by Peter Macfarlane for The Q Wealth Report

A number of readers have recently been asking me recently about the ‘Perpetual Traveler’ or ‘Permanent Tourist’ theories. The idea behind these theories is that smart, freedom-seeking individuals should not be bound in their allegiances to just one government. But do these theories have a practical application in real life?  In other words, do they work?

There also seems to be some confusion about the number of flags: The ‘Three Flags Theory’ of Harry Schultz, the ‘Five Flags Theory’ of the W.G. Hill series, publicized last year by Neil Strauss in his bestselling book Emergency… or the ‘Six Flags Theory’ of Bye Bye Big Brother?

What useful purpose does a government serve? Most people accept the institution of government because it has always been there; they have always assumed it was essential. People do not question its existence, much less its right to exist.

The various flags theories are all about achieving freedom by not having one single government controlling you. Most countries treat foreigners far better than their own citizens. So the idea is to be a foreigner wherever you go – hence the ‘Permanent Tourist’ tag. You also achieve privacy, because no government will have access to the full picture of you.

In general ‘PTs’ can, by moving between countries on a regular basis, legally reduce or eliminate their tax burden. Many, however, adopt this lifestyle primarily for self-ownership or freedom reasons – checking out of “The System”.

Either goal is achieved by simply using different governments, or flags, for different parts of your life. At its simplest, the theory works well with three flags:

• Have your citizenship somewhere that does not tax income earned outside the country.

• Have your businesses and speculations in stable, low or no tax countries – your business havens.

• Live as a tourist in countries where what you esteem is valued, not outlawed. These countries are known as Playgrounds.

Back in the 1980s, author Dr W.G. Hill and the Scope International publishing house produced a series of books such as The Passport Report, PT1, PT2 and Banking in Silence in which the original three flags were increased to five flags, by adding an additional ‘asset haven’ – a money management or offshore banking center, independent of the business flag – and a ‘residence’ flag in a tax haven where you have official residence.

Note that this is a paper or ‘official’ residence and is not necessarily where you physically spend your time. I wrote recently about residence and citizenship in the Dominican Republic for example – it’s ideal for this purpose, since you are allowed to be gone for up to a year at a time and still qualify as a resident.

Finally, in 2005, an anonymous author under the name of Grandpa wrote a new three volume update named Bye Bye Big Brother. In this, he added the sixth flag of cyberspace – a kind of virtual country which binds the other five flags together.

If your interested, check out our Critique of the PT Five Flags Theory which explains this in more depth. There’s also more information on the Survival Podcast forum.

Anyhow, having cleared up the confusion about the number of flags, the big question is, does it actually work?

It certainly does. Not only do I live this lifestyle myself, but I know plenty of other people who do too. However, I don’t know anyone who follows the rules absolutely. I think this was a set of rules made up for people who don’t like rules! Most people tend to interpret it in their own ways, picking and choosing the bits they like best.

When people first hear of the PT theory, they think it sounds difficult, complicated or expensive. It’s not.

Most people don’t decide to become PTs overnight. Think of it as a gradual process – little by little, you might open a bank account offshore (asset haven), buy real estate or spend time overseas (the playground) and expand your business by diversifying internationally (business haven.) Apply for a residence in a tax haven that can lead to a second passport, use the internet (sixth flag – cyberspace) and before you know it you are a fully fledged PT.

So this is certainly an interesting theory to bear in mind. If you would like to learn more about it, browse the Q Wealth website, and why not sign up for our free five part course ‘Secrets of the Super Rich’ which covers these ideas in more depth? There is no obligation, no spam, and you a free to unsubscribe at any time…

“In the years leading up to mid-2007 keen observers noted dangerous leverage in the US debt markets and some predicted that the bubble would pop. Predictions like this were contrarian while the market was rising, and they were ridiculed. But then when the bubble did pop, those same contrarians became nearly household names as network TV invited them on to explain their predictions.”

So begins a lengthy and informative article by blogger FOFOA, in which he claims that the coming devaluation of the dollar will be sprung on us without warning. If you have time, I recommend you read it (here is the link)

Your editor is in partial agreement with FOFOA. Indeed, I would say the devaluation of the dollar is already well underway. Unfortunately, the vast majority of people are currently living in a world of illusion… just this week, against all odds, the stock market rose again. When people see a rise in the nominal value of their investments, they believe they are making money. But they are wrong. Few take in that the cost of living is rising disproportionately higher… so they are actually losing. This is the fundamental strategy behind what I call the stealth devaluation of the dollar. The purchasing power of the dollar has fallen drastically since the Second World War, with a notable increase in the velocity of the fall in the last couple of years.

Another informed and respected commentator on the collapse of the dollar is John Rubino, who recently interviewed yours truly for an article on offshore banking and asset protection. In recent comments he refers to some news passed on by veteran newsletter writers Harry Schultz and Bob Chapman, that verges on what I would call a conspiracy theory…. or does it? You decide! The story goes like this:

“Some US embassies worldwide are being advised to purchase massive amounts of local currencies; enough to last them a year. Some embassies are being sent enormous amounts of US cash to purchase currencies from those govts, quietly. But not £’s. Inside the State Dept there is a sense of sadness & foreboding that ‘something’ is about to happen, unknown re a date-just that within 180 days, but could be 120-150 days.”

Bob quotes another source that “Panasonic has told their people to be back in Japan by Sept 09.”

Harry Schultz’s remarkable take on the situation:

“My HSL suspicion is that the elite plan another FDR style “bank holiday” of indefinite length, perhaps very soon, to let the insiders sort-out the bank mess which is getting more out of their control every day. Insiders want/need to impose new bank rules. Widespread nationalization could result, already under way. It could also lead to a formal US$ devaluation, as FDR did by revaluing gold (& then confiscating it). But devalue against what? The euro? Doubtful. Gold? Maybe. Or vs. the IMF basket of currencies (which seems more likely)-& much in the news recently.

Any kind of bank holiday will push the US$ lower, which may be a bonus benefit to their ongoing scenario of letting the $ fall. Such a fall would get the devaluation they want without having to declare it. In sum, the insiders want more bank & system control, fewer banks & a lower US$. A bank holiday would suit all their needs.”

So there is the question. Can we expect a sudden dollar devaluation, complete with suspension of markets and a so-called ‘bank holiday’? Or will we see the stealth devaluation of the dollar continue to accelerate?

My bet is on the latter. Why would politicians and those in power risk the wrath of the people by devaluing the dollar so explicitly from one day to the next, when they have successfully got away so long with devaluing the dollar on the quiet with few people noticing. But of course I may be wrong, and the situation may be even more out of control than I think.

Either way, I’m not sitting waiting for it to happen, and you shouldn’t either! If you are properly prepared, such a collapse would be a huge profit opportunity. But you would not be able to rely on usual market mechanisms… we have to consider that the stock markets and financial system might be completely suspended. It happened in the aftermath of 9/11, but it hasn’t yet happened during this global financial crisis. Never say never!

My advice is that markets are a nice convenient way of speculating play money for short term gains, but every serious investor needs to keep wealth outside the financial system too. That may be in your own business (if it is resilient) or it may be in real estate (people will always need places to live) or it may be by stashing gold bullion in an offshore safe deposit box.

The Q Wealth Report is here to advise you on all these options and more. If you haven’t yet read our free five-day e-mail course The Secrets of the Super Rich, I would urge you to sign up for it now. As I said, it is absolutely free and without obligation. I think you will find it an eye-opener!

With all the fuss going on about Swiss banking right now, many people might have overlooked the fact that you can simply move to Switzerland and live virtually tax-free, legally, and without being subject to notoriously strict Swiss immigration controls. How? Through the Italian tax haven enclave of Campione d’Italia – a little part of Italy, with some very special personal tax concessions, that functions like a part of Swiss territory.

“The first pure haven I remember reading about was Campione D’Italia, a village sized city on the shores of Lake Lugano in Switzerland and the first person I ever heard write or talk about Campione was Harry Schultz, publisher of the Harry Schultz International Newsletter” writes  Roger Gallo of Escape Artist. “Harry Schultz was the only one around at that time who was using the then uncommon word, ‘international’ when he spoke, and he was also the only one who was writing for an American audience who seemed to know all of the offshore secrets, and he knew scores of them.  He was years ahead of almost everyone else in writing about asset protection and he was the first to write about offshore investing. Harry has been publishing his newsletter for 41 years and it still very much garners the respect of most of the current lineup of hotshot investment gurus.”

Campione d’Italia is a small Italian commune of 1.7 square kilometres located entirely within Switzerland, on the eastern shore of Lake Lugano at the foot of a beautiful mountain. There are approximately 3,000 inhabitants, about 1,000 of them foreigners. The official currency is the Swiss Franc, but the Euro is accepted as well. All banking is done through Swiss banks. A famous Casino generates substantial revenue, which is one of the reasons why the residents of Campione enjoy some very special tax concessions.

Campione’s tax advantages only apply to private persons resident in Campione, and not to companies domiciled or managed from there (except that there is no VAT in Campione, which I suppose is a big advantage for companies)

How can you obtain a residence permit in Campione? You must normally buy an apartment or a house – simply because there is very rarely the opportunity to rent. Currently, however, I know of an opportunity to obtain a residence permit by renting. A client of mine is privately renting one of the nicest fully furnished, ultra modern duplex apartments in Campione Switzerland for EUR 2900 per month. It is located on the only sand beach with palm trees that we know of, in Ticino (what my client calls the “Banana Belt of Switzerland”). The deal is you pay one year in advance and that includes the right to Swiss & EU residency. He’s also prepared to sell at EUR 365,000. For more information contact me via info@petermacfarlane.net and I’ll put you in touch.

To sum up some of the many advantages of being resident in Campione d’Italia:

* Political, social and economic stability
* First-class Swiss infrastructure
* Swiss Franc is the official currency
* Banking through Swiss banks with Swiss banking secrecy
* Attractive lifestyle in a quiet, clean environment
* Efficient and reliable public services
* Swiss postal services, telephone numbers and car registration plates
* Effectively resident in Switzerland – with E.U. residence permit
* No value added tax (VAT)
* Special income tax concessions, no inheritance or gift tax

Interested in reading more like this? Every quarter, The Q Wealth Report covers material related to living the good life in tax havens around the world, protecting your assets in first class private banks. Right now, our focus is on How to Buy and Hide Gold Offshore. We are also publishers of the Practical Offshore Banking Guide 2009. Learn more at The Q Wealth Report homepage, or sign up today for our free 5-day e-mail course: The Secrets of the Super Rich