I recently spoke with Jayant Bhandari of Liberty.me on a wide range of topics— from media propaganda to better alternatives to college to international diversification steps anyone can take without having to leave home.
Jayant is a true international man. He’s constantly traveling the globe looking for investment opportunities. He also runs a yearly seminar in Vancouver titled “Capitalism and Morality,” which you can find out more about here.
Our discussion is below, and I think you’ll enjoy it.
Jayant Bhandari: With me today is Nick Giambruno. Nick is senior editor of Doug Casey’s International Man. I’ll let Nick introduce International Man and Doug Casey. Welcome, Nick.
Nick Giambruno: Great to be with you, Jayant. Doug Casey wrote a book—a bestselling book—back in the late 1970s called the International Man. In a nutshell, this book was about making the most of your personal freedom and financial opportunity around the world. That means you can live a much freer life and not be totally dependent on any one government if diversify internationally. Doug’s book went over how you do this, how you move various aspects of your lives abroad—your savings, your business, where you like to spend your free time, having citizenship in multiple countries, and these kinds of things. The book is obviously out of date now, though, and the International Man website is a continuation of that original idea.
You should think of international diversification in a couple of ways. First, it mitigates your political risk—the risk from your home government. People know about the portfolio diversification concept, you know, having different asset classes in your portfolio—stocks, bonds, metals, real estate, and so forth. In that way you can reduce your investment risk. In the same sense, you can do this with political risk. So it should be seen as an insurance policy against an out of control government. But it’s not just that. It also opens up the world to different investment opportunities as well, so it’s not only defensive but it can be offensive as well.
Jayant: So you shouldn’t consider your government as your friend or a servant?
Nick: No, you should view your home government as the biggest source of risk. International diversification is how you address that risk by making yourself not completely dependent upon that government.
Jayant: Doug Casey has said that you should try to have a passport of one country, live in another one, have your assets in a third one, or something like that. Can you expand a bit on that?
Nick: What Doug is talking about is taking different aspects of your life and putting them in countries where it makes the most sense. It’s unfortunate that we have to arrange our lives in this way to live more freely, but that’s just the nature of the world that we live in. Now, most people can’t live like this, but just doing a couple of these things will give you significant political diversification benefits. It also doesn’t necessarily mean that you have to up and leave and move to a different country. There are many things you can do without leaving your living room. For example, you can buy physical gold online in an offshore jurisdiction.
Jayant: So basically what you’re trying to do is to take some of your assets away from the control of your government because your own government can freeze your financial accounts tomorrow in two seconds. And to avoid getting into that problem, you should politically diversify yourself.
Nick: Yes, they can freeze and confiscate your financial accounts pretty much for any pretext. And having those assets outside of their immediate reach is not illegal and gives you the resources to fight a competent legal battle if you have to. So that’s one reason.
In my view, there are more important and relevant reasons to internationally diversify your assets. That’s because having international assets helps protect you from the measures that governments take when they go down the path of bankruptcy or they get into financial trouble. We’ve seen this in Cyprus, where they slapped rigid capital controls on literally overnight. People went to bed on Friday night and woke up Saturday morning and couldn’t access their bank accounts, they couldn’t wire money, and they could only withdraw a small amount of euros out of the ATM. Everyone’s bank accounts were essentially frozen. So having assets outside of your home country prevents you from being stuck in the case of capital controls. It would have also protected you from the bail-in or confiscation of bank deposits that also occurred in Cyprus.
And Cyprus isn’t the only country to do these kinds of things recently. Spain just announced that they are taxing all bank deposits. For now it’s just a small percentage. But don’t forget that most taxes start out small and then increase significantly over time, just like the US federal income tax. And then of course we have Argentina, which has done all sorts of these measures, capital controls, currency devaluations, pension nationalizations, and so forth. So if have your savings in an offshore bank account, it’s already out. It can’t be stuck in the case of capital controls, and it can’t be confiscated at the drop of a hat by bail-ins or bank deposit taxes.
Jayant: Even if they initially have a very small tax on your savings, they still have their tentacles on your account. And now all they have to do is increase the tax rate at the flip of a switch—because they have the software, they now have the electronic control over your account. So they can actually do it very quickly once they have their tentacles in place.
Nick: That’s what always happens. Once you concede on the concept—if you say it’s okay for the government to tax bank deposits for even a small amount, they can ramp it up as much as they want in the future. And I think that’s exactly what they will do.
Jayant: So should people wait for the moment when they start realizing that things are bad before they start politically diversifying themselves? Or should they prepare for it as soon as possible?
Nick: I think they should prepare for it as soon as possible. It’s always better to be one year early in your preparation than a day late with these things. Before the banking crisis last year, people in Cyprus could see the writing on the wall. When Doug Casey and I went there last year, we met with a number of smart Cypriots. These are the ones who took action and moved their money out of Cyprus before the crisis. So if you would have taken action before the capital controls and the bank deposit confiscation, you would have been totally fine. But if you were even a day late, you got screwed, and there was nothing you could do about it. So yes, there is a premium on taking action before it’s too late.
Jayant: Don’t you think international diversification is an unpatriotic way of thinking?
Nick: Well, that’s what the government propaganda says. But really, there’s nothing unpatriotic, immoral, or unethical about going where you’re treated best.
Jayant: Right, and your first responsibility is to yourself, your family, and your friends rather than to people those who are after your wallet.
Nick: That’s the basic argument of individualism versus collectivism, and personally, I fall staunchly in the individualist camp.
Jayant: Doug Casey has said in the past and he says that he is friends with people in Zimbabwe, and the friendship is closer because those people have no interest in eyeing his wallet. Whereas his biggest enemy is his own countrymen because they want to tax him.
Nick: He’s also said that he feels a closer connection to people who might think like him in other countries, and friendships have absolutely nothing to do with nation-states or the arbitrary political lines drawn on the map. I totally agree with that and have had the same experiences as well. You might feel a deeper friendship with somebody from, say, the Congo who is on the same wave intellectually than somebody who lives in the same neighborhood as you in the US.
I encourage people who haven’t traveled to go and travel. Travel is one of the best teachers. Instead of going to a university and getting some sort of liberal arts degree that’s really not going to help you at all in the world, your money would be much better spent traveling in Latin America, Africa, Europe, and Asia. You’re going to learn much more about how the world works and about how you can create a job opportunity for yourself by meeting consumer demands or meeting somebody’s demands. That’s what you need to do to create value and is what a job is all about… something a lot of people have forgotten today. I promise you if you travel and have an open mind, you will find business opportunities. That kind of education is really priceless, and I would encourage anybody to seriously look into it.
Jayant: And the world is full of friendly people. They aren’t a bunch of weirdos that the news media or the politicians might want you to think they are.
Nick: I’ve spent a lot of time in the Middle East and been to most of the countries there. If you’ve never been to the Middle East it looks like a pretty scary place from what you see on the news. And some places are of course not safe. In 2010, before the outbreak of hostilities, I traveled all around Syria—Damascus, Aleppo, Homs, Palmyra, and other areas. I also lived in neighboring Lebanon for about 2.5 years, where I worked at an investment bank. While in Beirut I never had a single instance where I felt threatened or anything like that. It was actually the exact opposite. In Lebanon there is an unmatched hospitality. I felt completely safe—safer than I do in some parts of the US actually.
So you have to be careful about what you see and consume in the mainstream media about other parts of the world. Information is like nutrition for your mind, and mainstream media is junk food.
Jayant: You have to be careful in New York as well. There are areas you shouldn’t go, and if you do, go you should think about what you’re going to be doing there. So you should think about and plan your trip. Understand what the risks and rewards are about going to Zimbabwe or Congo. I went to Zimbabwe a few years back, and it’s one of the safest places I’ve been to. I thought there would be people walking around with AK-47s all over, killing other people at random, but there was nothing of the sort happening there. Even white people walk around Harare without any worries about physical protection. So it’s just the media creating imaginary threats about places, which might not exist.
Nick, thank you very much for your time. It was a pleasure talking with you. Where can people find more information?
Nick: Sure; it was a pleasure. People can go to the International Man site, where there’s a literal treasure trove of information on these topics that we’ve talked about. We really just scratched the surface. At the website there’s also some great free resources and guides.