Mikkel Thorup of the Expat Money Show interviewed me in detail about my story, financial sustainability, how it works for expats and how to live free and unconstrained. This is one of the best 1 hour summaries of what I teach, my back story and why I'...
Myles Wakeham appearance on NTD News (TV) on October 22nd 2021, discussing the impact on Bitcoin due to Walmart trialing the installation of a number of Coinstar machines that will convert coins to BTC in their stores. Check it out.
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Myles was invited to be a guest on the legendary Ben Stein's show, "The World According to Ben Stein", with Ben, Judah Friedman and Gary Collins. Check it out on Rumble (link provided in the description). Check it out HERE
The announcement came on ‘Earth day’ in April, that the Biden administration will make good on their campaign promise of increasing taxes on rich people. I’ve done complete podcast episodes on his proposed fiscal policy when President Biden was running for office, and it is bittersweet that I write this article within 1 week of releasing a podcast episode entitled ‘Don’t be rich’. Well it seems that the day has come and soon we will know the full details of the capital gains tax hike. Let’s talk about what this means for the unconstrained and those seeking financial sustainability.
* This is not financial advice. If you need financial advice, talk to your CPA or attorney about your specific needs. I have no idea what your personal situation is, but I’m providing this information as a catalyst of thought – not as specific advice or instruction for you to do anything. That’s on you. With that out the way, let’s begin…
First, here's the episode of The Unconstrained Podcast I'm refering to: Episode 085 - DON'T BE RICH
Let’s say you decided to buy a house as a rental property. You paid $250K for it a decade or ago, and the housing market looked favorably upon you. You watch Zillow and other analyst sites telling you that your investment was smart. Now your house is worth $1 million. And your accountant structures your taxes so you can take that 3% depreciation deduction each year. Your tenants are paying down the property for you, so you only owe a small amount left on the mortgage.
Then ‘Black Thursday’ comes. The stock market dumps on the news that President Biden is going to roll-out a 43% capital gains tax for ‘the rich’. You were thinking 15 or 20% long term capital gains tax on this. All your strategies were based on this, since those numbers have been low for decades and why would you expect them to go up?
The housing market is strong and maybe you decided to sell the property since the market is high. Your regular salary of $100K is nice, but you want out of that racket. Listening to the boss berede you over and over isn’t your cup of tea, so the promise of financial freedom is calling your name. Then along comes this news.
Well that is the message that many seeking financial independence are hearing today. It might not be real estate – it could be the score you made when your brother-in-law told you to buy Bitcoin in 2016, or you have been sitting on a ton of Apple stock waiting for the right time to sell it. Or maybe it is some other long term equity position in a passive index fund like Vanguard, etc. Or maybe you bought a ton of gold and have watched it going up and up.
The last 10 or so years have been a bull market in most asset classes in one way or another. That is highly unusual of course. In fact, the 145 months of bull market has never occurred in human history before. Even the heady days of the Dot Com boom of the 90s only had 113 months of bull market. Even the aftermath of the 1929 Great Depression never had this sort of a recovery. But yes, the past 10 or so years has been very charitable to investors.
Then along comes the news that 43% of their winnings could be wiped off the table.
The initial proposal appears to be anyone making $1 million. Surely that can’t be you, right? I mean you are not THAT rich? Maybe you are, or maybe you want to be. But let’s look at the rental property example and explain just how you could be that rich. If you sell your property for $1 million, plus your regular salary income, and the fact you depreciated the base cost on the property over all the years you held it…. Well you could show a gross income of over $1 million here, and if that is the case, you are now subject to the ‘Rich man’s tax’ rates. Sorry, chief.
Now the details in this plan are yet to be unveiled and it still has to pass through congress. But this is a congress in which the Democrats hold the majority in BOTH the house & the senate, meaning that if all Democrats align with the party, this will sail right through to the President’s desk. That means, in my opinion, this has a very high chance of passing.
Do we know if the capital gains tax rates will go up for those earning less than $1 million? My guess is yes, they will. In a country with a budget deficit year after year, and an accumulated debt of $30 trillion dollars, and no sign of how to pay the damn thing off, I guess we are all expected to take a bite of this %#&$ sandwich. Maybe round one of this change in tax policy might be to exclude you if you have a lower income, but again we don’t know the details but we do know that the devil lies deep in those details.
The general social mindset regarding investing (not necessarily shared by the super wealthy by the way) is that you buy something cheap, you wait till it goes up in value, and you sell it when it is high. The profit is made between the two points, less the tax and that’s your enjoyed benefit. Sounds simple.
So if you have been playing the game this way, I’m sorry to tell you – you will probably be part of the many to help pay for the mismanagement of the world’s largest economy.
If you attempt to dilute or destroy this simple model a lot of things will happen. Firstly, no one wants to buy assets if they are going to potentially lose half of the profits they make when they sell them. That means demand for assets will drop.
When demand drops, the old skool model of “Free Market Economics” (remember that?), means that the supply hasn’t changed, but the demand drops. That reflects in pricing. So that asset you have that you value at $1 million, might now drop to $600K or so because no one wants it anymore. Sure, someone out there will want it, but not at $1 million. Unfortunately your net worth just took a big hit, if you are measuring it at all.
This would apply to so many parts of the markets. The DJIA has been bullish for way too long, and as I’ve said over and over, the universe has a way to bring things back into balance naturally. You can’t spin this planet unless the north and south poles are properly balanced and that reflects our weather cycles, night & day, etc. We live in a sine wave existence. If markets have been bullish for so long, they have to be countered by a bear market period.
That’s where my biggest concern comes from. If you remove even part of the desire to own assets because you will have a massive exit tax thrust on you when you sell them, then no one wants to buy them. It is that simple. There’s a ton of talking heads on the business media shows (CNBC, Bloomberg, etc.) trying to calm the markets right now because they say, “No big deal, just get back to making money”. But I do believe that this is a big deal.
When this is announced the impact will be immediately measured on Wall Street. But that’s not really where the impact is. The impact is going to be on anyone that saw themselves as an amateur “Flip this House” guest or host. Those that bought real estate to fix & flip are going to feel the pain here. And if there is little incentive to do the fix part of that equation, the neighborhood is going to look pretty tarnished.
It will also have a negative impact on other asset prices that have been overpriced. One large segment that may hurt retail investors will likely be crypto currencies. Unless you bought recently and intend to sell quickly, then your income is going to be added to your normal income for the year and taxed at those rates. But if you HODL’d on the premise that you keep the assets for 12 months or more and then sell and enjoy those super low capital gains tax rates, well….
End result: Retail investors are cautious. Sell before it’s too late and market tanks. Maybe institutional investors swoop in and pick off the corpse of retail investors losses. I guess that’s not going to be a first.
The common fallacy of buy low/sell high is that you make money when you sell. Not so fast. I don’t believe that. I believe that money & wealth is made when you buy low. Why? Because if you buy income producing assets, then you are focused on the yield – not selling the asset. That’s the core fundamental teaching that I do – financial sustainability comes from the yields on your assets, not the value of the asset.
It is the old story of the Goose that lays the Golden Egg. If you kill the goose, you don’t get any more eggs. It doesn’t matter if the goose is worth $50K or $500K. It is laying eggs. The focus should be on the value of the eggs. And all you need is that the egg value at market is more than what it takes you to earn an income in that crappy job with the boss you hate, and you are financially free. You live off eggs for the rest of your life.
What better condition could there be if the price of geese is cheap, and the cost of borrowing money is super low? You can buy a flock of geese and get a hell of a lot of eggs. As long as you are frugal with your costs early on, you can become the biggest egg farmer in town.
Each day is a blessing in your life. So if you don’t have to spend it working for that crappy boss, it is something you can enjoy. Sell the asset and you no longer have the income. You have a big tax bill. Then you are left with no asset, no rent and a big tax bill. But keep the assets, avoid the big tax bill (or maybe defer it until times change and maybe your exit tax is lower) and still enjoy the rents.
This could be true of equities too. If you are focused on dividend producing stocks, and you can get a nice dividend check from the companies each quarter, do you care so much on the value of the stock? Nope, because that dividend check from GE or wherever is paying your electric bill.
Let’s say that you need a ton of cash and your plans were to sell your assets, pay the small capital gains tax, and go off into the sunset with the money. Maybe this was your retirement plans. What do you do now?
Well let me introduce you to the concept of being your own bank. You know how banks work, right? If you don’t have the money, you go to them and borrow it. They create an asset on their books for your debt, and you have a liability to the bank. What if you had an asset already – let’s say the equity in your rental property (not your primary home – that is not an asset and should NEVER be used for this). If you have a nice relationship with your lender, they may allow you to use the equity in that rental property and lien it for a HELOC (line of credit) secured by your own real estate.
Now look, there are risks here. If the property value tanks and you find yourself owing more than the property is worth, then that’s an issue. You will have to wait until it reclaims its value back here. But if you have equity in the property and you borrow against that equity to get the money, the income there is offset by the debt to the property. Check with your CPA to make sure this would apply to you, but you can get the cash from the asset you already have, and yes – you have to pay interest on that money from a bank, but you then pay that off over time.
What’s left? You still own the goose laying the eggs. The rental income can be used to pay down the debt and service it, and you have the cash to acquire more geese or do whatever with it. If you are conservative with not taking too much equity out, so that there is a decent buffer on the value of the asset, this may be an option.
I’m not saying this is for everyone and history has shown us that some unscrupulous lenders call in their debts if times get hard. But with interest rates at historical lows, rather than selling the assets, you may wish to borrow against them and then if you sell them later, pay off the debts. Or not – just keep letting your tenants pay off the debts for you. Sure, it pushes off the time when you have freehold property out, but it may be a strategy that you can use to acquire more real estate at a time when pricing may become lower.
There are other ways of doing this outside of real estate. If you are interested, consider looking into “Infinite Banking Concept” or IBC as it is offered called. By using over funded life insurance, many people do exactly this. I’m not a life insurance expert, so I will defer to them, but the concept is much the same as using your assets as a bank you can borrow against.
We don’t know all the details of this capital gains tax hike just yet. But I don’t think it is the disaster that much of the financial news are portraying it as – at least not for those seeing financial sustainability. In fact, it could be the best thing that could ever happen for contrarians who are looking to acquire assets at low pricing, with low interest money, and hold them for yield. So many have been forced on the bench and can’t do this while asset prices have been so high.
As they roll out the details on this capital gains tax hike, you will see some reaction in the markets. But again, if you never intend on selling the asset, you won’t be impacted by this.
I have always said that this historically high bull market has to crash or come down at some point. Is this the ultimate catalyst to bring it down? Maybe. Certainly if it has been artificially high due to low interest rate money and Federal Reserve intervention, this could be a day of reckoning for a bull market that is so far over the natural point of correction.
The one thing that contrarians have to look forward to are buying opportunities. We are not following the herd over the cliff, but looking to receive wealth when the times show a potential of great wealth transfer. Yes, there will be casualties here. But that is going to be with the buy low/sell high investors – particularly the retail investors, as they are expected to be on the line to pay for the mismanagement of out of control government spending.
If you want to know more, check out my podcast episode entitled “Don’t be Rich”. And subscribe to The Unconstrained Podcast on your favorite podcast player for more information.
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The growing levels of riots, looting, violence on the streets, etc. have never been more intense today than at any time over the past 30 years that I’ve lived in the USA. My first experiences of it started in about 1992 during the Los Angeles Riots in which an onlooker video taped the beating of Rodney King, causing the city to turn to violence. But that was nothing compared to the constant barrage of violence since then all over the USA. I want to talk about what I think is really driving this, and why this isn’t going to stop any time soon.
The answer as to why there is so much unrest is due to many factors:
I’m sure there are others, but these are enough to turn a quiet little town into an all out armed warfare conflict, more like Beirut or Baghdad than Toledo. However as we’ve all seen on the nightly news, what would have been considered quiet cities in the past erupts into armed conflict, and often with fatalities. I’ve seen people taking to the streets as armed militia in dozens of cities, creating more of a sense of civil war like we’ve seen in Syria, than an orderly society.
Unfortunately I don’t see this changing any time soon, and I want to go over all the reasons why.
This is the big one. If you live in a world where you are barely scraping to get by, living on predatory pay day lenders, food charities, and constantly negotiating with your landlord on when you can pay the rent, things are not good. You are more likely to be homeless and a further burden to society.
But we all go through tough times in our lives. What brings us out of those times is the sense of hope of a better future, and that there are opportunities that we can engage with that will find the income we need for our survival. What if, however, those opportunities are no longer there, or only go to a select few while the majority starve?
In 2013, the US White House promoted the idea of “The Gatsby Curve”. This was a study underwritten by the World Bank that ranked countries by income inequality against opportunity inequality. Those countries that tend to rank better in both categories had a lower level of civil unrest and hence civil violence.
This is the graph today:
You can see that most of western Europe sits in a low risk category, but most countries that have enormous divides between income inequality and opportunity inequality also share a high risk of civil war, civil unrest, etc. This was clearly on the mind of the administration as they published this data on the official White House website.
The interesting observation was that opportunity in the USA was often defined by parents and where they were on the economic food chain. Wealthy parents typically provided better opportunity to their kids. I would argue that this is done through a “plausible deniability” layer called the US College system. If parents can afford to send their kids to Harvard, Yale, Stanford, etc. then the kid gets showered with opportunity. Are the parents evil against society for doing this? No, but the fact that they can hide behind the college system is horrible. We all recently saw the criminal sentences brought down upon Hollywood stars for paying massive amounts of money to get their kids into the “right college” (called the “College Admissions Scandal”). But this is not a scandal that is specific to those parents. This is a problem WE own. We have created a layer of protection between parents and kids where opportunities are only given to those that can afford the cost of the permission slip, that is the college degree.
I’ve argued that the best place to fix this is with the social mantra - it should be challenged because I do not believe it works anymore. Colleges have little efficacy in terms of education; they are only there to further this opportunity divide that is widening and widening and forcing parents to go into more and more debt, egged on by banks with non-dischargeable student loan debt.
Look at the other countries on the scale and you will see that most have constant civil wars, riots, protests, lootings, etc. to the point where it limits the peace & prosperity of the country itself. When they seem to be able to break free and give opportunity to all, things start to calm down. The USA is far from being in a “safe” place in regards to this, which we are seeing play out on the nightly news every day.
There’s a long history of racial inequality that dates well back to before the discovery and founding of the USA. Racial inequality is not a distinctly American thing. It is just that when you mix it with income & opportunity inequality in the richest country in the world, it is easier to mask it as that. And the fact it has been rampant, especially against the black community, now becomes headline news because a bystander caught it on their smartphone. The decencitized citizenry finally seem willing to stand up and act upon it, but why has it taken so long? And is it enough to change the course of history?
The concept of a master/slave relationship occurs through most countries history in some form, however most of the other countries in the world got a handle on this by way of a concerted effort to provide equal access to opportunities to all. But the US never did.
Instead the physical well-being of black Americans is threatened in such a way that the strongest buckle under the pressure. It is clearly unfair when statistics show us the level of incarceration falls unevenly to the black community, and that opportunity that is restricted by the college permission slip is taken from such a huge and valuable segment of society. Whereas I have never had any issues with finding and engaging with opportunity, if my skin color was different my story would be entirely different in the USA. I understand that. I'm humbled by it. I'm also disgusted by it. I always remember hearing Warren Buffet talk about the luck of birth and that we all could have been born into poverty or a tribe in the Sahara or the English royalty. We have no control of this, and its all luck. Those of us who got some lucky break at birth should be showing some empathy and support to those that didn't. And to deny such empathy & support because of the color of someone's skin, is simply evil.
Not only are African Americans discriminated against in the banking sector, whereas they are preyed upon by high interest lenders, but those of other races, including those of Latino descent are rejected from entry outright to the USA, despite the education, qualifications or experience that they may bring to the country. Statistics show us that someone is picking the winners & losers of prosperity, and they are not giving out the winning tickets evenly. When I saw lines and lines of Mexicans in Mexico City waiting outside of the US Embassy for limited VISAs that were only issued on one day of the year from my hotel next door, I got it. The door is closed to them, whereas for me it was wide open. Australians can come to the USA for 90 days on a VISA waiver program, and although they are not allowed to work, they can meet companies that might need their services, obtain contracts of work and do it remotely over the Internet. People from India can come to the USA and try and get access to the H1B program, which about 85% of those VISAs are issued to Indian head hunter corporations resulting in the huge population of Indian workers in the Silicon Valley. Those from Europe have similar access to the USA.
But not Mexicans despite the fact they are our neighbor to the south. Hence those that came across the border illegally or over-stayed some VISA, live in the shadows. We pretend they are bad and here illegally but we are happy for them to mow our lawns, clean our tables in restaurants, pick our vegetables and look after our elderly. Basically the jobs that Americans refuse to do is given to them, but without any legal status we perpetuate the master/slave relationship.
Although this is not perfect, many countries have created cultural awareness and policy to deal with this, resulting in less civil unrest. But it isn’t the Latino population that is uprising. It is the Black community because, despite them having US citizenship, they are discriminated against in a way that they can never escape - the obvious visible skin color determines attitude of the rest of society and you can’t change your skin color. The fact that law enforcement groups them into categories, despite there being clear laws against racial profiling, needs to change. And with such a large number of African Americans in law enforcement positions, you’d think that this could be changed from within.
But no - politics based on financial campaign financing from banks is determining police policy. Not community integration and serving the constituents that vote. The financing of political campaigns from the wealthy further perpetuates the policy that keeps opportunities only to the families that have the money or power or methods to obtain them.
Yet African Americans, when traveling to other countries in the world, are met with open arms and welcomed. We saw that with the rise of Jazz music in the 1920s and later, where black musicians who could not get opportunities to play in the USA (their homeland) found their careers in Europe. The likes of Charlie Parker demonstrated this and the same is true today. There is no barrier to entry for any African American to “go where they are treated best” just as the same lack of barrier exists for all other races. The only issue may simply be having the money to afford the trip.
Regardless of your political tribe, US politics for all elected officials is corrupt AF. To quote Henry Kissinger, “Corrupt politicians make the other ten percent look bad.”. Yes, absolute power corrupts absolutely, and it seems that the way to hide this corruption is by an unholy relationship between those in government with those in the private sector.
With term limits, politicians can obtain financing from their private sector connections, and can vote on policy that would benefit the private sector organization, with either overt kickbacks or some promise that after they leave office, there is a multi-million dollar gig for them waiting. Look to the wealth levels of politicians who are either in office, or who have left office, and you can tell me that they are not any particular business whizz-kid. And this is evenly distributed across all parties in power. Corruption doesn’t have party affiliation.
So when you hear party A attacking party B during an election over lies, corruption, grifting the population, its the pot calling the kettle black. That’s why it rarely comes up in debates because the best defense of that attack is to put up a mirror. No one in government is honest it would seem - those that manage to maintain some honestly can’t even make it to the debates or get on the ballot because the wealthy & powerful don’t need the status quo changed here.
Money bail outs go to the benefactors and not to the people. The “too big to fail” term doesn’t apply to you or me. It applies to Goldman Sachs, JP Morgan, Citibank, AIG, Boeing, etc. - those that are well connected into politics that get first dibs at the treasury give away, that ultimately reflects in increasing costs of goods & services for all of us - furthering the income divide.
The unholy alliance of banks with the “private” US Federal Reserve is clouded in mystery since its inception. Although it has been given congressional license by the US congress to act as the bank of last resort, and to fund the US treasury, it is not held with any form of oversight as to how it does this, who are the participants and it never (to my memory) has been audited by the US government, despite countless calls for this from ex-Representative Dr. Ron Paul.
Consequently the production of money that is coming from debt issuance means that there is no actual accountable level of debt and money issuance. The more they print, the less each dollar is worth. But with a built in system of inflation, the math works to try and stabilize the US dominance as the world reserve currency. Since 80% of other countries drank the KoolAid and got on board with this, it is pretty much too late to abandon it. Instead of actually addressing the fact that money printing is bad, they bring forward all this illusionary math that allows you to delay the innevitable results of bad behavior. Technology gives us cheaper goods as robots make it, so the drop in pricing gives license to create a fiction based inflation level, and that gives license to print more money. Meanwhile every service level cost is rising at astounding rates. Health care costs which are specifically not factored into the formula used by the Federal Reserve for inflation calcuation have risen 45% over the past 5 years, where the average US worker has their employer paying about $20,000 a year to provide them with health insurance.
The problem, however, is that the concept of free market capitalism is almost juxtaposed with the monetary policies of the Fed. You and I cannot get access to 0% interest rate money, but the member banks and their affiliates can. Hence they don’t need your savings, and there is no meaningful interest paid for savers. This means our senior members of the citizenry who are saving for their retirement, get no benefit for doing this. It would be easier if they just took out a $2 million loan over 50 years, and live off that until the day they died. Of course the banks won’t participate in that, but this seems to be the underlying methodology of finding security for the future.
As the debt level in the USA grows, there is more call for the wealthy to pay more tax to pay it off. However it has reached levels that no taxation could afford to pay it off, so rather than trying to slowly and gradually reduce it so that it can be brought back to those levels, our elected officials are spending money with little or no accountability on pet projects that they might think will get them re-elected. The cost of things like border walls, despite being proven over and over to be inefficient and unnecessary (there are more US people leaving the USA for Mexico, than Mexicans coming in), we still are expected to pay billions and billions for this pork project. The money is taken from military budgets and then the military go to congress to get more money on the proviso that “You don’t want to underfund the military and we get attacked” and no politician is willing to stand up to that, so the money just keeps on being printed.
Here's the reason why more taxes won't work. It wasn't for a lack of taxation that elected officials are spending money with abandon. If they had a surplus, they could choose to either re-invest it into the country (ie. infrastructure) or to reduce taxes. Pretty simple math there. But the problem isn't a lack of taxes. It is a lack of constraint by way of spending and a lack of willingness to even make the idea of paying down debt an issue for voters in an upcoming election. They only want to tell you what they can give you to get your vote. They won't tell you the truth, and that's just disgusting. The truth is that our future is directly linked to us taking the blindfold off, getting real with the fact that debt is evil and paying it off. Yes, it will hurt. But its a small pain vs. a total systemic collapse that is a more likely scenario the more we avoid to embrace this issue and deal with it.
When a true global crisis happens, the Fed kick into full gear to print money, but little actually makes its way to the people. Despite the fury over an $800 billion dollar TARP fund after the 2008 global financial crisis, in 2020 during the COVID pandemic, the US treasury issued $3T in money (4 times the amount of 2008) in an attempt to fund and stimulate the economy, but little of that money made it to the citizens. Those that did get fundings got it from states, where some states were able to acquire capital and others had a hard time based on the political allegiance.
But all large donor corporations received fundings, forcing the stock markets to return back to all-time high (bubble territory) levels, and forcing savers to participate in riskier and riskier asset speculation. To reduce risk, rather than returning to any form of sound money, my prediction is that the US government will enter the stock market and attempt to socialize it, as 50% of that market is being run by passive investment funds anyway (ie. Vanguard, Fidelity, etc) as an alternative to US Social Security. We saw this in countries like Australia that mandated superannuation by employers to divert the responsibility of funding seniors from the government back to the banks.
The government further underwrites the banks by providing them with non-dischargable student loan debts so that the banks can be the responsible party of opportunity distribution by way of college degrees, yet most students who graduate with said degree will take 20 years to pay off the student loans.
I think everyone agrees that the news media in the USA are horrible. There is no incentive provided by commercial media to fund actual journalism. In fact what is being marketed as journalism is celebrity personality presenters, mixed with constant repetition of the same catch phrases, same stories and each looks to their competitors to steal the same story.
No one actually goes out into the field and discovers and reports on what is going on. This is deeply disturbing because it is not something you find in many other countries. Sure, there are “editorialized” news media outlets that lean towards a particularly political leaning (ie. Fox, Sky News, etc.) but then they are usually offset with non-profit level news outlets which are often funded by government money. In the USA, however, those outlets have been left to fend for themselves (ie. PBS) and rely on donations from wealthy benefactors. And just like the power of government, those benefactors expect something in return for their money - ie. don’t ever tell the truth about our behaviors or we’ll pull the funding.
So we live in a world of hyped up media, shock & awe, and parroting of the same stories that are often fake, or deeply editorialized to slant towards a particular political leaning.
This just hypes up the tribalism in society and turns the nightly news & politics into a sporting even to team A vs team B, rather than an effort to benefit the citizenry.
This is probably the most controversial but I believe it lays the foundation for what anger and dissent there is in US society today. Back in the 1980s, G. Edward Griffin interviewed the ex-KGB Russian agent Yuri Bezmenov, who had defected from the USSR to the Canada.
He explained the entire methodology that the KGB & USSR enacted over time against the USA to breed dissent into society. This process has never stopped. In fact the full interview is on YouTube below if you wish to see it.
What is remarkable is the similarities to the outcome that they wanted back then and how society is today. If you infuse society with this propaganda, you can erode it from within. Which seems to be exactly what has happened.
Now this playbook is not uniquely soviet Russia. The Viet Cong did this in the war of Vietnam - broadcasting loud speakers into US camps and territory to try and erode the loyalty of troops and to help create dissent. This (again) is a communist tactic. We can see similar things being done in China through the CCP as we see in North Korea. If you control the dissemination of information, you can control the behavior of citizens.
But the Russians have taken this to a new level by using the Internet as a means to broadcast propaganda that turns American on American. The Facebook scandals of 2016 are a small part of this, but they have not stopped. In fact, through other outlets such as Twitter, YouTube comments, etc. you can see the level of anger and hatred that is now a normal part of US culture.
These problems didn’t happen overnight and they won’t be solved overnight either. 90% of Americans believe that if Trump or Biden is elected, they will solve all of these problems. They won’t. Neither the Republicans or Democrats have been successful in wrestling these issues over decades. In fact, they are just getting continually worse.
At some point the Great Gatsby Curve becomes a deterministic means of measuring when a civil war will begin. Who knows what the trigger is for that, but it could be an election, a party that refuses to accept the results of an election, widescale poverty and unemployment, and a “Eat the Rich” attitude to wealth. The race to the bottom is alive and well here and unfortunately the cost of buying weapons might be prioritized over paying rent.
Unfortunately the rest of the world is looking on. The 80% of the nations that signed up as the $USD is the world reserve currency are seriously questioning that position, particularly with the rise of China. More and more are detaching, and even large private corporations are now willing to settle their transactions in other currencies not tied to the $USD.
As the world detaches from the USA, the money flows out of one bucket and into another. The money never disappears - it just goes to a different bucket and bucket holder. The wealth migration may be followed by physical migration, but the unfortunate reality is that the history of the USA dominating other countries and their politic will not be forgotten any time soon. There is a vast willingness for other countries to detach and be their own decentralized society without the reliance or tethering to the USA while they see the likelihood of unrest and civil disturbance.
I believe that decentralization is the answer. We need to create a society of smaller groups that have a protocol to connect with other smaller groups. This network model of a society has been well documented in “The Starfish & the Spider” by Ori Brafman and Rod Beckstorm, and explains how the Aztec empire was conquered by the Spanish and the weakness of a hierarchical society vs. the strength of a networked model.
By breaking free of reliance on a central point, you remove your ability to be weakened when it is attacked. That means detachment from much of that central model - don’t use their currency, don’t consume their media, don’t subscribe to their attitude towards race relations and be good and equal to all, and create a world of opportunity based on your own discoveries and problem solving skills that empowers all around you evenly.
This is a Utopian idea, but it only seems to work in regional areas that are decentralized by design. There are still places on this planet that embrace a level of freedom by the way of dysfunctional government that can never be efficient enough to organize and impose will. Much of South & Central America fall into that category, despite the wide gaps of inequality. The sense of community and family is much stronger in those regions, which provides the decentralized framework needed to empower the citizen and dis-empower the politician.
It also suggests that wealth will be re-distributed but not necessarily within the US domestic boundaries. It is a more feasible situation, as I can see it, that wealth will disappear from the USA and fill up the buckets of other countries. Ideally countries will retain a trading relationship with the USA which still is the largest marketplace in the world. But with the threat of China usurping the USA as #1 super power and #1 economy, the option for other countries to tether with China seems to be more likely. We have certain seen that over the past 20 years or so, and often to the peril of those countries. The real answer is for each country to become sustainable based on its own resources, and to trade with others in a more respectful and win/win method.
I see that countries that can become efficient markets and can trade with the USA but retain their own sense of identity and pride, will benefit. For me, I’m putting my money on Mexico for this. I believe that there is enormous untapped opportunity there, and over the next five years, the trade imbalance will move towards a surplus economy in Mexico with the USA, rather than the small deficit they currently have. The enormous workforce, low costs and government investment in infrastructure, despite its challenges with Cartels, etc., will create a powerhouse for trade.
But this is just one country and there are another 200 or so that could also benefit here. When the bucket of money starts to leave the USA to other regions, the money just makes those other regions more buoyant.
If you are like me, and you want to find times to buy low and sell high, the movement of capital flows out of the USA has to be watched carefully. It will tell you where the real opportunities are. If you invest as much time in research that as you do watching the hypnosis of the nightly news, or being triggered by some political election, you might come out ahead. Just a thought.
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