The Best Way to Keep the Value of Your US Dollars? It’s a Second Citizenship!

Is 2021 the right time to invest your US dollars in a 2nd citizenship? Here you will learn about some new options in the Caribbean and beyond – for second passports via citizenship-by-investment, also known as economic citizenship.

Citizenship-by-investment programs are offered by about 30 jurisdictions as a ‘fast track’ to obtaining their residence, citizenship, and therefore passports in exchange for direct investments.  They are also called ‘citizenship-by-investment’, ‘residency by investment’, ‘economic citizenship programs’,’ investor residency’, ‘a second citizenship’, ‘Golden Visa’, or simply, and most commonly, ‘citizenship through investment’.

Why exactly is this year the right time for investing your US dollars savings? 

• Pandemic-slammed economies all over the globe are shrinking. 
• New waves of political instability are sweeping across even the most advanced regions. 
• Natural disasters are breaking records. 
• The US dollar value continues its downward trend, while inflation is growing. One of the most likely mid-term scenarios can be the significantly plummeting dollar on the back of the US government’s debt crisis. 

If you have a sound backup strategy you’re already way ahead! Most investors are confused and yet do nothing to protect the value of their dollar savings. 

It would be a good idea to consider investing in something real and long-lasting. Something that can bring both financial rewards and pure enjoyment and luxury to your family and future generations. This is a much better alternative than keeping your funds in a bank or the markets at nearly zero return, where your investment will probably be wiped out by inflation. 

This article highlights the urgency of the economic citizenship strategy as a superb investment, provides examples of possible plan B solutions,  discusses links between the falling value of the US dollar and the current status of the US national debt, points at the signs of unrolling trends, and finally offers expert advice and help.

Your family is trusting in your ability to protect them and their future wellbeing by launching your contingency plan. Don’t let them down!

2^nd Citizenship as a Boon for investors

For many families, investing in a second passport offers two benefits: the immediate “Plan B” escape hatch, and also diversification of financial risk… in other words bulletproof protection against adverse trends. 

Participants of citizenship by investment programs may have many returns on the investment:

• first and foremost, the new citizenship itself – and the flexibility in residence planning that comes with it;
• the freedom of increased visa-free or visa-on-arrival travel that comes with passports issued by some jurisdictions;
• access to important privileges (healthcare, education, retirement, other benefits) in both countries in case of dual citizenship;
• your protection from political and other risks in your country of current residence; 
• no need for a work permit if you decide to find a new job or start a business in your new country; 
• the likelihood of more beneficial tax planning opportunities;
• the right to buy any local property without limitations set for foreigners;
• a new market for your business; 
• new ideas for entrepreneurship in other fields; 
• the chance to diversify some of your dollar savings so as not to ‘put all your eggs in one basket’ in your home country;
• the excitement of extending and enriching your cultural experience;
• other incentives, including the satisfaction with your participation in the development projects of the host jurisdiction.

Recent years have seen a fast-growing trend: high-net-worth individuals, sick of the “tax the rich” attitude and “socialist insecurity” of many western countries, determined to find a friendlier business and social environment with higher living standards, better protection from disasters of all kinds, and brighter business opportunities. 

For example, Antigua and Barbuda, Commonwealth of Dominica, Grenada, St. Lucia, and St Kitts and Nevis all offer attractive incentives to foreign investors wishing to obtain second citizenship by investment and call their small tropical paradise home. 

The Dominica Second Passport program, for example, launched in 1993 and is one of the best known affordable, fastest, and flexible economic citizenship options. The program provides citizenship of this Caribbean country if you make a one-off investment in the Economic Diversification Fund (EDF) or purchase some real estate.

If you wish to buy some property, you can choose from a variety of luxury resorts, including world-renowned brands like Hilton, Kempinski, and Marriott. 

Your acquisition of some real estate in Dominica gives you the chance for the best of both worlds: you can buy a piece of paradise and at the same time protect your wealth from the looming dollar collapse. 

By donating to the EDF, you can participate in the overall improvement and development of the host country. The money contributed to the Fund’s accounts is channeled to healthcare, education, and tourism sectors, and important projects preparing Dominica for the effects of climate change. 

After a rigorous screening process (since Dominica accepts only investors of the highest moral character, with no criminal record), successful applicants receive many benefits, including:

• visa-free or visa on arrival access to nearly 140 countries and territories 
• attractive bank account 
• investment, business opportunities
• the permission to pass Dominica citizenship onto future generations. 

Please note: the Dominica government has recently amended the program rules for the inclusion of additional family members in the application submitted by the principal applicant. Thus, any family member supported by the principal applicant/spouse is now allowed to qualify for a passport and citizenship. Even children over 18, parents, grandparents, siblings, and the spouse of the principal applicant can be added to the application. Moreover, new applicants can be added to the application after the principal applicant has obtained citizenship and passport.

If you need more details of all incentives offered to applicants for economic citizenship across the world, please look up our articles on this portal.  

The Dominica program is just one of the recommended options. Indeed, based on your individual circumstances there might well be better options. We have covered St. Lucia, Antigua, Grenada, St. Kitts and Nevis, Turkey, Vanuatu and more than 20 other jurisdictions right here on our portal. 

Start making a shortlist of the most attractive destinations for your investment. 

You are welcome to contact us for more specific free advice and fee-based services. Our e-address is given at the top of this page. 

The US National Debt Snowball 

Why are financial experts, investors, traders losing faith in the stability of the US dollar and forecast its collapse? Because they analyze the U.S. national debt growth and its direct impacts. 

On January 8, 1835, President Andrew Jackson of the United States of America did something unprecedented. No other American president had ever done such a thing before him, and no one has ever done it since then either: Jackson paid off the national debt of the United States.

Jackson was a staunch fiscal conservative. He despised banks. According to his biographer, Jackson called the actions of the national bank and the national debt “a moral failing” and “black magic.” To accomplish his goal of entirely paying off the United States’ national debt, Jackson vetoed some big construction projects, sold some federal land in the West, shut down the national bank. As a result, the national debt of about USD 58 million was paid off within 6 years. The zero national debt situation lasted for just a few months. 

Unfortunately, a mix of different circumstances prompted the new rounds of reckless spending and borrowing by the states and the national government. Researchers name several factors that triggered the new national debt accumulation: Jackson’s fiscal policy, the downturns in foreign economies, promotion of looser lending procedures at the state-chartered banks after the destruction of the national bank, the issuance of state-issued bonds, speculative sales of land for gold coins, the Panic of 1837. The US has been in debt ever since.

The US national debt exceeded USD 1 billion for the first time in history during the Civil War; by the end of WWII, it grew to USD 269 billion in 1946,  climbed above USD 1 trillion at the height of the Cold War in the early 1980s, hit a new high of more than USD 10 trillion in 2008 (with the debt-to-GDP Ratio at roughly 68%) after years of wars in Iraq and Afghanistan, followed by the global financial recession.

With the total national debt as of October 2020 surpassing USD 27 trillion (nearly 136% of GDP), the US Treasury reported that for the fiscal year 2020, which ended September 30, the US deficit hit USD 3.13 trillion. It was more than triple what the annual deficit was in 2019.

Debt-to-GDP ratio is a useful tool for economists, politicians, and investors. It indicates a country’s ability to pay off its debt. According to the World Bank, the tipping point is at 77% of the GDP. The hereby data are taken from the publicly available official resource – the US Treasury Department’s website “Debt to the Penny”. We have to add, though, the following observations. 

The COVID-19 pandemic has had a serious impact on the US economy: many businesses shut down, many people lost jobs, public consumption shrunk, the economic growth slowed down, solid injections of relief funds had to be made to help households, medical establishments, businesses. Under such critical circumstances, it would be inaccurate to rely on the Debt-to-GDP ratio as an indicator of whether a country will default or not. Nevertheless, its current rate (above 136% of the GDP) is well beyond the 77% benchmark and signals that the recession is rolling out.

Experts agree that in the nearest future the US national debt will most likely exceed USD 30 trillion. However, the US government will not have to pay anyone back. As a rule, when US government bonds mature, many bondholders simply reinvest the proceeds from previous Treasury notes into new government bonds. The debt snowball is growing. 

In April 2020, yields for all types of Treasurys took a steep dive. Sooner or later, the national debt will need to be somehow curbed by raising taxes, cutting government spendings, investing in new jobs, shutting down some costly programs, or by some magic. Until then the US dollar will remain vulnerable.

Foreign Investors losing confidence in the US dollar

Major foreign holders of Treasury Securities, including the governments of Japan and Mainland China (the two largest holders of US Treasury notes), have already reduced the share of US government securities held in their overseas custody accounts.

In February 2020, shortly before the Covid-19 pandemic began, foreign governments held more than a third of the public debt (nearly USD 7.23 trillion in US government bonds). By November 2020 (according to the data published by the US Treasury Department in January 2021), the total value of Treasury notes owned by foreign governments had fallen to about 25% of the total public debt (below USD 7.07 trillion). The decline is not overwhelming. But such a trend indicates a clear reluctance of foreign governments to buy more US government debt securities.

Pressing Domestic Issues

Besides the foreign governments, another major holder of the US Treasurys is a cluster of the US federal agencies and trust funds (such as the US Social Security Trust Fund, federal public employee retirement funds, and military retirement funds). In other words, the intragovernmental debt is owned by the US citizens themselves. 

Over the years, the Social Security system has accumulated huge cash reserves in various trust funds. The trust funds have mostly invested in US government bonds, buying the new ones when existing bonds mature, thus helping the government refinance its debt. But this time Social Security has faced a huge problem. 

The Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds are quickly running out of money. At the end of 2019, the Social Security program was providing monthly benefits to about 64 million people. Before the Covid-19 lockdown and social distancing measures, the Treasury Department had expected the trust funds to run out completely by 2034. Nowadays, some analysts, i.e., the Bipartisan Policy Center (BPC) experts, predict a complete depletion of trust funds as early as 2029 due to the adverse effects of the Covid-19 pandemic. 

The unprecedented urgent wide-ranging stimulus packages to keep the country afloat during the crisis have involved direct subsidies, loans, tax incentives to individuals, companies, entire industries in the U.S.A. They have been quickly exhausting the resources of the US Social Security and Medicare. At the same time, the collection of payroll taxes has partially suspended, unemployment levels remain at 8.4%, many small businesses have closed, the inflow of funds into the social security system is decreasing. 

To fund the Social Security payments, the Social Security Trust will have to withdraw money from the system when the Treasury bonds mature, instead of buying new securities. The Congressional Budget Office predicted last year that the COVID-19 pandemic would raise the FY 2021 deficit to USD 2.1 trillion. According to the current projections, the federal response to the COVID-19 pandemic will push the 2021 shortfall well above USD 3 trillion. 

The federal deficit is already nearly double what it was at its previous peak during the Great Recession.

It seems that the only way to cope with the deficit is for the Federal Reserve to “print” trillions of new dollars, just like the Fed did in 2020. In such situations, the “black magic” of the US central banking system comes into play: the Fed manages to “conjure up” money “out of thin air” and increase the money supply, subsequently using such money to buy US government bonds. In 2021, the agency will have to do it again and emit trillions of dollars. 

The disturbing forecasts and scenarios projected for the US economy, national debt, and politics are getting louder in mass media. The number of advocates of various alternatives to the US dollar (from cryptocurrencies to good old gold) is growing too. 

However, our regular readers of InternationalWealth are well aware of the economic citizenship advantages as the best alternative to any conventional asset.

Expert Services to Applicants

If you need more information on economic citizenship or practical guidance and help from InternationalWealth experts, please write to our e-address at the top of this page. You can rely on our experts’ many years of successful experience in the Citizenship and Residence By Investment industry (CRBI) and effective cooperation with local partners around the world. We have helped many wealthy individuals obtain second citizenship and realize backup plans in the right jurisdictions where they feel safe, free, and happy.