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Capital Controls are Coming

Global FatcaAugust 15, 2014 | by Steve McCurdy

 

Deja Vue All Over Again

 
History teaches that governments under threat almost always react in ways that are destructive to the rights and well being of citizens. These reactions are always justified by the necessity for the government to “protect us” from some type of imaginary gremlins. What is interesting is that, going all the way back to the Roman Empire, governments under stress resort to almost exactly the same measures in the same order of progression.
 

   

Early on in every crisis the government declares a “state of emergency” which it believes gives it carte blanche to do whatever it chooses to do. According to Wikipedia, a state of emergency is “a governmental declaration giving it the power to suspend or change functions of the executive, legislative, and judicial branches for a given period of time. It can also be used as a rationale for suspending rights and freedoms guaranteed under the Constitution.”
 
Under Roman law, the concept was known as “Justitium” and was normally declared after a sovereign’s death or during a war, such as Hannibal’s attack on Rome.
 
In the Casey Research publication “International Man,” financial writer Nick Giambruno  shows us the nine steps of progression in that nations typically follow in “emergencies.” We have reprinted his graphic below

Desperate Governments
Progressive Government Steps in Tightening the Financial Noose 

Mr. Giambruno believes the US government is now somewhere between steps 2) and 3) in the progression. He says that increasing regulation, taxes, and police state measures are already in place, and he regards FATCA as the first of what will likely be many capital controls.

What We Can Expect

 
Expanding on Mr. Giambruno’s thesis that history repeats itself, we can expect the imposition of some combination of the following “Capital Controls” going forward:

International Travel and Customs Restrictions to Prevent Capital Flight – The flight of On the Way Out of Dodgecapital out of the country will be one of Government’s biggest fears, and strict restrictions will be imposed on the amounts of cash and the types of assets that international travelers can legally carry. Acquiring and renewing passports will become much more difficult and time-consuming, and it will become extremely risky to dodge the restrictions by moving assets or investing offshore. A noted international traveler said it this way: “If the sheep are to be sheared, they must first be penned in so that they cannot escape.”
 
Bank Holidays, Confiscation of Deposits, and Withdrawal Restrictions to Protect Banks   - In 1934 FDR declared a “Bank Holiday,” to give Government time to develop a plan to save the banks. Some banks stayed closed for weeks, and some never reopened. From 1929 through 1933, more than 9,000 US banks failed, taking more than $140 billion of deposits from bank customers. There was no deposit insurance at that time. From a strictly legal standpoint, the money you deposit in the bank belongs to the bank and not to you, and as we learned in Cyprus during the “Bail-In,” desperate banks can simply confiscate your money if they so choose. If the banks are allowed to remain open, they will place onerous limits on withdrawals.
 
Nationalization of 401K and Other Retirement Accounts  - It is estimated that the total value of  all IRAs, 401-Ks and other retirement accounts approaches $20 trillion, and it is no secret that this number makes the government’s mouth water. By comparison, total IRS tax collections are under $3 trillion annually. There has been significant speculation that the Government, to save itself from monetary meltdown, would nationalize these accounts, meaning that it would the redirect the values of all portfolios in these accounts into US Treasury Bonds or other Government securities that it might designate.

A One-off Tax on Wealth – Due to the sheer magnitude of the insane debt levels run up by politicians, the IMF is advocating for a massive one-time tax on wealth (instead of income) to solve the world’s financial problems. To take US debt levels back to pre-Bush levels such a tax would have to generate about $12 trillion, which would equal about 3.5 years worth of income tax collections, so if you multiply your normal annual income tax payments by 3.5, you can get a rough idea of the amount of a one-off wealth tax. Many market observers believe the primary purpose of FATCA is to lay the groundwork for a “Wealth Tax.”
 
Confiscation of Privately Owned Gold and Silver – President Roosevelt took this step US Silver Eaglein 1933, when he issued Executive Order 6102. Those who surrendered their precious metals were compensated, but at far less than the then-prevailing market values. Ft. Knox had to be built just to house the almost 10,000 tons of metals confiscated from private citizens. Several states are already proposing varieties of what are called “precious metals registration” laws. If you are a gun-owner this might sound familiar to you.
 
Temporary or Permanent Suspension of Entitlement Transfer Payments – Under the protective blanket of a “National Emergency” the Government could theoretically suspend funding for Food Stamps, Medicare, Social Security and other entitlement payments. It would obviously use this prerogative only as a last ditch measure because of the potentially fatal political damage it would cause, but it is nonetheless within the realm of the possible.
 
Imposition of Martial Law and Curfews – Americans would be naïve to believe that the Government does not already have detailed plans drawn up to respond to all kinds of geopolitical or financial disasters, and those plans will almost certainly include  imposing martial law and curfews on the public.

Anyone who has studied the history of governments should not be surprised by any of the foregoing. To any government, retaining power when under siege totally overwhelms all other instincts.
  

Summary

 
Throughout this website we discuss a long list of serious threats that proliferate around the world, and we stress the necessity for preparedness. If and when any one of these threats materializes it will very likely change our lives forever.
 
No one can know how much time we have left before something blows up, but we all know that once the government implements the capital controls described in Step 3 of its crisis management progression, above, the vast majority of our wealth will be trapped, and it is unlikely we will ever get it back.
 
So don’t wait to get ready! Two years early beats a day late.

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