By Dr. Erik Hofmeister, WCI ColumnistI think a lot about my country falling. This is not a new phenomenon. Growing up in the '80s, my mom taught at Beverly Hills High School. Many of her students were children of wealthy Iranians who fled their country as the Ayatollah took power. She was also interested in history, so I learned about Cubans fleeing when Castro took over and how Germany got taken over by the Nazi party. Growing up in California, I learned all about the internment of American citizens who were of Japanese descent. Whether accurate or not, I definitely learned the lesson growing up: “If your country is about to fall, get out before it does.”
We spend a lot of time in personal finance talking about shallow risk (e.g. volatility) and one of the deep risks—inflation. One of the other deep risks—confiscation—is rarely discussed. Given my upbringing, I'm tackling it today. What is it, when has it happened, and what can you do to hedge against it?
Confiscation is the loss of your assets to another. I have three scenarios in mind. 1) Legal confiscation by the government, such as when you owe a debt to another (e.g. a court judgment) or by paying taxes. Basically, you are transferring money from your account to the government. 2) Illegal confiscation by the government, such as seizing your assets because the people in charge don’t like what you say. This may be masked as legal confiscation, but I consider it separately because historically the laws have been selectively applied to certain groups of individuals. 3) Illegal confiscation by a private citizen—i.e. theft.
Government Confiscation in the 20th Century
Let’s look at the history of illegal confiscation by the government.
Before the Iranian Revolution of 1979, GDP was over 13% for more than a decade. After the revolution, the new government seized the assets of numerous businesses and private individuals. Ayatollah Khomeini ordered the seizure of property of those associated with the former Shah—including artists, craftspeople, and merchants—even though they may have had no actual organic association with the Shah. Over 80% of the economy came under government control, and inflation was between 12%-20% a year over the next 30 years. By 1980, the GDP went down to -20%.
At the time of the Cuban Revolution in 1959, Cuba’s GDP ranked seventh in Latin America. The Cuban Revolution was the overthrow of the dictator Batista who was eventually replaced by Fidel Castro. Castro set about expropriating property owned by Cubans and other nationals, including Americans. Oil refineries were nationalized, and the US placed an embargo against the country. Cuba became dependent on Soviet subsidies for its economy to function until 1990 when the Soviet Union collapsed and sparked a significant economic collapse in Cuba. The GDP from 1959-2006 was 0.92%, about half that of other Latin American countries.
Aryanization was the Nazi term for the seizure of assets from Jews and its transfer to non-Jews started in 1933. Initially, it was held under a veneer of legality before devolving into outright confiscation. Between $230 billion and $330 billion was stolen from Jews throughout Europe, and thousands of businesses were Aryanized.
Although not due to a “fallen” state, the US government in the 1940s relocated and incarcerated more than 80,000 US citizens on the basis of their race alone. Individuals were forced to sell property and businesses at fire sale rates, goods were lost or stolen, and earning potential was drastically reduced. Records were sparse, but estimates are that at least $77 million was lost, with only $37 million being compensated later.
There are untold numbers of other examples in history. One of the scariest consequences of confiscation is often that it precedes or is concurrent with the restriction of freedom (imprisonment, visa bans, etc.) and/or sanctioned violence.
So, we’ve established that confiscation has happened and can happen. Will it happen in your country? It’s impossible to say, just like it’s impossible to predict inflation. But if you’re interested in protecting your assets from this deep risk, there are a few steps you could take to hedge the risk.
Protecting Yourself Against Government Confiscation
#1 Education
Educate yourself about the fiscal policies in your country and the politicians and then act accordingly. You can vote, donate, volunteer, and otherwise peacefully advance the democratic process. It’s generally easier for governments to control fewer people, and scared or uneducated people seem easier to control. However, this is not a panacea. The referendum to create an Islamic Republic after the Iranian Revolution purportedly had a 98% “for” vote. Remember, “This is how liberty dies . . . with thunderous applause.” There’s no real drawback to education that I can see.
More information here:
Optimists Are the Best Investors, Even If the Pessimists Sound Smarter
Some Surprising Things I’ve Learned in 20 Years of Investing
#2 Cryptocurrency
One of the main use cases for cryptocurrency is this exact scenario. You can leave your country and still access your assets. A cryptocurrency hedge against confiscation works. Whether that cryptocurrency will be worth what you paid for it, though, is hard to say given the wide fluctuations in value.
#3 Treasure
Crossing a border with a briefcase full of cash is hard. Crossing it with a handful of valuable jewels in your shoe is less hard. People have often kept valuables at hand in the event of the need to escape a situation. If your Vanguard assets are frozen, having some cash or readily solid tangible property may help. If you have $10,000 in Krugerrand gold coins to help you flee the country, that’s probably not going to put any meaningful drag on your portfolio. If half of your assets are in these kinds of valuables, you would expect an overall poorer return.
#4 Have a Skill
Medical professionals of all types are needed in numerous other countries. You may need to get your license transferred and go through some other hoops, but you could find gainful employment in your same or similar high-paying career. Your assets may have been seized, but you can still work and generate a good income and hopefully reaccumulate those assets. You will at least be better off than those who have less valuable skills to offer other countries. I don’t see any disadvantage here except for the time used to acquire that skill, but hopefully, that’s already a sunk cost.
More information here:
How Moving to Canada Affected My Life as a Physician
#5 Learn a Language
One of my intern-mates was a native English speaker who trained in vet school in Montreal, so all of her medical knowledge was in French. This was only a minor barrier since numerous medical terms have a Latin or Greek root. If you can speak Spanish, how much easier would it be to obtain a professional job in a Spanish-speaking country? There may be some costs associated with language courses, in addition to the time it would take.
#6 Leave
It’s certainly easier to leave your country as an expat than as a refugee. You can get a job, get a work visa, a place to live, and maybe even move some of your assets to your new country. Assets tied up in retirement accounts may be stuck unless you want to pay penalties and taxes to take them out. The greatest drawback to this approach is that there are all kinds of things you may be giving up by leaving “prematurely”—before confiscation is likely to occur. You may have to sacrifice relationships, ask your siblings to take care of your aging parents since you’ll be an ocean away, give up earning potential, and have a different standard of living or quality of life. It’s a major life change for a relatively unlikely event.
More information here:
I’m Retiring in My Mid-40s; Here’s How I’ll Start Drawing Down My Accounts
Should You Worry About Government Confiscation?
Even though I think about confiscation a lot, I don’t worry about it very much. Like all things personal finance-related, there are important behavioral considerations. I don’t worry much about confiscation for the following reasons.
- I like to embrace optimism. I think hope is better than fear. Like Winston Churchill said, “Democracy is the worst form of government except all those other forms that have been tried from time to time . . . ” I remember reading a non-fiction book set in the early 1900s and thought, “That sounds a lot like the problems we are facing now in this country.” The country survived those trials, and hopefully, it will survive a few more.
- I have a marketable skill, a license recognized in a half-dozen English-speaking countries with similar veterinary medical systems, some foreign language competency, and the continued ability to work hard. I don’t have any significant barriers to moving (such as an invalid family member). If all of my property were seized, I think I could make a good life for my family elsewhere (as long as I could get out with my health and freedom). Right now, I am in a good academic job and planning to retire in my 40s in 2025, but those plans could be put on hold in the event of political calamity.
- I think there will be some time between when the government decides to start seizing assets and when they get to mine. I think I’m a relatively small fish and not particularly outspoken politically. This is in contrast to family members of mine who are deeply involved in politics and are already making plans to flee very quickly if things even start to seem to turn in the wrong direction. Maybe this is similar to believing one can time the market. But my trigger to flee is pretty low given my upbringing, so I’m hopeful we could make it out before the curtain comes down.
- There’s not much beyond voting certain ways that can be done about it. I like to focus on my circle of control. This is one of the “prepare for the worst and hope for the best” situations, but causing yourself great anxiety by preparing for the worst beyond reason can significantly impact your daily happiness.
I’m afraid it’s impossible to discuss confiscation without delving somewhat into history and politics, which is generally undesirable on a financial blog. But confiscation IS one of the deep risks to your financial life. Just like any other financial risk, you need to spend some time thinking about it.
What hedge strategies against confiscation would you add? Have you ever been worried about government confiscation? Are you now?
Yours is a very unique perspective. We are quite privileged in the USA, and this is not something that I have thought much about.
I was a little surprized that you did not mention Executive Order 6102 under which Roosevelt (FDR) made it illegal for Americans to “hoard gold” –meaning keeping gold as a financial investment– in 1933. The government bought the gold at $20.67 an ounce and then raised the official exchange value of gold to $35 an ounce a few months later which created a kind of windfall profit which allowed it to print more money while still claiming the dollar was backed by gold. I am not a gold bug (my entire gold holdings are on one of my fingers right now) but it is kind of amazing to me that without any act of Congress a President was essentially able to confiscate most of an entire asset class and most of the newspapers of the time applauded the move as though “gold hoarders” were somehow responsible for the Depression.
Yes, FDR’s theft by executive order was a pretty glaring omission. Also, the Bolshevik revolution and the Chavez and Maduro governments in Venezuela, white farmers in Zimbabwe, Indian business owners in Uganda, Chinese business owners in Indonesia, etc.
Perhaps a couple broad takeaways might be that communist and totalitarian movements are bad and that if you’re part of a smart, hardworking ethnic minority that’s more successful than the general population, you might want to bail early rather than late if crazy, vengeful people come to power. Envy can kill you.
“Perhaps a couple broad takeaways might be that communist and totalitarian movements are bad and that if you’re part of a smart, hardworking ethnic minority that’s more successful than the general population, you might want to bail early rather than late if crazy, vengeful people come to power. ”
This. Germany between 1933 and 1945 is another example. As Hitler steadily ramped up the Nazi anti-Jew campaign, the laws became more confiscatory. It reached a point where any Jew fleeing Nazi Germany left the country essentially penniless, as they were only allowed to take about 100 Reichsmarks with them. The German government confiscated everything else. It was quite literally a case of “Your money or your life.”
The problem with bailing early, of course, is that normalcy bias plus natural optimism (“It won’t get THAT bad.”) are hard to combat. It’s psychologically had to be one of the people leaving early, because leaving is painful and everyone else thinks they are leaving TOO early, or that they are being silly and there’s no reason to leave at all. And of course, if you leave early and nothing terrible does happen, you probably left quite a bit of wealth behind unnecessarily (in hindsight).
Thanks for sharing! I drew from my life perspective for this, so choose examples that I think about, but maybe they’re not the most representative of the problem. Thanks for bringing up this example, it’s a good one.
For a brief historical perspective consider what happened in VA during two upheavals. When it came to the confiscation of the property of Loyalists, the Supreme Court ruled in 1813 that the confiscation of Lord Fairfax’s land in VA was legal – despite the Treaty of Paris which said the property of Loyalists was protected. In the Civil War, the Confederate government seized property owned by Unionists and northerners. Monticello, which was owned by New Yorker Uriah Phillips Levy was seized. Depending on where the various armies were, a person risked their property being seized by either opposing army or by judicial application of confiscation acts by both the Union and Confederate governments. Those who survived in VA did so through luck, sheer will, the help of others or dogged determination.
When Richmond fell in 1865 the only things that had value was food and liquor. The latter even more so after the Union Army destroyed the liquor warehouses to prevent drunken mobs. Not even gold and sliver had value; they can’t be eaten and purity in chaos was difficult.
You forgot about all of the education and wealth stolen across all of the Soviet run countries over the course of 50 years+
People in America always downplay this point, but there are few countries where wealth has lasted more than a few generations as a result of either hyperinflation or government intervention.
Even ignoring the Jews in Germany for a minute, all of Germany also suffered from hyperinflation at a point, as did many other countries. In Poland, people started paying for bread with “millions.” Can you imagine if your multimillion dollar vanguard account all of a sudden was worth 3 baguettes? Many countries have gone through something similar.
Predicting the best investments during a time of uncertainty is extremely difficult. One of the most effective ways to not get screwed in this scenario is to ensure you are living life while you can and purchasing at least some usable assets that typically aren’t great investments (homes, cars, etc).
Thanks for sharing this. Deep risks were a driving force for me to sell my practice 8 years ago. This was missed or dismissed by some commentors on my post https://www.whitecoatinvestor.com/why-i-sold-my-practice
Have you thought about a plan B in case you were to decide to leave the country? A discussion of other docs that have already set up residency permits or licenses to work abroad seems interesting to me. At least in dentistry it seems quite difficult to transfer credentials abroad even though the need seems incredibly high like this recent report from the UK https://doi.org/10.1038/s41415-024-7764-2
Have you actually planned out where and how you’d leave if a black swan appeared to coming in for a landing?
Timely post, thank you.
It would be interesting to further discuss the logistics of investing in assets overseas. Certainly there are opportunities that don’t involve gold or crypto.
I would most certainly like to see such a discussion as I have been puzzling over that scenario for some time. It’s not as easy as it seems. Crypto to me is smoke and mirrors; it can be made to disappear or its value manipulated I suspect.
Nice post Erik! Might be tough to have treasure/gold and other physical wealth to protect against confiscation as these things are likely easily confiscated. I can’t imagine also toting a few hundred pounds of gold/valuables to another country. Do you think treasure/gold should be held outside your home country to mitigate this risk?
Thank you Rikki! Yeah treasure would have to be pretty small and valuable and portable. I’m thinking about it more in terms of helping you escape than being able to rebuild your nest egg. Holding assets outside your home country comes with all kinds of other hassles. I’m sure the super wealthy do this and have no problem paying for smart educated lawyers to figure it out for them. 🙂
>> Yeah treasure would have to be pretty small and valuable and portable. >>
you can carry bitcoin in your brain by memorizing 12 words, and there are tools to make this even easier
http://www.borderwallets.com
Never thought about this scenario. Fleeing my country would mean I have much worse problems to think about than personal finance.
Imagine having to start your life over in another country with nothing other than the clothes on your back and a $10 bill in your wallet. I don’t think being paranoid is necessary, but thinking about some reasonable ways to try to avoid that situation is probably worthwhile.
From what I’ve read, it’s onerous to transfer substantial assets to other countries due to their reporting requirements to the US. It would be nice to know if there were an “easy” workaround. Of course there is the issue of selling assets here and dealing with tax consequences/penalties/etc., but it seems that enterprising countries abroad would perhaps benefit from creating some kind of program to attract invest investments from the US.
IMD801, I’ve also heard that transferring assets can be a problem. There’s also the exchange rate to consider. I’ve heard that there are exchange brokers who can help you navigate that. I’m sure there are plenty of professionals who can help solve this problem. Finding good, trustworthy ones may be challenging.
#1 in the “Protecting Yourself” category should read: remember that you are the government, not just the governed. So too is your neighbor, your scrub tech, your in laws, and every citizen around you. Public discourse, accountability of elected officials and tax-funded programs, and participation in civic affairs (especially local) has never been more important.
I absolutely agree with this!
How about Canada freezing the financial assets of protesters in Ottawa in 2022, as a more modern example?
Cyprus also confiscated money from savings accounts in 2013: https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_crisis
I’d never considered this risk until reading this, and I feel fortunate in saying that after reading about it, it’s not a risk I am worried about – and I hope it’s one I never need to worry about.
That said, it did occur to me that two things anyone can do now to be prepared for this risk are:
1. Get a passport to another country. This may not be easy. But neither is it as difficult as some might think. It’s worth at least knowing which countries are the easiest ones to emigrate to (Portugal, for instance).
2. Check out wise.com. This is an online currency exchange platform that gives you the ability to do wire transfers up to $1m to dozens of different countries in their currency; and then access your funds in that country via an ATM or debit card transaction. I’ve had this for years and keep some euros in my account for trips to Europe. In the event it started to look like confiscation could become a threat, I’d seriously look at sending a big chunk of money overseas – and this would be an easy way to do it. And their forex rates are remarkably good.
I have never heard about wise.com. Where is the wire transfer going? To a foreign bank, or to wise.com?
Having some money overseas definitely reduces the risks of losing everything (although perhaps it increases the risks of losing something, as now there are two governments in play that might at some point become confiscatory, though not likely both at the same time).
Where they hold your money depends on where you’re located and what types of funds you’re holding. For instance, I have USD and EUR in my account. The USD are held in banks like Goldman or JP Morgan. The Euro are held in banks in Europe.
More info on their site here: https://wise.com/help/articles/2949821/how-wise-keeps-your-money-safe
PS – if you decide to open an account with them you can use my link and I’ll get a little bonus. [Link deleted: If you wish to adverise on this blog, email cindy (at) whitecoatinvestor.com and buy an ad.]
Thanks for the additional information! I do travel internationally quite a bit and already have a 2026 trip to Spain booked, so that is a service which might come in handy quite apart from doomsday prepping. If I decide to open an account with them, I’ll be sure to use your link!
Thanks!
Hello Tom, thanks for the comments! Those are two great suggestions. In addition to Portugal, I think most of the readers on this blog would qualify for the Non-Lucrative Visa for Spain. With respect to wise.com, I’ve heard that if you transfer more than $10k, it may get flagged by EU governments and wise doesn’t do much to help you resolve it. I haven’t tried it myself, though.
How deep confiscation could be? I give you an example: just by chance yesterday my wife, her mother and myself were talking about my mother in law’s grand father fate that when Fidel Castro overthrew Batista, in Cuba ( and becoming a much worse dictator than the former) the old man, in his sixties , but in perfect health, after seeing all his properties being confiscated got depressed to the point of refusing any food, and died in bed after a few months later. True and tragic story. Forget if the S&P goes up or down for sometime or if inflation is 8 or 9.
‘Civil Forfeiture’ is just another name for confiscation and has been going on for years now.
I didn’t realize there were so many chicken littles here! This topic won’t affect 99% of the people reading this forum. That said, the crypto discussion is interesting.
More like none of us will be affected OR all of us will be affected. But the likelihood that it just hits 1% of us seems vanishingly low.
This is the correct answer.
those black-swan events… we all hope they wouldn’t happen to us…
to the educated class and nobility in Russia in 1917 those chances also seemed very low (nonexistent??) that they would suddenly lose their mansions decorated with the Old Masters artwork in St Petersburg and Moscow and , at best, have to flee abroad with just clothes on their backs.
It was also inconceivable for so many Jewish professors of Berlin University in 1933…
The history is full of these examples regrettably
I wish we all had access to a financial “bug out” bag 🙂
That’s what so scary: you may not see what is coming in time to do anything constructive. Normalcy bias and general optimism are good things 99.99% of the time, but political calamity represents that 0.01% of the time when those traits are actually harmful (or even lethal).
I hope none of us ever have to experience political calamity firsthand!
I wouldn’t be so sure that it would only apply to very few of the readers here or all of them. About 15-20% of physicians in the US are of Asian descent. My own parents and their friends (all of Asian descent, naturalized US citizens and retired physicians) were recently aggressively told to go back to their countries while just eating lunch outside in their retirement communities. It’s more real for some more than others regardless of what country we live in. I genuinely appreciate the discussion here and am thankful for the insight the article and the comments have provided.
I’m sorry to hear about such a terrible experience of apparent obvious racism. I keep thinking we’re making great progress, but sometimes I wonder. I’m driving through South Africa as I write this and I assure you there are worse places than the US when it comes to racism.
Deeply interesting post. I have friends whose parents were involved in the Japanese internment so it is not so far-fetched. This is perhaps one of the few good reasons I have heard for the legal use of crypto.
That raises the question of how to store the crypto: in an online wallet (can be accessed from anywhere, but is vulnerable to hacking) or in a physical wallet (more secure, but could be potentially discovered and confiscated, or unreachable if you keep it in a safe deposit box). Its a variation on the problem that owners of gold/jewels face: the more secure the storage, the harder it is to access the stash in a real emergency.
Fingers crossed that none of every need to face that dilemma for real!
holding bitcoin can be as simple as memorizing 12 words, it’s easy and the result is a level of security that the state can’t penetrate. Of course they can lock you in a cage or beat you to death but they still don’t get your bitcoin
If the state has thrown you into a cage or beaten you to death, the fact that your bitcoin hasn’t been confiscated is immaterial, as you won’t be in any position to access it yourself.
of course, but the point remains. Everything else can be taken with violence
Even crypto can be taken with violence if you’re storing it on a wallet rather than online. If the government goons find and steal the wallet, you’ve lost the crypto! Crypto held in a physical wallet is just as hard to transport securely as physical gold is. (And if the baddies can torture you into giving them the password to your online account or wallet, then they have managed to get the crypto itself by using violence.)
Ultimately we all have to make peace with the reality that there’s no way to protect anything, even our lives, that is 100% foolproof. Confiscation is one of the hardest of Bernstein’s four deep risks to protect against.
No offense but you don’t know what you’re talking about.
Have you ever owned bitcoin or another cryptocurrency?
Yes, I do know what I am talking about. There is nothing in the world that you cannot lose access to, whether it is online or existing in the physical world. Crypto is not the magic exception.
It was funny, this morning my wife and I each forward this from our inbox to each other. It is interesting how it genuinely sounds impossible to think about this scenario happening in the US, yet with wars abroad without clear ends in sight, widening wealth inequality in our country, and further political division, this is becoming an (even slightly) more mainstream idea. That is one of the saddest realizations I have had in quite some time.
As a family of five, the idea of abandoning my assets, or suffering catastrophic taxes to uproot my family and relocate to an area I am not familiar with is truly a nightmare scenario. However, with so many examples alluded to above, it is clear no one thinks they will be in that situation, yet history has demonstrated it does. The lesson is that fortune favors the prepared.
It is true that civil discourse, exercising your right to vote, and being a descent member of humanity are all strategies for warding off ‘worst case scenarios.’ But I did find this article entertaining and offering insights for those who internalize the anxieties of the world.
I will add that I am a huge sceptic of cryptocurrencies and pretty much any unregulated securities, but for the specific reason of having a de-regulated money that can hold its value across country lines is definitely interesting and likely will influence my decision to keep a very small amount in my portfolio. I still see it as gambling, but as a ‘break in case of emergency’ scenario, it may be wise to keep a small amount on hand. Thanks for this intriguing read.
Thanks for reading TMMD and the positive comments! I agree it’s a nightmare scenario, but fortune favors the prepared. I also thought a lot of the other examples brought up in the comment were pretty eye-opening.
>> I will add that I am a huge sceptic of cryptocurrencies and pretty much any unregulated securities, but for the specific reason of having a de-regulated money that can hold its value across country lines is definitely interesting and likely will influence my decision to keep a very small amount in my portfolio >>
this only works if you actually take self custody of the asset, holding a digital asset on an exchange or in a derivative product like an ETF amounts to nothing more than an easily confiscatable IOU
I’m a complete novice to crypto, so please excuse the question. On that point, if you take self custody and memorize the security key, then it is secure and can be retrieved at any later date? (presuming there is still value to the coins).
I can only speak to bitcoin, but yes. The most common means to derive a bitcoin seed (private key, secret) is with a 12 or 24 word “seed phrase” and in effect those words, in specific order, represent the bitcoin. If you (or someone else) knows the words, you (or they) have access to the bitcoin. If you lose those words you’ve lost your bitcoin.
it is good practice to never ever enter those words onto any internet connected device
Thanks! It is a fascinating topic that I have largely ignored until now.
No matter who you voted for in the most recent election or how much doom and gloom is in your feed on social media, it’s unlikely that this will affect any U.S. based reader of this blog.
They said, take a few minutes to review just how few countries are unlikely to honor an extradition request from the United States or an asset seizure order from the U.S. Most of those who wouldn’t extradite you are rogue states that are likely to seize assets from a wealthy American who had no prior connections to the political insiders running the kleptocracy in say Belarus or Venezuela.
Congratulations, your stuff got confiscated anyway and you’re in an even worse country.
I’m kind of looking at it from the viewpoint of the Japanese internment. Most of the Japanese were citizens and stayed in the US after release. Upon release most had nothing left. Homes were sold, possessions gone.
I am second gen Chinese American and with the kind of tensions rising with the CCP and China, I would worry a small amount about another internment scenario. The worry is small but putting 5% of my assets in bitcoin is looking better and better to me so my family would not have to start from dead zero while we remain in the US..
That’s kind of a terrifying potential future isn’t it? I hope that never happens again in this country. Heck, I hope something like WWII never happens again.
What is shared here is a unique perspective. While possibilities for such scenarios may exist elsewhere, in most of our lifetimes, possibilities for this in US = 0%. This is not due to the trustworthiness of the “government”. Rather because the government is mostly subservient to the capitalist architecture. No cultural, political or any other hegemony can exist in the US without the capitalism that was its genesis and perpetuation. Hegemony will be tolerated in so far as the capitalist machinery is left humming and so taking capital from the capitalists will run roughshod of the fibers of the nation.
Regarding crypto being safe, worth noting that these assets can be frozen and confiscated if you really have agitated a “government” that is now all out to get you.
the state (nor anyone) can freeze bitcoin, that’s why it’s preferred by hackers
to be clear I’m talking real bitcoin, held in self custody. Not an IOU held on an exchange or as an ETF
Jaco, did you mean to say the state can or canNOT freeze self custody bitcoin?
can not, sorry
central authorities can still attack by cutting off the off and on ramps like central exchanges, they can direct exchanges to freeze and confiscate coins that are held on exchange, which is why self custody is the only real means to combat confiscation. not your keys not your coins
Very interesting post! I had the opportunity to witness this type scenario. When Afghanistan fell, I was working in VA just a short distance from DC. We had thousands of Afghans come through our area. Many told me that they left everything there. Their property, friends, family, and livelihoods were left behind. As an ObGyn, I delivered many of their children. Our newest Americans!
They had only the clothes on their backs. They didn’t even have clothes for their newborns. They lived in these “refugee” camps on military bases. Bathrooms were down the hall. Some could speak English and many could not. I thought about their condition a lot. Could I do what they had to do?
Today, many of these Afghan travelers are doing well. I see them in my community working. I see them in my office and get updates on their children. Their English is improving. My Dari/Pashto is not… as much as I try. I silently send them prayers for good health and success whenever I see them. What they did was very brave and hopeful. Hopeful that they can have a better life.
I saw this before. I was a child when Vietnam fell. My neighbors took in a Vietnamese family to help them become adjusted to a new life. They had young children. We played together. The family moved about 9 months later when the father got a job somewhere else. I often wonder about that family and pray that they are thriving.
Yours is an interesting (and also hopeful!) perspective!
Thanks for those examples, Aninabobina! Seeing immigrants and how they struggle and achieve success is quite eye-opening.
Interesting. During the World War II, the US government sent tens of thousands of Japanese Americans to camps and they lost their homes/belongs and trapped and alienated by the society. Japanese American soldiers had to prove their loyalty by fighting abroad while their own family was forced to stay in the camps in the home country. There may be some type of compensation or apology decades later. The current hostility in the US society towards Chinese Americans or Eastern Asian looking people reminds people of the dark history of the most prosperous and democratic country. Besides what the author mentioned, it is also important for everyone to create an inclusive and respectful environment to prevent overpower of the government, the super wealthy and powderful to infringe average people’s individual freedom.
Yes, in the long run on the best defense we have is to maintain a a robust democracy, which includes respect for other individuals and respect for constitutional rights. One advantage the US does have is that we do have a very long history of democracy, but the example of the internment of Japanese American citizens shows that even here confiscation can happen as can loss of important rights. We need to work hard to make sure it does not happen again!
In scenarios where your money is at risk, your life probably is as well, a much bigger issue.
Maybe not. In the Japanese internment, they did not actively kill anyone unless they resisted going to the concentration camps. However, many did die due to lack of food and medical care. Many survived and stayed in the US with nothing left.
Often your life is in danger, but not always. Nobody’s life was threatened when Cypress confiscated money out of savings account accounts, or when FDR forced people to sell privately owned gold to the government for a price that was artificially low. I think devastation usually goes hand-in-hand with Kahn confiscation, but confiscation can occur in the absence of political devastation.
Two bits of feedback by email, seemingly one from each end of the political spectrum, along with my responses:
# 1 Stupid a** article written by absolute moron. Just have AI write an article next time to produce SLOP for your readers! Writing about things he has no knowledge about. The Iranian revolution in particular. Inflation was almost 30% BEFORE the revolution. Immediately after the revolution, Iran was invaded by Iraq and fought a multi-year war of survival. Of course the economy was down. Keep politics out of this blog. This is not a place for propaganda. Not all of us are right wing anarcho capitalist lunatics. Reading this I feel like I’m at financial version of church camp.
Response: Thanks for your feedback. Negative feedback is always the most useful. I think the risk of confiscation is well worth discussing on the blog as are the other “deep risks” like inflation, deflation/depression, and devastation. They’ve been discussed before, but not to this level of depth. An example here:
https://www.whitecoatinvestor.com/how-to-become-an-investing-adult/
It seems you just didn’t like some of the specific examples used in the piece? But I’m sure numerous historical examples of confiscation can be found in both “right-wing” governments like Nazi Germany and “left-wing” governments like Communist Russia in 1918. Was there something else you thought was bad about the article?
# 2 This is a strangely timed post considering the recent election. The timing suggests the author is more concerned about confiscation since Trump was elected than if the past Democratic administration were to continue. Yet, Harris was proposing a wealth tax as well as taxing unrealized capital gains. Additionally, the continued open border policy is and will drain our tax dollars. This is the face of confiscation. The infringement of our free speech by leftists coupled with lawfare is further suggestive of the nation’s fall toward political calamity. So, to answer your question, I was worried about government confiscation prior to the election. But, I am far less concerned now that the silent majority has rejected Socialism resoundly.
Response: Thanks for the feedback. Negative feedback is always the most useful. Yea, the timing wasn’t awesome although I’m not sure it would have been better before the election. In fact, I vaguely remember a discussion where I said “let’s run this one well after the election, not before.” Obviously it wasn’t written after the election. We don’t work that fast. I got two pieces of negative feedback by email, yours and one who thought it was too right wing. So I guess we got the balance right and have offended everyone equally.
Interesting feedback. Anyone who looks at history can see that both confiscation and devastation can come from either side of the political spectrum. And on either side of the political aisle, there are some past Confiscation events that are absolutely horrible and some that are merely painful. That is why the topic is interesting! What if any steps to take to protect against Confiscation and Devastation is never a straightforward decision.
Actually I hope you do not avoid topics like this one. If someone does not like the topic at hand they can skip it. It may not be as relevant as asset allocation, but it gave me some things to think about. The first comment is not well written and the ad hominem attack is nonsense. Thanks to Erik for food for thought.
Thanks for the feedback! Thanks for the support Joey. If you’re going to put things out on the internet, you need to be prepared for criticism. I tried to stick to the facts and not make it political. Apologies to anyone who was offended!
Timely article. I believe the average American today is way less racist than the average American I used to meet 40 years ago – but a few folks seem to have become more willing to publicly and proudly proclaim racist views. How much of the rhetoric will translate into action remains to be seen, but eternal vigilance is the price of liberty and safety. The action I’ve taken in the last month – I postponed some elective home renovations as it occurred to me that if I have to sell the house and leave the country I won’t recoup the cost.
Thanks for this article.
I recently visited the Legacy Museum in Montgomery, Alabama, which discusses the history of lynching. This was in part motivated by confiscation, intended to terrorize Black people and force them to leave their land and property. Successful and prominent community members were often targeted to set an example.
Another good example.
I would like to believe that this is the case, about the average American being less racist. However there was no internet 40 years ago. The internet really removes the conscience barriers that hold back those feelings. It is extremely common online. But a few vocal people can make it seem widespread, I understand.
Either way, your line is well taken, “eternal vigilance is the price of liberty and safety”. Yet my wife thinks I am a delusional paranoid when I even mention these ideas.
Your perspective might be a a little different if you had spent the last two weeks here with me in South Africa. America certainly has its problems, but they pale in comparison to those of much of the world.
The book “Wealth, War and Wisdom” by Barton Biggs is an excellent perspective and foray into this topic.