Business

GGC, Part 6 — Johnson Re-Occupies Galt’s Gulch

By Terence Gillespie May 2, 2015

I’ve spent the last two days responding on the comment section of an article written by Rebeca Morla at the Panama Post. Though I find the article represents mostly Johnson’s point of view I sympathize with any journalist under deadline having to come up to speed on the Galt’s Gulch Chile project. I was informed by a comment on Doug Casey’s International Man forum that Rebeca used this series to prepare her article. I look forward to more articles from her and the post in the future. Also, James Guzman followed up with a brief article on GGC, as well. The only thing I might change about Guzman’s article is his reference to the rescue team’s entrance to the property, last October, as an “armed capture”. That probably comes from Berwick’s article referring to it as a “SWAT Raid”. My understanding is that there were no guns and no violence involved in the recovery team’s entrance to the property. I make that distinction because it’s important to libertarians and because Johnson’s recent reoccupation did, in fact, involve the use of a firearm. As I’ve pointed out in previous articles, Johnson is no libertarian and should not be confused, in any way, with the principles of Ayn Rand’s “Atlas Shrugged” from which the name Galt’s Gulch is derived.

With Mario Del Real already in control of “El Penon” (GGC Parcel #1 of 2) farm workers working on “El Lepe” (The second and largest parcel of land that comprises Galt’s Gulch Chile and it’s offices, hacienda and lemon trees) reported, last week, that, under threat of violence by three hired thugs (One concealing a gun), Ken Johnson has taken back occupation of “El Lepe”. Below is the narrative from farm managers Renzo and Ken Carpenter as sent out to investors on Wednesday, April 22nd.

Friday, April 17th at the farm:

Farm worker, Jaime Olivares, while cutting espino trees saw Manuel Hermosilla walking inside the property. When confronted Hermosilla said that he would kill Farm Manager Diego.
The Farm Managers made a complaint with the Curacaví police against Hermosilla for entering the property and making his death threat.

Monday, April 20th, at the farm:

At 8:30 pm, Ian Thornton and three thugs with a pistol, arrived at the gate and said to Diego and Coto, “Open the gate. We are coming in, one way or another.” Diego let them in.
Ian confiscated their telephones.
Coto, from a hiding place, was able to communicate with Renzo who was in town on farm business. He alerted Renzo as to what was happening.
Renzo phoned the police. By the time the cops arrived, Ian had put new chains on the gate so Renzo and the cops could not enter the property.
Renzo called Ian from the gate. Thornton said to him, “You have two options, cooperate or go to jail for the things you sold.”
Former developer Johnson arrived around 11 pm, inspected the house, and left with the IMac Desktop computer.
Thornton offered Renzo work if he would cooperate.
Thornton said that no employee would be paid this week, but would be paid starting next week.

Tuesday, April 21st, Morning, Santiago:

Former developer Johnson arrived with two police officers at Kenny’s apartment in Santiago.
Police showed proof of GGC ownership of the Jeep to Kenny.
Kenny explained to the police that the jeep was voluntarily loaned out and the keys handed over to him. He gave the cops the keys.
The police ask for a GPS and computer, but Kenny told them that he didn’t have any registered company property. Johnson called his lawyer who advised him to tell the cops to take only the jeep.
Johnson said that Del Real is about to go to prison and anyone aligned with him is in trouble.

Both the farm and the jeep are in improved condition from when The Recovery Team took possession of them. We have photographic evidence of that. The employees were paid up to date, and we were current on all bills.

Thursday, April 23rd:

The GGC Recovery Team received a report from Curacaví this evening that Johnson presented one of the farm managers with a criminal complaint for selling various “antiques” and old equipment around the premises to raise money for salaries and operating expenses. The farm managers were interrogated by Johnson’s lawyers and the PDI (Chilean FBI equivalent) for hours.

NOTE: As of May 3rd, 2015 there are no criminal charges on the court website. Johnson may have had a lawyer write up charges but it’s doubtful he would spend the money to file them.

Recovery Team Reaction

These are bullying and intimidation tactics. Former developer Johnson knows full well that the money was used to pay workers wages and operating expenses of an unprofitable farm. What does this say about him, that this swindler who defrauded a group of international investors of $10 million would use the cops to intimidate his former employees, the very men he, just a few hours before, terrorized with Santiago mafiosi? What does it say about Jerry Folta who bankrolled Johnson? And what does it say about Chile?

Regarding Johnson’s reoccupation, Cathy Cuthbert writes:

“The second Johnson Reign of Terror begins, *yawn*. At least we don’t have to worry any more about Diego and Renzo being knifed in the middle of the night.”

“We were well aware that something like this might transpire since for about four weeks, we’ve had evidence of Johnson’s goons casing the farm, and noted several amateurish attempts to gain inside information and stir up dissent among the Recovery Team.”

“While Johnson and Thornton celebrate their Pyrrhic victory, Uriah Heep-like as is their habit, we are reminded of that priceless scene from Tin Men.

The facts are these:

The expenses of the unprofitable farm are off our backs. All the legal fund money will go to legal fees at this very important juncture.
The harvest season is essentially over so there’s no income now, anyway. This is the least profitable time of year and excellent timing for us.
Johnson’s prodigious liabilities are intact and increasing.
The Recovery Team is relieved of management responsibilities, giving us more time to concentrate on the upcoming litigation.
Former developer Johnson now has a golden opportunity to prove he can keep his commitments.

We achieved our goals during our tenure at the farm. We blocked former developer Johnson from misappropriating this year’s harvest income. We paid the farm workers their back pay, pension and health contributions that Johnson owed. We acquired valuable information for our criminal discovery. We’ve made friends and contacts in Curacaví. We demonstrated to the community that we are willing to pay debts. We improved the condition of the farm after years of neglect.

The most important news is that Diego, Coto and Renzo are safe. Whether they continue to work on the farm or find other positions, we thank them for their service to us and wish them well.

The most important take away from this update is that our litigation plans are not affected by this violent act. In fact, we’re better off.”

Let Johnson Meet His Obligations, for a Change

Johnson used investor money to purchase the property and received title to it in his own personal entity (Inmobiliaria Galt’s Gulch SA) and not the entity created by the originating partners to receive title (Galt’s Gulch Chile SA). He’s been responsible for paying all bills, taxes, salaries and maintenance costs of the property from the date of the sale and up to the present day. When the recovery team visited the property, last October, the place was in shambles and the recovery team took it upon themselves to bring all bills, taxes and salaries up to date and clean the place up. From the standpoint of the fraudulent legal title under which the property is currently being held, the recovery team was under no obligation to make such payments. Such remains the case, today.

Of course, Johnson’s MO is to have his cake, eat it, charge others for it, demand someone pay for a new cake and the cost to refrigerate it, refuse to acknowledge that there ever was a cake, accuse anyone within sight of having stolen five cakes, and assaulting the bakers wife! Will this translate into Johnson claiming that Mario Del Real is responsible for all GGC obligations because thief #2 (Real) stole the booty from thief #1 (Johnson)? Johnson’s recent history shows that, if one can imagine it, Johnson can do it, claim it’s the truth or accuse someone else of doing it. The least likely of all things to occur is that Johnson will keep his word to anyone or anything he’s talked about.

No Honor Among Thieves

Johnson appears to have been out-swindled by Mario Del Real who somehow ended up with a significant portion of the shares of Johnson’s personal entity and, therefore, ownership of GGC. Johnson is suing Mario Del Real regarding this transfer/sale. Though he claims to be active in the suit, records show there has been no activity on it since November of 2014.

The investors have been requesting, then demanding, that Johnson share accounting and legal documents with them for 205 days, now. Johnson has been putting them off by returning their requests with either accusations or document fragments that are available to the public. Using Jerry Folta as an intermediary, Johnson recently tried to get the recovery team to pay his accounting bill of $8000 to get access to the records the team paid for, long ago. Here’s an example of the kinds of “deals” Johnson tries to make behind the scenes with his investors: The GGC team was to pay the accountant, in full, and in return would receive an income statement and balance sheet. The full accounting detail of all transactions would then be sent to Johnson and denied to the recovery team!

Well, the GGC team did not take the “deal” as they had already gathered the documents and conducted their own painstaking forensic accounting of what has transpired. As outrageous as the “deal” offered to the team was, an important thing to note is that Johnson doesn’t even have a copy of his own books!

Johnson’s Law

The cost of filing a completed criminal complaint in Chile is ~$50,000 US. ~~Johnson somehow managed to get one filed and~~ But, Johnson has not filed anything with the Chilean courts, recently. The complaint he showed up with at the GGC gates on April 20th, with two policemen in tow, was likely a prop drawn up by a lawyer (Johnson doesn’t speak Spanish).

Johnson’s “complaint” was that the farm workers were selling off his property to pay farm worker salaries and pensions. One must understand that Johnson’s priorities leave the payment of expenses such as farm worker salaries downstream of just about everything.

Cobin made a comment on a podcast in early 2014 wondering when Johnson would run out of lawyers willing to work for him as Johnson seems to have trouble paying his legal and accounting bills. That could mean his current lawyer either won’t be around for long or is expecting a form of compensation other than money.

Johnson is Probably Furious and Broke

If Johnson is the psychopath he’s widely speculated to be such predators are infuriated by exposure of their crimes and schemes. They become physically ill upon losing control to their “Inferiors” (Everyone other than themselves). One theory is that Johnson was so infuriated when the recovery team took over physical control of the property, last October, that he couldn’t stand himself until he took it back. As trivial and adolescent as this may seem to an outside observer such motivations are quite real and possible to a psychopath.

Johnson presents as positive for most items of Dr. Robert Hare’s psychopathy checklist. As such, it’s not irresponsible to use the metaphor that we are all mere projections in the twisted video game Johnson sees through his eyes that he calls his life. There’s a certain threshold of destruction and pain that can only be inflicted by those incapable of feeling empathy for their fellow man and many of those directly involved with GGC believe Johnson is there.

Ironically, Johnson’s occupation of the land is of minor importance to the recovery team. It may even give the team the ability to retain the moral high ground while letting Johnson pay “his own” bills, for a change. Any money that johnson uses to pay a bill would have come from the investors, anyway. In that sense, any bills he pays might be viewed as a form of recovery.

Johnson, like socialism, may also be running short of other people’s money, about now, and need a place to stay. Since he used investor money to pay for the property they should send him an invoice for the rent he’s now accruing by occupying the property and blocking such income to investors. His rental rate could be set at the same rates he quoted for a per-night stay at the hacienda in the sales brochures ($150 per night). Every month Johnson occupies GGC would incur rent due of $4,500 US.

Water Rights?

Johnson may have something up his sleeve in attempting to sell-off (Again) the most valuable asset of the GGC land: Water rights. Although the injunction, which blocks any sale until all legal actions against the property are resolved, is still in place, Johnson’s current lawyer has experience in the area of water rights. It’s not outside of the realm of possibility that Johnson has worked a deal with the lawyer to do this. The criminal complaint Johnson filed, that enabled him to show up at the gates with two policeman, can cost as much as $50k US to perfect. Johnson may have worked some backroom deal with the lawyer to work, pro-bono, with the promise of a share of future water rights. This is mere speculation on my part, but possible, considering what is of remaining value of El Lepe outside of free rent for Johnson.

Johnson Surfaces to Contact Wendy McElroy

Johnson “surfaced” in March to contact libertarian writer, Wendy McElroy, who purchased an option on a GGC parcel with her husband, Brad. Though Wendy is no fan of Johnson she thought perhaps talking with Johnson would facilitate some progress in negotiations without further involvement of State entities. For Johnson’s part, he’s received nothing but the bad press he deserves since Wendy’s exposé, last year. Perhaps Johnson thought he might turn that around if he could be seen as reasonable to a talented writer and GGC option owner. McElroy broached the possibility of further exchanges with Johnson to investors and I have no information about how it might have been received or if any progress was made.

No doubt Wendy’s exposé saved some number of potential new investors from losing money in GGC. She was not, however, responsible for the drop-off in GGC sales, as previously speculated. A forensic accounting of sales receipts shows a precipitous drop-off of investment money in January 2014 after Berwick stopped marketing GGC in October of 2013. So, after deals already in the pipeline were closed … sales slowed to a trickle. As described in Part 4 of this series, Berwick’s marketing efforts were the prime mover in bringing investor money into GGC. When Berwick stopped marketing, people stopped investing. Wendy’s articles exposed the reasons why Berwick stopped marketing but she did not cause him to stop. Berwick followed up the next day with an article of his own confirming Wendy’s information and adding his own take on the state of GGC and why he stopped marketing efforts.

Farm Status

The lemon trees need 50 Liters per second (LPS) to thrive and are now only receiving 1.5 LPS. Receiving so little water will greatly stress the trees and is a bad indictor for next years harvest.

The office and Hacienda were in great shape prior to Johnson’s reoccupation with pictures to prove it. In fact, it might have been about time to start renting it out for supplemental income to support the farm. Now that Johnson’s on site and blocking access to the investors, again, Johnson will most likely let the property fall back into decay. For all of Johnson’s lies the place was approaching biohazard status as the recovery team came on site, in October. We can only hope that Johnson’s hyped “Animal sanctuary” has also lost it’s credibility and more dogs won’t be dropped off to starve to death while Johnson feeds salmon filet’s to his own dog.

Litigation Pending

There are two civil suits pending from investors:

Josh Kirley’s suit which questions the procedures with which “El Lepe” was purchased from Ramirez, by Johnson. The Chileans are meticulous in their paperwork and Johnson showed the wrong ID for the deed of purchase. However, he did show the correct ID (Passport) in the closing. This civil case has already been heard and is awaiting a decision.
Jerry Folta’s civil suit, filed on 4/2/15, on behalf of Jerry’s entity (Jumpin’ G SpA) against Johnson’s entity, Inmobiliaria Galt’s Gulch S.A., for $450,000. Folta paid $450,000 US for the purchase of a 25 acre lemon orchard lot. It appears to me that Folta’s suit is positioned to become an uncontested judgement that will be turned into a lien against Johnson’s entity. Such a lien would put Folta in line before other investors should the company that holds the property be sold. Should Kirley’s suit start fraudulent sales to unravel Folta’s at the front of the line to block the sale or be paid off first.

I should mention that Johnson’s suit filed against Mario Del Real is about the theft of already stolen property. The first theft was performed by Johnson as he took investor money and used it to take ownership of the land in the name of his own personal entity and not the entity formed by Cobin, Eyzaguirre and Berwick with which receipt was to be taken. Therefore, Johnson’s suit against Real involves the dispute between thieves of previously stolen property.

Civil lawsuits are not issued a date to be heard in Chile. This is Chilean style justice and cases are heard as the judge gets to them or sees fit. The general public does not know when a case “is about to be heard”, despite Johnson’s public warnings.

Folta’s Follies

Jerry Folta has been playing both sides against the middle since GGC started unraveling. He pretends to support Johnson while filing civil suits against him. When questioned, he says the other investors don’t understand what’s going on and that he’s not suing Johnson. Technically, it’s Jerry’s entity (Jumpin’ G SpA) filing against Johnson’s entity (Inmobiliaria Galt’s Gulch SA). Is that what investors don’t understand? That the civil suit is filed between entities and not people? If so, Folta’s playing word games with the investors. Folta’s contracts are convoluted, as well, with all sorts of meandering language and terms.

If Folta still supports Johnson and yet files such lawsuits against him, then they’re both playing games such as what I’ve described as a lien disguised as a civil suit. What normal business relationship involves sending invoices to each other in the form of civil lawsuits? Perhaps a relationship in cahoots to use any form of fiat they want to make things go their way: Fiat loans, invoices, liens, mortgages, and even civil lawsuits, in whatever manner they agree to use them to protect their interests. It will take more digging to unravel such alleged constructive filings, completely, and I have not done so.

Short-term Predictions

My predictions are that the same sorts of things that happened before, when Johnson was “in charge” and blocking farm access to the investors who paid for it, will happen again:

Johnson will make no improvements, whatsoever, to the property.
Johnson will conduct no maintenance, whatsoever, to the property.
Johnson will string along, exploit and burn any employees or creditors who didn’t learn the folly of trusting him the last time around.
The place will be slowly returned to biohazard status as a result of Johnson’s squatting and “living” habits.
No bills will be paid so the electricity, and any other utilities, will be shutoff per the policies of the local Chilean energy provider.
Johnson will spend his days trying to figure out how to sell-off anything of value he possibly can: Water rights being the crown jewel and trickling downwards from there.
Any money Johnson receives as a result of one of his sell-off schemes will go directly into his pocket and to no one else.
And, last but not least: Even Jerry Folta will get further burned by Johnson.

When Johnson sends public updates about GGC I’ve found the best way to glean any actual truth they may contain is to invert every assertion and work from there.

Business

Galt’s Gulch Chile, Part 5 — Feedback from the GGC Recovery Team

By Terence Gillespie January 28, 2015

Part 1: What Happened and When? — GGC Story, Timeline & References.
Part 2: Root Cause of Problems? — The Creature from Galt’s Gulch.
Part 3: How Might Problems be Avoided in the Future? — Contracts are Good for Libertarians, Too.
Part 4: What’s the Deal with Berwick and GGC? — Jeff Berwick & GGC: A Regrettable Summary.

Last week, a GGC investor working with the Recovery Team sent me an e-mail with feedback on the four articles I’d written about the Galt’s Gulch Chile land development deal. Though I’d sent the first two articles to John Cobin and Wendy McElroy, this was the first correspondence I’d had with someone directly involved with the deal. The first four articles were written from what could be gleaned from all public documents, radio shows, forums, facebook, articles and their comment sections. Part 5 brings the series current with new information and feedback from those involved. My hope is that such provides a bridge to future articles that may be of more direct assistance to real-time recovery efforts. To that end, this will be the last article that refers to Cobin/Ezyaguirre, in any significant way, as their initiating role has already been addressed and they were cut out of the deal early in the development.

As you read the exchange (And any article in the series) keep in mind that the actions of those involved are either good, fine, questionable, wrong, or illegal. Much of the last three categories can only be decided, in retrospect. The legalities depend on “the law” of one’s vantage point: Natural, Chilean or US. My opinion is that most all of Johnson’s actions were wrong from the standpoint of natural law as I see nothing indicating he ever intended to keep his promises to those involved. The Recovery Team would prefer to remain diligent and prudent in refraining from making legal judgements without supporting evidence.

Recovery Team: Part I: It is not clear that the project had enough water for the development as Cobin advertised. As you know, it’s a dry climate, and scope of the project was large. However, another huge problem was that it is all environmentally protected. I have been told that the gov’t will allow only 12 parcels to be carved out of it.

Terence: Yes, Cobin’s water estimates could only be realized if all the wells were cleared, consolidated and inscribed to the property. Cobin said he and Eyzaguirre could do it (Restated by Cobin on his radio show during Berwick’s apology episode) and such was to be a crucial part of their contribution to the deal. Everything I’ve read indicates Johnson and Berwick cut ties with Cobin before the property was purchased. Johnson’s accusations against Cobin, or anyone else, for that matter, hold no weight because of Johnson’s clear pattern of accusing others of his own failures.

I hadn’t read that environmental concerns were tied in with the inability to zone the land, properly. If so, overcoming this obstacle would be as crucial to the project as consolidating the water rights.

Recovery Team: Also, I think you said–or maybe implied–that Cobin/Eyzaguirre somehow put money into the project. Other than pocket money, maybe, you are mistaken.

Terence: I see Cobin’s contribution as significant but non-monetary. He had the vision, chose the location and got the project rolling by involving Berwick to attract capital. This is what enabled Berwick and Johnson, neither of whom had stepped foot in Chile prior to flying down to meet Cobin, to connect with a large development deal within hours of their arrival.

Recovery Team: I doubt that Del Real and Johnson lived together. At one point early in their business (if you could call it that) relationship, Del Real bought office furniture, put it at the farm office and he and his daughter were working there. I’ll double check on that.

Terence: Berwick made this comment when talking with Cobin on his radio show. Since Johnson’s “sale” of GGC stock to M. Del Real and his daughter, Pamela, is important to the recovery, perhaps their living and working arrangements are worth knowing about.

Recovery Team: You imply throughout that Cobin/Eyzaguirre were necessary to the success of the project, but I doubt it. I have not met either person, but I have heard Cobin on the internet and have seen his astronomical consulting fees. Why Berwick/Johnson would agree to the equivalent of a finders fee of 25% for that property that can’t be developed is beyond me. Further, see attached the ridiculous marketing material that Cobin spearheaded. This wreaks of scam–$1M revenue per year for fish? Selling electricity? Selling water??? Too bad they didn’t continue on this vein, I would have been spared my losses since I wouldn’t touch the project with a ten foot pole with Cobin and his spin involved.

I am sure that had Johnson not been Johnson, he would have been able to find someone in Chile to develop the project. Cobin/Eyzaguirre were never necessary.

Terence: It appears Johnson did only enough “work” to muddy the waters for his cons and overpriced Chilean side-deals. Cobin/Berwick say the finders fee and GGC sales percentage was based on Cobin finding the land, creating the deal, negotiating the price of the first property, El Penon, to be $270/acre, and consolidating and inscribing the water rights. However, what Berwick and Cobin promised each other is between them. Nothing I’ve seen ties Berwick’s promise to Cobin to the GGC investors who probably never set eyes on Cobin’s business plan. Aside from his optimistic estimates the significant part of the document, for me, is that it shows that Cobin was fooled by Johnson’s persona, as well. It also shows that he had no idea that Berwick and Johnson would shortly cut him completely out of the deal.

Recovery Team: Part IV: Johnson lived off us for 2 years, not 3–from sept 2012 to sep 2014.

Terence: Very glad to hear that! I’ll update the article.

Recovery Team: The biggest hole in your articles is that you don’t even touch on the real story. This is NOT a purely gringo on gringo scam. Johnson could not have done what he did were it not for willing accomplices in Chile. There is a string of crooked notaries and lawyers enabling his illegal activities. Further, the Chileans, being good scammers themselves, sniffed Johnson out and then scammed him. Our problems now are that the overt scam artist, Mario Del Real, took control of the company and will not give it back, and that the seller, Guillermo Ramirez, appears to have 1. gouged Johnson on the price of the property, 2. misrepresented the water situation, and 3. may have been in partnership with Johnson in running up huge late fees. Johnson was never able to pay any but the first payment on the land on time. One document I have says that $1.14M in late fees were paid.

Terence: Wow! I stayed out of all the swaps (Sales?) and side-deals referred to in the “Kerfuffle” document to focus on the overall story and the gringos, first. I certainly understand that, from the GGC investors point of view, these are the most important aspects of the current recovery.

Recovery Team: Further, the whole time that one would think that Johnson would be very busy with obtaining the proper permits, managing the development and farm, as well as overseeing marketing and sales, he was looking for other “great deals” in Chile. That’s how he was scammed with the Rio Colorado deal. He also pursued buying water in Patagonia (?), and various bitcoin projects–he stole $100k from one of our investors with a bitcoin deal. He even put bids on a neighboring property and tried to negotiate a sort of lease-option arrangement with other neighbors. To the bitter end, he was sending emails telling us about how he was going to build a large solar greenhouse. Yet during all that time, the permits to subdivide the property were getting nowhere, the farm was deteriorating, and employees and vendors were being stiffed.

No vat tax was ever paid by Johnson for the sale of the lemons harvested and sold on the property. Last week, we finally had a visit from SII. Why couldn’t they have shown up when Johnson was stiffing them?

Terence: Whew! What a tangled mess. How intriguing that Johnson, himself, might have been scammed while he was using GGC investor money to protect himself from GGC investors. Unfortunately, lying to the bitter end is another characteristic of psychopathic behavior. For those who haven’t yet watched the documentary, “I, Psychopath” it’s worth the time:

I noticed Mario Del Real is described as having previously worked for the Chilean IRS (SII). Perhaps there’s a connection between his expertise and the timing of SII’s visit? Either way, bad timing all around.

Recovery Team: I have a descriptive timeline I’ve been working on. It definitely needs more work, but I’m supplying documents with nearly every entry. I’m also working on a financial timeline with documentation. I’m waiting for more accounting information to finish these.

Terence: I can’t think of anything more important to recovery efforts than such a timeline and the documents that go along with it. I’ll update the timeline in Part one with anything you can pass along.

Recovery Team: Btw, Jerry Foltas posts on the GGC webpage are not correct. I’ve caught him several times in contradictions. His only response to me is that I’m not reliable. yeah, right. I provide documents for everything I say, and I am trying to be especially careful to make no accusations. I try simply to present the documents and let them speak for themselves.

Terence: As an outside reader I can barely get through Folta’s “Newsletters”. I thought him a Johnson created sock-puppet prior to reading that the team had met with an actual person of the same name outside the GGC office. While reading Jerry’s “Newsletters” my theory was that he had taken advantage of the absence of a shareholders agreement (Which would have given a Right of First Refusal of IGGSA shares to all investors) and coaxed GGC shares out of Johnson in order to gain control of GGC. This would be “playing both sides against the middle”. A more tragic reality for Folta would be if, having lost his initial investment, Johnson scammed him again and Folta lost more money in return for GGC shares that were not Johnson’s to sell.

Where’s the Libertarian Media?

What’s with the absence of Libertarian commentary on Galt’s Gulch Chile? Even the Libertarians that spoke at the GGC Fall or Spring event held on GGC grounds in Chile seem to have little to nothing to say. The Recovery Team knows that the attendance of these libertarians was never an endorsement and that they had no access to information that would enable them to vett or endorse the project. It would be nice, however, to hear more from Ben Swann, John Tolley, Bob Murphy, Luke Rudowski, and others that actually set foot on the grounds.

Note: All articles on McGillespie.Com may be reposted in full, or in part, per Creative Commons license “By” and “Share-alike”.

Regarding Investors

I didn’t say much about the Founders or the investors in my first four articles because I didn’t know anything about them. As of today I do know this: The Founders had no idea what Johnson was doing. It’s beginning to appear that Johnson used Founder money to hire lawyers to protect himself against the Founders, themselves. They were confused with Berwick’s incompetence, and Johnson’s series of thefts and counter accusations, until mid-2014. They probably thought disagreements between Berwick and Johnson were that of typical partners, each with 50% ownership but neither with majority control. In fact, even today, it’s a tough forensic task to piece together the timeline and documents Johnson withheld from investors to the end.

Prior to his investment, Josh Kirley (One of the first investors) hired a Chilean law firm and offered them an additional bonus, above and beyond their hourly rate, if they could come up with any reason to not move forward with his investment into GGC. When they came up with nothing Kirley followed up with a background check of Johnson and still, no red flags appeared. Onlookers may protest that any number of items on some personal due diligence list were not covered but Kirley’s first two efforts at protecting his investment were quite bold. Contrary to popular understanding, lawyers are trained to find fault with, not enable, contracts and deals. And yet, they came up with nothing.

I’d also point out that the sophistication level of those who were fooled by Johnson’s psychopathic behavior is rising with every stone of this story unturned. Cobin’s business plan even documented Johnson’s many possible contributions to GGC as if they were additional selling points of GGC. It would be a mistake, therefore, for readers to believe that such behavior will be obvious should it be encountered, personally.

What’s Next?

The money and ownership trail of GGC has been greatly muddied and confused by Johnson’s complex maze of stock swaps (Sales?), director appointments, multiple bank accounts, additional overpriced purchases, missed payments, secondary entities, bitcoin theft, and suspicious penalty clauses, etc. These are the sorts of things Johnson was “working on” while claiming to investors that he was busy developing GGC. Even today, the investors are attempting to piece together the basic financial statements and reports that Johnson had been denying them for so long. The documents they’re discovering reveal a maze of deceit rather than land development.

Money invested into GGC was always about purchasing land. There are still many reasons to hope that, if investors can’t recover money, they might recover land. It wouldn’t be a total restoration but it would restore control of what was always at the heart of the deal.

It took four articles to tell the story of what happened, why and what others may do to avoid problems like this in the future. I didn’t follow the maze of Johnson’s deals (Likely made possible by Chilean collusion) as it wasn’t relevant to those purposes. However, it most certainly is relevant to efforts to recover money or control over the land. If I can make a contribution in that area, I will. The focus now is on substantiating Johnson’s activities and the gaggle of Chilean swindlers that may have followed in his wake.

I’ll conclude Part 5 with an open message to Jeff Berwick: I’ve run across the name of the investor Berwick referred to as left homeless having lost everything on his investment into GGC. This investor is, indeed, in dire straits. If Berwick is ready to keep the promise he made on the Freedom Feens Radio Show then now (1/28/15) would be an ideal time for him to help this investor. I’m sure someone on the Recovery Team would be happy to pass along his current location. Contact them at ggc.pressrelease@gmail.com.

Banking

Two Paragraph Expat Guide to Chile

By Terence Gillespie January 8, 2015

Rent and K.I.S.S.

All the land development talk in my Galt’s Gulch Chile series seems pretentious. Then again, merely telling the average person you’re flying to Chile has a good chance of causing eyes to glaze over as if one is doing something exotic. Flying to Chile is not exotic; it’s merely something that’s possible the instant one decides it is.

If there’s a storm headed your way it’s time to cut the crap-talk about some castle you own and get to a motel room anywhere the storm isn’t. Why be grandiose about the simple and elegant act of leaving to let the storm pass? In fact, why say anything at all except to make a few calls to shutoff utilities and keep any promises you’ve made to others before leaving town? With mouth firmly closed, just hop a flight and get a room.

Engaged Withdrawal is Not Passive

The point of all this ex-pat business is to contribute to the solution through engaged withdrawal. Having gone through much of the advanced work of ex-patting my family I can vouch for the truth that engaged withdrawal is not a passive undertaking (Hat tip to Wendy McElroy for this link).

Two Paragraph Expat Guide to Chile

Forget about all this talk of land development and ownership. Motels, Hotels, Apartments, houses and cabana’s dot the entire country, have already been developed, and are yours for the renting. Your best second home is a rental anywhere you want to be. Keep it that simple and you won’t even be limited to Chile.

Nine out of ten Chilean ex-pats end up in NE Santiago (Las Condes) so just rent there for a few months and make scouting trips on the weekends. When the 90 days is up on your visa fly to Argentina for the weekend and reset it. That’ll get you out of the US for six months with your “measly” first passport. You have one, right?

It’s Your World, Boss

The world is yours the instant you recognize it is. The nagging urge to “own” things, perhaps stronger in the American psyche, is best kept at bay when conducting one’s life across multiple nation-states.

I recall streaming the movie “Inglourious Basterds” [sic, indeed] from netflix to the ipad and realizing the adjoining cabana could be rented for my kids, along with the one we were in, for less than our US mortgage. With that thought, the fear of being trapped in proximity to the endless artificial problems of the state’s creation started to melt away. My second thought was that all this was achieved for the price of a plane ticket, rental car and a hotel room.

As Billy Joel Sang in “NY State of Mind”. . .

“Hop a flight to Miami Beach, or to Hollywood”

to which I add:

. . . or to Panama, New Zealand or to Chile.

Business

Jeff Berwick and Galt’s Gulch Chile: A Regrettable Summary

By Terence Gillespie January 8, 2015

This is part four of a series offering constructive criticism of the Galt’s Gulch Chile land development deal. To come up to speed on the story, see part one: GGC Story, Timeline & References. For the root cause of the current problems, see part two, “The Creature from Galt’s Gulch“. For what might be done to make future deals successful, see part three, “Contracts are Good for Libertarians, too“. Or, forget about all this and see my short, “Two Paragraph Expat Guide to Chile“.

“I did not invest in this fraud, but I listened to all Jeff’s blogs. It seemed clear to me listening it was HIS project and we were being asked to buy land based on Jeff’s brilliance and honesty which he portrays non-stop. He sure ain’t shy selling his brilliance. Jeff clearly wrote this new piece as an attempt to totally distance himself from the project from the get-go and any liability certain to come. I never heard any disclaimer on any of his posts/blogs about his being only distantly associated with this project. He portrayed himself as the owner and operator of it or at least that is how I heard it.”

“JJ” commenting on Berwick’s first Mea Culpa Communique.

I agree with JJ’s assessment of Berwick’s writing and media appearances with regard to GGC. Berwick continued to market GGC until the problems Johnson started causing from the beginning made it impossible to refrain from making a public statement. If Berwick’s reputation is to survive this fiasco he’ll have to do more than write another article for his website describing what others are doing to recover the project and monies stolen.

Berwick may also consider rehab and detox from a clear case of “Next Deal-Itis”.

Next deal-itis

In Berwick’s own words (9:40 – 10:17):

“At that moment in time with my business I was so busy and I didn’t have the proper help I needed. And I really wanted someone to kind of help me manage all these businesses that I had started up which is a problem that I sometimes have. I’m sort of a serial entrepreneur and sometimes I start too many things and I don’t do a good enough job in taking care of some of them as is what happened with Galt’s Gulch, to an extent. I didn’t take the proper care I should have for a project of that size and I put too much faith into one person who turned out to be a horrible person, in my opinion, and completely incompetent at running a business like that.”

After shaking hands with Cobin, Berwick hopped a flight and left “the details with his team”. Except there was no team except Johnson with whom Berwick had a long list of experiences that would have screamed “Danger!”, “Incompetence!” or “Psychopath!” had he been listening. The “details” he left in Johnson’s hands was a foreign land development project that would easily have overwhelmed the most disciplined, talented and honest of land developers.

Does anyone care if Berwick had too many irons in the fire, wanted to get on to the next deal having incompetently dealt with the current one, or that he was moving on to use his platform to bring money into a project into which the death-seed of Johnson had been firmly planted?

Berwick is a match for Robert Ringer’s “Builder-owner” Archtype:

“Builder-owners, bless their hearts, are a unique species. Not only do they not necessarily mean what they say, most of the time they don’t even mean what they think they mean. They live in an entirely different world from the rest of us—one that revolves almost entirely around “the next deal”—and they speak a language all their own. By now, though, I had learned to translate “builderese” doublespeak into English pretty well. For example, “I’m always willing to listen” more often than not really meant, “I’m desperate. Make me an offer.””

Yet Berwick takes it to a whole new level. He doesn’t even mean what he thinks he means when he’s not saying anything at all!

“At the time I thought that my silence on anything related to GGC over the last year would give enough people hints as to my happiness/involvement in the project that many would get the point. Unfortunately many didn’t.”

Perhaps that was due to Berwick’s appearance on Bloomberg during his “Year of Silence”. Does Berwick expect investors to be mind-readers watching his every move for silent cues?

“He’s a fantasy writer, nothing more. He writes about the fantasy of being a badass anarcho-capitalist. It took me a while to realize what big crooks they (Berwick and Johnson) were, but they rubbed elbows with so many people I trusted and respected. Hell, now, whenever anyone I listen to or respect interviews Berwick, I feel my gut drop.”

— Former TDV consultant who “Narrowly escaped involvement with GGC”

Here’s a tip for those who suffer from “Next Deal-Itis”: The fastest way to move on to your next deal is to set up your current deal, properly.

Johnson Superman?

To focus on Berwick I pose the following question about Johnson:

What would Johnson had to have been for Berwick’s actions to have lead to a successful outcome for GGC? In other words, if Johnson had none of the deficiencies attributed to him, what attributes, skills, and experience would be necessary to develop GGC, alone?

Here’s a conservative list:

Experienced Land Developer.
Fluent in Chilean Spanish.
A “People-Person” par excellence.
Able to make complex decisions quickly, and alone, in a foreign country.
Able to handle his personal and business affairs with complete integrity.
A work-a-holic (In a good way).
In constant communication with all partners and agencies he was working with.
Experienced with money management and Chilean bank and currency conversion quirks.
Knowledge of local business customs.
Knowledge of local contracting services.
An extraordinarily talented project manager with impeccable self-discipline.

When reporting on “Simon Black” ceasing activity on “Sovereign Valley Farms”, Cobin speculates that “Black’s” undoing was the inability to find a land developer in Chile with the rare combination of talents, listed above. The talent, experience and character to manage the GGC project Berwick left Johnson to manage is rare, by all accounts. Finding it is the lynchpin of the success of such an undertaking. Berwick somehow concluded that he could fly away from such a complex land development project, to which his name was attached, and be a “silent” and detached marketer.

Marketing is King?

At the very least, Berwick’s behavior hints he values marketing over development rather than seeing both as crucial to the success of such a project. Development work, if Johnson ever did it, is full-time, tedious, and demanding. If Johnson had actually proceeded he would soon resent Berwick’s absence and detachment from the avalanche of real-world “details”.

If this is the kind of “builder-owner” Berwick aspires to be he has a role model in Donald Trump who’s been failing forward to his next project for the past 30 years. The bankruptcies are never personal, but corporate, so the association with failure is never clear.

A Regrettable Summary

In summary, Berwick has revealed himself to be an unworthy steward of precisely the kinds of “deals” he wants to do. What little Berwick did right with GGC wasn’t done in time to make a difference. Yet, Berwick doesn’t appear to want to “Do” anything but make a few calls and write another article on his blog hyping the next bing thing for his readers.

For Berwick’s reference I admit that passive partner “unicorns”, described below, do actually exist and appear from time to time. They tend to appear having done a remarkable amount of real-world due-diligence and with impeccable credentials.

Passive Partner Unicorns

A valid passive partner is a unicorn that appears when:

One’s reputation is so established that the reputation, itself, is a contribution to a business (A great example of this is Arnold and Sylvester’s contribution to Planet Hollywood: All they had to do is show up and let their name be used. Was it worth it to Planet Hollywood? Yes, that’s why they made the deal).
One has the ability to bring capital into a project (Berwick was apparently able to do this for GGC).
One can remove a major obstacle (Usually legal and artificial) from the path of the project (Payoffs, bribes, political manipulations, ad. nauseam).

For those doing the day-to-day work the important contributions of such unicorns may be frustrating. However, such contributions are often the deciding factors of success. The only real-life example I can think of, possessing all three attributes, is Doug Casey. That Mr. Casey is one of the few who’ve managed to create a “foreign” bastion of liberty is no accident.

Berwick will read this reference to Casey and retell his story about not heeding Casey’s advice to “Think very carefully” about what he was doing with GGC. Perhaps it’s best if Berwick cease all reference to his superiors. Consider referring to them only in private prayer during a sabbatical of priest-like transformation and the physical work required to provide restitution to those he’s deceived.

Berwick was able to attract investment capital based on his supposed involvement and recommendation of GGC. If he doesn’t keep his publicly made promises the days of anyone seeing Berwick’s involvement in a project as a positive factor, are over.

Berwick’s Way Out

The way out of this mess for Berwick is to keep the promise he made on Michael W. Dean’s radio show, Freedom Feens, on September 6th, 2014 at 38 minutes into the broadcast:

MWD: “The really big question, and I hope this doesn’t make you uncomfortable, but, apparently you encouraged people to invest in this. If you and them can’t be made whole through private arbitration or through the courts, with this guy, are you willing to do anything to help make those people whole?”

JB: Yeah, absolutely …. yes, I’m going to work the rest of my life, if I have to, to make this right.

MWD: “That’s excellent and very honorable.”

Berwick must also make good on his promise to John Cobin. Why? Because there’s not a libertarian on the planet who will trust Berwick until they know he’s made good with Cobin (And they’ll be asking Cobin about that, not Berwick). The GGC investors and participants don’t owe Cobin a dime. I’m referring to a personal promise Berwick made to Cobin. It was Berwick’s responsibility to fulfill that promise. If what Berwick had in mind was to be built in to the sales structure of GGC then Berwick should have done so prior to the first peso being accepted into escrow on lot options. Of course, there was no escrow as Johnson was using investment capital like a personal bank account. Berwick is just as responsible for that as Johnson as it’s something a normally functioning 50/50 partner would discover a few hours to a day after it started happening.

Cobin has been admirably forgiving to Berwick and will likely remain so. Those less forgiving than Cobin, however, will be watching his every move. If Cobin isn’t satisfied then he’ll remain the elephant in Berwick’s “International” room, for a long time. Berwick either makes it right with Cobin or he’s made the equivalent of a conscious choice to cut himself off of future capital to pay for his white linen suits, cigars and booze.

Berwick Isn’t Working with the GGC Rescue Team

In all references to the GGC rescue team Berwick is careful to point out he has no affiliation with them nor is he working with or assisting them, in any way. It seems odd for Berwick to be at arm’s length to the GGC team but that’s the way he puts it. I point this out because he’s already using the word “we” when reporting on the team’s success.

In fact, neither his promise to investors or to Cobin have anything to do with the work of the GGC rescue team. If Berwick thinks it does then he should be working with the team, full-time. Otherwise, he’s fallen back into sales-speak and is, once again, leveraging the efforts of others and claiming they’re his.

Berwick’s promise to Cobin was made before the property that became GGC was purchased. It’s not the GGC team’s responsibility to fulfill Berwick’s personal promises to Cobin. The same goes for his promise to work the rest of his life, if he has to, to make things right with the investors who invested in GGC because Berwick encouraged them to.

Do people who lost money on GGC because of Berwick have to be working with the GGC team, directly, to be made whole? In other words, do all the people Berwick mislead now have to work together, themselves, to fulfill Berwick’s promise to them? What about investors like Wendy and Brad who refuse to involve the state, in any way? They have every right to do so and yet are still covered by Berwick’s unconditional promise.

The GGC Rescue team is already doing the arbitration and court work Berwick says he’s got nothing to do with. What will Berwick be doing, personally, to fulfill his promises?

Did Berwick Lose Money on GGC?

See if you can tell after reading what he wrote about that:

“They told me to just take my losses (my total losses of expenses, loans and money taken by Ken that I had given to him in exchange for a separate deal that he reneged on is approximately $500,000).”

“A separate deal that he reneged on” isn’t GGC money. So, what were Berwick’s direct losses on GGC? Based on what Berwick has written I don’t think it’s possible to know.

Public Apologies are Not Restitution

Public apologies are an excellent first step in what Berwick refers to as “Penance“. Yet, Apology is the easy part of penance. What follows should be consistency and the work of restitution. The work of restitution comes when one stops talking and starts restituting.

Those who’ve lost money on GGC surely hope the “work” Berwick is referring to doesn’t begin and end with another apology or article about what the GGC team is doing. The direct relationship between words and deeds may be too much for Salesman Berwick to comprehend. If so, the tragedy for Berwick has only just begun with the publicity of his regrettable behavior with regard to GGC.

Berwick refers to at least one investor with a family now living in his car having invested his life savings in GGC. Why wouldn’t such an investor be living in Berwick’s “house on the hill” in Acapulco?

Berwick is a young man and I’d prefer to err on the side of optimism for a future that is completely dependant on his own thoughts and actions. This period of that life requires a priest-like transformation and fulfillment of his personal promises. The appropos demeanor and perspective is that of Paul Newman in “The Verdict” where Newman’s character knows his entire life depends on the outcome of the case he’s working on. In desperation, Newman repeats to himself the prayer-like mantra of: “There are no other cases. This is the case!”

Hey, Jeff! There are no other cases. This is the case!

Fielding softball “International Man” questions on Bloomberg on behalf of the libertarian crowd is a walk in the park compared to keeping real-life, publicly made promises.

Johnson’s Way Out

The way out for Johnson is his next deal. Just like he did with the last one, before meeting Berwick, Johnson will disappear from Chile and reappear somewhere else on the globe with a new story and a rapidly moving mouth. Here’s Johnson in 2010 talking to a child about wind turbines:

Johnson’s whereabouts are unknown (As of 1/8/14). My guess is he’s in Paraguay holed up in a hostel with a backpack of booty stolen from GGC.

From Johnson’s point of view GGC was a resounding success. After all, where did all the money go that no one can find? Whatever Johnson got is money he didn’t have or earn. His living expenses were paid for the three years he was tying GGC capital in knots. How many three-year cons does Johnson have to pull for the string of victims to pay his expenses for the next 20 years? GGC was a big score for him. One or two more and Johnson can live off the booty for the rest of his life . . . if he can stop his mouth from moving.

What, no talk of justice for Johnson?

Most probably, not. Or, perhaps you’re empathizing with Johnson and tempted to cite his anguish and fear. And, what about the persecution of being on the run and being hounded by state officials or the GGC team trying to bring him to justice?

Nah, Johnson doesn’t feel any of that. To the extent you believe he does you’re ripe for being fooled by the next “Johnson”. If you want to understand a psychopath you don’t get there by empathy. You get there by studying them like a spider in a jar. What you’ll learn is that the only way to win is to not play with them. If you have them in a jar, don’t let them out.

Postscript

As light-hearted as Ayn Rand tried to make the fictional “Galt’s Gulch” it felt stiff to me. The biggest thing it had going for it was the reflective shield that made it invisable from the air. If one has withdrawn into the right country the best camoflauge is to blend in and be the gentleman, or lady, you are. Beautiful manners and graceful comportment make life wonderful and increase the liberty of those who rise to every occasion to show them. Excellent company doesn’t grow on trees but, the odds of finding it increase when you become the excellent company you seek.

Manage your engaged withdrawal, well, and you won’t be alone for long.

This is the last of the GGC series unless there are further developments that warrant commentary. If anyone connected to this incident may offer corrections, omissions, or suggest additions to what has been written, please contact me.

Galt’s Gulch Chile — Story, Timeline & References

See Part One to read this series from the beginning, Galt’s Gulch Chile — Story, Timeline & References. Or, forget about all this and see my short, “Two Paragraph Expat Guide to Chile“.

Business

The Creature from Galt’s Gulch

By Terence Gillespie December 17, 2014

Chile is on the short list of ex-pat locations for my family. We’ve been vetting countries for the past eight years and are far along in the process with second passports and visa’s in hand. Such documents are probably a luxury but exploring that question is for another day. In this article (Part Two) I offer perspective and constructive criticism of the Galt’s Gulch, Chile (GGC) land development fiasco. To come up to speed on the story, and for reference while reading this article, see Part 1: Galt’s Gulch Chile — Story, Timeline & References.

Root Cause

This fiasco has little to do with the Randian, libertarian, or anarcho capitalist ideals referred to in the marketing hype. The social, political and economic philosophies, purported to be at the heart of GGC’s failure, are only now coming into play in the attempted rescue of the project. What killed the deal was what kills most deals: The psychopathic behavior of a partner in a key role and the inability of the other partners to recognize and eject him in time. A contributing factor was Berwick’s silence, yet continued marketing hype, despite direct knowledge of egregious mismanagement and theft. Another contributing factor was the support of Johnson by investors who, understandably, needed more time and evidence to be convinced of the extent of Johnson’s misdeeds.

I’m being quite careful in my use of the word “Psychopath“. I am not a mental health professional or qualified to make a clinical diagnosis. However, “psychopath” is the word Berwick uses, in public articles and radio interviews, to describe Johnson. After studying all public documents my layman’s opinion is that, to Berwick’s credit, he is correctly naming Johnson’s pattern of behavior and that it is consistent with the testimony of multiple eyewitnesses.

Not Guilty by Association

The world is full of successful “libertarian” projects. What distinguishes them from GGC is that the political-economic philosophies of the participants were not the primary marketing lure of the project. Because Galt’s Gulch dared to use a famous Randian catchphrase the fact that it was taken down by a psychopath, like most deals are, is becoming associated with the philosophies of those involved. In fact, the philosophies and aspirations of the investors and participants in GGC had no bearing on its failure. They simply failed to spot Johnson’s egregious behavior, in time. According to eyewitnesses (John Cobin, Jeff Berwick) Johnson had no grasp, whatsoever, of libertarian principles prior to his involvement in GGC. It remains unclear what principles, if any, might explain Johnson’s predatory, aggressive and anti-social behavior.

Natural Law Prevails, Naturally

Much has been made of the irony of anarcho capitalists having to rely on the state for justice when deals go awry. No such thing has yet to occur with respect to GGC. In fact, the state has done nothing to restore funds, order or justice to GGC participants. The only entity to make progress on those fronts has been the GGC participants, themselves. Specifically, the GGC rescue team, a band of investors and members who have a personal and financial interest in restoring order to the project.

On October 23, 2014, the GGC rescue team met with private attorneys and security at the Santiago airport and were able to garner local support of their restorative efforts. What garnered their support, and made the GGC rescue team’s efforts successful, was their restorative intentions and the ground they held: The moral high ground. The locals were convinced the team had given an honest account of the situation and had the intention and means to oust squatters, clean the place up, meet payroll for the farm workers, restore utilities, and bring accounts current. Using private funds the rescue team proceeded to do all that they had promised.

What Do I Care?

I care because I’m a libertarian interested in living in Chile. In public articles and extensive comments about GGC, thus far, I see stories, facts, and the usual name-calling from the uninvolved, but little to no constructive criticism.

I care because this deal is being cited as “proof” that libertarians are unable to trade with one another in peace without resorting to state agencies.

I care because libertarians have long-term concerns about the negative exposure GGC might bring to perfectly great ideas such as not aggressing on one another and letting free markets reign:

“That is why people like me are so pissed off. Berwick has not just defrauded people. He has discredited the anarchist movement, the start-up community movement, and discredited authors like Wendy. He played right into the Marxist stereotype of what a venture capitalist is: the Zeitgeist people and the socialists are going to have a f*)#$& field day.” —Jack O’Brien commenting on Berwick’s first public Mea Culpa “communique”.

I care because the simplicity of flying to another country to live, for a while, is becoming associated with the tar pit of foreign land development. One has nothing to do with the other.

“As long as there are nations, changing your nationality should be as easy as changing your cell phone plan.” —Michael W. Dean, Freedom Feens Radio Show & Podcast.

I care because what every businessman, and especially libertarians, should be learning from this fiasco is that people can’t do anything in peace with a psychopath running the show. Recognizing them in time and screening them out, in advance, is crucial for human liberty and success.

Chile and Me

My first trip to Chile was for seven days in 2011. My wife and I liked it so much I went back in 2012 with a friend and spent 17 days scouting most of the country from Northern Patagonia to Santiago. My libertarian friend and I split the costs of rental cars and hotels and drove wherever we wanted for over three weeks. By the time it was over we’d vetted every place in Chile that would meet the needs of our families.

A Dryer Sonoma, CA — Ideal for GGC’s Demographic

The location for GGC is a dryer version of Sonoma, California. Those familiar with Sonoma know that it can be quite dry in the summer. The location for GGC is dryer than that. Chile is one of four places in the world with a perfect Mediterranean climate. The borders of the country enable the luxury of dialing into that perfection by going north (For hotter and dryer) and south (For colder and wetter). Since my subjective view of perfect climate is a little cooler and wetter than the GGC location (33° 16.287’S, 71° 7.284’W) my preferences are south of Santiago.

Though the location is dry for my taste it’s ideal for the target demographic. Between the ocean and Santiago, and nestled in (Dry) wine country, it would meet the needs of jet-set ex-pats and self-sufficient” preppers, alike. The near perfection of the choice of location is no accident but that of long-time Chilean resident, John Cobin (Not Jeff Berwick, et. al.).

Nothing to See in December of 2012

Much like today, there wouldn’t have been much to see of “Galt’s Gulch” on my last trip to Chile in December 2012. My wife and I had breakfast in Curacavi in 2011 on the way to Vina del Mar and enjoyed a wine tasting tour of the Curacavi. area. In December of 2012, If my friend and I had known about GGC’s marketing existence, we would’ve skipped it, anyway. We were both familiar enough with the road, vineyards and terrain between Santiago and Vina Del Mar. The only point in making such a drive would have been to meet John Cobin. My friend and I wanted to see the entire country, for ourselves, before doing that. Here’s the view from a small plane flying in and out of Curacavi. GGC is 17 kilometers north of the city in the surrounding mountains.

John Cobin is the Real Deal

John Cobin is the talent behind the discovery of GGC’s ideal location, the business plan to develop it, and more: Chile, itself, as one of the best alternatives for liberty in the southern hemisphere. He ranks those alternatives, in order, to be Chile, Panama (A distant second), Colombia (Could be the new Chile in 20 years) and then New Zealand though says one would have to distinguish between economic and social freedoms to make a personal choice.

Cobin moved his family and six children to Chile in 1996 and has written four books about living in Chile. I read his “Life in Chile – 2011 Edition” prior to the second trip and can vouch for its accuracy and expansive detail. Although Chile remains Cobin’s #1 choice he pulls no punches about the difficulties of living there. It’s hard to read, at times, as he dispels romantic notions that are hard to let go of when one is still wallowing in the excitement of the journey to such a magical place. In the end, however, Cobin’s honesty makes Chile even more enchanting because he makes its magic accessible. Cobin has been to every city in Chile with at least 500 people. This volume of exploration, combined with his knowledge of economics and politics, gives him a remarkable grasp of the country and the pros and cons of each area and village.

Any libertarian who had done a half-hour’s research into Chile would have discovered the wealth of information Cobin has made available online for free to those interested in living there. It should be no surprise to potential ex-pats or GGC investors that Cobin is at the heart of all the good parts of the original deal. What I find surprising is there are no public references to investors absorbing Cobin’s material as the low-hanging fruit of their due diligence.

Cobin and GGC

Cobin found the land, made an extensive business plan, was making calls to possible investors (This is how Berwick found out about the deal) and had partnered with Eyzaguirre to formulate a plan to unlock the all-important water rights and subdivide the land. Cobin referred to the project as “Galt’s Gulch, Chile”.

One of the keys to understanding Cobin’s rather perplexing involvement of Berwick and Johnson in his project is Cobin’s recognition of his limitations. He is an academic professional and author and inexperienced with raising the significant amount of capital required for his business plan. Cobin saw Berwick as a plausible means of raising such capital and made a straightforward agreement with Berwick and Johnson to do so. Cobin had them sign over power of attorney so he could act on their behalf to create a holding company and bank account. Cobin and Eyzaguirre were to receive a $250K finders and negotiation fee (Later increased to $285K) for property #1 (El Penon) and 20% of the holding company. Shortly after agreeing to these terms Berwick left Chile leaving Johnson to do the “land development” work of their partnership. Cobin and Eyzaguirre were about to cut through the Chilean maze of unlocking and inscribing the water rights when Johnson went, inexplicably, incommunicado. Contrary to all agreements Johnson created an entity that only he controlled and used money that Berwick attracted as investment capital to take title to the land. Unable to speak Spanish, and with no local or administrative experience, Johnson, predictably, bungled the process for aggregating and inscribing the water rights. Although Johnson cut all ties with Cobin he blames Cobin for “finding a property with no water rights”. Johnson then proceeds to spin a bizarre web of land, stock and company swaps and, with no money to spend, commits to the purchase of a second property for $6 million dollars. This is property #2, El Lepe. Fast forward to today, 12/17/14, and the GGC rescue team is still trying to unravel Johnson’s bazaar web.

The Talent Left the Building

When Cobin was betrayed by Berwick and Johnson the talent to make the project happen, namely Cobin and Eyzaguirre, left the building. Cobin and his partner knew what had to be done to unlock the water rights, subdivide the parcels and assign title to the lots to make them transferable for purchase. They were cordial and on honorable terms with the locals, spoke Chilean Spanish(!) and familiar with the quirks of accomplishing administrative tasks in Chile. Johnson, who Berwick left “in charge” of their purported partnership, had none of these advantages and was a poor candidate to accomplish anything in Chile (Or his native country judging by Berwick’s description of his awful behavior while working for TDV).

From what I can gather it appears the GGC Rescue team will, eventually, have to come to some kind of agreement with Cobin for the original GGC deal on property #1. They may as well accept what Berwick understood from the beginning: Cobin and Eyzaguirre’s insight and expertise are crucial to turning this dream into reality. All agree the project must be renamed as part of the restoration. However, merely throwing more money into the deal without also adding talent commensurate to Cobin and Eyzaguirre’s will not be the ingredients for progress. Even if the right balance of talent and money is struck one can only hope that Johnson hasn’t soured the local taste for gringos.

Freedom Orchard?

Freedom Orchard is what Cobin and Eyzaguirre had to rename their separate land development project after Berwick and Johnson co-opted, and ruined, the GGC name. This is probably a blessing for Cobin as Chileans have a hard time saying “Galt’s Gulch” and Cobin’s original vision was not for the project to be exclusively libertarian but open to everyone. Adding to the confusion is that some of the photos on the GGC website and Facebook page are photos of Freedom Orchard and neighboring farms. Freedom Orchard is a separate property, better located and more fertile, directly south of GGC property #2, El Lepe. Some confusion about the distance between GGC and Freedom Orchard has resulted from not distinguishing between El Penon and El Lepe. Driving North from the freeway one must drive through Freedom Orchard to get to El Lepe, first, and then to El Penon.

Red Hot Chile Radio- Liberty and Life in Chile with Dr. John Cobin

GGC and Freedom Orchard are discussed in the following episodes of “Red Hot Chile”:

8/29/14 – 24:50 – 53:00, 45:45 – How it all started.
9/5/14 – 41:00 – Quick interview of Berwick, 42:30 – Cobin and Berwick discuss the terms of the original deal.
9/12/14 – Cobin Interviews Berwick for most of the show.

Psychopaths are a Primary Adversary

An important lesson to come out of the GGC fiasco is for libertarians to learn how to spot this human adversary and screen them out of all affairs. With no conscience, the inability to empathize, a parasitic nature, the pleasure they derive from causing pain, and their affinity for seeking power over others, the psychopath has aggression at the core of their being. They can be relied upon only to throw a monkey wrench into every situation with which they are involved. Until they are removed, or screened out in advance, it’s an exercise in futility to attempt to accomplish anything.

Paul Rosenberg provides a great introduction to psychopaths and the importance of avoiding them in They Walk Among Us:

“Here’s the bad news: Predators walk among us, and they are indistinguishable from normal people. These differently wired humans have a predatory advantage, and they use it. This is not a plot from a scary movie; this is real. I am deadly serious about this, though by the end of this column, I will also explain why there is also good news. These predators are called sociopaths (psychopaths in the clinical literature). They rather seldom damage our bodies, but they make careers out of bleeding our souls.”

When …

Every request is ignored, every admonishment reflected back to you, every task left undone, every responsibility shirked and blamed on someone else, every agreement pretended to never have taken place, when you find yourself dragged into a world of complete inversion… consider the possibility that a psychopath is “walking among you”. Learn how to spot a psychopath and the different types and terms for them.

Psychopathy Checklist

I was impressed that Josh Kirley ran a background check on Johnson and that nothing came up that would alert investors. Perhaps such background checks should be supplemented with an informal check against the psychopathy checklist put together by Canadian psychologist Robert D. Hare. Another useful trick is to think of the psychopath’s story as a 3D illusion (An autostereogram) that can only be seen and believed by the victim when the mind muscle that controls focus is coaxed into relaxing.

Signs, Signs, Everywhere a Sign

The most common word Berwick now uses to describe Johnson is “psychopath”. I don’t fault Berwick for not recognizing Johnson as a possible psychopath. In fact, it’s a sign of normalcy to be confused by psychopathic behavior upon first encountering it.

What I fault Berwick for is moving forward with Johnson, or with anyone, who had behaved as badly as Johnson had leading up to the critical decision of partnering with him. A clinical diagnosis, or even a layman’s understanding of psychopathy, was not necessary for Berwick to know to walk away from someone lying about, and assaulting, his employees. No expertise is required to part company with a partner insisting that business begin with the selling of a product they don’t own. Berwick’s inability to put a name to Johnson’s behavior has nothing to do with his bad judgment in tolerating it.

Ken Johnson and Josh Kirley — Ken Johnson (Left), Josh Kirley (Right). Photo courtesy of Josh Kirley

That Johnson had behaved so badly, from any perspective other than his own, was a luxury that most who are first encountering psychopathic behavior don’t get. If Johnson is ever clinically diagnosed he will be seen, in retrospect, as an easy one to spot. Berwick, and libertarians in general, will need a more refined antennae to increase their batting average of avoidance. Berwick refers to the following warning signs prior to agreeing to the 50/50 GGC partnership with Johnson:

Johnson’s claim that “he could sell anything to anyone” is an admission of being able to lie with no guilt or shame.
Johnson was at odds with everyone in Berwick’s office and physically assaulted one of Berwick’s employees. Berwick would have been familiar with his own employees and, presumably, able to determine whether Johnson was lying or distorting facts about them.
Johnson wanted to begin their partnership by selling land neither owned or optioned. Even if they had an option on the land there were serious legal obstacles to overcome to make lots ready for resale. To Berwick’s credit, this was a point of contention that almost lead to a fistfight with Johnson. Perhaps it would have been better for future investors, and Berwick’s reputation, if some kind of gentlemanly fistfight had resolved the matter.

See Part 3 of this article for:

Contracts are Good for Libertarians, Too
Slow is Fast
The Contract and Natural Law as Rules for Self-Government
Rules Without a Ruler
Mediation First, State Courts as Avoidable Alternative
Bitcoin & Alternative Currencies
Privacy is Not Partner Leverage
Libertarian Version of 1 Corinthians 6

Business

Galt’s Gulch Chile — Story, Timeline & References

By Terence Gillespie December 9, 2014

The story, timeline and references in this article (Part 1) were put together for reference in my next article (Part 2), “The Creature from Galt’s Gulch“.

All publicly available documents, articles or references to Galt’s Gulch Chile (GGC) are cited or linked to in this article as of 12/9/14. The best overall narrative was written by “someone who left a great life and a job, to move to Chile, in the hopes of building this ambitious project” and posted on The International Man Forum. I’ve added comments (TG:) to fill in or correct the narrative where I know it to be inaccurate or where perspective would be helpful.

Intro

As introduced by “Dave322” on the International Man Forum just before posting it on August 27th, 2014:

“A large number of employees and investors received the following email. It was sent by a producer for an American television programme, who happened to work at GGC, in its early days. They were looking for people to interview for an upcoming show they are doing. It is titled, “Kenneth Dale Johnson, The Bernie Madoff of Bitcoin”.”

TG: It appears the intended show was never made.

Following the narrative, below, is a timeline assembled by reading all GGC related documents and listening to all GGC related radio shows and podcasts, multiple times.

Narrative

I am sorry to be the bearer of bad news, but you are receiving this email because of your investment in or association with Ken Johnson and Galt’s Gulch Chile (GGC). What follows is a brief time line of this project – a short summary of a much larger story that is still being written. This will be the first of many emails detailing the scheme of which you are a victim.

In 2012, Ken Johnson and Jeff Berwick (The Dollar Vigilante) explored the idea of creating a community in Chile that would appeal to people worried about the financial and political stability of their home countries. Chile, they believed, would be a welcoming home for those of a libertarian/anarchist and free market bent, much as Argentina is home to Doug Casey’s Cafayate. Turns out that John Cobin (Host of Red Hot Chile) and his associate German Eyzaguirre also had plans to launch a community In Chile. When Berwick and Johnson met Cobin and Eyzaguirre in Chile in late 2012, they decided to join forces. Cobin and Eyzaguirre had tried to purchase land near Curacavi – a plot of land referred to as El Tranque (aka Freedom Orchard) – but could not raise the funds to fulfill the contract. Cobin and Eyzaguirre helped Johnson find a tract of land nearby – Caren, known locally as “El Penon” for a large rock formation near the crest. In exchange for finding the property and helping to facilitate the deal, Cobin and Eyzaguirre would receive $250,000 and 30% of the shares of the holding company. Berwick and Johnson would evenly split the remaining 70%.

TG: Cobin and Berwick agree that only 20% of the shares of the holding company were to be assigned to Cobin and Eyzaguirre and the $250k finders/negotiation fee was later increased to $285K. They discuss this on Cobin’s 9/5/14 radio show, 42 min, 30 sec. Therefore, Berwick and Johnson could split the remaining 80% of the deal, not 70%. It is possible the 30% figure in this narrative was a direct quote from Cobin, Berwick or Johnson. However, the only recording I have is from the principles, themselves, who say it was 20%.

$1.75 million was raised from four Founders, known as the “First Round.” Within a month, the sale had been made for $1.18 million – the majority of the money that the four founders (funders) had put up. None of the founders was Johnson, Berwick, Cobin and Eyzaguirre, or any of his associates. They were just regular people who wanted to move to the proposed community.

TG: The only “regular” person in this group of four would have been Johnson, who ostensibly brought nothing but a moving mouth to the deal. Cobin and Eyzaquirre found a near perfect property, created a detailed business plan, suggested the GGC name, contacted Berwick through his TDV employee, Johnson, and persuaded them to start attracting investment capital for the project. Cobin also setup the holding company, negotiated the price/acre to be an amazingly low $270 US. For Berwicks part, all public articles about this project suggest it was his efforts that attracted the four founders to purchase the property. There were many subsequent “regular” people who just wanted to move to the proposed community but Cobin, Eyzaquirre and Berwick were not among them.

As quickly as the sale had been made, it was discovered that the land would be unsuitable for the promised development. They told the first rounders it would be subdivided into 3,000 parcels. Turns out it could only be divided into 12 parcels. And even those 12 had building restrictions due to the elevation and being zoned for agricultural use. To top it off, though there were water rights (surface only), there was very little water. Johnson failed to register the few wells that existed,within the required time frame, making matters worse. The entire deal was a spectacular failure. Johnson would later place fault with Cobin and Eyzaguirre for misrepresenting the possibilities of the land. That should have been the end of Ken Johnson’s tenure as developer or manager of a community of expatriates in Chile. Instead, it was just the beginning.

TG: The property had more than enough water through consolidated wells and dam water access, but Johnson, who didn’t speak Spanish or have any local contacts or knowledge of the process, bungled the clearing and consolidation process to get them inscribed to the property. Cobin and Eyzaguirre would have done all this had Johnson not gone incommunicado (See RHC Radio show, 9/12/14, 14 Min 30 sec.). The correct water inscription process, alone, would have increased the number of lots allowed in the subdivision and Cobin and Eyzaguirre had similar solutions at the ready to resolve other zoning challenges. Such is the nature of land development for which the involvement of Cobin and Eyzaguirre was crucial. Johnson’s pattern is clear: All obstacles he couldn’t overcome after cutting himself off from the talent were blamed on the talent. This is like blaming a broken pipe on a plumber whom you’ve never called! This insane pattern of blame is important to the psychopaths scheme: It elicits the sympathy of other parties who, having no time to investigate the situation, assume the psychopath has been wronged and is in need of help. In short order, all who even listen to a story are drawn into the web and even blamed, themselves, for one thing or another.

To rewind a bit, before the sale of Penon was registered to one of many legal entities tied to GGC, Berwick and Johnson managed to nullify their deal with Cobin and Eyzaguirre, and register title to the albatross Penon land to a Chilean entity – Inmobiliaria SA – that only they had 50/50 control of. Johnson’s swift move to oust Cobin would foreshadow Berwick’s own treatment by Johnson.

TG: What follows are the, possibly true, details of a series of purchases and land swaps that Johnson engages in after bungling almost every aspect of the first property deal of El Penon. I find it unnecessary to follow Johnson’s rabbit trail in order to learn most of the important lessons from this deal. I will interject comments only if I can clarify something or know that something has been written is not true or described, poorly. I have no direct knowledge of all these swaps so must leave the accuracy of these descriptions to the original author who remains unknown to me as of 12/9/2014.

In a display of pure brass, Johnson doubled down and found another property adjacent to El Tranque and Penon: a land known as Lepe. Without a penny to his name or a single investor, he negotiated a cash deal (to be paid in installments), agreeing to pay a staggering $6,850,000.00 USD for land and water rights. Now, why would the seller, Guillermo Ramirez, make a deal with a total stranger, from a foreign country, who had no money and no reputation? In short, he did so, because Johnson was offering him nearly 4 million dollars more than the price he had already agreed to sell the land for (to Cobin and Eyzaguirre). Locals were astounded by the price tag. Some allege there was a kickback scheme between Ramirez and Johnson; this theory is buoyed by the fact that in addition to the inflated purchase price, Ken Johnson was to issue a 5% stake in Galt’s Gulch Chile to Mr Ramirez, when payments were completed. Still others believe this is just another case of a foolish Gringo being taken by a wise local who grossly overstated the value of the land, the profitability of the farm, and the amount of water. (Johnson would later exaggerate these already inflated figures to potential clients.) The actual amount of water is not known because Johnson, for a second time, going against the advice of his paid legal counsel, performed no due diligence. Not a single water test was performed.

Upon hearing that his employee and partner had unilaterally entered into another hasty land deal, Berwick panicked. Johnson had no credibility or reputation. This entire venture was on the shoulders of Berwick. The initial debacle could have been enough to destroy his reputation. He had been heavily promoting the idea of this community, shared 50% of the holding company, and had even given Johnson 50% of his organization, The Dollar Vigilante. Ken was also doing other business development for The Dollar Vigilante, most notably a questionable Paraguayan passport program. Berwick apparently felt he was in too deep to turn back. And even though he had doubts, he continued to play the hand he was dealt, and went about promoting the community and stood behind Ken Johnson’s efforts to secure the additional land purchase.

On both El Penon and Lepe, Ken Johnson paid a premium and did no due diligence. He did not sufficiently verify the zoning status or perform water tests, either time. And he did not commit a cent of his own money to either purchase. The same can be said for Cobin, Eyzaguirre, and Berwick. Since Johnson had no skin in the game and he was not a public personality like Berwick, Casey, Black, or Cobin, he never had anything to lose. And, he would behave accordingly.

TG: Cobin, Eyzaguirre and Berwick had money, time and reputation “skin” in the game, in my opinion. From what I can gather, Berwick had the least money and time (And expertise) at risk but his reputation was more at risk than any of the others. I have no idea why the author of the letter refers to “Casey”, presumably Doug Casey, in the paragraph above. The only time Casey’s name comes up, at all, in this drama is Berwick’s mention that Casey told him in a personal conversation to “think very carefully” about what he was doing. Berwick later laments not heeding Casey’s advice.

At one point, the lawyer for the New Zealand trust – Evgeny Orlov – described Johnson’s behavior as follows: “Ken has accused almost everyone I know of extremely serious things when he appears to be playing with his investors money like a child in a sandpit.” (2/26/14).

In defending his rushed purchase, Johnson misrepresented to Berwick and other investors that there were several competing bids on the land purchases. He made it appear that time was of the essence in both deals; this high pressure sales tactic would later be used on potential investors. With Ken Johnson it was always: “We must act right away, the time is now.”

His malfeasance would not be limited to acquisitions. His behavior would, within a year, alienate almost everyone who was associated with the project: partners, employees, professionals, vendors, the local community, and investors.

Ken Johnson partners with someone, uses their money, time, reputation, and resources, and when they are no longer of use to him, he discards and vilifies them. And even though Ken Johnson has been the sole director of Galt’s Gulch Chile since inception, he has taken no responsibility for its continued failure and downward spiral. It is always everyone else’s fault.

TG: An excellent description of Johnson’s overall pattern. Please take note of this pattern as it relates to The Creature From Galt’s Gulch.

In April of 2014, Johnson showed his true self and his true motives. Even though he was not paying his investors, his employers, his contractors, or the landowner, he negotiated to purchase 51% of a company called Rio Colorado from a local “businessman” who had worked for the Chilean IRS: Mario Del Real. Johnson agreed to pay del Real the mind numbing sum of $8.1 million USD. This was to be a private, personal purchase for the sole benefit of Ken Johnson, having no benefit for, or relation to GGC.

TG: Cobin was called by an interested party and told “These guys are gonna kill each other!” referring to Johnson and Real who were apparently living together at the time. See Cobin’s radio show of 9/12/14.

Let that sink in. Someone with no backers, a negative net worth, and owing millions of dollars, agreed to make a private purchase of this magnitude. Why did he think he would get away with it? Because he already had. Twice. It began with El Penon, then pulled it off with Lepe; now he figured he could do it again with Rio Colorado. When the money came due, and he was light $8.1 million out of $8.1 million, he decided to trade the equity, held by GGC.

TG: Yes, “let that sink in” and see my next article on the subject.

This would be tricky for a couple of reasons. First, he told his investors and clients that all shares were held in escrow. Second, it would need approval. Knowing this would not be possible without support of the board of directors, he simply named a new board of directors: the very family he was trading GGC’s assets to: the Del Real family. What was interesting about this maneuver is that it was done twice. Both times through official notaries. Each times with drastically different signatures, proving that at least one, if not both, documents are forgeries. The new, hand picked Board, had no assets, investments, or interest in GGC and were granted control of the entire project. Mario, after receiving over a quarter million USD, became majority shareholder; his daughter Pamela became managing partner, treasurer, and accountant. And, his children were each given 10% ownership. Since Ken no longer had the ability to receive international wires because he refused to identify the source of funds, Pamela Del Real’s personal bank account became the corporate bank account for GGC. Including bitcoin wallets, this would be one of more than 15 accounts used by Ken Johnson to receive client funds.

TG: If these swaps and giveaways can be overturned for lack of consideration of the parties there may be some hope in the above paragraph.

At this point, I bet you are wondering, ‘How did this happen?’. How was someone with no experience, no reputation, and no money, able to pull off a multi-million dollar Ponzi scheme? Well, first it took big balls. And each time he was allowed to get away with something, he got even more brazen.

Second, he had a lot of accomplices. Some were willing, but most were unwitting.

By aligning himself with established names, these accomplices gave Johnson an air of respectability. People saw that Johnson was aligned with people who they knew and trusted, so they transferred that trust onto him. Initially, it was his association with Jeff Berwick that raised money for the first land purchase. Later, it was his direct association with media personalities like Josh Tolley and Ben Swann that gave him credibility within the Freedom movement. Others were swept into his web when Johnson mentioned that he had worked with Jay Leno, Ed Begley, Jr, and Mario van Peebles. The fact that he was represented by the Carey Group, the largest and most prestigious law firm in South America, got many investors to let their guard down. This was a most curious pairing because Johnson actually paid these attorneys, with investor funds, to represent himself against those same investors. As recently as 8/18/14, Johnson forbade the Carey Group (and all of his former legal advisers) from sharing any information with GGC clients. And, ignoring their own code of legal ethics, they complied.

In fact, to date, Johnson has never shared a budget, a financial ledger, a business plan, a mission statement, or any formal documentation with a single client. He refuses to reveal how much money he has taken in, how much money he has spent, how it was spent, how much money he has, and how much money he owes. He cannot or will not even say who owns the land and who is running the project. These are all very basic, straightforward questions that every client and investor deserves to have answered.

I do not expect you to accept the story from an anonymous email. I implore you to do your own investigation. Do not make the same mistake twice, by taking another stranger at his or her word. Blind trust created this situation. Be accountable to yourselves and to each other. Do some research. Reach out and contact your fellow investors/victims. Email or call former employees, former attorneys, architects, builders, salespeople. You will find a single bond that joins them all. Every single one of them was lied to by Ken Johnson. Every single one of them was mistreated by Ken Johnson. And, every single one of them is owed money by Ken Johnson.

Ask what he did with the millions of dollars that he has taken in. Ask how many bank accounts he has. How many bitcoin wallets has he used? Why did he pay over a million dollars for land that could not be divided or lived on? Why did he agree to pay $6,850,000.00 (over 8 million, after late fees) for land and water rights , when the owner had already agreed to sell them to someone else for only $3 mill USD? Why did he refuse to identify the source of his funding to his own attorneys and his own bankers? On more than 10 occasions. Why has he physically and verbally abused employees and issued “cease and desist” orders or threatened suit against more than 2 dozen current investors and former workers?

Who owns GGC? Who is the managing director? Who holds the bank account or accounts that new investor money flows into? Who is the sales director? Who is the general contractor? Who is the accountant? Who is the attorney? Where are the financial records? Why has a master development plan or business plan not been created or approved? Why have farm and orchard owners not received dividends? Or any information, for that matter? Press Ken on why he has not fulfilled his repeated promise to turn the project over to the clients, whose money he squandered, in the percentage that they invested.

Here are a few unsolicited suggestions, from someone who left a great life and a job, to move to Chile, in the hopes of building this ambitious project. First, you have to accept that you have been conned. Most of you are probably not shocked by this news. Some of you understand the nature of investments, and know that there are not sure things. For others, this may be more difficult. But, you must accept that your money is gone. It was taken by a crook. A con artist without a conscience. He is a tyrant whose only power has come from the money that he has received from trusting investors. Needless to say, it is incumbent upon all of us to make sure that he receives no more. To do so would be abetting a Ponzi scheme.

TG: I appreciate your loss and efforts to document your point of view in this letter. Please contact me if you have anything to add to this post or would like your name attributed to it, here.

Second, you need to extricate that crook from the equation. With the amount of damage that Johnson has done to this project, the road to success is much longer and more difficult than it otherwise would have been. But, there is no doubt, in anyone’s mind, that as long as his claws are in GGC, there is absolutely zero chance of this community ever becoming a reality. He and Mario del Real have proven they will sell off every marketable asset GGC owns, while neither of them have ever put in a penny. Meanwhile, you all, the real owners, are left on the outside looking in. Federal authorities, in both Chile and the US, have been alerted to his actions, and are acting on them. But, a lot of damage can be done between now and the time that justice is served.

Once he is removed, there will be a great deal of messes to clean up. Johnson has made enemies around the Curacavi region, in Santiago, the United States, and on four continents. He did this in the name of GGC. Whether it is through active marketing or total rebranding, the damaged parties need to know that there has been a clean break between Ken Johnson and the people he purported to represent. Finally, he needs to be replaced.

TG: The GGC Rescue team seems to have agreed with your assessment, here.

His replacement should be everything he is not. This person should have experience. They should have references. They need to be bilingual. They need to be local, or have a knowledge of the local culture. Most importantly, they need to have their own skin in the game. Johnson behaved so recklessly because he had nothing to lose. He spent so frivolously because it was not his money. You need to align with an equity partner, whose success is tied to your own.

TG: Experience, references, bilingual, local, knowledge of local culture and with skin in the game? That’s another way of saying that Cobin and Eyzaguirre were a crucial part of the original deal and it went off the rails, in large part, due to their involuntary absence. One may then ask a rhetorical question: Of what use is investment capital applied to the recovery of this project if it is lacking such qualifications?

Finally, there needs to be transparency and a system of checks and balances. Johnson kept this sham alive for so long because he was able to compartmentalize and separate so many parties; there was no transparency. He refused to introduce investors to each other. If he found out that clients were communicating, he denounced it as meddling. If employees talked to one another (ostensibly, about the fact that they had not been paid in months), he reprimanded them for “gossiping.” There was no oversight, no legitimate Board of Directors, no accountability. Secrecy begat tyranny.

Finally, you all need to become involved. This should not be a passive investment. Get your asses down to Chile. Live on the land. Oversee the construction. And, take it upon yourselves to build this community into your own vision. All is not lost. But, it will be, if you do nothing.

Timeline & References

Late Spring (May?), 2012: Berwick meets Johnson at a conference in Palm Springs
July 6th, 2012: Representing The Dollar Vigilante at Freedom Fest in Las Vegas, Ken Johnson says, “Getting A Second Passport Has Never Been Easier“.
July 11-14, 2012: Johnson claims to have met John Cobin at Freedom Fest in Las Vegas. Cobin describes a property in Chile to Johnson “because he knows Jeff Berwick is interested”. As Cobin clarifies later with Berwick on his radio show, the meeting was by skype and Cobin’s interest was in obtaining investment capital to move his already formulated business plan for Galt’s Gulch Chile (Cobin’s Name, plan and location) forward. In other words, prior to Berwick or Johnson setting foot in Chile for the first time Cobin, who has been in Chile since 1996, is making calls to attract investment capital to his project.
August, 2012: After Freedom Fest and Before their trip to Chile Berwick has problems with Johnson running sales and business at TDV. Berwick decides it’s best for Johnson to focus on sales at TDV while limiting his contact with people(?). Johnson spends the month trashing well-known and good employees at TDV and physically assaults one of them.
September, 2012: Johnson goes to Chile to meet with Cobin and see Property #1, El Penon, 17 Kilometers north of Curacavi Berwick flies to Chile for the first time in his life to join Cobin and Johnson and see the property.
September 30th, 2012: Berwick and Johnson meet with Cobin and partner in Santiago to discuss the land and Cobin’s detailed development plan for what Cobin refers to as Galt’s Gulch Chile. During the dinner meeting Johnson and Berwick almost get into a fist fight over strategy and ethics. Even so, shortly thereafter Berwick agrees to be 50/50 partner with Johnson on 80% of the deal with a $250K finders and negotiation fee due to Cobin (Later raised to $285K) with 20% ownership in the holding company retained by Cobin and Eyzaguirre.
October 14th, 2012: Cobin forms Galt’s Gulch Chile SA (GGCSA) and opens a bank account. This is a partnership of Cobin, Eyzaguirre, Berwick and Johnson formed to hold and develop all lands purchased for Galt’s Gulch Chile.
October, 2012: Berwick departs Chile leaving Johnson to do the Real Estate work of their partnership to be funded by money brought in by Berwick’s marketing efforts on TDV. Listen to Cobin and Berwick describe the details of their meeting and partnerships on Cobin’s Red Hot Chile radio show on the 9/5 and 9/12/14 episodes.
November 14th, 2012: The four partners have a meeting and informally agree to dissolve the company GGCSA. However, Cobin is due $250k for finding the location, negotiating the price of the land and creating the initial business plan. He most likely would not have to signed any dissolution documents until being paid for his services. Indeed, GGCSA is not formally dissolved until 8/30/13 when Berwick and Johnson realize they can dissolve the entity without Cobin’s cooperation due to their majority share ownership.
November 30th, 2012: Johnson forms his own personal entity, Inmobiliaria Galt’s Gulch S.A. (IGGSA). Johnson and Berwick have a verbal agreement they are 50/50 partners but Berwick is not listed as a principal in the corporation nor is he listed as a director or a shareholder.
December 12th, 2012: El Penon is purchased by IGGSA from Sarrazin. IGGSA is an entity that is 100% personally owned by Kenneth Dale Johnson. As Johnson never informed the first four investors that he was the now the only one involved in the project. This is a material ommission as the investors still think that all four of the original partners are involved in GGC.
January 3rd, 2013: El Penon is registered to IGGSA.
January, 2013: The investing “GGC Founding Fathers” are attracted to the project by Berwick’s marketing efforts and supply the money for property #1 to be purchased. Johnson breaks contact with Cobin and registers the property to an entity owned and controlled solely by himself. Johnson then bungles Cobin’s detailed instructions to consolidate and inscribe the water rights on property #1 within the 90 day period allowed. To cover-up his bungling, Johnson accuses Cobin of having recommended a property that doesn’t have sufficient water rights for the project. In fact, the property has more than enough access to water but Johnson, who doesn’t speak Spanish, is unable to the navigate or comprehend the consolidation and inscription process to get them assigned to the property.
April 26th, 2013: Johnson’s lawyer, Jose Cordoba, officially gives all shares of IGGSA to Johnson and none to Berwick.
April 30th, 2013: Johnson tours El Lepe with its owner, Ramirez.
May 13th, 2013: El Lepe Deed of Sale by IGGSA, Closing on El Lepe doesn’t happen until 8/14/13.
June, 2013: First GGC “sale” after the first four investors.
October, 2012 to November 2013 (Best guess): “Since I had already brought in thousands of leads to GGC throughout 2012 and the start of 2013 and Ken had begun to market this new property that GGC didn’t even own I was very distressed.” Nevertheless, Berwick continues to market GGC on TDV. Those who trust Berwick think he’s intimately involved in GGC and many invest their money, as a result, including Wendy McElroy.
June 2013: Berwick gets an alarming e-mail about a purchase Johnson has initiated and flies down to Chile with his financial advisor. Johnson assures Berwick that they remain 50/50 partners.
July to October 2013: Berwick continues to market GGC.
August 14th, 2013: El Lepe purchase from Ramirez by IGGSA closes.
August 30th, 2013: Berwick and Johnson realize they can dissolve the original partnership with Cobin and Eyzaguirre becaues, together, they have a 70% quarum of ownership of the entity. Thereyfore, they didn’t need cobin and Eyzaguirre to close the entity. However, they still owed Cobin and Eyzaguirre the money they promised and the value of the partnership shares they owned.
November 2013: GGC has it’s first event to which Berwick is not invited. However, someone hired by Johnson assumes Berwick is to receive an invitation and sends him one and he attends the event. Attending the event are Josh Tolley, Ben Swann, Angela Keaton, Luke Rudkowski, Jordan Page and Bob Murphy.
November 15th, 2013: Jeff Berwick on Galt’s Gulch Chile and Bitcoin on Bloomberg TV.
December, 2013: Josh Tolley Interviews Ken Johnson on the Josh Tolley podcast.
May, 2014: The founders conclude that Johnson was not only lying to them but had not even given them the shares of the company in which they had invested in more than a year and a half earlier and had begun treating them like enemies.”
August, 2014: Wendy McElroy documents her experience explaining that she and her husband were defrauded as were other sophisticated investors.
August 27th, 2014: Berwick tells his story.
August 29th, 2014: Cobin describes, in his own words, what actually took place between himself, Berwick and Johnson in September, 2012. “Jeff Berwick is as guilty as Ken Johnson with respect to scamming us. He made the agreement as much as Ken did. He is not a righteous victim despite what Wendy wants to say about him. He has had plenty of time to come clean with Eyzaguirre y Cobin SA and has not done so. Those that trust in Jeff Berwick will be making the same mistake and throw their money away once again. He made an agreement and and has not stuck with it. He has paid us NOTHING. He would now like to distance himself from KJ. Good choice but that fact does not change what he agreed with us. He scammed us. We set up a company with his team. He went around our backs and purchased the property with another company. Then he did not know how to deal with the local authorities or water rights and screwed it up. We would have handled all of those issues. That was our part of the business. They had no intention of including us. Jeff and Ken are scammers, plain and simple.”
September 1st, 2014: Ken Johnson “weighs in” on Facebook.
September 5th, 2014: Berwick’s apology and full on-air acknowledgment to Cobin of their primary business deal, contract and power of attorney’s assigned to Cobin by both Berwick and Johnson, on the Red Hot Chile Radio show of the same date.
September 6th, 2014: Freedom Feens interview with Jeff Berwick.
September 12th, 2014: John Cobin and Jeff Berwick discuss how to move forward in Chile.
September 28th, 2014: The latest from Wendy in a follow-up interview with The Daily Bell.
October 23, 2014: GGC Rescue team takes control over the property. This “Raid” is described, in detail, on page 42 of this document.

Other References

Galt’s Gulch Chile Website

Galt’s Gulch Chile on Facebook

Latest Update from the GGC Rescue Team

Freedom Orchard’s Website

Freedom Orchard on Facebook

Atlas Mugged: How a Libertarian Paradise in Chile Fell Apart – by Harry Cheadle

Berwick’s Penance

The Promise of a Liberal Paradise that Resulted in a Fiasco

Gringo De Lepe Sale a Encarar a Su Compatriota John Cobin y Anuncia Acciones Legales

Galt’s Gulch Chile Rehab and The Exposing of Ken Johnson
is on Facebook

Gringo Cobin Califica De “Mentiroso” Y Sinvergüenza A Gringos De Galt’s Gulch Chile

John Cobin, el gringo que quiere “colonizar” Curacaví: “No hay una persona más neoliberal que yo en este país”

Ken Johnson answers questions about Wind Turbines

Jeff Berwick’s “Penance” on August 30th, 2014

Jeff Berwick’s “Redeeming Galt” Reports on the Efforts of the GGC Rescue Team

Charity

How to Save Your Own Life

By Terence Gillespie September 30, 2014

One of the contributing factors to my brothers’ death was hemachromatosis. By the time he was diagnosed, a year before he died, it had already caused serious damage to his organs.

It was a hereditary condition and my brother told me to get checked for it. So, I went to a doctor and had blood tests taken along with a painful liver biopsy. In the follow-up appointment to discuss the results the doctor was puzzled. He said I definitely had the condition but was not showing any symptoms. He asked if I had ever donated blood. “Yes, all the time”, I said. “I’m in the gallon club at Cedar Sinai.”

Then the doctor said, “Well, congratulations. You just saved your own life.”

Bloodletting is the only way to get rid of excess iron in the blood for someone with hemachromatosis. Donating on a frequent basis had cleared my blood of excess iron. If the iron hadn’t been removed it would have built up to high enough levels to do severe damage to my internal organs. At my age the damage would have already been life threatening.

This is How

You save your own life by contributing directly to mankind for the sake of humanity with no strings attached.

Not tithing. Tithing is to God.

Not your work. The work you do to create value for others in exchange for money is a wonderful thing. There’s no conflict between that work and the direct contribution I’m referring to here. They’re separate offerings made for a different purpose.

Not an action you take for a direct benefit. Although, its almost impossible to do something for others that doesn’t return to you, in some way.

Like Putting Quarters in a Strangers Parking Meter

Sometimes I use spare quarters to load the parking meters of strangers. I especially like to feed the meters of those who are about to get a ticket. It sounds like a cheap thrill, but, I find it thrilling for less obvious reasons:

I hate getting parking tickets.
I can’t save myself from getting one, but, I can save someone else.
Maybe one day someone will do the same for me.
I like the idea of being nice to someone before they’re nice to me.
I know the hassle I’m saving my stranger.
I know the cost to me is less than the hassle saved for my stranger.
I know my stranger will be in a better mood and their mood is contagious.
It’s possible their contagious mood travels around the invisible world and improves my own.
The state gives out parking tickets to make money, not to encourage people to change their parking habits.
Denying the state the proceeds of its deception gives me a thrill. Cheap for me, but not for them.
It costs me a quarter. But, it costs the state $25. 100 times ROI in money alone!
If my ROI is 100 in money what does it return in the improved and contagious mood of my stranger?
If my stranger has $25 more than he would, otherwise, what will he be able to do with the money?
If the state has $25 less what may it be prevented from doing that, like all state interference, would decrease the liberty and wealth of society?

Every time I drop a quarter this list comes to mind and makes me smile. Not such a cheap thrill after all, is it?

A Pint of Blood vs. 25 Cents

How much more beneficial is a pint of blood to save a life than a quarter to save a parking ticket? The prospects are enormous and powerful. Powerful enough to save a life. Maybe it would even save your life. Maybe, maybe, maybe. But, not for me.

It did save my life.

Banking

Read Lew Rockwell!

By Terence Gillespie September 25, 2014

I read LewRockwell.com, every day, because he writes or posts the best line-up of articles in the world…every day!

For a modest incentive to checkout Lew’s site (And put it in your daily reading routine) please see the following articles on Lew’s site:

Mr. Party’s Gun Bible

Selecting Your Optimal Armory

Ammo for Barter – Ammo vs. Money

The Best Gun in the World

Fractional Reserve Banking Made Easy

Checklist for Hard Times

76 Reasons To Have a Gun

The Ten Best-Read on LRC for October 2009 Source of readership stats: Google Analytics

Banking

Catherine’s Financial Detox

By Terence Gillespie September 20, 2014

This is a re-post of a summary of Catherine Austin-Fitt’s financial detox plan as given to Max Keiser five years, ago. The 15 pieces of wisdom extracted from the video are timeless. If you had started working on them in 2009 it would have had a dramatic impact on your life. Five years from now the same will be true about starting to work on them, today.

Catherine Austin Fitts is a breath of fresh air.

With a keen understanding of the links between politics, corruption, and money she is unmasking economic con-games, one by one, for the benefit of us all. Give her 15-minutes and she’ll explain the most complex schemes and enable you to see right through all sides of the rhetoric we’ve been hearing all our lives.

Not only that, but, she offers powerful solutions and action plans that can be implemented within minutes of watching one of her videos.

Listen to her describe her “Bailout Plan” in the video, below, which I found on The Edge with Max Keiser.

1. – Save Time

Cut out TV and corporate media. They’re a brainwashing waste of time. You’ve got better things to do and think about. Get radical about cutting this out and save 5-10 hrs a week of “bad training”.
Get corrupt people and enterprises out of your life. They get access to your data and money. Consider carefully the banks, brokerage houses or institutions you do business with.
Control personal data. There is no privacy. Think through who you do business with and who has access to your data.
Compliance – be impeccable with compliance. In a situation with highly complex rules and no privacy it’s easy to get caught up in a dragnet.
Simplify. The less things you’re responsible for the better.

2. – Get Smart

Implementing 1. gives you time for 2. and 3.

See things as they truly are.
The greatest wealth creating entity of all time is the family. Think strategically about your family and friends.
If you’re not in a conspiracy you need to start one. Conspiracy means to breathe together. Start a conspiracy with your family to benefit each other and keep corrupt institutions out of all your lives.
Network with other people who know what’s going on. Nobody is as smart as all of us.
If you have time, understand history. What’s happening today is logical if you understand the history of things like narcotics trafficking, mortgage fraud, etc.

3. – Reposition Your Assets

The goal of the games of economic warfare are control and equity.
Build your equity. Invest in your health and your knowledge. Think strategically about managing these key assets.
We’re leaving a large bubble and now people want hard assets. Shift out of phony financial instruments into securities and hard assets with solid economics.
Stick with long term trends. Follow the tapeworm. Don’t be confused by economic nonsense into investing into anything that is not long term and high quality like food, water, gold, Precious metals.
Demonetize. We put money into financial assets, get yield, then buy things. This is a losing proposition.

Catherine Austin Fitts is always worth your time. Check out her blog which she calls, The Solari Report.

Creativity

Jumpstart Your House in the Country. Build it Backwards (Or maybe not at all)!

By Terence Gillespie September 11, 2014

The most useful things built on land are built last. I propose reversing that order. Build it backwards. Small structures provide big comfort and improvements relative to their size and cost. Their return on investment is high because the investment is small and the return is relative to the “nothing” of vacant land.

Building backwards and small enables you to get the most important uses out of your land first, and soon. There are many advantages other than a high ROI. One might be to rescue this widely held and rarely realized dream from the never-to-be-crossed-out section of your bucket list.

We’ve started the project of securing a retreat in the country and there’s been a world of decisions in choosing one plot of ground. That part of the journey is ongoing and best left to a separate article. Between scouting trips thoughts have turned to solidifying the vision. As the vision became clear I started thinking about ways to Optimize the effort-to-value ratio of building any house in the country. We’ll be building across state lines so remote access factors come into play in our optimization approach, as well.

Plan the Site – Then Build Small and Useful

You have to plan the site anyway, right? Planning is an expense that enables every downstream cost (Including time) to be optimized.

Plan everything your dreaming of for the site. Make sure it fits with the natural flow of the topography. Be practical and figure what you want and what you don’t. Consider everything including the next owner and future generations. And when you’re done pick the smallest most useful element from your plans and build it first.

Easements and Road Access

If you don’t have road access or need an easement then you’ve got some road or legal work to do. Depending on your site design, however, it’s possible your first small structure is some distance from the main building site. If that’s the case then you’ll only need road access to the first structure. Working on that, and leaving the larger road work project aside, for now, still fits the general idea of building it backwards.

Universal Site Plan

If you plan well your plan will capture the universal truths of the lay of the land. Future owner preferences will vary though none would benefit from going against the natural flow of the land.

If circumstances change before you actually build out your vision then most of the things you’ve already built have a good chance of fitting in with the next owners vision. Though not more important than your own values and goals there’s good reason to believe that well-built structures in-line with the natural flow of the land will become permanent beyond you.

Possibilities

My working definition of useful is anything that provides shelter, storage, rent, access or produces income or savings. Ideally, it’s something you would have gotten around to building anyway and decided to build first rather than last.

Covering every possibility is impossible. There’s a continuous line of structures from a tent to the Taj Mahal. Here’s a trigger list to get your creative juices flowing:

The popular descriptions of structures bleed into each other. At what point does a shed become a garage? When you use it as one. What’s the difference between a shed and a Gable? Roof design and quality. The difference between a cabin and a cottage? Depends on who you’re talking to about the property.

For Example

We’re securing a retreat in the country where we’ll build a downsized semi-off-grid version of the house we currently live in. We live in a 3200 sq. foot home and could easily chop off 1000 sq. feet as long as there is storage and room for guests.

We have a clear vision of the design and function of our future home in the country. We are also in the advanced stages of choosing the exact location. Once we’ve decided and bought the land there’s some big decisions to make. Made badly, or not at all, and the whole project could grind to a halt.

Build or Sell?

If our vision is clear why not find an existing place that fits and buy it?

No debt. Purchasing the land and building slowly is a form of self-financing that keeps us from having to take a loan.
Flexibility. As circumstances change and money comes and goes we can make optimal choices on the margin about the timing, cost and usefulness of the next step.
Working harder now to build a second house will enable us to rent our current house in the future for retirement income.
Doing so would require selling our current home and moving immediately. In addition to disrupting my wife’s job we prefer to hold onto our current house for backup.
I like to build things and would prefer designing and building exactly what we want (Where we want it).

Most Bang for the Buck

The last thing we need is land we don’t use. Our best use for land would be to provide:

Overnight Stays – Comfortable enough so they’ll actually happen.
Storage – For Tools and Supplies.
Income – Rental or from our direct use.
Security – For our retreat and securing the property in our absence.

These are the functions we’ll keep foremost in mind when deciding what to build first. The sooner a stucture provides one of these functions the better. Chosen wisely we could fulfill all these needs with minimal cost and effort and spread more ambitious plans over time.

Overnight Stays

We could stay in a motel, hotel, apartment, rental cottage, cabin or at a friend’s house. There’s nothing like the occasional motel room to freshen up. However, we’d prefer to put money directly into improvements wherever possible.

Tent & Rental Car

Realistically, it will be yours truly driving a rental car, setting up a tent and enjoying some getaway camping, at first. This zero structure lo-fi method is a custom fit for me (Supplemented with an occasional motel room). Some of the best adventures I’ve been on were done car camping with a tent. I can’t think of a better way to stay overnight while jumpstarting our place in the country.

Lean-to or Shed

Depending on the land the first structure will be either a Lean-to and Firepit or a custom shed. Either will provide extra shelter and comfort for future solo trips. The Lean-to would become an outdoor gathering place when we’re living on the land, permanently. The shed would be a great place to store supplies and tools and also be a notch above a tent for shelter. Done well, either one will give a sense of accomplishment and start momentum towards the next improvement.

While building the first structure I’ll collapse the tent and check-in to a motel room to recuperate, now and then. Our location shouldn’t be more than 30-40 miles away from one. I’ll keep tools in the truck and haul supplies as needed. My SUV has been a champ playing this role on local builds. Though it hasn’t been necessary I could always rent a local U-haul for a day to haul large materials.

Mobile Home or RV

My wife will go two nights in a tent or lean-to. Longer than that and it’s time for a motel room. If we ever hope to stay on the land, together, for longer than a week then we’re talking mobile home or RV. Happily, mobile homes and RV trailers can be bought for a song, nowadays.

If we go with the mobile I’ll prepare the site and have it delivered. If we go with an RV I’ll pull it on-site with the truck. Either one is a big step up from, and will supplement, the lean-to or shed.

Time Out for Perspective

This is a big step. If I can make overnight stays a pleasant experience it would get my family on-site more often and provide support for the next build. That would pave the way for making progress on the rest of the project. If our project gets stopped we still have land, a shed for on-site storage and a comfortable means for overnight stays. Add the rental of a small public storage unit and we’d have a Bug Out Location, already.

There will have been significant expenses, at this point. However, in relation to their value it smacks of Optimal bang for the buck.

Nothing Wasted

Notice all of the above options leave nothing wasted though we’ll be implementing only four of them depending on the site:

The rental car gets returned.
Use or sell the tent at a garage sale.
The lean-to and firepit become an outdoor family gathering place for BBQ’s.
Everyone needs a shed and a good one, at that.
The RV can accommodate guests or be taken on your next vacation.
The mobile home can become a guesthouse, sold or moved.

Storage

Everybody needs a place to put things. Building requires tools and supplies and so do humans. Kick back on a hammock all week and your food and water is still better off out of the heat of the rental car. The questions are should the storage be:

Underground?
On-site or off?
Secured by something/someone other than you?

I find underground storage options to be more romantic than practical. It’s expensive to build reliable underground structures and the drop-ins are no picnic with their delivery charge and crane installation. Completely concealing underground storage is hard unless it’s kept small and dispersed.

Until I have someone on the property full time my answer to off-site storage is yes. More specifically, we’ll supplement our on-site shed with a public storage unit. When we’re off site everything we can’t afford to lose goes into a public storage unit. That’s only $35/mo where we’re looking; cheap insurance for expensive tools.

A side benefit of renting public storage is it gives you a local ship-to address while you’re remote. Ask a friend (Or the on-site storage folks?) to receive the shipment and put the materials into storage for you. When you come into town stop by and pick up what you need to get started.

Gotta Love These Pole Barns

A larger pole barn is a possible one-building solution to overnight stays, storage and a little bit of security for the trouble. There are options to insulate them if it fits your long term goals for the structure. In fact, a pole barn that fits the site is so useful my first title for this article was, “Build the Barn First!”. However, building backwards is a more complete way to say it and opens up more possibilities.

If it fits the site plan we may skip the shed and go right for a larger pole barn. If so it would make sense to consider one big enough to house an RV. In the event we decide to buy an RV for overnight stays the barn would provide a bit more security and protection for it.

Even if the pole barn was not insulated it would become a second option for sleeping bags over a presumably more comfy RV. Also, if there are ways to secure it well enough, or, we discover that theft is a non-issue then we might risk storing an RV and more expensive supplies there. Such choices can only be made on the margin as things unfold.

Security

Nothing is 100% secure if you’re not living there. Second best is a house sitting friend or renter. Third best is line of sight view and regular stop-by’s from a neighbor. When you’re off site store anything you can’t afford to lose in public storage.

Put a Web Cam on it?

You’ll need electricity, satellite-only internet and a dedicated (Cheap) computer for this option. For the trouble you’ll get four to eight cameras monitoring your site. It’s not foolproof but it could make your eyes the first eyes to see anything suspicious. Call your neighbor and ask them to check it out.

Retreat

With all the excitement of working on your house in the country don’t forget it gives your family the added benefit of a retreat location should you ever need to leave your current home. Every improvement makes it that much more comfortable for you family in times of retreat. One need only browse recent headlines to become a fan of having some geographical diversity in your housing plan.

Income

What if you could build something that would provide a source of income?

If a moblie home were in the right location and had electricity and water then it could possibly be rented out. Nowadays that may require having cable and internet installed, as well.

A Tiny House

A second possibility is to stay in your mobile home or RV while building a Tiny House on Ground or a Small Guest Cottage. Once built you’d no longer have an issue providing a comfortable place to stay for your family. Depending on location you might even be able to rent it out to someone who could keep an eye on the place for you between builds.

Two is One

If you can rent out a mobile home or cottage then why not have two (Or one of each)? One for a renter and the other for you.

Building two enables leveraging of design, materials, labor and knowledge into a second identical structure. Rent one and stay in the other. If one isn’t rented then all the more options for family and guests. Even if you build one tiny house or cottage and don’t rent it you could then get rid of the RV or supplement the cottage with the RV.

Either way it will be much easier to get your family to stay longer!

Electricity

Speaking of Building it Backwards the smallest and last provision for electricity will be the first one on the back of my truck: A generator.

Bringing electricity to rural land is expensive. Even if your land already has an electrical drop the expense was built-in to your purchase price meaning you would have been able to purchase more land if it wasn’t. Whether you value more land or less with electricity is up to you. I’m a bit torn on the issue and will face it as we zero-in on our exact land choice.

My overall opinion is that electricity is the easiest utility to do without or provide by self-sufficient means. Since our goal is to provide at least some of the latter I’m not sure how much I’m willing to pay for the former.

Water

Water is life and mandatory. It’s so crucial to rural land it makes for a go/no-go buying decision. If you’re lucky enough to have a stream running through your land then you have a huge jumpstart! You’ll still have to setup pumps, plumbing lines, sewer and leach field, but, drinking water is only a two-stage gravity filter away.

Everyone else has to either drill a well and hope for the best or haul water in. If drilling a well is mandatory it’s too big a risk to not have an idea of whether you’ll be successful or how much money to set aside for the expense.

Cell Phone Coverage

Will you have to drive to get a signal on your cell phone? That could be a time and money losing proposition. Satellite has too much latency for any VOIP functionality you may be counting on. Best check on this, in advance.

Structure vs. Strategy

Structure order is only part of build strategy. You may know what to build and still get stuck on strategy. Since we’re building remotely I’ve been thinking through the various options. Here’s some thoughts off the cuff in the spirit of sparking a jumpstart or an idea to break the logjam of the theoretical.

As discussed previously, unless your paying someone else to build you’re going to need tools, supplies, a place to store them and a place to stay while you’re building. While large industrial one-use tools are best rented general tools and equipment are best owned for long term use.

Store all tools and supplies underground on-site.
Store all tools and supplies in an on-site Shed.
Build an on-site shed supplemented with small public storage rental.
Keep RV onsite or in local public storage and pick it up when visiting property.
Rent and return a separate RV trailer for each building session.
Keep RV on a friends property and pick it up when visiting property.
Build a pole barn on-site large enough for supplies, tools and to store RV inside.
Put a wood stove in the Pole Barn (Properly vented and with CO2 detectors all around) to heat.

We live a considerable distance away from our potential building site. That means any RV must be stored or rented locally even if we own it. I’ll be driving the truck to the site and it’s not worth the extra gas to haul an RV back and forth. The gas savings alone would pay for the RV or its local rental.

When in Doubt

The more clear and definite your vision the less time you’ll waste. The best use of your time is spent building structures that fit into your overall site plan. You would have built them anyway and just decided to build them first because of their superior marginal utility.

If you’re stuck on what to build first then there are three ways to go.

Build the Smaller Thing

Let’s face it, building something useful that you would be proud to have on your land is always a bit more difficult than you first imagine. Maybe what you have in mind is too ambitious. Take it down a notch or two. Instead of building a pole barn build a shed. Instead of a shed build a metal canopy. Instead of a canopy a Bear Grylles lean-to to take the edge off the wind for overnight camping.

Cut to the Chase

If you know a larger pole barn will obviate the need for a shed, smaller barn or serve as a workshop (And maybe even store an RV) and you have the means then the optimal use of your time is to build it first. Such a barn is a considerable project though much less than a home. The useful structures you build before your home may still, in themselves, be considerable projects. But, they still bestow the benefits of building it backwards.

Temporary Stuctures

Anyone who’s hauled a port-a-potty or scaffolding onto a building site knows that temporary structures can be the Optimal next choice. If a temporary structure has that much use, and you’ve got the money and time, then build it.

Build It Backwards Advantages

The idea of building it backwards can be implemented in an infinite number of ways. Limiting the focus to my family’s personal goals the approach has the following advantages over a more traditional strategy:

Gets you thinking of ways to use of your land, immediately.
Gets your land ‘producing’ at the beginning of the building process rather than at the end.
No debt. Purchasing the land and building slowly is a form of self-financing that keeps you from having to take a loan.
Flexibility. As circumstances change and money comes and goes you can make optimal choices on the margin about the timing, cost and usefulness of the next step.
Working harder now to build a second house will enables renting your current house in the future for retirement income.
You get to design and build exactly what you want, where you want it, and when you’re ready to build it.
Motivates site planning from the beginning which saves time, money and effort.
Provides a place to live on your property whenever you decide to be there.

Provides a place to live while working on or building the next phase of your country home.
May provide a place to rent for income or on-site security.
Starts momentum. Once you’ve built something useful the chances of adding further improvements rises exponentially.
Your improvements to the property for tax purposes will be minimal. By the time it amounts to something you’ll be getting maximum value from the land.

The most useful things built on land are built last. Reverse that convention and build it backwards. Small structures provide big comfort and improvements relative to their size and cost. Return on investment is high because investment is small and return is relative to the nothing of the vacant land your starting with.

Get the most important uses out of your land first, and soon. Doing so may rescue this widely held and rarely realized dream from the never-to-be-crossed-out section of your bucket list.

Freedom

One Nation, Under Surveillance

By Terence Gillespie September 10, 2014

Book Review by Terence Gillespie

“Privacy is an insurance policy against oppression. Privacy allows a tyrannized citizenry to think independently, freely and clearly.”

– Boston T. Party

Such is the clear and historical perspective of Boston’s new privacy book, One Nation, Under Surveillance — Privacy From the Watchful Eye. In this most up-to-date and comprehensive book on the subject the author accomplishes three feats for those of us interested in state-of-the-art privacy:

A complete analysis of why privacy is more crucial than ever, still possible and still works!
A detailed description of who and what to protect our privacy against.
An exhaustive and up-to-date implementation guide for achieving our own “sweet spot” of insulation.

In fact, Boston intentionally overdid his own privacy to learn how far it can be taken before it begins to work against you. This makes him one of the few Americans that can give first hand knowledge of the true costs, details and tradeoffs to balance in putting together our own plan.

Those familiar with the subject know that privacy cascades into multiple areas and down many rabbit trails of implementation. Because of its completeness and the inclusion of the three elements above it’s quite possible to implement a complete privacy plan using only this 480-page book as a companion.

More Crucial Than Ever (And Still Works!)

“Too many wrongly characterize the debate as ‘security versus privacy.’ The real choice is liberty versus control. . . . . that’s why we should champion privacy even when we have nothing to hide.”

– Bruce Schneier, “The Eternal Value of Privacy”

If you thought the battle for privacy was over after watching “Enemy of the State” Boston would ask why everyone still wants your data with every transaction or activity. The authors’ short answer to that question is that privacy still works!

If you’ve got black helicopters over your shoulder your cover is blown. However, using the same movie reference how much more peaceful would our lives be if everyone had 80% of the cover of Gene Hackman’s character?

The author would advise not turning yourself into a paranoid hermit obsessed to the point of having no life to protect. His suggestion is to commit to 20% of the full effort to achieve 80% of the results. In the authors’ experience going for 100% privacy consumes too much time, joy and money diminishing the quality of the life you’re protecting.

Keeping Your Nose Clean is Not a Plan

‘Doing nothing wrong and keeping your nose clean’ is normal rational behavior; it is not a privacy plan.

Viewed as a ‘privacy plan’ here’s the hard truth about ‘keeping your nose clean’: It might have worked in 1910, it was naive 30 years ago and it’s hazardous to your health, wealth and peace of mind, today.

As Boston describes, “What we are facing is, in effect, an environmental issue regarding tyranny’s pervasiveness. It’s as though the toxic gas of oppression is everywhere.” Going on to say “I may be wrong, but I don’t think that this force can any longer be fought and won on a national scale. Any inroads made there will evaporate after the next disaster or emergency or attack.”

The Data Beast

For an inside look at how hungry our state rats are over ‘public’ data aggregation see Catherine Austin-Fitts’ six-part series, The Data Beast. It’s a rare inside perspective on how important your live data is to those who pretend they already have it.

In benevolent hands accurate data is the beginning of discovery and optimizing the delivery of value. In evil hands it’s the most crucial element for manipulating the truth.

The State is selling an agenda not discovering a truth. The agenda is decided prior to data collection. Information that doesn’t support the agenda, although coveted within the agency, is squashed or denied publicly.

Climategate, Pandemics, the unemployment rate, the HUD scandal, the inflation rate, etc. . . . . The official story has nothing to do with the truth.

Beware of hungry data beasts masquerading as public servants.

The Cops and the Mail

Why does the average law-abiding heart race when seeing a cop or receiving a piece of mail from the state? Gee whiz, if you’ve done nothing wrong and have nothing to hide, then . . . blah, blah, blah.

Perhaps because the last guy “protected and served” owes $1500 or was “served” into the emergency room. Or, maybe you’re still paying the fine or tax levied on ‘no services rendered’ or violating some conjured up prohibition. If your news hasn’t covered such unpleasantries Will Grigg has expertly chronicled the increasing steady stream of such incidents. It’s especially alarming that police brutality is on the rise at a time when the police are in less danger of being killed in the line of duty than ever before.

The architects of our depression are hungry to fund their next crisis. With a broad legislative brush anyone can be painted guilty of something or other. This creates the target rich environment necessary for profitable selective enforcement.

I’m a generation behind the boomers, but, you guys better watch out: Your upcoming social security and medicare costs are a big liability to a hungry, broke and desperate state wolf. Maybe the timing of this universal health non-care ruse is no coincidence?

Let’s face it: We’re nervous when we see the cops or get state mail because these guys are either desperate for money or psychopaths that need to control us as part of their therapy.

Getting Back to Normal

Most of the modern day battle for privacy involves reclaiming information that, not long ago, could not be tracked or didn’t even exist!

In 1910 there was no:

Social Security number to give
Business income to track
Income taxes to pay
Phone number to hide
Credit card to track activity
Computer, Database, e-mail, internet
Barcode to track shopping habits
Gun registration
DNA testing

And yet we had a higher quality of life than the world had ever seen.

We need to shed this notion that personal information is the price of better service. We’re not being served by its disclosure. We’re being numbered, branded, looted, sheered, taxed and vaccinated into a stupor.

We’re living in an age of laws so numerous and incomprehensible that enforcement can be focused on anyone ripe enough to harvest. Selective enforcement is a matter of revenue generation per the mood or balance sheet of the tax feeding agency.

There’s no shame in getting back to normal private behavior. The only shame is in what we’ve already given up.

Know Thine Enemy

“As long as you do not mistake a sociopath for a person of character, your privacy is generally safe from those whom you rightfully consider your friends.”

– Boston T. Party

One of the unique aspects of Boston’s latest privacy book is his crystal clear description of the enemy: The Psychopathic (Or sociopathic¹) 4% of the population and the organizations they’ve infested.

“A sociopath is somebody who, through a combination of heritable condition, genetic predisposition and upbringing, has no sense of interconnectedness (bonding) with living beings and thus no foundation for an active conscience (Like the 96% rest of us who do have one). Studies indicate that sociopathy involves an altered processing of emotional stimuli at the level of the cerebral cortex, and thus sociopaths simply cannot process emotional experience, such as love and caring.” Chapter 6, pg. 11.

The author provides an extensive list of character flaws and behaviors to enable recognition of the psychopaths among us. A abbreviated list for the purposes of this article would be:

Grandiosity
Shameless lies
Unreliability
Lack of empathy
Flair for manipulation
Scheme further ahead than moral people can anticipate
Audio/video record their victims much more often than vice versa
Make Plans for Justice Backfire
See sudden adversity as a challenge; they thrive on it
Always act behind the scenes, which is difficult to discern
Masters of manipulation through compartmentalization

Recognition of psychopaths is difficult for normal people. We tend to project our own innate goodness onto strangers and find ways to forgive their endless transgressions until its too late. By the time we recognize them, or dare to call them out, they’ve either damaged us or teamed up.

(To improve your recognition skills you can see one under a self-imposed microscope in the documentary film,”I, Psychopath“).

Apparently, these mutants recognize one another and tend to team up to take control of powerful organizations. “Psychopaths have this dream that they would like to govern. ‘We want to be the government,’ they think, and this dream is realized from time to time in the human history and this is a gruesome time.”²

“In the case of work, a psychopath may feel envious of another’s position and prestige, but will not actually work to achieve that position. Instead he will brutally manipulate and exploit the work of others in order to achieve domination. Hare and Babiak describe this phenomenon in their book, Snakes in Suits: When Psychopaths Go to Work.”²

The enemy is most likely to present in one of five entities:

Individuals who make their way into your personal life.
Gangs, the leader of which is likely to be fully psychopathic (Ralphie, if not Tony in the Sopranos).
Organizations who, despite their benevolent banner, have been infiltrated to the point that their internal controls are largely psychopathic (SEIU, Climate Change Orgs, in some cases local police).
Individual members of the state exerting direct psychopathic influence on policy.
Any combination of the above who exert psychopathic control of state apparatus through indirect means (Enter our beloved illuminati and their NWO).

To all of these entities we (Normal, productive, law-abiding and rational human beings) are just one thing: Supply.

Once you realize who the enemy is privacy takes on the same urgency as your desire to continue living a moral and rational life. Without insulation we are in a constant state of derailment with a severe lack of freedom in making optimal choices.

“A right-thinking man – with puppet strings attached – cannot be a right-doing man.” (ch. 22, pg 20)

Batten Down these Hatches

The following outline was gleaned from the index of ONUS and provides a glimpse into the scope of implementing a complete privacy plan.

These are the elements of life most likely to cause exposure. Each element represents a privacy ‘hatch‘ to be batoned down in its own way. One of the major feats of the book; each element is addressed to the point that the reader could close the exposure, themselves. That would be an impressive feat in any one area, let alone all ten.

It would be possible to break out the computer sections and present them as a complete book on privacy in that area. Luckily, the author grants himself no such reprieve and we get it all in one book.

People
1. Friends
2. Family
3. Spouse
4. Children (Schooling)
5. Relatives
6. Business contacts
7. You
  1. Your mouth
  2. Your plan
  3. Your passport
  4. Your SSN
  5. Drivers License
  6. Other ID’s
Mail
1. Business
2. Personal
3. Vehicle Registrations
4. Sending
5. Receiving
Business
1. Asset Protection Entities
  1. Car
  2. Boat
  3. House
  4. Business entities
2. Contacts
3. Employees
4. Assets & Data
5. Offices
6. Income
  1. W2
  2. Corporate
  3. Barter
7. Insurance
Communication
1. Mouth
2. Phone
  1. Cell
  2. VOIP
  3. Voice Mail / FAX
  4. Landlines
3. E-mail
4. Internet
  1. Social Networking
  2. Forums
  3. Blogs
  4. Web browsing
Computer
1. Windows (A surveillance virus masquerading as an OS?)
2. MAC or Linux
3. Data Backup
4. Passphrases
5. Physical Security
Money
1. Credit?
2. Debit
3. Cash
4. Money Orders
5. Digital Gold
6. Gold & Silver Coins
7. Checks
8. Loans
9. 401K / IRA
Guns
1. Private Sales only
2. Minimal onsite
3. The Purchase
4. Ownership
5. Selling
6. Tracking
7. Storing
House
1. Address
2. Utilities
3. Census
Travel
1. Car
2. Hotel
3. Bus
4. Air
5. International
6. Border Crossings
Insurance
1. Life
2. Car
3. House
4. Health
5. Business

A complete plan would combine the private version of the elements, above, with behaviors that minimize exposure during interaction with untrusted people or entities.

Many life areas can and should be trimmed down and the author offers frequent tips on doing so. For instance, friends or relatives who can’t be trusted probably don’t belong in your life. And, trimming down business entities, employees, vehicles and office space leaves much less work in eliminating exposure to prying eyes.

In fact, it’s not easy to tell where Boston’s own well-researched techniques and experience blend with his accumulated knowledge of privacy. Hence, one of the author’s points: “Much of wisdom is using the hindsight of others as your foresight. . . . there is not enough time to learn the lesson from purely your own mistakes . . .”.

For those with the foresight to use ONUS over the next several years it’s an exhaustive and up-to-date implementation guide for achieving your own “sweet spot” of insulation. Beyond that, the universal principles outlined will have to be combined with your own improvisations as the data noose inevitably tightens in years to come.

The private lives we all have a right to will require a fight to reclaim.

Privacy Premiums

“To govern oneself is a natural imperative, and all tyranny is the miscarriage of self government. The first requisite of freedom is to accept responsibility for the lack of it.”

– E.C. Riegel, 1949

The Rules

Don’t draw attention to yourself
Privacy is complicated – think it through
Privacy is expensive – don’t be greedy
Privacy is inconvenient – don’t be lazy
Privacy is private – don’t be glib
Be consistent – be thorough
Work your story out in advance
Privacy requires your alertness

You Are Your Data

To most entities you are known only by your data. There is no personal relationship. Change your data and you’ve changed your ‘relationship’. Another way of putting it is that what happens to your data happens to you. Since we’re not talking about friends why not make the data version of yourself unavailable for:

Tracking and control
Subpoenas for bogus civil suits
Visits from stalkers
False arrest arising from bureaucratic screwups
Unlawful search and seizure
Forfeiture of personal possessions to agencies who are broke

Opportunity in Crisis

A move to another location is an excellent opportunity to reclaim lost privacy. The number of people leaving/losing their houses and renting provides good cover. With this book you could start tackling the problem in a big way during the move. What a great time to make privacy a part of your new life.

Never Take Candy from a Psychopath

Bargains with the devil always come with an incentive package. Turn them down:

Loans from strangers
Tax deductions that blow your privacy
Child tax deductions if you’ll just get baby a social security number (Fight this: No baby needs one. Even the boomers won’t get their booty)
Free medical tests or ‘screenings’ as an excuse to get your DNA into a database (All babies born in a hospital are now subject to this outrage).
10% off if you’ll just sign up for our in-store credit card

The candy offers go on and on. You’ll recognize them when you see them. Walk away. Consider the forgone ‘service’, discount or deduction to be a small cost of freedom.

A Little Goes A Long Way

Don’t get overwhelmed. Make privacy an extension of a normal civilized life. Change your mindset from within and calmly privatize one piece of life at a time.

Just a few pieces create a working bubble:

Keep business income discreet.
Never take candy from a psychopath (See list, above).
Pay with cash or prepaid debit card.
Keep computer and online activities private (Extensive tips on this in the book).
Keep phone activities secure (Extensive tips on this in the book).

Use the peace from this privacy to map out a plan for the rest.

“Privacy is like fire insurance; you can’t get it after you need it. You get it first, and then hope that it never becomes necessary. (ch. 2, pg. 2)

The ONUS is On Us

“We’re not what we believe. We’re what we’ll fight for.”

There’s going to be a scuffle or two when reclaiming lost privacy. And, there’s going to be cost and inconvenience in maintaining the insulation level you decide on. Slowly, but surely, however, the river of trivialities that derail life can be brought to a trickle.

Reading through the implementation part of the book it’s evident the author has become quite brilliant at improvising privacy solutions as new exposures present. I believe the most valuable contribution of the book is that it tends to impart such improvisational skills to the reader.

“Do not confront, but learn to mask yourself and circumvent.” (ch. 22, pg. 17)

My overall take on ONUS is that it’s so thorough, comprehensive and actionable on such a complex (And urgent) subject that it was a practical sacrificial effort to get it all current and in one book. Apparently, this parting gift of liberty is no accident as it’s the authors last “Boston T. Party” book.

It would be a shame not to have this privacy tool available now that it’s needed most. But, it is available. All the mistakes have been made, we know privacy is crucial and possible, we know what the enemy looks like and have a detailed roadmap to get to a safe place.

The only shame would be in not taking privacy and shelter from the psychopathic storm.

Try imagining a place where its always safe and warm

Come in she said I’ll give ya’ Shelter From The Storm, —B. Dylan

Privacy Reference

Optical illusions: autostereograms and sociopaths
Political Ponerology (A Science on the Nature of Evil Adjusted for Political Purposes)
Snakes in Suits: When Psychopaths Go to Work
Cracking the Code: The Fascinating Truth about Taxation in America
I, Psychopath
Yuri Bezmenov discusses the science of demoralization in America
Schneier.com

¹Psychopath and Sociopath are rough synonyms with pychopath implying inherited traits and sociopath leaving open the environment as a main contributing factor in causing the same behavior. The author uses the word sociopath perhaps to expand recognition of the traits to be present in seemingly normal everyday encounters, as they certainly are. I chose to use psychopath because the three friends I asked were better able to identify the word with the behavior.

²Interview with Andrzej M. Łobaczewski, author of Political Ponerology: A science on the nature of evil adjusted for political purposes.

Business

Wealth Transfer around Collapsing Asset Prices

By Terence Gillespie September 10, 2014

The decimation of the middle class continues through 23% unemployment¹ and the daily evaporation of net worth. Those who remain employed are running to stand still taking up the slack of former, less fortunate, co-workers. Mortgage holders above water are the exception and many are cashing in what’s left of their 401k to meet expenses. The word retirement is fading into the dreams of yesteryear and will be a mere web-search term for children born after 2000.

There is a moral, peaceful and non-violent way to be on the receiving end of this slow-motion artificial wealth transfer. One of the keys is to understand . . .

Why Asset Prices Collapse

“Asset prices collapse during periods of hyperinflation when priced in gold.”²

When first reading that I wondered, “If assets are desirable and the currency is worthless then why would their price go down?” The answer is that prices rise in fiat and fall in gold. Why would prices fall when measured in gold? Current news headlines provide some answers:

Some assets were overpriced to begin with and are returning to normal.
Unemployment leaves people with less to spend causing less demand.
Those with income cut back, save more and buy less causing less demand.
Current housing inventory and projected foreclosures could meet demand for three years of sales. That figure is closer to four months in an efficient market.
Equites, when priced in gold, have lost enough real value to cause people to flee into safer investments.
Retirement plans are being liquidated to meet monthly expenses
Luxury items are being sold to meet monthly expenses.

If current trends continue #2, #3, #5, #6 and #7 will get worse. If the banksters checkmate themselves into an inflationary corner then they will get much worse.

Women, Computers and Volcker to the Rescue?

In the early 80’s America was rescued from runaway inflation by three things: A massive influx of women into the workforce, the personal computer and the temporarily sane monetary policy of Paul Volcker. Many women followed the pied piper of woman’s liberation but the piper’s agenda was to double the work-force tax base. The second rescue was the personal computer and the ensuing productivity boost it poured into the economy. From a monetary point of view the same amount of money was now circulating in an economy with more productive workers and twice as many of them. Once again, the American public and ingenious entrepreneurs saved the state from its incompetence. Mom is now gone from the house, working and replaced with daycare and using computers developed by private entrepreneurs. And yet, it’s Paul Volckers’ monetary policy that is purported to have rescued America.

Is there anything on the horizon that could rescue the economy, today, as women and computers did in the early 80’s? Cold fusion? Free energy from the sky? A quadrupling of workers or their productivity? I’m not sure. But, there are ways to rescue oneself and family in any circumstances if they are understood.

Inflation and What Else?

The US has done more to cause hyperinflation than any country that’s ever actually had it. And yet, the US continues to escape this well-earned fate. Instead, bubble after bubble is popped and the proceeds are put into the bags of the ones who create them. For those who care about macroeconomic measures the most reasonable short-term expectations are more of the same of the last decade:

Informal Devaluation
Stagflation
Continued Decline

Great, but it’s a waste of time to dote on things one has no control of. Instead, why not bone up on the usual ways wealth is transferred under these circumstances? The “Collapse” that everyone is expecting is occurring in slow motion. However, since it’s easier to see the trades if we pretend it will happen overnight I’ll refer to what I think will happen over many years as the “Collapse”, below.

Wealth Transfer around Collapsing Asset Prices

Vulture economics is wealth transfer from weak to strong, emotional to rational, unprepared to prepared, city dweller to farmer, productive to unproductive, Keynesian to Austrian, and from the manipulated to manipulator. In a crisis the unprepared and wealthy (In fiat only) will sell anything to meet basic needs. In Weimar, well-to-do city dwellers came out to the countryside to exchange cigars for meat, pianos for wheat flour and gold watches for potatos.³ In essence, they traded Diamonds for Water.

Prior to Collapse

In a trade of Diamonds for Water the guy with the water gets both and the guy with the diamonds gets some water before losing both.

The general pre-collapse roadmap is to:

Think like a foreigner in your own country.
Move towards employment and safety.
Postpone the purchase (And sell excess) of future collapsing assets.
Don’t payoff your house. Make the minimum payments on all mortgages and large fixed debts.
Purchase real money and wealth storing assets.
Stock up on the life essentials while they’re available and cheap.
Invest in the factors of your own production.
Warn who you can without causing resentment.
Make a shopping list for the eye of the storm.

My Optimal choices are laid out in Your Optimal Bailout Plan, Depression Proof Your Money, Checklist for Hard Times and 240 Jobs That Won’t Disappear in an Economic Crisis. Essentially, you sell assets whose price will collapse (Further) and buy the staples of life while they’re available and cheap. Later you buy the “diamonds” by preserving the purchasing power of your savings and not relying on anyone to provide life essentials for your family. If hyperinflation occurs pay off your mortgage with an egg. If it doesn’t use silver and inflation to pay off your house.

Foreigner in Your Own Country

You hear it all the time: Those ‘foreigners’ come over here with suitcases and buy everything in sight because the Euro/Yen/Yuan/Franc is strong. The opposite used to be the norm: Americans traveling everywhere for $10 a day on world wide shopping sprees.

Gold is the best money in the world and enables easy conversion to every form of cash. If your idea of cash is limited to government issued fiat then at least hold a stable one. They’re all based on nothing but Swiss Francs and Canadian dollars will faire better than the dollar. See How To Buy Swiss Francs in 5 Minutes or Less.

Today, you can swap in and out of any currency in the world with the click of a button. There’s nothing to prevent swapping into the strongest fiat of the moment. It’s well known that during the currency crisis’ of Chile and Argentina the first people to exchange local fiat for US dollars were among the few to keep their savings from disappearing into smoke. Those who bought dollars prior to the official devaluations and newly issued local currency were saved. Soon it will be even more ironic that the widespread use of US dollars provided the stability needed for these countries to transition into a new fiat currency based on ten times the nothing of the first one that collapsed.

Or, you can “play it safe” and keep your “money” in the bank. You’ll be able to retain and spend every cent as it’s being devalued.

Field Trip

Take $500 to the bank and tell them you’re going on a trip to Switzerland and would like to purchase Swiss Francs. Take the Swiss Francs and put them in your pocket and let the feeling of having cash wash over you. If you ever need emergency cash convert them back and you’ll probably get more dollars than you started with.

Factors of Your Production

The best investment is in the factors of your own production: Health, education, training, building a strong network and community. If there’s no market for your specialty consider moving and/or directly producing what your family needs. Create a water rain catch system, grow your own food, make your on electricity, etc..

“Before you hunker down get out of the way”⁴

Many people are newly unemployed. Though beyond the scope of this article to explore would moving be a better use of your time than scanning the want ads? Would a move within the US, or to another country, be the best start of a new business or profession?

Wealth Storage

The TRJ/CRB is a benchmark representation of commodities as an asset class. These commodities are not the only place to store wealth but they do represent assets with well established markets.

Aluminum
Cocoa
Coffee
Copper
Corn
Cotton
Crude Oil
Gold
Heating Oil
Lean Hogs
Live Cattle
Natural Gas
Nickel
Orange Juice
Silver
Soybeans
Sugar
Unleaded Gas
Wheat

Most of these have indexes for those who trust brokerage accounts. At least 10 of them, however, could be personally purchased and stored. Notice this list is in the Before Collapse section of the article.

Collapsing Assets

All of the following assets are collapsing and will continue to collapse relative to gold. Don’t be fooled by nominal price increases in fiat. Sell them now, if you can.

The US Dollar
Municipal Bonds
US Treasuries
High Multiple (P/E) Stocks
Financial Stocks
Equities in consumer discretionaries
Grand Pianos
Diamonds
Luxury cars
Yachts
Jewelry
Rental Houses
Designer Watches
Designer Handbags
Recreational (Only) Property
Luxury (Empty) Apartments
Overpriced Wine

Signals to Look For

The Mainstream Media does not report real news so you’ll have to glean the timing of the worst part of the collapse from alternative media or inductive reasoning applied to personal observations. The short list would be:

Witnessing a diamonds for water trade.
A precipitous rise in gold or silver.
Stock market collapse or close.
Sharp increase in the rate of failing banks.
Social unrest, heated protests or riots.
Bank holiday followed by formal devaluation.

We had family members stay with us, last Christmas, from Venezuela. The week after they returned home Chavez devaluated the Bolivar by 40% for non-food and medicine imports causing panicked shoppers to flood the stores to beat overnight price increases. A devaluation of 40-50% seems to be the norm. States may fear social unrest if taking more than 50% of people’s money overnight.

During Collapse

Trade gold, silver or other wealth storing assets for assets whose price has collapsed, but, still represent good underlying value.
Stay out of the way of those competing for food, water and essentials.
Help whatever family and friends you can.
Pay off your mortgage and all fixed debts denominated in the collapsing currency.
Buy houses, land or whatever real estate you can use and manage.
Buy equities of companies unlikely to be nationalized (If there are any) and who produce things needed to rebuild.
Go bargain hunting with whatever you have left.

Shopping List

Real Estate
Farm equipment
Fertilizers
Agricultural commodities
Energy producers
Mining companies
Oil producers
Energy
Forestry
Manufacturing
Mining
Transportation
Utilities
Water

Real estate now shifts to a good buy as people dump it for essentials or to escape. You may have sold luxury condos and vacant rental houses prior to the collapse. Now is your chance to get them back … if you want ’em.

Gold Cost Average the Purchase of Real Estate

You can do it with stocks so why not with real estate?

It’s the same principle, just harder to imagine because real estate is rarely cheap enough to allow it. Instead of lamenting the nominal price drop of your house buy two or three more during the collapse. When things return to normal it will more than make up for what you overpaid in the housing bubble. By this time you may have already paid off your house with silver because the mortgage is denominated in fiat and you’ve got real money.

When sanity returns you will have saved yourself from being one of those guys you meet who got burned in Peru, Chile or Argentina and are still bitter over never having recovered from the collapse.

After the Collapse

Welcome to the latest third world country. Your neighborhood is starting to resemble the pictures from your last trip to Mexico. The middle class is gone or fled, labor is cheap, imported goods are expensive and the local goods get exported to countries that can afford them. Infrastructure disintegrates for lack of money and power outages are a way of life.

Try to look on the bright side: Markets have been cleared of toxic debt, derivatives have disappeared, entitlement programs have been cut or renegotiated and policy makers have learned their lesson!? Or is that being too optimistic?

Well, at least labor is cheap and you can afford a nanny for each child if that’s your style. And massages, spa treatments, manicures and dinner out will be as affordable as they were on that last trip to the Belize!

Don’t Be a Vulture

The problem with eating raw flesh and blood is that it’s not good for you. Vulture economics requires stomach bacteria for digesting flesh without remorse. You’re not a genius to be in a temporary position of strength with your fellow man. But, you have a chance to act like one for recognizing him as such. This is your moment to shine by using strength in an exemplary manner. The golden rule remains golden. Will you?

If someone offers diamonds for water give them water and let them keep their “precious” diamonds. Use the chaos to invest in assets and people who are going to improve lives. If anyone’s going to be left with capital to rebuild why shouldn’t it be the good guys?

“For to everyone who has, more shall be given, and he will have an abundance; from the one who does not have, even what he does have shall be taken away.”

– Matthew 25:29

¹Shadowstats, September 9th, 2014

²In Peter Schiff’s 2007 edition of Crashproof

³When Money Dies: The Nightmare of the Weimar Collapse

by ADAM FERGUSSON.

⁴Peter Schiff, “The Little Book Of Bull Moves in a Bear Market”