Be Aware of the American Empire Risk to Your Wealth & Liberties
“The civil wars in the 1st century B.C. put an end to the Republic…then, Caesar crossed the Rubicon and it was a new era in Rome, an era of Empire.” – Bill Bonner, Editor of The Daily Reckoning e-mail financial newsletter.
There are the usual reasons American investors should diversify a portion of their wealth offshore. These typical benefits include:
· The relative out performance of international equities to US stocks.
· Currency fluctuations on foreign stock returns expressed in US dollars, or in other words, the potential for currency gains.
· The reduction of portfolio risk and volatility from a globally diversified portfolio.
· Substantial asset protection benefits from a portfolio in a jurisdiction outside the United States.
You can read about all of the benefits in many books and financial websites, so I will not repeat the global diversification benefits here. The main topic I want to discuss is a new threat to your wealth, arising from the cause and effect actions of a new world empire, the Washington Empire. It is not just a problem of big government, nor some secret cabal or conspiracy. My problem with empires throughout history is the threat their policies create for the wealth and liberty of their own citizens. Thus, the foreign policy/empire risk today is creating a new reason for global diversification with benefits far exceeding the traditional ones listed above.
America’s Fall from Republic to Empire
In America today, both our politicians and the legal system have become the major plunderers of our wealth. A study of history clearly shows that government theft is nothing new. The problem facing productive, wealthy Americans is that we no longer have a constitutional republic form of government with limited federal powers in which state governments and individuals are sovereign. This lack of political checks and balances in Washington is why the federal government is out of control.
The United States has evolved from an isolationist republic with a balanced foreign policy and a government with limited powers at home, into a world empire with troops and dominion over a large portion of the world like the former British Empire. Even though we may have good intentions (like the earlier British Empire), the negative effects on personal liberty and wealth will, in the long run, be identical to all earlier empires. The structure of empires makes stealing wealth and power for government almost inherent. They are also characterized by producing profits for favored industries and the business establishment, while the consequences for the individual citizen is often negative both in prosperity, tax rates, and on investment empire market and retained liberties.
Let’s consider for a moment the Washington foreign policy threat to your liberty, wealth and investment portfolio. Although there is some debate as to whether we are an empire or not, many non-Americans around the world certainly consider us an empire. History has shown that empires have additional risks and this is further increased by the terrorist threat facing our nation. — Cover detail from American Empire, by Andrew Bacevich
Contrary to foreign and leftist propaganda, the United States certainly is not a purely evil empire but, with military bases and troops in over 100 countries around the globe, America often appears heavy handed at best to most Europeans and Middle Eastern peoples. More importantly, 9/11 has shown how we are in a world terrorist environment where those who hate us have the opportunity to take out their frustrations on our foreign and diplomatic policies with relative ease, and we have little real defense against these actions.
We have come a long way from the time of George Washington, when he said, “The great rule of conduct for us, in regard to foreign nations is, in extending our commercial relations we have with them as little political connections as possible. It is our true policy to steer clear of permanent alliances, with any portion of the foreign world.”
Can the United States today still follow the advice of George Washington? Apparently we can not, although for decades, countries like Switzerland, Austria, Ireland, and Sweden have followed this wise counsel to the benefit of their economies and financial markets.
History shows that empires have political and military risks. Former empires like Germany, France, Russia, and even the United Kingdom have paid the price and discovered the real cost of global empires and constant warfare. Today the American Empire is at extreme risk because, although we are the major economic and military power on the earth, our Achilles heel is the extreme risk of our financial infrastructure and investment markets to future terrorist attack.
The history of world empires, including their rise, their overreach, and their subsequent falls is one of the best indicators that major diversification outside U.S. investment markets and the dollar is necessary. Histories of previous empires also explain why it is especially appropriate for American investors to build a wealth preservation plan and investment portfolio specifically designed to reduce this foreign policy or empire risk.