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]
- 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:
- 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?]
- They’ve authorized military detention of civilians on U.S. soil.
- 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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One can barely keep up with what is going on here in Argentina, since each day brings more ‘new’ government dictates, rules and initiatives which all seem to share the same features – dumb and dumber – and virtually all with guaranteed unintended negative consequences. Let me give you my on-the-ground insights of the lay of the land – of what is REALLY happening in Argentina – and about to happen! Words: 853
Long the champion and beneficiary of free trade and the free flow of capital, the United States has enacted legislation that becomes effective, in part, on January 1, 2014 [revised from January 1, 2013 date mentioned in the original article] that a growing number of commentators and professionals believe could be the start of capital controls in America and have serious unintended consequences. Let me explain…… Words: 1252
“Trying to do business internationally for Americans is becoming a real nightmare. The once land of the free & home of the brave has been transformed into George Orwell’s 1984 nightmare squared….The damage to international capital flows is off the charts. This single law has wiped out whatever international trade advantages Americans once enjoyed.” ~ Martin Armstrong Words: 692
The “Trillion Dollar Coin” is a hot topic amongst economic policy analysts these days…The idea consists of a proposal for avoiding the inconveniences caused by the congressionally imposed “debt ceiling” in the U.S. by bestowing unlimited power upon the U.S. Treasury to issue money with no backing. When you reflect upon the economic and political implications of [taking such action]it becomes clear that the notion of the Trillion Dollar Coin is just plain stupid. Most importantly, when you look at the wider political, legal and ethical implications of this scheme for the rule of law and liberal institutions, it is beyond stupid. [Let me explain the idea more fully.] Words: 2362
With both the fiscal cliff and debt ceiling looming, US stocks beginning to trail stocks overseas and the much increased volatility of the US market compared to those outside the United States, it is getting difficult to argue that the United States is still the “safe port” in a storm. Given the changing dynamic, we continue to believe that this is a good time for investors to consider lowering their overweight position in US equities while raising the allocation to international stocks. [I explain my position more fully in this article.] Words: 711
The United States and most of Europe…risk an eruption and collapse of the mountain of unsustainable sovereign debt built up over the last two decades. Frankly, the U.S. dollar and national debt situation is so dire – and our means to contain a sovereign debt crisis so limited by multiple wars and Washington’s debt and political incompetence at home – that anything could happen, almost overnight. [The best] America and most European governments and the central banking elites, which created the criminal sovereign debt fiasco, [appear able to do is] try to buy more time and delay the inevitable. This inaction means the threat of an immediate US debt and dollar collapse cannot be ruled out. Therefore, readers who have not protected themselves certainly have cause to worry because now could be too late. [Let me explain further.] Words: 1689