Under Many Flags

A route to survival


The safest way to survive in today's hellish climate of monetary chaos, economic decline, stock market erosion, increasing social breakdown, violence on an ever-escalating scale, disappearing currency values, ever-increasing inflation, etc., is to "internationalise" oneself.

This calls for maintaining three flags.

First, you have a country of domicile, That means where you were born. Let us assume this might be the U.S.A. That's flag number one.

Second you have your country of residence. To many readers of this magazine this has been the U.S.A. also, but for an increasing number of U.S.-born persons the country of residence has been changed. Americans leaving U.S. shores have mounted dramatically in recent years. There are "American colonies" in every major city of the world. Such major cities as London and Paris and Rome each boast something in the vicinity of 75,000 Americans. But this is only a rough estimate—in fact, it could be considerably more. So, for many individuals, flag number two is, let us say, a European flag.

Third is your flag of passport or citizenship. This relates to (in most cases) those people who have changed their citizenship from that of the country in which they were born.

Regarding the three flags above, let me point out that one never, ever lives (if one is a truly international person) in the country that one is a citizen of, and therefore one pays no taxes in that country. Then for those who have left their country of birth and likewise changed citizenship, they also pay no taxes in their domicile country. This means that the only tax exposure one faces is in the country of residence, and in most cases this tax will be based simply on money brought into that country each year rather than on money earned on a world-wide basis.

There is not space here to explain the exceptions and qualifications and special arrangements necessary to facilitate this tax arrangement, but take my word for it, it can be done as I have outlined. Under this three flag arrangement one is therefore paying virtually no tax except a token tax in one's residence country. The jet set, of course, go one step farther and only remain in their country of residence about 6 months each year (or live 6 months in two or three different parts of the world alternately). So in their case they pay no tax ever, ever! Thus the richest people in the world live a tax free existence—and this helps them stay rich, obviously.

As you can see, with this three flag "holy trinity" one has the best of all tax and protection worlds on this very muddled and nearly totally socialistic globe. The holy trinity is—one might say—your way of fighting back, or at least of providing some armour plating.


It may amaze many readers of this magazine to learn that thousands of Americans have changed their citizenship in recent years. This means that for Americans changing countries (i.e., moving) is not enough, since the U.S.A. (alone in the world) continues to tax its citizens after they have left the country—a citizenship change is necessary also. Furthermore—and in fact an even greater incentive for changing citizenship than escaping taxes—here has been the desire to get out from under Big Brother, tax audits, the 1040 form; in short, to escape the intimidation which has become as American as apple pie once was.

Another major reason for Americans giving up their U.S. citizenship has been their disagreement with U.S. political policy, "the folks who brought you Vietnam," the Watergate episode and what it represents about the changed fibre of the country, the increased violence, the drug scene, the moral degeneration, the monetary crimes committed in Washington (e.g., the watering of U.S. currency)—and the dismal prospects for the future which seem to include more of the same, if not worse.

(Before leaving this subject of new citizenship and passports let me just comment that—as a social observation on the times—a steadily increasing number of people who come to me for private consultations ask me to help them in the acquisition of a new citizenship. I do not seek this kind of business and I find it very burdensome, but I seem to be the only one around who is able to give genuine guidance and assistance in this esoteric area. Of course anyone can get a new citizenship simply by residing in a given country for approximately five years. But most people want to short circuit the red tape, to cut the time dramatically.)


In addition to the need for you to be legally international in order to survive, let me also point out the necessity of reading publications that are not from your own country in order for you to get a broader view of the world. Americans, for example, who read only U.S. newspapers and books and advisory letters and magazines have a very, very provincial view of the world. U.S. news magazines may well discuss the entire world in their pages but their reporters are still American, and even if they write from Bonn and Paris and Tokyo they see the world through star spangled glasses and carry their prejudices with them into every nook and cranny of the globe. The average American news magazine is about as international as Salt Lake City, Utah.

Let me add also that the best newspapers in the world are not published in the U.S.A. And among those U.S. newspapers, rare though they be, which do give wide international coverage, their prejudices and bias show rather strongly in the slant of both the story and its headline.

A writer needs to "de-nationalise" himself in order to write objectively and therefore to be of use to his readers. I have struggled very hard to achieve this de-nationalisation myself and like to think I have achieved it. I have lived a good many years in a good many countries and am as much at home in Copenhagen or Sydney as I am in Los Angeles or Johannesburg or Paris.

Travel alone does not achieve this de-nationalisation. You have to adopt a citizen-of-the-world attitude and drop all semblance of so-called patriotism in order to view the world with true objectivity. Therefore I am suggesting the next flag you add to your collection is the flag of the United Nations.

I am not praising the U.N. Far from it! But it symbolises, for the purpose of this article alone, an attitude that I recommend to you—that of not associating yourself with a piece of real estate, i.e., with any country. It makes for better investment decisions, I assure you. And better political ones too. Plus, it improves your chances for physical survival as well.


Now let us launch forth into the flags you should be flying for your investments. I assume most of the readers of this magazine are sufficiently well read and sophisticated to know that the days are long gone when one could keep all of one's assets in one's own country and invest only in, for example, the New York Stock Exchange. Nor can one keep only U.S. dollars any more. Times are tougher now—it takes more work, study, and research to plan a safe dispersal of one's assets in order to achieve maintenance of buying power.

So the next flag you should acquire is the Red Cross flag of Switzerland. I refer, of course, to acquiring a Swiss bank account. Anyone without one at this stage of the monetary collapse does not want to get or stay rich very hard. Swiss banks provide "supermarket" facilities for the distribution of assets and the spreading of risk. But in these days of ricocheting bank failures one should not rely even on Swiss banks alone. Therefore I suggest your next flag be a Dutch and/or German flag. Holland claims to have excellent bank secrecy and certainly their facilities are quite good. For maximum protection one should use at least 3 or 4 countries for asset dispersal which involves 3-5 separate banks. It is inconvenient and a nuisance and not terribly efficient. But it is the stuff of which survival is made.

Also, one should diversify one's assets into a number of currencies. In fact, currency diversification has become so essential that I now include a special "Currency Corner" in each issue of the International Harry Schultz Letter (published every 3 weeks. P.O. Box 1161, Basel, Switzerland. $225 a year).

At present I recommend that you hold 50 percent of your investable assets in currencies, but this percentage may very well change radically in the months ahead, if the monetary picture changes shape. An example of how investment percentages change is gold: in my investment letter the percentage recommended has altered quite radically over the years from as low as 10 percent to as high as—I believe—65 percent. It is now (in early February) at about 25 percent, but at some point in 1975 it will be increased dramatically. I suppose I should deem it my good fortune that people must subscribe to my newsletter in order to learn when to shift in and out of such investments (including New York industrial shares), but I would gladly trade this dependency for a more stable economy and society!


I hope what I've said has given you an insight into the possibilities and benefits from becoming a more international person. There is, by the way, a spin-off benefit from this that goes far beyond that of financial and physical survival. That is the mind expanding aspect. In becoming global, you will simultaneously increase your understanding, widen your horizons, learn more about people around the world, become at home in a variety of atmospheres, and enrich your life and understanding immeasurably. Your awareness (perhaps the most important aspect of all) will escalate monumentally. Good luck!

Dr. Harry D. Schultz is president of the International Investment Letter Association, and publisher of the International Harry Schultz Letter. He is the author of a number of books, including Panics and Crashes and How You Can Make Money Out of Them, and What The Prudent Investor Should Know About Switzerland and Other Foreign Money Havens. He has co-authored with James Sinclair, the book How the Experts Buy and Sell Gold, Currency and Coin, to be published shortly by Arlington House.