At a period in America’s life when all seems insurmountable, what with an astronomical national debt, high unemployment and underemployment, failing small businesses, and controlling corporate interests that don’t seem to have American citizens’ best interest in mind, it’s hard to believe that America is truly rich. Join Jason Hartman as he interviews Dr. Nick Begich, founder of Earthpulse Press, regarding the true wealth of America. Only looking at the profit and loss statements of our country and of many businesses conjures up a sense of failure and hopelessness, but Dr. Begich shares his optimism about America’s profitable future, encouraging people to look at the assets sheet, i.e. the vast resources our country boasts. The mineral wealth alone in this country is enough to retire the national debt, as well as put Americans back to work for a very long time.
Dr. Nick Begich is the eldest son of the late United States Congressman from Alaska, Nick Begich Sr., and political activist Pegge Begich. He is well known in Alaska for his own political activities. He was twice elected President of both the Alaska Federation of Teachers and the Anchorage Council of Education. He has been pursuing independent research in the sciences and politics for most of his adult life.
Begich received Doctor of Medicine (Medicina Alternitiva), honoris causa, for independent work in health and political science, from The Open International University for Complementary Medicines, Colombo, Sri Lanka, in November 1994. He co-authored with Jeane Manning the book Angels Don’t Play This HAARP; Advances in Tesla Technology. Begich has also authored Earth Rising – The Revolution: Toward a Thousand Years of Peace and his latest book Earth Rising II- The Betrayal of Science, Society and the Soul, both with the late James Roderick.
His latest work is Controlling the Human Mind – The Technologies of Political Control or Tools for Peak Performance. Begich has published articles in science, politics and education and is a well known lecturer, having presented throughout the United States and in nineteen countries. He has been featured as a guest on thousands of radio broadcasts reporting on his research activities including new technologies, health and earth science related issues. He has also appeared on dozens of television documentaries and other programs throughout the world including BBC-TV, CBC-TV, TeleMundo, and others.
ANNOUNCER: Welcome to Creating Wealth with Jason Hartman! During this program Jason is going to tell you some really exciting things that you probably haven’t thought of before, and a new slant on investing: fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible. Jason is a genuine, self-made multi-millionaire who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it! And now, here’s your host, Jason Hartman, with the complete solution for real estate investors.
JASON HARTMAN: Hey, thanks for joining me today on the Creating Wealth Show! This is episode #221, and this is your host, Jason Hartman. Appreciate you listening; hope you enjoyed the last show, where we talked about relationships. Every 10th show we do a non-financial topic, so we had Gary Chapman on that show, on the Five Love Languages. So today, let’s talk with Dr. Nick Begich, and let’s talk about some real reasons to be very optimistic about America’s future. And the best way, or actually, one of the two best ways, we could get out of our problem, our $60 trillion time bomb problem, where the nation is just insolvent. It’s not really insolvent, though, when you look at the balance sheet rather than looking at the profit and loss statement.
And that’s an interesting thought. Some people, in their own businesses, in their own financial life, just with personal finance, even if you don’t have your own business—they can become very disheartened and depressed about their current situation, because they’re looking at the profit and loss statement. They’re looking at the income statement, rather than looking at all the assets they have on their balance sheet. And when you talk about a country like the United States of America, it has incredible assets. This country, with its energy, and mineral, and other natural resources, is rich beyond belief. And that’s what we’re gonna hear a little bit about in this show. So, we’ll get to that in just a moment.
But before we do, let me just talk to you about a great property. This is on our website—the newly revised website—at www.jasonhartman.com. Hopefully it’s easier to navigate, and you all like it. We’ve been getting some nice feedback on the new design. This property is in the greater Atlanta area. It was built in 1999, so it’s only 12 years old. And it’s over 2000 square feet, almost 2100 square feet. Subject to qualifying, you can buy this property for only $20,800. And that is your total cash in. But check this out. The projections are as follows. Gross rent: $1050 per month. The property is $86,900. Cash flow projected at over $3000 per year. Almost $300 per month. And the cash on cash return here, 15%. Overall return on investment, 32%. It’s a two-story home, two car garage, nice floor plan—there are just some great opportunities. Right now we really have a lot of attention focused on the greater Atlanta, greater Dallas market—Dallas/Fort Worth, I should say—because we’ve got some really good inventory in these markets right now.
So take a look at those, they’re on the website at www.jasonhartman.com, and I sure hope you are coming to join us for the Meet the Masters event, October 14th. We have the fun night, that’s on Friday, and then all day Saturday and Sunday, the 15th and 16th. Hyatt Regency Irvine, California, the beautiful Hyatt Regency in Irvine, California. Special room rate for our listeners we got at $119 per night, so mention that you’re with Jason Hartman and Platinum Properties Investor Network for that.
Also, before we go to the interview, make sure you take advantage of listening to the Jim Rogers interview in the members section. By the time you hear this, that interview should be posted. If it’s not, it will be very shortly. But Jim Rogers, of course, is the brilliant, uber, uber-rich hedge fund manager who was partners with George Soros, although he does not want that mentioned as part of the interview, so I didn’t talk about George Soros in the interview. And I’m not a fan of George Soros, by the way. I just want you to know that. I think he’s anti-American, and in many ways, anti-capitalist, frankly. Although he’s a capitalist himself. It makes no sense. Very hypocritical, right? But that’s the way a lot of these uber-rich people can be.
And Warren Buffet would be a great example of that, by the way. You know, if you’ve heard his latest stuff, he’s buying Bank of America stock, and of course he gets a better deal than everybody else does, and it just goes on and on. He supports an anti-capitalist president that we have—it just doesn’t make any sense. But that’s another story, as it were.
But listen to that Jim Rogers interview in the members section at www.jasonhartman.com. If you’re not a member, join; you’ll get some great discounts on stuff. One of which being, the Creating Wealth Home Study Course. Since we’ve progressed, on this show we’ve interviewed a lot of guests, and we’ve gone a little bit away from the basics. The sort of the fundamental stuff. And I’m gonna go back on future shows and review some of this stuff. What are those things? Well, we recently did a repost of an old concept which is the concept of the 10 Commandments of Successful Investing that I created. And that’s a review. But what are some of the other big core content type review items? Well, you can listen to them in the old shows. Some of these shows are up. Not all of them. Some are in the members section. But they would be the Hartman Risk Evaluator, which is something that I discovered after 19 years, it took me to discover this phenomenal way to reduce or virtually eliminate risk when investing in properties. So that would be one of the core content issues. That, and the three dimensions of real estate. That’s another core content issue. The Ten Commandments. So we’ll be reviewing some of this stuff in future shows, because we’ve kind of gotten away from that.
But I just want to encourage all of you, and I hope before the Meet the Masters event—I know we have so many people coming this time, and I’m just very pleased with the response. But you know, if you don’t have it, get a hold of the Creating Wealth Home Study Course. Those are the fundamentals. It’s about—I don’t know, five hours long, or so. It’s downloadable audio from the website in the products section of www.jasonhartman.com, and that is just super important, core material for you to have and to know. For your education. And education is by far the least expensive way, or this type of education, is the least expensive way. They always say, you’re gonna get an education no matter what. It can be the real world education, which is very costly and very painful sometimes, or the education by learning through OPE—other people’s experiences and other people’s efforts. So learn from mine, learn from our clients, by taking advantage of the Creating Wealth Home Study Course. Really just a great sort of foundational, fundamental product that I want you to take advantage of. And that’s available on the website, www.jasonhartman.com.
Okay, let’s go to the interview with Nick, and let’s talk about America’s prosperity. Let’s talk about some real reasons to pause for some real optimism. We talk about a lot of negative things, and there are a lot of negative things out there. But if we look at the balance sheet rather than the profit and loss statement, I think you’ll be very impressed with the real wealth that we have. So we will be back with that, in just a moment.
ANNOUNCER: Now’s your opportunity to get the Financial Freedom Report. The Financial Freedom Report provides financial self-defense in uncertain times, and it’s your source for innovative, forward-thinking investment property strategies and advice. Get your newsletter subscription today. You get a digital download, and even more! The price is only $197. Go to www.jasonhartman.com to get yours today.
JASON HARTMAN: My pleasure to welcome Dr. Nick Begich to the show! I interviewed him recently for another show, the Holistic Survival Show, where we talked about HARP, and energy, and weather control, and all sorts of interesting stuff like that. But today, he’s talking to us from Alaska, and we want to talk today about some real reasons for optimism in America. This is not something you hear much of in the mainstream media, certainly, and you haven’t been hearing a lot of it on my show, frankly. There’s a lot of reasons to be annoyed and bothered and concerned and scared, frankly, about the future. But there are some real shining reasons to be optimistic about the future. And most of it comes from, as Nick says, looking at the balance sheet rather than the profit and loss statement. The balance sheet rather than P & L. America is an incredibly rich country, in terms of energy resources and mineral resources. So, let’s talk about that today. Nick, how are you?
DR. NICK BEGICH: I’m doing well. It’s a pleasure to be with you again, and on a topic of optimism, really. And I’m excited to do the program with you today.
JASON HARTMAN: Well, yes. And I’m excited to have you. First of all, tell us where you are in Alaska. Because I don’t know if we’ve had anyone on the show from Alaska before! It’s a beautiful place. I was there years ago, and I’ve got a picture of myself standing on the Alaska pipeline on June 21st, the longest day of the year. And that picture was taken at like midnight, and it looks like broad daylight out there.
DR. NICK BEGICH: Right. Well, I’m a couple hours north of Anchorage. In fact, I’m the second to last pole before you run out of power and telephones. And behind me is an area about the size of West Virginia that is completely empty of villages, towns, or development. Although there’s some pretty good size mineral developments taking place in terms of exploration in that particular region. And that is really the topic of the day. When I look out today, as I’m looking out my window, I can look about 10 miles in any direction, and I do not see another sign of a living soul. So this is a very good place to be talking about natural resources today.
JASON HARTMAN: Well, this is a great topic, because my take on it is that we are very, very wealthy in this country, and mostly I think the environmental movement, and the political correct movement, has stopped us from exploiting our own resources. It’s interesting to me that we won’t drill off the coast of California for oil, but we’ll drill off the coast of Brazil. You know? I mean, this is just—it’s nutty! Are there powers that are just trying to make this country artificially poor? What’s going on?
DR. NICK BEGICH: I think there’s a lot of economic shifts, obviously, in the world. I mean, the market is not in the US, in Europe, anymore. The market is the developing world, where 6 billion people are trying to catch up with the rest of the industrial world. And I think we’re seeing that shift in the tradeoff. And often what happens in terms of developmental interests is that the industry, here in Alaska particularly, the oil industry, has leveraged foreign development against development here, and what they essentially do as multinationals is say, until you lower the taxes low enough, and in some cases we have tax rates at zero [LAUGHTER], they won’t spend any money here investing in infrastructure and developing resources.
And their rationale is, we can get a better deal elsewhere. And what the real rationale is, we can be excused from any environmental considerations elsewhere. We can keep this as a safety deposit box backed by the US military, and someday, we’ll develop it when we get thrown out of every other region in the world. Or, as 88% of oil-producing regions in the world have already determined, the oil belongs to their people, and they actually keep their oil, and hire the industry as contractors to really come in and do the heavy lifting. But the real story is, who owns the underlying resource? And this is the crux of the balance sheet comments that you opened with. Because the energy resources of the country, at least most of them on the west side of the Mississippi River, are owned by the public, and either state governments or the federal government, which is us. And so ultimately, the value—the fair value of those resources needs to be booked, and we need to make sure that the American people are receiving fair value for our resources.
JASON HARTMAN: Okay, so, it sounds like, then, that you’re largely blaming the multi-national companies. Which I agree with. I was reading, years ago, Pat Buchanan’s book, Death of the West. And then I later interviewed him on the show, and believe me, I understand the guy’s a controversial figure. I get it. But, he is pretty smart. And one of the things he complained about, is he said that companies—American companies—large corporations, just like sports teams—I don’t know if he made the sports teams comparison, I’m making that one—used to have a loyalty to their place. And nowadays, they’re just these soulless entities that move across borders like they’re nothing, to get the best deal, as you said. So, I know that’s a factor, and I completely agree with you that that’s going on. Is that the main place you would place the blame as to why we haven’t exploited our resources?
DR. NICK BEGICH: No. No. The other is the environmental community have used Alaska as the poster child for fundraising for every fundraising event they can ever conjure up. And the problem is, we’re almost 20% of the land mass. We have more coastline than the east, west, and Gulf Coast combined. We are a huge region with incredible resources, but when we’re used as a poster child for the environmental community—and the thing I say, and it gets me pretty excited, is—the environmental community has never come up with any project that they support, and that’s a problem, because that kind of extremism doesn’t belong in the public debate.
JASON HARTMAN: What’s interesting about that is that we know that they support their own consumption for their own luxuries [LAUGHTER].
DR. NICK BEGICH: Driving to the meeting in the nice car.
JASON HARTMAN: And driving to the yoga class, and Starbucks, and all of that consumption. So—and Al Gore’s mansion in Tennessee.
DR. NICK BEGICH: And it is a balancing act. And stewardship is something that conservatives and liberals should understand. You know, this is a responsibility to the earth, to each other, and to succeeding generations. To find the balance in that is indeed possible; it has been demonstrated numerous times in developments, and what really needs to happen is the environmental community needs to start coming up with programs, plans that help companies do a better job. And that’s the kind of cooperation that we need in order to develop balanced programs. Otherwise we get the extreme ends, and then when we have some national emergency, all those environmental considerations will be pitched aside in favor of the national interest, and that’s a problem. If we don’t plan forward, one day we’ll find ourselves in a position of actually having to do the kind of exploration and exploitation that everyone objects to because we won’t have any options. Alaska with proper planning can provide an incredible economic base to the country. And my family’s been involved in Alaska politics for now three generations.
My father was in the United State Congress in the early 70s, my brother’s in the United States Senate today, as one of the representatives from Alaska. And making the case for why Alaskan mineral and oil and gas developments and need to move forward in the national interest. And it is a huge, huge opportunity. I’m involved in the minerals industry, and have participated the last three years in the Miners’ Association’s meetings here, and what I find surprising, is that virtually all of the countries that show up—the big ones and the mid-sized juniors, as they’re called—all are from other countries! They’re not from the United States! And they are locking up some of the most incredible resources for development here. In fact, just one development alone, the Red Dog, which is essentially a Canadian firm—Red Dog opened a number of years ago for lead zinc mining up above the Arctic Circle. They now produce 6% of all the zinc concentrate in the world. And they do it from a location most people don’t even know exists, and they can’t even ship out of their port half of the year. So that is a phenomenal resource, and it’s one of many world-class resource discoveries, many of which are not in development yet in Alaska, but have that potential. There’s over a billion and a half dollars being capitalized for one gold mine in south-central Alaska. This is an Anglo American and Northern Dynasty joint venture. In fact, Northern Dynasty in the last two days just announced they’re selling their 50% stake in that project. And they were just a small junior. They were the lead that came into this thing a number of years ago. But when you start to look at sort of the history of what happened here, with minerals, that’s where the story really, really begins.
JASON HARTMAN: Okay, so hang on. Before we get on that, I just want to kind of review a couple of things that you’ve mentioned. So, number one—the problem is being caused by the multi-national companies and the environmental movement. And the environmental movement is basically saying that they’re against everything. They’re never for anything, yet they’re still alive, they’re still consuming, so you’ve gotta come around and be rational, and be for something.
DR. NICK BEGICH: That’s right.
JASON HARTMAN: So that makes complete sense. Something responsible, obviously. So fair enough there. Nick, if you would, just give us the macro view here of how rich the country is, and we don’t even have to talk about North America and our friends to the north, the Canadians, and how rich they are, with their tar sands full of oil the size of Saudi Arabia or larger, many say, but right there in North Dakota, and in Alaska, and in the Gulf Coast—I mean, there are a lot of opportunities right here at home to create a lot of wealth in the economy, and maybe even export that to other countries, rather than—as T. Boone Pickens talks about, spending, what, a trillion dollars a year to import oil from these corrupt foreign oppressive regimes?
DR. NICK BEGICH: Right, and then spend trillions more to defend the multi-nationals’ assets in those countries by engaging in foreign wars that otherwise we would have absolutely no interest in.
JASON HARTMAN: Right, and that is a ridiculous environmental waste. War is the biggest environmental sin ever.
DR. NICK BEGICH: For sure.
JASON HARTMAN: No question about it. So, before you go into anything else, just give us the macro picture of how rich we are. That’s what I want the listeners to hear. Just the big, big picture.
DR. NICK BEGICH: When you look at Alaska alone, in terms of coal, we have 20% of the known coal reserves in the world here. We have coal seams 600 feet thick near Tidewater in south central Alaska that are being developed by the Bass and Hunt families under a project called Pack Rim. They have one billion tons of what’s called a proven reserve, which is the absolute highest assurity of reserve, a billion tons of low-sulfur coal at Tidewater accessible to the lowest cost port in the north Pacific, the port of Tionic. And when you look—I worked as a tribal liaison for Tionic in the Tionic Native Corporation; I’m very familiar with that area.
There’s also a big geothermal project being developed by Ormat, which is capitalized at over $1.3 billion and is a publicly traded company—they just secured a couple years ago geothermal rights for I believe it was 30,000 acres of state land, but the entire Aleutian chain, 2000 miles long, is essentially a geothermal plant. It’s a chain of volcanoes, for God’s sake, and it has huge, huge potential in terms of that kind of energy, renewable energy, energy that will last 10,000 years, in the case of [unintelligible]. When you look at the dollar values, when you think about oil and gas on the North Slope, there’s enough there to retire the national debt. There are tens of trillions of dollars of oil and gas alone, off the coast of Alaska in US waters which extend 200 miles from our continental shelf. And a growing dispute is emerging as we start to look at those arctic waters, and begin to argue with the Russians and with the Canadians and with the Europeans, over whose rights these are. So that becomes very important to define, the perimeters of those rights.
And then more importantly, to reassess our relationship with the oil and gas industry to make sure that the country is getting a reasonable share of that resource, in terms of rents, royalties, etcetera. And none of that is being talked about. The mineral wealth alone, in terms of creation of jobs and possibilities—we have no infrastructure that even links us to the Lower 48 states so we could even move these minerals into the Rush Belt where we could make it shine again and start producing value added product and shipping them back through the Great Lakes and back out into the Atlantic, or shipping them by rail across the country. We need rail links—we have 15,000 miles of road in the entire state. Think about this. 20% of the country, we got 15,000 miles of road. You have more roads in the city of Seattle than we have in this entire region. We need infrastructure built, which means jobs for US citizens.
We need rails, ports, and access to the mineral wealth. We’re on the Pacific Rim, the ideal position. And one of the more exciting projects that I’ve been involved in is a coal to liquids technology, which is extremely exciting, and has huge possibilities for oil independence and creating what’s called a neutral CO2 footprint, by applying technologies that are now available. And I think that becomes really exciting, because this becomes economic for coal conversion at about $50 a barrel oil, which we’re well within that range.
JASON HARTMAN: Well, and Nick, before you get into that, I want to ask you this. Since you started off with coal, and I was just asking you for the macro view of the things. One of the famous things that Obama said, or intimated, during his campaign, is that he would bankrupt coal plants. Coal power plants. And what can the coal be used for that’s clean? Is this an example of it you’re about to mention?
DR. NICK BEGICH: Yes it is. In fact, let me talk first about the process itself. It uses chunk coal, not pulverized coal, so you mitigate a lot of the dust issues that come up, as well as, they’re heavily regulated, with the Clean Air Act and Clean Water Act. The difference with power plants is, their output is essentially a coal ash, which creates lots of problems and controversy. Although I think there’s ways to handle that. Some of the things we’ve done in the past obviously haven’t worked. In coal to liquid you don’t produce a coal ash, you produce what are called bottoms, which are a heavy tar-like substance that’s sort of the waste product. But these are them combined with normal petro-chemical production, and actually produce, and are added into the feed the produces asphalt, which is used for road paving.
So essentially the waste ends up being utilized. But the CO2 issue, which is another big issue, has to do with the idea that, you know, if you’re going to create pollution you need to neutralize it. So, the technology that I’m speaking about was originally developed over about a 40 year period by ExxonMobil, later licensed to a company called Excelergy, and then in the course of that, Excelergy has done some things here. I worked on a specific project to certify the state’s coal for the air force, because the air force wants what they call bio-safe fuels, which these qualify. The fuel that’s produced—you can produce JP8 jet fuel, diesel fuel, or gasoline. And the way this is done is, you literally break the coal down into its elemental constituents; carbon, sulfur, whatever trace mercury, and so on. And then you recombine the elements, and you carve out the byproducts, the sulfur, the mercury, any of those turn into byproducts that are sold separately, but they don’t end up back in the environment. There is a hybrid blue-green algae that goes with this that takes about 600 acre footprint, but it produces—it basically absorbs the CO2, and the out product of that are three things: a biomass feed that goes back into the coal processing, an organic fertilizer, and the third is an oil that is actually given to the petrochemical industry again to improve hydrocarbon cracking in normal crude oil. And at the same time, so you can get a zero, or a neutral CO2 footprint, you can actually create a sink.
You can enlarge that piece of this puzzle, and actually create a net carbon sink, rather than a carbon producer. The other issue is the bio safe nature of the fuels. If they spill, they biodegrade in the environment, and they’re ultra-low sulfur. In the case of the jet fuel component, they can create sort of a hybridized jet fuel that actually gives you 20% more energy, or British Thermal Units—BTUs—in each liter of fuel. Now what that means is, for predators and drones and aircraft, you can get 20% further on the same payload. Or in the case of international air freight, which Alaska happens to be the leader in the country in air freight, you can then add 20% less fuel, which then you can add that weight, make up that weight, with additional cargo. And that goes straight to the bottom line of those companies.
Now Alaska, Anchorage is so short of jet fuel. We’re losing cargo traffic. They’re actually having to barge the jet fuel in, and park it in our inlet, which creates a very serious hazard. Whereas coal to liquids would create a jet fuel that a) wouldn’t have to be, at least we wouldn’t have to worry about the spill as much if it did occur, but more importantly, one of these facilities will provide 60,000 barrels of jet fuel a day, which is what our airport here at Anchorage consumes. That’s a tremendous, tremendous thing, and when you look at this one facility that’s being considered for Alaska, it would replace almost 20% of the capacity, in terms of cash capacity, of the trans-Alaska pipeline. Which many people don’t realize is only running at about a third of its capacity right now. Not for lack of oil to go into it, but for a lack of will to drill for that oil and put it in that pipeline.
JASON HARTMAN: So, in other words, the oil’s in the ground, it’s just that nobody’s extracting it. And so the Alaska pipeline’s only running at one third capacity?
DR. NICK BEGICH: That’s right. It’s running at about 600,000 barrels a day, and it was designed for 2 to 2.1 million, which it ran on for many, many years, and then what happened is, the industry began to negotiate what they called marginal fields, which in other parts of the world they call gushers. And these marginal fields they were able to negotiate 50% of royalty reductions, and in some cases no royalty requirements whatsoever. Now in the course of all of that tax and legislation, we were very uptight about it up here, because it was strictly a formalized method of bribing public officials, which eventually turned into a more formal method of bribing, which indicting our US Senator Ted Stevens, and about seven other legislators here in Alaska. Several of them went to jail.
A few of them managed to get out on technicalities, including our former US Senator. But the fact of the matter is, the industry had corrupted our legislature to the point where they used this as a sort of proverbial safety deposit box. They knew they could always come back, and their rationale was, we can go elsewhere. And the reality of the industry is, each deal stands or falls on its own merit. Most countries of the world have eliminated 88%—88% of countries now produce their own resources, and use the industry as the contractors that competitively bid for the right to drill and build the infrastructures. But the underlying resource is owned by countries. In the case of Norway, with the fields that they have, they now have over $400 billion in what they call their permanent fund, or their heritage fund. Here in Alaska we have about $40 billion from our state revenue source. In fact, we let our government essentially buy endowment. We run it off of oil and gas revenues. We don’t have a state property tax here. We don’t have a state income tax here. And we don’t have a state sales tax here. Essentially, it is a—
JASON HARTMAN: There is no other state that can boast those. I mean, Washington state has no income tax, Oregon has no sales tax, and they all have property tax, right? I mean, nobody—you have the trifecta of libertarianism!
DR. NICK BEGICH: Now, there are communities, of course, that have some small sales tax.
JASON HARTMAN: But not a state tax. I got you.
DR. NICK BEGICH: No. Because the state budget runs on our revenue stream, developed by our natural resources, and on the endowments we’ve created out of that revenue stream for those natural resources. And the state gives us each a check every year, which is an allocation of 50% of the earnings on that fund, averaged over a 5-year period. Every year they calculate a benefit to each of us and send us a check. You know, last year it was around 1200 bucks a piece. Which is kind of our energy subsidy, if you think about it that way. We not only don’t pay the tax, we get a share of the wealth that’s developed from our resources that we all own in common here. And it was a republican governor that put that in, and it has been republican governors that have been the strongest advocates not just for the industry but also against the industry in terms of fairness.
JASON HARTMAN: We’ll be back in just a minute.
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JASON HARTMAN: Before you go on, I want to make sure people know where you’re coming from. So your brother is a senator, and he’s a democrat, right?
DR. NICK BEGICH: Right.
JASON HARTMAN: And where do you stand, politically?
DR. NICK BEGICH: I’m a democrat. Probably the most conservative democrat in the party.
JASON HARTMAN: Alright. So you’re a center democrat. You’re a center leftist, right?
DR. NICK BEGICH: Yeah. I am. And actually, you know, if the republican party wasn’t so corrupt here, I probably would have switched. But they will not get rid of the leadership that brought the corruption, maintained it, and they’ve kept that leadership, and for that reason I’d never join that party in this state. But as I look at the landscape, what the value of Mark being a democrat, supporting the development of oil and gas, supporting mineral development—
JASON HARTMAN: Which is rare for a democrat. Most democrats are like the California type that don’t want to let you drill, blah blah blah, and don’t want to let anybody do anything, right?
DR. NICK BEGICH: That’s right. And here in Alaska, Mark is enlightened in that respect. And as an Alaskan, working with Murkowski, who is our senior senator from Alaska, and a republican, here we have an opportunity. And I think Mark is the messenger for the Obama administration that has convinced the Obama administration to allow additional exploration on the North Slope of Alaska. And this is extremely important, because that is the key to energy independence, is the development of Alaska’s resources. The coal to liquids technology could make us energy independent. You know that China right now is using the very same technology to retrofit their coal to liquids facilities. Retrofitting them from the old Fischer-Tropsch technologies which started back in the 30s in Germany, you know, when they needed oil, and they didn’t have it, to fight a war in the 40s. And so, this method only yields about three to three and a half barrels of oil per dry ton of coal.
The new technologies are five to five and a half barrels of liquid products per ton of dry coal. So the Chinese are now retrofitting their plants. They intend to be energy independent, based on coal to liquids conversion, so they don’t import oil and gas, or at least oil, anymore. And that ought to be a message. They’re gonna support an infrastructure for over a billion people on coal to liquids, and they weren’t concerned about the environmental footprint. And when they went through this facility driving for miles and miles, going to these facilities, somebody asked—well, what could we do to help the CO2 footprint? They said, plant trees! You’ve got all this vacant land; plant trees. Well, the next time they came through, every 30 meters there was a tree planted on both sides of that road for miles and miles as far as they could see, because to hire Chinese laborers to plant trees is not a huge expense, but the payoff they could understand and relate to. And in the long run, they got to breathe the same air. And people do realize it.
Are they going to the extremes? Absolutely. But look at what the Chinese are doing. They’re taking the dollars that are devaluing, they’re buying mineral resources and oil and gas rights all over the world, they’re paying what we think is a premium, but they’re betting against the devaluation of the dollar. They’re dumping the dollars. Look how much copper they bought when it was $1.30 a pound a few years ago. They were the biggest buyers of all. They drove the price right back up to its pre-depression or recession levels, because of their consumption and stockpiling. This is a critical thing, when you start to look at Alaska. We have 32 of the strategic 33 minerals in place in world-class minable quantities in Alaska, and we’re not developing them.
JASON HARTMAN: And again, why not? I mean, just because the tree huggers won’t let them do it? Because the multi-nationals can do it cheaper elsewhere because they don’t have the environmental restrictions, the OSHA requirements, the taxation climate, the regulatory climate? Is that why?
DR. NICK BEGICH: Those issues are all there, as well as infrastructure. Alaska needs infrastructure to bring these resources to the rest of the country. We’re the last of the frontier regions. You go back to the land disputes—going back to even before the pipeline; you know, the pipeline—
JASON HARTMAN: Why can’t we get the infrastructure resources, though? Again, the same reasons? Those two major forces?
DR. NICK BEGICH: Well, we’re one state competing against 49 others for those same dollars. We’re a very small population.
JASON HARTMAN: I know, but you can enrich the other states, and employ people in those states! The resources are where it’s at. I mean, the population is expanding dramatically. We’re hitting one of those billion number marks this year, over 7 billion people, I think, around August, I think it’s actually happening right now!
DR. NICK BEGICH: Actually delayed until November, I saw. But it is—you’re right, we’re in that frame of the 7 billion, and you know, again, it’s a question of public education and awareness to know what’s here. When you go back to the original debates—because, the titles on Alaskan land were a bit in dispute because of indigenous claims—that in 1971 was able to pass, as a freshman, the largest indigenous settlement in the history of the country, the Alaska Native Land Claim Settlement Act, which transferred 44 million acres and a billion dollars, basically, to the native populations of Alaska. They got a priority selection, and went around and picked out their properties, and then, as part of that, because it was a case of Mo Udall from Utah did not want this bill passed as it was structured, he slid in a section called Section D2, which set up a 105 million acres for parks and preserves as a one-time and last time the federal government would take land out of the public domain in terms of accessible land for other purposes, and put it into parks and preserves.
Well, what they locked up were the biggest and most important mineral areas in many cases within these parks and preserves, and essentially preempted any further development. And up until that moment, you and I as American citizens over 18 years of age could go out, make a discovery, and claim that discovery in your name, and pay the fees that are due to the government, which were not that extreme. But by taking it out, what they’ve done is now locked it up in a way—and it’s interesting, some of the big groups supporting the environmentalists at time were the Rockefeller Foundation, the Ford Foundation, people were going, what the heck are these industrial foundations doing supporting this environmental effort? And what they were doing is making sure the best resources got locked up into a safety deposit box that in a national emergency, all the environmental regulations will be swept away. All of the issues will be swept away, and multinationals and companies with immediate capacity will be invited in to exploit those resources in the national interest, and we’ll all scream what great heroes they are.
JASON HARTMAN: What you’re saying is, rather than the little guy, like you and I, making a discovery, or some wildcat making the discovery, only the multinationals would be invited in in a time of crisis, because they stand ready with all the resources to exploit the energy and the minerals, right?
DR. NICK BEGICH: That’s exactly right. And when you look at it, Alaska’s always been the big guy’s game, because of the amount of money it takes to build and do large projects here. But the state of Alaska, with our current administration, and even in the past administration, is very encouraging for the industry. And there’s huge resources here available to private industry, in terms of tax-free bonding to help build out infrastructure related to projects. We built $150 million road and port for the Red Dog mine, which they actually paid off out of the production over a 10 or 12 year period. But again, they built infrastructure with cooperation with the state, the Alaskan Industrial Development Fund that has huge bonding capacity, and capacity to help big projects get off the ground. So even the juniors and smaller companies that have an interest in Alaska have an opportunity to look at infrastructure builds that make sense, that are in the public interest. But it takes a broader view. Alaska at one time, they analyzed back during the D2 debates, all of the oil and gas debates.
And a video I produced actually showed that map, and it’s about a third of the state is oil and gas based, and only one of them—Prudhoe Bay is the one everyone hears about, and the other one is Cook Inlet, which is where Anchorage is located, which produces gas and oil, and the interesting part of that is, the USGS just came in and tripled the estimated gas reserves for Cook Inlet. And if you ever looked at any USGS analysis, they usually come out about 10% of what the actual resource eventually shows, and Prudhoe Bay is a good example. They said there’d be a billion barrels of oil there, and we’ve produced 14 billion already. So, the USGS isn’t the most reliable. They tend to be absolutely the most conservative.
JASON HARTMAN: See, here I thought this was going to be an optimistic show, and I’ll I’m doing is getting upset with our government for not exploiting these resources.
DR. NICK BEGICH: Well, here’s the beauty of it. Really, Jason, as we look at this, is think about the fact that nobody knows this stuff. I mean, here we are, we’re having this conversation, making the public aware, and it should get people a little bit uptight, but it is an optimistic view! Because we have the resources to dig our way out of this. not just from the standpoint of the private side, but by establishing fair tax taxing of these industries going forward, we can pay this national debt off. We don’t have to leave it to our great-great-great-grandchildren to worry about. We can set this up now. We can take the leadership now. We have the resources, we have the intelligence, what we need is the political wherewithal to get it through a gridlocked Congress, and then to start to look at a holistic plan for developing 20% of the nation’s land mass in a way that makes sense—that’s better than what we did when we came into the western states. We can do it. We can do it with the technology and the knowhow we have now, but we have to take that forward view of how do we rebuild a country on our own base, and not on the base of someone else’s dream from some other place. And that’s the challenge for this generation.
JASON HARTMAN: Yeah, it is. Well, maybe close with some action suggestions. People hearing this—I’ve been hearing it, I have these discussions with my friend Gary frequently, about how we’ve just got so many untapped resources that the country can pay its bills if—if—we were to use these items. I have identified in my shows and my seminars and so forth when I’m talking to real estate investors, several ways that the government can get out of the mess, and I’ll just highlight a couple of them for you. They can raise taxes, that’s an idea, but there aren’t enough—if they made everybody’s tax rate 130% it wouldn’t be enough to pay for the cost of the unfunded liabilities and entitlements. So that’s not gonna work, and obviously when you raise taxes you suppress economic activity. At least that’s what I think, because I’m on the more right side of the political spectrum. You’re more on the left, or left center, so you might disagree with me there. But whatever the case, you can’t get it from tax revenue, okay? There’s just not enough there.
DR. NICK BEGICH: Right, I agree with that.
JASON HARTMAN: The other way is, growth! That would be really good, if there’s some growth, some new discovery, whether it’s an invention or a biotech, nanotechnology, stuff like that, or it’s just a discovery of more resources that we could actually use. I don’t think we need to discover them anymore. We know they’re there; we’re just not tapping them. The other way is to sell assets. And basically, have a big American yard sale. And we’re already doing this, to some extend. And everybody listening will certainly remember the whole debate over selling the ports to Dubai, which didn’t happen. But those kinds of things, I think we’re going to see a lot more of that, and more of this sort of garage sale thing. And then the other way, which I think is frankly the most likely scenario, because it’s the most politically expedient, is to simply inflate our way out of the debt and the liability. Which slowly it seems like that’ll be okay, because it’s what we’ve been doing all along, especially since 1971 when Nixon closed the gold window.
So, we inflate our way out of the debt, and ultimately what that does is it impoverishes people who have done the right thing. They have saved money, they have lived a productive life, they have put away for a rainy day, they have paid off their debts, because inflation destroys lenders and makes borrowers become wealthy, which is the wrong behavior, I am the first to agree philosophically. But in practical terms, inflation is the likely scenario. I mean, it’ll be a blend of all these things, really. But you know, if we’re not going to exploit these assets, are we going to sell them off and take the money, at least?
DR. NICK BEGICH: Well, here’s some things to consider, in terms of land sales, as an example. Do you know why the British crown still has so much money? They didn’t sell anything. They leased everything for 100 years. You know? And so when the 100 years is over, and all the development’s taken place, they get to come in and take possession of not just the land, but the improvements. And then release them. It makes for a really nice arrangement. But being smart about it, looking forward about it—you know, oil and gas prices like in the state of Alaska, why don’t we hedge against the price, so we maintain the optimum value of our resource on the sales side? None of us do that. The state doesn’t do it. National government doesn’t do it. It’s something the private side does all the time.
When you look at the actual cost of development, and taxes—and I agree with you on the tax issue. And here’s where the confusion comes in on mineral resources. You can think about royalties as a tax. But really the right way to think about this is, we own the resource, we are the landlord. We are the public. We lease these resources to the industry. That lease, we’re being taken advantage of, because the tenant thinks he’s the landlord. And this is the problem. We own the resource, everyone’s entitled to a fair profit, but the change needs to be in how we allocate that resource. Instead of leasing it to the industry, we should retain ownership as states in the federal government, and then create a competitive bidding environment for those that wish to drill, and build the infrastructure so that those companies can make a profit, be competitive within a capitalist system, but recognize the underlying resource is ours, and we need to optimize the value of that resource. Especially on non-renewables, because once gone, they’re gone.
If we’re going to pay the national debt off of non-renewable resources, then we need something that stops the government from recreating another national debt when we don’t have those resources in the future to pay off. And that’s the balancing act. At the same time, what Alaska did is took 25% of its oil and gas revenues and created this permanent fund I mentioned earlier, and that permanent fund now is large enough that it’s actually able, if they chose to, to actually underwrite a great deal of the states’ general operating budget. And again, the mistake I think we made is we should have put more in it. Because if we had put more in it, we could have actually, within another few years, run this place by endowment. Now, at one time, British Petroleum was trying to create a monopoly on the North Slope with Atlantic Richfield’s holdings up there. And I was the only person to testify suggesting that the state buy Atlantic Richfield. And I estimated it would sell for $9 billion, and it actually sold for $8.9, so it wasn’t too far off. But if we bought—if Alaska had bought ARCO and then divested itself of its foreign assets, Alaska would have owned 51% of all the natural gas on the North Slope, 33% of all the oil, and 22% of the pipeline, and our dividends, instead of $1200 last year a piece, would have been $12,000 a piece last year.
The state’s permanent fund would have grown to such an extent we would never have income taxes in this state in perpetuity, nor the pressure to develop another state resource unless we felt that it could be done in absolutely the best way. That’s the difference between letting a multinational take the resource, or retaining the resource in the public interest, and that is the answer to solving this country’s problem, is reassess those natural resources, reassess how they’re being allocated, and recreate a 21st century deal that reflects a new deal for multinationals; heartless, soulless, companies that have eternal life on earth, and no accountability to the American people anymore.
JASON HARTMAN: It’s like free agency in sports. There’s no home team anymore, really, is there? Because the players keep moving around.
DR. NICK BEGICH: And here’s the other thing. You look at the home team—how did we defend the home team? With 800 bases and military installations scattered around the world. We don’t need that. Just bringing those bases back to the continental United States, can you imagine that money, instead of rolling through Germany’s, and the Philippines’, and Asia’s economies, could you just imagine that spending taking place here and rolling over three to seven times in our economy?
JASON HARTMAN: Right. In other words, what you’re almost saying is, when you said spending, I initially just thought about the troops themselves. Not even the government spending. If the government closed those bases, and just those troops, those people came back here, and spent money, and even if they were still in the military, and the government was spending on the military money, they wouldn’t be spending money on the travel, and the logistical expenses like they do now—
DR. NICK BEGICH: But they’d spend it here, and it would roll through our economy, and it would create growth, and more tax base, and we would be solving the problem. If a foreign country wants to keep that base, let them pay for it at a 30% charge for our administrative overhead. If they want that, let them pay for it.
JASON HARTMAN: It sounds like you’re ready to support Ron Paul in 2012, my friend.
DR. NICK BEGICH: Hey, Ron Paul, in my opinion, is the man for 2010.
JASON HARTMAN: Couldn’t agree more.
DR. NICK BEGICH: Because he understands these issues, and he understands the future. And whether he’s a republican or democrat, he’s a man of integrity, and he’s accurate on what he’s saying.
JASON HARTMAN: Well, that’s fantastic, I’m glad you said that. Well, hey, what I want to close with here is just, what can an individual do, who’s listening to this? What are your recommended actions just for a person? A listener. What can they do? What are they going to do? Write a letter to their congressman? [LAUGHTER].
DR. NICK BEGICH: Get a hold of your congressman and US Senators, and ask them to please allow Mark, my brother—talk to him about resource development. If you have a democratic senator or house member, there’s someone they can talk to that’s a democrat, that’s one of their colleagues. That should happen. They need to understand these resources, and listen to what we’re saying as democrats and republicans in Alaska. We’re saying the same thing. We’re concerned about the country’s interests. Let your congressman know that we’re concerned about developing Alaska’s resources in an appropriate way, and to start discounting the environmental organizations. If you’re a member of one of those environmental organizations, ask them which projects in the world they support. And if they don’t support any, find yourself a new organization that will actually create a positive and cooperative way of finding solutions to the environmental problems we face. Because industrialization is either going to happen here, or it’s going to continue to move into the third world, and the rest of our jobs are gone, and we’re the third world for the future. And that is not the place Americans belong, and not the place that this country deserves, on the basis of our resources alone.
JASON HARTMAN: And like you said—I love that, what you just said. If industrialization—it’s going to happen either here, or it’s gonna happen somewhere else, but it’s going to happen for sure. And earlier you quotes Kennedy when you said we all breathe the same air. And that air moves around the world. So, the industrialization is going to happen, and it might as well happen in the most responsible place, and it might as well benefit us. So, I couldn’t agree more. Well hey, Nick, thank you so much. Nick Begich, give out your website if you would, and tell people where they can learn more about you.
DR. NICK BEGICH: Sure. The website is www.EarthPulse.com, and the energy issues are explored actually in one of my videos, and it’s called Earth Changes, and it’s a contrary view to climate change, so people might find that interesting.
JASON HARTMAN: Good stuff. Well Nick, thank you so much; I appreciate you joining us today.
DR. NICK BEGICH: Thank you for having me.
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Transcribed by David
The Jason Hartman Team
Episode: CW 221: America’s Optimistic Future with Dr. Nick Begich Founder of EarthPulse Press
Guest: Dr. Nick Begich
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