“Simon Black,” a pseudonym of a guy who encourages Americans to live and invest abroad, sent out an email today that rhapsodized about the first time he got a passport from a country other than the U.S.
My research and writing about How To Protect Your Life Savings from Hyperinflation & Depression, 2nd edition caused me to realize that when there is an inflation or deflation crisis in your country, you need to leave the country for the duration. That is no exaggeration. Look at Venezuela today. Wouldn’t you leave there if you could?
So I looked into getting a second passport, that is, becoming a dual citizen of the U.S. and at least one other country. The idea being that if you have to leave the U.S., you must have another country where you are a citizen in which to take refuge.
I ultimately concluded that was not necessary or worth the trouble. I am not sure I am right. Neither am I sure that guys like “Simon” who say that you need a second citizenship are right.
First, it generally is either expensive, time-consuming, and/or very difficult. Also, there is a moral issue. Do you really want to be a citizen of the country in question? Are your kids also going to be citizens there, and subject to being drafted into their military? Do you want to pay foreign income and wealth taxes and national health care taxes? Do you want to go to jail for doing something—like exercising your right of free speech—that is legal in the U.S. but illegal in places like Canada or Germany?
Are you going to be proud of that new country and do your duty as a citizen of it, or is this just a flag of convenience for your extended tourism?
What I concluded was that the 90-day tourist visas generally offered to arriving Americans around the world would suffice for the duration of a monetary instability crisis in the U.S. I figure hyperinflation typically lasts six to 24 months—the durations of various historic hyperinflations are discussed in my book.
You can generally just go to the vast majority of foreign countries and automatically get a 90-day tourist visa upon arrival. That assumes you are a citizen of a G-7 country or maybe the OECD. Some countries, like Australia, make you get the visa in advance and charge you a small fee.
Roughly speaking, most countries will let you stay in their country for two such 90-day periods per year. Often, that policy is unwritten. Put the 90-day limit is pretty strict. In some cases, you may only need to leave for 24-hours or some such between 90-day periods. The Schengen Area (most of Europe) makes you stay out for 90 days before you can come back, but that’s unusual.
Anyway, there are over 200 countries. To minimize movement, you might just go to Australia and go back and forth between there and New Zealand every 90 days—with a week or two vacation in, say, Singapore, because 4 x 90 is only 360 not 365. Or you could just keep moving to an endless series of countries.
If you are fleeing U.S hyperinflation, you do not need a non-U.S. passport, but you will damned well need non-U.S. MONEY. By definition, during U.S. hyperinflation, the U.S. dollar will be worthless and the border guards at all other countries will demand to know how you will support yourself during your stay in their country. If you cannot prove to their satisfaction that you can, you will be denied entry.
The second country where you are a citizen has to let you in, but with nothing but USD, you will starve there. A foreign passport only gets you into one other country and you will starve there if you have no good currency. On the other hand, if you have money in a non-inflated currency, you can go to about 200 countries and live well there with only a U.S. passport. Am I saying money is the real passport? Not quite. Some of you re Americans who have not bothered to get your passport. You need non-hyperinflated money and at least one passport to be allowed into another country. If you are entitled to a passport, but do not have one, you will likely be stranded here for months waiting for it.
I have and recommend AUD, CAD, CHF, DKK, and NZD, but there is no need to take refuge in those particular countries. If you go to, say, Belize, you can support yourself by withdrawing money from your account in Australia or New Zealand. It would be cheaper to spend your Australian money in Australia. No currency conversion fee. But the cost of living or travel to, say, the Cayman Islands, may be so much cheaper that you are better off paying the foreign currency conversion fee in Cayman.
I recommend you put your rainy-day savings into foreign accounts or cash in a Canadian safe deposit box. It should be enough to live abroad for 24 months. How much is that? It depends on how frugally you live there and which country you go to. Some are really cheap.
Others are really expensive. If you want an affluent life during your exile, probably two or three hundred thousand of current USD value. If you don’t have that much then you darned well will live frugally when you go there. For example, instead of going to relatively expensive Sydney, Australia, you might live in a suburb of Toowoomba, Australia. It’s a big world.
The main point is if you are currently rich in the US, and your assets are generally USD-denominated like cash, money market, bonds, annuities like Social Security, certificates of deposit. cash-value life insurance, understand that you will be poor overnight if we get hyperinflation. You must protect yourself before the ’flation hits the fan.