Legally Stash Your Cash
With the real possibility of capital and currency controls looming during Obama's second term, former Congressman Bob Bauman's book tells you how and where to place your cash and assets out of the reach of the grasping socialist planners that now rule Washington. Click here for details. Bitcoin Mania By Bob Bauman JD, Offshore and Asset Protection Editor Dear Sovereign Investor,
By now, you could probably overhear a conversation about "bitcoin" on every square foot of the planet. If you're one of the few who hasn't heard of bitcoin, it is a "virtual currency" invented by a secretive Japanese programmer some years ago. Like any currency, bitcoin is designed to function as a means of exchange, a unit of account and a store of value. But unlike most currencies, bitcoin was created for use outside the control of government. This unique feature has turned bitcoin into a big hit with technologically-minded libertarians (and drug dealers). If bitcoin isn't issued by the government, it cannot be overprinted into oblivion, nor can it be tracked or subject to income tax.
Finally, some good news about retirement…
Turns out there ARE still places where you can afford to kick back in your "golden years"… where you don't have to be wealthy to live the good life.
Find out where in 7 Great Retirement Towns You've Never Heard of...
Much to the delight of gold bugs, bitcoin is designed to behave exactly like the precious metal: increasingly difficult to "extract" from cyberspace and intentionally limited to a fixed supply of 21 million units. In fact, a graph of the growth of bitcoin looks almost exactly the same as a graph of the growth of gold stocks over the centuries. "Fiat" money, by contrast, increasingly functions as a form of perpetual slavery to the governments who control and overproduce it. The value of fiat money like the U.S. dollar, or the euro, is based purely on the world's trust in the competence of the issuing governments. To coin a phrase: "How's that working out for ya?" Accordingly, bitcoin has become so attractive that the price of a single unit of the electronic currency recently topped $1,200. Courts in the U.S. have ruled that bitcoin is a de facto currency. The German government says it plans to recognize bitcoin as a "private currency," subject to taxation. Chinese investors are in a virtual rush to get their hands on bitcoin and recent Senate hearings about the virtual currency were characterized as a "love fest" with praise from both sides of the aisle. Sounds wonderful, right? What could go wrong? Think again. This week, bitcoin's value crashed – twice – from a peak of $1,240 to a low of $870 – a 30% drop. To put this in perspective, the crypto-currency had been valued at about $150 for much of this year, rising through the $200 level for the first time in October. In fact, before this week, bitcoin's value had tripled in the previous four weeks. That's not happening because people have suddenly decided to go out and buy groceries with bitcoin. It's pure speculative madness, driven largely by Chinese investors with limited options. As former Netherlands Central Bank President Nout Wellink noted: "This is worse than the tulip mania. At least then you got a tulip (at the end), now you get nothing." Of course, many folks hold fiat currencies for speculative purposes. In the established currency markets, monthly swings of 5% to 10% are considered a very big deal. Swings of 250% on the other hand, would be a sign of the end times. So what are we to make of bitcoin? Remember, like any currency, the main purpose of bitcoin is not to store value, although it does do that. The primary purpose of a currency is to facilitate market transactions. The huge run-up in bitcoin in the last month isn't about the currency's utility as a means of exchange – it's a sign of pent-up demand for speculative investment by Chinese investors typically blocked by their government from investment in other markets. Just as speculators flood in, they will flood out. And if you weren't part of the initial run-up in November, you've missed the boat. Bitcoin's multiple sell-offs this week illustrate another key point: Even though they don't issue them, governments have a great deal of de facto control over bitcoin. Case in point: This week's 30% drop was the result of the Chinese government forbidding Chinese Bank participation in the bitcoin marketplace. The current wave of bitcoin-love in the West could easily be reversed, driving the currency underground. In that case, it would still be useful for peer-to-peer transactions, but the stuff you could buy with it would be severely limited. Given the U.S. National Security Agency's cryptological prowess, we can be sure that if they want to stop all use of bitcoin, they'll be able to do so without too much trouble. In the long term, bitcoin will only catch on if it succeeds as a means of exchange, which will only happen if it is widely and easily accepted for nearly everything. As long as we keep electing governments that refuse to listen to us, however, those governments will fight tooth and nail to prevent this from happening. If we do succeed in replacing our dollar-spewing government with one that respects the principles of a sound currency, then we won't need bitcoin anyway. In that case, our own dollar would be as "sound as a pound." My advice is to focus our efforts on fighting back against the abuse of our own sovereign currency – and keep working on a financial escape plan to a better life abroad. Faithfully yours,
Bob Bauman JD
Editor, Offshore Confidential
P.S. There's an easy strategy to ward off the damage being done to the U.S. dollar by the bumbling bureaucrats in Washington, D.C. Click here to learn more. | 
From second passports to offshore trusts, Bob can help you make the most of what offshore has to offer with his Offshore Confidential. 
No comments:
Post a Comment
Keep a civil tongue.