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Let’s talk about facts, not fear


October 15, 2012,
Bangkok, Thailand

[Editor’s note: Today’s letter is an excerpt from the edition of Sovereign Man: Confidential that will be published this afternoon.]

Let’s step away from the noise for a moment and look at the big picture. This isn’t about doom and gloom, or fear, but objective facts.

Undoubtedly, the Western hierarchy dominated by the United States is in a completely unsustainable situation. Across the West, national governments have obligations they simply cannot meet—both to their citizens and their creditors.

In the UK, national government borrowing is already 22% higher than at this same point last year, a record year for borrowing. Meanwhile, the UK’s budget deficit for August hit a record high.

In France, the new government of Francois Hollande passed a ‘historic’ and ‘austere’ budget that is still posting a deficit of 3% of GDP. That’s including a 75% tax on incomes exceeding one million euros.

In Japan, the government is mulling legislation that will fund 40% of the budget with ‘deficit-financing’ bonds.

In the United States, the government recently hit $16 trillion in debt about six weeks ago, after reaching the $15 trillion mark last November. It took 200 years to accumulate the first trillion in debt and 286 days to accumulate the most recent trillion.

Each of these countries has a debt level that exceeds 90% of GDP– the historic point of no return. More importantly, each of these countries also has to borrow money simply to pay interest on money they’ve already borrowed.

This is important because it makes the problems multiple. At the beginning of the 1780s, the French monarchy was spending around 30% of tax revenue to service its debt. Eight years later when the revolution began, they were spending 62%.

The next 26-years in France were filled with internal civil war, external war with Austria and Prussia, hyperinflation, crime, social unrest, and Robespierre’s genocidal dictatorship.

In the 19th century, the Ottoman Empire faced an even steeper financial decline. In just 11-years, the Ottoman central government went from spending 17% of its tax revenue on interest payments to spending over 52% of its tax revenue on interest payments. Then came default, in just eleven years.

In the US, debt service is also rising. According to the Government Accountability Office’s figures, the US government was spending 9% of revenue to service the debt in 2002. Throughout most of the last decade, in fact, the US government spent roughly 9% of its tax revenue on debt service.

But in 2009, the figure hit 9.75%, then 10.5% in 2010, then 11.5% in 2011. For the fiscal year that just closed on September 30, the Bureau of Public Debt reported cumulative interest expense of $375.8 billion on income of $2.45 trillion. This is a rate of 15.3%. See the trend?

But it’s not just debt burdens that are problematic. ‘Rich’ countries in the West are also rapidly debasing their currencies, spawning tomes of regulatory impediments, restricting the freedoms of their citizens, aggressively expanding the powers of the state, and engaging in absurd military folly from Libya to the South China Sea.

Once again, this is not the first time history has seen such conditions. In our own lifetimes, we’ve seen the collapse of the Soviet Empire, the tragi-comical hyperinflation in Zimbabwe, and the unraveling of Argentina’s millennial crisis. Plus we can study what happened when empires from the past collapsed.

The conditions are nearly identical. Is our civilization so different that we are immune to the consequences?

[Image: Are we really any different?]


Probably not. And the cycle that has befallen so many great powers before us– decline, collapse, turmoil, and reset– will likely happen in our time too.

But it’s not the end of the world. Not by a long shot.  It’s a complete reshuffling of the deck. A brand new game with brand new rules. And the old way of doing things (like printing money backed by nothing) will be resigned to history’s waste bin.

One of the things that we see frequently in history is that this transition occurs gradually, then very rapidly.

Think about the Soviet Union, which you may recall. One day, they were the greatest threat to the planet. The next day, the wall came down. It happened so quickly. It’s like what Hemingway said about bankruptcy– it happens slowly at first, then all at once.

Unfortunately we don’t know where we are along this path. And we won’t know until we’re over the cliff on the way down. Everything will feel normal until then.

[Image: Where are we on the curve?]


Argentina’s millennial crisis is a great example of this. Argentines woke up in December 2001 and everything still felt normal. Within a few weeks, they had defaulted on their debt, the currency collapsed, and people were out in the streets doing battle with the police.

But since we don’t know precisely when things may happen, it’s a sharp idea to take responsible action that makes sense no matter what, even if all of the world’s problems are miraculously solved. Things like:

– Owning gold and silver (and storing it abroad)
– Acquiring agricultural property overseas.
– Holding savings in a strong, stable foreign bank
– Looking at healthy economies for top quality investment and business opportunities
– Improving tax efficiency and asset protection with proper foreign structures
– Developing relationships with like-minded people
– Learning valuable skills
– Traveling a bit and exploring potential relocation options
– Increasing your digital privacy
– Considering dual residency and nationality options

All of these steps make sense no matter what happens. Yet, should the thesis hold, and we indeed find ourselves on the precipice, then you and your family will be in the best possible position. And that too is a fact.

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens.

If you liked this post, please click the box below. You can watch a compelling video you’ll find very interesting.

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

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

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

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

Don’t be one of the millions of people who gets their savings, retirement, and investments wiped out.

Click the button below to watch the video.

About the author: Simon Black is an international investor, entrepreneur, permanent traveler, free man, and founder of Sovereign Man. His free daily e-letter and crash course is about using the experiences from his life and travels to help you achieve more freedom.

Comments on this entry are closed.

  • http://www.facebook.com/Dr.PDG Paul D. Giammalvo

    Can anyone explain WHY or HOW Indonesia is flooded with brand spanking new 100 dollar notes? Since the fall of the Soeharto regime in 1997, the country has been and remains awash in previously uncirculated 100 dollar bills. Unlike anywhere else in the world, this is the only place that will not accept bills which have the slightest imperfection- writing, wrinkled, folded, stapled….

    Something doesn’t make sense here and I am curious if anyone can explain why this is happening? Is it Uncle Ben laundering money through Indonesia?

    Dr. PDG, Jakarta

    • Claudio Jackels SERPENTIN

      I don’t know the exact situation and how it happens but it is historical fact that the Central Intelligence Agency gave printing plates and the paper to print to the Shaw. This could be to ensure US dominance in Tiger Area.
      Just a thought.

  • Claudio Jackels SERPENTIN

    Simon, this is correct. The US is already a quiet corporate dominated crony plutocracy, prepping for hot fascism. This ability of the USA dominant elites to hoodwink their citizens is one thing they do best. Plus it is highly improbable that the USA elites will step aside gracefully to a world uni-polar/Russia/China dominance order.
    No one is Soviet system believed the propaganda unfortuantely USA has human nature and need to blame, the blame game in backup. Historically a young country that resembles an immature drunk teenager.
    I feel the October incident is rapidly approaching due to various completely unrelated chatter from various sources. And also the absolutuely astounding war gaming in front of the population for domestic clampdowns and Iraq style insurgency measures. This could only be because the accelerating factors are due to converge.

  • Claudio Jackels SERPENTIN

    There will be no REVOLUTION IN THE USA, only purges and accclerating atrocity.
    Turn up the I-Pod and look away.

    • Jan Andersen

      Get the morons out

  • Paul Mills

    Dear Simon… The facts are the fear. You eschew the idea of fact discussion, then proceed to repeat all the usual media fear factors, with some vague generic “solutions” at the tail end. Anyone can do that.
    Here, I’ll show you.
    To save the world from destruction:
    1 Get rid of fiat money
    2 Get rid of politicians.
    3 Everyone grows a vegetable garden
    4 Dump corporatocracy.
    5 Everyone stops taking GM and starts eating veg.
    6 Kill all bankers… and lawyers.
    7 Meditate every day.
    See? Easy!
    You keep telling us things we already know, over and over.
    Solutions are what we need, not problem discussions.

    • Jan Andersen


    • Piotr Ługowski

      Who do you think is going to implement this? General public is dumbed down from school and disoriented from media. Rulers have every incentive to keep going as long as possible and than run. Few people that see what’s up and want to stop it have nowhere near the power, or persuasion to win.

      Some countries will go down. Only question is what will happen to those next in line, that will see collapse of much of the West. They might actually make the turn if they know what was the cause. Murdering banksters is not the way here, but stating the truth might just work.

    • dubld

      “Start eating veg”, REALLY!?!?!?

      You give the article a fail for using fear factor, then promote a the veg agenda (in addition to genocide) as the ‘solution’ (?). Every fear agenda out there, from global warmists, to the overpopulation crowd, to PETA is pushing this so-called ‘solution’. Have you not yet figured out that vegetarian diets destroy health, fitness, and intelligence, which is precisely the reason why they are so widely promoted by all these unsavory looters? Low cholesterol equals low brain matter. Whole grains perpetuate digestive problems (and the prescription drugs to treat them) among the 40-odd% of humans who are allergic to gluten. Allergies to legumes like peanuts can be fatal. Check your facts and you’ll see that this ‘healthy lifestyle’ is intended to turn you into a sick, stationary, malleable, dependent blob. Seems you didn’t need the help.

      Gullible dupes pushing one fraudulent ‘solution’ over another are all part of the same problem, not the solution. Practice what you preach and get a clue before arguing stupid against stupid.

      • http://www.facebook.com/salocin.jim Salocin Jim

        You searching for “facts” is also searching for this pushed ‘solution’ you speak of. Vegetarian/Vegan lifestyles does not equate to low cholestrol or dependency on the system. In fact, it is the complete opposite. Those stuffing themselves with GMO’s from all the processed, packaged garbage and fast food are those that are sick, stationary and dependent. The SAD (Standard American Diet) is what leads to all the disease. I believe the problem is not in the ‘solutions’ but in thinking that a ‘solution’ is an escape from reality.

  • Jan Andersen

    Going down to the basement!”

  • http://www.facebook.com/oztexan Chris Robertson

    Great analysis but the selfish action points are very weak indeed… The simple reality is if the US goes down (THE financial markets) the world is going with it including any international bank you can think of.

    Looking for a personal safety valve overseas, running away, is risky.

    We just moved back from Australia. Our local council there, a small seaside community called Manly in Sydney, was hammered by the CDO mess in 2008 & 2009. The world is Über-integrated.

    If the US fails, you will be relying on the rule of law, protection of property rights in the overseas country(ies) during the global financial meltdown. Will they survive intact through the turmoil? How will your neighbors view you and your US accent?

    If you’re a US citizen and the angry/self-protecting type…buy a ranch in Texas or Montana and ensure you can enforce your own rule of law. Or move to Canada, but you might want to blend in and say aboot.

    On a more “optimistic” note… I’m not one for focusing on just self preservation. I don’t want my sons having to live through decades of chaos, zombie-apocalypse style. There is work to do in halting the slippery slope you identify and we should get to work.

    History says it’s difficult, perhaps impossible. But if you’ve got the ability to contribute, do it.
    I think bloggers like you and the internet have the potential to foster a new age of critical thought. Help elevate the discussion, refocus our attention on reality and the facts rather than the red herrings that swim the gulf between democrats and republicans.

    Good luck everyone. I’m voting for Gary Johnson.

    • stephen

      got me with Gary Johnson – i’m in his camp too – i have a self sustaining farm
      and hope the descent is non violent and the 1% realize we are all unequally in this together

  • Bukit Tomas

    Great interview worth posting on the front page of your site: http://www.youtube.com/watch?v=9o30gNfPq_k

  • Stephan Larose

    The fundamental problem here is not the economy. There are an enormous number of resources and talents available and much work to be done to retrofit the global economy to be green. The problem is credit (lack thereof) due to a corrupt global banking system. It is the global banking system which must be reformed. The power to coin money must return to the people on whom the value of money is based. Citizens should own their national banks and loan money to commercial banks, earning profits from the interest. Commercial banks should be run as utilities, not reckless investment banks.
    The entire premise of the global banking system is to perpetuate massive fraud and enslave all of humanity with debt created out of thin air issued as our “currencies”, debts real human beings must pay back with real value produced through labor and innovation. This is little more than “legal” counterfeiting.

    Our consent to a financial system that is basically a giant counterfeiting operation is the problem. To be rid of debts, nations should issue their own currencies debt free and simply control inflation through judicious monitoring of the money supply, taxation and other regulatory enforcement measures. A nation needn’t issue bonds and have the bank print currency out of thin air, it can print currency itself debt free. International trade can be settled using a re-calibrated exchange rate system and/or commodities. Without national debts, there would be no need whatsoever for income taxes. Taxes could be green/luxury/labour standard based.

    Our problem is that bankers control and hoard an enormous amount of resources, resources better used were they circulating in an economy that was less hamstrung by the current wealth gap. For humans to progress we need economic freedom, high levels of education, a dominant middle class, and transparent participatory democracy.

    Living under the yoke of the central bankers of the world paying back infinite amounts of odious, legally-counterfeited debt is not the way to go.

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