a big step. You're not going to do it unless you've done the homework needed to understand how and why you can count on the trustee to handle the assets in the way you intend.

Getting the protection and tax savings of an international trust doesn't require you to give up management control of the assets. The trust can be limited to owning just one thing – an LLC that you manage. The LLC owns all the investments, under your supervision as LLC Manager.

If you establish an international trust, it will be tied to you for income tax purposes. But at the end of your lifetime, it will completely disconnect from the US tax system. At that point, for the benefit of your survivors, it becomes...

Rung 9: An International Trust Someone Else Established

Being a beneficiary of an international trust established by someone other than a living US person is as good as it gets. It's not linked to you by any transfers you've made to it, and you don't have a determinable percentage interest in it (since it's a discretionary trust). So until you actually receive a distribution, there is nothing for you to report, nothing for you to pay tax on and nothing a potential lawsuit creditor can hope to take from you. And, having no living connection to the US, the trust is as far beyond the orbit of any conceivable US gold seizure or currency controls as the former planet Pluto.

One Toe over the Line

It's a long way from walking into the local coin shop and buying a few one-tenth-ounce gold Eagles to setting up a trust in a foreign country. But the distance isn't nearly as great as you might imagine, and it will get shorter both in fact and in apprehension with each step you take.

As you move up the ladder, you'll learn about the reporting requirements for US taxpayers. Rung 1 (gold coins in your pocket) entails no reporting, nor does Rung 8 until you actually receive a distribution. Rung 5 (foreign real estate) also is free of reporting requirements, at least for now. But under rules in effect now or soon to come, everything else covered in this article entails filing a form with the US government. The most reliable way to make sure that you stay within the rules, so that internationalization adds to your safety and not to your problems, is to let your accountant know what you are doing. Keep him informed, so that he can see to it that all the reporting requirements are satisfied.

Every day you delay beginning your internationalization strategy is another day your bank accounts are hemorrhaging. Learn how to protect yourself.

December 23, 2011 Copyright © 2011 Casey Research

Terry Coxon is contributing editor of Casey Research. He is president of Passport Financial, Inc., and for over 30 years has advised clients on legal ways to internationalize their assets to optimize tax, wealth protection and estate planning goals.

"The Folly of Forecasting" and "The Myth of The Model"

2011-11-29T11:31:00.000-08:00

"The Folly of Forecasting" and "The Myth of The Model"

It gets a little tiresome for me to, post after post, keep making the "same old same old" point about saving and investing and the almost complete unpredictability of future market events, and so it is nice for me to have recently come across two articles that say almost the exact same thing as I invariably end up saying both here and, inevitably, to most of my clients as well, until they are all sick of it/me! Maybe, just maybe, these two authors say it a little more convincingly than I have so far managed to?:

"...........the mathematical games economists play are just so much flapdoodle being dished out to an eager audience of those craving to know the future. The future is uncertain, except for knowing that government interventions, based on some economist's modeling, will make matters worse."

Complete article here

Article number two: "The Myth of The Model" by Max Borders .

Enjoy,regards, onebornfree.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others far more intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Gold at US$2000 Within 6-8 Weeks? Commentary

2011-11-16T08:40:00.000-08:00

Unfortunately, the truth is that gold _may_ go that high in that time frame, or it might not, there is simply no way for anyone, including Mr Waters, to know for sure.

Although gold is in historically uncharted waters, it seems reasonable to assume that $2,000 per Oz. is a significant support/resistance level .

Meaning that if and when it breaks that barrier , then it might hold and confirm that new valuation over time, or it might quickly fall back below $2000 for a year or so, or it might even quickly move up to the next logical support/resistance level of $2500 per oz.

Again, there is simply no way to know for sure- outside of pure luck/coincidence, the economic financial future cannot be reliably/accurately predicted by anyone with any worthwhile consistency.

However if an individual places his/her bets on a higher price for gold :

1] using money they can afford to lose, [and allocates a specific, not to be exceeded, amount of that money],

2] sets realistic, automated, limited, buy orders with their broker;

3] employs pre-determined, automatic, realistic, trailing stop-losses that can be raised should the market price of their speculation increase, but that are never lowered should the speculations price drop below the stop loss level [instead the speculator is automatically "stopped out"],

4] has a general awareness of probable support/resistance levels, risk/reward ratios etc.etc.,

then they will at least have protected themselves from losing their shirts[ i.e money they cannot afford to lose- a fixed percentage of which is already pre-allocated to gold bullion, regardless of its current price], should their bets on the seeming "inevitability" of a higher gold price not pan out as hoped for.

More On Speculations in Gold Bullion

As a pure speculation, for a number of to remain publicly undisclosed reasons [i.e.disclosed to clients only],I would definitely not be buying gold at around the $1800 per oz. price, as Mr Waters appears to be suggesting you do.

None clients may purchase my "Complete Guide to Safe Speculations",[currently in the process of re-editing] for $250, to find out exactly why, as a speculation, even a limited gold bullion "buy-in" at around $1800 per oz. that allocates only a small portion of money you can afford to lose, is still probably a bad idea as a speculation.

Gold Bullion as Part of A Long Term Savings Plan [not a speculation]

On the other hand, and regardless of current price per oz.,for the person who has no gold bullion at this time for their long term savings plan, buying a specific amount of gold at this time in order to commit a specific percentage of their long-term savings to gold as a constant part of that savings plan that never changes percentage-wise,no matter what happens to the daily price, is a very good idea. Regards, onebornfree.

Update [11/18/11] The both famous and highly esteemed Mr Richard Russell has also recently written on what he sees as Golds inevitably glowing future prospects, and advises his subscribers to accumulate even more gold, regardless. Although I am a great admirer of Mr Russell, I have to say that ultimately, he knows no more, or less about the future than you, me, or anyone else. Therefor I would advise extreme caution in acting on his advice- I feel that everything I said above in the main part of this post applies equally to Mr Russell's advice.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others far more intelligent than myself], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line, international, person to person consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Money Market Funds, An Investment Whose Time Has Passed? [commentary]

2011-11-04T07:09:00.000-07:00

[edited 11/07/11] Onebornfree's commentary: The original article title, by the highly esteemed [by myself, at least] Mr Terry Coxon, had no question mark in it.[It was added by me, as a subtle part of my own commentary.]

Terry gives a short very interesting history [well worth reading]of money market funds, and how they came about as a way to circumvent government regulation and still make a profit for the funds themselves and for the individuals who chose to put money into them.

He then speculates that because these funds generally did well during the generally inflationary period that somewhat fortuitously followed their creation [1970- 82], and because the [post 2008] economic environment is entirely different from what had mostly prevailed up until the "collapse", that these types of fund might no longer be useful for the average saver/investor.

He speculates for a number of related reasons:

"Today there is little good reason to use a money market fund for substantial amounts of cash.

1. There is no material yield advantage because there is no material yield on cash anywhere – unless you are willing to take risks that mock the idea of cash. The highest yield on a money market fund I've seen since the Federal Reserve hammered rates into the floor at the end of 2008 was an offshore operation called Bank of Ireland USD Liquidity Fund, with a yield of 0.54%. How the fund earned that much (after expenses) in a world where 30-day jumbo CDs return 0.20% and one-month T-bills yield 0.04%, I don't know. But if the fund's risk disclosure was adequate, it would have included language that amounted to "Baby needs shoes!"

2. With most money market funds, there is a material safety disadvantage vs. FDIC-insured CDs since, of course, commercial paper and jumbo CDs carry a risk of default.

3. With a T-bill-only fund, the best you can say in favor of the fund vs. FDIC-insured CDs is that it's a tossup. Both are very secure."

So what do I think?

Well basically, what I think about Mr Coxon's conclusion [i.e. that Money Market Funds ARE An Investment Whose Time Has Passed] , is represented by my addition of a question mark to his title. In other words, despite the fact that I agree with just about everything in the article, I disagree with his level of certainty.He appears to be sure, I am not.

The economic future [inflation, deflation, or whatever] as always, remains unknown, so while it is not prudent to keep all of one's life savings in any money market fund [regardless of type], no more than it is prudent to keep them all in any one investment class such as: gold and other precious metals, or in real estate, or in stocks, or in US Treasury or corporate bonds, art, or even in cash under the mattress, money market funds of a particular type [e.g. those investing purely in U.s. T-Bills], might, to a degree, still serve some particular advantage for the individual saver [for example, as a convenient,liquid way to hold cash and still earn a small return in a deflationary environment. ]

Other types of money market funds [e.g. those investing in jumbo bank CD's mentioned in Mr Coxon's article] , might still also be useful, if and when inflation returns.

So maybe, don't write them off completely just yet, Mr. Coxon?. Regards, onebornfree.

DISCLAIMER : I have no financial interest in any money market fund, of any description, anywhere in the world.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

The Daily Bell "Stocks Are Up- But Why?" [Commentary]

2011-10-28T04:43:00.000-07:00

[Updated: 11/01/11] Yesterday's Daily Bell website asked the question "Stocks Are Up- But Why?" in reference to the recent gains in broad US stock indices:

"Given that the European mess continues, that most banks in Europe (and likely in the US) are under-water, that the US is technically in debt for some US$200 TRILLION if all socio-political promises are kept, that Europe is even worse off in terms of debt and insolvency, that China is dealing with vicious price inflation (along with India and Brazil), that Japan just hiked rates, etc., etc. ... given all these factors, how can markets be going UP?

The US stock markets set the tone for markets worldwide and US markets have been climbing steadily even as the world's economy seems ever closer to collapse. How can this be? ..."

The article mentions/hints at price manipulations, the Federal Reserve system etc. as possibly being the cause.

Here is my own [as always] somewhat warped view:

Why has the US stock market been going up?

Well, the truth is that nobody really knows for certain.

Another truth is that many will earnestly tell you, with absolute certainty, and total conviction, that they [and only they] know exactly why it has been going up.

These types of people people are either naively delusional , or just plain dishonest.

I could make an educated [or uneducated- depending on your point of view] guess as to why the US stock market has made gains recently, but ultimately, it's still only a guess, because, at any point in time my available market knowledge, no differently from any other individuals, remains finite and incomplete, making my guess no more or less of one than anyone else's, or than any one "expert's" "absolute certainty".

My own"educated" or "uneducated" guess [take your pick], would be that with both the ongoing European debt crisis, and the rapidly snowballing Chinese crisis, plus the generally assumed knowledge that in the end, the US is most likely to pull out of its recession sooner than the rest of the pack, that, rightly or wrongly, the US economy is still generally perceived worldwide as being a safer bet than most of the rest of the world, at least for the time being, and that with seemingly limited options, many investors worldwide are buying US stocks.

But like I said, that is all just a guess. In reality, and just like everyone else, I really don't have a clue.

Your Best Protection-A Neutral,"Don't Know",Long Term Saving's Plan

As always, a neutral "don't know" long-term savings plan, in other words, a fully diversified savings plan that is not committed to any one particular "certain" economic future and is therefor not dependent on any one future economic outcome [e.g. inflation, deflation, tight money, stock market prosperity etc.], is the best protection for all of your precious, "cannot afford to lose" long term savings.

Regards, onebornfree

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All of the more valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know", customized basis, depending on specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts are not made on any regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

As previously stated, to date [20 years+], nearly all previous clients have come to me via direct, in-person referral from other satisfied clients- that is:

[1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Is [Austrian] Economics a Real Science?

2011-10-24T08:39:00.000-07:00

"The economics of the Austrian School has a very firm scientific methodology as a foundation. "

I hate to nit-pick such an otherwise excellent article, but this is , unfortunately, an extremely misleading statement as read.

There is nothing in the Austrian methodology [nor in any other school of economics for that matter] that can bear any resemblance to the methodology of the physical sciences [i.e physics chemistry etc.], which use the only real scientific methodologies that I am aware of.

Economics is a social science only, not a physical science like, for example physics or chemistry. All Austrian economic insights are supposed to be derived from the consistent application to preceding economic events, of logic [i.e. ratiocination and deductive reasoning], in retrospect, after the fact; and that post-event reasoning always starts from the written in stone assumption that all individuals are both unique and have unique [and constantly changing/evolving] value systems.

Given the fact that all individuals are unique, what Von Mises himself called " methodological individualism" [ and the _true_ bedrock of all Austrian theory, and the starting assumption from which every other Austrian theory always proceeds], in no way can Austrian Economic theory be reliably used to predict future economic events, such as the collapse of the $ US or Euro, or the collapse of a nation/state,or any other economic event, in any manner comparable to what can be quite reliably and accurately predicted in the physical sciences where molecules etc. can be repeatedly experimented on in completely controlled laboratory environments in order to reach conclusions about the way those molecules will behave in the future when subjected to the same conditions.

What About the Austrian Business Cycle Theory, Isn't That Predictive?

Although , as I would be the first to admit, there definitely is a business cycle, as the Austrians have repeatedly demonstrated, given the realities of human action, unlike the physical sciences, there is simply no way to know in advance at what stage of the business cycle we ever really are, or for how long a boom, a recession or a depression might last. There are simply too many known and unknown human action variables that can never be reliably measured [even if known], let alone accurately predicted.

At best, using Austrian theory at any point in a recession, or in a boom period, we can make educated guesses about what caused the present state, what might end it, and what might be next, but since all knowledge is finite, it is impossible to know with absolute certainty what is just over the horizon. It could be a depression, it could be a recovery, it could be something else- there is no way to know in advance using any supposedly "scientific" predictive properties of economic theory.

Summary: Austrian Business Cycle Theory can be very useful in trying to determine, after the fact, what might have caused an economic climate/event/scenario, but it has, no differently from any other school of economics , absolutely no use as a predictive tool that can accurately forecast future economic events, climates or scenarios.

As Always,The Economic Future Remains Unknown, and Unknowable

The US nation state might collapse next week, or it could stagger on for another 50-100 years , nobody knows for sure - the exact same thing can be said about its fiat currency [or that of any other nation]; the $US could fold soon, or it might recover and hang around for a lot longer - no one can be certain, despite what many claim _must_ happen, based on their understanding of Austrian theory,[ which I would suggest, is a simple misunderstanding].

Your [Free!] Financial Safety Services Summary:

SAVERS BEWARE! Do not believe any "investment professional" who attempts to "blind you with science" with his/her assumptions and predictions about the future performance of any investment he/she sells and whose results have been derived from graphics [charts etc.], or who claims that economics , whether it be Classical, Keynesian, Austrian, or something else entirely, is based on scientific principle , and that therefor, his/her predictions about the future are reliable .

Instead , start to construct a long term savings plan for your savings that is mostly immune to the unpredictable ups and downs of booms, recessions, depressions etc. Regards, onebornfree.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Elliot Wave and Kondratieff Wave Theories and The Great, Ongoing Inflation/Deflation Debate

2011-09-25T16:44:00.000-07:00

Elliot Wave and Kondratieff Wave Theories and The Great, Ongoing Inflation/Deflation Debate

Just a few thoughts.

The fortunate [or unfortunate, depending on how you look at it], truth is that nobody can reliably, consistently predict future economic scenarios, [inflation, hyper-inflation, recession, deflation etc.]

So although I personally lean towards a possible real deflation and deflationary depression merely on instinct/gut feeling [deflation defined as a situation where the worldwide demand to hold and not spend US $'s and US treasury debt consistently outstrips the available supply of US $'s], I know that those predicting inflation , or even the imminent return of "good times" , have just as much chance of being right, and that my own instincts could be way, way off track.

Of course, just like myself, they have as much chance of being wrong as well :-) .

One thing's for sure- people who rely on charts that purport to show what happened before - and therefor what happens next [eg Elliot Wave theorists, Kondratieff Wave theorists , etc. etc., ] are no better at predicting the economic future than "economists", "investment advisors" , "portfolio managers" or your average tea- leaf reader or astrologist.

In light of the fundamental principles of human action, the belief that one can successfully and consistently predict an economic future based on "expert" interpretation of arbitrary figures, points and lines drawn on a chart or graph that supposedly represent the economic past is, to put it mildly, deeply flawed.*

In my opinion, savings and investment wisdom starts from the assumption that no-one can reliably predict future economic events, and builds from that assumption.
, Regards, onebornfree.

* If you would like to know more about these principles, and exactly why they make any wave theory more or less redundant, let me know . [onebornfree at yahoo dot com]

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

For more than 20 years, nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, deliberately incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large.

Internet posts arer not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - as i previously stated, to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make on this site, they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Doug Casey on the Continuance of the Greater Depression and the Brighter Prospects for Gold-Commentary

2011-09-05T05:55:00.000-07:00

[updated 09/06/11] Commentary : I have been a fan of Doug Casey since the appearance of one of his earliest books "Crisis Investing" somewhere around 1982[?] .

In fact that 1 book was the one that opened the door for me into the world of Ayn Rand, Austrian economic theory, anarchism,libertarianism etc. etc. Much of the most useful information for me at the time was to be found in the sources/bibliography at the back of the book; eager for more information, I diligently followed up and read most of the books referenced, including even his science fiction recommendations!

I find myself agreeing with nearly everything Mr Casey says in this 09/04/11 interview with Anthony Wile at the Daily Bell, except for one crucial area: that is: his firm prediction/prophesy for what is coming "down the pipes" in the next 5 years for the US economy.

For around 13 years after reading the aforementioned "Crisis Investing" [probably still the biggest selling book on investing published in the US, but I'm not sure], I preached the Casey gospel, basically, that I knew exactly what was coming next for the US economy [i.e.disaster!].

Although I had previously started to suspect that, given my own understandings of human action, that individuals could not reliably, consistently predict future economic events [as early as 1986], it was not until around 1995 that I finally [painfully!] "woke up" and admitted to myself that neither myself, Doug Casey, nor anyone else [i.e. other "investment advisors", economists, bankers, businessmen, tea-leaf readers,etc.] could reliably, consistently predict future economic events.

And although I still had a strong feeling, given the realities of governments, central banks and the business cycle etc., that some type of financial catastrophe [i.e. deflation, or hyper-inflation] was more or less inevitable at some point in the future, I admitted to myself that the reality was that I had absolutely no idea as to when, whenever whatever was going to happen, would in fact happen!

At that point I gave up trying to predict the economic future for friends/clients, but instead concentrated on showing them simple ways to construct a simple, relatively safe, long-term savings plan that in no way depended on predicting future events.

Fact: Mr Casey Knows He Cannot Reliably,Consistently Predict future Economic Events!

Yes, that's right! Truth be told, Mr Casey is all too aware of his own lack of ability to predict future economic events, I know this for a fact. Why he would insist on attempting to do so in this interview , and to give readers the distinct impression that he can in fact so do, is a question I am not going to attempt to answer- you must draw your own conclusions.

But that might just be "sour grapes" on my part. Apart from that one area of disagreement, Mr Casey makes some excellent points.

P.S. It is worth noting that most of the comments on the interview, where the readers disagree with him, it is usually over his predictions- the readers are just as convinced as to their own ability to reliably predict future economic events as Mr Casey appears to be! Regards, onebornfree.

Article "Doug Casey on the Continuance of the Greater Depression and the Brighter Prospects for Gold"

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

Nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large. Internet posts are therfor not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I likewise have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make at this site they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

The Many Collapses of Keynesianism-Commentary

2011-08-28T06:32:00.000-07:00

"It should be obvious to everyone but the most dedicated adherent of Keynesianism that the stimulus did not accomplish its end. The combination of outright spending by Congress, the desperate schemes to reflate the housing market, the attempt to transfuse bleeding firms with other people’s money, and the creation of trillions in artificial money, has not done a thing to lift the US economy........... " Full article here

Onebornfree's brief commentary [updated 09/05/11]:

False Assumption?

The false assumption of Mr Rockwell's piece is that the stimulus "should" have worked by now, and because it has not, this somehow disproves "the Keynesian paradigm".

But it ain't necessarily so![Not that I am , in any way,shape , or form, a fan of Keynes' economic theories].

It might be just too early for the false stimuli to have worked yet. Actions by the Fed typically take an average of 3 to 5 years to have any effect- sometimes longer, sometimes shorter, it all depends.

Nobody can know for sure whether the fake credit/money created out of thin air by the Fed is going to work this time around or not- it is possible that the Feds actions have already been absorbed/offset by the market at large- it is also just as possible that enough time has not yet passed for those actions to have had any real effect in the market at large [hence the continued slowdown in economic activity].

Although it is reasonable and logical to conclude that the reason that the various QE's have not worked to date is because the Fed is [this time around] paying banks interest on access reserves, [therefor reducing their willingness to loan money to new business start-ups etc.], such reasoning and logic is _not_ infallible, [even though I lean toward the same conclusion]; there are simply to many unknown factors involved to know for sure, which is exactly why you need to keep the money you cannot afford to lose [i.e long term life savings] in a savings plan that does not attempt to predict the economic future.

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

***********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

Nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large. Internet posts are therfor not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I likewise have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make at this site they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

The Golden "Bubble" - Time to Buy, or Sell?

2010-10-23T17:21:00.000-07:00

Two articles recently caught my eye concerning the current and future price of gold.

One from the free, free market oriented "Daily Bell" daily newsletter entitled "The Golden Bubble", .. and the second from USA Today "Want To Invest In Gold-You have options"

The Daily Bell article asks the question "is gold in a speculative bubble right now?, while the USA Today article asks the "investor" if they wish to invest in gold _because_ it has done so well and presumably will [according to USA Today] continue to do so, and how to go about it based on the assumption of continued good performance.

Onebornfree commentary: Is gold in a bubble right now? 'Truth is nobody really knows.[Having said that, the mere fact that it is being seriously considered as an "investment" in a mainstream publication like USA Today _should_ set some alarm bells off for you, dear reader!]

Ultimately however,hindsight is 20:20, meaning the only way to know for certain if we are in a "gold bubble" situation now will probably be in 5 or 10 years from now,looking back.

Even then, it is a matter of individual perception- after all, "one persons mountain is another persons molehill".

I can think of two good reasons for buying gold now:

[1]as part of a fully diversified long term savings plan.

As part of a long term savings plan for money that cannot afford to be lost, a certain percentage of total savings is always allocated to gold bullion.

This gold is bought regardless of current price or supposed future outlook for the gold market. My long term savings plan recommends that you _always_ keep a certain percentage of your savings in gold, come what may [and so the question of whether or not gold is or is not in a bubble right now is not even an issue].

or,

[2] as a short to medium term speculation for those who think that gold is either [a] in a bubble that still has a long way to go upward [and therefor takes a "long position" betting on continuance of the upward trend] , or [b] is "an accident waiting to happen" and about to suffer a significant price collapse [a "short" position- profiting from a decline in golds price as measured in $US].

As nobody can predict the future of gold prices, ALL speculations [i.e both long or short positions] should only be made with money that the individual can afford to lose.

My Own Golden "Bubble" Thoughts.

At this time my own thoughts, particularly in light of the USA Today article linked above, is that a peak may well have been reached and that it might therefor be a good time to set a stop loss [if you have not already done so] on any speculative position you currently hold in gold and be prepared to get out.

Of course, I have my own private thoughts on where that stop loss should be placed etc.etc.

Also, I intuitively still lean more towards a further deflation, as opposed to the inevitable inflation that most "hard money" types see ahead right now, which means that, speculative gold "bubble" or not, ultimately the price of gold, relative to cash "_must_" fall considerably at some point, "logically speaking"[!]

Regards, onebornfree

DISCLAIMER:

Financial Safety Services is NOT an investment advisory service. Financial Safety Services is an educational service that teaches the interested individual non-original [i.e. invented by others], time-tested safe methods/principles that might be successfully used by the individual for relatively low risk speculations in various financial markets.

ACCURACY OF INFORMATION : Financial Safety Services MAKES NO CLAIMS AS TO THE ACCURACY OF ANY INFORMATION EITHER GIVEN AT THIS BLOG SITE, OR IN PERSON TO PAYING CLIENTS. All information given/sold, must be understood to have been acted on AT THE INDIVIDUALS OWN RISK .

***********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

Nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large. Internet posts are therfor not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I likewise have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make at this site they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

EU Fizzling [ or about to "Fizzle Out" Completely? ]

2010-09-08T09:07:00.000-07:00

EU Fizzling- or about to "Fizzle Out" Completely?

Another excellent thought provoking article from the Daily Bell, a free, free market daily newsletter.
"Daily Bell" article located here

*************************************************

Onebornfree's commentary:

Truth be told, no one can predict the future- no matter how corrupt you and i might think the EU is, or how much you think you might know about economics, the way of the world, or how much you pay your investment advisor/money manager etc. etc.

The EU might collapse next month, next year, or it might stagger on for another 20 years or more.

Therefor, perhaps it makes sense for the concerned individual to look for simple ways to short the Euro, [using _only_ money they can afford to lose], or to make some other speculation based on the assumption of the EU possibly imploding at some point in the near future, _again_, always only using money one can afford to lose.

Meanwhile, money that an individual cannot afford to lose [i.e long term savings for retirement etc.] must be saved in such a way that it it is both largely immune to unforeseen [and unforseeable!] future economic scenarios, yet at the same capable of consistent growth above and beyond the rate of inflation.

Such a plan is both simple, and possible for the concerned individual.
See: "Financial Safety Rule#1":

The Maximizing State- Anthony de Jasay

2010-09-01T10:30:00.000-07:00

Published in my "mythbusters" blog, here, a new essay by the great Anthony de Jasay,

Onebornfree commentary: An excellent essay by one of my favorite writers and thinkers, Anthony de Jasay , author of "The State", one of my favorite books on political theory.

Regards, onebornfree.

New York Times: Fed Ready to Dig Deeper to Aid Growth, Chief Says

2010-08-28T15:27:00.000-07:00

New York Times: Fed Ready to Dig Deeper to Aid Growth, Chief Says

Onebornfree commentary:

Dangerous Assumptions

Most people who save money for retirement and investing hold many false assumptions, most of which have their origins in misunderstandings about economics, markets, human action, and governments.

Their assumptions cause them to make serious errors in their long term savings plans and strategies, often unknowingly [often until its too late], thereby exposing money they cannot afford to lose to extreme loss.

Naturally, as with anything else, dangerous assumptions will lead to dangerous consequences.

For example, people who read this headline, Fed Ready to Dig Deeper to Aid Growth, Chief Says, from the New York times sat 08/28/10, and actually believe that the central bank actually can "improve" the economy, suffer, to my mind, under many many dangerous, false assumptions.

Here are just two :

Dangerous assumption [1]: that government people [and related institutions such as the Federal Reserve] can do things more effectively than other people.

Dangerous assumption [2]: that governments [and related institutions such as the Federal Reserve] will produce beneficial results.

I am not going to try to explain to you as to why both these assumptions are completely false [those types of discussions are reserved for clients], I will just make the assertion that these, and many other very similar common assumptions about governments and central banks are simply not true out here in the real world.

Suffice to say that both present and former clients of mine usually understand why this is so [because the issues have been fully explored with most of them].

Making Things Worse?

For the purposes of this blog, however, I would simply state that any further proposed interference by the Federal Reserve system [see NYT article below for its stated options], will either have an even more negative effect on the economy than its prior actions have already had to date, or, simply no effect at all.

In short, the Fed cannot, and will not, "fix" "the economy", only the markets can do this, if it/they are left alone [an extremely unlikely event].

Similarly, other government or quasi-governmental agencies cannot "fix" health care, the environment , or "fairly regulate" markets, institutions etc etc., although, of course, they always claim that they can.

[Tip: never believe any government claims, about anything].

Are You In Serious Trouble- But Don't Know It Yet?

If you believe articles like this and in the magical powers of the Federal Reserve and Mr Bernanke [ or whomever ], I would suggest that you and your life savings are in serious danger .

If you would like to know exactly why those two listed common assumptions and many more like them are false, and how to protect your savings and rid yourself of these and other false assumptions that can and will dramatically reduce the value of your savings/investments in the future, let me know.

Can You Afford It?

As I see it the question is, as I'm expensive and exploring fundamental core assumptions of a client can take a considerable amount of time and mental energy for both parties [its a bit like going to a psychoanalyst!], so, can you afford to talk to me?

I would suggest that since your life savings might well be at risk, a better question might be: can you afford not to?

Regards, onebornfree.
********************************************************************************************************************************

Fed Ready to Dig Deeper to Aid Growth, Chief Says
By SEWELL CHAN

JACKSON HOLE, Wyo. — The Federal Reserve chairman, Ben S. Bernanke, signaled once again on Friday that the central bank was prepared to act if the economy continued to weaken, as yet another economic report confirmed that the recovery had slowed to a crawl.

Mr. Bernanke made clear that while the Fed could take various steps, including large purchases of government debt, “central bankers alone cannot solve the world’s economic problems.” Speaking at the Fed’s annual symposium here, he hinted broadly that political leaders had to take steps to tackle the deficit and the trade imbalance.

Hours before Mr. Bernanke spoke, the Commerce Department lowered its estimate of economic growth in the second quarter to an annual rate of 1.6 percent, after originally reporting last month that growth from April through June was 2.4 percent. Economists had been predicting a steeper decline, and stock prices rose after the markets opened.

While Mr. Bernanke announced no new steps that the Fed would take immediately, he said the central bank was determined to prevent the economy from slipping into a cycle of falling wages and prices, a situation he said he did not think was likely. Instead he predicted that growth would continue modestly in the second half of the year and pick up in 2011.

Mr. Bernanke said the Fed, having kept short-term interest rates at nearly zero since 2008, had essentially four options:

It can purchase more government debt and long-term securities. It can try to coax down long-term interest rates by announcing its intention to keep short-term rates extremely low for even longer than the markets currently expect. It can lower the interest rate it pays on the funds banks hold at the Fed. And it can raise its medium-term target for inflation, which would discourage banks from sitting on their cash.

Mr. Bernanke suggested that the first of those options was the most likely, and all but ruled out the last two............."

http://www.nytimes.com/2010/08/28/business/economy/28fed.html?th&emc=th

Expatriate Your Wallet

2010-08-14T06:56:00.001-07:00

Onebornfree comment: I've been a big fan of Mr Coxon's thoughts/writings/suggestions for around 20 years or more, in fact, ever since his pamphlet explaining the use of warrants.

His classic wealth protection manual, "Keep What You Earn" although published a while ago, should be closely studied by those concerned with protecting their wealth and long term savings.

Mr Coxon employs easily to understand essential principles of wealth protection that need to be consistently and judicially employed to protect one's acquired savings from confiscation by private parties, courts, and/or governments around the world.

Onebornfree's [free:-) ] advice, take anything Mr Coxon says very seriously indeed!

Regards, onebornfree

Expatriate Your Wallet

by Terry Coxon

If everything you own is held in your own name in your own country, then you are not merely exposed, you are vulnerable absolutely, to whatever decisions the government might make about how you should behave and who gets the wealth you’ve earned. Tomorrow's new government measure, which might land out of the blue, could be a law that affects everyone, or it could be a rule devised to deal with people like you. Or, it could be an administrative action aimed at you alone. In any case, with all your assets at home, you'd find out how the lobster feels when his trap is being hauled out of the water. Nothing he can do about it.

The only way to protect yourself against the risk of being boiled in a government pot is to keep some of your assets in another country. Depending on how you go about it, the specific benefits you might achieve are:

* Protection from currency exchange controls
* Protection from the confiscation of precious metals
* A lower profile as a lawsuit target
* Income tax planning advantages
* Estate planning advantages
* Easier access to investments in other countries
* A measure of financial privacy
* Practical readiness to move additional assets quickly
* Psychological readiness to think and act internationally when you need to

There are many ways to go about getting those benefits. None is right for everyone, and they all come with some element of cost or inconvenience. Here’s the main menu.

Small bank account. A small account at a foreign bank gives you a ready and private landing spot if you ever decide you want to move a large amount of money in a hurry. If you're a U.S. person, the account is non-reportable, so long as the balance (together with any other foreign financial accounts you own) never reaches $10,000.

Large bank account. A large account at a foreign bank also provides a landing spot for anything you want to send later. If foreign exchange controls are ever imposed, the new rules may require you to repatriate the money – or they may not. Depending on the specifics of the new rules, your account may be grandfathered. In that case, the overseas funds would enable you to travel outside your own country while others are forced to stay at home.

A foreign bank account also slows things down if you’re ever under attack. It’s safe from an instant seizure by functionaries of your own government or by the unassisted order of a court in your own country.

The disadvantage of a large bank account vs. a small bank account is the loss of privacy. If you’re a U.S. person, you are required to report your foreign financial accounts if their aggregate value reaches $10,000.

Physical gold. Gold stored in a safe deposit box in a foreign bank is not a foreign financial account, nor is physical gold in segregated storage with a non-bank safe-keeping facility. So a U.S. person can store an unlimited amount of metal that way without triggering any reporting requirements. Avoiding a need for annual reporting is a plus, but don’t rely too heavily on the privacy you get with a safe deposit box, since the steps the gold takes to get there may create records of their own.

Foreign variable deferred annuity. As with an annuity issued by a U.S. insurance company, a variable annuity issued by a foreign company is tax-deferred for a U.S. investor until he withdraws the earnings. The annuity can be invested in major currencies or in portfolios of international stocks and bonds. If the annuity is big enough (a minimum of $1 million or more, depending on the insurance company), it can be invested in real estate, a private business, or just about anything else.

It’s only conjecture, but if foreign exchange controls are imposed, they are unlikely to disturb any foreign annuity that’s already in place, which is a big plus for an annuity vs. a foreign bank account.

A foreign variable deferred annuity isn’t private for a U.S. investor. When you buy one, you generally must file an excise tax return and pay a 1% tax, and you must report the annuity as a foreign financial account.

Swiss immediate lifetime annuity. A Swiss annuity that begins paying you an annual income when you buy it isn’t a foreign financial account, which may save you a reporting burden. And under a tax treaty with the U.S., Swiss annuities are exempt from the 1% excise tax. There’s nothing private about it, however, since part of each annual payment you receive will be taxable income.

You can make it difficult for a creditor (such as someone who won a lawsuit against you) to get his hands on a Swiss immediate lifetime annuity by electing not to have the option to cash it in. A forced assignment to a creditor generally would not be valid under Swiss law.

Offshore mutual funds. The array of mutual funds available internationally is even broader and more varied than what’s available in the U.S. And, like a foreign bank account, your share account with an offshore fund is safe from a lightning seizure by your own government. But for a U.S. investor, an investment in a foreign mutual fund comes with certain tax disadvantages. They are tolerable if you handle the investment properly or truly ugly if you don’t. And your shareholder account would be a foreign financial account and so would be reportable.

Offshore LLC. You can use a limited liability company formed outside your home country as an international holding company. It, not you personally, would buy and hold the overseas investments you want.

An offshore LLC can be designed to be very unfriendly to your potential future lawsuit creditors, even more so than an LLC formed in the U.S. An additional plus is that while many banks, mutual funds, insurance companies, and other financial institutions shun business from individual Americans, many of the shunners will welcome business from a non-U.S. LLC even if it is American-owned.

An offshore LLC owned by a single U.S. person (or by husband and wife) can elect to be treated as a disregarded entity for U.S. income tax purposes, which makes it absolutely income-tax neutral. Or it can elect to be treated as a partnership, which makes it almost income-tax neutral. The LLC also can be used for estate-planning in the same way as a U.S. LLC.

By the ratio of benefits to cost and complexity, an offshore LLC rates especially high. But it does not eliminate your reporting burden. If the LLC owns a large foreign bank account, you will be required to report it. And there will be annual reports for you to file about the LLC itself.

Foreign real estate. A direct investment in foreign real estate is free of any special U.S. tax or reporting rules. It’s just like buying a farm in Kansas. It would also present added difficulties for a lawsuit creditor looking for ways to collect. And it is unlikely that any regime of foreign exchange controls would touch existing foreign real estate investments.

Foreign real estate can also pay you a psychological dividend. Knowing you have a place to go to, should you ever want or need to go, provides a sense of security. That apartment in Buenos Aires or the acreage in New Zealand means you’ll never be a lobster.

Foreign real estate partnership. By investing in a private foreign partnership or LLC that owns foreign real estate, you can achieve all the advantages of a direct investment. In addition, you increase your protection against foreign exchange controls and lawsuit creditors because there is no ready resale market for your partnership interest.

International IRA. An IRA or a solo 401(k) is permitted to own anything other than life insurance and so-called “collectibles.” Anything.

Some IRAs and solo 401(k) plans own a domestic limited liability company and use it as a vehicle to buy and hold other investments. Such an LLC can own an offshore LLC that does the real investing. As with your direct ownership of an offshore LLC, this does nothing to reduce your reporting duties; in fact, it adds to them.

The advantage of such an arrangement is that it allows you to internationalize your retirement plan. Anything international you might do with your personal investments, you can do with your IRA’s investments. And it’s the ideal structure if you want to invest in offshore mutual funds. The IRA short-circuits the special tax rules that apply to investments in offshore funds, and the offshore LLC’s shareholder account application is likely to get a warmer reception from the fund than would your own American hand knocking on the door.

Private international investment contract. Depending on your circumstances, it may be possible to structure an investment contract between you and an international financial institution that is tax-deferred, non-reportable, and protected from future exchange controls or prohibitions on owning gold. This is custom work, so, of course, it’s only practical for large chunks of capital.

International asset protection trust. A properly structured international asset protection trust provides the maximum level of protection from anything that happens in your own country. It does so by leaving you with a measure of influence, but not control, over the trustee. The trustee is outside of your home country and thus is not subject to its laws. And you don't possess the authority to compel the trustee to invest or distribute the trust fund in any particular way. Thus there is no direct means for your own government to impose any regime of exchange controls or investment restrictions on the trust fund.

An international asset protection trust is far and away the most powerful of all financial planning devices. Handled properly, it is virtually impenetrable to future creditors and is especially helpful in estate planning. It is also the most complex device and hence the one most likely to be handled ineptly. And of all the tools mentioned in this article, it comes with the heaviest reporting burden if it is funded by a U.S. person.

Of course, this is the briefest of overviews of a complex topic. For specific guidance on each of the menu items listed, and pros and cons related to your own circumstances, you’ll need to seek qualified counsel.

With an ever-growing number of regulations and financial restrictions that gradually choke your ability to build and maintain wealth, protecting your assets by getting them out of the country should be a critical part of every investor’s strategy. We recommend you get started before it’s too late. Read more about the 5 best ways to internationalize your assets.

August 12, 2010

Terry Coxon is contributing author of Casey Research’s ‘Going Global’ Special Report.
Article reprinted from here
l
Copyright © 2010 Casey Research

Is It a Deflationary Depression?

2010-07-28T11:36:00.001-07:00

07/28/10Onebornfree's commentary:
Below, a thought provoking article concerning imagined future economic conditions.The article below asks the question : "are we at the start of, or actually in, a deflationary depression right now?".

The truth is, there is no way to know for sure, and no way to anticipate/predict that this might be the case at some point in the future, either. Economists , investment advisors and such like who trumpet that they can see the future are just blowing smoke, its as simple as that, in the end.

A more important question to ask, regarding an individuals long term savings plan, is not "Is It a Deflationary Depression?", but rather : " are my savings going to be protected if it is, or is soon to be [a deflationary depression], regardless, and if not, are my savings still equally protected from what ever else is coming and cannot be reliably predicted in advance [e.g hyper inflation, economic stagnation,stagflation, etc. etc.] ?

For more on long term savings protection please see my post "Financial Safety Rule #1"

Onebornfree Update 07/29/10: Have Money You Can Afford To Lose?

Of course, my comments above only address the safety issue for your long term savings. If you have money you can afford to lose [see Financial Safety Rule #1], and you would like to make a speculative bet with that money on the occurrence of a deflationary depression in the near to medium term future, then certain classes of investments will most likely profit, while others would most likely collapse in value. As to exactly what those classes are, and the best way to speculate in them- well that is between myself and my clients[!].

Also my original comments do not address the just as important issue of how to physically protect oneself and ones family and possessions in[ imagined] future times of great social unrest that might occur during times of economic hardship for many, such as deflationary depressions, where unemployment would be a fact of life for many of us, and socio-economic boundaries would become very defined [i.e. "the haves" vs. "the have-nots".]

Regards, onebornfree.

***********************************************

Is It a Deflationary Depression?

Original article here.

Drip after drip of deflation data ... Today's release on manufacturing activity by the Richmond Fed is pretty ghastly, as you would expect given that the effects of fiscal stimulus are now wearing off at an accelerating pace – before the happy handover to the private sector is safely consummated – and given that the structural East-West imbalances that lay behind the global crisis are getting worse again ... This follows yesterday's horrendous fall in the Texas business activity index from the Dallas Fed, which fell from -4 in June to -21 in July. "Thirty-one percent of firms reported a worsening of activity, up from 22 percent in June," said the bank. Texas New Orders were -9.6 in July, -8.2 in June, and +15.8 in May. Capacity Utilization was -0.6 in July, +2.7 in June, and +18.7 in May. This of course is why Fed chair Ben Bernanke has been giving strong hints of QE2 (helicopters again) if necessary. – UK Telegraph

Dominant Social Theme: A deflationary depression coming at ya.

Free-Market Analysis: The Telegraph has been very good at diagnosing deflationary trends in the larger economy, and we have agreed with this analysis because it seems obvious. What is noteworthy, however, is that prices keep going down, as the Telegraph analyzes above, even though there are numerous proclamations that the "recession" is over.

In fact as much as we find the economic analysis of the Telegraph to be intriguing, the emphasis on deflation and the central banking response inevitably gives rise to a kind elitist dominant social theme: "If only central bankers would respond diligently and with the right monetary formula, all would be well or at least better."

Of course this theme plays right into the larger meme of central bankers as a kind of priesthood tending to a monetary Godhead. It is a secular religion, encouraged by the bankers themselves, that a technocratic elite can "manage" the economy to a monetary Nirvana. History and present day events of course show that bankers can do no such thing. But the meme will be continually trotted out, especially during times when central banking is seen as evidently and obviously failing.

What the Telegraph warns us about is a deflationary depression, which the Telegraph believes is the worst of all possible worlds. Various writers at the Telegraph then express their preferences for immediate and vigorous activity by central bankers to rev up the printing presses so as to prevent additional price deflation. Central bankers are in charge, according to this reading of economic history. But are they really? As we have pointed out in the past it is possible to see falling prices in another context as the inevitable outcome of a crack-up boom.

This is an Austrian free-market analysis. Such analysis perceives central banks as over-printing money, which fools people into believing that the economy is better than it really is. Thus, businesspeople over-expand and consumers splurge. Eventually the larger market realizes the reality of what is occurring and stocks pull back (often crash) and a "recession" sets in.

The crash and subsequent retrenchment have been worse than normal, as evidenced by the sharpness of the decline in 2008-2009, and its lingering effects. This, too, is entirely to be expected given that the current economic crisis is the end-result of decades of monetary stimulation starting at least as far back as the early 1980s. In fact, Western economies are bollixed up because constant monetary stimulation makes it very difficult for anyone to know what economies would actually look like – or how they would function – without it.

Even the words themselves are suspect. While there are formal definitions delineating the differences between a recession and depression, they do not get at the cause of the problem from our point of view. Recessions occur because central banks print additional money when the economy starts to slow. By printing a lot of additional money, central bankers can ease the economy into a "soft landing. "

But a "soft landing" is actually counterproductive because the larger economy is never allowed to wring out distortions. This is of major importance because if businesses are not allowed to fail and are always supported by monetary stimulation (and now bailouts) then price discovery ceases to work. Once price recovery doesn't work, lending stops because banks and other lenders don't know whom to lend to. The economy tends to freeze and the velocity of money diminishes.

That's where we are today, in our humble opinion. Because of constant monetary stimulation, the larger economy never had a chance to wring out excesses. Eventually there must be a much larger bust. According to this definition, smaller busts are times when bankers are successful in reflating, but larger busts (the Great Depression, the 1970s crises and now the Great Recession of the 2000s) are indicative of epochs when monetary stimulation doesn't do the trick.

Within this context, it is certainly understandable that prices head downward as they are doing now. The question one must grapple with – especially if one is an investor who wants to understand such things – is whether central bankers can do anything to reflate during a "larger bust." We've indicated in past articles that the unwinding and diminishing prices are probably inevitable and that when central bankers print money during such times they are simply raising the odds of price inflation down the road.

We have little doubt that at some point, price deflation (deleveraging) will come to an end. Central banks will do everything in their power to prevent the natural unwinding of economies, thus storing up additional trouble for the next business cycle. Additionally, by making banks and certain other entities "too big to fail," the powers-that-be have added another level of confusion that further obscures economic indicators and increases the difficulty of normal price discovery.

From our point of view, these are all natural processes stemming from the determination of central bankers to use fiat money, which is inevitably prone to exaggerated booms and busts. The use of fiat money also makes figuring out what is going on economically very difficult. It even obscures the issue of what money actually is.

By constantly injecting money into the system and by not allowing businesses to fail, central banks further distort the business cycle. In this case, the distortion in the economy is very great and the central banking response has been proportionately greater, thus ensuring that the Great Recession will stretch out in length. Eventually, once prices have normalized, there will be some sort of "recovery." But because bankers have already baked "inflation" into the cake by printing so much money, price inflation will inevitably be generated by any recovery, causing bankers to raise rates, etc.

The above is a purely monetary approach to depressions, recessions, deflation and inflation. Ordinarily, economists like to speak about supply and demand and business factors influencing the economy. But in fiat-money economies, we would argue that there is little that matters beyond what is being accomplished monetarily. The ability to print money at will is such a powerful activity that it virtually overwhelms most if not all other business-cycle influences.

There is little from our point of view that central bankers can do to "cure" an initial downward spiral in prices in the context of a major crack-up such as the one the West is currently undergoing. It is a most normal part of the business-cycle. The idea that central bankers can "manage" the economy or even salvage it through money printing and bailouts gives the modern banking community more power than it actually has. The only power that central banking really gives to bankers is the power to inflate – a clumsy one at that. Central bankers can also retard the unwinding process of an economy by trying to inflate yet again and by promulgating "too big to fail" policies.

Since central banks have taken an unfortunately proactive approach (as they always do) this Great Recession will be even longer and more painful than it would have been otherwise. Prices will continue to fall and banks and other entities will be reluctant to lend until the distortions wring themselves out of the economy. Then, as activity picks up, prices will rise rapidly as central banks have already printed and attempted to circulate an overabundance of money. The question that will be asked in the meantime (though never in the mainstream media) is whether people will continue to tolerate the system as it is or demand changes.

Conclusion: The bankers already have a fallback plan, of course. They will apparently suggest a kind of IMF money, and insist that such new money will ameliorate past problems. The dollar (and perhaps the euro) may be sacrificed to popular wrath and a basket of currencies implemented as a new world money. But what won't be pointed out, were this scenario somehow to take place, is that the Anglo-American axis controls the IMF as thoroughly as it currently controls the dollar. Thus a change to IMF SDRs won't really be much of a change at all, were it to happen. What is really necessary at this juncture is the emergence of a private gold and silver standard. Perhaps one will emerge spontaneously. These are strange times, so perhaps it is possible.

Article source

Does Jim Grant Really Predict an Interest Rate Rise Here?

2010-04-03T09:14:00.000-07:00

He Does?

In this March 31st 2010 Youtube interview below, Mr Jim Grant, a famous financial author and originator of "Grant's Interest Rate Observer" for 28 years and author of 5, [and counting] books on the economy, markets etc., and consequently a well respected figure in the financial and investment community, appears to say that interest rates will rise soon [the implication being that inflation is due for a return] , at least according to the videos' Youtube headline. [The full headline reads:" James Grant Says U.S. Treasury Yields `Likely' to Rise: Video"]

He Does Not

However, if you listen closely to the end of the interview, it is apparent that in fact he does not claim to be a predictor of interest rate movements, at least, not any more.

Perhaps, after all of this time, Mr Grant has learnt a small measure of humility regarding the mysteriousness and inherent unknowability of the future movements of all markets?

His admission here makes a point I have repeatedly made in this blog : nobody can consistently, reliably predict the future state of the economy.

Use Money you Can Afford To Lose For Speculations on Interest Rates etc.

If you wish to make predictions and place bets on interest rate changes [or changes in anything else] do so with money you can afford to lose [if you are lucky enough to have some!] not with precious long-term savings that you cannot afford to lose, which must be saved in such a way as to protect against a broad range of economic scenarios, without a need to second-guess or predict any possible future market movements and thereby have to execute buy or sell orders.

Such a long term savings plan is possible.

For more on this, please review my article "Financial Safety Rule #1"

Regards, onebornfree.

The Money Privacy Crisis: 'Banking' Secretly in the U.S.A.

2010-01-06T08:51:00.000-08:00

The Money Privacy Crisis: 'Banking' Secretly in the U.S.A.

by Grant Hall

[N.B. by Onebornfree: anonymous banking is also possible with a properly set up Nevada Incorporation. Contact me for more detail. As for LLC's New Mexico LLCs can also work well for various privacy issues .]

"Banking" Secrecy Prevents Identity Theft and Seizures

Ever wonder why Americans give up their financial privacy so easily? Slowly condition a population over a generation or two to believe it’s normal to let government, quasi-government agencies, and private investigator–types have access to citizens’ money and banking information – and privacy becomes obsolete.

Throw in a numerical identifier that nearly everyone has – the good old Social Security Number – and a national money-tracking system is created. And the most sophisticated and otherwise security-conscious individuals roll over and accept it like timid little puppy dogs.

Why? Because they lack the information, assertiveness, and persistence necessary to create a banking and asset privacy plan. This article is about doing just that – establishing a financial privacy plan for your money and other liquid assets. Once you have a banking privacy plan in place, you’ll be able to effectively eliminate the threat of theft of your money by identity thieves and others who may be attempting to find your cash.

Why should you be so concerned about your financial privacy? Since identity theft is the fastest-growing fraud crime of the century, preparation to conceal business and personal money is a prudent move. In the event you or your business become the successful target of an identity thief, you can expect an average personal loss of $2,400 and an average business cost of over $10,000 in out-of-pocket expenses to clean up the mess (Hall, 2006).

What about intrusions from your own government? Violation of financial privacy is a necessary first step to gaining control over every business and individual (Hill, 1998). Would it not be best to have assets and money hidden and out of reach from everyone – government included – in order to avoid unlawful theft or seizures?

Recently, a notable property seizure occurred, as FBI agents raided offices and seized property, equipment, and cash of Liberty Dollar maker, NORFED corporation. The seizure warrant – case 1:07-mj-100119-DLH – was issued and signed by U.S. Magistrate Judge Dennis L. Howell in Asheville, North Carolina, on November 9, 2007.

Privacy advocate and author W. G. Hill warned us of the current trend and wrote: "In so-called western democracies, the state has increasingly granted itself the power to simply take from you whatever it desires" (Hill, 1998, Banking in Silence, p. 43). While Hill advocated banking secrecy through the use of offshore accounts and jurisdictions primarily, he acknowledged the increasing difficulty of financial privacy worldwide in his book on the subject, Banking in Silence.

Financial Privacy in the U.S.A.

Readers may be surprised to learn that banking privacy can be accomplished in the U.S.A. In fact, if you reside in the states, you’ll be best served in most cases by keeping your funds in the country. The exceptions are high-net-worth individuals and those who spend substantial time out of the U.S.A.

Offshore bank accounts and assets may be vulnerable to discovery and seizure, and few jurisdictions offer complete banking secrecy. Mutual Legal Assistance Treaties (MLAT) between the U.S.A. and forty-eight countries enable the exchange of financial information without "probable cause" and with only "reasonable suspicion" (Barber, 2007).

As you work, live, purchase goods and services, and make investments in the U.S., you need immediate access to your funds and timely clearance of negotiable instruments. Otherwise, you face lengthy hold times on deposits – sometimes in excess of thirty days for offshore banks, not to mention the withdrawal restrictions on many foreign accounts.

Years ago, the most private bank account known to privacy seekers was the Austrian Sparbuch account – an anonymous passbook type of account with only an associated password as an identifier. This bearer account belonged to whoever held it and could recite the password to the banking official. This account is no longer available through Austrian banks. Numbered accounts previously offered by the Swiss banks are also no longer offered. These two stalwarts of banking secrecy have gone by the wayside following pressure from outside forces – mainly the U.S. government.

Today in the U.S.A., you, as a believer in freedom and privacy, can have your personal and business financial privacy once you gain the information and know what resources to use for privacy. Stop listening to the "talking heads" who tell you that your privacy has been taken from you or that you have to give it up in the name of national security.

America has traditionally been a land of free people who have been entrepreneurs and innovators. Business men and women risk time and capital to produce products and services to supply the demands of the marketplace. Take advantage of what is available to you for your privacy needs and learn how to best utilize these resources to create a bulletproof "banking" privacy plan.

Check-Cashing Stores

The most secure way to "bank" anonymously is through the conversion of checks into cash within a system where funds are accessible and your personal and business information and location is known to as few people as possible. Check-cashing stores have become a growth industry within the United States of America, as demand soars for the clearance of checks by those illegally working in the country, banned bank customers, and others who choose these pseudo-banking operations as a means of turning checks into greenbacks.

For the privacy seeker, check-cashing stores offer a way of cashing checks without the risk of storing money in a deposit account. Bank accounts and the associated taxpayer identification numbers and names have been stolen by identity thieves, liened by government agencies, and confiscated by investigators without proof that the account holder is liable for a debt. You won’t run this risk as you cash your checks and carry your cash away from a check-cashing store.

Certain check cashing stores will cash checks payable to a Trust, Limited Partnership, or Limited Liability Company. An individual manager or trustee will necessarily have to prove that he or she is authorized to receive money on behalf of the company or trust. Portions of the trust, partnership agreement, and articles of organization may have to be shown to the manager of the check-cashing store.

Typically, the individual who is the trustee or manager of one of these entities will provide verification of his or her identity, a mailing address, and a telephone number. Social Security Numbers and Employer Identification Numbers are not necessary for "accounts" with certain stores, and these should not be given in order to preserve your privacy.

Once you have opened an "account" with a check-cashing store, the most difficult part of your future business will be awaiting their verification of funds by telephone for those new checks you present for clearance. You must understand that privacy living is always more inconvenient and more expensive than the way the masses choose to live. So you will have to expend some extra time in order to accomplish your "banking secrecy" and expect to fork over three to six percent of each check for service fees as you cash your checks at your favorite check-cashing store.

While those who issue checks to your business or trust will be aware of where the check was cashed, only your company name or trust’s name will be known, and your name will not be revealed to them, as the check cashing store’s name, bank, and account number will be stamped on the back of the check – not your name or account number. An illegible endorsement signature will assure your anonymity. Therefore, only your "banker" will be aware of who is authorized to receive money and sign on behalf of the LLC, partnership or trust.

Once you accept the responsibility of taking charge of your cash, you will be faced with finding a suitable, private place to store the money. Safe deposit boxes have served this purpose for those desiring the utmost in privacy. However, bank safe deposit box holders risk unwanted intrusions by government agencies, disgruntled spouses, identity thieves, and others. Also, banker’s hours do not allow for the "withdrawal" you may need for an unexpected expense or a weekend emergency.

Private Vaults

24/7 Private Vaults, Las Vegas, Nevada (telephone: 702-948-5555) offers complete secrecy to their private vault clients at reasonable prices. Founded eight years ago by world-renowned privacy expert, radio talk show host, and businessman, Mr. Elliot, the company’s private safe deposit boxes are available in a variety of sizes. You may choose to store U.S. dollars or foreign currency, gold, silver, rare coins, stock certificates, bonds, or anything of value in your private vault.

Regardless of your storage requirements – small or huge – 24/7 Private Vaults will meet your business or individual demands. Totally private, more secure than any bank I’ve seen, and staffed with excellent personnel, this unique company is a privacy seeker’s dream. Someone is available to take calls 24 hours a day, 7 days a week, 365 days a year. Knowledgeable, customer service–oriented staff answer the phone and field questions 24/7. The president of the company, Mr. Elliot, is available at certain times during the week.

No identification, no Social Security Number or Employer Identification Number, address, telephone number – not even a name – is required to store your valuables and cash at 24/7 Private Vaults. Access to the customer’s private vault is accomplished through iris recognition and a numerical code, anytime day or night. And your privacy is assured as the scanned recognition of the eye is encrypted once it enters the database, and it cannot be reproduced. Therefore, your "banking" privacy is guaranteed.

Think it might be inconvenient to have your own private vault at a distance? Privacy has some concessions and is always more inconvenient and expensive than living an "average" lifestyle. However, with the proper information and knowledge of how to use those quality privacy resources available, neither you nor your business will suffer huge losses through theft of property or money.

According to Mr. Elliot, president of 24/7 Private Vaults, no business or person’s private vault is subject to seizure, because of the total absence of identity information required of customers. The company has no records of the names of individuals or business customers. I encourage you to call this reputable company (702-948-5555) and to stop in for a visit when you are in Las Vegas. 24/7 Private Vaults is located at 3110 East Sunset Road, Las Vegas, Nevada.

Now that you have a totally private vault – more secure than any bank I have ever seen – you have essentially created a "current account" or a place to store your money once you have cashed your checks. Certain privacy seekers have explained that they convert excess cash into money orders, while separating the "check" portion from the proof of purchase and receipts. These safety measures make it possible to receive reimbursements if the money orders are lost or stolen. Then, once they are ready to make a trip to their private vault, either the money order itself or the cash from cashing it is stored in their private vault.

Serious privacy advocates – especially those facing an emergency – believe the inconveniences associated with total privacy are a necessary and worthwhile trade-off for the guaranteed safety of their money.

Nevada Limited Partnership

During my research for the book, Privacy Crisis; Identity Theft Prevention Plan and Guide to Anonymous Living (James Clark King, LLC, 2006), I discovered the most private and safest entity for holding liquid assets to be a Nevada Limited Partnership. In fact, at last check, a Nevada Limited Partnership has never been pierced to satisfy a judgment for an individual who is a limited partner in any Supreme Court case. Please consult your attorney for advice on limited partnerships for the purpose of holding investment funds.

A Nevada Limited Partnership has been used successfully by privacy advocates who require privacy and asset protection. Liquid assets, including cash, stocks, bonds, and stock funds may be held in the partnership’s name. An EIN and partnership information will be required by the brokerage firm when the limited partner and signer opens the account.

Providing you’re timely in the transfer of personal holdings to a properly structured Nevada Limited Partnership, I’m told by a reputable attorney that no one – not the government, your ex’s attorney, not the taxman, no one – can legally seize it for the debt of a limited partner. And when you insist that Mr. Stockbroker titles the account in only the partnership name – a name totally unrelated to any partner – and equip the account with password protection, a company-name debit card without the signer’s name on it, and other privacy precautions as described in my e-book, Privacy Crisis, you will have a private account for holding assets.

Brokerage companies generally provide better customer service than do banks, in my opinion. They have even been known to accept checks for deposit payable to a partner, individually, into the limited partnership account – a service that no bank I know of will provide.

Summary and Recommended Reading

Through the combined use of check-cashing stores, an anonymous private vault, and a Nevada limited partnership, one can accomplish personal and business financial privacy goals. Brokerage accounts may be suitable for holding liquid assets of a limited partnership. Individuals and businesses can accomplish high-level "banking" secrecy in the U.S.A. For in-depth information and details concerning all principles and concepts of financial privacy, refer to the e-book, Privacy Crisis, available from the publisher, James Clark King, LLC.

References

* Barber, Hoyt. Tax Havens Today: The Benefits and Pitfalls of Banking and Investing Offshore, John Wiley & Sons, Inc., 2007.
* Hall, Grant. Privacy Crisis: Identity Theft Prevention Plan and Guide to Anonymous Living, James Clark King, LLC, 2006.
* Hill, W. G. Banking in Silence, Scope International Ltd., 1998.

January 5, 2010

Grant Hall [send him mail] is the author of Privacy Crisis: Identity Theft Prevention Plan & Guide to Anonymous Living. Visit his website: http://www.privacycrisis.com/

Copyright © 2010 Grant Hall

Client Questions on Credit Union Safety, Interest Rate Rises, Inflation

2009-10-05T06:38:00.000-07:00

Two Client Questions

Q1: how does a large credit union compare with a savings and loan association with regard to overall safety and vulnerability to failure?

A:Generally, there is little difference. Both lend out money obtained via demand deposits and are therefor basically illiquid.

Q2: What causes interest rates to rise?

A: interest rates rise when the demand to borrow money is greater than the supply of funds available for loan.

In my opinion, a number of things may cause this situation:

1]An increase in the general markets expectations for inflation

2] Changes in tax laws that increase the tax -saving value of interest deductions- causing many to favor borrowing ahead of saving money.

3] Sales of treasury bills or bonds by the Federal Reserve system - which "tightens" the money supply. this causes less money to become available for lending, a shortage of liquidity and an unexpected slowing of business, leading more people to want to borrow money.

Reader Question on Inflation [from a forum]:

Q: "Ok I get inflation raises prices due to the devaluing of currency...and I get that prices are set by subjective premises of individuals but how do these two come together? How do prices fluctuate due to inflation yet also do to subjective value?"

A: I have always liked Austrian economist Ludwig Von Mises' explanation, as found in his book "The Theory of Money and Credit" , because it is so simple, and makes so much sense.

He points out that money [ i.e.paper money, " fiat currencies", " fiduciary media" etc.] is merely a commodity, albeit one with a negligible , close to zero cost of production.

Just like any other commodity it is therefor subject to the laws of supply and demand [a.k.a . the subjective valuations of individuals]; therefor its actual value at any point in time [i.e real world, market value, as opposed to the denomination printed on it- $1, $5, $100 etc.], just like any other commodity, is always ultimately set by the final outcome of the interplay of the two factors, supply, and the demand for that supply.

[Nov.2010 update/clarification: the term "demand for money" on this site refers specifically to the individuals demand to hold on to $'s, or whatever fiat currency being used, and to _not _ spend them.

The desire to hold on to more, or to spend more of a currency is an ever changing factor mostly accounted for by psychological factors that are both unpredictable and individually unique - however the end result will still be a general tendency to hold on to to more, or hold on to less currency units than previously felt necessary.]

"Inflation" is the term for a result, the end result of the supply/demand equation wherein the broad mass of individuals have [individually and subjectively] decided that the paper money produced is worth less to each of them than the broad mass of other goods /commodities available to them, so they decide to hold less $'s .

"Deflation" is the opposite; the broad mass of individuals have [individually/ subjectively] increased their (e)valuation of paper currency relative to other goods/commodities [for whatever reason], and desire to hold on to more [$'s] than they did [collectively] previously.

N.B. increasing the Money supply Does not Necessarily Cause Inflation!

Although increasing the money supply may cause inflation, it is not a foregone conclusion simply because demand for that supply can never be anticipated.

For example, if demand for money consistently outpaces the increased supply [of newly created money] , deflation [i.e increased consumer valuation of paper money] , will still result.

Conversely, if the money supply is decreased [less issued], but the demand for that decreasing supply drops even faster, inflation [i.e decreased consumer valuation of each $], would still result.

Inflation,The Federal Reserve and The Consumer Price Index

2009-09-01T17:32:00.000-07:00

Inflation Myths,The Federal Reserve,The Consumer Price Index 1913-2000, and How to Profit From Renewed Inflation

Click on Image to Enlarge

Above is a graph that I used in consultation with a client a few months ago to aid in our discussions concerning the safety [or not] of their then long-term savings plan. The graph shows the change in the US Consumer Price Index [C.P.I.] since the inception of the Federal Reserve system in 1913, through the year 2000.*

For the purposes of this graph, the C.P.I. changes were calculated using year 2000 value U.S.$'s . **

Introduction

As a financial safety consultant, my job is most often more psychology than anything else, involving as it does the close examination of a clients beliefs about investing, saving, economic principles etc. etc., and seeing if, for that person, their beliefs and previously unquestioned assumptions stand up to close scrutiny, or whether they are in actuality harmful to the clients long term savings plans.

As the client for whom the graph above was constructed has herself since discovered, in our numerous discussions over the past two months, there are endless numbers of myths concerning economic issues, the economy, investing, saving etc., [most of which she now assures me she has been "cured" of!] - any one of which could cause serious future damage to the overall value of your long term savings [ e.g.money saved for that "rainy day", or for retirement etc.] if consistently acted on/believed in.

Blog Posts, Free Time, Clients and Responsibilities

As previous clients are usually aware , when I accept a client, in order to really help them, I feel obligated to fully concentrate on their questions, fears , and my answers, for as long as it takes. This can be very time consuming, leaving little time for casual "blogging" [or anything else for that matter!] .

Having just recently finished up with a client, and with none on the horizon for a month or so, I have more free time temporarily and as long as this situation lasts I can devote a little more time to the blog - hence this fairly long new post.

Two Common Myths About Inflation For You to Consider

Briefly examined below are two of the most common myths [and potentially most damaging] regarding the economic scenario labelled " inflation"- a condition which was last of serious concern to US savers and investors in the late 1970's and early 1980's when interest rates on 20 year plus U.S. Treasury bonds peaked at around 15% and gold briefly reached more than $800 per ounce.

What Is Inflation?

For the purposes of this article, inflation is a term used to describe a specific economic state of affairs- that is, a condition which results in a steadily occurring increase in the general price level [i.e. the cost of most goods and services in an economy, as measured by units of the government issued legal tender in use], so that overall, more units of the legal currency [$'s in the U.S.] are required to buy the same mount of goods and services than were required 3 months, 6 months, or a year or more ago.

Cause [a] Versus Effect[b]

Effects of Inflation [b]

The effect of inflation is to make most everything you buy on a day to day basis appear to cost more . You need more dollars and consistently higher wages in order to keep up with the rising cost of living- to buy that bar of soap, see that movie, rent that car, buy gas, light bulbs etc. etc., than you did last week, last month or last year.

I used the word "appear" because appearances are deceptive here.

Cause of Inflation[a]

Actually what has happened is that each dollar [or whatever legal currency you happen to be using], has lost value relative to it previous value, so that now more of them are needed to buy the exact same amounts of goods and services than were previously needed in the past[e.g. last month, or last year]. Each dollar is actually now worth less than it was worth previously.

Obviously this situation can cause considerable anxiety to the average consumer, even without long term savings- this anxiety will increase even more for a person with substantial long term savings which are not sufficiently protected against the withering effects of the inflation - for example, a person with most of their life savings held in municipal, corporate, or government bonds, or even in stocks.

Why?

As to exactly why this [loss of per $ value] occurs, brings us to our first inflation myth:

Inflation myth [1]: "Inflation is caused by increases in the money supply".

Actually, just like everything else, the value, or price of money [i.e. its per unit value, or purchasing power] is subject to the laws of supply and demand, therefor it is more accurate to say that inflation[i.e. a lower value or "price" for each $] is caused by an increase in the supply of money above and beyond the demand for it, with the result that each $ unit loses value.

[Nov.2010 update/clarification: the term "demand for money" on this site refers specifically to the individuals demand to hold on to $'s, or whatever fiat currency being used, and to _not_ spend them.

The desire to hold on to more, or to spend more of a currency is an ever changing factor mostly accounted for by psychological factors that are both unpredictable and individually unique - however the end result will still be a general tendency to hold on to to more, or hold on to less currency units than previously felt necessary.]

Half Truth?

Inflation myth [1] is a half truth at best because logically, using the supply /demand principle, if the supply of money increases, yet the demand for money (i)keeps up with or (ii) surpasses that increased supply, inflation will not result - in fact, if demand consistently outstrips that increased supply (ii), deflation [i.e an increase in the per unit buying power of each $] will inevitably occur!

Impossible To Be More Specific

Despite what you may have heard or read, it is impossible to more specific about the cause of inflation than what I have just outlined : ultimately, inflation is nothing more than a "mismatch", or differential, between the supply of money and the demand for that supply - a mismatch that might occur for any number of reasons.

Inflation Myth [2]: "inflation can be predicted" [perhaps the most damaging myth of all]

Despite my graph [above] that shows a seemingly irrefutable link between the creation of the Federal Reserve system in 1913 and a persistent, historic decline [an almost 100%+ loss in the relative value of the $U.S.from 1913-2000, when measured in year 2000 $'s], Financial Safety Rule #1 says that no economic future event can be predicted with certainty - including inflation.

Therefor, although in my graph inflation appears to be a historical constant and future certainty, realistically there is no hard guarantee or economic rule that says that rampant, incessant ,damaging, inflationary effects and conditions must definitely occur in your own lifetime. It might, but then again, it just might not, it is impossible to know one way or another for certain.

How To Profit From Inflation - Got Money You Can Afford To Lose?

However if you have divided your holdings into 2 groups: [1] money you cannot afford to lose, and[2] money you can afford to lose, I can see no harm in using some, or possibly all of the money you can afford to lose to speculate in certain investments [such as gold bullion] should you believe, for whatever reason, that inflation is about to make a serious comeback. [ newly revised/edited copies of my 17 page guide "Onebornfree's Guide To Safe Speculations" are available free to current clients, and for $250 [Nov.2010 price, subject to change] to non-clients].

Financial Safety Rule #1: Nobody Can Consistently Predict the Future of Inflation

To be clear, neither you, nor I, and no financial graph, no economist [regardless of which "school" of economic thought they adhere to], no investment advisor, no banker, no financial speculator, no "investment portfolio manager", no financial "expert" of any description ,and no other fortune teller of any description can consistently and accurately predict future economic events, including the likelihood or unlikelihood of inflation.

Conclusion

A realistic long term savings plan must protect against the effects of unexpected inflation at all times. Therefor it must always contain elements/ vehicles that easily and safely accomplish this task.

However,putting all of one's long term savings in "inflation proof" investment vehicles is both dangerous and makes little sense in light of inflation myth [2], as it leaves your savings open to large losses in value through the occurrence of other unexpected future economic scenarios [such as deflation], and also does not contain any way of profiting should "good times"[i.e. rising stock markets] make an unexpected comeback.

Notes

* Consumer Price Index general information: http://en.wikipedia.org/wiki/Consumer_price_index

** Log versus Linear Scales

The vertical [y] scale axis uses a log [i.e "logarythmic" or "ratio"] scale of value [see also: http://en.wikipedia.org/wiki/Log_scale ] as I feel that often such a scale gives a more accurate visual representation of change , as changes over the length of time scale [ x- horizontal axis] at any point can be viewed and compared, percentage wise, to any other point in time.

In other words, the viewer may pick any point in time and then quickly measure/compare its percentage increase or decrease relative to a previous point in time.

This is not possible with the more widely used linear vertical scale, which necessarily gives equal weight/value to any point on the vertical [y]axis, for any movement from left to right along the horizontal [x] time axis.
***********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

Nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large. Internet posts are therfor not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I likewise have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make at this site they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

Recession-Plagued Nation Demands New Bubble To Invest In

2009-06-02T04:04:00.000-07:00

WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.

"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution."

The current economic woes, brought on by the collapse of the so-called "housing bubble," are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.

"Perhaps the new bubble could have something to do with watching movies on cell phones," said investment banker Greg Carlisle of the New York firm Carlisle, Shaloe & Graves. "Or, say, medicine, or shipping. Or clouds. The manner of bubble isn't important—just as long as it creates a hugely overvalued market based on nothing more than whimsical fantasy and saddled with the potential for a long-term accrual of debts that will never be paid back, thereby unleashing a ripple effect that will take nearly a decade to correct."

"The U.S. economy cannot survive on sound investments alone," Carlisle added.

Congress is currently considering an emergency economic-stimulus measure, tentatively called the Bubble Act, which would order the Federal Reserve to† begin encouraging massive private investment in some fantastical financial scheme in order to get the nation's false economy back on track.

Current bubbles being considered include the handheld electronics bubble, the undersea-mining-rights bubble, and the decorative office-plant bubble. Additional options include speculative trading in fairy dust—which lobbyists point out has the advantage of being an entirely imaginary commodity to begin with—and a bubble based around a hypothetical, to-be-determined product called "widgets."

The most support thus far has gone toward the so-called paper bubble. In this appealing scenario, various privately issued pieces of paper, backed by government tax incentives but entirely worthless, would temporarily be given grossly inflated artificial values and sold to unsuspecting stockholders by greedy and unscrupulous entrepreneurs.

"Little pieces of paper are the next big thing," speculator Joanna Nadir, of Falls Church, VA said. "Just keep telling yourself that. If enough people can be talked into thinking it's legitimate, it will become temporarily true."

Demand for a new investment bubble began months ago, when the subprime mortgage bubble burst and left the business world without a suitable source of pretend income. But as more and more time has passed with no substitute bubble forthcoming, investors have begun to fear that the worst-case scenario—an outcome known among economists as "real-world repercussions"—may be inevitable.

"Every American family deserves a false sense of security," said Chris Reppto, a risk analyst for Citigroup in New York. "Once we have a bubble to provide a fragile foundation, we can begin building pyramid scheme on top of pyramid scheme, and before we know it, the financial situation will return to normal."

Despite the overwhelming support for a new bubble among investors, some in Washington are critical of the idea, calling continued reliance on bubble-based economics a mistake. Regardless of the outcome of this week's congressional hearings, however, one thing will remain certain: The calls for a new bubble are only going to get louder.

"America needs another bubble," said Chicago investor Bob Taiken. "At this point, bubbles are the only thing keeping us afloat."

SOURCE

Financial Safety Rule #1

2009-05-01T10:36:00.000-07:00

Click on image to enlarge

Financial Safety and Investment Truth That You Don't Want to Hear:

[last edited: 09/25/11]

Financial Safety Rule #1 says: " despite many claims to the contrary, no one, not even your favorite economist or investment advisor, can reliably, and consistently, predict future economic events."

That being the case, in order to broadly protect your savings from unforeseen and unforeseeable economic events/scenarios, you must take two very important steps:

Financial Safety Step [1]:

divide your savings into two distinct, not to be mixed, categories:

a] money that you cannot afford to lose.

b] money you can afford to lose.

If you have no money for category [b], don't worry, it is not as important, category [a] is much more important as it will contain long term savings for retirement etc.

Financial Safety Step [2]:

having completed step [1], you must then set about constructing a long term savings plan for the money you cannot afford to lose [a], one that broadly self-protects/ insures itself against unforeseen economic events [i.e recession, deflation,hyper inflation etc.] as far as possible without you having to do any daily, weekly or monthly buying, selling or trading, and without the need for you to make predictions about future economic events,and which boasts the inflation beating results shown in the graph above for the savings plan that I have personally recommended for more than 15 years, and that is, at the same time, also able to automatically profit from those unforeseen "economic good times" if and when they occur in that unknown future.

This plan has produced annual gains averaging between 6-9% above the annual rate of inflation for 30 + years, with no buying or selling involved outside a once per end of the year buy/sell re-adjustment to restore percentage allocations for each investment class back to their original, beginning of year allocations .

If you are seriously interested in such a long term savings plan, let me know.*

Do You Have Money You Can Afford To Lose?

Also, if after taking financial safety steps 1] and 2] you find that you have money that you can afford to lose [category [b]], and need some guidelines for safe speculation, let me know.

For more truth that you probably don't want to know, stay tuned to this blog!

Regards,Onebornfree @ yahoo dot com

***********************************************************************

More About Financial Safety Services

Financial Safety Services is a private , mostly off-line consulting service that attempts to show its real-time [i.e. non-internet derived] clients how to speculate safely with money that they can afford to lose. Money that the client cannot afford to lose should never be risked in these speculations

Nearly all of Financial Safety Services clients to date have been found via direct [i.e off-line, in-person] referral from previously satisfied clients only.

No attempts are made to procure clientele via the selling of the sporadic, incomplete online information posted at this site. All valuable information is sold to clients, via e-mail, or preferably in person, on a "need to know" customized basis, depending on their specific speculative wants/needs.

Therefor any/all posts at this site are for the reference and possible benefit of pre-existing , real-world, paying clients only as part of my services [and to perhaps help emphasize a particular point I make to them in private], and never for the benefit of the general reading public and casual internet reader at large. Internet posts are therfor not made on a regular schedule in order to build an on-line audience; only when I feel that so doing is beneficial to my actual existing clientele.

I likewise have no interest in gaining clients first hand from any posts made either here or elsewhere [if it happens, it happens!] - to date [20 years+], nearly all of my previous clients have come to me via direct, in-person referral from other satisfied clients- that is, [1]an existing client personally recommends my services to a close friend, [2] the friend contacts me, [3]we discuss their wants/needs, [4] I make a decision as to whether or not I can really help them, [5] We come to a financial agreement- or not :-) .

None- Client Questions?

Should a casual reader/none client have a serious question about an assertion I make at this site they must write to me at: onebornfreeatyahoodotcom and I will do my best to answer their question. Their first question will usually be answered for free. After that, fees may apply.

Current Client Questions.

All existing, paying client questions are of course, answered for free [usually via private e-mail]- it is part of the service!
onebornfreeatyahoodotcom

The F.D.I.C., or “Fantasy Deposit Insurance Corporation”

2009-03-27T10:11:00.000-07:00

[The article reprinted below outlines a problem with US banks that I have been personally aware of for 20+ years, but which few who I have ever talked to have ever understood or acknowledged.

However the current systemic crisis has forced some of the newly nervous to reconsider my warnings and to look a little closer at what I have always maintained vis a vis US banks, and to perhaps take those warnings a little more seriously.

Simple Steps For Your Banking Safety

There are several steps that can be taken to ease concerns over US bank deposits, ranging from the simple and straightforward to the more esoteric and complex.

If you would like to discuss steps that you yourself can take to protect/ insure your own deposits, please let me know.]

Selling Certainty in Uncertain Times

"If there’s one thing that constitutes a bankers’ worst nightmare, it’s a bank run.

Because – as we can see in today’s markets – banks are more than happy to carry on the illusion of “solvency” as long as it’s in the banker’s best interest.

But a run? Well, with a run…all bets are off. Depositors cry “Show me the money!” and the jig is up. The bank doesn’t have time to wait for loans to be repaid. They suddenly can’t fulfill the massive demand from their depositors and everyone loses (except the lucky few that reach the teller’s window first).

That’s why the Federal Deposit Insurance Corporation (FDIC) is one of the greatest achievements in the history of bank regulation; because it prevents bank runs.

How? Not by actually insuring all deposits, but by assuring depositors’ peace of mind.
Uncle Sam Says: “Don’t Worry…The Money’s There”

You see, the FDIC’s dirty little secret is that they don’t really have enough money to back all the deposits they’re insuring.

They didn’t even receive the authority to collect their insurance premiums until 2006…shortly before Sheila Bair took office. Even more shocking is the fact that the FDIC collected no insurance premiums whatsoever from most banks in the decade between 1996 and 2006, according to the Boston Globe.

Why hasn’t this mattered? Because the FDIC is a security blanket…and it’s actual functionability is secondary to the psychological effect it has on the depositors it insures.

Step back and think about it for a second. Have you been watching the evening news lately? How many times have your local news anchors reminded you that the FDIC insures all bank deposits? Likely more than once.

Or perhaps you caught CNBC’s “Special Town Hall Event: Who’s Protecting Our Money?” featuring Jim Cramer and Erin Burnett. Did you feel like you were being “sold” on the legitimacy…the credibility of FDIC insurance?

If you can be convinced that the FDIC will protect your deposits, then it’s essentially served its purpose. Because it will keep you – and the rest of America – from rushing to the bank to collect your deposits in the case of an emergency. As such, it guarantees that banks won’t face the imminent demise of a run…giving them time to rebuild their balance sheets and muster the funding to make their depositors whole.

And the FDIC has had a massive impact, even on today’s crisis.

Think about it. If the FDIC didn’t exist, who would still have any money with Citigroup? Normally speaking, depositors would be extremely concerned by the fact that Citi (or indeed any bank) is – for all intents and purposes – currently insolvent.

What beyond the FDIC’s guaranteed insurance could possibly compel a depositor to trust that institution with his or her continued business?
Competing for the Title “Worst Insurer on the Planet”

Now we’re not saying that the FDIC is insolvent. We’re not saying that they’re likely to fail at their obligations. If worse comes to worst, Congress will back them and print fresh dollars to satisfy their obligations.

But inquiring minds want to know…just how deep in the hole are they?

The answer; pretty deep.

According to a Bloomberg report from September of last year (my, what a difference a few months can make) the FDIC had assets of US$45.2 Billion, and a US$70 Billion dollar line of credit, bolstered by promises of more credit being made available when it becomes necessary.

Behind that limited pool of assets, the FDIC was – as of Bloomberg’s report last year – guaranteeing some US$4.5 trillion in deposits (under the US$100,000 rule). And after expanding coverage to all deposits under US$250,000, that pool of deposits nearly doubled (see here for our full exposé). Either way, their coverage works out to 1% or less of the deposits in question.

And adding more fuel to the fire is the FDIC’s own “troubled bank” list. After 25 bank closures in 2008 and 17 so far this year, the list has ballooned from 171 to 252 banks, and the pool of associated “troubled bank” assets from US$115.6 Billion to US$159 Billion…roughly matching the FDIC’s pool of assets.

Facing a list of “troubled banks” that could wipe out the FDIC’s reserves, it’s no wonder that they’ve stepped up the PR campaign to sooth the public.

But the harsh reality is that they – like their long-forgotten sister organization, the “Federal Savings and Loan Insurance Corporation” – face a problem that’s too big for them to handle. They may, like the FSLIC, face several bouts of insolvency in the coming years. And the face of the organization might even change drastically before it’s all said and done.

But what if the FDIC takes over your bank? And what if they’re busy scheduling “emergency funding” when they do so?"

Article reprinted from : The Sovereign Society Offshore A-Letter
Thursday, March 12, 2009 - Vol. 11, No. 65

UBS Bank- A Swiss or an American Bank?

2009-03-23T11:51:00.000-07:00

U.B.S., a "Swiss Bank" in Name Only

Because of the troubles/ travails that UBS bank and its US clients have encountered with the US government, it has been assumed, by some people who really should know better, that this means that Swiss banks in general are no longer safe for US law-abiding depositors demanding financial privacy, and that their accounts are no longer shielded from the prying eyes of the US government.

As usual, nothing could be further from the truth.

Surprise! UBS is Subject to US Banking Regulations and Tax Law.!

Even though UBS originated in Switzerland, and even though it has many branches worldwide, merely by maintaining branches in the USA [even just one], legally speaking, as far as any U.S citizen depositor is concerned ,U.B.S. is NOT a Swiss bank subject only to Swiss banking law , Swiss tax law [tax evasion is not a crime in Switzerland] , and Swiss courts, but effectively a US bank subject to US banking law, US judges and courts.

The negative publicity that the UBS case has generated about Swiss Banks in general is, as well as being the product of ignorance about the subject, most likely primarily designed to:

[1] scare US citizens into staying within the establishment US banking system [UBS is a foreign intruder/competitor on a domestic market dominated by B of A, Chase, etc.], and...

[2] to discourage thoughts of tax evasion by US taxpayers. Notice how the story has been built up post Christmas, in the New Year, before tax filing deadline of April 14th 2009. Expect this story, plus others in a similar vein [i.e. "B.B.B." or "basic bush-beating] to increase in frequency through 04/14/09.

If you want financial privacy via an offshore bank account [for whatever reason], and while it is still legal to do so, do not open such an account with any bank that has ANY branches in the US, or even has branches in an overseas territory at the mercy and influence of the US government..

Confiscation/ Seizure of US Citizen Depositors Funds

Remember also, any bank account held in the US or overseas that is subject to US law , in any US regulated domestic or foreign bank branch [ie still subject to US law], can be easily frozen, or even confiscated ", merely on suspicion", pre-trial, even pre-sentencing, by virtually any federal agency or by any federal judge, literally on a whim.