India after Narendra Modi’s electoral earthquake

His first government did important things, but they were not transformative

Martin Wolf



Narendra Modi’s overwhelming victory in India’s elections is an extraordinary personal achievement. It confirms Mr Modi’s ascendancy over the world’s second most populous country and largest democracy. It confirms the marginalisation of the Congress party, which had dominated Indian politics for most of the years after independence in 1947. It confirms the rise of Hindu nationalism as an increasingly dominant ideology, in place of the secularism promulgated by the founders of independent India.

This is all very important. But what might this election mean for the economy and economic reform? Will we see the reformist Mr Modi unleashed, or more of the same? The answer is likely to be the latter. Alas, that may be a disaster.

It is rare for a leader to be more radical in the second term than in the first. It is normal, too, for the traits of self-confident and charismatic leaders to become more pronounced. Indeed, as we have seen with Vladimir Putin and Recep Tayyip Erdogan, they tend to become more autocratic. Will Mr Modi prove to be another of this kind? He is an autodidact who mistrusts India’s western-educated policy intellectuals. He is a centraliser and has proved to be an interventionist more than a pro-market reformer. But he is also prepared to take gambles. Given his political success, it is hard to believe these traits will not become even stronger in this term.



Mr Modi’s first government did significant things, but they were not transformative. One of his important contributions was to extend public provision of essential goods and services for the poor: cooking gas, toilets, electric power, housing, bank accounts and emergency medical insurance. He also implemented two significant and long-discussed reforms: the insolvency and bankruptcy law and the goods and services tax, or GST, though the implementation of both has brought significant problems. The radical demonetisation of 2016 remains highly controversial. But most informed observers believe it was a big mistake.

Far more radical action is now needed, for India confronts some big challenges. The economy seems to be slowing significantly. In a recent column, Shankar Acharya, former chief economic adviser to the Indian government, notes that growth in the last quarter of 2018-19 was 5.8 per cent, the slowest in 20 quarters. Investment is also markedly weak. The latest “periodic labour force survey” confirmed that “the employment situation in the nation was the worst in several decades, with just under half the working age population actually working or seeking work”. Merchandise exports have stagnated since 2011-12. The combined fiscal deficit of the central and state governments is now about 7 per cent of gross domestic product.

The challenge of resolving the “twin balance sheet” problem of non-performing assets of banks and unserviced debt obligation of companies remains significant, while a big new problem has emerged within nonbank finance companies. In the context of stretched balance sheets, the much-needed monetary policy loosening is having limited effect.




All this is quite worrying. Arvind Subramaniam, chief economic adviser until last year, has now thrown up an even bigger concern, by arguing that “Official estimates place annual average GDP growth between 2011-12 and 2016-17 at about 7 per cent. We estimate that actual growth may have been about 4.5 per cent”. If this is right, past views of the performance of the Indian economy and the reliability of Indian statistics were plainly wrong.

Beyond these concerns, all significant, lies the deteriorating global environment. There is now a real possibility of a war in the Middle East, with possibly large effects on the price of oil. More important still, the outcome of Donald Trump’s trade wars remains highly unpredictable. A breakdown of US trade relations with China seems unlikely to benefit India, since it has never been willing, perhaps able, to make itself a hub for globally-oriented manufacturing. But the disintegration of the global trading system is dangerous, especially for a country that is outside all big regional trading arrangements.




It is clear that India needs reform if it is to thrive. It must fix the financial sector, perhaps by creating a publicly managed “bad bank”, to accelerate the cleaning up of defective balance sheets. As Mr Acharya argues, it must also proceed with the overhaul of labour laws and regulations, easier land acquisitions for non-farm uses, reform of agricultural marketing, and making the bankruptcy process work far better.

Much of the needed effort will also have to focus on institutions of government, including the tax system, competition policy, management of natural resources (especially water and air quality), education, agriculture and relations between the centre and the states. The statistical services are apparently in serious need of repair, too.



Mr Modi has to be an exception to the rule that second-term leaders are no better than their first-term selves. He must use his present prestige and power to transform India. He needs to strengthen institutions — not weaken them and promote markets — not leave them hobbled. He must also seek to ensure basic economic security for all Indians.

If, in the absence of action, India’s economy falters further, perilous things might happen. The big worry is that strong leaders tend to choose the politics of paranoia when the economy fails.

In India, that could be lethal. Embrace of deep reform is now essential if Mr Modi is to bequeath a stable India. He has the freedom to act. Now is the time to do so.

Was It an Invisible Attack on U.S. Diplomats, or Something Stranger?

An “unknown energy source” has been blamed for debilitating symptoms suffered by Americans posted in Cuba. The real cause may be more surprising.

By DAN HURLEY






The piercing, high-pitched noises were first heard by a couple of recently arrived United States Embassy officials in Havana in late 2016, soon after Donald Trump was elected president. They heard the noises in their homes, in the city’s leafy western suburbs. If they moved to a different room, or walked outside, the noise stopped. The two officials said they believed that the sound was man-made, a form of harassment. Around the same time, they began to develop a variety of symptoms: headaches, fatigue, dizziness, mental fog, hearing loss, nausea.

On Dec. 30, 2016, the Embassy’s chargé d’affaires, Jeffrey DeLaurentis, and his security chief, Anthony Spotti, were told what the men were experiencing. By then, a third Embassy worker who lived nearby also heard the sounds and began developing symptoms. DeLaurentis eventually sent the three for evaluation by an otolaryngologist at the University of Miami, who told them they had damage to their inner ears’ vestibular organs.

Similar reports of sickness after hearing noises began trickling in from other diplomats in Havana. One of them, a foreign-service officer, told me he was awakened one morning in March by a screeching noise. “It paralyzed me,” he said. “When the sound occurred, I could not move. I couldn’t get up until it stopped.” In the days that followed, he felt extreme fatigue, heard a ringing in his ears, found himself making many mistakes at work and became sensitive to loud sounds and bright light.

That month, DeLaurentis called a meeting of his senior staff to tell them what was going on. He insisted that they tell no one else — not even their families — which had the perverse effect of heightening the staff members’ anxiety rather than calming it. Within days, DeLaurentis felt compelled to call an open meeting of the American staff. More than 60 people crammed into the Embassy’s Sensitive Compartmented Information Facility — an inner sanctum for confidential communications. They were told about the noises and the symptoms and were offered the opportunity to be tested if they had concerns. Nearly all of those present, as well as some family members, soon asked to be evaluated.

“There was a sense of hysteria and concern,” said another government official who worked in Havana at the time. “Perhaps ‘hysteria’ is the wrong word. It really was more concern and fear: ‘Why are you just telling us about this now?’ The ambassador was doing his best to allay any fears, saying: ‘If you want to be tested, we’re going to do that. If you want to send your family home to the U.S., you’re allowed to do that.’ ”
Of the roughly 80 people tested, 12 were found by the otolaryngologist to have symptoms similar to what the first two officials experienced months earlier. But a few did not hear noises, and some who did described other, more subtle sounds, including one that called to mind the experience of vibrating air pressure in a car with a single open window in the back.

In April, DeLaurentis called a meeting with ambassadors from Canada, Britain, France and other U.S. allies. None knew of any similar experiences afflicting their officials in Cuba. But after the Canadian ambassador notified his staff, 27 officials and family members there asked to be tested. Twelve were found to be suffering from a variety of symptoms, similar to those experienced by the Americans.
By August 2017, the number of U.S. diplomatic personnel and family members reporting symptoms totaled at least 16, and some were insisting that their symptoms went beyond what could be treated by the otolaryngologist. The foreign-service worker who spoke with me, for instance, said his symptoms progressed to include vision changes, dizziness and increasing cognitive deficits. The State Department’s medical director arranged for affected individuals to be treated at the University of Pennsylvania’s Center for Brain Injury and Repair. Around the same time, the story finally went public, with news reports citing an official theory that attributed the symptoms to a sonic attack using some sort of invisible energy force — like something out of “Star Wars,” only real.

“We hold the Cuban authorities responsible for finding out who is carrying out these health attacks,” Rex Tillerson, then the secretary of state, said. Soon Tillerson ordered nearly every American at the Havana Embassy, and all family members, to depart, leaving only a skeleton crew. The United States then expelled 15 Cuban diplomats from their Embassy in Washington, issued a travel warning to American tourists and placed new limits on travel between the two countries.

The claim of an invisible weapon, fantastic as it sounded, gained scientific respectability when, in February 2018, The Journal of the American Medical Association published a study by the doctors at the University of Pennsylvania. “These individuals appeared to have sustained injury to widespread brain networks,” the paper stated. Finding no obvious signs of a viral or chemical cause, the Penn group left unanswered how the injuries might have occurred. They simply assumed that the symptoms were due to an “unknown energy source associated with auditory and sensory phenomena.” 
Since then, reports from major news organizations, including NBC and The Times, have focused on the “unknown energy source” theory. Most recently, “60 Minutes” aired a segment on March 17 titled “Targeting Americans.” The correspondent Scott Pelley said the diplomats had “suffered serious brain injuries” and noted that the F.B.I. is “investigating whether these Americans were attacked by a mysterious weapon that leaves no trace.” The attacks, Pelley intoned in his signature rumble, appear to be “a hostile foreign government’s plan to target Americans serving abroad.”
And yet, two and a half years after the first diplomats in Havana said they heard strange sounds and fell ill, and after at least six visits to Cuba by the F.B.I., the study by Penn researchers, another study led by the otolaryngologist at the University of Miami and a continuing investigation by a “health incidents response task force” organized by the State Department, the claims of an attack by an invisible weapon remain not only unproved but also highly contested by prominent physicists and engineers in the United States and abroad.


Dozens of leading neurologists, psychiatrists and psychologists, meanwhile, have offered an alternative narrative: that the diplomats’ symptoms are primarily psychogenic — or “functional” — in nature. If true, it would mean that the symptoms were caused not by a secret high-tech weapon but by the same confluence of psychological and neurological processes — entirely subconscious yet remarkably powerful — underlying hypnosis and the placebo effect.

They are disorders, in other words, not of the brain’s hardware but of its software; not of objective injuries to the brain’s structure but of chronic alterations to how the brain functions, typically following exposure to an illness, a physical injury or stress. And the fact that the State Department and doctors the government selected to treat the diplomats have dismissed this explanation out of hand does not surprise these experts. After all, they say, functional neurological disorders are among the most misunderstood, debilitating and denigrated ailments known to medicine.

On Nov. 2, 1881, a 15-year-old French girl broke a pane of glass, resulting in a slight cut to the back of her left hand. The wound healed in four or five days, but by then her fingers had contracted into a cup shape, with the thumb pressed against the index finger. It remained that way, “a veritable clubhand,” for an entire year, as described by the neurologist Jean-Martin Charcot. A founder of modern neurology, Charcot diagnosed the contracture as “hysterical” in nature, not directly caused by the minor injury but also not simply a figment of the girl’s mind.

Charcot applied the term “hysteria” not to episodes that conjure our cartoon images of Victorian matrons swooning or running amok but to cases like the girl who lost the use of her hand: persistent disorders of the nervous system, whether of sensory perception or the control of movements, that appear to lack any physical cause. Charcot devoted much of his career to studying and treating such disabilities, and many of his insights remain relevant today. He was among the first, for instance, to dispel the belief that hysterical disorders occur only in women. “That a strong and vital workman,” he said in an 1887 lecture, “a railway engineer, fully integrated into the society and never prone to emotional instability before, should become hysteric — just as a woman might — this seems to be beyond imagination. And yet, it is a fact — one that we must get used to.”

Having treated many railroad workers who developed paralysis or bizarre movement disorders after seemingly minor injuries, Charcot came to one of his key insights: that these conditions rarely develop out of the blue but are instead often triggered by a slight trauma, as if the person had been frightened into it. By comparison, in cases of a purely physical injury resulting in a chronic disability, he said, “there is not the same disproportion between the triviality of the injury and the intensity of the contracture; and, moreover, it has not the same persistence after the cure of the peripheral irritation.”

By the early 20th century, Charcot’s neurological perspective had given way to the psychiatric theories of Sigmund Freud, who regarded the behaviors as being a result of repressed trauma so unacceptable to the conscious mind that it had been converted into physical symptoms. “Conversion disorder” thus became the province not of neurologists but of psychiatrists. But as Freud’s influence dwindled over the course of the 20th century, interest in patients like these declined so markedly that the phenomenon virtually disappeared from medical textbooks.


Then, around the turn of the century, neurologists who specialized in movement disorders began seeing and writing about cases that had been thought to be a relic from a hundred years earlier. One such neurologist was Mark Hallett, who in 1984 joined what is now the National Institute of Neurological Disorders and Stroke (Ninds) as its clinical director and chief of the Human Motor Control Section. Hallett, one of the country’s leading experts in movement disorders, decided to open a clinic where neurologists from around the country could refer patients with the most difficult-to-diagnose ailments. In a 2015 presentation to students, he described how some of those patients turned out to have a disorder that Charcot would have instantly recognized but which few modern doctors then understood.
“This class of patients turned out to be about 30 percent of the patients that were coming into our clinic,” Hallett said. He showed clips of three women who suffer from functional disorders: one who experiences severe tremors, another who repeatedly jerks her arms up as if startled and a third with balance problems that cause her to sway and sometimes fall as she walks. Based on M.R.I. or electroencephalogram (EEG) testing, Hallett told the students, the patients’ movements appear to be voluntary. “But they say it’s not voluntary,” he said. “This isn’t something they’re doing; this is something that happens to them.”
What Charcot did for the 19th-century understanding of “hysteria,” Hallett and a small group of other leading neurologists have done for the 21st century’s understanding of what they now call functional or psychogenic disorders. The name, in fact, is a rare point of contention among them. Some, like Stanley Fahn of Columbia University Medical Center, have argued for “psychogenic” because, among other reasons, it points directly to the mind as the source of the sufferer’s troubles. Others, like Hallett and Jon Stone, a neurologist at the University of Edinburgh in Scotland, dislike “psychogenic” for exactly the same reason: because it makes the condition sound as if it’s purely a psychiatric problem, whereas they see it as having a major neurological component.

“I wince when I hear the word ‘psychogenic,’ ” Stone told me during one of many Skype conversations. “It creates a false impression about what these disorders are. They’re like depression or migraine. They happen in that gray area where the mind and the brain intersect.”


One of the first modern textbooks published on the subject, coedited by Stone, Hallett and Alan Carson of the University of Edinburgh, estimates that about 15 percent of patients seen by neurologists have a functional disorder. The most remarkable kind involve bizarre movement abnormalities that look, to the untrained eye, exactly like epilepsy, Parkinson’s, multiple sclerosis, blindness, coma or paralysis. Other times, they cause the sort of more mundane yet still debilitating symptoms seen in the diplomats.

The emerging understanding of functional disorders has spread widely enough that an editorial accompanying the Penn study in JAMA argued that a functional disorder could also explain many of the symptoms ailing the diplomats. “In particular,” the editorial stated, “persistent postural-perceptual dizziness (P.P.P.D.) is a syndrome characterized primarily by chronic symptoms of dizziness and perceived unsteadiness, often triggered by acute or chronic vestibular disease, neurological or medical illness or psychological distress.”

Months after the JAMA paper was published, Stone co-wrote a letter to the editor, endorsed by 38 prominent neurologists, psychologists and psychiatrists from around the world, which likewise argued for the diplomats’ illness being functional. “In many functional neurological disorders, initial sensory discomfort together with anxiety and heightened attention trigger maladaptive processes that lead to persistent symptoms,” the letter stated. “Although diagnostic caution is warranted, functional neurological disorders are common genuine disorders that can affect anyone, including hardworking diplomatic staff.”

In a Skype conversation, I asked Stone if he had ever treated a patient with P.P.P.D. “I had a lady today with P.P.P.D.,” he said. “This lady walked normally into my office. You wouldn’t think anything was wrong with her. But like most of these patients, they come in absolutely at their wits’ end, and they’re quite concerned you’re not going to believe them. What she was describing was a continuous feeling of movement, that things are swaying, which is just driving her nuts — not literally nuts, but it just wasn’t stopping.”

I asked him if she had an actual medical disorder causing her symptoms. “She does have something medical,” Stone answered, a note of exasperation in his voice. “She’s got a functional disorder.”

But how does an individual case of functional disorder, like the one experienced by Stone’s patient, map onto an outbreak involving dozens of diplomats? In Stone’s view, whether somebody develops a functional illness on his or her own or does so in a group is immaterial. While some call the latter “mass hysteria,” and others use the more modern term, mass psychogenic illness (M.P.I.), Stone finds both terms misleading at best. “The term ‘mass hysteria’ is just ridiculous and insulting,” he told me. And he dislikes M.P.I. because its use of “psychogenic” suggests that affected individuals’ symptoms are “all in their mind.”

“M.P.I. is a subset of functional disorders, not a separate entity,” Stone said. “I agree completely that ideas about illness can transmit from one person to another. This happens all the time with many types of functional disorder. Even just seeing a news item on multiple sclerosis can be the trigger for some individuals to develop similar symptoms.”

If it is hard to understand how a mysterious psychological and neurological process could have sickened a group of previously healthy diplomats, it turns out to be even harder to understand how invisible weapons could have done so.

I asked Douglas Smith, the senior author of the paper in The Journal of the American Medical Association, what kinds of devices might have injured the diplomats. While noting that he is not an expert on such devices, he replied, “The usual suspects are anything from ultrasound, infrasound, microwave — those are things that could potentially affect the brain.”

But physicists and engineers who specialize in the effects on humans of such technology strongly disagree. Ric Tell, a former chief of the Electromagnetics Branch of the Environmental Protection Agency, has spent more than 50 years studying and helping to set international standards on safe exposure limits to electromagnetic radiation, including microwave radiation. “If a guy is standing in front of a high-powered radio antenna — and it’s got to be high, really high — then he could experience his body getting warmer,” Tell told me. “But to cause brain-tissue damage, you would have to impart enough energy to heat it up to the point where it’s cooking. I don’t know how you could do that, especially if you were trying to transmit through a wall. It’s just not plausible.”

The U.S. military has tested beams of powerful microwaves as a crowd-control device, but the process works not by penetrating the brain but by heating people’s skin surface so quickly that they run from it soon after the device switches on.



Illustration by Tishk Barzanji


One theory for how the sounds reported by the diplomats might have been generated was that it involved something called the “Frey effect,” named after Allan H. Frey, an American scientist who found that microwaves aimed at the head can cause a clicking sound. But according to Kenneth Foster, a professor of bioengineering at the University of Pennsylvania and an author of a 1974 study on the effect, the sound would be so soft that near silence would be needed for a person to detect it. “It is just a totally incredible explanation for what happened to these diplomats,” he said. “It’s just not possible. The idea that someone could beam huge amounts of microwave energy at people and not have it be obvious defies credibility. There’s nothing behind it. You might as well say little green men from Mars were throwing darts of energy.”

Ultrasound has also been proposed as a possible cause of the diplomats’ symptoms, based on the observation that at high-enough levels, it can cause an “acoustic bubble” to form in liquids. This has led to speculation that such bubbles could form in the inner ear or brain, causing injury. Timothy Leighton, a professor of ultrasonics and underwater acoustics at the University of Southampton in England, literally wrote the book on acoustic bubbles (called, naturally enough, “The Acoustic Bubble”). As he explained it to me: “If you put an ultrasound transducer next to a liquid, the way we do in ultrasonic cleaning baths, you can cause bubbles to form. But if you send it through the air, you will never get that effect. Acoustic bubbles only happen if you have direct contact. If someone goes for a pregnancy ultrasound, the doctor holds the transducer up against the body. They even have to put a slippery gel on the woman’s abdomen, because if there is even a microscopic air gap, the ultrasound won’t propagate.”

Devices that generate high-pitched noise are sometimes used by businesses to deter young people from congregating around a certain area, because they can perceive it and find it annoying, while many older people’s ears cannot hear it. But while exposure to extremely loud noises can certainly induce hearing loss or tinnitus, noise has never been shown to produce brain damage in humans. “We have no evidence of that at all, and no real theories of how it could possibly do that,” Leighton said. “The idea of some kind of secret ultrasonic death ray going through the air to hit you, it’s nonsensical.” 
But then what caused the diplomats’ brain damage? That turns out to be something of a trick question, because many neurologists and psychologists assert that the JAMA paper provided no convincing evidence of any brain damage at all. Certainly they published no images of physically damaged brains (and in any case, no such visibly apparent injury is typically associated with concussions). Instead, the diagnosis was based on the diplomats’ symptoms and their performances on tests of balance, hearing, memory, eye movement and the like. Even most of those test results — almost none of which are strictly objective, critics say — were within the range of normal.


For all their mystery, functional disorders are not diagnosed simply after eliminating every possible “normal” disorder that might be causing a patient’s symptoms. Rather, neurologists look for signs and symptoms that are inconsistent, varying even during the course of an examination, and incongruent with what they expect to see in known, objective disorders caused by a physical injury or illness. One of the most remarkable aspects of the diplomats’ illnesses, for instance, is that even if all of them experienced an actual blow to the head shortly before their symptoms appeared — which none of them did — most should have fully recovered in a matter of days, weeks or months, as is standard following a minor head injury. Instead, many of them experienced symptoms that remained steady or worsened over a period of months, and some continue to suffer chronic, perhaps lifelong symptoms. While usually inconsistent with a concussion, such long-term effects are routinely seen in cases of a psychogenic disorder.

The biological underpinning of how such disorders are kicked into gear remains, as with many other neurological disabilities, only faintly understood. The experience is thought to be brought on, in part, by undue attention, fear and expectation. But these conscious processes are only part of the story; much more happens at the deep, neurological level where all our perceptions, feelings, movements and memories are encoded. For instance, a 2016 study of people with functional disorders, co-written by Hallett, found decreased functional connectivity from a region of the brain involved in self-agency — the perception of having control over your actions. Another study Hallett co-wrote found more gray matter in the left amygdala and other emotion-regulating areas in the brains of people with functional disorders, and less gray matter in the left sensorimotor cortex, where movements and sensations are controlled. Essentially, such findings suggest, functional disorders appear to hijack the normal neurological mechanisms by which we experience our body.

“These disorders challenge our views of what perception really is, and the truth of our perceptions,” Stone told me. “In some instances they are disorders of perception and are giving us a window into how perceptions go wrong.”

To sufferers, of course, the details of how a functional disorder develops matter less than simply getting help to recover. Consider the case of Jason Lindsley. One night in March 2016, Lindsley — then a healthy 21-year-old college student living in Lancaster, Pa. — felt flulike symptoms coming on, with fever and chills. After a couple of hours, he began to feel strangely numb, from head to toe. But by 1 a.m., the numbness had gone, replaced by extreme pain in his lower back.

At that point, Lindsley’s mother, who is a nurse, drove him to the local emergency room. “They decided they wanted to treat me for lower back pain,” Lindsley told me. “I’ve had football injuries from the past. I have a herniated disk. So they gave me pain medication, said try to relax and sent me home.”

That was on a Friday night. By Monday morning, the pain medicine had run out, but the pain persisted. On Tuesday, he saw his family physician, who referred him to a spine specialist. The next morning, Lindsley’s legs felt wobbly. By Thursday, he was having such trouble walking that his parents gave him a bar stool to use as a makeshift walker. By Friday morning, he was unable to stand.

The spine specialist he saw that day offered a tentative diagnosis of Guillain-Barré syndrome, a neurological disorder caused by an immune-system attack on the peripheral nervous system. Taken immediately to the hospital, he was placed in the intensive care unit and given intravenous immunoglobulin as treatment.

But he didn’t recover. After multiple blood tests, spinal taps, M.R.I.s and physical exams, doctors at his local hospital and at the University of Pennsylvania could find nothing physically wrong with him. According to Lindsley, he was told by a senior neurologist at Penn, “I guess we’ll have to figure it out at the autopsy.” The neurologist gave him a diagnosis of conversion disorder, the century-old Freudian term. But three psychologists whom Lindsley subsequently consulted could find no deep, dark psychological torment underpinning his paralysis.

A year later, despite months of physical therapy aimed at strengthening his leg muscles, he remained unable to stand without assistance. Then, as Lindsley was resigning himself to a lifetime of disability, his mother found a video online of Jon Stone talking about functional disorders. She insisted that her son watch it. “With the conversion disorder,” Lindsley recalled, “the doctors were labeling me with a mental problem, like I was doing this to myself, and it was my fault. Dr. Stone said that is absolutely not the case. I thought, maybe this guy is right — that your brain is so powerful it can trick itself into doing whatever it wants.”

Lindsley emailed Stone, who put him in touch with Kathrin LaFaver, a neurologist who trained under Hallett at Ninds and now runs a clinic for functional-movement disorders — one of the few in the United States — at the University of Louisville. Lindsley decided to give her clinic a shot. In March 2017, almost exactly a year after his symptoms began, he entered in a wheelchair. A week later, he walked out on his own power as if nothing had ever been wrong.

The treatment consisted of what LaFaver calls motor retraining, designed to overcome Lindsley’s resistance to normal movements. Physical therapists began by asking him to make minuscule movements of his feet, assuring him, over and over, that he could do what his brain was telling him he couldn’t. He also spent part of each day undergoing cognitive behavioral therapy aimed at learning relaxation strategies and focusing on his own well-being.

LaFaver’s clinic has drawn patients from across the United States. “There’s a huge unmet need,” she told me. “More patients have these disorders than have multiple sclerosis. Everyone has heard of multiple sclerosis. There is an M.S. treatment center in every large city. And yet here we are with these functional disorders, which are more common, yet nobody has heard of it, and there are almost no treatment centers. It’s mind-boggling.”

‘Even just seeing a news item on multiple sclerosis can be the trigger for some individuals to develop similar symptoms.’

To see and hear for myself whatever happened in Cuba, I went to Havana for five days in October. In a meeting there at the headquarters of the Cuban Ministry of Foreign Affairs, Johana Tablada, the ministry’s U.S. deputy general director, complained bitterly of how her country has been accused of having knowledge of the attacks.
“What we know is what did not happen,” she said. “We know there was not a person who came and attacked Americans with a weapon.”

On the street where the first diplomats said they heard strange noises and became sick, I heard nothing but the odd bleating of a goat. A neighbor told me that nobody who lived nearby had heard anything out of the ordinary. “Only them,” the man said.
The State Department has now identified 26 U.S. diplomats and family members as having become sick in Havana, as well as one additional confirmed case that was reported last year in Guangzhou, China.
“I’m not really doing too well,” Catherine Werner, who became ill while working in Guangzhou, told me. “My balance is so impacted that I need certain aids to help me. Now I use a balance vest and a cane. It’s something I’m struggling with because I’m only 32. I went from managing a team of very smart, driven individuals and working on really critical trade policy and promotion issues to not being able to recall very basic words, not being able to process very simple tasks and problems. My whole life has really been derailed.”
The noises she heard were unlike what the initial group of sickened officials in Cuba reported. “I experienced a very low, pulsing sound, mostly during the night,” she said. “It was waking me up. I thought at first it was the air-conditioning system making a funny noise. It sounded mechanical, like a very low but humming, oscillating sound.”

Her initial symptoms, too, included some that other diplomats have not reported. While she experienced tinnitus, nausea and dizziness, as others did, she also developed hives and nosebleeds. “My hair started falling out in clumps,” Werner told me. “Yeah, I was really sick.”

Since the initial Canadian report, more diplomats or family members from that country have been identified with symptoms, bringing the total number to at least 15. When it announced a new case in January, the Canadian government said it would cut its diplomatic staff in Cuba by up to half.

On March 27, Secretary of State Mike Pompeo reiterated the claim that the U.S. diplomats were the victims of “health attacks.” “We have not been able to resolve this yet,” he said. “Some of the best minds, not just in government, but across the global medical system, have not yet been able to identify and connect up so that we can find the cause, so that we can go attack the problem set. It has proven incredibly vexing.”

One promising piece of news is that among the doctors at the National Institutes of Health asked last year to examine the diplomats was Mark Hallett. He was not, however, appointed to the task force established by the State Department. When I requested an interview with Hallett, he replied in an email that he did not think he would be allowed to talk. “The N.I.H. is concerned about us in H.H.S. [Health and Human Services] getting involved with matters of the State Department,” he wrote. (Additionally, the N.I.H. explained Hallett’s silence by saying it would be premature for him to talk about the evaluation of the patients.) He was also denied permission to be listed as a writer of the letter that Stone submitted to JAMA in response to Smith’s paper.

To find out more about why one of the world’s leading experts on functional disorders would be forbidden to express his views on the matter, I submitted a Freedom of Information Act request. I eventually received 79 pages of material, including the email in which the director of Ninds apparently told Hallett that he could not speak with me. The entire text of the email was redacted.

The idea that the diplomats have a functional disorder is firmly rejected not only by State Department officials but also by the diplomats I spoke with and doctors who have treated them, who are convinced that the symptoms were caused by something external, physical, “real.”

“I had everything from brain scans to physical exams to advanced eye exams, the whole nine yards,” said the foreign-service officer who became sick while in Havana. “These tests demonstrated a brain injury. It’s a disservice to those of us who were injured to suggest that we were just making it up in our minds.”

“All the people on my team who have examined these folks believe it’s real,” Smith said. “It’s only people outside who think it’s psychogenic.”

Peter Bodde is a retired ambassador who in 2018 led an Accountability Review Board that examined the State Department’s response to the diplomats’ illnesses. “People will have their opinions,” he said. “But our colleagues were injured, and they were attacked, and that’s real, and you can see it.”
But what if the State Department, the Penn doctors and the diplomats themselves are wrong, and those who see the possibility of an outbreak of functional disorders are right?

“If people have a functional disorder, it’s obviously very damaging to tell them they have a brain injury,” Stone said. “Telling someone they have a traumatic brain injury is not going to help them if they actually have a functional disorder. And it can stop them from getting therapy that might help them.”

Millennial Home Buyers Might Never Come Knocking

The tepid U.S. housing market is still waiting for a buying surge from the generation that entered the workforce during the recession. It may never come.

By Justin Lahart


Illustration: ROB WILSON



More than a decade has passed since the financial crisis hit, yet the housing market remains in a deep funk. Fear not: A wave of millennial buyers is about to hit the scene.

Right?

One of the weirder things about the current economic recovery is how little housing has contributed to it. Unlike past expansions, which have tended to start with a flurry of home buying, the housing market remains deeply depressed. Last year, there were a combined 5.4 million new and existing homes sold. That was about even with 1998’s tally, when there were 50 million fewer people living in the U.S. The lasting slump is a reminder of just how severe the financial crisis was and how housing itself was at its epicenter.


Now the millennial generation of Americans born from 1981 to 1995 have reached the age when people tend to buy homes. They could buy a lot of them. As of last year, there were 67.7 million millennials, according to the Census Bureau. At the same age, the membership of Generation X—the prior demographic cohort—was about 3.7 million people shy of that total.

But people have been talking for a while now about how millennials are going to reinvigorate the housing market, and so far they haven’t. The homeownership rate among households headed by someone under 35 was 35.4% as of the first quarter, according to the Census Bureau. In 1999 that level was about 40%.

A case can be made that the millennial wave has merely been delayed. The recession that ended in 2009 was unusually severe, and it hit millennials particularly hard, just as many of them were entering the workforce. The unemployment rate among workers aged 20 to 24 shot as high as 17% in 2010. It would have been even higher if more young people hadn’t opted to continue schooling instead of joining the labor force or simply stopped looking for work.

As a result of millennials’ delayed entry into the workforce, it is probably taking them longer to develop the financial wherewithal to buy a home. Many also are saddled with higher levels of student debt than previous generations, making mortgage approvals more daunting. Moreover, the tough labor market they faced early in their careers may have delayed other life events that often coincide with the decision to own a home. Compared with previous generations, for example, millennials have been getting married and having children later.

Some of the scars left by the financial crisis may never fully fade, though, limiting the number of millennials who achieve homeownership at any point in their lives. Take, for instance, the belief widely held until the bust that houses were a great investment because home prices never fall. Millennials learned during the crisis that this simply isn’t true. Like previous generations who came of age during hard economic times, they may be less willing to take on financial risks than people born in more prosperous periods.



Changes in the regulatory and financial environment have also made homeownership less enticing, according to Bank of America Merrill Lynch economist Michelle Meyer. Up until the crisis, government officials considered increased homeownership desirable, claiming it helped Americans accumulate wealth and build healthy communities. That notion has lost some currency, and the 2017 tax cuts actually reduced the financial incentives for homeownership. Furthermore, banks have become more risk-averse since the crisis. Many have become more eager to extend pricey mortgages to wealthier clients than to lend to those seeking smaller home loans, as do many first-time buyers.

A greater preference for urban living also could make millennials less likely to become homeowners than previous generations. Economists at JPMorgan point out that a greater share of millennials live in the central city of a metropolitan area with a population of at least 500,000 than did Generation X at the same age. Moreover, fewer urban millennials have decamped to the suburbs in their 30s than previous generations.

Home prices are, of course, substantially higher in many cities than in outlying areas, and while the higher incomes offered by urban jobs help mitigate that, for many city-dwelling people they remain out of reach. Only 33% of New York City homes are owner-occupied, for example, compared with 64% nationally.

It still seems likely that, as they age, many millennials will catch up with their predecessors and finally buy a place of their own. But when it comes to the housing market, the millennial buying wave may end up being little more than a ripple.

Gold’s Run Signals Worrying Future

The Federal Reserve’s easing signals have given gold a boost, but the move portends economic troubles

By Lauren Silva Laughlin


After a long period of lackluster performance, gold has jumped roughly 9% in the past month. Photo: Mike Groll/Associated Press



Gold has taken the lead. The asset, at times considered a haven, has hit an almost six-year high after the Federal Reserve signaled that it was willing to lower interest rates. If rates continue to fall, expect further jumps in the yellow metal. But the moves portend some bad news.

The price of gold has sometimes risen in tandem with inflation, or in response to financial stress around the world. Lately though it appears to be responding to signals sent by central banks.

This helps explain why, after a long period of lackluster performance, gold has jumped roughly 9% in the past month, even as stock prices have also risen.

Following the Fed’s dovish signals Wednesday, the benchmark 10-year Treasury yield went below 2% on Thursday, its lowest level in several years, and gold rallied by around 3.5%.

Gold tends to rise when after-inflation returns on other assets perceived as safe, such as government bonds, decline. Pimco has tracked the relationship between gold prices and interest-rate yields, and concludes that for every 1 percentage point decline in inflation-adjusted yields, gold prices should move up by roughly 30%.

In that light, the recent jump in gold prices looks fairly tame. Since the end of October, inflation-adjusted yields on 10-year Treasurys have fallen roughly 0.9 percentage point, while gold is only up about 13%, Pimco notes. The fund manager figures gold should have risen 20% to 30% in total based on the yield movement.

Of course, the question now is where yields are going. Earlier this month, JPMorgan Chasecut its year-end prediction for the 10-year Treasury yield to 1.75%, down sharply from its prediction in March of 2.9%.

Other central banks are pushing in the same direction. In the U.K., 10-year yields fell close to their lowest levels since late 2016 after a downbeat assessment on the economy from the Bank of England. Meanwhile, German yields remain deeply negative as the European Central Bank nears further easing.

Investors have more than just boosting their gold positions to consider. The underlying cause of the depression in yields is worsening global sentiment about growth, partly due to the U.S.-China trade dispute. Gold may offer some protection. More worrying is what investors are protecting themselves from.

Facebook’s Crypto Plan Borrows From China

The Chinese precedents suggest the social-media giant needs to focus less on crypto engineering and more on improving the use case for Libra

By Jacky Wong


Tencent's WeChat, which started as an instant-messaging app, now also runs WeChat Pay, one of China’s two top mobile-payment systems. Photo: Zhao YanxiongVCG/Getty Images          


Facebook ’s FB -1.74%▲ plan to reinvent money owes much to the runaway success of payments via social media in China, only with a crypto spin.

The problem it will bump up against in the U.S. and Europe is that consumers already have decent mobile-payment options using established currencies, regulations and financial plumbing. A few specific cases such as cross-border transfers aside, it also isn’t clear what obstacle Facebook’s cryptocurrency would overcome.

The U.S. social-media giant spelled out Tuesday its plan for a new cryptocurrency, Libra. Sending remittances across borders is the initial focus, but Facebook hopes people will eventually use Libra to pay bills or buy goods and send money to each other on its messaging apps WhatsApp and Messenger.

Facebook wants to leverage its billions of social-media users to expand into digital payments.

That approach has worked in China. Tencent’s WeChatservice, which started as a WhatsApp-like instant-messaging app, now also runs WeChat Pay, one of China’s two top mobile-payment systems.

WeChat Pay took off in 2014 when the app started to enable its users to send red packets to each other—a common practice during Lunar New Year. Merchants also hand out red packets through WeChat, which has 1.1 billion monthly active users, to attract customers. Peer-to-peer transfers like that didn’t make money directly for Tencent, but they boosted adoption of the service. People can now use WeChat Pay to settle almost everything, including bills online and lunches at restaurants. Third-party mobile payments are ubiquitous in China, with transactions worth 160 trillion yuan ($23.2 trillion) last year, according to data research firm BigData-Research.

It would be difficult for Facebook to achieve the same dominance, both because of privacy concerns and the presence of alternatives. Apple Pay and other services offer mobile-phone payments using the existing financial architecture. Facebook may think cryptocurrency is the best way to assuage consumer fears about its use of personal data. Libra is minted by an independent, not-for-profit organization, while Calibra, Facebook’s subsidiary that offers a digital wallet for using Libra, promised to separate social data from financial data.

But that seems an unnecessarily convoluted way for people to buy coffee at Starbucks .Even though Libra’s price should be relatively stable compared with other cryptocurrencies such as bitcoin—it is backed by a basket of global currencies or other investments—it will still fluctuate. Nobody wants the price of a cup of coffee to change every day.

To succeed in payments, Facebook needs to focus less on crypto engineering and more on understanding how and why its social-media users use payment apps.


Will A False Flag Iran War Cause A Financial Crisis?


Just a couple of weeks ago the financial world’s biggest worry was the plunging price of oil. Supply was up, stockpiles were building and speculation was pointing towards $40 a barrel, a price at which the fracking/shale oil “miracle” would evaporate. A trillion dollars of related junk debt would default, taking a big part of the leveraged speculating community along for the ride.

Then it all changed. Someone attacked some ships and oil infrastructure in the Middle East, the US and Saudi Arabia accused Iran, and now the fear is that a major regional war will interrupt the flow of oil, sending its price way up and causing a financial crisis at least as severe as a shale oil debt collapse.

This is a legitimate concern, for two reasons.

First, oil shocks have happened in the past, most notably during the Arab-Israeli war of the 1970s. So we know what they do, and it isn’t pretty. Gas prices jump, workers can’t afford their commute, the economy slows dramatically and pretty much everyone other than domestic energy companies suffers badly.

Second and potentially more serious, the pretext for this war is so blatantly false that it risks destroying what little creditability the US government has left. Think about it: With the US doing everything it can to delegitimize and destabilize Iran while positioning assets for an invasion, Iran’s leaders … start attacking oil tankers in its offshore waters.

Does that make sense? Of course not. Much more likely is that this is yet another false flag – that is, an incident faked to give a pretext for war – and a clumsy one at that.

For readers who aren’t clear on the false flag concept and its ubiquity in geopolitics, here are just a few of the dozens of documented examples:
  • Japanese troops blew up a train track in 1931, blamed it on China and used it to justify the invasion of Manchuria.

  • After taking power, the Nazis burned down their own parliament building and blamed the communists. Later on, they faked attacks on German citizens and blamed the Poles, to justify the subsequent invasion of that country.

  • In 1939 the Soviets shelled one of their own villages and blamed Finland, prior to invading.

  • In 1954 Israeli terrorist cells operating in Egypt bombed U.S. diplomatic facilities, leaving behind evidence implicating Arabs.

  • The CIA hired Iranians in the 1950s to pose as Communists and stage bombings in Iran in order to ignite a rebellion against the democratically-elected government. After the rebellion succeeded the US installed a hand-picked dictator.

  • The US staged a naval engagement — the Gulf of Tonkin incident – and blamed the North Vietnamese, providing a pretext for entering the Vietnam War.

  • The FBI used provocateurs in the 1950s through 1970s to carry out violent acts and falsely blame them on political activists.

  • In 1984, Israel faked radio messages that linked Lybia to terrorism. The US bombed Libya immediately thereafter.

  • Russian blew up apartment buildings in 1999 and falsely blamed it on Chechens, in order to justify an invasion of Chechnya
The list goes on seemly forever. But these examples are enough to make the twin points that 1) lots of countries employ false flags attacks, and 2) the US is especially fond of them.

There’s just one problem this time: Everyone is on to it. Even the New York Times, which has never met a Mid East war it didn’t love, sees through the deception:

As Trump Accuses Iran, He Has One Problem: His Own Credibility
To President Trump, the question of culpability in the explosions that crippled two oil tankers in the Gulf of Oman is no question at all. “It’s probably got essentially Iran written all over it,” he declared on Friday. 
The question is whether the writing is clear to everyone else. For any president, accusing another country of an act of war presents an enormous challenge to overcome skepticism at home and abroad. But for a president known for falsehoods and crisis-churning bombast, the test of credibility appears far more daunting. 
For two and a half years in office, Mr. Trump has spun out so many misleading or untrue statements about himself, his enemies, his policies, his politics, his family, his personal story, his finances and his interactions with staff that even his own former communications director once said “he’s a liar” and many Americans long ago concluded that he cannot be trusted. 
Fact-checking Mr. Trump is a full-time occupation in Washington, and in no other circumstance is faith in a president’s word as vital as in matters of war and peace. The public grew cynical about presidents and intelligence after George W. Bush’s invasion of Iraq based on false accusations of weapons of mass destruction, and the doubt spilled over to Barack Obama when he accused Syria of gassing its own people. As Mr. Trump confronts Iran, he carries the burden of their history and his own. 
“The problem is twofold for them,” said John E. McLaughlin, a deputy C.I.A. director during the Iraq war. “One is people will always rightly question intelligence because it’s not an exact science. But the most important problem for them is their own credibility and contradictions.” 
The task is all the more formidable for Mr. Trump, who himself has assailed the reliability of America’s intelligence agencies and even the intelligence chiefs he appointed, suggesting they could not be believed when their conclusions have not fit his worldview. 
All of that can raise questions when international tension flares up, like the explosion of the two oil tankers on Thursday, a provocation that fueled anxiety about the world’s most important oil shipping route and the prospect of escalation into military conflict. When Mr. Trump told Fox News on Friday that “Iran did do it,” he was asking his country to accept his Word. 
“Trump’s credibility is about as solid as a snake oil salesman,” said Jen Psaki, who was the White House communications director and top State Department spokeswoman under Mr. Obama. “That may work for selling his particular brand to his political base, but during serious times, it leaves him without a wealth of good will and trust from the public that what he is saying is true even on an issue as serious as Iran’s complicity in the tanker explosions.”

Combine these two problems – a Middle East war sending oil much higher, and a near-universal lack of belief in the rationale for that war – and the remaining faith in American competence and honesty might evaporate.

This takes us back to finance, specifically to a monetary system based on fiat currency which depends for its value on our collective trust in the people managing it.

The Fed will respond to an oil crisis by cutting interest rates back to – or below – zero. But will this be met with euphoria as in the past or with skepticism, as happened in Europe recently? If it’s the latter, remember what gold did the last time there was both an oil shock and a loss of faith in government:

gold price 1970s false flag

Beef Just Lost Its Place In The Fast Food Burger World

Last year I read an article about the Impossible Burger, a plant-based patty that was supposed to rival the real thing. Intrigued, I called a friend who lives in a neighboring town and appreciates strange but environmentally cool things, and we met at a restaurant that served Impossible Burgers.

They were good. Close to meat in taste and texture and – if the marketing hype was to be believed – produced in a way that would obviate the need for animal factory farms with all their cruelty and pollution.

There was just one problem. Those Impossible Burgers were $15.95, which is a lot in a $5 Whopper world. So, as promising as the concept was, the price would have to fall considerably before plant-based or lab-grown burgers changed the world.

It only took a year. Thanks to the fact that plants are both cheap to grow and infinitely scalable, the price of an Impossible Burger has fallen to the point that Burger King now offers an Impossible Whopper for only $1 more than the beef variety. And that’s just the beginning. Economies of scale will keep driving down costs, resulting in burgers that taste like beef, are healthier than beef, and, crucially, are dramatically cheaper than beef.

At that point hamburger, rendered obsolete by better tech, will simply disappear from the supply chain. Cows will then go the way of horses at the dawn of the automobile age, shrinking to a tiny fraction of their current population, no longer enslaved and mistreated, and free to return to their original place in nature.

Here’s an example of the kind of reporting you’ll be seeing a lot more of in coming years, courtesy of technology site CNet:

Burger King made a meat-free Impossible Whopper and it tasted like real burger
The Impossible Burger is coming to Burger King as the Impossible Whopper, in a market test that could lead to the largest restaurant industry embrace yet of a plant-based meat substitute. The Impossible Whopper will feature the same bun, cheese and condiments as a traditional Whopper, but with Impossible’s plant-based patty where animal meat is normally found.  
Fifty-nine Burger King stores in the St. Louis area will offer it starting today, with a potential expansion to the other 7,100 US restaurants later in the year. Burger King is making an unusually high-profile endorsement of plant-based meat, while Impossible is facing its own Tesla Model 3 moment in terms of going mainstream.  

I got a jump on the debut when I arrived at Impossible’s Silicon Valley headquarters carrying two bags of Whoppers from the local Burger King. There, J. Michael Melton, Impossible’s technical sales and culinary manager, cooked up a batch of the patties they’re supplying to Burger King, using the same broiler Burger King uses. He swapped them in for the beef in the Whoppers (with professional dexterity that somehow left the burgers appealing) and I took a couple bites.  
The remarkable thing was how unremarkable they were: Nothing gives away the fact that this Whopper contains a different main ingredient. 
The patties supplied to Burger King will be based on Impossible’s new 2.0 formulation that was announced at CES in January, 2019. Among other upgrades, this formulation holds up better in restaurant environments like sitting in hot holding trays or the 6-inch drop at the end of the conveyor that grills the patty for exactly 2 minutes and 35 seconds at 630 degrees. 
“We’re making meat from plants. That’s never been done before,” Impossible Foods founder Pat Brown told me, tacitly demoting competitor Beyond Meat’s plant-based burger, which has been offered at most of the 1,100 Carl’s Jr. restaurants since the beginning of 2019. “People have made plant-based replacements for meat, but they haven’t made plant-based meat.” 
One way the Impossible Whopper will indeed differ from the original is price, costing a significant $1 more in an industry where brands have gone to war brandishing menus of items that only cost a dollar. As with electric cars, price parity with the established choice is a future linchpin to mainstream success. 
“Once we have products that taste the same or better and that cost less, plant-based and clean meat will simply take over,” according to Bruce Friedrich, executive director of the Good Food Institute, which champions plant- and cell-based meats.  
“So very little will change in people’s everyday lives as more and more meat is produced either from plants or from cells. Consumers will continue to buy burgers, chicken sandwiches and sausages (but) those products will simply not have the adverse impact on our environment and global health.”


Now the real fun begins, as plant-based burgers try to use their first-mover advantage to head off the onslaught of lab-grown meat start-ups that are raking in hundreds of millions of Silicon Valley venture capital dollars. Because “cultured meat” is a branch of biotech, it will, without doubt, improve exponentially in coming years, moving beyond hamburger and chicken nuggets into steaks and sushi. The winners are impossible to predict, but the process is capitalist creative destruction at its most spectacular — and great news no matter how you slice it.

How Close Should Your Wealth Be?

By Jeff Thomas




Recently, an eminent gold advisor, whom I know and have a high regard for, stated that holders of precious metals would be well served by keeping their metals in a remote location, saying, “Distance equals security.” (He lives in the US and recommends storage in New Zealand, as it’s as far away from him as possible.)

Another prominent metals advisor, whom I also know well and respect, contacted me after the release of this statement to say that he doesn’t necessarily agree with the idea, even though he himself stores gold in a country outside his own.

So, what’s the real answer? Is the investor better off keeping his metals as close to home as possible or as far away as possible?

Well, the answer should not be defined by distance at all. It should be defined by accessibility and safety.

Accessibility

Keeping your precious metals as close to you as possible is the ideal. You unquestionably maximize your control over them by having them within arm’s length. But there’s a caveat: This works only as long as safety can be achieved and maintained.

The old idea of “midnight gardening” – keeping metals in a box buried in the back yard – is regarded as primitive, but conceptually, it’s quite a good one. I’ve often advised people to keep a stash of wealth at home. Granted, a box under the rosebushes has its disadvantages and a more sophisticated choice might be a home safe.

A home safe is costly to install but absolutely worth the expense. Hopefully, you’ll be handy enough to install it yourself, as you won’t wish to trust workmen with the job.

You’ll want to prepare yourself by having some of your wealth (however great or small) in gold bars or coins, plus some silver coins or rounds. These latter items annoyingly take up more space than gold, platinum, etc., but should a currency crisis occur, as appears very likely, you’ll have a stash of coins that are worth about fifteen dollars each (at current value) as spending money. In any economic crisis, precious metals quickly rise in popularity as being “real” money, and soon, even your grocer or gas station attendant will know what an ounce of silver is worth.

This is likely to work well in a crisis, but your salvation would be brief, as it would only take a period of weeks before your neighbours – who are holding only worthless paper bank notes – begin to realise that you’re the only guy in town who has something of real worth. They will not think fondly of you as you become the only one in the neighbourhood who repeatedly is able to secure essential goods, when they cannot.







Therefore, this security is only a temporary condition.

Safety

The second concern will be that, your government, if it’s the EU, US or Canada, has already passed confiscation laws. Historically, countries that are in the throes of monetary crisis almost always institute protective tariffs, then currency controls and confiscations.

This means that, if you live in one of the above jurisdictions, you can expect sudden implementation of controls that would disallow your ability to use precious metals as currency and/or result in confiscation.

In the latter scenario, the precious metals you have would be taken from you unless you hide them, making you a criminal. Either way, you’d be robbed of your ability to use your wealth.

Therefore, you’d want to possibly keep a small amount (say, $5,000–10,000) in silver for emergency use, but no more. Your real wealth would need to leave the jurisdiction prior to the implementation of controls.

So, does that mean that it’s beneficial to send your wealth as far away as possible? Well, not necessarily. What you’d want to do is find the safest jurisdiction. There are several in the world, so you’d pick the one that’s closest, not the one that’s furthest.

Well, then, what constitutes the ideal safe haven?

• No direct taxation of any kind. No taxes or duties that apply to the purchase, ownership, storage or sale of precious metals. No capital gains tax; no inheritance tax.
• World-class financial system to provide auxiliary services.
• Stable government with consistent history for economic stability that caters to international investors.
• Minimal wealth legislation and regulation, to ensure a minimum of red tape in processing purchases, sales, transfers and shipment of metals.

In such jurisdictions, the wealth and power of political leaders is based upon satisfying international investors. If they were to suddenly betray investors, their power would evaporate in the amount of time it would take for investors to transfer their wealth out of the former haven. (In today’s world, that often means a keystroke on a computer.)

This is not to say that there’s a guarantee of safety anywhere in the world. There isn’t. The idea is to select the safest of all jurisdictions, where loss is the least likely. The reason for expatriating wealth is as simple as:

Home jurisdiction – loss highly likely;

Selected jurisdiction – loss highly unlikely.

In moving your wealth to relative safety, you pick the closest jurisdiction that satisfies all the bullet points above. Then you find the best facility in that jurisdiction. In Asia, that might mean Singapore or Hong Kong. In the Western hemisphere, that might mean the Cayman Islands. In Europe that might mean Austria or Switzerland.

To sum up, ideally, you want all your metals at arm’s length, where you can grab them if necessary. You only push them further away to attain greater safety, but no further than necessary. After all, you still want to get to them as quickly as possible.

Once a crisis is under way, it quickly becomes impossible to expatriate wealth.

However, if you’ve previously successfully expatriated your wealth, all you need do is move to where you wealth is waiting and sit out the crisis.

Editor’s Note: As the US speeds closer to widespread economic collapse, choosing where to put your money is crucial to ensuring it doesn’t get caught in the crosshairs.