Yesterday, I told you how President Obama's massive spending plan would add up to about $80,000 in federal debt for each American family.
As I wrote, no one will want to pay the money back – ever. And it can't be financed forever. The poor will blame the rich. The rich will leave and take their wealth offshore. And absolute chaos will follow. The dollar will be completely destroyed.
Now, you're thinking, "I've heard all of this before. But the end of the world somehow doesn't happen. We find a way out."
Not this time. When I wrote last year that the dollar would cease to be the world's reserve currency much faster than anyone expects, I'm sure no one took me seriously. But since then, we've heard two of the world's leading powers – China and Russia – both openly suggesting a new world reserve currency must be created. Russian leader Vladimir Putin is even talking about using gold to settle international trade. It will happen because no one will want to be a creditor to the United States. Especially once they see a breakdown in our society with scapegoat taxation and a mass exodus of wealth from the country.
You can tax the rich to pay for current spending. You can even tax them very heavily. But when the rich look forward for decades and see nothing but increasing taxes, debts, and government control of their businesses and assets – they will leave.
The battle between the rich and the government has already begun. I'm sure you've noticed the global crackdown on private, offshore banking in places like Switzerland and Liechtenstein. But you probably don't know about the Heroes Act of 2008.
On June 17, 2008, then-President Bush signed the bill into law. The main purpose of the bill was to provide benefits and more financial flexibility for military families. However, also stuck in the bill was new legislation requiring full estate taxes to be paid on the worldwide assets of any citizen voluntarily giving up U.S. citizenship. In other words, you can leave the country if you want, but you can only take about half of your assets with you. (You can read a review of the new law here.)
These are the same kind of emigration laws the Soviet Union used to prevent its citizens from fleeing during the Cold War. Keep in mind, no other major country in the world taxes global earnings, and no other country in the world has anything like these punitive expatriation taxes. The land of the free has become the only land that both taxes its citizens anywhere in the world they decide to live and refuses to let them leave. What would our founding fathers think of these laws? Incredible.
I have no doubt the restrictions will continue to get more and more aggressive. The government must try to maintain the illusion it can pay its debts and the dollar is not being destroyed. The only way to do this is to begin to restrict the flow of dollars. As more and more people try to get out of the dollar, the government will be forced to forbid the free exchange of dollars into other currencies – and perhaps even to forbid the purchase of gold bullion. This will happen. I guarantee it. And it will happen during the Obama administration.
That's why it's critical for you to take precautions now, while you still can.
The first thing you should do, if you haven't yet, is buy gold bullion. It's easy: You just call a few coin dealers, find out who offers the lowest premium on bullion, and wire them the money. Once you have the coins, they're easy to hide, easy to store, and easy to transport. There's no law (yet) saying you can't take bullion out of the country. If things start moving that way, you should have enough time to get the bullion out before the law passes. If not… you can clip your coins easily and use the gold to pay for whatever you might need.
The second thing you should do is move as large a percentage of your financial assets as possible out of the country. Unfortunately, I don't know enough about this yet to offer any good advice. I'm working on it.
And the third thing you ought to do is to build a stimulus package for yourself. I realize it's paradoxical. But the coming crisis will make lots of people rich. It's not hard to generate a paper fortune in a huge inflation. All you have to do is own the most important economic assets: energy, communication, and transportation.
The thing to do right now is buy the assets you know the government has to have for the economy to function. These assets will remain in private hands, and their values will increase the most.
I can tell you what happens to countries that go bankrupt. I've been to Argentina. I'm familiar with the history of Mexico and Great Britain. We'll see the same things here shortly: inflation, huge tax increases, capital flight and, eventually, capital controls.
It will probably take decades for Americans to realize socialism doesn't work. But that clarity might not happen during my lifetime. And I don't want my assets to be stuck inside a banana republic in the midst of a huge socialist experiment. I'm graveyard serious: If you do not take precautions – like the three steps I outlined above – and prepare yourself and your family for the inevitable collapse of our currency, you will suffer incredibly over the next decade.
P.S. In the latest issue of my Investment Advisory, I told my readers about the absolute best ways to own energy, communication, and transportation assets. Yes, keeping the profits from these assets away from the government might be difficult. But in the early stages of this crisis, the value of these impossible-to-replace assets will soar.
If you're looking to hedge your portfolio against the financial crisis, you must own these assets. Click here to learn about a trial subscription.
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