Feedback Friday - August 31st, 2012

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What a week, what a week. TDV's Jeff Berwick and Ken Johnson were in Paraguay for much of it, trying to find the best way for you, dear Dollar Vigilantes, to escape the USSA. Meanwhile, back in the home of the slave, the Republicans are holding a powwow in Florida where last night Clint Eastwood looked every bit the 82-year-old doddering fool that he is. As always, the GOP pushed the libertarian wing to the side, again proving that those who love freedom and liberty have no place in the good ole U S of A.

And now, on to your Feedback...

WHAT TO DO WITH TREASURY BONDS

Hi Jeff,

I'm an avid reader of your newsletter and your insistence on leaving the USSA has always piqued my interested. However, the reason I'm writing you tonight is because I'm stuck in a quandary. On my 18th birthday, my grandparents gave me $10,000 in treasury bonds and with interest they are roughly worth around $20,000 fiat dollars today. I've always wanted to cash them in to buy some gold and silver, however I didn’t want to pay tax on them so I've just let them continue to gain 0.90 % interest or something incredibly low number. Therefore, the question  I'm posing to you is if I should cash them in and just pay the tax or just let them to continue gain minimal interest?

Thank you,

Bryan W.

Jeff’s Response:

Hi Bryan,

Okay, I certainly understand you not wanting to pay tax. Actually wanting to pay tax is like delibertely dropping your soap in the prison shower. But in your desire to avoid taking a one-time hit, you are incurring a continuing loss as inflation eats away the value of bonds, even as the nominal price of those bonds increases. You didn't say how old you are now or in any way indicate how long you've held those bonds. But a qucik look at the charts tell me that it took about 10 years for Treasury prices to double:

But that was a result of the Fed constantly pushing down interests rates (instead of letting the market set rates)...which was a result of an increase in the money supply and the Fed bidding up the price of government debt with the newly created money...which has resulted in an increase in general prices that just about matches the increase in Treasury prices. In short you've gained absolutely no purchasing power. Those nominal gains are an illusion that keep most people from realizing that they're being fleeced and acting. 

In the last 10 years rates declined (thanks, Greenspan and Bernanke), which made bonds a reasonable investment. Now that they are effectively at 0% there is no where for rates to go but up, which means the value of the bonds will almost assuredly decline.  So whereas before bonds might have kept pace with general price inflation, now it's just about guaranteed that they'll fall behind. Hence we are short Treasuries in our portfolio.By the way, notice how gold performed while those Treasuries were doubling in nominal price:

 

Around $250 to over $1600...and the current $1600 level is a decline after nearly hitting $2000! While you were sitting in those Treasuries, you were really losing in terms of real money like gold and silver. If you'd immediately cashed in those Treasuries when your grandparents gave them to you and bought gold and silver back then, you'd be sitting on about $90,000 in assets instead of $20,000.

Here at TDV we recommend a substantial holding in precious metals...and for those willing to gamble on the chance of making a fortune, put a small percentage of your portfolio into the gold stocks - just make sure you Bulletproof them.  Ed Bugos, at TDV Premium, is a world renowned gold mining analyst who can help guide the way. Or if trading is more your style, Vin Maru of the TDV Golden Trader is one of the most savvy traders in the market.

 

In my opinion, it's time you stop messing around with those certificates of guaranteed confiscation and get into gold. You've already lost out on ten years worth of gain. Why continue the pain?

A FRONT ROW SEAT TO THE END OF THE WORLD

IN RESPONSE TO: Fascist Wing of Single USSA Party Not Even Bothering to Pretend Anymore

Dear TDV,

Love reading your rag. It's more interesting & diversified than the End of America infomercial selling goal. When I was young I sailed around the world. Never had a desire to leave after seeing first hand the cesspools called countries. I'm old now but prepared and want to be here for the collapse of the dollar. It will be interesting watching (or listening on the short wave) the screaming minions trash city after city looking for that last can of corn in the supermarket. Meanwhile I and like minded families will radio each other with an invite to a bbq. Keep up the scary stories.

Carl M.

Jeff’s Response:

Hi Carl,

Glad you love our rag, but allow me to focus on just one of your comments.  You stated that years ago (I’m presuming decades by the sound of it), you “never had a desire to leave after seeing firsthand the cesspools called countries”.  I hear that quite a bit from people who travelled the world decades ago… and as someone who also did some travelling in the early 1990s, I have to tell you, you’d be shocked at how things have changed.

I remember going to Mexico in the early 1990s and thinking it was quite poor and dirty.  Today, visiting almost any major city, from Acapulco to Zihuatanejo, almost everyone has new cars, new iPhones, new everything.  In fact, I just visited my favorite hair stylist in Acapulco, an Australian expat, this afternoon and she told me how she is getting sick of all the really rich women who talk down to her because she doesn’t have a chauffeur… or because she doesn’t live in a mansion.  In fact, for many years I had to almost beg to get into some of the top discos and restaurants in Acapulco.  They look at Americans/Canadians as terribly devoid of class and very, very broke.  Actually, now, so do I.  

Most everyone I know in Mexico is very well off and whenever an American walks into a bar down here I prepare myself to see them act like fools, get angry at drinks being too expensive and getting really drunk shooting tequila – something no Mexican would ever do.  Sure, there is still a fair amount of people in Mexico who are what you would call “poor”, but even they are more well off than most Americans who, unbeknownst to themselves, owe $250,000 per person in US Government debt and liabilities alone… and about $100,000+ in debt per household.  A case can be made, in fact, that no one is poorer on Earth than the average American… especially once the ever-shrinking wages they receive are done going through the government tax wringer… income tax, property tax, sales tax, cigarette tax, alcohol tax, speeding tickets, fines.

And what I’ve seen in Mexico is the same almost worldwide.  In Thailand, everyone has an iPhone, or even better, a Samsung… most people have cars (just look at Bangkok traffic if you don’t believe it)… and, guess what, they are all fully paid in cash.

Sure, there are still a few places that have clung to socialism/communism such as Cuba, Belarus and a few others that are pretty down and out… but what I find, everytime I return to the US, is that it is the place that feels like a third world country.  Name an airport… LAX… Miami… San Diego… it feels like you are in a post-apocalyptic wasteland.  I actually feared for my life once INSIDE the Miami airport from all the street and ghetto people milling about.  And need I mention Walmart?  As one TDV employee said to me recently, “Wow, here, Walmart is nice.”

So, Carl, I highly recommend you either re-assess the world… take a trip… or listen a little closer to what people like ourselves are saying.  We are the boots on the ground reporting in regularly from around the world.  I just returned from Santiago, Chile, which was probably the most first world-feeling city I’ve been in in years… nothing but mile after mile of shiny new glass/steel buildings, throngs of business attire-wearing young professionals, all jacked into their iPhones, busily whisking from meeting to meeting.

Don’t let the world pass you by Carl… things change fast when there is more freedom… and much of the world is much more free today than 30 years ago… just look at Chile.  Meanwhile, the US has been going in the opposite direction.

 

In closing I'd like to present this post from Mava, a long-time regular on the TDV forums, in response to yesterday's article, "Why I'm Leaving America"...

There are so many things that I love about America and about its people. No, not the 99%-ers, "f" them. I am amazed and enchanted by the 1% of Americans, those that find a way around legislation, those that envision, start and lead productive businesses, those that make things possible. You know, the guys who were standing on the roofs of their business ventures in LA during a riot and blasted the thieves...People that figure out how to navigate around every weapon ban and still deliver the arms to the customers.

And, the comfort, the availability of absolutely anything one might need (well, I am way too spoiled - living in the heart of Orange County you can buy God, - the only question they will ask is do you want it in bulk or retail! Actually, lately, they will also ask if you have a license or a prescription to buy that.) So, me being the guy always busy with projects that amuse only me, I am glad to be able to buy any part or a material or a tool that I can possibly desire.

I love the freeways. I understand that they were actually the product of a crime. Well, if it comes to that, at least they were built with a sober mind. And, if we weren't bankrupt already for such a long time, they would still be useable. I love the private roads even better. For instance if you have ever taken SR 73, you know what I mean. These people managed to build a highway that is not only super efficient, but makes the countryside look great (the view from a nearby 5 fwy is much worse).

When I first came over to the US, I kid you not, I used to drive around for fun. I'd take a car and just drive, say from Irvine to LA on 405, and 110, then take like 6-8 loops (!) around downtown staying on 10, 5, 101, 110, and back on 10, and then drive home on 5.

I love the fact that in America, no one cares about you. I could, if I wanted to, walk in the middle of the crowd on Venice Beach wearing Siberian Parka, and not even one man would call me an idiot. There is absolutely no fashion in America. God, I am so thankful, seriously.

But I am afraid, that something very bad is coming. I can just feel it. Nothing feels right, nothing feels like it could last. I think I understand what is it, and where it is coming from. But even if I don't, I can't discount the feeling.

And the signs. I can see the signs. It sickens me how people are clamoring for a 'leader' to have more power. I think back to the motherland, and I remember how everyone forgave Putin for killing the crew of Komsomolets. At the time, the people were mad. But, day by day, they acknowledged that "a strong leader" had to do something like that, and that sickens me. Everyone hates him. But, yet, everyone loves him, because he is 'strong', even despotic, tyrannical.

Back to what is going on with America, I think I see the signs of the same disease. I ask people who just flew in, whether they took the groping or the X-ray. They tell me without any shadow of dislike. I know they are just the regular people, they are deep asleep. But I note how if even that doesn't wake them up, then I know that a Marshal Law won't wake them up either. I know that tomorrow there would be concentration camps, Arabs made to saw a crescent onto their clothes before they are sent to the stem cell research facilities, and the people won't object.

So, leaving America is not the same as leaving some other countries. Leaving some of them is ultra easy, because no matter how hard it is, you've got everything to gain and nothing to lose. But, leaving America is like parting with a girl who wants to marry another. You know she isn't yours, but you still love her. Or like jumping into an ice cold water from a beautiful ship. It just has to be done, but otherwise it not pleasant.

That's it for another Feedback Friday.  Till next week.  Please send all hate mail to TDV@Dollarvigilante.com! 

 

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