Is El Salvador - The Dragon & The Treasure
I've lived the dream of working off a laptop at some random caribean beach. It's a good time. But deep in this lifestyle, there is a dilemma...
A favorite strategy of the wealthy and ambitious of our era is voting with their feet. The idea of the perpetual traveler, the perpetual tourist has been popularized and polished for well over a decade. The dream of working off your laptop out of a Caribbean beach while you pick shrimp off a “Vuelve a la Vida” is rooted deep within our generation. I’ve lived it, it has its perks. But deep in this outlook on life and politics is a dilemma. We know ‘they’ are coming for ‘us’. I hate to use such paranoid and conspiratorial language, so let me clarify. ‘Us’ is everyone middle class or under throughout the world. ‘They’ at the very least are the WEF whose agenda is public and unambiguous. ‘They’ are not a creed, a race, or a religion. They are a political and economic class, an oligarchical cult of power. And they don’t like the competition. We are the competition.
So the WEF wants eco & bio marxism, installed and activated throughout the world. And the trick is, they can’t just start with one country at a time. They have to activate their new world order in as many countries as possible. Because you see, any city and state that rejects their eco-marxism will become a shining beacon of freedom. Casting their machinations into the shadows of suffering. We saw this play out with the Covid lockdowns, actually. While the world was imprisoned in their homes over a virus with a 99.9% survival rate - for most - the seeds of his economic recession and possible depression were being planted, sowed, and watered. Texas and Florida in particular stood out. They were among the first in America to free their people from medical tyranny and the baton-wielding Karens of the world. And soon the covid & economic statistics began to shine in the free-er states.
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That light, shining from Texas and Florida cracked the lockdown regime in the US. It provided an escape hatch, as we saw a massive internal migration of Americans, escaping the bleak, depressive outlook of the lockdown states.
The same can happen with eco-marxism aka the climate change agenda. The WEF’s intentions and the consequences that follow are explicit. Energy prices will go up as a result of the over-regulation of energy. It is our ‘duty’ after all, to starve and become impoverished so that “the world doesn't end in 12 years” - they tell us.
Food prices will increase - they admit - as Dutch farmers, the second largest food exporters in the world get punished for using fertilizers that have fed the world for 100 years. Farmers struggle to source diesel, raising the costs of production for them and thus for us.
So what do we do? Where do we run? Is there any place to hide? Maybe, but hiding is for losers. The question is not ‘where will you be safe’ - but, where are you willing to take a stand? Sun Tzu's The Art of War teaches readers to fight, only when they have the advantage. To retreat when trapped. To seek the high ground. What high ground will you pick? At some point, we all have to be willing to draw a line on the sand and say NO MORE. Where do you want to be when that day comes?
El Salvador - Bitcoin country
I don’t know if El Salvador is the mecca or not. But as a believer in Bitcoin and its promise, I have to take it seriously.
What’s there to take seriously, you ask? Here’s the recap.
Bukele’s War on MS13 has brought homicide rates to historic lows, and peace is on the horizon.
Tourism booms as Salvadorians report feeling safe in their country, returning near pre-covid levels.
International capital investment into the country is booming, with talent entering the country in the hopes of riding the Bitcoin wave.
New securities laws are being developed to fit the digital age, which if done right could turn El Salvador into a Latino American Hong Kong.
No shitcoins policy means that the financial ignorance of many won’t be exploited by fly-by-night shitcoin hustlers and ‘DEFI’ marketers, opening the doors of real capital investment into infrastructure, products, and services.
Bitcoin being regulated as legal tender means there are no capital gains taxes for Bitcoin hodlers. That is bound to attract Bitcoin owners from across the globe.
On the 7th of September of 2021, El Salvador approved the Bitcoin Law, regulating BTC as Legal Tender in the country. This announcement means a lot of things to a lot of people. What I see is a huge opportunity for Bitcoin and the ideas of many of its proponents to be put to the test.
The Bitcoin law is also a consequence of good leadership - in my opinion - on behalf of President Nayib Bukele, alongside a population that seems ready for growth, peace, and good change.
Now I could jump into statistics and numbers. But, do you see the promise?If El Salvador can continue on this trend, and separate itself from the IMF’s questionable loans and policies. Secure its country from the gang violence that has plagued it for decades. Reform its securities laws to be agile for the crypto era. Open itself up to software entrepreneurship as Silicon Valley did decades ago. Mine Bitcoin at an industrial scale. Become a global tourist destination. And on top of that modernize its infrastructure and expand its exports.Well, I see a bright future for El Salvador.
Imagine being on the ground floor of Hong Kong, or Dubai. Imagine having the chance to invest in Venice during the first few years of its inception!
I don’t know. I’m excited. However, it's not all sunshine and rainbows. There are serious risks and hurdles for El Salvador to overcome if it is to fulfill this promise. Risks which I touch on in this issue of the WTF Newsletter. Risks that not everyone has the stomach for, and that’s ok. However, It is to assess those risks and get a real sense of where the country is going, that I will be attending a Bitcoin conference in El Salvador this November 2022.
The conference is called Adopting Bitcoin, and it is start-studded with Bitcoin OGs, Twitter celebrities, and entrepreneurs. The cost of renting and having a good time in El Salvador is what you would expect for a Latino American nation - cheap. And the price to attend is very low! at 300 USD equivalent payable only in Bitcoin.
Better yet, with coupon code WTF2022, you get $50 dollars off! ( Coupon expires mid-September)
I can’t even. I’m sold, and maybe I’ll see you there! I have to see what’s really going on in El Salvador!Anyway, in the meanwhile, here are economic facts about the country since their announcement of the Bitcoin Law, as well as my thoughts on the promise of El Salvador and its challenges ahead.
Macro & Opportunities for El Salvador
Since the announcement of the Bitcoin Law, the country has since received a great deal of attention, both positive and negative.
The IMF has refused to give loans to El Salvador thanks to the Bitcoin Law, while Bitcoin millionaires, entrepreneurs, and companies from all over the world have entered the country, seeing investment opportunities.
OG Bitcoin Investor meets with El Salvacor President Nayib Bukele.
Tourism as a result has flourished, reaching near pre-covid highs.
“The report by the WTO states that some “Central American destinations have the best results compared to 2019,” including El Salvador at +81% compared with 2019, or pre-pandemic levels.
Contrary to reports from the Wall Street Journal that El Salvador’s bet on Bitcoin to attract tourists “hasn’t worked,” visits for the first half of this year almost outpace total visits in 2019: 1.1 million people visited the country in six months, compared to last year’s total of 1.2 million.”
Tourism of course brings money to the local economy, boosting GDP.
In fact, despite the stagnant collapse in the price of Bitcoin and markets in general over the past year, El Salvador’s GDP grew over 10% in 2021 with a strong bounce from 2020, and that trend is on track to continue.
Remittances are flowing into the country with a reported 1.6% being in Bitcoin, with a high of 3 Million USD in one day late in 2021. These numbers may not sound like much in the context of 6 Billion in remittances received by El Salvador each year, but is a big jump from what was probably much closer to zero before the Bitcoin Law.If Bitcoin and The Lightning Network can truly provide cheaper rails for remittances, then this number should continue as Bitcoin understanding and adoption grows among Salvadorians at home and abroad.
As Legal Tender in El Salvador, Bitcoin transactions are not in eternal conflict with the state. There are no potential capital gains taxes on every coffee you purchase, eliminating a large disincentive to use the coin as currency, by normal people.
Better yet, if Bitcoin can actually function as a currency anywhere, then El Salvador should be a place to figure out how to make that happen. With the state, for all intents and purposes out of our way. In this sense, El Salvador is a real test case environment for Bitcoin as a currency. Can people overcome the volatility? Is the comparison to the greenback which Salvadorians are used to, too tough a competition?
Is it possible to create Bitcoin bank-like institutions in El Salvador that minimize custodial risk and use Bitcoin to improve money in real ways? What happens when a small nation becomes an industrial-scale Bitcoin miner? Can we bring financial education to the Salvadorian people and help raise them out of the same goop of industrial era education the whole world is stuck in?
There’s a lot more going on in El Salvador in terms of macroeconomics. More than I personally care to get into, but if you are interested, dig! Bukele’s Twitter account is a solid place to start, ´providing a long list of claims about the growth of the country which you can go ahead and fact-check yourself.
Don’t trust but verify!
Speaking of El Presidente. Let’s talk about his war on MS13.
MS13 - The Mara Salvatrucha
El Salvador’s new president Bukele appears to have had a positive impact on the peace of the country since he was elected earlier in 2019. The homicide rates have been plummeting rapidly, elevating El Salvador from a nation once seen as too dangerous to get close to, to a touristy tropical paradise.
While talking about homicide rates at all is nothing short of alarming. You may find some comfort in my experience living in Acapulco, a city with 104 homicides per 100k inhabitants. As with any other country not involved in a large-scale war, if you play it safe and don’t overexpose yourself, you’ll most likely be fine. Anyway, everything seemed to be trending in the right direction for El Salvador, until earlier this year in March when 62 people were killed in a single day by what was reported as random gang violence.
Immediately all fingers were pointed at MS13, the infamous international gang born out of Los Angeles. Many founding members of MS13 were refugee immigrants from El Salvador’s brutal civil war in the 80’s.
MS13 is widely known as one of the most violent and powerful gangs in the world. Spreading throughout the Americas in particular with the qualities of both a mafia and perhaps even a religion. Its structure is fairly decentralized, with strong in-group preferences, bloody initiation rituals, and tattoos. Lots and lots of tattoos.
Various waves of mass deportation of MS13 from the US took place since their inception, flooding a then war-torn El Salvador with a powerful new ideology and mafia-like structure, resulting in decades of gang conflict and organized crime until recent years. While homicides and other crimes in El Salvador were trending downwards in recent years. The massive spike in homicides in early 2022 shook the country. It was immediately taken as a political message, triggering Bukele and the Legislature to enact a state of emergency. The next few weeks resulted in a military sweep of the country, likely focused on areas known to be MS13 territory, leading to mass incarcerations. Accusing the gangs of the worst kinds of organized and petty crimes. As of earlier this month, 50,000 arrests are being reported. Those are big numbers. It will take some time for the country to digest these changes and process those cases.
“We have strongly impacted the terrorist structures,” Security Minister Gustavo Villatoro said in presenting the extension request to lawmakers. “We have witnessed how Salvadorans were able to enjoy the safest vacations in history”, he added, referring to recent national holidays.
As of the time of writing, El Salvador has been in a state of emergency for 5 months, following 5 extensions of 30 days periods, all supported by Bukele’s coalition in the legislature, with 66 or so votes to 84 elected officials. The country really is at war with MS13. The public in general remains in strong support of these emergency actions. It is the innocent people after all that have suffered at the hand of these gangs for decades. Homicide rates appear to have returned to their trend towards zero after a bloody March of 2022. The fact that tourism has remained strong despite this conflict is certainly a good sign. Other reports also corroborate the effectiveness of Bukele’s crackdown.
“An association of bus companies said that gang extorsion of their members has decreased 95%. “It’s a respite,” they said in a statement.”
War, Peace, Victory & Comparisons to Colombia
I’ve seen what security can do for a country and its economy. Real security, from real violence and crime, not the fake security we had to suffer through during the covid lockdowns. A real sense that you are not gonna get mugged on the streets. That kind of safety is beautifully important for humans to flourish.
Colombia was at war with narco guerrillas for 60 years. I grew up during the tale end of this conflict. My family was impacted by that conflict for generations. We’ve also experienced the breath of fresh air that comes with peace. It is most notable for tourism and the safety of highways, as the government won the war and secured the country, opening up Colombia to travelers from across the world.
From this perspective, I sympathize with the people of El Salvador and their wish to end the gang violence, which like Colombian narco-terrorism, seems to have affected Salvadorians for decades.
I also sympathize with the difficulty of maintaining high standards of due process and justice when engulfed in the fog of war. In fact, I believe it is impossible to apply due process and respect the rights of a civilized society when at war, almost by definition.While Colombia has enjoyed relative peace ever since the end of Uribe’s war on the guerrillas, the political backlash to corruption revealed during his presidency was also swift and memorable - Casting then Colombian president Uribe into political exile. In particular the murder of thousands of innocents who were being counted and falsely reported as guerrillas, also known as the “Falsos Positivos”.
To what degree something like this could happen in El Salvador remains to be seen and I’m personally not making any such accusations. El Salvador’s conflict with MS13 is on a much lower scale than Colombia’s 60-year hot war with the narco-guerrillas. However, truth and justice take time and can only be discovered as the war ends and the rule of law is re-established, beginning a likely long process of delivering judicial process to those arrested.
Much of the arrests are likely happening based on MS-13 tattoos and other profiling or associations. Given the nature of war it is inevitable that some innocents will get caught up in the machine. It will be up to Bukele and his party to end emergency powers when appropriate and deliver proper justice and amends to all harmed and arrested, rightfully or not - as is due.
Also in their defense, It would be great if one could wage a war and uphold the highest democratic and constitutional standards. Sadly, I think if you do the math, you soon realize that justice doesn’t scale. It only really works when there is peace and people have the civility and wisdom to work out most of their issues without the state.
Anyway, Bukele has what is called a super-majority government today. Massive popularity among its people, by most estimates. If he can continue to wield his power wisely and can win this war against MS13 with minimal innocent casualties, deliver justice, and reinstate the constitutional and natural rights of his people, then he will achieve a truly great deed.
A deed, which I have faith is within their power and can bring long-lasting peace and prosperity to the country.
There is a path here to deliver El Salvador 21st century as a forward-looking, safe, and educated Cristian nation with strong roots in sound money and technology. A beacon of freedom and innovation in Latino America.
That to me is a beautiful vision and ambition, one that I am personally inspired by. I commend Buleke and his people and wish them the wisdom and tact they will need to succeed.
Deep Thoughts W/ Juan Galt is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.