July 2017 Issue

DOW/GOLD Ratio — 10-Year Chart

DOW/GOLD RATIO — 2-YEAR CHART

www.DollarVigilante.com 1

GOLD — 1-YEAR CHART

www.DollarVigilante.com 2

THE SHADOW (US) GOLD PRICE INDICATOR

2002-2015 (arithmetic scale)

1959-2016 (log scale)

www.DollarVigilante.com 3

Contents

The Memory Hole Redmond Weissenberger

5

The Big Picture Jeff Berwick

6

TDV Economic & Investment Review & Outlook Ed Bugos

18

Bitcoin Scaling Wars

Juan Galt 23

TDV Groups: TDV Groups: Costa Rica, Still A Viable Option Luis Fernando Mises

33

In Closing… Thomas Jefferson 46

www.DollarVigilante.com 4

The Memory Hole Redmond Weissenberger

In my family, today—the Fourth of July—is the most important day on the calendar. It’s a day we celebrate obstacles and accomplishment, family and friends, and the birth of something unique and special never to be seen again. July 4th is, of course, my birthday. It’s an odd thing to share your birthday with the Evil Empire. It provides a special kind of reflection on the day they ironically call Independence Day. Humans are fallen creatures, so it is not a surprise that a country formed with the express purpose of limiting government has become the largest empire in the world. But, as we all know, that aspiration of limited government also stands as the world’s foremost example of bloated statehood. The USSA is a joke… the failed dream now left to the whims of madmen and morons. Today will be filled with jingoism. Fireworks, men in uniform, hamburgers, Bud Light, apple pie, anthems, and patriots. It will be pageantry at its worst. I’ll celebrate MY birthday the only way I know how: With liberty and cocktails coursing through my veins, sticking it to the man and every opportunity. Happy Fourth!

www.DollarVigilante.com 5

The Big Picture Jeff Berwick

It is getting monotonous how often I repeat how crazy things are getting. But, they continue to get crazier. I’ll be looking at two different Economist magazine covers in this edition of The Big Picture. The Economist is majority owned directly by the Rothschild family and they’ve been putting hints about future planned events in their esoteric covers for decades. The World In 2017 cover being the latest.

www.DollarVigilante.com 6

The DEATH card is the most ominous of the eight tarot cards listed. The JUDGEMENT card is also interesting, with Trump situated atop a globe. Soon after he was photographed in this creepy photo after selling $100 billion of weapons to the criminal terrorist organization known as Saudi Arabia.

It was only a few months ago that Trump admitted to being a globalist. What caught my attention this month, though, was the TOWER card. Let me explain. SEVENS AND ELEVENS May 1st is the Illuminati Mayday ritual. The Bavarian Illuminati was formed in 1776. Two sevens plus 1 plus 6, for the 777. On that day, a Boeing 777 encountered turbulence and made worldwide news. Also on that day, Trump and Putin had a friendly phone call and agreed on meeting each other for the first time in Hamburg on 7/7 at the G20 meeting (letter G is the 7th letter of the alphabet).

www.DollarVigilante.com 7

11 days later, after Mayday, the supposedly worst cyber attack of all time (but was a globalist hoax) happened, called WannaCry, on May 12th. 11 days later, (or shortly before midnight of May 23rd) after the WannaCry cyber attack, on the 23rd of May was the Ariana Grande attack. The free masonic ritual with all high ranking free masons was shown on all the world news channels talking about this Manchester Massacre. 11 days after the Ariana Grande's Illuminati human sacrifice was the London bridge attack of the 3 masked men stabbing 6 people with knives, happening on 6/3. And then, 11 days later, on June 14th, the Grenfell Tower fire. The amount of rumors and evidence of wrongdoing is everywhere with it. Probably one of the best theories of what actually happened was by David Icke which you can hear here. It seemed almost like a ritual burning of the poor. For years the people in the building said they knew this was going to happen… and then it did! Interestingly, almost exactly the same scenario as the Grenfell Towers was originally broadcast on December 12th 1993 in a show on the BBC called House of Cards. You can see it here. Especially uncanny are the details of the degraded state of public housing, and even the specific points that a small fire on the fourth floor began the blaze, and the death toll being 72 (an estimated figure of around 70 from the fire service was given in relation to Grenfell). Predictive programming? Or just yet another strange coincidence? In any case, another major event in the UK? And happening every 11 days? It appears, for whatever reason, that the Illuminati decided to focus their efforts in the UK so far this year. And it makes me wonder if this was the TOWER card from The Economist’s tarot cards. One thing is interesting… Grenfell Towers was a complete inferno for hours and never fell into its own footprint at freefall speed like the three World Trade Center towers did when physics stopped working on September 11th, 2001. Then, 11 days after Grenfell, on June 25th, six people were hurt as a car collided with muslim pedestrians in Newcastle. We’ll see if anything else interesting happens in the UK on July 6th, which will be another 11 days. The day after the 6th is the G20 Summit to be held in Hamburg where protests against globalism are expected to be large. It will be globalist Donald Trump’s first appearance at the G20 and internet chatter seems to indicate that many are expecting something important to happen at the event.

www.DollarVigilante.com 8

INDIA A TEST CASE FOR CASHLESS SOCIETY? Last year, India was used as a test case for cancelling a large amount of the fiat currency in circulation, overnight, to see what would happen. It caused millions of people a lot of problems, waiting in lines for days and in many cases losing their life’s savings. Many people also committed suicide due to being impoverished. The one thing that didn’t happen was a large, violent response by the masses… which is just what the globalists who back Indian Crime Minister, Narendra Modi, were hoping. Spurred on by their success, the Indian government has begun targeting gold with new taxes, regulation, and incentives for citizens to turn over their undeclared gold to the financial sector. In addition to a 10% import tax on gold, India recently placed a 3% nationwide goods and services tax on gold that went into effect on July 1st.

The government is also keen to get the public to recycle its jewelry. After a slow start to its plans to monetize the precious metal held in households and institutions, the government is looking to tweak the scheme and attract more participants. The initiative, launched in November 2015, was aimed at returning an estimated 20,000 metric tons of idle gold to the financial system.

We can expect everything happening in India to be rolled out to all countries worldwide in the coming years.

IS BITCOIN A ROTHSCHILD CREATION?

This week I heard an interesting theory equating the famous 1988 Economist cover to bitcoin.

For years we have speculated that the 1988 cover was to usher in a new global fiat currency, likely the SDR, in 2018.

But, according to this theory, the fact that it is a phoenix is because of how many times bitcoin has been declared dead and risen from the ashes. The

www.DollarVigilante.com 9

phoenix has a chain around its neck… as in block-chain. On the chain is a tangible coin which the media likes to depict bitcoin as. And, the 10 on the coin could represent binary code. Of course, if you search hard enough for a meaning you are looking for, you’ll find it. And I think this is a real stretch. First, in 1988, the internet was still just a crazy idea. I was on computers back then and all there was were Bulletin Board Systems (BBS) where you’d dial up someone’s house with your 300 baud modem (about the speed a slow typer can type) and, if no one else was on the BBS, and there was no busy signal, you could get on a BBS which was entirely text based without graphics. If the Rothschilds not only knew how the internet would develop but knew that bitcoin would come about in 2009, more than twenty years later, and then expect it to grow enough by 2018 to be the world currency… well, if they did, they are using some sort of black magick that most of us aren’t aware of! The Rothschilds and the globalists were blindsided by the internet in my opinion. I was shocked that we were well into the 21st century before they even began to realize how much of a threat to them the internet is. Even now, in 2017, they still haven’t really come up with any good ideas on how to stop it. So, to think that they missed so wildly on the internet but were able to predict bitcoin nearly 30 years in advance, is out of the realm of possibility in my opinion. Some think that both the internet and bitcoin were creations of the government. But, if so, they’ve both backfired. WHAT IS HAPPENING WITH THE CRYPTOS? Phew. What hasn’t been happening with the cryptos? As many of you know, as bitcoin hit $3,000 and Ethereum hit $400 and many other altcoins were skyrocketing, both Ed Bugos and I suggested those with big profits take some profits. Since then we’ve seen bitcoin pull back to the $2,200 area but actually fall below $2,000 briefly on some exchanges in early June.

www.DollarVigilante.com 10

And bitcoin has held quite steady around the $2,500 mark since. This is in line with what I felt could happen. Of all the cryptocurrencies, bitcoin has been the furthest from being in “bubble” territory. One year ago, bitcoin traded near $700. At the time of this writing, it is at $2,600 for a 1 year gain of 271%.

www.DollarVigilante.com 11

While a 271% one year gain in most other assets would be a massive move… it isn’t in bitcoin. In fact, when asked last year when bitcoin was around $900 what my price target was for 2017, I believe I said $2,900. So, just based on supply and demand and the growth in bitcoin related development I suspected bitcoin would hit near $3,000 this year. Compare that to something like Ethereum which was at $11 a year ago and is currently near $300 for a 2,600% gain.

Or, just look at all cryptocurrencies excluding bitcoin in the last year.

A year ago the total value of all altcoins was $2 billion. And, it is now $60 billion for a 2,900% gain.

www.DollarVigilante.com 12

Now, THAT sounds more like a bubble than bitcoin does. In fact, if we see any serious weakness in the altcoins I suspect it will only increase the value of bitcoin. After all, if you are holding Dash, Ethereum and Dogecoin as speculations and the bottom starts to drop out and you want to sell, you’ll be selling for bitcoin. And, how many people, once they have bitcoin, would then sell bitcoin for fiat currency? I know, for me personally, the thought of ever selling bitcoin for fiat makes me sick to even think about. Once you get into crypto you never go back to government fiat. But, on the topic of altcoins, the market as a whole still looks very strong to me. I’d prefer to see a pullback to perhaps somewhere in the neighborhood of $40 billion for the altcoin market as a whole.

At $30-40 billion, that is where altcoins really took off and hit over $70 billion in the last three months. I’d really love to see that pullback. But, at the moment, it doesn’t feel like it is happening. There is simply too much interest in this entire sector right now. I can’t see a large selloff happening here without some unforeseen circumstance. There is just too much big money moving in and the holders of altcoins are not big sellers… they believe too much in the potential of the alts. If you sold some cryptos in the last month as we recommended I’d look to start to wade back in… particularly on bitcoin which could be the big winner if we do get a big selloff in the alts. If you are new to all this and don’t even own any bitcoin yet then I’ll give you the same advice I’ve given subscribers since it was $3 in 2011, “Just buy some now!” Of course, if you are buying or holding bitcoin you’ll want to stay up-to-date on possible soft or hard forks this summer. Further below, Juan Galt takes a detailed look at the current scenarios.

www.DollarVigilante.com 13

As well, make sure to stay tuned to The Dollar Vigilante’s YouTube Channel (subscribe here) as I’ll be interviewing Roger Ver for his insights on the upcoming potential forks in the next week. If he says anything very actionable we’ll release the video to subscribers first. Depending on timing we’ll send out an email but if we don’t have time we’ll often just post it to our private subscribers only Facebook Group (click here to join). CHINA FIRST COUNTRY TO TEST NATIONAL CRYPTOCURRENCY As I mentioned earlier, the cat is out of the bag on cryptocurrencies. No matter what happens now, even if bitcoin were to completely fail, the concept is not going away. The Chinese government has even now become the first to test a rollout of a national cryptocurrency. Of course, any prospective national cryptocurrency will not be like bitcoin in that it is open source software and has set limits to money creation. No government or central bank would ever give up that control… if they did then there would be no need for a central bank. And without central banks, governments would have far less opportunity to spend well beyond their means. So, we won’t see that happening. But if governments push their own form of cryptocurrency it will only make it so the public is educated on using cryptocurrencies. And once they find out about cryptos they’ll surely find their way into things like bitcoin and even other altcoins. Which means the future for cryptos is very bright. LITECOIN SKYROCKETS Litecoin has been skyrocketing lately. It has now risen 1,000% in the last four months and is one of the best performing cryptocurrencies in the last month, nearly doubling.

As I’ve said in the past, I’ve never bought the “bitcoin is digital gold and litecoin is digital silver” meme. Litecoin, though, has been introducing developments at a much faster rate than bitcoin and has caught the interest of some speculators.

www.DollarVigilante.com 14

But, I would not be buying here. PIVX PUMPS On May 27th I did an interview with Trace Mayer on the upcoming BIP 148 fork. In it he mentioned PIVX as his altcoin pick for speculators.

At the time PIVX was trading under $1. But it has been one of the best performing cryptocurrencies in the last few weeks, rising above $2.50.

I don’t have any comments on it at this time except to point it out as being one of the best performers in recent weeks.

www.DollarVigilante.com 15

CONCLUSION As you’ll see further below, TDV’s Senior Analyst, Ed Bugos, thinks the stock market bull has run out of steam. And, my senses tell me it is getting close to time for a crisis of one sort or another. It’s been months with very little volatility. The VIX index has been below 12.5 for nearly three months.

It’s quiet. Too quiet. I’ve postulated that 2017 is possibly the Jubilee year. If so, we’ll see some major event having to do with Israel occur by the end of September. And a major event could be war… which would cause quite the ruckus in the financial markets. In the meantime, save some powder for the cryptos. I’d still like to see a serious pullback in the altcoins before committing new capital. Stay mostly in bitcoin in the meantime. And make sure to read over Juan Galt’s info on being prepared for a potential upcoming fork further below. And, most importantly, make sure you are taking care of your physical, mental and spiritual health. That is all that really matters. I didn’t have time to do a “Health Vigilante” column in this issue but I’ll be back soon with more info on how to raise your vibration. Until next time! Thank you for subscribing!

Jeff Berwick

www.DollarVigilante.com 16

Vigilante’s View — Las Vegas, NV

www.DollarVigilante.com 17

TDV Economic & Investment Review & Outlook Ed Bugos, TDV Senior Analyst

Wall Street’s bull appears tired. The Dow Industrials’ 130 point rally in the middle of a holiday weekend on a thin trading day (where volumes were 50% of the norm) and without help from the NASDAQ or the utilities was like a feign of optimism in my view. I think it is a sign that the big short is about to pay off too.

The bull has only one positive to cling to, and it is a slippery twig at best, because it includes the benefits of higher interest rates. Specifically as it affects the lending industry: the banks, which in the US is among one of the few equity sectors that has never recovered its pre 2008 highs, unlike their Canadian counterparts. Unfortunately for the bull, it is delirious and has forgotten how much the bank stocks - and most other stocks, bonds, real estate, etc - have already absorbed the benefits of a historic interest rate suppression. The banks have made a lot of money from their wall street dealings. So unless all of wall street is going to continue on merrily with the banks, which some bulls clearly believe, a downturn caused by withdrawing the easy money policy that has kept it aloft, and that has prevented an economic healing, is likely to offset margin gains, assuming there would be any lending whatsoever if the broader share markets failed to hold. Far more things would have to unwind than wind up. As you recall, the banks haven’t engaged in much new lending since November. Total bank credit has grown less than 2% in 7 months, causing our money growth indicator to plummet, in turn bringing down US GDP and job growth, and causing other notable deteriorations in US economic activity this year.

www.DollarVigilante.com 18

I would accept that higher interest rates are going to improve lending margins and may even stimulate some lending growth. Still, let’s think about that for a minute. Price inflation is starting to simmer, and the rate of interest rate increases is expected to be very meager and slow. Even if it is uninterrupted by a new crisis before it finishes tightening the Fed’s present trajectory calls for the Fed Funds rate to barely exceed 2% by the end of 2018. Of course, that’s not the rate that banks make money from, and if the slowdown in money growth eventually undermines the investment boom as we keep suggesting, then those market rates - i.e., especially the longer term bond yields and lending rates - would likely fall while the FFR is rising. That would lead to what is called a flattening yield curve, in fact, a little of which has been happening so far. So are the bulls making too much bull about buying bank stocks? I think so. They could rally this week, and continue to test our resolve. However, the broader technicals suggest the bulls are over extended and tired. There doesn’t seem to be anything else for this bull to gain traction about. The Fed and most central banks claim to be ready to unwind their interest rate suppressions, which typically sounds the bell for a new bust. Conflicting Trends in US Mfg Activity On Monday the Big 3 carmakers said,

“Auto sales continued to slide in June, as car buyers react to higher vehicle prices and Detroit backs away from dumping unwanted inventory into rental-car lots. General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV reported steep monthly sales declines compared with the same period in 2016. While retail demand is losing steam, each of Detroit's players also reported significant reductions in deliveries to daily-rental companies.” — (Marketwatch, July 3)

But their shares rose because those declines weren’t as bad as expected. Along with the bounce in car and energy shares, and a delusional (?) run in bank shares, 3M and other manufacturers benefitted from news that the ISM Purchasing Managers Index “rose to 57.8 in June 2017 from 54.9 in May and way above market expectations of 55.2. The reading pointed to the strongest rate of expansion since August 2014, as output, new orders and employment grew at a faster pace.” Below is a chart of the US ISM Purchasing Managers Index back to 2012, note the recent trend:

www.DollarVigilante.com 19

On the other hand, the reading and trend on this index conflicts with the seasonally adjusted IHS Markit final US Manufacturing PMI, which is nowhere near its 2014 and is much closer in fact to its 2016 low. US Manufacturing PMI:

So what is the difference? The latter, Markit index, is newer, less volatile, and includes a broader survey.

www.DollarVigilante.com 20

In 2012, in a comparison of the two indicators, the UK based company noted that both,

“PMIs are composite indicators derived from various survey questions, and although using the same indexes, the two surveys have different weights for each component.” That same year, when the differences were much smaller, it said, “one of the key divergences between the headline PMI readings for the two surveys is due to the differences in the Stocks of Purchases/Inventories and Employment indexes. The Stocks of Purchases Index is weighted higher in the ISM PMI than in the Markit equivalent index.”

Markit explains:

“There are many factors that can explain divergences between the two surveys, and also reasons why Markit’s survey typically provides a smoother trend, with a lower “noise to signal” ratio. Markit’s survey panel is nearly twice as large as the ISM’s stated panel size, is very closely mapped against the official structure of the economy and uses a different method of seasonal adjustment, calculating the factors every month instead of once per year. These methodological differences have a clear impact. When the Output Indexes from the two surveys are compared against the three-month change in official production data (a widely used comparison for survey and official data), the Markit index has a correlation of 94% compared with 87% for the ISM data (this is based in both cases on the data from mid-2007, when Markit data were first available).”

Essentially, the ISM data is going to be more volatile and more sensitive to recent trends while the Market data is going to be generally less volatile and broader, and more in tune with the underlying trend. THE ONLY CATALYST THAT MATTERS The Collapsing Money Growth Measure I hate the catalyst framework for how markets operate. It is bogus. Catalysts are proximal events, outcomes of underlying causes. If you understand the cause of the booms and the busts then it doesn’t matter who or what the catalyst is going to be unless you are trying to pick the right deal or sector to short, or the right timing. To

that extent I think we are right to be short the techs, as that is where most of the malinvestment is likely to have occurred. We can’t really know until the bust reveals the uneconomic enterprises for what they are, a wasted investment. That’s also why catalysts involve 20/20 hindsight. But we are speculating. Whatever the news event will be, the cause is going to be the statistic on the left here. That is what is behind the weakening economic data already. It is also what the asset bubble relies on as fuel to keep going. Asset bubbles can’t inflate on irrational exuberance alone!

www.DollarVigilante.com 21

The year over year growth rate in our broad money measure has collapsed to 5.4%, its lowest level since the summer of 2008, another ominous sign in fact. Recall that a reading of under 5% year over year in this statistic is a sell signal in my stock market model. I have been front running this decline, which is likely why I have been early (perhaps hasty) in getting on the big short… for lack of missing out! That fear of missing the short is undoubtedly another aspect. Yet, historically, a decline below 5% almost guarantees a bust within a year, 2 at most; but in this case probably even way sooner, as we have reached extremes in all the other indicators and see the boom sputtering. And for what it’s worth, the narrow money measures calculated by Frank Shostak and Sean Corrigan have dropped to just 3.5% year over year in June (I keep track of other Austrian economist’s measures as well). Concluding Remarks Gold got pummeled on a bounce in the US dollar and Wall Street’s interpretation of the ISM data, and who knows, maybe somebody got a glimpse of the June employment report due out this Friday. Or maybe we can chalk it up to a countertrend week. We could be due for a small bounce in the USD and the tech shares, although I feel a serious slide coming in those things, as well as government bonds. I don’t think the bulls are going to get a lot of traction out of their hopes for bank earnings tied to the rate increases, and while I agree that letting interest rates higher ultimately is good for the economy, an asset liquidation must first occur in order to free up the capital and other resources for redirection to their highest value end use. As Wall Street likes to say, there is no market discovery under the Fed. Whatever the errors are, they have to be revealed and liquidated before the economy can truly grow.

www.DollarVigilante.com 22

Bitcoin Scaling Wars

Juan Galt, TDV Crypto-Analyst

First and foremost, bitcoin is a network of financial infrastructure. It has certain rules and standards for the use of its platform, enforced through mining power and cryptography. Bitcoin is also a brand that has worldwide recognition. Both of these assets are very real and they are at stake right now, in what will probably be known as the bitcoin scaling wars. Now when I use the word “war” here, I do so in a very specific way. Unlike most wars, bitcoin’s future is not fought for with guns, bombs or other physically violent weapons. No, this war is fought with code, mining hardware, media campaigns, price manipulation stunts and money. Lots of money. This war is also much more peaceful than most other wars. In fact, it is quite literally a war of language, human and computer words and symbols (at least for now). So, we can take some solace in that progress. Nevertheless, there is a real conflict here and there will be winners and “losers” when the dust finally settles. The good news is that we are closer to a resolution to this scaling conflict then we have ever been before and there’s good reason to think that it will resolve. Let's take a look at the current players and factions. The Developers, The Exchanges and The Miners On one side is Bitcoin Core, the open source development community that have arguably built most of what bitcoin is today. Their belief is that making the bitcoin blocks bigger will lead to centralization and thus the death of Bitcoin’s vision as a censorship resistant, decentralized and sovereign financial system. They also don’t believe that it is a long term sustainable scaling solution, and no one is really arguing against that. Even Roger Ver has expressed support for off chain scaling solutions like lightning network and Segwit. His main disagreement with core appears to be about the value of increasing the block size and when it is done.

www.DollarVigilante.com 23

Here’s some back of the envelope math on on-chain scaling, although I understand this is not a total clincher.

● Let’s start with an above average transaction size of 0.8 kbytes each.

● Bitcoin’s blockchain is currently increasing in size by 45 GB/year.

● Visa does 100 billion transactions/year.

● Bitcoin currently can do a maximum of 52 million transactions/year.

● By reaching 1% of Visa’s volume, the block size would grow to around 1000gb/year, or one terabyte per year.

● A 3tb hard drive is around $100 USD.

● 50% of Visa’s volume would require 50tb/ year, or about 1700 USD worth of hard drives per full node at current prices.

● Sure these prices may drop, over time. However, unless things change a lot, I think we can see why on-chain scaling can lead to centralization especially when there is no direct financial incentive for users to host a full copy of the blockchain. Though, some subtle incentives to host a full node include doing their own transactions, trustless verification and getting direct access to the chain for your business.

A majority of core developers and a sizable portion of the Bitcoin community, as well as major exchanges and companies, have declared their support for Segwit. Segwit is a bitcoin scaling proposal that allegedly makes transactions smaller and allows for faster and safer paths to upgrade the bitcoin protocol. The groundwork for Segwit was done over a year ago, and the final date to activate it per the code’s built in limits is around the beginning of August. This development has been industry wide and is arguably valued at tens of millions of dollars. Most of these entities support something called a UASF, or User Activated Soft Fork. UASF is a means by which to activate Segwit without the majority of mining support. Its activation is set to happen on the first of August. The most popular version of UASF is BIP 148. What does UASF mean for Bitcoin? In short, Bitcoin full nodes that are running the UASF version of Segwit released by Core, will only accept Segwit compliant transactions. If you receive non-Segwit compliant transactions after the August 1st split happens, and at some point after that the UASF version of the chain gets the majority of hashing power from miners. Then the bitcoin you received could be “wiped out” as nodes all over the network reorganize their copies of the blockchain to

www.DollarVigilante.com 24

match the one with the highest mining power behind it. This is the great danger that Trace Mayer was talking about and why he suggested people move their coins out of exchanges and don’t engage in economic activity until after the fork settles. Specifically, this danger comes into play after August 1st, the day that UASF is activated; that is, if a resolution to this conflict is not reached before then. So will it be reached? Let’s take a look at these charts of support for and against Segwit to get a sense of the current state of the market. Sourced from Bitcoin.it. On the left are some of the most prominent Bitcoin core

developers, as well as lead developers from various big companies in the industry. Below on the following page we can see many prominent Bitcoin companies and exchanges including Coinbase, Xapo and Bitfinex. Also notice that Bitmain, the very influential Asic manufacturer, supports Core’s Segwit as long as it goes through before the August 1st, UASF. This is very important since Bitmain is the biggest player on the opposing scaling faction. But more on that later. So with those two charts we can get a very good sense of where the developers and most major companies stand.

www.DollarVigilante.com 25

But what about the miners? Well, let’s start with Bitmain the biggest bitcoin ASIC (specialized mining hardware) manufacturer, holding an alleged 80% of the market share. They also run Antpool, the biggest bitcoin mining pool in the world at 14% hashing power, as of the day of writing. That’s right, according to various sources including Adam Back and as far as I can tell, any Bitcoin miner you ask. It’s generally accepted as true that Bitmain

produces most of the mining hardware for Bitcoin. Here’s an ok article on the matter. Perhaps in the not too distant future, hardware manufacturers like Asus and Nvidia will enter the ASIC game, as we are seeing them do with high power graphic cards. Some have speculated AMD or Intel might also enter the ASIC space at some point. That would be huge. In the meantime, they are the most most efficient consumer grade ASIC manufacturer which puts Bitmain in a very strong position when it comes to the future of Bitcoin. Jihan Wu is generally seen as the head of Bitmain. Bitmain also happens to disagree with Core on how to scale Bitcoin, or so it appears. They feel so strongly about this that they have been in conflict with the majority of Bitcoin core developers for years, in a series of controversies and “agreements” that end up being questioned and reneged. This includes the infamous Hong Kong Agreement, which you’ll find was a pivotal point for the conflict we see today.

www.DollarVigilante.com 26

Bitmain’s resistance to the activation of Segwit as the best scaling solution, has been one of the main reasons it has taken this long, although there has been significant opposition from other members in the community. In general, there are probably a lot of reasons why this has been such a hard fought battle. Whatever the reason for their resistance, they, nevertheless, have a great deal of say on how Bitcoin will develop just given their hashing power. And they know this which is why they published their plans to protect themselves against the UASF wipe out. When they did this, the price of Bitcoin crashed from a near all time high to about 2100 USD. Here’s the article. Basically, they will do a full hard fork of Bitcoin, if UASF gets enough hashing power behind them in order to protect themselves from this “wipe out.” If the conflict comes to this, there will be two separate Bitcoins. I strongly suggest everyone read that article if you have not already. What they did with this blog post was explain in the clearest terms I’ve ever seen, what the state of the Bitcoin scaling debate was. Here’s a chart of the mining power as of the time of writing.

Some speculate that Bitmain might be willing to go as far as refusing to sell its hardware to various mining pools unless they support Bitmain’s fork. While this argument at face value makes some sense, I have yet to see any evidence for it and wonder how much business Bitmain is willing to give up in order to get its version of Bitcoin to win.

www.DollarVigilante.com 27

The risk of a wipe out, however, could erase many of their Bitcoin profits, as they are one of the biggest Bitcoin miners. If Bitmain and their Bitcoin pool, Antpool, decide to mine on the non-Segwit version of Bitcoin after the August 1st UASF and UASF ends up getting most of the mining power a few weeks down the road, then Bitmain will have millions of USD in Bitcoin erased. So why don’t they just go along with Bitcoin Core? Well, there’s much speculation about this. One of them is Asicboost, which is an exploit of a bug in the proof of work cryptography of Bitcoin that lets Bitmain have a 20% mining efficiency increase over other ASICs. Segwit supporters argue that the current implementation of Segwit in the Bitcoin mainchain is incompatible with Asicboost, providing one financial motivation for Bitmain’s resistance. It is unclear to me whether Asicboost is actually in use. Andreas Antonopoulos was recently quoted saying: “The covert version damages the market, damages the protocol development and since nobody’s using it, let’s turn it off.” Bitmain has also paid lip service to the big block argument, though their support for Segwit as seen in the above chart contradicts this.

(Source) Within hours of the crash to 2100 USD, many companies began to express their position on the debate,

www.DollarVigilante.com 28

adding to the charts on Bitcoin.it seen above. This brought back some confidence to Bitcoin’s future which was soon reflected in the price. Days after, Bitcoin mining pools from all over the world signed an agreement to implement a version of Segwit called Segwit2x through BIP 91. Segwit2x is a compromise solution lead by Barry Silbert, attempting to deliver Bitcoin a Segwit implementation with a 2mb block size in a very short time. The BIP91 version would activate Segwit before UASF and then hard fork to 2mb blocks in a few months. This is really good news in a way. It means that consensus is forming. And frankly, I think it needed to get this bad for consensus to actually form. In a sense, the past few months of Bitcoin scandals and power struggles and theoretical threats have allowed all pĺayers to recognize the costs of splitting the network - the costs of actually going to war.

(Source)

This compromise agreement known as the Silbert Agreement, as seen in the “Bitcoin.it” charts, it is one of the possible solutions to this conflict. Now, the future of Segwit2x is still uncertain, and the discussions I’ve seen on Twitter the past few days have still shown significant friction between UASF supporters and Silbert’s Agreement. Take a look at his Twitter timeline, though. There’s still plenty of contention around it. So it is not yet settled, but it does show that Segwit is something pretty much everyone is willing to accept under certain conditions. Perhaps the no unclear terms of what may come if a solution that satisfies all parties is not reached, as we very clearly stated in Bitmain’s blog post, is enough to bring resolution and consensus to Bitcoin. I’m optimistic about Bitcoin right now and think that something like this is what will likely happen, but there’s certainly risk and nothing happens until it happens. So for now, let’s talk about how you can protect your money regardless of what happens in the coming months.

www.DollarVigilante.com 29

Protecting your Bitcoin from the potential split Alright, so let’s get to the nitty gritty here. There are three big risks with a Bitcoin split like the one we are facing. The first and biggest is for exchanges. How will they interpret the fork? Will there be two Bitcoins? Will they get replayed attacked like we saw with Ethereum and Ethereum Classic? We will have to see. This uncertainty and the high trust involved with leaving your coins with any exchange be it CoinBase, Kraken, Poloniex, Bittrex, Bitfinex or any of the Asian exchanges, is the main reason “experts” are suggesting that you store your own coins in a personally and privately held wallet. But which wallet is best to use? Here’s the second challenge. Not all wallets have resources to prepare for user interface support of both chains. Some may actually just be hoping for the best. It’s hard to say when they don’t make clear public statements. Some of the wallets that I would avoid during this crisis (and I say this with a heavy heart, as I like all of these wallets) are Jaxx.io and Mycelium. Unfortunately, Mycelium has been going through some hard times internally. So, they are running on a low budget and have expressed a specific intent to support UASF if it comes down to it. But that means they don’t currently have plans to deal with a Bitmain version. Jaxx.io, as much as I appreciate their ease of use and multicoin support, have not responded to my request for comment on how they will deal with such a split. They are also being very clear that their wallet is not meant or designed for cold storage, instead calling it a hot wallet, which is usually the term used for short term, online, high risk wallets managed by exchanges. Hot wallets are usually the transition holding place for coins between cold storage and withdraws from an exchange. With Jaxx.io, only you have access to your coins. Just as with Mycelium. So, there will likely be techy ways for you to claim both coins from these wallets in the case of a fork, but they will not be supported by default and will not be supported at the interface level (as of the time of writing). So what’s left? Well, if you can get your hands on one, either Trezor or Ledger. The two leading hardware wallet manufacturers have expressed clear intent to protect users’ funds from a Bitcoin split and this is exactly what they should be doing, as far as users are concerned. Here and here are two tweets from Ledger that illuminate their plans and position. Trezor also expressed their support for both such Bitcoins in no uncertain terms. You can pre-order either of these hardware wallets from CryptoHWwallet.com and even get a 5% discount with the discount code “juangalt” on purchases above 100 USD. However, they are pretty much out of stock until after the split, and as far as I know, everyone is. These things sell way faster than they can be produced. You might be able to find one on Amazon, but you will pay a premium price, easily twice their retail price tag, which, may very well be worth it.

www.DollarVigilante.com 30

Last, but not least, if you can’t afford or get your hands on a hardware wallet, is Electrum, the classic, open source Bitcoin software wallet. Electrum is a bit geekier than most wallets you’ll see today, with an old school, gray silver interface and lots of buttons. It might take a bit of exploring for you to get your head around it, but in general it is a great wallet. Make sure to check the transaction fees when sending coins from it. A few months ago, their transaction fee calculator was out of date and your coins would get hung for days until a miner picked them up, unless you manually placed a high fee on it. Electrum recently made a series of tweets regarding its development around the coming fork. This includes fork detection code which would let Electrum see if there’s a split happening, as well as support of UASF, if UASF gains majority hashing power. So it’s not perfect with Electrum, or with any of the wallets as far as I know. However, being one of the oldest lite client Bitcoin wallets with a wide range of use by various cryptocurrencies and Bitcoin applications, makes it one of the safest places to put your coins aside from hardware wallets. Chances are, if there is a clean split of Bitcoin and there’s two separate chains, there will be a clear way for electrum users to split their coins and move them on both chains. All of this, however, will take some time, even with hardware wallets. So the best strategy right now for users and investors is to make their bets on bitcoin’s short-term future, put their coins on their personal wallet of choice before August the first and prepare to hold for two or three months. You also may not want to accept bitcoin deposits during that time. Use other coins instead, like DASH, or Litecoin. They are faster, cheaper and more stable right now and you can use both with Jaxx.io. If the above options are overwhelming, you may want to cash out some BTC for the short term and get back in when the dust settles. You should ask your favorite exchanges what their position will be and choose one whose approach you like. I personally will be keeping my bitcoin locked up for a while, and will be asking for and using other coins until the dust settles, after August first, that is, if there is a fork. If bitcoin can reach consensus, all of this will be regarded as a good stress test of the community and a good learning experience. But we’ll be able to go back to normal bitcoin use and strap-on for its ride to the moon. What about the price? Well, unfortunately, I don’t have much time to do price analysis right now. But here are my thoughts. Confidence is king when it comes to price valuations. Bitcoin is at its weakest right now with this internal struggle. That means the price is going to keep testing the bottom trend line of the bull trend.

www.DollarVigilante.com 31

If the price breaks below that trendline, then we could see prices as low as 1100 USD. Though 1300 USD is more reasonable. A good time to buy if this happens, if you ask me. I’ve been placing buy walls close to the trend line above and sold the latest bounce reasonably well, though the June 15 panic really got to me. Placing some buy walls between 1300 and 1500 is probably good insurance against such a crash. After such a split happens, if we follow the example lead by ETH and ETC, the price of both coins will be greater than the whole, not long after the split. So basically, you should hold. And if you can, buy when the panic hits. You might also want to take some profits now, since there’s also a chance of an extended bear market with such a Bitcoin split. That would last easily six months; maybe even a year. On the flip side, if consensus is reached and Bitcoin remains whole, we will very likely see new all time highs: easily $5000 USD, in my humble opinion, by the end of the year. I hope that gives you some clarity about how to navigate this coming storm. Riches will be made during this turbulence, no doubt. But there is no shame in taking profits now and entering the waters later on when the sea is calmer. Signing out for now. I’ll be offline for the coming three weeks as I join the Rainbow Gathering near Portlandia. :) Happy trading!

www.DollarVigilante.com 32

TDV Groups: Costa Rica, Still A Viable Option

Luis Fernando Mises

Luis: Welcome to another exciting interview with the Dollar Vigilante group. Today I have our friend, Ernesto Duran, and he is in Costa Rica. And we actually met because he travels the world. He does a lot of work overseas, and he is somebody that has seen very different areas, very different––many countries and many cities, so he is somebody that I would like to get his experience and see Costa Rica through his eyes. Costa Rica used to be the go-to place for a lot of US citizens, and I don’t know. I want to explore with him if that is still the case or if it has slowed down since prices have gone up and other things. Ernesto, thank you so much for doing this with us today. Ernesto: Well, I think the kind of people that are coming here right now are very different from 20 years ago, when it was all about the backpacker type that would come and explore a pretty wild, pretty untamed country. Where is right now, it is a highly Americanized place that has seen prices go up significantly. So right now, Costa Rica is still getting quite a bit of Americans, but more of an upper-middle-class of really rich people, as opposed to, say, 20 or 25 years ago.

www.DollarVigilante.com 33

A pretty good example is my best friend here in Costa Rica, who comes from Baltimore, Maryland. He came here with about $25,000 in his pocket, and he made a fortune here in real estate. And right now, you can do that. $25,000 right now in Costa Rica is next to nothing if you want to buy a patch of land, whereas 26 years ago, when he arrived, it was quite a big fortune. Luis: Right. It makes a huge difference. You know, that is another thing. Since the price has been up, the quality of life has gone up also, and the amenities have gone up. Like there are so many cool things in Costa Rica, and I would like to explore them all with you. Where do you think we should start? Ernesto: Well, I have to say, the quality of life has gone up quite significantly, yes, but that is just the natural progression, I think, that Costa Rica was headed towards. I do think that in the 80s, Costa Rica made a pretty wide position to associate themselves more with America, as opposed to Nicaragua and the Soviets and all that, because then that capitalism route was chosen quite wisely, and it has been the trend ever since. Other countries in the region are significantly poorer because they chose to go with the more socialist, more like influenced by the––back then Soviet Union––now Russia, but yeah. It was a pretty big difference, and it really set the trend for the region for years and years to come. Another example is Panama, which chose to go the same route, but a few years after Costa Rica made that decision, and that is what happened when Manuel Noriega was removed from power. So you have countries in a very, very small region like Central America that choose to go with either a capitalistic or a socialistic point of view, and then they developed quite differently. So that is something I really wanted to say about the quality of life here. It is pretty good, but there has been a natural progression. It hasn’t been something that has been forced or anything like that. It is been pretty organic. Luis: That is actually a great thing to highlight, because we are seeing the downtrend in a lot of Central and South American countries that have chosen to lean a little bit to the left––or a lot in some cases. Bolivia is a great example, and we have covered that here at the Dollar Vigilante groups. And Peru is still kind of developing. As you mentioned, Panama––oh my gosh. Exuberant, just as Costa Rica is. So one of the interesting things is Costa Rica does not have an army. Ernesto: No. Luis: I have always found that that is kind of cool and impressive.

www.DollarVigilante.com 34

Ernesto: Well, it is fascinating that you bring it up. So the Army was abolished in 1949. The president at that time had just won a civil war in Costa Rica, so many said that he felt threatened that somebody might do it again on the and he decided to abolish the Army just to keep the enemies at bay. But when he did that, he also decided to invest quite a bit of money on education and health instead of weapons, and that created a huge impact on the country and the philosophy of the country that is being felt even today. Costa Rica boasts amazing health and education records internationally, and it is amongst leaders in Latin America in both areas. So that makes the country very, very appealing to foreign investments, and that has been one of the biggest things that Costa Rica has been able to sell to companies that want to invest here. It is a very stable country, very peaceful. It is Latin America’s most solid democracy, and that is why I am such a huge proponent of democracy. It brings about a lot of peace with it as well, and that leads to the kind of stability that has made Costa Rica a very, very suitable place for investments to take place.

Luis: I think that one thing that you have mentioned that is very important for all of that to be able to work is there is a lot of education. Ernesto: Yes. Luis: You know, without that––I mean we see it in Mexico. Forty-five percent of the population lives in poverty. It doesn’t quite fly like that, and here in the States even. Oh my God. Ernesto: Yes. I have had plenty of experience, because of my work in both

Mexico and in the US, and I have to say some places really shocked me compared to the life I have had since I have been working in Costa Rica. It is like night and day. Even in the States, the one thing in the States is that I have seen amazing wealth, but insane poverty as well. And very, very often––more often than not actually––very close to each other geographically. And that happened to me in Michigan, where I spent pretty much all of last year working on a project. I saw these amazing areas like Auburn Hills or North Hills, where I stayed for a whole year, and then you go to Flint, which is like 45 minutes away, and that is a shithole. And I don’t know what kind of policy you have for swearing, but it is a shithole. Luis: Yes. You know a lot of that happens because of the legislation––you know, zoning and all of that. So it’s something where the people will say, “Oh, it is the big corporations doing some shenanigans.” No. That is how the state regulates tent cities or how difficult it is to start a business. I mean gosh, Michigan, like you said––and Detroit specifically––there are so many legislations and rules, that it just makes it impossible for anyone to create a business. So that is one of the cool things about Costa Rica is that it is very free and very organic, right?

www.DollarVigilante.com 35

Ernesto: Costa Rica is something you will find fascinating. It is called a 3-zone regimen. That means in a certain geographical area, any company from any country can establish itself and pay absolutely no taxes at all in exchange for just employing people––no taxes––no income, any equipment they can afford, everything from manufacturing services to anything else you can think of to pay for––no taxes. And in return, big companies employ people, and they generate quite a few positions here that pay fairly well, and that is money that gets pumped into the economy when people have money to spend. It is one of my favorite things about a capitalistic society is when people have jobs that enable them to have money for discretionary spending––something beyond just paying your bills and eat and that is it, you know? Costa Rica has an explosion of mobile phone usage. The average right now is about 1 mobile phone per person in the country. That is pretty insane. Costa Rica has seen an explosion in shopping centers because when people have money, they want to buy every single thing you could possibly imagine, and that is when the free market comes in to buy the things that people want to buy. So these 3 zones that have been developed in Costa Rica the past 20 to 25 years have offered people the ability to have a very well-paying job and the ability to have a pretty good life. And precisely at that time when that thing started, the middle class here in Costa Rica suffered an explosion of growth that has been pretty ongoing for the same amount of time. Costa Rica boasts a very, very good middle class––a very strong middle class––and it just keeps growing because people are able to enter the middle class and not leave it, whereas in countries like the US, people are leaving the middle class––some to join the upper classes, but a lot of them to go into the lower middle classes, where you can just scrape by and make a living without actually having fun. That’s just paying your bills. Luis: Absolutely. And it is kind of funny because President Trump was saying that he is going to bring the iPhone to be made in the United States. Ernesto: Bullshit. Bullshit. Luis: I agree. Ernesto: No. You know why? Because American workers for one are very expensive and two, there are labor laws in the US that do not allow for the kind of manufacturing teams that these people have in China, where they can work just around-the-clock without any safe protections. So that is what makes all these people very, very cheap, and no. There is no way that all the manufacturing positions are going back to the US, because Americans are simply too expensive. Luis: Yes. So my iPhone is going to go from $750 to perhaps $15,000. Who is going to buy a $15,000 phone? I couldn’t buy a $15,000 phone.

www.DollarVigilante.com 36

Ernesto: Right, No. The thing with capitalism is that there will always be somebody willing to pay for a product, but if you reduce your cost, there will always be somebody willing to work for that amount of money being offered. So it is not about just shopping for things. It goes both directions. So you always have people willing to work for whatever amount, which is one of the reasons why I think the argument for the minimum wage is nonsensical. Costa Rica has a minimum wage, and that has actually deterred a lot of people from getting entry-level jobs, and that has been one of my most, I guess, contentious areas of debate here in the country because a lot of people just want to work for less money sometimes than the minimum wage stipulates in the law, and they can’t because it is illegal.

Luis: Yes. And at the same time, one of the cool things that I have seen in Costa Rica, which is kind of the norm in a lot of Latin American countries, is that anybody at any given time can create––you know, like the juice lady. There is an orange juice lady moving around her little cart on, and bam, you’re in. Those kinds of organic–– Ernesto: That is the way it should be. That is the way it should be. I will give you a fantastic example that you will love for sure. Back in the early ‘40s when the Jews

were being chased out of Germany and Poland, a lot of them came to Costa Rica, and many of them, they established a pretty particular business model where they would buy clothes and they would sell them door to door, and people would pay a weekly fee, if you will, just to get the bill settled in a matter of 4 or 5 or 6 weeks. So they would buy a pair of jeans for, say, 10 bucks, right? And they sold it for 40 bucks, but people had time to pay. So they loved that model, and they would collect the money every week from the workers, because back in those days, the workers got paid on a weekly basis. These workers, they would pay the salesman every week for the clothes that they bought, and the people made a good profit––the salespeople made a good profit that enabled them to grow their businesses and the like. And it got to the point where they started accumulating quite a bit of wealth, and right now, some of the richest Costa Ricans are the sons and daughters or granddaughters and grandsons from those Polish immigrants that came here, and they ended up having enough money to buy a lot of things, like car dealerships or universities or whatever you want, and they are like very, very rich. And it all started just selling clothes door-to-door. And it got to the point where people referred to these door-to-door salesmen as the Polish. In Spanish, they call them the polaco. So the Polish here in Costa Rica are associated with the business model of selling things door-to-door and letting people pay on a weekly basis. And that is not something that many people outside of Costa Rica know, but it is nevertheless fascinating.

www.DollarVigilante.com 37

Luis: Okay. I just learned a bunch, and I am so happy that you shared that story. And you know, like you mentioned, one of the things that I liked about what you said is that people are left alone in Costa Rica to where they can grow to be able to get to where they want to be without any kind of pressure or any red tape. So let’s say, for instance––that is, for locals or for people who want to go visit––how difficult is it––or do you even know?––for someone to come to Costa Rica from the States or New York? Ernesto: Like what exactly? Luis: The visas–– Ernesto: For business or––? Luis: Let’s do visiting and tourism first. Ernesto: Well, tourism is the number 1 industry in this country, so it is extremely easy to get in because the government does not want to impose bullshit restrictions on people to come in here because they want people to come in and spend money. That is the main industry this country has, tourism. So most countries in the world have a 90-day period in Costa Rica without a visa. So if you want to come to Costa Rica, you get 90 days absolutely free of visas or bullshit. You come in. You spend the 90 days, and then you can go back out of the country and come back any time. There are not any restrictions on that, and I think last year in 2016, Costa Rica received well over 3 million tourists during the whole year, and this is the country that only has about 5 million inhabitants. So think about that. And Costa Rica is only about 50,000 km², which is about 1/12 the size of Texas. So you can fit Costa Rica 12 times in Texas and have space left. Luis: That’s very–– Ernesto: 3 million tourists. Luis: That is incredible. Ernesto: Yes. But, the whole industry is extremely well-developed, and many of them that come here, they are expecting a certain, I would say, familiarity for the places they come from. So the tourism industry has been extremely clever here in figuring out what people in certain countries and certain regions want, and they take it to them, which is how it should be in a capitalistic society. So Americans can have a wide array of hotels to choose from that are remarkably American-like, but there is also the whole area where they can just go and choose something that is more local for them. So the tourism industry here offers everything for everybody, because who doesn’t like money? Who doesn’t like a lot of money? Luis: And you know, like you said, you have the levels of spending which are in tiers. You know, you have the fancy hotels where you spend hundreds of dollars a night, or you can go to Airbnb. How does that work? Do you have a lot of that happening in Costa Rica? Ernesto: Airbnb is growing quite a bit, I would say, in the past couple of years. The biggest thing here may not change, right? It is mom-and-pop hotels. Maybe they have a house or something, and they converted it

www.DollarVigilante.com 38

into a hotel, or they build kind of mid-level hotels. Of course the chains attract a lot more people, but if you are in a touristy area and you have your own place, you can make a pretty good living. Luis: Now, I have a question. I am a Mexican citizen. I am a US citizen. I go to Costa Rica. I want to go visit you. I want to buy a house. Can I do that? Ernesto: You can buy a house. Yes. Absolutely. You just have to fill out some paperwork or whatever. That is fine. If you come in all cash, everybody will love you. If you need to take out a loan, certain nationalities––certain passport holders, Americans included, French-Canadians, and I think Germans as well––they get offered loans by banks straightaway. You know, off the plane, you can apply for a loan because your passport offers a certain sense of security for the bank. Of course, if you have an Afghani passport or an Iraqi passport, you are not getting jack shit. If you have a passport from a country that conveys a sense of security in your investment, then you can get a loan and you can buy a house. I have to say, because I am close to buying a house, the market has grown to a point where it is increasingly difficult for locals right now to be able to buy nice houses if the prices keep going the way they are, because foreigners have made prices soar in the past 10 years. Luis: That is the one downside.

www.DollarVigilante.com 39

Ernesto: Yeah. The downside to all this growth and all this influx of foreigners––more often than not with good money in their pocket––is that the locals are getting increasingly priced out of certain things, certain areas of society, say, and they’re left only with limited choices for many of those things. Now, if you are solid middle class in this country, then you can have a pretty good life, and you can go to the same places that the tourists can go to most of the time. But of course, you need a good job and a good income to do that. The lower classes, they get stuck with what the foreigners really don’t want, and that is just their reality, because business owners of course are going to go for the people that give them the money and who invested in them to begin with. So a lot of these poor people, they don’t have access to these five-star resorts where these spectacular white sand beaches or whatever. But they do have their own places to go to that cater to the less affluent people, that’s for sure. Luis: So what it sounds like to me is just like any other country. I would go to, for instance, Mexico––or Acapulco, to be precise––where there is a touristy area, and then there is the local area, and that is just the way it is. Even in California, I went to Newport Beach, and then there is a fancy side, where some of the tourists stay in some nice fancy villas, and then we could go down to eat at a not super exorbitant restaurant where more local people would go. So that happens even here in the States.

Ernesto: It is similar to Mexico as well. I stayed in Saltillo for a couple of weeks, and we would often go to the finest restaurant in Saltillo for dinner, for example. It would seem insanely cheap to me in my economy segment––insanely cheap. But then I would tell the people in Saltillo how much I paid for a meal, and they would be shocked that I had spent that much, because that was something they couldn’t really afford to do on a regular basis. And then I stayed in a pretty good hotel in a pretty good area of town, but when I saw the roughest areas of town, the difference was insanely absurd really. It was just massive. Luis: Yes. And again, there was a guy in finance who went to Mexico who recently got caught stealing 23,000 pesos a year on average for 7 or 8 years. He ended up with millions of pesos. That is what they do when there is a lot of this legislation that only helps some. I think that no country is free from corruption, but I sense that Costa Rica has less corruption and their government is more friendly. Is that correct?

www.DollarVigilante.com 40

Ernesto: I would say partly yes. I mean, there is corruption. You know, you can’t really deny that. There is government waste, that every country has it. Compared to other countries, yes, it has the least. I agree. It has less corruption, or at least the government realizes that if they get out of people’s business as much as they can or will, good things happen. So yes. I would say, for example, compared to Mexico, it is a lot different. Luis: I guess I just mean corruption. Yeah. It’s a synonym of government, so it is just the level that they have. I’m not by any stretch of the imagination trying to say that governments are good. It is just kind of like what Doug Casey says––you know, you have to kind of make friends with corruption, see which government uses you as a milking cow, and try to shop for less invasive governments. Ernesto: The thing is, people here––I mean, we pay taxes, like every country, but the level of taxation are lower here compared to other countries. For example, my income tax––and I am and the 2nd highest bracket in the country. It is the 2nd highest downwards. My taxation is 15%. Luis: 15? Ernesto: Yes. In the US, my bracket would pay 38%. Luis: Wow. Ernesto: What I do pay every month is 9% for my healthcare. So in Costa Rica, there is a hybrid system of healthcare, where you pay 9% to the government every month, and that is universal. It covers “everything.” But you also have a private option. So I have both public and private healthcare here in Costa Rica because my employer has made it a perk, so to speak, or a benefit for me to have private care available at my disposal. So if I don’t want to wait a long time and I know it is something trivial, I would go to the private healthcare systems, get my needs taken care of, and then I do not interact with the government––no red tape, no bullshit, no nothing. You just go. You get taken care of, and you pay, and you leave. That is it. In the public sector, we have pretty good things, where it is something that will be extremely costly or something that will take a long time, like an ongoing disease. So to give you an example, my mom has epilepsy, and she gets medication every month from the public healthcare system, and that medication is more expensive than what she puts in every month, because she gets a very expensive medication, and she gets consulted by a neurologist every couple of months or so. So the cost of a neurologist just every couple of months or so plus the cost of all the pills she gets is more than she puts into the system. But then you have

www.DollarVigilante.com 41

people like me who pay every month 9% of my wage but never use this system. So that kind of all gets mixed up with that. And I would bet you could go without having to pay without really using the system at all, but once I found out that my mom gets more out of the system than she puts in, and I pay and never use it, I stopped bitching, because that is what is keeping my mom alive. Luis: Well, yes and no, because what you agree that if that wasn’t the case, you would have 9% more of your wages to be able to give to your mom? Ernesto: Probably. Yes. So if I had the chance to save that 9%, and she had the chance to pay her 9%, maybe we could pay for her needs privately. Yes. I agree with that. I don’t know exactly how that would work, but yeah. Theoretically, mathematically, yes. Luis: So, again, it is kind of like the States. It breaks your legs and hands you a wheelchair, and you have to be thankful for that.

Ernesto: Costa Rica has a life expectancy that is better than that in the United States. Costa Rica has an infant mortality that has absolutely shattered the one in the US. It is about half of the infant mortality rate in the US. I mean, I’m not exactly sure, but it’s fantastic. The literacy rate is better than in the US as well by a few percentage points, I think. And there is also the ratio of debt––student debt per capita––is a lot lower here, so people do not really take out these loans like tens of thousands of dollars in the US. They don’t do that here. It is pretty much unheard of, and there have been

quite a few times when I have gone to the States and people talk to me about their debt. I was frankly shocked to realize that they mortgaged their future from such an early age. I don’t have to worry about that. Luis: Right, that is kind of like the difference between what is happening now to the United States versus the more cash-based economy that happens in the Latin American countries. Because here, in the States, everything is fueled by debt. Well, not everything. I don’t want generalizations, but a lot of things are fueled with debt, whereas in most Latin American countries, if you don’t have money, it is really difficult to even want to get into some sort of financial liability. Ernesto: Yes. I agree. One of the things, though, that I found very, very interesting about the differences in life in Costa Rica versus the US is that there is no––I think Americans call it food stamps or supplemental

www.DollarVigilante.com 42

nutrition. So there is none of that, so if you don’t work or you do not have a family member or something to take care of you, you are fucked. Luis: And I think that is a wonderful thing at some point, because it forces you to actually do something and not just––I mean, the way I see it, a disability––at least coming from the Latin American perspective––is only a disability if you choose it to be. There are a lot of times that I see people without an arm or without a leg or whatever, and they work and they contribute, whereas here, I see people that are wearing Air Jordan’s, and you see them walking and just getting a bunch of stuff off of their EBT card at the gas station. Ernesto: Yeah. That doesn’t happen here. Luis: And I am like, how in the hell does––I mean, I’m all for helping or assisting, but there are people that could do something to contribute. I think that is another reason why Costa Rica is so successful. Ernesto: That wouldn’t happen here. If a program like food stamps was instituted here, there would be an uproar if unworthy people were found out to be using it. There would be an uproar.

www.DollarVigilante.com 43

Luis: Absolutely. Ernesto: That is society. The society is different, and in a sense, Costa Rica still has that sort of mentality that if you are a leech, you get shamed for it. There is a social stigma attached to not working or not being a productive member of society. So if you’re collecting checks all day and you do nothing, you are not going to get a pass from people very easily. Luis: And actually that is the way to go. You don’t necessarily have to have a legislation that prevents you from this or whatever––just the social feedback that takes place is enough. Now I do have to say that I think it is a good idea that there are programs that do help people with whatever ailments that they have. I think there is a place for that here in the States, especially being so wealthy. Now do I agree that they have to go through government? That is a different story, you know? Ernesto: You know, there is also something interesting that is happening here, I believe in the past 10 years. Medical tourism has grown insanely rapidly. Medical tourism is a phenomenon that started when the health care costs in the US exploded to a point where it was just unsustainable for these companies. I think Americans call them HMOs. I am not sure. But when these companies started realizing that they could spend about half or a quarter of the bill in Costa Rica instead of the US and have the same level of healthcare or even better sometimes, you know, they started sending patients here. So medical tourism has grown to the point where there are a lot of private hospitals––very luxurious, five-star hotel looking hospitals––that cater only to tourists. It is insane. Luis: Most likely younger ones that can afford it at that rate, right? Ernesto: Well, for example, I don’t know if you know, but my wife is pregnant right now, and we’re going to have a kid in a private hospital and not the public one because the attention is so much better than the private sector. And the delivery of the baby is going to cost about $5000. Because we have jobs that offer a medical insurance––private medical insurance as a perk––they are paying $4000, and we just have to pay $1000 from our pocket, which is not a big expenditure, to be honest, if you’re going to have a baby. So we put in $1000. They put in $4000, and we get 5 star treatment at a hospital. It is so ridiculous that my wife will be able to choose what music is being played during the birth. The baby will get a brand spanking new set of clothes from the hospital to give the baby to me once it is born and cleaned and all that. It is going to come with 2 meals for her, one before the birth and one after the birth. I get a meal as well, and we get our own private room with the music that we want in the room. It is insane. But that happened because there is a very robust private industry that caters to people because there is so much competition. Luis: That is what you have to do to be able to attract the clientele. Ernesto: Indeed. Luis: I think we have covered so much. Is there anything that you think we are missing before we close down the interview?

www.DollarVigilante.com 44

Ernesto: No. I mean, to end, I would have to say that Costa Rica took a lot of the good practices from the US in the 1980s and used them to catapult itself to a very privileged position right now. And I am kind of sad to see that many of the good practices that the US had in the 1980s and 1990s are fading away right now because the US has so much potential, but I think it isn’t really a very friendly country right now for business. And I say this having spent quite a long time in the US in the past couple of years here. I think in the last 2 years––I have been to the US 16 times, so I have a lot of experience in the US, and what I can tell is that things have not been done in a way that will allow businesses to just grow in the way that they do in Costa Rica because there is so much control over them, it and I think the US should relax its policies so that it can go back to what they were, and then the economy can be better again. Luis: Absolutely. Thank you so much for this, and I could not agree more with what you said. So Ernesto, again, from Costa Rica. Thank you so much for this interview. Ernesto: You’re very welcome. Any time you want. Luis: Thank you. And dear subscribers from the Dollar Vigilante, this is Luis Fernando Mises with the Dollar Vigilante group, and I hope you liked this interview, and give us a shout out if you have any questions. Thank you, and have a great day.

If you want to join the main TDV subscribers’ only Facebook group click HERE.

If you want to join the group in the Costa Rica, click HERE. To see a list of all worldwide TDV Groups click HERE.

If you have any questions about the groups or if you’d like to start one in your area contact Luis Fernando Mises at lfernando@dollarvigilante.com

www.DollarVigilante.com 45

In Closing… Thomas Jefferson

History, in general, only informs us what bad government is. To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. . .I place economy among the first and most important of republican virtues, and public debt as the greatest of the dangers to be feared. Peace, commerce and honest friendship with all nations; entangling alliances with none. The natural progress of things is for liberty to yield and government to gain ground. Timid men prefer the calm of despotism to the tempestuous sea of Liberty. To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical. In matters of Power, let no more be heard of confidence in men, but bind him down from mischief by the chains of the Constitution. Thomas Jefferson was the principal author of the Declaration of Independence and the third president of the United States. The ideas of liberty he promoted continue to form the basis of the American cultural heritage today.

Disclaimer: The Dollar Vigilante needs no disclaimer. Everything we say here is what we believe. Furthermore we need no disclaimer because we believe that all nation states, governments, securities agencies or other legislative bodies are illegitimate and we do not recognize them nor believe we need their permission to say what we feel about any topic and frankly think it is hilarious that people think a government body should be there to protect them. However, because we know that all manner of Government agencies will come after us just for showing such disdain for them we are going to include a standard, cookie-cutter disclaimer below just to keep them off our backs. Enjoy reading it, bureaucrats at the SEC. Information contained in The Dollar Vigilante Emails or on The Dollar Vigilante website (www.dollarvigilante.com) is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. The information contained in such publications is not intended to constitute individual investment advice and is not designed to meet your personal financial situation. The opinions expressed in such publications are those of the publisher and are subject to change without notice. The information in such publications may become outdated and there is no obligation to update any such information. Jeff Berwick, Ed Bugos and other analysts or employees of The Dollar Vigilante may from time to time have positions in the securities or commodities covered in these publications or web site. Any Dollar Vigilante publication or web site and its content and images, as well as all copyright, trademark and other rights therein, are owned by The Dollar Vigilante (TDV). No portion of any TDV publication or web site may be extracted or reproduced without permission of The Dollar Vigilante. Unauthorized use, reproduction or rebroadcast of any content of any TDV publication or web site, including communicating investment recommendations in such publication or web site to non-subscribers in any manner, is prohibited and shall be considered an infringement and/or misappropriation of the proprietary rights of TDV. TDV reserves the right to cancel any subscription at any time, and if it does so it will promptly refund to the subscriber the amount of the subscription payment previously received relating to the remaining subscription period. Cancellation of a subscription may result from any unauthorized use or reproduction or rebroadcast of any TDV publication or website, any infringement or misappropriation of TDV proprietary rights, or any other reason determined in the sole discretion of TDV.

www.DollarVigilante.com 46