Not Everybody Went Down with the Titanic

Not Everybody Went Down with the Titanic

It’s one of the most dangerous myths most people believe…

Boobus Americanus thinks cash he deposits into a bank is a personal asset he owns.

But that’s not true.

Once a deposit is made at the bank, it’s no longer your property. It’s the bank’s.

What you own instead is a promise from the bank to repay. It’s an unsecured liability. That’s a very different thing from owning physical cash stuffed under your mattress. Yet, 99.9% of people conflate the two.

Cash deposited into the bank technically makes you a creditor of the bank. You’re liable to get burned should the bank make a bad bet and get into trouble. The risk is not insignificant. Most banks gamble with their customer deposits on risky investment fads like mortgage-backed securities.

Government deposit insurance schemes are a false sense of security. With their current reserves, they could only cover less than half a penny for every dollar they supposedly insure.

People in Cyprus had to find all this out the hard way a few years ago. People awoke on an otherwise normal Saturday morning to the horror that the cash in their bank accounts had vanished.

It was perhaps the most potent, recent example of the risk of being totally dependent on a single country that suddenly found itself in financial trouble. It also shows why I am such a fan of owning hard assets outside the immediate reach of your government.

You probably already know it’s a bad idea to put all of your asset eggs in one investment basket. The same goes for holding all of your assets in one country. But how much thought have you put into political diversification?

International diversification frees you from absolute dependence on any one country. Achieve that freedom, and it becomes very difficult for any group of bureaucrats to control you. The results can be life changing.

While everyone in the world should aim for political diversification, it’s exponentially more critical for those who live under a government sinking hopelessly deeper into financial trouble. That means most Western governments and the U.S., in particular.

This brings up an uncomfortable truth for North Americans and Europeans. The way the political and economic winds are blowing, things are about to get much worse.

Central banks around the globe have created the biggest financial bubble the world has ever seen. Interest rates are the lowest they’ve ever been in 5,000 years of recorded history. In some parts of the world, they’re even negative. We’re living in a financial Alice in Wonderland.

I think the social and political implications of this bubble bursting are even more dangerous than the financial consequences.

An economic depression and currency inflation (perhaps hyperinflation) are very much in the cards. These things rarely lead to anything but bigger government, less freedom, and shrinking prosperity. Sometimes, they lead to much worse.

We’re already getting a small preview of what is to come…

It seems like each week, there’s a new attack or mass shooting. Racial tensions are on the rise. Europe is experiencing a migrant crisis that’s tearing the continent apart.

There’s no doubt the world has become a crazier place in the past couple of years. Unfortunately, I think it is only going to get worse… 

There’s really only one way to remove yourself from all of this unpleasantness.

Freedom Insurance

Most people have a health insurance policy, a life insurance policy, fire insurance, and car insurance. You hope that you never have to use these things, but you have them anyway.

I call international diversification “freedom insurance.”

It’s all about putting the different components of your life where they’re treated best. In that way, you can maximize your personal freedom and financial opportunity.

For example, Singapore is an excellent place to do your banking. Switzerland is an excellent place to store your precious metals. The Cook Islands is an excellent place to form a company or trust. And Argentina is an excellent place to spend time from a lifestyle perspective.

Speaking of Argentina, it really feels European in many ways. Unlike its other South American neighbors, which have a more native flavor, Argentina is primarily an immigrant country where most people trace their roots to Italy, Spain, and other European countries.

Combine this with the extremely low cost of living and it feels like living in Italy for a fraction of the price. In my extensive travels around the world, I haven’t seen a country that has such a high quality of life at such a low cost.

It’s also refreshing that Argentina doesn’t have the politically correct culture that has infected the U.S.

One reason is that the government in Buenos Aires is weak and inept. That’s actually a good thing. Nobody takes it seriously, let alone is frightened by it.

It’s pretty much the opposite of the U.S., where armed agents of the State routinely harass citizens for the most innocuous of things, like kids running an unlicensed lemonade stand.

If the Argentine government tried to enforce an edict on transgender bathrooms—or the PC issue du jour—Argentines would just laugh and ignore it.

But there’s another big reason I’m so keen on Argentina…

As many are aware, my colleague Doug Casey created a world-class residential community in Argentina—La Estancia de Cafayate.

(Editor’s Note: Doug Casey believes the coming financial collapse is going to be much worse, much longer, and very different than what we saw in 2008 and 2009.

Unfortunately, most people have no idea what really happens when an economy collapses, let alone how to prepare…

That’s exactly why Doug Casey just released a guide titled Getting Out of Dodge that will show you exactly how. Click here to download the PDF now.)

Earlier this year, I decided to buy a property in La Estancia de Cafayate and become part of the community. Crucially, of course, my wife also loved Cafayate and its breathtaking natural beauty.

I had been reading about La Estancia for many years and naturally had high expectations. After visiting, even my high expectations were blown away. I can honestly say that it was not only as good as Doug Casey has described (see here and here), but better.

La Estancia has passed the hurdle and has really become a huge success. It’s not some embryonic concept that hasn’t been financed (the project has no debt), zoned, and just exists on some blog.

There are over 50 houses fully built and a similar number under construction. All the on-site facilities—like the hotel, golf course, and so forth—are really top notch. The athletic club and spa, in particular, impressed me. I plan on using them every day I’m there.

In my opinion, as impressive as the amenities are, the most important thing about La Estancia is the people. You’re surrounded by likeminded and successful people from all around the world, but predominately from the U.S., Canada, Argentina, and Europe. The networking opportunities here are really unparalleled. There’s really no place else like La Estancia anywhere.

Doug once remarked: "Some of the people here are going to pay for their houses with the opportunities they come across just by being around likeminded entrepreneurs.” I don’t think that’s an exaggeration.

In terms of lifestyle, Argentina and La Estancia de Cafayate, in particular, are hard to beat.

I also think my purchase will turn out to be a great investment.

With the election of the pro-market Mauricio Macri, there’s a good chance Argentina is turning the corner to a brighter economic future. In any case, I think it’s clear La Estancia and the wider Salta region it’s in—which many believe is the next Mendoza—will continue to prosper.

Besides the compelling investment and lifestyle aspects, there are other solid reasons to own property outside of your home country.

I often describe owning foreign real estate as an “international diversification grand slam.” It can accomplish four key goals all at once:

1. Geographically and politically diversified savings. I traded overvalued digital fiat currency (U.S. dollars) in an unsound banking system for an undervalued hard asset out of the immediate reach of the government.

2. An easy path to residency. Many countries will give real estate investors residency or a path to it. Given the degrading social, political, and economic trends of the U.S., I think it’s critical to have an emergency “bolt-hole” that you can always escape to if necessary.

3. Portfolio diversification. Foreign real estate diversifies the mix of asset classes in my investment portfolio. It also gives me the option to generate foreign currency cash inflows from rental income.

4. A measure of privacy. I’ve also described foreign real estate as the “new Swiss bank account.” That’s because owning foreign real estate is one of the very few ways Americans can legally keep some of their wealth abroad while maintaining a modicum of privacy.

It’s for all these reasons that I’ve outlined that I think La Estancia deserves a serious look. So I’d say come check it out and have a glass of wine with Doug and I sometime.

Which reminds me, we have just confirmed the dates for the next private retreat at La Estancia.

This exclusive event takes place November 1-6.

Over the course of those days, you’ll join Doug Casey and I in an immersive experience of the good life in Cafayate.

It will be a week filled with exciting social events, including cocktail parties, horseback riding adventures, golf, tennis, luxuriating at the athletic club & spa, dining out on Cafayate’s scenic plaza, and generally enjoying Argentina.

There will also be plenty of opportunities to network with successful, likeminded individuals from all around the world.

Most importantly, this retreat will allow you to fully appreciate just why, out of all the places in the world, Doug chose Argentina, and specifically Cafayate, as the place to build his lifestyle community.

The only way to fully appreciate the opportunities in Argentina and what’s going on at Doug’s La Estancia de Cafayate is to visit in person. It will be an experience you will remember for the rest of your life. Be sure to mark the dates: November 1-6.

Space is extremely limited. For more information about this special retreat with Doug and I and how to attend, send an email to JoinNick@LaEst.com.

Nick Giambruno

Nick is Doug Casey’s globetrotting companion and is the Senior Editor of Casey Research’s International Man. He writes about economics, offshore banking, second passports, value investing in crisis markets, geopolitics, and surviving a financial collapse, among other topics. He is a CFA charterholder. In short, Nick’s work helps people make the most of their personal freedom and financial opportunity around the world. To get his free video crash course, click here.

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