Simon Black reveals the true picture of capital controls and insolvent governments.
“Only the most desperate governments have to restrict the free-flow of capital across their borders. And once they hit, you know the endgame is near.
Capital controls can take a variety of forms… often as blunt as preventing outgoing international bank transfers (Iceland, 2008), or forbidding citizens to purchase foreign currency (Argentina, 2013).
Capital controls can also be more subtle.
India’s government recently hit the panic button, and in an effort to stem capital flight from the country, they cranked up import duties on gold bullion to 10%.
By taxing people on their gold imports, they are essentially providing an incentive to hold their paper currency, and a disincentive to own real money.
In the Land of the Free, the US government’s efforts have been even more subtle.
Over the last few years, they’ve cultivated an environment of fear and intimidation, threatening everyone with fines, imprisonment, and debilitating paperwork.
The IRS ran the oldest bank in Switzerland out of business and jailed foreign bankers.
They’ve prosecuted septuagenarians who failed to file a foreign bank account disclosure form.
They convicted Bernard von Nothaus and labeled him a ‘domestic terrorist’ for the grievous crime of minting silver coins.
They’ve thrown one set of regulations after another at foreign businesses, from Dodd-Frank to FATCA, arrogantly demanding that everyone in the world comply with US law.
As a banker friend of mine in Hong Kong once told me, “We are shit scared of the IRS.”
Their tactics are obviously working. And some firms are coping with this by simply eliminating their US customers altogether.”
Read Full Story: sovereignman.com
- This is what textbook capital controls look like
- Capital controls, trade controls, border controls…
- A very subtle form of theft
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