Wednesday , 13 December 2017


Will the U.S. Follow in the Footsteps of the Once Great – and Now Financially Desperate – Argentina? I Wonder

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Like health, freedom erodes gradually over time… then all at once. We lose a freedom here, there, through a slow, measured deterioration of civil and economic liberty: body scanners at the airport; declarations of foreign accounts; mandatory health insurance and then, suddenly, there’s a bifurcation point when the deterioration goes nonlinear. It’s like the old saying about going broke– it happens gradually, then all at once. We lose our freedoms in the same way. [That is already happening in Argentina where the government is] screwing everyone, big time: banks, businesses, workers, retirees, professionals, entrepreneurs, even government employees and the U.S. is starting to go down this road as well. [Let me explain.] Words: 625

So writes Simon Black (www.sovereignman.com) in edited excerpts from his original article entitled Capital controls, trade controls, border controls…

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Black goes on to say, in part:

This is the familiar story of almost every once-great world power throughout history – from the Romans to the Venetians to the post-Bourbon French – and the impetus is often the same: dire economic problems, underpinned by unsustainable debt or inflation of the currency.

History shows us that when governments start to get into financial trouble, their only solution is to try to control and regulate everything. They impose:

  • capital controls,
  • wage and price controls,
  • exchange controls,
  • border and travel controls,
  • population controls.

They destroy freedom in the name of preserving the status quo.

The Argentina Example

Nowhere today is there a more clear example than here in Argentina. This nation, once one of the richest in the world, has gotten into financial trouble so many times it’s hard to keep track and, in light of so much economic decline and capital flight, President Cristina Fernandez de Kirchner has imposed just about every control in the book. [Read: How NOT to Run a Country: What’s REALLY Happening – and About to Happen – in Argentina]

She’s:

  • cut people off from being able to hold foreign currency,
  • forcing companies with profits abroad to repatriate the funds back to Argentina,
  • nationalized pensions
  • requiring steep taxes on overseas retail transactions,
  • required that every single purchase be recorded and reported to the tax authorities,
  • practically taken over the media,
  • exerting controls over most of the utility companies,
  • slapped export quotas on Argentine farmers and ranchers, forcing them to sell in domestic markets at an unprofitable price and
  • controlling the prices of another 300+ products,
  • fired a former central banker for not bending to her policy wishes,
  • demanded that Argentine banks allocate a percentage of their deposits for loans to be made at negative real interest rates.

Basically, she’s screwing everyone. Big time. Banks, businesses, workers, retirees, professionals, entrepreneurs, even government employees. Again, we know how this movie ends. The more governments control, the more disastrous the results.

Will the U.S. Follow? 

[The above is] an important topic because we’re seeing the same signs in Western Europe and the U.S. This summer I saw harsh banking and border controls in Italy, financial transaction controls in Portugal and Spain, and all-out asset confiscation in Greece.

The U.S. is starting to go down this road as well. Indebted past the point of no return where they must borrow money simply to pay interest on the money they’ve already borrowed, they’re out of options.

Think about it:

  1. With the FATCA legislation that kicks off this year, they’ve already implemented de facto capital controls. [Read: Update: U.S. Currency Control Implementation Has Been Delayed Until Jan. 1, 2017!  How Will It Affect You?]
  2. They’ve authorized military detention of civilians on U.S. soil.
  3. Their best idea right now, hopelessly drowning in debt as they are, is to mint a trillion dollar coin. [Read: What is the “The Trillion Dollar Coin” Idea? Why Is It Beyond Stupid?]

How long will it be before the world’s largest economy becomes the world’s largest financial prison? How will you be worse off for holding some savings in a strong, stable bank overseas? Will anyone really miss receiving (and paying tax on) 0.1% interest at an insolvent US bank?

It’s utterly absurd… and truly time to diversify overseas [Read: U.S. Events Suggest It’s Time to Further Internationalize Your Portfolio].

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*http://www.sovereignman.com/expat/capital-controls-trade-controls-border-controls-10324/

Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.

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