FREE: JOIN 100,000+ READERS   
≡ Menu
SOVEREIGN MAN

Sentiment vs. Reality: Total disconnect

iStock_000017142324XSmall

June 19, 2012
Vilnius, Lithuania

Exactly three years ago, we launched this daily e-letter… and needless to say, it’s been eventful.

It should be clear by now that the topics we routinely discuss in our daily conversations are actually happening:

- The grand fiat experiment is unraveling.

- Governments are, in fact, going bankrupt.

- And they’re turning the heat up against their own citizens in a desperate attempt to maintain the status quo.

Here in Europe, bank runs are becoming commonplace, and depositors are being frozen out of their accounts without warning. Politicians in many countries have seized private pensions and are once again touting capital controls as the panacea.

Meanwhile, privacy continues to be stomped out in the worst possible way. Western governments have made coordinated assaults on everything ranging from banking privacy to Internet usage. It never stops.

To boot, Google just reported an alarming increase in government requests to block, censor, or obtain user data; this year’s requests are on course to -quadruple- last year’s 3.3 million requests.

And then there’s the printing… the endless expansion of sovereign debt and silly pieces of paper that are being passed off as money by handful of morally bankrupt individuals who control the whole game.

These politicians and bureaucrats still haven’t figured out that nations don’t become wealthy by printing paper currency… or by raising taxes, or through big entitlement programs, or by going into debt.

Going into debt and consuming does not create wealth. It temporarily creates the illusion of wealth… until the house of cards collapses.

Just like individuals, nations become wealthy by being productive and saving.

None of this is rocket science. And yet, the guys controlling the system don’t seem to get it. They’re doing all the wrong things, worrying much more about their own electability rather than getting the hell out of the way.

In Europe, a lot of people have finally started waking up to this reality; they at least understand that they’re dealing with serious problems that aren’t going away.

In the United States, I’m not so sure.

I just spent about a month on the ground in the US, and I came away with a feeling of tremendous discomfort. Never before have I seen such a massive disconnect between sentiment and reality.

Everywhere I went– Dallas, Los Angeles, Reno/Lake Tahoe, Denver, New York, and San Francisco, everything appeared to be fine. Shops and restaurants were full, the mood was light, and people seemed fairly optimistic that things were OK.

There was definitely no air of doom and gloom like there is here in Europe.

And yet, the real story in the US is disastrous:

- There has been no meaningful growth in years.

- The true rate of unemployment is a postwar record high.

- Foreclosures and bankruptcies are on the rise once again.

- The average American’s income and net worth are both much lower than 4-years ago.

- The federal government is totally insolvent, as are most state and local governments.

The numbers don’t lie. They have no sentiment, they don’t feel optimistic or pessimistic. They just are what they are. And they’re terrible.

The massive disconnect between what the data tell us and people’s optimism are deeply concerning; it suggests that the majority of people are completely oblivious to what’s happening.

Just like when the housing bubble burst, most people were blindsided and totally unprepared for the pain that followed.

I’m concerned that the same thing is going to happen again… only this time, the collapse of the sovereign debt bubble is much, much bigger.

So much of what we have discussed over the past few years has already come to pass, and the next phase is playing out right now in Europe. The writing is on the wall for the US.

Undoubtedly, this is a time when thinking people should be getting prepared.

For one, it means buying real assets– something tangible that you actually own or control yourself, and that stands a chance of retaining its value.

Think precious metals, operating businesses, agricultural property, collectibles.

Don’t underestimate the counterparty risk of assets which are merely claims– ETFs, stocks which are not registered in your name, sovereign debt.

Also, the importance of international diversification is paramount right now. And I mean now. Given the speed with which banks are shuttering, a lot of people are about to become victims.

Most folks put all of their eggs in one basket. They live, work, invest, own their property, store gold, run a business, etc. all in the same country of their citizenship.

And all of those assets/interests are subject to the whims of any number of government agencies.

Direct confiscation is a primary tactic of insolvent governments… as Greeks and Italians are finding out now.

When you spread your assets and interests across multiple locations– a bank account in Hong Kong, gold stored in Singapore, owning property in South America– you’re taking your hard earned savings and moving it outside the control of your home country’s bureaucrats.

This puts you ahead of 99.8% of the population (based on IRS filings) who aren’t taking these steps.

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.

Want more stuff like this?

Our goal is simple: To help you achieve personal liberty and financial prosperity no matter what happens. Click below to join our community of 100,000+ sovereign individuals.

SIGN ME UP FOR FREE

Comments on this entry are closed.

  • Doctordaigle

    Congrats on your 3 year anniversary!

  • Elai

    I think the reason why things seemed fine in the larger cities is because some segments of the US economy is experiencing a boom.  SF has a software engineer supply crunch right now for example.  I think if you went to the rest of the usa, it would look different.

    • http://profiles.yahoo.com/u/6EWDTDGGPM2NUB23WZXTLKO6DI Lorili

      You mean the SF area has a supply crunch of cheap Indian engineers.  Many companies purposely do not hire Americans.

  • shamus

    Property Values in WA state have held firm, save for the highest metropolis atreas. But changing course is difficult for many families. I’ve spent the last 3 years wiping out my debt and creating a surplus.  Reflecting on my grandfathers time, gathering stores of wealth, while not feeling a HARD pinch of fiscal tightening in the household does not result in FAST recovery. Without being castrated by your household for fiscal prudence the process takes quite a few years!

    • Pollywog

      You’ve hit the nail on the head here. Too many people just thing that the world will keep going on forever and don’t work to lower their debt. These are the ones that will hurt the worst. I have been on this mission for a while myself and will reach solvency by the end of this year. What a feeling of freedom that will be. Never to be in debt again! People need to figureit out and quit paying for yesterday’s indulgences

  • Mcmayhon

    This is my country and I will not allow “direct confiscation” of my property or of my nieghbors property. I would die first.

    • Gil

      Since when is it “your country”?  Are you the Monarch of America?  Or you feel you have ownership rights over a place because you lived there a long time?  I hope I never become a landlord and have you as my first tenant.

    • Dsylexic

      thats a nice sentiment.how exactly did bravehearts like you react in 1933 when fdr confiscated everyone’s gold?

    • Libertymike

      Do you pay any taxes whatsoever?  If you do, you are already “allow[ing]” direct confiscation of your property.

    • http://profile.yahoo.com/TOZA64AZIPOLX5YY6V6XRI4G7E Hamms Purcell

      Yeah, yeah, I’ve heard that kind of talk before. The fact is that confiscation is going on all the time, and it is not just through taxes and inflation. You are nothing more than another barker. This country is full of barkers. The land of the free and home of the brave is not anymore if it ever way.

  • Autolykos

    Simon, surely you understand that these politicians don’t care about making “their” nations wealthier. They simply care about making *themselves* wealthier – nations be damned.

Read more:
2- celebrating... tanks
Could this make Ben Bernanke a Soviet dictator?

Close