Welcome to our weekly mailbag edition of The Daily Cut.
As longtime readers know, our mission is to spot profit trends early on – so you can really move the needle on your wealth.
We do that by plugging you into the top moneymaking ideas from Teeka Tiwari, Jeff Brown, Nick Giambruno, Dave Forest, Dan Denning, Jason Bodner, and the rest of the Legacy Research team.
We also keep an eye out for threats on the horizon… especially when it comes to your freedom.
A founding principle of this newsletter… and across all our publications at Legacy… is there’s no point being wealthy if you’re not free.
That’s what’s so disturbing about what we call the War on Cash.
It may sound far-fetched… But physical cash – banknotes and coins – is on its way out.
Governments hate it because they can’t track and trace transactions.
So they’re replacing the cash in your wallet with a digital-only alternative – what Legacy cofounder Doug Casey calls FedCoin.
As I’ve been showing you, this new digital dollar will be loosely based on cryptocurrencies such as bitcoin (BTC). But it will have none of the decentralization and privacy benefits.
Instead, a federal database will monitor and record every transaction you make.
State-backed digital cash will even allow governments to switch off the accounts of dissenters and regime critics… preventing them from buying even basic necessities.
It’s a grave threat to your freedom. And it’s coming soon.
That’s according to the most powerful central banker in the country – Fed chief Jerome Powell.
In a 60 Minutes interview that aired on CBS last Sunday, he said the Fed is involved in a large-scale research and development project on the digital dollar.
That’s why, in today’s dispatch, we’re throwing the spotlight on how the feds are winning the War on Cash… and what you can do about it.
Legacy analysts Nick Giambruno, Dan Denning, and Jeff Brown weigh in on the coming digital dollar – and reveal how you can shield yourself from the fallout…
And make sure you stay with us until the end of today’s dispatch. You’ll hear from readers of legendary financial newsletter publisher and Legacy’s other cofounder, Bill Bonner.
Bill believes the U.S. is in deep trouble. And he wonders if it’s time to get out of Dodge.
First, though, a burning question about the coming digital dollar…
Reader question: With the dollar inflating and the government going into digital currency, what will happen to paper money?
Should we keep some under the mattress? Should we keep any in the bank? And if so, what should we keep? What should we do with the rest of our cash? Gold? Crypto? Anything else?
– Michael B.
Nick’s response: It’s always a good idea to define our terms. One of the most common misunderstandings is with inflation and deflation. Contrary to popular conception, the true definition of inflation is an increase in the money supply – not an increase in prices. Deflation is the opposite – a decrease in the money supply.
The distinction may seem subtle, but it’s not. The popular conception confuses cause and effect. Central banks and their lackeys like to promote this misconception, as it conceals their direct role in printing money, which causes prices to rise. In the last year alone, the U.S. money supply has grown by more than 26%.
With that perspective in mind, if your after-tax wealth is not growing faster than 26.6% – the Fed’s monetary expansion – then you’re losing ground. You’re on the road to serfdom.
The move toward a digital dollar will make it even easier for the government to inflate away the value of the dollar.
That’s why I highly recommend making bitcoin and physical gold the focus of your long-term savings. They are the best forms of money available today and are the monetary assets most resistant to inflation.
Dan’s response: At The Bonner-Denning Letter, Bill and I recommend our readers own plenty of real money: gold. This is going to be even more important when the dollar goes purely digital.
One of the tricky parts about going cashless is there are a lot of folks still without phones. You can’t use your phone as a bank account if you don’t have a phone.
So my prediction is that the “Obama phones” will come back – cheap phones funded by the feds. Instead of getting stimulus checks or universal basic income with debit cards or checks in the mail… you’ll get a burner phone, preloaded with digital cash.
These government-issued phones will have compulsory location tracking. This will be for (ostensibly, at least) contact tracing AND verifying your vaccination status. Little passports, too!
Most likely, the hardware and software will be developed privately, but given an official status through some contract award.
With respect to technology and surveillance, the model is already in place. It’s just waiting for the right dystopian vision.
Jeff’s response: Hello, Michael, and thanks for the great question.
First, let me address how a central bank digital currency (CBDC) would affect cash.
Physical cash would disappear. Once a “FedCoin” is issued, the government would begin the process of removing all paper bills and coinage from the system.
For starters, there’d be no need for them anymore. And the government wouldn’t want bills and coins to be used for any transaction.
In time, I believe paper currency will be entirely removed from society. There would be a multiyear window within which one could “return” their bills in exchange for digital dollars. But eventually, paper and coins will no longer count as legal tender.
So I wouldn’t recommend hiding cash under the mattress.
Where’s a good place to put our money, then? Here are a few ideas:
Finance or refinance your primary residence with a fixed 30-year loan at the lowest possible rate. You’ll pay back the loan over time with inflated dollars, and can invest the money you didn’t put into the house to make higher returns. Real assets, like property, are always a good store of value in inflationary times.
Finance income-producing properties using fixed-interest-rate loans. These properties could be rental properties or timberland. It’s the same reason as above. The benefit is land is a real asset.
Invest in digital assets like cryptocurrencies, digital tokens, and digital securities.
Well-designed digital assets like bitcoin are an interesting alternative. But they don’t come without risk. And if governments see them as too much of a threat, they can make it very difficult to transact with cryptocurrencies. This is a market investors would have to stay on top of to avoid losing their hard-earned capital.
There will also be digital assets backed by real assets, cash flows, dividends, or equity that will serve as smart places to allocate capital.
Precious metals like gold and silver might be interesting, but after watching what happened between 2008 and 2016, I’m not convinced at all.
The feds printed more than $10 trillion dollars during that eight-year window. That amounted to more than all of the past U.S. presidential administrations combined…
Did gold go to the moon? Not even close. And now, even with all of the trillions of dollars of new stimulus spending, gold is still only $1,778 an ounce.
Collectibles are one of the more interesting asset classes in an environment like this. Artwork, rare wine, vintage automobiles, rare watches, coins, and other collectibles have historically been excellent stores of value.
The problem is these asset classes have mostly been accessible only to high-net-worth individuals. But this is changing. A perfect example is a new company called Masterworks. It acquires artwork, securitizes it, and allows fractionalized ownership of it.
We’ll see a lot more of these types of investment alternatives in the near future. And the collectibles market is now racing into the digital age with non-fungible tokens (NFTs), which will eventually become an asset class all its own.
These are just a few general suggestions for readers to consider.
Of course, I’ll be tracking and recommending investment opportunities that will benefit in an inflationary environment over at Brownstone Research.
Whether I like it or not, we’re in for some serious inflation in the years to come. No country can employ the current kind of fiscal policy without serious and ultimately devastating consequences.
If you want to learn about the specific investments I recommend in the face of the coming reset of our financial systems, I recently put together a presentation on this very topic. You can go right here for the details.
Switching gears, Legacy cofounder Bill Bonner has been surveying the American political and economic landscape from his bolthole in rural Ireland.
In last Friday’s edition of his Diary e-letter, he noted that, like him, 16 million Americans have been on the move over the last year. Bill…
Some are fed up with politics… with their neighbors… or just with the weather.
Others, like animals moving to higher ground before a tsunami, may be sensing danger.
Bill’s essay certainly struck a chord with your fellow readers. Many wrote in about their own boltholes of choice…
If something really bad happened, nearly every small town in Texas is better than any other country… All the essentials and all the freedom, God-loving neighborly people, economy, agriculture, wild game, livestock, water, access to advanced medicine in the cities within hours, guns, and liberty-minded attitudes.
I’ve spent a decent bit of time in Mexico. I’d rather die in Texas, defending my property and family against commies from the coasts, than drag my kids into Mexico to live.
– Michael T.
We’ve always lived in a “bolthole.” Only difference now is the relatives quit laughing. We adopted an “I told you so” attitude while helping them find property that is now exorbitantly priced. Our taxes are going up because they are willing to pay any amount to feel safe again.
– Pam L.
I’ve been wanting to move out of the USA for a long time, but my wife has a severe case of complacency bias. Besides, we both have a lot of stuff we can’t seem to let go of. This is not an easy thing to do.
– Donald B.
I met a typically gorgeous Ukrainian woman, a “10” in every respect. I will be relocating from Florida to a Kyiv “bolthole” during the year, leaving the mess of the U.S. behind, exactly as you observed. This is not my America anymore.
I will carry a bag of gold and silver coins as well as some diamonds. I will live like a king in a big city that is relatively sophisticated and safe.
– Mark S.
The U.S. is not doing very well. But moving abroad does not make much sense, because the rest of the world is doing no better.
Instead, the best strategy these days is to be careful where in the U.S. you live. Stay away from large cities, blue states, and even red states that have large cities.
Living close to Mexico or Canada is not a bad idea, because you can get out fast if a crisis develops in the U.S.
Texas is worth looking at because it is a red state, and also because it has the legal right to secede from the U.S. It could therefore become an independent country in the future.
– Christopher C.
Your bolthole article resonates. For the last decade we have wondered where in the world we should go. Despite being in New Zealand – allegedly the hot destination for billionaires – we’ve concluded Malaysia is the smart place to be.
It is openly corrupt, but with a higher standard of living and better healthcare than where we are. The people are friendly, the food is amazing, and winter never arrives.
Did we mention the people there have almost zero sense of entitlement and no feelings of victimization? It’s refreshing!
– Michael N.
That’s all for this week’s mailbag.
Remember, if you have a question for anyone on the Legacy team, be sure to send it to feedback@legacyresearch.com.
Have a great weekend.
Regards,
Chris Lowe
April 16, 2021
Barcelona, Spain