Introduction: Simon Black is an international investor, entrepreneur, permanent traveler and self-described free man. He publishes a free daily e-letter at SovereignMan.com. Off the top of his head, Simon can cite the price of beachfront property in Croatia, where to bank in Dubai, the best place to store gold in Singapore, which cities in Mexico are the safest, which hospitals in Asia are the most cost-effective and how to find condo foreclosure listings in Panama. His site is dedicated to the achievement of true freedom. In Simon's view, that is accomplished by making money without geographic constrictions, controlling one's time and embracing personal liberty. He specializes in teaching people how to embrace financial and lifestyle opportunities across the globe.
Daily Bell: Hello, Simon Black. You're the proprietor of the SovereignMan.com blog and you travel around the world to dozens of countries each year looking for profit opportunities. We're pleased to interview you today.
Simon Black: Nice to be here. Thanks for having me.
Daily Bell: Simon, you've established yourself in a very unique industry. How is it that you came to realize the need for internationalization?
Simon Black: That's a big topic. It really began in my 20s after I left the military. I'd actually started a business while in the Army. When I got out, I started to travel, partially for business reasons. I stayed in Panama for a while and after I sold the assets, I had a good amount of money for a young fellow and I was interested in investing. In the process of investigating alternatives – and continuing my travels – I gradually began to realize that the world was a pretty big place.
At the time I was doing a lot of reading, and I'd discovered Austrian economics. Combining that discovery with thoughts about the nature of the free market, I began to come up with an idea for a lifestyle that suited my interests and desire to find new investment opportunities.
Daily Bell: Okay, you started to travel. But where do you call home?
Simon Black: I guess I don't have any one home, though I have favorite countries and places. I must visit between 30 and 50 countries a year, so "home" is a relative term. There are simply a lot of unknown places that few visit with the idea of finding opportunities, and these are the places I'm interested in.
If you add up all the days I spend in all the places I travel in a given year, the biggest number is in Chile, a country with fantastic potential, in my view. That's where I am right now (though I am headed to Australia and Asia in a few days), and we have a lot of interests in the country.
Daily Bell: Can you give us some examples of other countries you think have potential?
Simon Black: Colombia. Even now, Colombia has this dangerous reputation as a drug-infested country convulsed by violence and cocaine. In fact, in many ways Colombia is more livable than a number of countries in the West.
The weather is pleasant, the people are friendly and the amount of violence in the country probably doesn't compare in many ways to what goes on in major Western cities. The drug problem is ridiculously overstated.
That brings me to another point, which is that we often have preconceptions about other places.
Google is a kind of black hole of inaccurate information – but that's where most people get a lot of their information these days. Often what comes out of Google is what you put in.
You can get information that reinforces the query you are making. But just because you read it doesn't mean that it's true. Often, when you travel to the places you've read about, you get an entirely different impression. On the ground, you can see, feel, smell and touch a different reality.
Daily Bell: That's why the old cliché applies – travel is broadening.
Simon Black: Sure, it's not just my perspective, and it has implications that go far beyond sightseeing. For instance, institutional wealth is allocating away from the dollar – and from the West itself.
China, Brazil, even India – these countries will experience growing pains but the fundamentals have already been established. There are too many people and too much opportunity elsewhere in the world.
What you have to ask yourself is whether the status quo is sustainable. And for many countries in the West, I'd answer that it is not.
The current crash in the price of oil has destabilized banks and sovereigns once again. And Western debt-based economies are not that solid to begin with. The people in these countries live beyond their means and the bureaucracy will do everything in its power to sustain the status quo because that's how they get paid.
Maybe Ludwig von Mises said it best of all. He said, "It's either a voluntary abandonment of the credit expansion, or you risk catastrophe of the currency involved." That's where we're headed, in the West anyway.
It's true that other countries have similar systems. But you have to observe how far along the curve the country is.
The West, the US in particular, is unstable right now and there's not a lot that can be done about it. Even if the people fully understood the problem, the leadership doesn't have the energy or courage collectively to address the issues and make the necessary changes.
Daily Bell: Unfortunately, most people don't fully understand the instability they live with, certainly in the West.
Simon Black: The capital misallocations and inefficiencies in the West are deeply intertwined with every level of civil and business enterprise.
As the global economy gets shaken out, it's the West that is going to bear the brunt of the reallocation of wealth. That wealth is not going to stay in the West's debt-based economies. It's already traveled east, and this is just the beginning.
Daily Bell: Speaking of debt-based economies, you write frequently about the US debt, which has just hit record highs of $19 trillion. Can you please reemphasize why this is a problem.
Simon Black: Well, the name William White comes to mind. You may have heard of him. Or at least the Bank of International Settlements (BIS), where he used to work at a very high level. The BIS's role is to coordinate what central banks do around the world, to facilitate transactions and generally to act in a supervisory capacity.
Basically what White said in a recent interview was that the world was facing the consequences of a huge misallocation of capital. His statements were extreme and troubling, especially given that they come from a veteran central banker.
Even more troubling is that he probably had a kind of authorization to make them. We're being warned and White is the messenger.
Daily Bell: Yes, we read about that as well. His statements were unusual in that the BIS usually remains in the background. You're more likely to read statements from the IMF than the BIS.
Simon Black: Not this time. White was blunt. He said that the global financial system is dangerously unstable and central banks no longer have the ammunition to fight off a major crisis.
He said the debt levels faced by banks and sovereigns alike would never be repaid. There's too much of it.
In fact, astonishingly, he called for a debt jubilee of the kind the world used to have in the past – a general reset of debt – that would result in the recapitalization of major financial institutions around the world.
Daily Bell: Pretty extreme stuff. Makes one want to head for the hills.
Simon Black: It does, but I've built a business reacting differently. Where some see crisis – even one of this magnitude – I look for opportunity.
It's not just logical; it's also a law of nature. There are problems and there are solutions. Yin and yang. If you have the fortitude to face what's going on and the courage to act – to take "human action," you can take simple, sensible steps to prevent the consequences – and even to enrich yourself.
I've done this over time and so have the people who subscribe to our services and take advantage of the opportunities.
Daily Bell: Well, you have a point.
Simon Black: It's a way of thinking, a positive attitude you can adopt.
Daily Bell: A lot of people are too frightened to look at what's going on. Maybe it's your military background.
Simon Black: Not so sure. I don't attribute much good coming out of that particular time of my life.
Daily Bell: It gave you discipline …
Simon Black: I'd like to believe I had discipline before the Army. Anyway, there's a lot I did later that proved a good deal more valuable to me than joining the Army. But one thing that did come out of my training at West Point and then my service overseas was the growing realization that so much of what I'd been taught was a lie.
That was one reason the US didn't feel like home to me after I returned from the service. I knew what we were doing in the Middle East. I knew about the real reasons for the wars.
Daily Bell: It's not top-of-consciousness for most people.
Simon Black: True. When people would come up to me and thank me for my service, I hardly knew what to say. It's not just me. The suicide rate for vets once they come home from war is a staggering number, a tragedy of national proportions.
You have many more individuals killing themselves by their own hand than you do from enemy attacks. I'd see people with bumper stickers that read "Support the troops" and I would just know that these people had no idea of what was going on.
Daily Bell: That was an impetus?
Simon Black: I finally decided I'd had enough. There was nothing that compelled me to live in the US once I got out of the military, and as I researched the alternatives, it became apparent to me that there were good reasons to live abroad.
Daily Bell: The tax write-off?
Simon Black: It's not something that the US publicizes to its own citizens, for obvious reasons. But if you are living abroad, you basically are allowed to earn up to around $100,000 in earned income without being taxed.
There are also some housing exclusions as well, taking the benefit up to $150,000 or more. But the Foreign Earned Income Exclusion is very valuable, especially since your spouse can take advantage of it as well.
Imagine how much you'd be taxed on $200,000+ and what you could do with that extra income.
Now, I am aware there are some who will say that not paying a full amount of taxes is somehow immoral, but after what I saw in the military, I have my own definition of immorality.
I simply choose not to – as much as possible – support the endless foreign wars of the US and NATO.
I am firmly in the camp of those who disapprove of bombing children by remote control drone, who are enraged by the constant "civilian" casualties these wars entail. This is the real immorality to me, an immorality I have chosen not to support within the legal context of what's feasible.
Daily Bell: People will also say you ought to work for change through the political system.
Simon Black: I think voting is a pointless exercise in futility. We could talk about this for hours. But suffice it to say that no one ever gets the "hope and change" we're looking for. All we get is more debt, more war, more bombs.
If you really want to make a change, start with money. Take whatever legal steps you can to restrict the resources they have at their disposal. This is a far more powerful way to effect change than punching a chad in a voting booth.
And just imagine all the good you can do by taking the amount of money you would have spent financing more war, and instead allocating it to something more productive or peaceful.
Daily Bell: You've done this yourself, obviously.
Simon Black: I read about a fellow, call him Joe, who had his leg blown off in Afghanistan. Now that's bad enough, but because the amputation was so high up on his thigh, he couldn't find a prosthetic that would fit.
It turns out there is a new procedure that exists called osseointegration, where they fuse a titanium rod where his bone would have been, and then attach a prosthetic device to that rod.
Well, Joe found out about that procedure and wanted to have it done. But the FDA decided that it was too dangerous… as if getting deployed to Afghanistan ISN'T dangerous.
And because the FDA didn't approve the procedure, the VA department wouldn't pay for Joe to have the operation privately.
The operation was expensive… like between $50,000 and $100,000… and Joe was left by himself to pay for it. Needless to say, he didn't have the money.
I had the good fortune to happen across Joe last year. It turned out that the amount of money he needed was pretty close to the amount of my tax savings due to the Foreign Earned Income Exclusion and other allowances.
So I immediately decided to use my own tax savings to pay for his operation. And I'm pleased to say that Joe is now walking around and living a much more normal life.
It was amazing. I mean, this guy could go overseas and get his leg blown off. But an operation that would allow him to walk around was "too dangerous."
I was able to help because I had taken legal steps to reduce what I owe. So instead of my money going to finance more war and sending more guys like Joe to get their legs blown off, I instead had the opportunity to help heal.
That's why I say money is power, and money is in a way morality if we chose to employ it for moral causes.
Daily Bell: That must have been very satisfying.
Simon Black: The satisfaction was in the choice. It was one that I could make because I had the wherewithal and the freedom to do it.
Daily Bell: That point – freedom – is important, and one that you write about a lot. For example, you have multiple passports because you say that it provides more options. And more options mean more freedom.
Simon Black: Sure. Think about this – Ulysses S. Grant traveled all over the world after his presidency. He didn't need a passport or a visa. That was just 150 years ago.
Daily Bell: It is more difficult nowadays. It takes more planning.
Simon Black: But if you use the right resources, you can still achieve the same kind of freedom. Having another passport (or multiple passports) is one option that just about anyone can take advantage of.
There are so many ways to do this. I think a lot of people would be surprised that they might qualify for Irish, Italian, Polish ancestry, or many more just because of their parents or grandparents. It's a no-brainer to go through the basic and inexpensive steps to do this.
But there are other things as well that we discuss to increase one's level of freedom. Moving some money outside of your home country's financial system. Ownership and proper global storage of precious metals. Legal asset protection measures. There are so many.
Daily Bell: These are all issues you touch on in your publications.
Simon Black: Every one of them … If I had anything to say that would sum up the messages we regularly write about at Sovereign Man, it's that the world is not coming to an end no matter how bad things look from time to time, and that there are solutions to almost any problem, certainly any problem caused by government.
I call this having a Plan B.
We can see a lot of risk out there – bankrupt governments, erosion of freedom, shaky financial systems underpinned by negative interest rates. It's madness. Having a Plan B just makes sense.
Daily Bell: The famous Plan B referred to in Sovereign Investor articles and white papers. Can you help us understand what you mean?
Simon Black: It's a broad topic. But essentially it comes down to taking rational, sensible steps to mitigate these risks.
If it's obvious that your banking system is highly illiquid and potentially insolvent, for example, why are you holding 100% of your money there?
If it's obvious that your government is totally bankrupt and has a history of bullying everyone and confiscating private property through civil asset forfeiture, why are you holding 100% of your assets there?
It's just common sense. And more of a state of mind than anything.
Number one – don't panic. Again, the world isn't coming to an end. It's changing. Be on the right side of that change. Understand that there are solutions. Educate yourself, and take some basic action.
Number two – think globally. Expand your thinking to the entire world. Don't just assume that because you're American your money, your assets, or your energy needs to remain at home.
Number three – look to the future. These trends take a long time to unfold. But if you make smart bets about the long term, not only will you get through any turmoil down the road, you could set yourself and your family up for some extraordinary gains.
Daily Bell: Well said. If people want to learn more, they can certainly go sign up for your free daily e-letter, which we read every day. It's excellent.
Simon Black: Thanks. We've also decided to hold a special online seminar talking about these issues – and some specific steps for HOW to set up your own Plan B.
Right now it's absolutely free to attend, and I think anyone who is interested in this topic will get a ton of really valuable information from it.
The seminar was originally designed for our readers at Sovereign Man, but I'm happy to extend an invitation to readers of the Daily Bell as well. Your community can sign up here.
Daily Bell: Great. That's excellent. Thanks so much for that, and thanks again for sitting down with us.
Simon Black: My pleasure.