Asset Protection Strategies, Exclusive Interviews
Terry Coxon on Government, the Reality of Regulation and the Importance of Asset Protection
By Anthony Wile - January 13, 2013

Introduction: Terry Coxon is the author of Keep What You Earn and was for many years a close collaborator with and editor for the late Harry Browne. He currently is a regular contributor to The Casey Report. Mr. Coxon has a distinguished history as an architect of innovative financial planning arrangements, including the Permanent Portfolio Fund, the United States Gold Trust (the first gold ETF), the Passport Financial Offshore Trust and the Open Opportunity IRA.

Daily Bell: Glad to speak with you again. Let's jump right in. You've been speaking out for freedom and free markets for decades. Yet things seem to be getting worse. Why is that?

Terry Coxon: Once the public accepts or even tolerates the notion that regulation is needed for one thing, it's ready to accept every claim that regulation is needed for something else. Roll back the clock and look at what has happened.

The unstated premise of the Pure Food And Drug Act of 1906 was that individuals acting privately are too lazy, gullible and silly to stop handing their money to providers of rotten food or of poisons labeled "medicine," whereas individuals acting as government employees are energetic, shrewd and purposeful. If you accept the premise, then of course you want the same energetic, shrewd and purposeful people to prevent any mistake that you fear the lazy, gullible and silly might make. That's why today anyone who wants to smoke in a bar in California has no choice but to grab the stool by the window and lean his head out.

Daily Bell: Does regulatory democracy work?

Terry Coxon: I'd call it a great success. It works splendidly for:

  • Businesses, especially the bigger firms, that want to freeze out new competitors
  • Politicians who want to point to their accomplishments
  • Politicians who want campaign contributions
  • Politicians who want to re-enforce the dependency of their business constituents
  • Foggy-headed individuals galloping to the rescue of millions of people they will never meet
  • Utopians who enjoy their thoughts of intellectual and moral superiority
  • People who enjoy punishing
  • People who doubted that they really existed until they acquired the power to punish
  • People who've decided that their best career plan is to collect a government paycheck for going through the motions prescribed by particular laws
  • Individuals who are afraid of being free
  • Individuals who resent those who are not afraid of being free

The numbers add up.

Daily Bell: Who is behind regulatory democracy and why does it continue to function from a regulatory and enforcement aspect despite its failure?

Terry Coxon: It hasn't failed at all. Just ask any of the people I've listed. It delivers what they want.

Daily Bell: Why do facilities like the SEC continue to gain power despite their incompetence?

Terry Coxon: You can rate the SEC as incompetent only if you judge it by its stated purpose. If you judge it by how well it serves the people on my list, it's performing swimmingly.

As for the public, any investor who thinks he's being protected by the SEC is a sheep waiting to be shorn. Quiz the people waiting in the sheering pen and you'll find that the place is crowded with people inclined to believe that individuals holding government-employee IDs are energetic, shrewd and purposeful.

Daily Bell: You were caught up in the system via the SEC. Tell us about that.

Terry Coxon: Imagine Martians destroying your planet.

Daily Bell: What needs to be done to reduce this regulatory plague?

Terry Coxon: I don't know that there is anything that can be done to stop the plague. Freedom is man's natural state but it is not his usual condition. By history's standards, liberty for the general public is an abnormality. The best you can do is to understand the problem, so that your head doesn't get filled with fictions and so that you can try to avoid getting hurt. One way to look at The Daily Bell is as a mental health project. By confirming for visitors that their doubts about government are in fact well founded, you help them get past the official fictions and stay grounded in reality.

Daily Bell: We believe we've noticed an uptick in the aggressiveness of the regulatory state − the aggressiveness regarding gun control, for instance. We believe that there is a power elite behind this aggressiveness. We believe that this group is pushing forward with plans to consolidate world government. Disarmament is part of that plan. Agree? Disagree?


Terry Coxon: Some people are far more effective than most in moving government in their preferred direction. Call them the power elite if you like but I don't believe you need to refer to a power elite to understand and explain how government works.

The starting point in making sense of government is to stop thinking of it as though it were a person. It's not a person. It's many thousands of people (including the members of what you call the power elite) pushing and tugging on one another in an effort to direct and control their collective power. It's a scrum. Everyone in the scrum has his own purposes, which is why government so often behaves in a contradictory fashion − attacking cigarette companies while at the same time subsidizing tobacco farmers, for example. Multiple personality disorder is an excellent model of government behavior.

Today most of the people in the scrum are lovers of big government, and they feel about private gun ownership the way monkeys in trees feel about panthers. There is a reason for their passion about gun control: Control over weapons is at the heart of government power.

It's a postulate of political science (both among libertarians and among more conventional folks) that government is the institution that holds an effective monopoly on the exercise of force. I think that touches on the truth but then glances off it. The monopoly isn't on force per se. It's a monopoly on intimidation. I've come to that conclusion by considering how a monopoly arises spontaneously.

A natural monopoly occurs in an industry if and only if the available technology supports unlimited efficiencies of scale. In such a situation, where any firm can turn out the product more efficiently than any smaller firm, the result is that the biggest firm forces the others out of business. It becomes a monopoly.

It's the production of intimidation (more so than the production of force) that enjoys efficiencies of scale. Regardless of how large or small the groups, a larger organized group of unarmed men can be expected to succeed in subduing a smaller group of unarmed men, if that is what they set out to do. And the intensity of the motivations of the two unarmed groups matters little. Both groups know who is likely to win any contest so even if the members of the larger group are only marginally interested in prevailing, the usual result is that no contest takes place because the smaller group sees that the odds are badly against it. The smaller group is intimidated.

Lovers of big government hate privately owned guns with such passion and obsession because weapons dampen the economies of scale in the production of intimidation. A single armed individual may succeed in overcoming multiple armed government employees, even though he would have no chance of overcoming them if no one were armed.

And private weapons dampen the efficiencies of scale in the production of intimidation in another way. With lethal weapons as part of the mix, motivation becomes a big factor. Three armed men who are seen to be seething with anger or who show a belief that they either must prevail or die may succeed in intimidating six armed government employees who are watching for 4 o'clock so that they can start getting overtime pay.

I wish the truth were gentler but that is, I believe, how things actually work. For myself, however, I have no taste for being part of either group.

Daily Bell: You deal a lot with asset protection and estate planning. Tell us about that.

Terry Coxon: It's a big topic.

No one wants to be a financial victim of what so many governments have become, but protection means dealing with multiple threats to wealth and covering all the bases. Here's a broad outline.

1. Decide on the kinds of things you want to own. That's the first step because you make can those decisions independently of how you handle the next steps.

2. Decide where you want to own things. Keeping everything in your home country is a mistake because it means volunteering now to cooperate in whatever the government decides to do tomorrow.

3. Decide how you want to own things. In the US, direct, personal ownership just isn't what it used to be. It's now more of an illusion of property than a reality. Direct personal ownership now means that you are the government's unpaid custodian. You take care of things until a tax collector or a regulatory agency or a judge says "hand them over." Using a foreign company to hold assets, especially liquid assets, would be a big improvement. But the thorough solution is an international trust. You hire the right institution to own things for you. No arrangement is sturdier.

4. Build exactly one plan, a single plan for all your objectives. That single plan should coordinate the goals of asset protection, internationalizing your investments, avoiding estate taxes, reducing income taxes, achieving privacy and generally becoming less dependent on what happens in your home country. If you have a separate plan for each objective, you risk tripping over yourself.

Most people can be far better protected than they are. For people in the US, all the goals I listed (which are the ones most commonly mentioned by my planning clients) are achievable to one degree or another.

Asset protection. It's not difficult at all to put liquid assets absolutely beyond the reach of future litigation risks, and it doesn't take long to get it done. Sixty days is plenty of time, once you decide to act. Immoveable assets, such as real estate, are more of a problem but the problem is solvable.

Estate tax. That's a tax on not planning. Even the largest taxable estate can be whittled down to almost nothing, and it can be done without interfering in investment decisions or giving anything away before you really want to. But it's a more complicated project than protecting against lawsuits, and it's a slow, gradual process that may take years.

Internationalizing your investments. Setting up accounts with foreign institutions has become a gigantic chore. But it's a kind of grunt work. What it takes is patience and persistence.

Income tax planning. There are some simple but rewarding steps that most people overlook. Few investors realize what they can accomplish with a familiar, homey thing like an IRA. There are other approaches that can accomplish even more, if your assets are large enough and if you have a tolerance for complexity.

Financial privacy. You can't have any but your heirs can have plenty.

Daily Bell: Tell us a little about the Passport Trust program. It's been quite a success.

Terry Coxon: An international trust is the permanent, robust solution for protecting family wealth. Nothing else comes close. I designed the Passport Trust program to make international trusts easy to understand and to eliminate unnecessary costs. Controlling costs lowers the wealth threshold at which real protection becomes practical.

Because an international trust can accomplish so much, getting the full advantage of one requires a lot of information. But the core concepts are quite simple. If you're curious, start by reading "Your Own International Trust." You can find it HERE. In ten minutes you can become a minor expert.

Daily Bell: Thanks for your time once again.

After Thoughts

One profound perspective offered by Terry Coxon in this interview is that our perception of government shouldn't be a monolithic one. Government is not some sort of implacable entity. It's simply an organized group of people motivated by individual self-interest.

The power of government and its dysfunction comes from these people being granted a certain amount of power over others. The power itself is stated in the social contract. But one thing is certain: If "society" begins to withdraw its approval and deny the legitimacy of certain people to exercise power over others, then this exercise of power becomes more questionable.

This is what's happening now, we'd argue. The Internet Reformation itself is a process, not an episode. As people educate themselves about the way the World Really Works, their perceptions change and their ideas about how their lives can be organized begin to shift as well.

One part of this change involves a gradual understanding that society's structure is not immutable. People can gradually conceive that there are different and better ways of living than the current choices. Of course, the current organization, in our view, has been configured by some enormously powerful people for their benefit, not ours.

In addition to beginning to understand that there are different ways of living and organizing society, people involved in a rethinking of their lives and situations often begin to take action where they can create change most effectively – with themselves and their loved ones.

It is in this sort of change that Terry Coxon's solutions can be most helpful. His Passport Trust program offers a comprehensive way to defend assets against a predatory legal environment that can surely strip you of your resources if you do not anticipate potential depredations.

His larger points on asset protection generally are well taken, too. What Mr. Coxon perceives is that freedom begins with one's own life and circumstances. What must first be secured as much as possible is one's individual environment. Larger issues are important to understand but one's personal circumstances are where human action can be applied most effectively.

Our thanks to Terry Coxon for presenting a solution that people can use to better secure their assets and even their livelihoods.

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