“When goods don’t cross borders, soldiers will”
There has been no shortage of dramatic events over the last couple of years. The COVID hysteria led to governments all over the world getting dictatorial powers to close “non-essential” businesses and force people to stay in their homes. We are dealing with a war in Ukraine and two nuclear powers (the U.S. and Russia) exchanging jabs.
Now we are seeing the weaponization of financial assets, whether it is between governments or governments using it against non-compliant people.
The U.S. is currently imposing heavy sanctions against the Russians, which also happens to hurt the American consumer. Some of these sanctions are personal against Russian officials, while some of them apply broadly to the Russian people.
Of course, the U.S. government is forcing the Russians to trade without using the dollar as a middleman. This is why the Russians have started to demand payment from some countries in either rubles or gold. This spells trouble for the dollar as the world’s reserve currency, but we will get into that in future posts.
Here, I want to focus on financial assets (or assets in general) being seized by governments against individuals.
With regard to Russia, I was surprised when I read a story a few weeks ago about the yachts of Russian oligarchs being seized in Italy. They are called Russian oligarchs, but I don’t know what that means. Are they high-level government officials, or do they just happen to be rich?
What if Nancy Pelosi or Dr. Fauci had their assets confiscated by the U.S. government or some foreign government? I don’t like these people and think they are corrupt and criminal, but they should still have their day in court. How did we get to a point of just seizing assets without any due process?
In Canada, a very bad precedent has been set where Dictator Trudeau claimed emergency powers due to the protest of the truckers. Now there are stories of people who donated a small sum of money to the trucker convoy who have had their bank accounts frozen.
So if you were against vaccine mandates and supported the statement of the truckers protesting and decided to chip in a few bucks, now you aren’t allowed to access “your” money in order to pay the rent and buy food for your family.
Property Rights
It’s easy to get wrapped up in terminology and see digital technology as detrimental at times for our liberty. At the same time, it is important to recognize what this is all about. It isn’t just a problem of digitalization and the banking system. At the core, this comes down to a lack of respect for property rights.
There has been an issue in the U.S. for decades of asset forfeiture, which is really just asset seizure. Someone can be accused of a crime and have assets stolen from them by the state. In many cases, the person isn’t actually convicted of a crime but then has to prove their innocence to get back their assets from the state.
This is an injustice and a clear violation of property rights.
It doesn’t matter whether the police take your car from you or your money is taken from a bank account. They are all a violation of property rights whether it involves digital financial assets or a hard asset.
I suppose the main difference with digital financial assets is that it is easier than ever before for governments to seize assets. They don’t have to take out their guns and show them. They don’t need to cause a scene. The police don’t have to be used to impound your car. You can just make a call to the bank and give the orders and make it happen.
Getting out of the System
Even though technology makes asset seizures easier for governments, it still comes down to property rights. The good news in the United States is that there are a lot of lawyers. You can’t live with them, and you can’t live without them.
We still do have something of a justice system here. While the same thing could happen in the United States as what happened in Canada, it is less likely to happen. If the U.S. government starts confiscating bank accounts because of political protests, there will be lawsuits everywhere. This doesn’t mean it won’t be tried, but it does add a layer of protection.
We can only control what we can control as individuals. So the question comes up on what individuals can do to protect themselves from these property rights violations.
First off, don’t park your yacht in Italy.
In all seriousness, if you do hold significant assets, it is wise to find a country that is more likely to respect your property rights. Admittedly, this isn’t easy these days. If you live in the United States and want to diversify, it is probably better to find a jurisdiction that doesn’t just go along with everything the U.S. government tells them to do.
For the average middle class American, diversifying outside of the country isn’t really a realistic option. The best option is to diversify outside of the system.
If the government really wants to come after you, then you are in trouble no matter what. Just ask the January 6thprotesters who stepped a foot inside of the Capitol building.
Almost all of us are highly dependent on our high division of labor society. Most people wouldn’t be able to survive very long without access to some money. So while I think it is important to have a small amount outside of the financial system, it shouldn’t be seen as a long-term plan.
I saw someone ask about the wisdom of stockpiling gold for the coming collapse on a forum that relates to financial independence. It is not a libertarian forum by any means. I actually agreed with several responses that said if you think there is a coming collapse in the dollar or the economy in general, then you should be stockpiling food and bullets instead of gold.
I think this is largely true. Instead of buying gold first, buy things that you would buy with the gold, assuming that they keep for a while. You aren’t going to buy extra milk at the store that will go bad in a week, but you can buy extra toilet paper and soap.
This is a good strategy right now even if you don’t expect any kind of economic collapse. With price inflation high, it makes sense to buy things in advance if they keep for a while.
In all of this, the subject of Bitcoin comes up a lot. I have been a big critic of Bitcoin and cryptocurrencies in general. I think they are fiat currencies that don’t have the backing of a government. I think they are part of the massive speculative bubble that we call the Everything Bubble.
Still, I have to admit that in these times, Bitcoin may have served a short-term purpose for those in desperate situations. This applies to Ukrainians fleeing war and Canadians who can’t access their bank account.
The problem is that this is not a long-term strategy because the value of what a bitcoin will be worth in the future is so uncertain. Also, you can’t get any more digital than Bitcoin. In a real apocalyptic scenario, you won’t have a smartphone or even electricity.
There are many problems with Bitcoin, but at this time in history, “owning” Bitcoin could get you out of a short-term crunch.
Diversification
The problem is that property rights have been weakened, and we have no idea where things are headed and how they will take shape.
The best recommendation I have is to diversify. At the very least, you want to be able to buy yourself more time if you get in a pickle.
This can mean any number of things, depending on your concerns and your means to deal with those concerns. For some, it might mean owning a little bit of a lot in various forms.
It could mean owning both physical and digital gold and silver, owning Bitcoin for emergencies, having both physical and digital cash, and even owning a small house out in the country.
It could also mean buying extra supplies and food that can be stored. It could mean starting a small garden in your backyard. It also means forming a good bond with friends and neighbors in your area.
I have never considered myself a prepper as a prepper is thought of today. I think some preppers underestimate the degree to which we rely on the division of labor. Most preppers get a lot of their stuff by walking into a store and buying it with money. Or maybe they are ordering the stuff online.
Still, it is a good idea to be prepared. And since we don’t always know what we are preparing for, it means we should diversify without being wasteful. This is probably a good plan regardless of the times we are living in.
One last thought is that we have to be smart in the battles we fight. A small percentage of the protesters on January 6thgot suckered into believing that they were fighting for freedom by entering the Capitol building. Now, as a result, many of them are still locked up with their lives in ruin.
We have to use good judgment when protesting government tyranny. It is important to do so peacefully, and sometimes not at all in certain situations. It is also important not to follow others off a cliff who aren’t thinking straight in the moment.
It is important to fight for liberty, but it is more important to protect yourself and your family. The truckers in Canada gave a voice to what was previously a voiceless minority. But it was still a minority unfortunately. The majority of Canadians are all too willing to do whatever their government tells them to do. You should keep that in mind if you are ever in a position of wanting to protest by marching in the streets.