====================================
THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Tuesday, November 8, 2005 - Vol. 7 No. 225
====================================
In This Issue:
* COMMENT: Behind the Interest Rate Curtain.
* OFFSHORE: Bob in Beijing. Bermuda Independence. Rich Leaving.
* WEALTH: I.R.S. Chases Rich Companies. Cancel Your PayPal Account.
* PRIVACY & RIGHTS: FBI Pushes Patriot Act Powers.
====================================
ADVERTISEMENT:
Make 450% More Than Wall Street’s Best Stock Traders Over Your Morning Coffee
In just 10 minutes each morning, you could earn 4.5 times as much a s Wall Street's best stock wizards. Gains of 62.1% in 24 hours, 53.3% in just over two weeks and 92.5% in two days are commonplace.The secret lies in three indicators that accurately measure a stock’s Momentum, Strength and Trend. When all three indicators line up, you stand to make money up to 92% of the time.
And it only takes 10 minutes a day to get in on the action. The next recommendation is coming out soon. Find out what it is…
LINK: http://www.agora-inc.com/reports/MST/EMSTFB19
====================================
Our comment today is from John Pugsley, Chairman of the SovereignSociety and a leading author on economics, investments, and free markets. He is also the founder of The Bio-Rational Institute.
====================================
COMMENT: Behind the Interest Rate Curtain.
Dear A-Letter Reader:
Economists and market analysts are effusive about the appointment of Ben Bernanke to the post of Chairman of the Federal Reserve System. The hope, as expressed by the majority of economists and market analysts, is that the new monetary wizard will be able to fine-tune interest rates so that the American economy will continue to grow at a sustainable, non inflationary rate.
He won't.
The financial world may be convinced that central banks have it within their powers to create endless, sustainable economic prosperity simply by adjusting interest rates, but it’s not true.In the same way that the “all powerful” Wizard of Oz was simply a man behind a curtain pulling levers to project the illusion of powers that he really did not possess, the central bankers of the world are fake wizards, all involved in deception. However, in this case the motive is malevolent, rather than benevolent.
Allow me to pull back the curtain. In spite of what the Fed says in its press releases, The Federal Reserve does not set interest rates. It creates money. It does this by buying Treasury debt. That is basically all it does. The only power Mr. Bernanke will have, aside a stream of soothing double-talk, is to vary the speed at which money is created. He can press on the accelerator, and he can ease up. Interest rates are simply a consequence of this action.
Now to the point. Money creation is pure theft.
Imagine that you are a counterfeiter and go into a small town with a suitcase filled with counterfeit cash. You dine extravagantly, drink the finest wines, buy a dozen new suits, an expensive car, the latest computer, and a half dozen Rolex watches. Local business owners are ecstatic. You’ve created a mini-boom! You leave town with your booty, and the money is soon discovered to be counterfeit. It is declared worthless. The merchants who accepted the fake bills have been duped. Defrauded. Counterfeiters are thieves.
It makes zero difference whether the piece of currency is printed by you or by Ben Bernanke. It is still just a piece of paper with less utility than toilet paper. In both cases the goods and services it buys are consumed, and all the seller has is paper. As economist Ludwig von Mises once uipped, “Government is the only entity that can take a perfectly useful commodity like paper, slap some ink on it, and make it totally worthless.”
The Fed has succeeded for the past twenty years in vastly expanding the money supply without those dollars being declared worthless. First, the dollars circulate, are generally accepted by the other citizens, and only gradually lose purchasing power (price inflation) as more and more of them are printed. Price inflation has further been delayed as citizens around the world have chosen to hold dollars as “reserves.”
The money is printed. Around the world people are holding it, like the merchants in the small town, thinking it has value. It is inevitable that those holding hoards of paper dollars, will eventually discover the counterfeiter's game, and try to dump their dollars, and the value will begin to fall. When, no one can know, but we can guess that after more than 20 years in which the rate of money creation has dramatically exceed the rate of price inflation, we are closer to the moment at which the curtain will be pulled.
What can an individual do to avoid the inevitable consequences of this malevolent wizardry? Understand the difference between ‘virtual’ wealth and real wealth.
Real wealth is comprised of all of the goods and services that we use. It is those things with “utility value.” Cars, carrots, houses, gold, copper, etc., have real utility. On the other hand, ‘virtual’ wealth includes those things like cash, bonds, and other IOUs that only have value because people have confidence that they do.
At some point, confidence will come to an end. Virtual wealth will vanish, just like virtual reality disappears when the computer is shut off. Those holding real wealth will survive, and those holding wealth in the virtual world of fiat currencies will lose.
At the Sovereign Society we believe that individuals must place high confidence in real wealth. That’s why our investment strategies emphasize natural resources as well as the companies that produce them, while our holding strategies emphasize international diversification. We remain skeptical of the ability of any Federal Reserve Chairman, no matter how highly respected or credentialed, to continue the game.
If you'd like to read this coming issue of The Sovereign Individual and learn more about money creation, consider joining The Sovereign Society by clicking here: The Sovereign Society.
John Pugsley, San Diego, California Chairman, The Sovereign Society Ltd.
For insights on the evolutionary roots of money and freedom, sign up for The Bio-Rational Institute's FREE e-letter http://www.biorationalinstitute.com/email.html
====================================
COMMENT LINKS:
* Greenspan turns over the helm to Ben Bernanke. LINK: http://quote.bloomberg.com/apps/news?pid=10000039&refer=column
ist_currier&sid=aV2EDpVSzwfY
* Bernanke Will Keep Raising Rates. LINK: http://www.industryweek.com/ReadArticle.aspx?ArticleID=1
0979&SectionID=3
* Reserved.
LINK: http://www.nytimes.com/2005/11/06/magazine/06wwln_essay.html
====================================
BOB BAUMAN FROM BEIJING:
Strange how disorienting being in the Orient is.
I'm writing this about 35,000 feet in the air aboard a Thai Airways flight from Bangkok to Beijing, somewhere over central China. My trusty laptop desktop tells me it's 2:00 AM EST, Tuesday, Nov. 8, back in hurricane ravaged south Florida. Here in the Chinese stratosphere it is two in the afternoon the same day. A week of R&R in Thailand mercifully allowed my body, if not my mind, to adapt to the earth's rotation and my insignificant place therein.
I am more than curious as to what I will see when I land in Beijing.
I was last here at Easter time, 1980, just as Deng Xiaoping's move towards a freer market economy began in earnest. I vividly recall that when disembarking from US Air Force Two and entering the VIP Lounge of the Beijing terminal, we were greeted with glass showcases containing bottles of CocaCola displayed like valuable artifacts -- perhaps meant to reassure a plane load of visiting US congresspersons that Americans were welcome to the Middle Kingdom.
Those quaint days of the first Chinese steps towards world and US trade, after the Nixon-Kissinger détente, begun in 1972, are long gone.
Total Chinese exports are forecast to hit US$745bn this year and imports are projected to rise 18% to US$655bn. China's trade surplus is set to rise to a record $90bn (£50.5bn) in 2005. Not to mention the billions in US Treasury bills owned by the Chinese government, propping up the deficit spending USA. And its GDP has grown almost 10% in the last 9 quarters.
When last I was in China it was a nation barely emerging onto the world scene. Today it is an incipient world power with trade deals all over the globe. The millions in drab, padded Mao jackets I saw then have been replaced with a new, rich middle class, and millions of peasants who no doubt want a share of the more or less free market pie.
As our Sovereign Society tour progresses through Beijing, Shanghai, Hangzhou and Hong Kong, I'll give you my impressions of the New China, 25 years later.
That the way that it looks from high over the so-called Peoples Republic of China.
BOB BAUMAN, Editor
-----
* Chinese trade surplus set to soar. LINK: http://news.bbc.co.uk/2/hi/business/4391906.stm
* US-China relations in the wake of CNOOC.
LINK: http://www.cato.org/pub_display.php?pub_id=5135
====================================
* FROM THE EDITOR'S DESK:
OFFSHORE:
* BERMUDA P.M. SAYS INDEPENDENCE 'NATURAL'
HAMILTON: Government is maintaining its push for Independence with a pledge to hold further parliamentary and public debate but Premier Alex Scott has again refused to give a timetable. LINK: http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/20051105/NEWS/111050169
* Government to push ahead with Independence. LINK:
http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/2 0051105/NEWS/111050164
-----
* AMERICAN RICH HEADING OFFSHORE
Analysis of Forbes lists of 400 Wealthiest Americans and World’s Billionaires since 1999 shows the number of billionaires in the US increased at a rate barely greater than could be accounted for by inflation, while the number of billionaires worldwide increased at a rate six times greater (22% vs. 132%). Based upon this and other hard data, it’s hard to deny that High Net Worth Individuals (HNWI’s) are leaving the US in large and increasing numbers. LINK: http://www.ActionAmerica.org/taxecon/tickfast.shtml
====================================
WEALTH:
* I.R.S. CHASES RICH, COMPANIES
WASHINGTON: Your friendly tax collectors, the IRS, is targeting you if you are wealthy, notwithstanding the fact that rich people pay more than 1/2 of all taxes.
* IRS audits target firms & rich taxpayers. LINK: http://www.washingtonpost.com/wp-dyn/content/article/2005/11/03/AR2005110302256.html
* CANCEL YOUR PAYPAL ACCOUNT
PayPal, the internet money-transfer arm of eBay will disclose to the IRS the identity of customers who use the service with offshore credit or debit cards. PayPal fails to defend the privacy of its customer -- so it deserves no customers. LINK: http://news.independent.co.uk/business/news/article325054.ece
====================================
PRIVACY & RIGHTS:
* FBI WANTS FULL SPY POWERS OVER U.S.A. WASHINGTON: Lawmakers concerned that the FBI is aggressively pushing powers of the supposedly anti-terrorist Patriot Act to access private phone and financial records of ordinary people.
* FBI Pushing Patriot Act Powers
LINK: http://www.wired.com/news/privacy/0,1848,69493,00.html
* PATRIOT ACT LIES
When it was made law PATRIOT Act sponsors promised the law would only be used to stop terrorists. Is anyone surprised that the Act is being used against average Americans?
* For more information on how you can avoid the threats that the PATRIOT Act poses to you, click here: LINK: http://www.agora-inc.com/reports/190SPATY/E190FB09/
* FBI's secret scrutiny of all Americans. LINK:
http://www.washingtonpost.com/wp-dyn/content/article/2005/11/05/AR2005110501366.html
====================================
ADVERTISEMENT:
The Most Rapid Wealth-Building Secret of The Super Wealthy…
A wealth-building technique so powerful you may only have to do just ONE DEAL that will make you a lot of money in the near future and a steady income, allowing you to retire immediately.
Here's exactly how to do it:
LINK: http://www.agora-inc.com/reports/700SODFR/E700FB56/
====================================
THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr., Managing Editor. SUBSCRIBE to The A-Letter FREE or send to a friend at LINK: Home
Please DO NOT respond directly to THE A-LETTER.
Send E-mail to: INFO@THESOVEREIGNSOCIETY.COM
====================================
* The A-Letter provides accurate information on the subject matter covered and advertisements displayed, so far as we can ascertain.We cannot certify the absolute accuracy of referenced articles nor do we necessarily endorse products advertised herein. The Sovereign Society advocates full compliance with all applicable tax and financial reporting laws. All LINKS are operative at time of publication.
* Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed under securities laws to address your particular investment situation.
* LEGAL NOTICE: This document is based on SEC filings, current events, interviews, press releases and knowledge gained as financial journalists and may contain errors. Investment decisions should not be based solely on this document. The Sovereign Society expressly forbids its writers from having financial interests in securities theyrecommend to readers. Sovereign Society, its affiliated entities, employees and agents must wait 24 hours after an initial trade ecommendation published on the Internet, or 72 hours after a direct ail publication is sent, before acting on that recommendation.
====================================
THE SOVEREIGN SOCIETY Ltd., 5 Catherine St, Waterford, Ireland
TEL: 353-51 844 068 FAX: 353-51 304 561All contents COPYRIGHT (C) 2005 by Sovereign Society Ltd. All rights eserved. Reproduction of all or part of this document in any form is rohibited without express written consent of Sovereign Society.
Protected by US copyright laws 17 USC 101 et seq., 18 USC 2319;
violations punishable by 5 years imprisonment and/or $250,000 in fines.
====================================