004 – Simon Black: Your Uncertain Times Backup Plan?

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  • November 26, 2014
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Simon Black

Simon Black

In this episode of Survival Dad, Buck is joined by Simon Black, the founder of Sovereign Man, who shares his views on the current financial situation of the United States and discusses the warning signs of an impending financial downturn.

Simon talks about personal privacy, and how not only the government, but also other institutions can easily track your online communication and financial decisions.

According to Simon, it’s more important than ever before to have a Plan B. He describes how you should divide up your investments to avoid investing in only one type of asset, and that you should consider relocating to another country that can support your lifestyle but at a lower cost.


In Today’s Episode:

0:00 – Introducing Simon Black

0:30 – Are We in “The Age of Turmoil”?

3:14 – From the Outside Looking In

8:22 – Is the U.S. in Trouble?

15:16 – Will There Be a Warning for All This?

17:25 – Do We Really Care About Privacy?

22:51 – What Can We Do to Protect Ourselves from Prying Eyes?

25:15 – Having a Plan B

28:46 – Gathering Data and Instincts

32:00 – The Government’s Priorities

39:00 – Planting that Second Flag

42:33 – The Three Things You Need to Do to Get Started on Your Plan B

46:33 – Ending Notes



Introducing Simon Black

Buck: Hi folks, Buck Rizvi here with Survival Dad, and with me I have Simon Black. Simon is the founder and editor of Sovereign Man, an online publication and membership site dedicated to educating people on how to diversify their lives and assets geographically, so that no government has power over you.

Simon, you there?

Simon: Yep, I sure am.

Buck: So, Simon, great to have you. I really appreciate you joining us on the call. I know you’re traveling all over the world, and it’s really tough to get a hold of you. So, I’m very pleased to have you here.

Simon: Well, thanks! Thanks for the invitation.

Are We in “The Age of Turmoil”?

Buck: Hey, well, why don’t we jump right into it? You refer to the world we live in right now as the “age of turmoil.” What do you mean by that?

Simon: Well it’s, for me — and I think for a lot of folks — it’s probably pretty clear. I think there are people who look around and feel like this just isn’t the country they grew up in.Wherever they happen to be in the world — doesn’t matter if you’re in Sweden, or South Africa, or Canada, or the United States…I think there’s a lot of people that feel very deep within their bones, they feel like it’s just not the country they grew up in. And there are so many things that have changed fundamentally across society — If you look at values, if you look at the way that, you know, government interacts with the people and so forth.

I mean, if you think back, I mean, even 20 years ago. How different things used to be, and the things we see now unfolding just wouldn’t have happened back then, and there are so many of the things that our society functions on — I mean, our system of money and banking and the monetary system and, you know, the fiscal institutions. These massive debt loads and so forth, and all these things are sort of reaching, you know, really reaching a critical point. And they’re causing a lot of problems.

I travel all over the world, and I see the repercussions of these issues everywhere I go. Actually, I just did the count: I went to 25 countries in the last three months.

Buck: Wow. OK.

Simon: Yeah, I mean, all over the world I was. Just a week and a half ago I was in Ethiopia, and I was all over Asia. I was in Europe before that. So I see this stuff with my own eyes, and I see how it affects people, and I think a lot of people are pretty clueless. People don’t realize that, for example, the United States has $17.7 trillion worth of debt. There are serious consequences to that.

Buck: I think a number like that doesn’t compute with people, right? Just the number…

Simon: What does that even mean, right? What does that even mean to most people? And so, people just don’t realize there are really serious consequences to that. For the last several years in particular, the Federal Reserve of the United States has expanded its balance sheet by a factor of five, and again it’s one of those things that’s “What does that even mean?” We’re talking trillions of dollars that have been conjured out of thin air, and there are serious consequences to those things.

And, the long-term effects of these consequences are something that I think most people are just woefully unprepared for. We’re sort of told to go our entire life to just have faith and trust and confidence in the government and the institutions and so forth. But it’s, you know… that’s something I think, for most people, it’s just not going to work out very well. It’s like a big Great Gatsby party, and people think it will never end. Right, yeah, that’s exactly right.

From the Outside Looking In

Buck: Well, you were just talking in the green room here, just a moment ago,and you mentioned you came back to the U.S. for a short visit. Did anything in particular really stand out in this latest trip to the U.S.?

Simon: Yeah, it’s interesting because my take on the U.S. is always, at this point, sort of one as an outsider. I don’t live in the U.S. I spend less than 30 days a year in the U.S. And so, when I come in. I tend to notice very acute changes very quickly, you know.

The example I always give —it’s like if you have a child, and you live with that child, I mean kids grow formidably between when they’re young. But if you live with your child, you don’t really necessarily notice the day-to-day changes.

It’s when you add up all those changes in aggregates, you know, when the uncle comes into town, the grandparents come into town, and they haven’t seen the kid in four months, six months…and they go, “Oh my God, look at how much you’ve grown.” And it’s the same thing, and I really notice all those changes, the aggregate of all the changes that I think a lot of people — just because they’re living through it every day — are pretty much oblivious to.

So, there are a lot of things that I notice, really. I mean, I look and see so many signs of the top, in a looking at this sense, with the wealth gap between rich and poor really at an all-time high. And that’s really an uncomfortable position to be in. And no matter what, I think, striving for equality is always kind of a BS notion because there really is no such thing as equality.

There’s always going to be people at the top, and there’s always going to be people at the bottom. The system that we have is one in which central bankers print trillions of dollars. The Federal Reserve has a $4.4 trillion balance sheet that’s up from 800 billion a couple of years ago. So where did all that money go? You know, all that money ended up going… again, you look at the accumulation of wealth of the top one-tenth of 1% of people in the world particularly in the United States, and they’ve gotten extraordinarily wealthy.

You know, they’ve got to see stock market at all-time highs, bond markets at all-time highs, different property marks at all-time highs, and the art markets at all-time highs. And those markets for different kinds of rare coins and all these things that most people don’t think about —all this stuff is at all-time highs.

Buck: Yes.

Simon: And so, if you are already incredibly wealthy, you’ve gotten even more wealthy, right? But what about everybody else? There are some people who are in the upper-middle class who’ve done fairly well, you know, their portfolios have registered some nice gains over the last couple of years. But for most people, we’re looking at higher gas prices, higher insurance prices, higher university tuition, and so forth. These gains come at the expense of everybody else.

Buck: Well, their incomes aren’t catching up. It’s interesting though that, you know, entrepreneurs— you’re an entrepreneur, I’m an entrepreneur — I mean, we were able to kind of take advantage of this global economy and through technology automation and off-shoring, we can actually get services provided to us or do software service and applications and so forth. And make more money without necessarily having to hire people here in the U.S.

Is the U.S. in Trouble?

Simon: Well, that’s true, and I think you know this: I run an entrepreneurship camp every summer, and that’s always the thing that I like to tell people, and it’s frankly what I tell even our own subscribers. I mean, the best investments you’re ever going to make is in a productive business, primarily investments you make in yourself. So, I think as entrepreneurs and as investors who are out there looking at places where other people aren’t looking, that’s really where there’s a lot of opportunity. I think conventional investments at this point, I mean people that are…

This is the Age of Turmoil. I mean, that’s what it’s all about. It’s people that are completely oblivious to what’s happening, so they just follow what they’ve been told their entire life. Trust your government, invest in stocks, invest in bonds. Stocks are good for growth, you know, bonds are good for safety and so forth. I mean, you look at some of these basic premises that we’re told to believe, and people just buy this stuff hook, line, and sinker.

They say the treasuries that are issued by United States government are considered to be the risk-free investment. And you look, and you say, “Okayman, these guys are $17.7 trillion in debt.”They are spending hundreds of billions of dollars a year, and they are spending a significant portion of tax revenue just to pay interest. More importantly, in 2013, the U.S. government took in $2.6 trillion in tax revenue, but they spent $2.5 trillion just on interest on the debt and mandatory entitlement spending like Social Security and so forth. So, they’ve almost entirely… they’ve almost blown their entire tax revenue before they pay for the military.

Buck: The hole keeps getting deeper and deeper.

Simon: Right, it just keeps getting deeper and deeper and deeper. And you look at it, and you go, “That is not risk-free.” I mean, how can anybody credibly say that’s risk-free? It’s not. If you just took out the fact that it was the U.S. government, and you said, “Oh, you know, Bob down the street, who’s in debt up to his eyeballs. You slash a bunch of zeros from that and say, “Yeah, Bob makes $250,000 or $260,000 a year. He spent $260,000 a year on his insurance and credit card bills.” Do you want to float him alone, and would you consider that risk-free? No, of course I wouldn’t float this guy alone. Let alone, at interest rates that are below zero.

So, this is another part of the Age of Turmoil. Savers are getting screwed. If you hold money in a bank account, you’re lucky if you get half a percent, right? Fifty basis points. Then you’re going to pay taxes on that. So, let’s say you’re a 20% tax bracket, which is the average marginal tax rate in the United States. You’re going to end up walking away with 40 basis points. Even the government’s own numbers say that inflation is 2%.So, if you’re losing 2%, and you’re only getting 40 basis points after taxes, you’re guaranteed to lose 1.6%.So if you hold money in a bank, you are guaranteed to lose 1.6% of your money.

If you don’t want to lose 1.6%, they’re forcing you into the market to accept greater and greater levels of risk. They’re forcing you to say, “Well, I gotta do something with my money, so I don’t lose it, so what do I do? Let me go buy stocks.”Oh, there’s just one little problem with that: Stocks are at all-time highs, right? Every credible, objective evaluation of the stock market says it is crazy overvalued and people would be foolish to [invest in stocks].

Buck: It’s hard to ignore right now for the average American not to see hitting high after high after high.

Simon: That’s just not normal. It’s not natural for a stock market to just keep going up, up, up, up, up, up, up. It’s just not normal, and so you are forcing little people into the market, right? So, you’ve got some retired schoolteacher who’s getting killed leaving all of her money in a bank, so it’s forcing her to take on greater and greater amounts of risk.

But then we’ve got all the talking heads and all the…you know, everything we’ve sort of grown up to believe and say, “No, no, no, it’s not risky.”It’s the same sort of thing when they say real estate always goes up. And then, what happened, right? It all crashed. Stocks go up. Well, who’s to say it can’t all come crashing down tomorrow.

And they tell us the same thing about debt. They say the U.S. can never default on its debt. I’m sorry, but on what planet did the world, you know, the rules of finance in the universe not apply to the United States. This doesn’t make any sense. Whether spending all this money…

They don’t make enough, they don’t generate enough tax revenue, and spending way too much money they can’t afford, and even when they can’t afford it they still go and wage wars overseas. They drop bombs by remote control, and they spend hundreds of millions and billions in tens of billions of dollars on spying apparatus, so they can go and, you know, figure out what websites people are surfing and spying on their Facebook account. And all these things, they cost a lot of money, which none of it they can actually afford. You know, none of this stuff is actually risk-free. They just keep telling people that.

They tell people, and I just have to say this:I think the biggest lies in finance are when they tell people — in the United States in particular — they say our debt doesn’t matter because we owe it to ourselves. It’s one of the biggest lies in finance because what they are really saying is that, you know, of course the Chinese and Japanese and the oil exporting nations, you know, they own a few trillion dollars of treasuries.

But the vast majority is owned by the Social Security trust fund and the Federal Reserve and so forth. And when they’re saying, “Oh, it doesn’t matter because we owe it to ourselves” it’s like saying, “it’s okay if we default on ourselves.”Well, if you default on the Federal Reserve, you create a currency crisis of epic proportions, throwing the entire global financial system into a tailspin.

And if you default on Social Security, well, you’re basically screwing every single retiree who’s been paying into the system for his or her entire life. You know, they tell people, “Don’t worry about retirement, don’t worry about social security — your social security is fine even though the government’s own numbers say that social security is not fine.” You know, the politicians lie and say everything’s fine.

It’s human nature to want to believe in something positive; it’s to have hope and have optimism. It’s human nature to just think that everything’s going to work out, and when somebody comes along and says it all going to be fine, people want to believe that, right? So they just ignore reality,and they say,“Okay,the bank’s going to be fine, the currency’s going to be fine, the debt doesn’t matter, social security is going to be there for me, I’m going to keep investing in the stock market.It’ll all be fine.”

So I’m saying the vast majority of people are just setting themselves up for something really terrible to happen, and that’s really the message that we try to spread.

Will There Be a Warning for All This?

Buck:Simon, you make a very, very powerful case, and you talk in your writing — and I think on your podcasts — about Argentina and what happened with Argentina and the currency situation there. And about that being a foreshadowing of what’s in store for America and potentially Western Europe. Can you, kind of,articulate what you mean by that?

Simon:Well,Argentina was in a position that most countries in the West are in now, including the U.S. and most of Western Europe — simply that Argentina was in a fiscally unsustainable situation. They had pegged their currency to a level that was just absurd. Anybody looking at it said there’s no chance that can be sustained. And of course, you know, that’s nature that what can’t be sustained, won’t be sustained.

Argentina went bankrupt. They had a mild recession in the late 1990s.It was amazing what happened. December 1, 1999, people in Argentina woke up, and it was kind of normal.There was a little recession.It was a little uncomfortable, but everybody kept telling themselves the same sort of thing that people tell themselves when the real-estate market started to slow down the U.S.:“Oh, everything’s going to come back soon, just wait.”

And literally, within a matter of days, the government collapsed;they defaulted on their debt, you know, they had a currency crisis. They closed all the banks and confiscated people’s savings. If you held money in an Argentinean bank, you lost all your savings.They callit the “Corralito.”

People are out in the streets rioting.The police were out shooting people in the face. The president had to escape in a helicopter,resigned.Crime rates soared, inflation,hyperinflation — I mean, all this stuff happened literally in a matter of days from early December through mid-January. It was unbelievable how quickly things unraveled.

So, mathematically, this is really an exponential decay curve where it goes very slowly, you know, as Hemingway wrote.So gradually, then suddenly, and that’s usually how these things tend to work out, and I think the West is really in the exact same thing.

It was just a couple of days ago —it was actually the anniversary of this happening in Mexico, and there are so many cases of this. In Mexico, they had the exact same situation. They had unsustainably high debts and deficits and this unstable monetary regime, and everybody just sort of ignored it. The president got on the radio in Mexico, and this is back in the 70s, and he said,“Don’t worry,everything’sgoing to be fine.We’re not going to devalue the currency,everything’s going to be fine,” And of course,a couple of days later, they devalued the currency by 50%. So anybody who was holding money in Mexican pesos, in a Mexican bank, literally lost half of their life savings overnight.

Buck: Yes.

Simon: And that’s just the way stuff goes. It just happens all of a sudden, all at once. And looking back, people go,“Duh, how did I not see that coming?”

Buck:I think that Americans,and maybe westerners, have this attitude that there’s going to be plenty of warning. We’re going to see this thing coming from miles away. Just talking to my wife, you know, you and I have spent time in Lithuania together.You know my wife is from Lithuania,and some people, some of the older folks, in Eastern Europe have a very different attitude, and they remember.

She was talking — her parents were talking to a friend from Poland, and how everything was peachy keen just before the Germans invaded Poland.Everything was fine, life was good, people were eating great food, music was playing,people were dancing. And then suddenly, overnight, you know, things changed. And I guess we don’t have that same sensitivity and sense that something could happen that fast. Is that true?

Simon: I agree with that entirely. I think in the case of the Nazi Invasion of Poland —I mean,by August 1939 Hitler was amassing literally dozens of divisions. They had 150,000 Nazi troops on the border with Poland, and yet people were enjoying a carefree summeracross the border because their political leadership told him not to worry,“Everything’s going to be fine.”

Buck: Right.

Simon: So they instill this false sense of confidence.But you’re right: Nobody’s going to send you an invitation and say,”This is all to come crashing down on September 1, 1939.”It just happened that way. So, you know, history is very generous with examples that people whosort of look around and take an independent and sobering view of reality and make their own objective, rational, data-driven, independent decisions end up doing very well. And people that just sort of do what they’re told and fall in line like a good little citizen;those are the ones that end up getting crushed. And there are so many examples of that throughout history.

Do We Really Care About Privacy?

Buck: Well, I know you’rea historian, and I really admire that. I think we can learn a lot from history.People who are… You mentioned earlieryou made a strong case for the importance of having maybe a business or online business or some other means of income —we’re going to come back to that in just a minute because that’s an important point.

But I’m going to switch gears here just a moment because I know that you — some people may not know that — you were in the Army. You werean Army intelligence officer, as I understand it,back during the Bosnian crisis. And now,here, we’re in this age where you know the U.S. intelligence community is this huge behemoth.

And now with this Snowdenembarrassment of the U.S. intelligence community. I know that made great fodder for Sovereign Man subscribers. I knowyou probably talked about that a lot.Why does the typical —let’s say the person listening to this is a dad, husband,a father — why does a typical father and husband need to be concerned about their privacy if they’renot engaged in illegal activities?

Simon: Just a quick correction: I wasn’t involved in Bosnia. Icame a little bit after that. I was actually involved in Gulf War version 2.

Buck:Oh, oh, I’m sorry.

Simon:It’s OK. It’s not a big deal. Just wanted to —

Buck: Yeah, thank you for correcting me.

Simon:Why does anybody want to be concerned about their privacy?I mean, why does anybody want to be concerned about the food they put in their body, or the air that they breathe?To me,you’re the kind of person that either does or you don’t. If you don’t see…If somebody doesn’t see the value of having privacy, I don’t know that I can explain to them why they should care.If somebody doesn’t care about their privacy, frankly I don’t care. I’m perfectly fine to care about my own privacy and help other people who care about their privacytake more privacy. And privacy — the other thing isif you believe that privacy is important, it’s either a right or it’s not.


Simon: You’deither have a right to privacy,or you don’t.There’s no middle ground there.

Buck: Right.Well, it’s an encroachment attitude, isn’t it?

Simon: Right.

Buck: I mean, it’s an encroachment of freedom.As if more important than, I think, just whether or not your email should be kept private to you and the person you’re communicating with.

Simon: That’s right, and that’s essentially what’s happened.I mean, sending a clear text email to somebody is the equivalent of shouting across a crowded room: Ifyou don’t have a problem with other people listening to that,then that’s fine.

Buck: Right.

Simon:And with a lot of things, privacy and security and so forth,there’s always trade-offs and so trade-offs…

Buck: I’m going to take that back one step as I think the presumption of the average American is that when they’re sending email to a private individual, they have the same assumption of privacy that they would if they dropped that into a physical mail andput it in the postbox.

Simon: Yeah.

Buck:I know that’s not true.

Simon: Of course.

Buck: But people assume that, I think, on average.

Simon:Yeah, that’s just not the case. You know emails are getting picked up by so many different interesting counterparties. We’d have to dedicate an entire conversation just to that, you know, to get into that.But I think Snowden, Edward Snowden cracked the case on that pretty clearly, and everybody understands that now.It’s just a question ofwhetheranybody cares. I mean,who cares? Some people do, some people don’t.

Buck: OK.

Simon: I think a lot of people don’t care,legitimately don’t care.There are folks that put their entire lives online,and they say,“I’m checking into this location and this location” and tell everybody where they’re at,and what they’re doing. You know, their entire lives online, so I think there’s been a…the convenience of social networking, I guess, has created a gradual — has also eliminated privacy as a value. And I’vetravelled around to a lot of countries where privacy really still is a highly prized value across the entire society.

Buck: OK.

Simon: I don’t think it is in the United States, not anymore. I think for a lot of countries in the West it’s just not. In many places, it still is.

Buck:Good point.I talked to my 20-year-old daughter, and she probably doesn’t care that much.

Simon: Right.Some people just don’t care.You know, they might not necessarily want to feel like the government’s snooping in their Gmail account, but I don’t know if they really care about privacy. It’s just not as important a value as ensuring that, you know, 600 people who are ”friends” — most of them they’ve never actually met,or wouldn’t be able to recognize in a lineup — that they know that they enjoyed their Starbucks coffee today.You know, that’s more important than the value of privacy.

So, that’s fine, I mean, to each his own. But for people who do care it’s becoming more and more difficult to actually maintain that in all elements. There’s your digital privacy, which is obviously being encroached upon left and right.There’s your financial privacy, which is just — it doesn’t even exist anymore.It’s almost impossible to have any level of financial privacy anymore. What you do with your finances is being monitored by any number of agencies.I mean, the Internal Revenue Service gets a direct download from the Society for Worldwide Interbank Financial Telecommunications as well as Visa, MasterCard, and American Express.And there’s nothing that you can do, basically,in a conventional banking system that’s private, and that’s finished.

I think we’re starting to see that chipped away with medical privacy in the health-careindustry. I mean, all these things,it’s just a slow gradual grind, and the boiling frog mentality I think when people suddenly realize, “Wait a minute, I don’t have any privacy left,” suddenly they start to care, but by then it will be too late.

What Can We Do to Protect Ourselves from Prying Eyes?

Buck:Well, even if it’s just an exercise in futility, are there a couple of simple things that you might recommend to…I know you talked about some of these resources on SovereignMan.com. But do you mind sharing with the Survival Dad community a couple of resources for computer privacy,maybe communication, you know, keeping communication off-limits from prying eyes?

Simon:Yeah, this stuff changes all the time, honestly. It really does change all the time.There areso many different tools out there, and some of them go up and down. It was really interesting — there were these, like Lavabit for example. They just pulled themselves out of business. I refuse to be a stooge of the U.S. government and then hand over all this data to the NSA like they’re demanding.So, I’m just going to go out of business.

Buck: Sure.

Simon: And I think that was an incredibly admirable thing to do.Itdoes change all the time.I think, honestly,the most important and timeless strategy is just “don’t be a bonehead.” Don’t assume that what you’re sending is private, so if you’ve got something that’s sensitive, have a filter.I mean, not everything that we say.

Acouple of folks everything,they send me is encrypted,human symptomsand whatever. It’s like “you’re not that important,bro.” It’s like what we’re talking about is our dinner plans, really not that critical, so I don’t think we have to.

But obviously,there are things that are that way, so whenever you are dealing with things that are sensitive, don’t just assume that it’s private.I mean, people do this stuff, for example — sending passwords to things in a different system and emailing. Particularly if you have an online business, you have employees on the other side of the world you’re dealing with, and somebodysays, “Oh, what’s the password to that A Webber account.” You know, you just drop an email and send it back. And that’s a pretty bonehead thing to do.

Buck: Sure.

Simon:And we see these sorts of things all the time and using the same password for everything that you have, whatever.Those are just kind of bonehead things. Butthere are a lot of tools,and they’re always changing, and we try and keep up to date.

Having a Plan B

Buck: Maybe we’ll put a couple of mentions on the…I’ll setup a resource page for this blog post under survivaldad.com/Simon, and we might reference a couple of things.I’m sure,like you said,they’re going to change, come and go, and have some ideas put up there, like late-breaking stuff.

So, why don’t we move on.You write a lot about having a Plan B, and I love —for me, being a Survival Dad — I love the idea of a Plan B for everything.But you specifically like to focus a lot onmoney investments,investment opportunities, and where you might plant your flag as far aswhere you might live. Whether it’s residency, or where you might retire to,or have as a Plan B. Is your material on Sovereign Man geared towards maybe folks that are either retired or approaching retirement age, or should someone that also has young kids, like me, at home be paying attention to this?

Simon:Well, I try to write to anybody that gets it.I’m not trying to convince anybody that doesn’t want to see reality for what it is, but I think for anybody that really gets it.You know, what we tryand do is just tell that story. Shine a big spotlight on it and provide actual real solutions andsay, “look, stock market’s at all-time highs,does it really make any sense to put all of your savings in a market when it’s at an all-time high? Look at these other opportunities out there for you.”

You know, you’reliving in a place — I mean, there are so many people in the world that even in developed countries, in the United States and in Europe,they’re living in places that are undergoing severe droughts. Does it really make all the sense in the world to have all of your eggs in thatbasket?You know, you’re in this bankrupt country, and your taxes are going up, and the debt levels going up, and “Oh, by the way, there’s very little water left available,” andnow you’ve got the water police running around telling you what you can and cannot do.

Buck:That’s just it, Simon.

Simon: I mean, does it really make sense to put all of your eggs in that one basket?Probably not.So there are solutions out there;there are a lot of options.

Buck: The irony is, specifically about water,my wife has a girlfriend who went with her family, left Colorado where we live,went to California thinking they’d find the grass is greener. Turns out the grass is not greener over there, literally.They’re running out of water. There’re fires everywhere. They came running back to where we live here in Boulder. And shocking,coz I’m hearing that the water’s running out,but there are not any water restrictions in place in many areas, probably due to political reasons.

Gathering Data and Instincts

Simon: That’s right. It was funny because I run an agricultural fund down here in Chile,and I was talking to my chief operating officer the other day.And he was looking at some of this data in California, and he said basically 100% of California isin either extreme drought, severe drought, or just drought. Only 10% of the state is just in plain old drought. There’s 0% of the state that’s actually in any level of a water adequacy,let alone abundance. And yet, I was in L.A. just a couple of days ago, driving around, and the most I saw in terms of it was, you know, a billboard basicallysaying,“Please try to not use water if you don’t need to.”You know, that was —

Buck:Don’t wash both cars on the same day. [laughs]

Simon:Yeah, and that’s the thing. And at the end of the day, it’srestrictions, no restrictions,I mean, the data is just very clearly there. It’s very clear;I mean, it doesn’t take a rocket scientist to figure out there’s just no water. So,we have this data, so does a rational human being look at this data and go,“Oh,that’s a trivial issue, I’m not going to do anything about that.”Or does a rational human being say,“Gee, maybe I should have a Plan B.”

Buck:Well, this is the point that you made:If the politicians on this local level, these municipalities are not imposing water restrictions when it’s obvious that they need to.Then, what does that say aboutwarning you about other impending dangers?

Simon:Right.Again,that’s what we’re saying before. Nobody will send you an invitation.Nobody’s going to send you an invitationsaying the stock market’s going to crash three weeks from now, make sure you sell all your stocks.They’re engineering a currency crisis; it’s going to peek, you know, in a month and a half, so get your money out of dollars, and you buy some real assets.Nobody’s going to send an invitation when the water runs out.

And so, it’s up to rational people to just look…I mean, if you just… Everybody has that part in their brain,I mean, we’re all animals at the end of the day.I go to Africa every year, and I always see animals in the wild,and animals have instincts, and they take in all the data around them,and they’resitting there at the watering hole and everything’sgreat, and all of a sudden they just run.

Buck: Yes.

Simon:As fast as they possibly can and it turns out that “Oh, there is a huge pride of lions there that’s about to take everybody out.” And the ones that don’t listen to their instincts and stick around, get slaughtered.

Buck: We’ve definitely desensitized our instinct,it sounds like.

Simon:Right, so we all have that part inside of us that says,“Hey, there’s something wrong.” But what’s happened is our brains get involved, and they start listening to political leadership and so forth saying,“Oh everything’s going to be fine, don’t worry don’t worry,”and we just sort of plug in and tune out, and nobody does anything about it. We suppress that part of our brain that says,“Hey,something’s wrong, you need to do something.”


Simon: Right? And so, all any rational person has to do —I mean, we’re taking in all the data,most people just filtering it out and ignoring it. So,all we have to do is just switch off that part of our brainthat’s filtering it out and just accept it for what it is and say,“Okay,maybe I should have a Plan B.” Or, as I like to put it, it’s not even really a plan B, it’s like when you get in a car, what’s the first thing that a rational person does? Putson a seatbelt. You make sure your kid’s wearing a seatbelt.

Buck: Right.

Simon: Simple. So, what we know what people are doing, they’re not even… not only are they not putting their seatbelt on,but they’re cruising down the road, you know, like Ray Charles is driving the car.

Buck: Yeah. They’re texting.

Simon: Nobody’s got a seatbelt on.Right.You know, it’s just like,“Man, just put your seatbelt on,and life’s going to be awhole lot better.” If you just put your seatbelt on, and this is the basic thing that people do, and a lot of them are situationally dependent. Somebody’s a retiree, their situation is different than somebody who has a young family at home,or a young person just starting out and so forth — everybody’s in a different position.

But as for every single person,there arethings that they can do to put their seatbelt on, to have a Plan B, to mitigate all these risks. I don’t think anybody has to make any radical changes in their life. I don’t advocate everybody, you know,“Get up and,you know, move to a bunker somewhere and start living in a commune or whatever.”

Buck: Right.

Simon:I mean, this is crazy.Go out and live your life.Engage with the world, but do it rationally, with your seatbelt on, have a Plan B. That wa,y if you have that, how are you really going to be worse off?

Buck:No, you won’t be. And you’ll sleep better at night.


The Government’s Priorities

Buck: Why don’t we talk for a moment about what the government…we talked about what the government may not be so good at — let’s talk about what they’re really good at, which seems to be issuing uniforms, and I notice that —

Simon: They’regreat at that. They’re great at dropping bombs and as I love that old George Carlin quote, especially if you got a lot of brown people in your country, they love dropping bombs on brown people. They lovespying on people all over the world. They’re really good at that stuff.

Buck: I knew I would touch a nerve with you. So,you and I have both worn battle dress uniform.So being in the military,I’m a veteran as well and, you know, we’re good at shooting an assault rifle,wearing a BDU,maybe driving around in an armored vehicle. But having that experience, maybe on a military base here in the U.S.or abroad, but then coming here and seeing what we’ve seen recently, some of these events that unfolded in Ferguson, Missouri. And watching police officers not dressed in blue but dressed in BDUs with bulletproof vests, military-style or army helmets, carrying AR-15sor probably fully automatic M-16s,and driving around in Armored Personnel Carriers. What is this scene that we’re seeing in the streets of America right now? What does that…

Simon:Yeah, the appropriate word,or used to be appropriate, is police state. But it’s not really even a police state because these aren’t police, these are paramilitary, so it’s become a paramilitary state.I mean,it’s the same stuff that I’ve seen in broke “banana republics” in Africa where you’re just driving down the road,and you see these guys in their full military outfits, camouflage, holding automatic assault rifles and just sort ofmilling around looking like thugs. And this is sort of what they do now.

The difference is that in the Land of the Free they just happen to be a lot better equipped. You know, they’ve got theirurban assault vehicles and all these ridiculous things that they can stand up and point their rifles at people, finger on the trigger saying,“I will effing kill you!”[Laughs]

I’m sorry, but I think there’s a problem here.I don’t think it’s such a radical idea to think that in the Land of the Free this sort of thing is just not okay, but this is what it is.I mean, this would be the thing whereall people should stand up and pay attention and [realize] this is your reality and law enforcement now.

It’s funny that it didn’t even use to be called law enforcement;it used to be called peace officers. Right, you were a peace officer, right? And now everybody’s a law enforcement officer, and they go around with all of theirhead-to-toe black outfits, paramilitary combat boots,and assault rifles.And this is so far beyond any realm of what’s acceptable or normal, and yet you know —this is the thing, I think people only now are starting to realize the conditions that they’re living under.

Buck: How did we go from Andy Griffith to this scene of“I’m going effing kill you” in the streets? Is this a preparation for some kind of mass unrest that these police forces are preparing for?

Mike: Yeah, there are a lot of people that say that. I mean, I’m a very data-driven person, so I make my… draw conclusions based on data, so I haven’t seen…There are a lot of things that I don’t particularly like. I mean, all the hollowpoint ammunition orders that are going in. There was a law my team uncovered:A bill was put before Congress to actually outlaw body armor.

Buck:I heard that.

Mike: Make it illegal for civilians to go out and buy body armor.You look at it, and yougo — no matter where you stand on this issue of gun control… You can’t say gun — I don’t say or use the word gun, you know,it’s firearm, buddy. But anyways,where people stand on the issue of gun control it’s… even people think that firearms are the worst things in the worldcoz all they do is kill people. I can’t imagine anybody is anti body-armor.

Buck: Right.

Mike: How are you going to kill another? I mean, you’re going to beat somebody to death with your flak vest?This is something that’s very clearly for protection,and they want to outlaw it.What is that?

Buck: Is it to make police more effective at killing an enemy, or is it…are you allowed to protect yourself as a citizen?So it’s a…

Mike:Yeah, I mean, I look at that, and I go “This is incredibly concerning.” But for me to jump to the conclusion that they’re… I mean there’s the whole belief of setting up internment — they call them FEMA camps and all that. You know, I don’t have any data on that for me that supports that conclusion.There are a lot of — if I apply Occam’s razor —there are certainly a lot of plausible scenarios; I’ve seen this. As an army officer,I saw the way the government spent money,and the way they spend money when you’re…

If you’re some agency —and this is one of the other things —every federal agency now has their own police force. The Fish and Wildlife Service has its own police force.

Buck: Oh yeah.

Simon:So in the age of security or security theaterwhere we cower in fear from men in caves 10,000 miles away. And every one of these agencies is getting a huge budget. I mean, you know how it works, like they’re going to spend the money.

Buck:They’re going to spend the money, and they’re going to deploy the armament. [Laughs]

Simon: Right. They’re going to spend money. If they don’t spend the money,they’re not going to get the money next year.

Buck: Right.

Simon: And they’re also going to pump themselves up, and talk about how important they are,and how the country will be in turmoil if they weren’t out there with this.“The terrorists will win if we don’t have these hollow-point rounds” and all these sorts of things. So,who’s in charge of making the decisions?Some guy who is attracted to those sorts of… When you give somebody a badge and a gun, you give him the authority to abuse other people.I mean, this is one of the worst traitsof human beings: their desire to control others.

Buck: Right.

Simon: When you just award that power to somebody and expectthat it’s never going to be abused,I mean, that’s a really bad assumption. So you give people like that a budget and say,“Go and spend this.” You give them incentives to waste taxpayer dollars on a lot of things like this.

Buck: With no accountability as to what they purchase.

Simon: Right. With no accountability. Cheering them on along the way for what a great job they’redoing. Keeping America safe. This is what you end up with. I don’t know that that means FEMA camps,and I don’t know that means they’repreparing forArmageddon and warfare, but if it ever happened, it’s pretty clear that the government has the upper hand. I wouldn’t want to go toe-to-toe with Homeland Security in the streets of Las Vegas or whatever. I don’t know…Again, I don’t have enough data to reach that conclusion right now.

Planting that Second Flag

Buck:It’s an interesting observation, right? And if somebody wants to… for some reason if they’re not happy with the scene that they’re seeing here,and they decide to take… I know you have a lot of countries you talk about that make great places to planta second flag.

I know you and I both have an affinity and fondness for Lithuania, and you just had your boot camp there recently. So, I happen to have a friend in Lithuania who is an ex-pat, American. And he, I don’t know whether to believe him or not, but he says he’s able to get by and live a pretty comfortable life for something less than a thousand bucks a month. I think you said 500 bucks a month. That includes he grows his own vegetables, organic vegetables. He has Internet access,he has a car, he can pay for fuel. And this is a safe European Union country, although with the stuff going on in Russia right now, they’re a little nervous about Putin. But is this an aberration, or are there other low-cost, high-quality-life places where someone can plant a second flag and actually have a reasonable cost of living and a great lifestyle?

Simon: Yeah, I mean, frankly there are so many places across the world where you can have a nice life.It just depends on how you define that. If you define it by the amount of Starbucks per capita, then frankly the place that you want to go is South Korea, which has more Starbucks per capita than any other country in the world.

I mean if you’re idea of the high life is being able to cruise down to a bunch of big-box retailers and go from Bed Bath and Beyond to Best Buy and then stop for yourtriple mocha latte on the way, there are places in the world that you can do that.But, other places kind of define their life and lifestyle and wealth not necessarily on consumption but on experience.

Buck: Yes.

Simon: So I think a lot of people really end up living richer though less consumptive lives.You know, far less expensively.They have high-quality medical care. They have high-quality food as opposed to what I think most people in the U.S.eat, which isfood-like substances, articles formerly known as food that people are consuming now.It’s these sorts of the things, I think, people have all over the world; it doesn’t cost very much money.

As I see this everywhere where 1000 bucks or 1500 bucks a month is huge money.And sure, there are places that are far more expensive. You can’t live like that in Monaco and Singapore. But there are so many places in the worldwhere, yeah, you can do extremely well on not a lot of money.

Buck: I know you have a personal favorite, which is Chile, which is where you spend a lot of your time. Any other countriesyou care to name that might be a great place to plant a second flag right now?

Simon:Again, it’s so situationally dependent.I mean, I was just… Every place has its ups and downs. I spend a lot of time in Chile because I love the weather here more than anything.Almost every day is bright blue sunny skies. In particular,we’rein sort of late winter right now,but even the wintertime’s very mild, and it’s like Southern California but without all the downsides of Southern California.

Buck: Right.

Simon:I’m quite big on it. The cost of living is reasonable.And frankly, the way I… the lifestyle that I have here, I would go as far as to say it actually couldn’t be duplicated almost anywhere else in the world.

Buck: Amazing.

The Three Things You Need to Do to Get Started on Your Plan B

Simon: That’s a whole other —

Buck:That’s another interview.Well, listen,why don’t we do a very rapid fire, just right off the cuff that you could say if there are three things I should get moving on right now to start on, you know, not in detail,but sort of the high-level steps in preparing a plan B — what would they be?

Simon: I thinkeverybody needs to consider moving funds overseas. If you, particularly if you are in the U.S., or if you’re in Western Europe, I think everybody really should consider moving some funds overseas. If you’re in a bankrupt country, the fundamentals of your currency are not sound, and there are so many options around the world. Most of the banking systems, particularly in Europe and even the United States, the fundamentals of the banking systems are not good.


Simon:So I think that’sdefinitely something that people should consider. And again, how are you worse off?You’re not going to be worse off because you have a little bit of savings in a strong and stable bank in a jurisdiction that has no debt and has never had a banking failure. That’s not really going to cost you anything.There’s no downside risk.

Buck:I think you recommended Australia at one point as being a good spot for something like this.

Simon: There’s a number of different places,really. But that’s something, I think,just about anybody should consider. I think,sort of point 1B,is make the same assessment with your retirement savings, honestly.There are a lot of vehicles to do that, but I think holding all of your retirement savings, you work hard for your money, you work hard to save,and you would expect that you’d want to have that when it comes time to actually collect. So…

Buck: Of course.

Simon: So number 2is looking after yourfinances. I think this goes in particular with folks who have children. A lot of people just sort of keep their heads down and get up every day to go to work, and they don’t really give a whole lot of thought to where that’s going —what the longevity of that career is.

I mean,things are changing very rapidly, and I think most people sort of have, in terms of income, they have all their eggs in one basket.It’s critical to consider some alternatives.What other ways, if you put yourself in this position to say if I lost my job tomorrow,now what would I do? Go and find another job?How would you be able to find one? What does the market look like?Are there other things you would be able to do to actually start generating income? Are there ways you can develop passive income? Is there a business you can start on the side?Is there something else that you can do to actually create additional wealth in your family now and in the future? I think that’s really a huge one.


Simon: And the other is really looking at your investment strategy as well.If you’re completely allocated in stocks, particularly in the U.S.,or owning bonds and so forth, I think this is an incredibly risky strategy. I’m not a financial planner — I’m not trying to be a certified financial planner. I think people need to really trust in their instincts and look at the obvious warning sign and say,“Does this make sense?” And consider alternative investment classes that are not the things you’rejust not going to hear about on CNBC.But there’s a lot of options out there, so don’t just follow the herd and do what everybody else is doing.

If you’re doing what everyone else is doing, that’sa serious issue because if something happens it’s going to affect everybody.I mean,the fate that awaits for all the masses of people that aren’t paying attention to reality is not particularly a pleasant one.If you just look at the data, and then you see, “Oh by the way, this isn’t the first time in history that there’s been a major superpower that’s been in terminal decline and another power that’s coming up and rising in these huge debt bubbles and these huge asset bubbles” and so forth.

This is not the first time in history this has happened. It happened over and over and over again,and we can see the consequences, and we’d be foolish and arrogant to think that this time is any different, or that we’re special.

So, those would be the three things that I really worry about.

Ending Notes

Buck:Totally agree. Yeah, that’s great,Simon. Thank you so much.I know you need to get going.Like I said, I’m going to set up a resource page for this blog post, for this podcast at survivaldad.com/Simon. But they should also definitely go to sovereignman.com, sign up for your newsletter — I know that’s available for free, isn’t it?

Simon:It is, yeah.

Buck: And I know you typically write daily, if not more often than that,on a variety of topics, and you’re traveling all over the world. So it’s incredibly useful and timely information about what’s happening in our world, and I think everyone should pay attention to it.So Simon, thank you very much again for your time, and I would love to have you come back on the Survival Dad show.

Simon:Ok, thanks Buck.

Buck: Take care. Cheers.


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