By Trace Mayer, on April 20th, 2011
La Estancia De Cafayate is a unique life hedge, even a modern day Galt’s Gulch, located in Salta, Argentina. This is the dream project of ‘The International Man’ Doug Casey who partnered with Former Salta Governor and current Argentine Senator Juan Carlos Romero. If you are considering a life hedge, given the quality of people this development is attracting, the uncertainty in the world and the potential for significant major disruptions to daily life then I think this special phyle deserves consideration.
When the time for performance has come the time for preparation has passed.
WHAT IS A LIFE HEDGE?
In Chapter 6 of The Great Credit Contraction I discuss the importance of the Five Flag Theory and a life hedge is an essential competent of this concept. A life hedge is a backup location where you can relocate yourself to maintain the lifestyle you have designed. Implementing provident living principles requires one to put in place a contingency plan for their personal location.
When one is unprepared for and effected by those events which are possible, although not probable, then one’s lifestyle gets designed for them and in many cases they do not like it. Just ask the cold, starving masses in Japan, Haiti, Chile, Thailand, etc. who failed to adequately hedge against natural disasters. A life hedge is a form of insurance for yourself and your family against the flock of black swans. While charity is nice I guarantee you that no one cares more about whether you are fed and comfortable than you do. With the current system unraveling it is important to prepare for survivalism in the suburbs as the veneer of order is extremely thin.
For example, if you had to take the last plane out of your city then (1) where would you go and (2) how would you maintain your standard of living?
In the Information Age the ability to have a ‘location independent’ lifestyle has becoming increasingly available to more people. By designing your lifestyle to be location independent and having multiple locations you frequent then you will be able to have continuity of lifestyle despite the tumultuous and unpredictable events, from natural disasters to political unrest from supply chain disruptions to currency collapse, that can and will occur during this transition from the Industrial to the Information Age.
When considering a life hedge there are a few elements to consider such as plentiful water, good sun exposure for gardening or photovoltaics, not on a flood plain, panoramic views, minimal noxious weeds, away from potential real estate developers, low housing costs, access to and ability to produce food, low population density, compatible neighbors, and many more.
Doug Casey has been preaching the end of the world for 30 years and with La Estancia being his pet project and personal life hedge he has made sure that La Estancia De Cafayate is an excellent well-rounded choice when it comes to its survival characteristics.
INTERVIEW WITH DOUG CASEY, JUAN CARLOS ROMERO AND JUAN ESTEBAN ROMERO
Who is John Galt?
LA ESTANCIA DE CAFAYTE
Even if you never use La Estancia De Cafayate for its retreat value it will still add considerable utility via the golf, polo, wine and networking opportunities. At every event I have attended I have learned a tremendous amount from the others there. With so many successful, creative and productive people with a similar philosophical and practical outlook the environment is ripe for business opportunities. Since one has to be somewhere why not be around other successful, creative and productive people with whom you can plan and plot great business ideas and opportunities to accomplish?
The first time I visited La Estancia De Cafayate was in 2008. At the time I thought the probability of success was about 15%. Doug’s idea was rather crazy; raise a first class country club from the desert sand in the middle of nowhere and a thousand miles from the closest large city.
But after three years I would say the probability of success is now 100% because enough lots have been sold that the development has no debt and enough cash in the bank to finish all major projects. Additionally, this is the crown jewel of Salta and its success or failure reflects tremendously on Mr. Romero’s reputation. The clubhouse, many vineyards, roads, polo field and utilities are finished. The Health Club and Spa are under construction along with the incoming Grace Hotel and a regular flight from Salta to Cafayate.
So much of the initial risk with the development is gone. World conditions have continued to deteriorate which increases the attractiveness of this type of life hedge. Information technology makes it easier than ever to be in the middle of nowhere yet in the thick of it all when it comes to business or trading. The lots are selling at a quicker pace.
I think the probability of it selling out and becoming a very exclusive community which high powered individuals frequent on a regular basis has greatly increased which adds additional utility for those who may be seeking the opportunity for networking for business opportunities, etc. Plus, how does one put a value on having cool like-minded neighbors?
FAILED WORLDWIDE FINANCIAL SYSTEM
The fractional reserve banking and fiat currency conspiracy system failed in 2008. Only inertia coupled with quantitative easing is keeping the system from unraveling faster. But the effects of massive inflation are well known to result in shortages and rationing. World political and monetary authorities can print little colored coupons but that creates neither wealth nor food. Why are gold, silver, oil, and food rising so quickly?
 The Federal Reserve’s insane monetary policies sustaining the unsustainable are going to cause tremendous problems. Food is going to become a lot more expensive and this will continue to feed political instability. The chaotic fingers of instability are getting even more unpredictable.
The financial crisis will lead to economic, social, political and geo-political crises of increasing intensity. The FRN$, the world reserve currency, will be the last layer to evaporate in the great credit contraction. So far the United States has largely been insulated from the effects of the financial crisis on daily life. But when the FRN$ currency crisis comes, hyperinflation being a form of deflation, the United States will be ground zero. Then things will get dicey real quick. You may want to know how to vanish.
Are you going to watch this mess on the Internet or out your front porch? La Estancia De Cafayate is well positioned should the more dire forecasts about Peak Oil or this worldwide financial crisis come to fruition. Even if the end of world does not happen it will still be a fun place to spend time and have a great batch of people to spend it with. After all, it is not so much where you go but who you go with.
CONCLUSION
How many more wake up calls does one need before they take action and secure a life hedge? Bear Stearns, Lehman Brothers, Iceland, Greece, Portugal, Haiti, Japan, the FRN$ and so many others. When the time for performance has come the time for preparation has passed. I think La Estancia De Cafayate deserves serious consideration if you are looking for a life hedge and we would appreciate the opportunity to help you in that regard so feel free to contact us. For example, Bill Rounds is fluent in Spanish and can help with any legal documents.
By Thersites, on March 20th, 2009
What we are seeing right now are the kinds of last ditch efforts that reveal how truly inept and desperate our leaders are. First there is the AIG bonus fiasco, a case study in the bumbling incompetence of the representatives in charge of containing the financial fallout (ironically the very people that preempted it). Then there is the move to quantitative easing — a seemingly sophisticated way of getting around the fact that the government is effectively socializing the government debt market and literally printing a trillion dollars out of thin air (as is the government’s wont). The implications of these two bamboozles are very telling.
In the case of AIG, first let me go on record as saying that AIG was a poorly run company that strayed from its business of insuring, and became a large hedge fund. When times were good, the illusory value created for shareholders in churning out CDS contracts and getting involved with all sorts of other derivatives made it seem as if this company was rock solid. But once the laws of economics came into play as we have seen time and time again, the straw men were revealed; malinvestments were proved to be malinvestments.
As such, the fact that anybody in this company who was responsible for running it into the ground should receive any bonus money period is appalling. Once they made the deal with the devil and accepted a government bailout (really a bailout of their counterparties who would have been decimated were AIG to have gone under as they should have), it is clear that these are the kinds of pathetic situations we end up in. Taxpayers paying bonuses for employees that destroyed the company the taxpayers are backstopping; politicians who conveniently forgot that their bailout legislation insured that these bonuses would be paid, only to turn around now and work to pass bills to tax bonuses at 90%. First, contracts should be honored, and if a company wants to pay inane amounts for failure, then so be it; BUT that company should be allowed to fail. Further, on principle, I am against this knee-jerk reaction to kill the greedy businessmen. On the other hand, the fact that we are all paying for private incompetence is an outrage. Again, we wouldn’t be talking about this if we had allowed the company to go belly up. Be outraged at the government for bailing AIG out, not AIG for being a garbage company.
Just think about the little game the politicians are playing — nationalize a failed company with taxpayer money, then tax bonuses to get taxpayers’ money back. Seems a bit screwy doesn’t it? Our dollars are sloshing around in all different directions. As you can see from this mess, the government isn’t exactly the most competent or honest steward. They are also capitalizing on the populist backlash against “corporate greed” to cover their own blunders for a measly $165 million, chump change compared to all the cash they have thrown around. Even if you hate Wall Street, when it comes to Barney Frank and Chris Dodd versus guys like Martin Sullivan and Angelo Mozilo (call him a derivative of his Wall Street brethren), it seems like a push to me. Then again, Mozilo was gracious enough to help Dodd get a good mortgage. Advantage incompetent/corrupt businessmen.
As I mentioned, the reason we keep dropping truckloads of money into AIG is because of AIG’s counterparties. This is the real game being played. For all of the populist backlash against the banks by politicians, Wall Street has been a part of Washington since the days of Alexander Hamilton. The whole financial system has been socialized since 1913. The Federal Reserve is the government’s bank that controls the fate of all of the other banks on the street. I don’t even know if I would really call its conduits private institutions because their policies are to a large extent determined by their lender, the Fed. But of course, the Fed is a private bank based on its charter too.
All in all through my incoherent rambling, what I am trying to get across is that we are witnessing the crack-up of this system, and the quantitative easing measures to buy a trillion dollars in treasuries and mortgage-backed securities to bring down yields on all sorts of debt (and also to effectively screw my double-inverse short position in long treasuries temporarily, boy that’s a mouthful) reflect the utter panic at the prospect of the socialist financial system going under.
Basically, the government needs to keep yields low to service its own debt and to bail out other debtors, such as for example most Americans. Foreign countries no longer want to purchase more treasuries given the massive supply and the lack of yield (due to the previous flight to the “safety” of our nation’s debt). So after the Treasury creates all this debt to finance the deficits that we’ll never be able to pay back, the Federal Reserve comes in and buys the treasuries, effectively pumping in a trillion bones or clams or whatever you call them to the market. It is the highest stakes shell game ever played. And also the most dangerous.
Since all the government can do at this point besides letting the chips fall and the system collapse (which will happen anyway in this author’s humble opinion) is to inflate (in fact that’s all the Fed does anyway), they are inflating like crazy. They have never lost the battle to falling prices before, and I don’t see them losing the battle this time given the pertinacity of the Depression scholar, the eminent Mr. Bernanke. He will probably get his rising prices sooner or later. Markets certainly think so given the massive run-up in gold, oil and decline in the dollar relative to other currencies. And of course when inflation does hit, the yields on government debt will have to rise anyway. I wonder if Bernanke and Co. thought that through?
But more fundamental than all of this is just the sheer desperation that these actions show: government officials going in ad hoc to side-step contracts by taxing at 90% those receiving TARP money over 250K…or something like that, the minutiae pales in comparison to the principle; government officials going into the debt market and buying treasuries it creates with another one of its entities (flooding the world with dollars) since nobody else wants to hold our garbage debt as we are totally insolvent as a nation to begin with. And then just look at the simply embarrassing, amateur actions of the Obama administration: going after Rush Limbaugh and Jim Cramer (a pretty socialistic guy himself)…giving Gordon Brown a set of DVDs during his visit to the US…attacking the very businessmen who are the only ones that are going to be able to help our economy rebuild…focusing on NCAA picks, Twittering, Facebooking and Lenoing instead of doing his job. What exactly is President Obama thinking?
Americans really need to understand the dire nature of the situation. These guys (and gals) in power on the whole are simply second-rate actors. They are in Washington for self-interested reasons, not with the longterm well-being of their constituents at heart. Companies lobby (basically bribing) politicians to get ahead through patents, monopolies, regulations and other ways to insure that they can win because of a playing field that is not level. The politicians are more than happy to oblige because they will be rewarded upon leaving office with lavish jobs or other support from their business friends. So long as the nation doesn’t implode in their faces, or if it does, so long as they can deflect their failures on others and act sympathetic, they can stay in power forever (see Barney Frank). It is all one big joke. The sooner we accept that these people are not to be taken seriously — that they are a bunch of crooks and frauds who work in the public sector to gain advantages because they couldn’t make it in private life, the sooner we can get the government off our back and out of our lives.
When I imagine the founding father’s thinking about who they wanted to represent the people, I see a group of largely retired folk who had been fairly successful in life and thus had no reason to govern to benefit themselves; they were to serve as competent and honest stewards and largely maintain the status quo (i.e. the Constitution) because they felt it was their duty and valued the sacrifices made to build a country guided by the rule of law and the belief in preserving the life, liberty and property of the people. The government was never intended to be the intrusive, insolvent ignoramous of an institution that it is today. America, wake up and take this country back from these pathetic excuses for representatives!
By J.D. Seagraves, on September 17th, 2008
First, Fannie Mae and Freddie Mac were seized—Communist style—by the federal government. Then Lehman Brothers—which was worth $45 billion as recently as November—announced plans to file for bankruptcy. And now AIG, formerly one of the largest companies in the world, has been taken over by the Federal Reserve.
In 2000, American International Group, an insurance giant, was worth $250 billion. As late as August of 2008, the market set the battered company’s value at $80.4 billion. But following heavy losses on “Black Monday” (September 15, 2008) and the following day, AIG’s market cap now stands at just $10 billion—down over 94% for the year.
What Austrian Economists Knew All Along
These losses may be unprecedented, but they’re not unpredicted. Theorists from the Austrian school of economics have been prognosticating the implosion of the fiat-money-fueled financial system for decades. And according to Cato Adjunct Scholar Dr. Robert Higgs, we haven’t seen anything yet.
Higgs, who’s also a Senior Fellow at the Independent Institute and an Adjunct Scholar at the Ludwig von Mises Institute, predicts that many more financial dominoes will fall, with the end game being the collapse of Social Security and Medicare. “The question is not whether they will fail, but when,” Higgs says, “and then how the government that can no longer sustain them in their previous Ponzi-scheme form will alter them to salvage what little can be salvaged with minimal damage to the government itself.”
Higgs compares what he sees as the impending collapse of the U.S. financial system to what happened to the Soviet Union. And he points out that Keynesian economists—such as textbook king Paul Samuelson—didn’t see the Russian collapse coming, just like they didn’t see the collapse of Fannie Mae and Freddie Mac. Austrian theorists, however, did.
“Who Killed the Economy? …Greenspan’s the Popular Choice”
And their theories are starting to catch on. Key to the Austrian view is the notion that the birth of the Federal Reserve and subsequent inflation of the U.S. money supply created the boom of the Roaring Twenties and the subsequent bust of the Great Depression. Adherents to the teachings of leading Austrians such as Ludwig von Mises, Murray Rothbard and Nobel Laureate Friedrich von Hayek have long held that Alan Greenspan’s inflationist policies would produce another major depression, and now that it’s come to pass, people are for once correctly fingering the culprit.
For example, a recent front-page story on Yahoo! Finance was titled, “Who Killed the Economy? So Far, Greenspan’s the Popular Choice.” The reasons stated in support of this view are Greenspan’s push for “financial deregulation,” his “unwavering support” for the Bush tax cuts and his role in “keeping interest rates too low for too long.”
The Three Indictments Against Greenspan’s Fed
The first—the idea that “deregulation” is responsible for the meltdown—is completely at odds with the Austrian view and conveniently in line with the views of the political establishment. Yes, the same leaders who have rejected Austrian theories in favor of Keynesianism and Monetarism, and who lavished praise on Greenspan as he split his tenure almost equally over Republican (a little Reagan, Bush I and a little Bush II) and Democratic (eight years of Clinton) presidential administrations, are now calling for more regulations. Why should the people who support this view be given any consideration when they’ve been 100% wrong up to this point?
There is a hint of truth in Greenspan’s second supposed crime: his support for the Bush tax cuts. While the Austrian view rejects taxation entirely, Bush’s “tax cuts” were anything but—they were redistributions. After all, the government’s budget deficit increased as the tax cuts were implemented, and government spending went through the roof. Obviously, the federal government was borrowing and printing money to pay its bills—thus expanding the money supply—and these tricks are only possible under a fiat money regime.
Finally, the third argument strikes the heart of the truth. Alan Greenspan kept interest rates “too low for too long.” But what is “too low”? Who is to decide? In the Austrian view, it’s the free market—not central economic planners at the Federal Reserve—that should set interest rates.
There is No Silver (or Gold) Bullet
The Austrian school demonstrates that central economic planning cannot work. The Austrians stood alone in their prediction that the Soviet Union would collapse under its own weight, and for now, they’re largely standing alone in making a similar prediction for the U.S. financial system. More regulation—becoming more Soviet-like—would only hasten the system’s demise. Raising taxes, while arguably preferable to inflationary deficit spending, would definitely worsen the current recession/depression. Obviously, interest rates should have been higher during the Greenspan years, but what can be done about that now?
The harsh reality: nothing. A recession or depression will be necessary to set things right. Government cannot magically fix problems—bad investments need to be liquidated, and intervention only makes the inevitable worse when it finally does come to pass. The question we must ask ourselves is how do we prevent this from happening again?
The obvious answer is that we need to stop the Federal Reserve’s artificial money creation. The only way for interest rates to be neither “too low” nor “too high” is if they are set on the basis of savings and demand. We must stop ignoring the enormous entity—half elephant, half donkey, and all evil—in the room. That hybrid monstrosity, of course, is the Federal Reserve System itself, which was created by Congress and can be destroyed by Congress.
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