Advice for the wealthy.
It
starts: the government’s plan to steal your money
Simon
Black
12
June, 2012
There
are consequences to being flat broke.
There
are consequences to investing any level of confidence in a financial
system underpinned by debt and the creation of paper currency.
There
are consequences for ignoring reality and pretending that everything
is normal.
This
is one of them: European officials yesterday flat out admitted that
they were discussing rolling out a series of harsh capital controls
across the continent, including bank withdrawal limits and closing
down Europe’s borderless Schengen area.
Some
of these measures have already been implemented sporadically;
customers of Italian bank BNI, for example, were all frozen out of
their accounts starting May 31st upon the recommendation and approval
of Italy’s bank regulator. No ATM withdrawls, no bill payments,
nothing. Just locked out overnight.
In
Greece, the government has taken to simply pulling funds directly out
of its citizens’ bank accounts; anyone suspected of being a tax
cheat (with a very loose interpretation in the sole discretion of the
government) is being releived of their funds without so much as
administrative notification.
It’s
no wonder why, according to the Greek daily paper Kathimerini, over
$125 million per day is fleeing the Greek banking system.
European
political leaders aim to put a tourniquet on this wound in the worst
possible way.
So
what are capital controls?
Simply,
capital controls are policies which restrict the free flow of capital
into, out of, through, and within a nation’s borders. They can take
a variety of forms, including:
-
Setting a fixed amount for bank withdrawals, or suspending them
altogether
-
Forcing citizens or banks to hold government debt
-
Curtailing or suspending international bank transfers
-
Curtailing or suspending foreign exchange transactions
-
Criminalizing the purchase and ownership of precious metals
-
Fixing an official exchange rate and criminalizing market-based
transactions
Establishing
capital controls is one of the worst forms of theft that a government
can impose. It traps people’s hard earned savings and their future
income within a nation’s borders.
This
trapped pool of capital allows the government to transfer wealth from
the people to their own coffers through excessive taxation or rampant
inflation… both of which soon follow.
The
thing about capital controls is that they’re like airine baggage
fees; ultimately, all governments want to do it, they’re just
waiting on the first guy to impose them so that they can shrug their
shoulders, stick it to the people, and blame ‘industry standards’.
Moreover,
capital controls were a normal part of the global economic landscape
for most of the 20th century, right up to the 1970s. It’s been a
long time coming for governments to return to that model.
Since
the inception of this letter, it has been a constant theme for us to
talk about the increasing threat of capital controls. Your money,
your savings, your livelihood are all under attack by insolvent
governments, and it’s critical to take steps to reduce your
exposure.
When
European financial leaders all openly admit that they’re making
plans to establish continent-wide capital controls, it really begs
the question– what additional warning sign does one need?
The
dominos have already started falling. Iceland. Ireland. Greece.
Spain. Portugal. Italy. Cyprus. Soon even France and the rest of
Europe. And it will come to the United States as well. There are over
15 trillion reasons why.
So
what are the most critical steps to take now?
1)
Buy precious metals and store in a secure jurisdiction.
Holding
gold and silver overseas is a great way to (a) ensure your savings is
protected against inflation, and (b) ensure that your precious metals
cannot be confiscated in the event that gold ownership is
criminalized in your home country.
I
strongly recommend Singapore, Hong Kong, and Abu Dhabi as three
potential safe jurisdictions for your gold and silver.
2)
Open a foreign bank account.
For
funds that need to be maintained within the financial system (as
opposed to precious metals), make sure you have a safe home for your
money abroad in a safe, well-capitalized bank.
3)
Have a place to go overseas
Economic
turmoil brought on by governments stealing people’s savings
generally goes not bode well for social stability. If things get
hairy, you’ll want to have a place to wait it out. And you don’t
want to be deciding on the location while you’re packing your bags.
As
an example, I’ve picked up an 1100-acre farm in central Chile that
won’t skip a beat when the financial system implodes. The sovereign
debt bubble does not affect whether or not my trees will bear fruit
or my vegetables will grow.
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