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David Galland is Managing Director of Casey Research, LLC. (, and the Executive Director of the Explorers' League. His career in the resource and financial services industry dates back to a stint working underground at the Climax mine in Colorado, following college.... More
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  • Breakfast With A Lord Of War

    For reasons that will become apparent as you read the following article, I was quite reluctant to write it.

    Yet, in the end, I decided to do so for a couple of reasons.

    The first is that it ties into Marin Katusa's best-selling new book, The Colder War, which I read cover to cover over two days and can recommend warmly and without hesitation. I know that Casey Research has been promoting the book aggressively (in my view, a bit too aggressively), but I exaggerate not at all when I tell you that the book sucked me in from the very beginning and kept me reading right to the end.

    The second reason, however, is that I have a story to tell. It's a true story and one, I believe, which needs to be told. It has to do with a breakfast I had four years ago with a Lord of War.

    With that introduction, we begin.

    Breakfast with a Lord of War

    In late 2010, I was invited to a private breakfast meeting with an individual near the apex of the US military's strategic planning pyramid. Specifically, the individual we were to breakfast with sits at the side of the long-serving head of the department in the Pentagon responsible for identifying and assessing potential threats to national security and devising long-term strategies to counter those threats.

    The ground rules for the discussion-that certain topics were off limits-were set right up front. Yet, as we warmed up to each other over the course of our meal, the conversation went into directions even I couldn't have anticipated.

    In an earlier mention of this meeting in a Casey Daily Dispatch, I steered clear of much of what was discussed because frankly, it made me nervous. With the passage of time and upon reflection that it was up to my breakfast companion, who spends long days cloaked in secrecy, to know what is allowed in daylight, I have decided to share the entire story.

    During our discussion, there were four key revelations, each a bit scarier than the last.

    Four Key Revelations

    Once we had bonded a bit, the military officer, dressed in his civvies for the meeting, began opening up. As I didn't record the discussion, the dialogue that follows can only be an approximation. That said, I assure you it is accurate in all the important aspects.

    "Which country or countries most concern you?" I asked, not sure if I would get an answer. "China?"

    "Well, I'm not going to say too much, but it's not China. Our analysis tells us the country is too fractured to be a threat. Too many different ethnic and religious groups and competing political factions. So no, it's not China. Russia, on the other hand…" He left it at that, though Russia would come up again in our conversation on several occasions.

    As breakfast was served, the conversation meandered here and there before he volunteered, "There are a couple of things I can discuss that we are working on, one of which won't surprise you, and one that will."

    "The first is precision-guided weaponry." Simply, the airplane and drone-launched weaponry that is deployed so frequently today, four years after our breakfast conversation, that it now barely rates a back-page mention.

    "The second," he continued," will surprise you. It's nuclear armaments."

    "Really? I can't imagine the US would ever consider using nuclear weapons again. Seriously?"

    "Yes, there could be instances when using nukes might be advisable," he answered. "For example, no one would argue that dropping atomic bombs on Japan had been a bad thing." (I, for one, could have made that argument, but in the interest of harmony didn't.)

    "Even so, I can't imagine a scenario that would warrant using nukes," I persisted. "Are there any other countries doing the same sort of research?"

    "Absolutely. For example, the Russians would love to drop a bomb that wiped out the people of Chechnya but left the infrastructure intact."

    "So, neutron bombs?"

    "Yeah, stuff like that," he added before turning back to his coffee.

    "Okay, well," I continued, "you at least have to admit that, unlike last century when hundreds of millions of people died directly or indirectly in world wars, pogroms, and so forth-most related to governments-the human race has evolved to the point where death on that scale is a thing of the past. Right?"

    I kid you not in the slightest, but at this question the handsome, friendly countenance I had been sitting across from morphed as if literally a mask had been lifted away and was replaced with the emotionless face of a Lord of War.

    "That would be a very poor assumption," he answered coldly before the mask went back on.

    I recall a number of thoughts and emotions coursing through my brain at his reply, most prevalently relief that I had moved with my family to La Estancia de Cafayate in a remote corner of Argentina. We didn't move there to escape war, but after this conversation, I added that to my short list of reasons why the move had been a good idea.

    Recapping the conversation later, my associate and I concurred that Russia was in the crosshairs and that if push came to shove, the US was fully prepared to use the new nuclear weapons being worked on.

    Four Years Later

    As I write, four years after that conversation, it's worth revisiting just what has transpired.

    First, as mentioned, the use of precision-guided weaponry has now firmly entered the vernacular of US warmaking. Point of fact: there are now more pilots being trained to fly drones than airplanes. And the technology has reached the point where there is literally no corner on earth where a strategic hit couldn't be made. Even more concerning, the political and legal framework that previously caused hesitation before striking against citizens of other countries (outside of an active war zone) has largely been erased. Today Pakistan, tomorrow the world?

    Second, instead of winding back the US nuclear program-a firm plank in President Obama's campaign platform-the Nobel Prize winner and his team have indeed been ramping up and modernizing the US nuclear arsenal. The following is an excerpt from a September 21, 2014 article in the New York Times, titled "U.S. Ramping Up Major Renewal in Nuclear Arms"…

    KANSAS CITY, Mo. - A sprawling new plant here in a former soybean field makes the mechanical guts of America's atomic warheads. Bigger than the Pentagon, full of futuristic gear and thousands of workers, the plant, dedicated last month, modernizes the aging weapons that the United States can fire from missiles, bombers and submarines.

    It is part of a nationwide wave of atomic revitalization that includes plans for a new generation of weapon carriers. A recent federal study put the collective price tag, over the next three decades, at up to a trillion dollars.

    Third, the events unfolding in Ukraine, where the US was caught red-handed engineering the regime change that destabilized the country and forced Russia to act, show a clear intent to set the world against Putin's Russia and in time, neutralize Russia as a strategic threat.

    So the only revelation from my breakfast four years ago remaining to be confirmed is for the next big war to envelope the world.

    Per the events in Ukraine, the foundations of that war have likely already been set. Before I get to that, however, a quick but relevant detour is required.

    The Nature of Complex Systems

    Last week the semiannual Owner's & Guests event took place here at La Estancia de Cafayate. As part of the weeklong gathering, a conference was held featuring residents speaking on topics they are experts on.

    Among those residents is a nuclear-energy engineer who spoke on the fragility of the US power grid, the most complex energy transmission system in the world.

    He went into great detail about the "defense-in-depth" controls, backups, and overrides built into the system to ensure the grid won't-in fact, can't-fail. Yet periodically, it still does.

    How? First and foremost, the engineer explained, there is a fundamental principle that holds that the more complex a system is, the more likely it is to fail. As a consequence, despite thousands of very bright people armed with massive budgets and a clear mandate to keep the transmission lines humming, there is essentially nothing they can do to actually prevent some unforeseen, and unforeseeable, event from taking the whole complex system down.

    Case in point: in 2003 one of the largest power outages in history occurred. 508 large power generators were knocked out, leaving 55 million people in North America without power for upward of 24 hours. The cause? A software defect in an alarm system in an Ohio control center.

    I mention this in the context of this article because, as complex as the US power grid is, it is nothing compared to the complexities involved with long-term military strategic planning. This complexity is the result of many factors, including:

    • The challenges of identifying potential adversaries and threats many years, even a decade or more, into the future.
    • New and evolving technologies. It is a truism that the military is always fighting the last war: by the time the military machine spins up to build and deploy a new technology, it is often already obsolete.
    • The entrenched bureaucracies, headed by mere mortals with strong biases. Today's friend is tomorrow's enemy and vice versa.
    • The unsteady influences of a political class always quick to react with policy shifts to the latest dire news or purported outrage.
    • The media, a constant source of hysteria-making headlines masquerading as news. And let's not overlook the media's role as active agents of the entrenched bureaucratic interests. In one now largely forgotten case, Operation Mockingbird, the CIA actually infiltrated the major US media outlets, specifically to influence public opinion.

      All you need to do to understand the bureaucratic agenda is to take a casual glance at the "news" about current events such as those transpiring in the Ukraine.

    • And, most important, human nature. We humans are the ultimate complex system, prone to a literally infinite number of strong opinions, exaggerated fears, mental illnesses, passions, vices, self-destructive tendencies, and stupidity on a biblical scale.

    The point is that the average person assumes the powers-that-be actually know what they are doing and would never lead us into disaster, but quoting my breakfast companion, that would be a very poor assumption.

    Simply, while mass war on the level of the wholesale slaughter commonplace in the last century is unimaginable to most in the modern context, it is never more than the equivalent of a faulty alarm system away from occurring.

    Those history buffs among you will confirm that up until about a week before World War I began, virtually no one in the public, the press, the political class, or even the military had any idea the shooting was about to start. And 99.9% of the people then living had no idea the war was about to begin until after the first shot was fired.

    Back to the Present

    It is a rare moment in one's life when the bureaucratic curtain falls away long enough to reveal something approximating The Truth. In my opinion, that's what I observed over breakfast four years ago. That, right or wrong, the proactive military strategy of the US had been turned toward Russia.

    Knowing that and no more, one can only guess what actual measures have been planned and set into motion to defang the Russian bear.

    Based on the evidence, however, the events in Ukraine appear to be a bold chess move on the bigger board… and to be fair, a pretty damn effective move at that. The problem for the US and its allies is that on the other side of the table is one Vladimir Putin, self-made man, black-belt judo master, and former KGB spy master.

    And that's just scratching the surface of this complicated and determined individual. One thing is for sure: if you had to pick your adversary in a global geopolitical contest, you'd probably pick him dead last.

    Which brings me to a quick mention of The Colder War, Marin's book, which was released yesterday.

    I mentioned earlier that the book had sucked me in and kept me in pretty much straight through until I finished. One reason is that while you can tell Marin has a great deal of respect for Putin's capabilities and strategic thinking, he doesn't shy away from revealing the judo master's dark side. As you will read (and find quoting to your friends, as I have), it is a very dark side.

    But the story is so much bigger than that, and Marin does a very good job of explaining the increasingly hostile competition between the US and Russia and the seismic economic consequences that will affect us all as the "Colder War" heats up.

    Before signing off for now, I want to add that it is not Marin's contention that the Colder War will devolve into an actual shooting war. In my view, however, due to the complexities discussed above, you can't dismiss a military confrontation, even one involving nukes. Every complex system ultimately fails, and the more the US pushes in on Putin's Russia, the more likely such a failure is to occur.

    I recommend Marin's book, The Colder War; here is the link.

    We'll leave the lights on down here in Cafayate.

    Casey Research partner David Galland lives in La Estancia de Cafayate (

    Tags: war, putin, russia
    Nov 19 8:00 PM | Link | Comment!
  • Lessons From Economic Crises In Argentina

    Nick Giambruno: Joining me now is David Galland, the managing director of Casey Research. His internationalization story, which involved moving his life and his family from the US to Argentina, was recently featured in Internationalize Your Assets, a free online video from Casey Research. He is perfectly suited to help us better understand some of the important lessons in internationalization that Argentina offers. Welcome, David.

    David Galland: Nice to be here.

    Nick: First, why don't you give us a little background about the Argentine people and how they have learned to deal with their government and recurring financial crises?

    David: A good way to think about Argentina is that it is an immigrant society, very much like the US, except that the dominating culture emerging from the melting pot was Italian. This is why Argentines tend to be famous for their dark good looks, vibrant culture, and excellent food. Unfortunately, they also inherited "Italian style" politics. I think that's a useful context for understanding the consistent dysfunctioning of the Argentine government.

    This at least partially explains Argentina's long love affair with the Peróns. The country had one of the most successful economies in the world until Juan Perón came into power and destroyed it. And, with some rare bright spots, it's gone through long periods of financial crisis ever since. Despite that, the Perónistas are still very much in charge.

    If you look at the history of financial crises in Argentina, you will see there is almost no 10-year period when there isn't a financial crisis. As a result, the population has become extremely resilient in the face of financial crises. When you mention the faltering state of the economy, every Argentine you talk to will shrug and make a comment along the lines of, "No problem; this is Argentina, we're used to it." In other words, they have become fatalistic about such things.

    But that doesn't mean they are complacent, because thanks to their long experiences with financial crises Argentines have become masters at dealing with things like inflation and ridiculous government policies. For the most part, the government is highly ineffective, and so the Argentines just ignore it. Reasonably intelligent people always figure out ways to work around whatever the latest decree the government comes up with, then they tell their family members and friends. The word spreads so that in no time at all, the populace at large has figured out how to deal with the government's latest misstep, as often as not turning it to their personal advantage. As a consequence, there is a very robust underground economy; if people can do business off the books, they do. Argentines pride themselves on their ability to outsmart the government.

    Nick: How can the actions of the Argentine government give us insight into what a desperate government is capable of and what might be in store for the United States?

    David: The current Argentine government is dominated by true believers - young people who have that idealistic notion of equality for all, and who believe that government mandates can fix anything that ails. They are hardcore socialists, leaning towards communism. But, as is the case in the United States, they really don't know what they are doing and so pursue policies that are incredibly shortsighted. They are uninformed as far as history and economics are concerned and blunder from one harebrained policy to another. There is literally nothing that they will not try.

    It is like a textbook case in government gone mad.

    They have stolen the retirement accounts, devalued the currency, and put capital controls in place. There are trade controls so that people can't import necessities into the country, but instead, have to manufacture them locally, with the government giving monopolies to their friends. They have price controls, which force the local supermarkets to not raise their prices. This will ultimately lead to shortages. And there are already shortages of certain items. They didn't like an opposition newspaper, so they nationalized the newsprint manufacturing industry. In fact, just about every single thing that you could do to screw up a country, they have done. It is comical to see the extremes they have gone to. For example, in Argentina, if you publish an inflation statistic that differs from of the official government numbers, you could be hit with a $100,000 fine. I had never heard of this anywhere else - except maybe in communist Russia. They are really completely out of control and the country is spinning off into la-la-land. Frankly, I love living right in the midst of all of it.

    There is a lesson to be learned from all of this, and I think it is a very important one. When it comes right down to it, any government - not just the Argentine government, but the US government as well - will simply do whatever it thinks it needs to do to keep the status quo intact, with no moral or ethical considerations.

    In the case of Argentina, and the United States as well, it is a testament to the legacy strengths of the country - minerals, an educated population, agricultural land in abundance, energy resources - that despite a history of bad governance, the economy is still remarkably robust. People living outside of the country would be forgiven, based on the media reporting, for thinking the place is a basket case - but, against all odds, it isn't. To a large extent that is because the government's policies have chased much of the economic activity underground.

    Nick: I think something that exemplifies some of the points you've just made was the recent debacle with the minister of the economy. During an interview he was asked a very straightforward question on the Argentine inflation rate. He uncomfortably stumbled through his answer and cut the interview short [Editor's note: You can read more about that here]. How was that received in the country?

    David: It was widely reported. At this point, the Argentines have a great sense of humor about their government, as in the majority of them think it's a joke. That said, people are fed up too. In the seven months that we have lived down here, there have been two massive, countrywide protests totaling around two million people. That's about 5% of the country's population. In most countries that would be enough to send a dictator and the government scrambling for their private jets to get out of town.

    The Kirchner government, however, has basically said, "Let the people protest. We don't care; it's just a bunch of noise." To a certain extent, that is true. But it's getting to the point where one of these days it's going to boil over. In addition to the middle class, the unions - which have traditionally been a bastion of support for the Perónistas - are starting to show up in the streets as well. If the government's purported friends are starting to protest against them, then you have to wonder how much longer the current regime can last.

    Nick: Given the situation you just described, what's it like for you personally to be living on the ground in a country that is going through all this? Does the inflation work to your advantage if your money is not denominated in pesos and not located in the country?

    David: Yes, absolutely. Argentina is really two different countries. First, there is Buenos Aires [BA], which is a big city and contains by far the largest percentage of the country's population. In BA there is a bit of crime, and in certain parts of the city you are going to have more crime, but generally speaking, you would be surprised to know that you were in the beating heart of a crisis. Restaurants are full; the stores are open and full of very nice stuff. Second, there are the provinces, which are mostly rural and agriculturally oriented. Here the central government's authority is weak, and the people are relaxed. The quality of life is tremendous. This is not just the case for Americans, or people who are non-peso based; it's pretty much for everyone. Food in a place like Cafayate, where we live, is so cheap it's almost free. You can walk out of a store with a huge bag of fresh produce and it's going to set you back only a few bucks. A kilo of fine tenderloin will cost you maybe five dollars. Back here in the US a couple of days ago I paid $22 for less than a pound of steak. Then there's the cost of labor. In Argentina, we have an extremely competent maid who comes in for five hours a day, five days a week and does all the cleaning and laundry - drudge work that people in the Western world have learned to view as an unavoidable part of life - and the cost is all of about $40 a week.

    So, despite the overarching reality that the government is dysfunctional and that this is currently being evidenced in the inflation, the quality of life in Argentina for anyone with a few bucks is very, very high.

    When I first arrived in the country, I was expressing bewilderment about how screwed up the government was and all of their stupid policies to a friend of mine who owns a local café. After listening patiently, my friend looked at me and said, "David, is the sun not shining, is the wine not plentiful, and is the food not good? So what are you worried about?" It's a fatalism, but it's also a realism that the people don't worry about the government. And because the government is so inefficient, people can, for the most part, ignore it with impunity. That's not the case in the Western countries where the government has become very adept at using the latest technologies to keep an eye on the populace.

    Another friend of mine, a retired successful businessman said, "You know, Argentina is the best country in the world. We just need a little better government." And I looked at him and I said, "Just a little better?" And he said, "Yeah, just a little better. We don't want them to become too efficient, then we wouldn't be able to get away with everything we are able to get away with."

    That said, there are obviously middle-class and lower-class people who are struggling under the inflation. Again, this is especially the case in the big city where the social safety net of friends and family is not quite as tightly knit, and where ready access to the straight-from-the-farm produce is not as easy.

    For anyone whose net worth isn't tied up in pesos and who keeps most of their money out of the country, the current inflation has been a real boon.

    You can go to the best restaurant in town and your entrée is going to cost you five to seven dollars, and this is a very good restaurant. A bottle of wine that would cost you $40, $50, $60 in the States, costs you maybe $5-6. The quality of life is incredible. A lot of that has to do with the exchange rate, which has been as much as ten pesos to the dollar recently. When we first started coming down here, it was like three and a half. In short, the inflation is a real benefit if you don't have your savings and income tied up in the peso.

    Nick: From what it sounds like, despite having capital controls, those measures are mostly aimed at people trying to take so-called hard currency, like US dollars, out of the country. For those bringing them into the country, it doesn't appear that there is much of a problem. Is that the case?

    David: You would think they would want more US dollars to flow into the country, but the government policy is so balled up they have put up some barriers to bringing money into the country. That said, there are simple mechanisms you can use to get around the restrictions that are completely legal. One of which involves buying Argentine bonds on the international market and selling them back in Argentina. As for the Argentines who want to get their money out of the country, they have to be extra clever, but they are very good at this kind of stuff. For me, dealing with this situation has been a great experience. Unlike in the US, where everything is straightforward and the rules generally make sense, in Argentina it's a very fluid situation. I love the fact that I feel like I'm getting a degree in economic crises and how to operate in one.

    Nick: Do Argentines favor gold? What about getting gold in and out of the country and buying or selling it in the country?

    David: This is a very interesting question. I've asked that question in the context of economic crises around the world and throughout history. Gold only comes in as sort of the asset of last resort. We did a crisis panel at one of our conferences a couple of years ago, and we had people who had been through the hyperinflation in Zimbabwe and Serbia, and we also had someone from Argentina. I was moderating the panel and asked them all what factor gold played in preserving their wealth. Everyone said it was not a factor. Instead, they all used whatever strong currency they could get their hands on. In the case of Serbia it was the deutschemark. In the case of the Zimbabwe it was the South African rand, and in the case of Argentina it was, and still is, the US dollar.

    In Argentina, the whole country revolves around US dollars; it's their medium of exchange and how they preserve their cash. For now at least, the US dollar is king in Argentina. Personally, I exchange my dollars in a coffee shop where I slip behind the cashier's counter and this very cute girl does the exchange from stacks of pesos and thousands of dollars. At some point, if the dollar starts to really collapse and there isn't a suitable regional or local currency to take its place, I think you will see more transactions in gold.

    As far as gold transactions in the country, there are dealers in Salta City, which is the nearest big city to us. Private transactions can also be arranged. In Buenos Aires, of course, you can buy and sell gold easier, but it's just not part of the culture at this time.

    Nick: Turning to real estate, there are many people who are potentially interested in Argentine real estate as we approach what appears to be the bottom of the current crisis. What are your thoughts?

    David: I'm a big fan. We own a lot of real estate in Argentina, most of bought when it was a lot cheaper. If you are a dollar-based investor and you can get your money into the country at a good exchange rate, then the real estate prices are very reasonable. That said, I would add that the biggest market for Argentine real estate currently is for Argentinians, because they have to find a place to put their currency before its purchasing power erodes further. Right now it is depreciating probably at 30% to 45% a year. My general sense is that people who have their money outside of the country aren't in a rush to bring it into Argentina. I can't fault them for that.

    As far as I'm concerned, if you can afford to live in La Estancia de Cafayate and you don't, you are a fool. But that's a lifestyle decision, not a pure investment decision. Cafayate is a really beautiful place, with all the amenities and a great community of people. It's like the Napa Valley 80 years ago. Most people who are looking to make a pure investment right now should probably wait a bit longer. I don't think the current crisis is over yet.

    Nick: Last year the government made it illegal for people to use US dollars in real estate transactions. Now, as you mentioned, not everybody follows these types of rules. Is this something that's adhered to? It could actually work to your significant advantage, if you are foreign investor or someone who is looking to make a lifestyle decision to buy property in Argentina, if there is a further significant decline in the peso and you are forced to use pesos in real estate transactions.

    David: Absolutely. Provided you can get your money into the country and get a good exchange rate, which you can, using that bond trade method I mentioned previously. Cafayate is a small valley with a limited amount of real estate available. It is very much on the upswing, and prices are definitely going higher in dollar as well as peso terms. In terms of putting your money into a pure investment or real estate speculation, I don't think you could go wrong buying in Cafayate at this point, especially if you get in at the right exchange rate. You have to have the right mentality though, as it is not a traditional investment.

    Nick: What is the endgame with this current crisis? Do you think there will be devaluation of the official exchange rate or some other wealth-confiscation measures? What do you think will signal that we're at the bottom?

    David: I don't think you are going to see wealth confiscation. The foreign percentage of ownership of the Argentine economy is pretty small, so I don't think they would go after wealthy foreigners. Could they go after the wealthy Argentines? It's possible, but Argentina is not a big country and everybody knows each other. Most of these government officials have managed to steal themselves enough money to become part of the elite they would potentially be targeting. So I don't see wealth confiscation coming. I think the endgame will come when you get three or four million people in the streets and the government realizes it has to do something. Maybe they would give into the pressure for a devaluation of the peso.

    Regardless, in the next election this October, I think there is a good chance the current government will get voted out. If the new government isn't completely stupid, then I think you could end up with a real economic boom. That's the history of Argentina, a crisis followed by a boom. I don't think we are at the bottom of the current crisis yet, but I think we are getting there.

    Nick: All right David, thanks for your time and insight into the situation. There are indeed many lessons that Argentina can teach for those wise enough to absorb them.

    David: My pleasure.

    Argentina is one of several strong candidates for internationalizing your wealth, as well as your life. In addition to the things David mentioned, there's much more to consider in taking this very important step... such as how and from where to get a second passport... the best ways to move wealth out of your home country... opening an offshore bank account... investing in foreign stock markets... and much more. Fortunately, the Casey Research team has put together a fact-filled, comprehensive report that is an invaluable resource for anyone developing an internationalization plan. Learn more about Going Global 2013 and start your internationalization adventure today.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jun 05 1:30 PM | Link | Comment!
  • A Glimpse Of Life From The Other Side Of The Wall

    Argentines have a phrase, "mi lugar," for when you find your special place in this world - the perfect combination of place and people that entirely suits your nature. The phrase translates simply as "my place."

    I was very fortunate in my early thirties to be able to spend three years on a quest for paradise on earth, visiting pretty much every country I thought might be a suitable candidate. It turns out, in hindsight, what I was really looking for was not paradise, but mi lugar.

    Much like "love at first sight," mi lugar has almost mystical connotations - it is the place in this world where, should you be fortunate enough to find it, you belong more than anywhere else.

    When we arrived in Cafayate, it was with some entirely natural trepidation. After all, not only were we going to be living in a remote corner of Argentina, we were bringing along our teenage kids with all that that implies.

    It is entirely human to worry about the unforeseeable, and so we pondered all manner of questions and concerns. Would our stumbling knowledge of the local lingo prove a hindrance? Would the highly dysfunctional government hereabouts be an impediment at every turn, the bureaucracy frustrating? Would the kids adapt to the new environment and be able to get a good education?

    Yet, never ones to worry ourselves into inaction, we plowed ahead and on October 22 set down our bags in Cafayate.

    So, how's it gone? Were our fears - any of our fears - realized?

    To the extent that it may be of interest to those of you currently contemplating seeking solace on the other side of the wall, I would like to tick down some of the good and the not-so-good we have discovered as a result of our move.

    Mi Lugar

    The first, and possibly most surprising, thing about life in Cafayate has been how social it is. The Argentines are very warm and welcoming people, and we have made a surprising number of local friends. In addition, there are the generally like-minded and almost entirely agreeable owners at La Estancia de Cafayate, complemented by a steady stream of visitors.

    Interacting with only one of those groups would be more than enough social life for me, by temperament something of a recluse (my wife always laughs when I say that, but it's true). When taking all three groups into consideration, however, the amount of socializing gets positively over the top.

    Last week it was a charity poker match, then my wife's big birthday bash with forty friends at the Club… I don't even know forty people in the town in Vermont where we lived the last 25 years.

    It just never stops.

    In fact, after seeing our friends and enjoying the beauty of a Vermont summer, the next-biggest reason for returning to the States for four months is to get some rest!

    Other aspects of life here that represented a significant change from life back on the other side of the wall:

    Education of the Kids

    Our children are now 14 and 16, ages considered very important in terms of personal development.

    Before getting into what they got from living down here, a quick word on what they didn't get. For example…

    1. They didn't get a state-mandated cookie-cutter curriculum replete with dogma and indoctrination about completely unimportant topics.
    2. They didn't get an education by teachers whose sole purpose in life is to ultimately get a pension. In fairness, our children had had a couple of good teachers in their public schooling back in the States, but most seemed to have majored in sapping the creative juices out of students with minors in spirit crushing and teaching utter nonsense with a straight face.
    3. They didn't pick up bad habits from fellow students. They didn't learn how to drink, smoke, do drugs, or have sex at an age when they are not mentally prepared to keep things in perspective. In fact, it became something of a running joke how many times we went to restaurants hereabouts and the kids were offered wine, which they turned down of their own accord. When it's not the forbidden fruit, it's not nearly so desirable.
    4. They didn't live in fear. When I see an article such as this, on the US government's zero tolerance for, well, anything - including stupid kid pranks, I am shocked. Here's a link to the article.

    What they did get, however, was…

    • Personalized instruction and coaching for their self-studies. In the beginning, there were another three children in the educational program, but the parents pulled up stakes fairly early on, leaving our two kids with a teacher ratio of 1:1 (except for a number of weeks when children of visiting owners and guests sat in on classes).
    • For much of the time we were here, there weren't a lot of other kids their age around. In hindsight, that worked out just fine. In addition to not picking up the bad habits mentioned above, they quickly adapted to interacting on the level of adults with the residents of La Estancia and those from town (many of whom act like kids anyway).
    • A shared family adventure. We've always been a close family, but living together as foreigners in a foreign land has made us only closer. No small feat given they are both in the challenging mid-teens. While there was, naturally, a certain amount of the teen drama, it always passed quickly and we moved forward in concert. Personally, I have learned to accept that they are no longer children but young adults who need to be able to make their own decisions and reap the rewards or suffer the consequences as a result. All in all, the family dynamic has changed, and only for the better.
    • Fresh air and a more active lifestyle. While my son is showing the classic characteristics of being something of a geek (by no means a detriment in this day and age), every day he walked to and from school wearing his heavy backpack and, sporadically, joined in on hikes and long walks around the sizable estancia on school projects (for instance, mapping all of the many fruit and nut trees on the property). In addition to the school walkabouts, our more active daughter also took advantage of the Athletic Club, horseback riding, dancing, hiking, and so forth.

    In the final analysis, hiring our own tutors and having a hand in a curriculum that focused on the core subjects of reading, writing, and arithmetic - with a side course of Spanish, and all of it structured to inculcate the love of learning - turned out to be a big win. So much so that the kids volunteered to continue studying over the summer with the remote guidance of their lead tutor.

    Personal Well-Being

    In a phrase, I haven't felt this healthy, this fit, this alive, or this happy in decades. The active lifestyle, the high-quality food, the multitude of good-humored friends, the fun activities… the overall quality of life… have completely reenergized me.

    Whereas before a dumb email from a colleague might have sent my blood pressure spiking, now it's all water off this duck's back. Hardly a day passes without me opening my arms to the beautiful skies, a happy grin on my face. Reflexively, I start singing, "Oh, what a beautiful morning" when walking outside first thing each day.

    Call me goofy, but it sure feels like stark raving happiness to me.

    Speaking of beauty, I have always been one of those people who, lost in thought, took almost no notice of my surroundings, no matter how striking (and Vermont can be pretty striking).

    Down here, however, the beauty of the place grabs you by the collar and demands you view it in awe. It is like living in an ever-changing art display with the red rocks of the surrounding mountains the canvas.

    Connection to a Community

    Before moving here, I was only tenuously connected to the community I had lived in for 25 years. While it is not all fun and games - because every community, no matter how like-minded, has its small cadre of serial malcontents - the overwhelming majority of the people at La Estancia and in Cafayate are positive and constructive.

    In short, they are people you want to spend time with… and so we do.

    The community is not just physical, but virtual as well. There is constant email correspondence between the owners, and several of us have been involved in a writers' group going on a year now. There is also a local photography group that a number of us have joined.

    Here's my wife's entry for this month, a great shot (in my biased opinion) of the sort of transportation hijinks that are a common sight around here, but which would have you face down on the pavement, your arms handcuffed behind your back, were you to attempt the same in the Land of the Free.

    The Concept of Time

    Despite the active schedule, there is always time to linger over lunch or dinner, to have a siesta, to play a little golf with friends (even if it means getting up before dawn to get my work out of the way).

    Today I ducked into town on an errand and ended up stopping for an hour and a half at Baco's café to have coffee with Mauricio the Chilean and Bausti, the son of the owner who is in the final phase of a three-week-long motorcycle ride from Cafayate to Northern Brazil and back.

    Once the coffee was finished, the old David would have made his apologies and hit the road. Not anymore, as I settled into my chair at the table on the sidewalk, enjoying the perfect weather and sharing stories, music, and photos with my friends. Mauricio, despite having work to attend to at his lighting and paint store, stuck around as well. There are things far more important than money down here, especially time spent with friends.

    The Nature of Reality

    In the US and other media-saturated countries, reality is defined by deviants with degrees in manipulating minds. The old standard "If it bleeds, it leads" has been bolstered with "If it's green, it's good" and "If it scares, it blares."

    I can't stress the point enough… down here none of that counts. Reality is what you have for lunch, it's not some imagined threat lurking around every corner. Terrorists, cyber-surveillance, school lockdowns… none of it matters in the slightest.

    As for the stories trumpeted over and over in the global press about the Mad Queen Cristina who is tenuously holding power over these lands, no one really cares. And the inflation has again made Argentina one of the least expensive countries in the world for those of us who are not peso-based.

    Last night I had an excellent dinner at the best restaurant on the plaza - and it's a very good restaurant - and the cost of my entree was all of US$7.00.

    Adventure Around Every Corner

    One of the best things about climbing over the wall is that so many things you will experience are new and, at least to me, interesting and exciting. While here, we have been on stunning hikes, amazing horse treks, wonderful drives deep into the Andes - on one memorable occasion spending a few days at fellow Argentine aficionado Bill Bonner's massive estancia, a place so remote that, to reach it, you have to drive for many kilometers on a dried-up river bed.

    A deep-thinking friend of mine once explained how important it is to the maintenance of mental acuity to challenge yourself, even - or maybe especially - when it comes to the mundane. For example, if you are right handed, try brushing your teeth with your left as it forces you to use new connections in your brain.

    Moving here from a completely different culture, with a completely different language, forces you out of your comfort zone every single day. For instance, when the patron of the well-known local bodega offered to let me ride his powerful champion stallion - he had heard I was a polo player and so assumed I could handle it - my initial reaction was to think, "Are you crazy?!" Fortunately, that thought was quickly supplanted by one akin to, "When will I ever have an opportunity like this again?" So I took him up on his offer, and what an amazing ride it was.

    Parting Thoughts

    First and foremost, as you may be able to tell from the above, despite the trepidations we felt before heading down here, my wife and I have not had a single regret… not for a second.

    The house we built, which is fully paid for (as is the case with virtually all the houses in Argentina), was beautifully constructed. And, thanks to the competence of the architect who oversaw the construction, and the builder, the building went up with less hassle than was the case with our house back in Vermont.

    We have fallen in love with the area, most ardently with Cafayate but also the province of Salta and the surrounding countries that together form what is called the Southern Cone. While life here, like everywhere, has its challenges, the challenges are nothing that a reasonably intelligent and patient person can't handle. In fact, with a little help from our local lawyer and knowledgeable friends, our interactions with the government amount to next to nothing… and, in most months, literally nothing.

    Meanwhile, as noted above, the much-noted inflation here in Argentina has put the place on sale… and at a steep discount. Yet, even the locals in this tight-knit community don't appear to be overly disadvantaged. I suspect that's because, unlike the big city, this is an agricultural area where the cost of input is low, and so is the price of the output… thus the basic stuff of life is extremely cheap.

    It is worth mentioning the cost of labor, as well. We have an exceptionally agreeable and hard-working maid who comes in for five or six hours a day, five days a week, at a cost equivalent to $40 a week. Simply put, that means that the drudgery of washing dishes and clothes, dusting, making beds, and so forth simply vanishes from your life, freeing you for far more agreeable pursuits. This is, in my view, almost the very definition of luxury - yet at a price many Americans push over the counter at Starbucks each week.

    Now, this is not to say that other places in the world don't have their strengths as well as their weaknesses. If you love to snow ski or sail the big blue sea, this is probably not the place for you… at least not full time.

    I also think, despite the low cost of living here, that it's probably not terribly well suited for people without at least some decent amount of money in the bank, or a source of revenue from outside the country. For example, from a job you can do over the Internet. That's because while there is 100% employment here, the local pay scale is low and the challenges of actually starting and running a business here are considerable.

    While I have often said that "anyone who can live here and doesn't is a fool," in truth your own special lugar may have a completely different set of characteristics. I understand that some people even like big cities.

    Whatever you do, if the place you are living doesn't make you feel alive, then do seriously consider setting out in the quest for a place that does.

    No matter what lifestyle you enjoy, there's a place on the planet that could be your lugar. It's rarely one's home country, because they tend to treat citizens like milk cows rather than valued inhabitants. To help you find your place, Casey Research has created a free webinar featuring some of the best minds in internationalizing and global investments... people like Doug Casey, Peter Schiff, and World Money Analyst editor Kevin Brekke discuss the ins and outs of internationalizing your wealth and your self. For many people, the window of opportunity is slowly closing - and could slam shut quickly under the right circumstances. Don't be caught on the wrong side of your wall: watch the free, online Internationalizing Your Assets webinar today.

    May 31 6:28 PM | Link | Comment!
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