When They Write About This Crisis...

Dear Fellow Expat:

Sir Gregor MacGregor was a Scottish mercenary, world adventurer, and conman.

He famously raised several hundred men in Charleston, South Carolina, and “invaded” the northern Florida key of Amelia Island in 1817.

There, he declared himself king of the “Republic of the Floridas.”

He printed his own currency – called Amelia dollars - to compensate those troops.

Sadly, his reign wasn’t long – about 100 days before he abandoned the island.

He left those troops to fend for themselves – with a currency worth?nothing.

Three years later, MacGregor devised an even more outrageous scheme.

He’d sailed up the Mosquito Coast, a narrow stretch of now Nicaragua and Honduras that faces the Caribbean Sea.

He'd received about 8,000,000 acres of Mosquito land in exchange for jewelry and rum from a?Miskito?king named George Frederic Augustus I – even though it’s uncertain that the man had the power to gift the land in the first place.

The descendants of shipwrecked slaves and indigenous people had previously inhabited the region. But by the time MacGregor arrived in 1820, all signs of civilization had vanished. The jungle may have looked beautiful from the ship’s deck. But it wasn’t a place to raise animals or cultivate agriculture.

The land would kill him if he let it.

So, MacGregor devised a way to unload those useless assets, just as Goldman Sachs devised to dump worthless bonds on unsuspecting customers in 2008.

He created a fake nation as part of a massive confidence trick.

He called it Poyais, dubbed himself a “Prince,” and developed a fairytale story of a “land of opportunity” across the Atlantic Ocean.

MacGregor took this confidence game to extreme levels.

First, he created fake uniforms for the fake Poyaisian Army, fake land titles, a fake honours system, and even a fake coat of arms.

By 1821, MacGregor returned to London, establishing himself as foreign royalty and a frequent recipient of high social invitations where he’d court investors and followers.

No one had?Google, so they couldn’t look him up to learn of his failed adventures in Florida.

He presented himself as a wealthy dignitary, earning adulation from rich society.

The timing for MacGregor’s scheme could not have been better for him.

After the Battle of Waterloo, interest rates had dropped precipitously as the post-war English economy grew.

New investors wanted more returns and more risk. So where did they turn?

Some turned to MacGregor, who was selling the luxurious vision of Poyais in newspapers from London to Glasgow.

He bragged of black, fertile soil. He forecasted millions of dollars in crop production. He talked about ample fish and wildlife for settlers to hunt.

He described spa-like waters for sick people.

And… of course…?it was all a lie.

Still, hundreds of people invested in Poyaisian government bonds and land – even though the nation didn’t exist. Roughly 250 people even moved to the region in 1822 to find it wasn’t the paradise promised.

More than half of them died.

Turns out, MacGregor was one part?fake socialite Anna Delvey, one part FyreFest?co-founder Billy McFarland,?and another part Goldman MBS broker.

He’s been labeled the “founding father of securities fraud” thanks to a real estate bubble he’d fueled across the Latin American region. But it gets worse.

The Poyais scheme – among other ill-gotten, crowded investments in Latin America- helped influence a stock market crash called the Panic of 1825 three years later. That financial Panic saw 70 banks fail.

The autopsy of the 1825 Panic is the definition of history rhyming.

The British economy experienced a big boom after the Napoleonic Wars. The central bank dramatically increased the money supply, making speculation like Poyais investment rampant.

Then, the Bank of England rapidly tightened the money supply.

The result was a massive run on the banks.

The Bank of England refused to act as a lender of last resort.

Until it was too late…

Sound familiar?

Read more about the pending bond crisis... here.