Guest Post: This Is What Textbook Capital Controls Look Like

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man blog,

Selling snake oil and issuing unbacked paper currency are not so different. They're both wildly successful ploys for the guys pulling the strings. And they're both complete scams that depend solely on the confidence of a willing, ignorant public.

But once the confidence begins to erode, the fraud unravels very, very quickly, and the perpetrators resort to desperate measures in order to keep the party going.

In the case of fiat currency, governments in terminal decline resort to a very limited, highly predictable playbook in which they try to control... everything... imposing capital controls, exchange controls, wage controls, price controls, trade controls, border controls, and sometimes even people controls.

These tactics have been used since the ancient Sumerians. This time is not different.

Today, Argentina presents the most clear-cut example. Here the 'mafiocracy' unites organized crime, big business, and politicians to plunder wealth from Argentine citizens. Just since 2010, President Cristina Fernandez has--

* Nationalized private pensions, plundering the retirement savings of her people.

 

* Increased tax rates across the board-- income, VAT, import duties, etc. as well as imposed a new wealth tax.

 

* Inflated Argentina's money supply, printing currency with wanton abandon; M2 money supply has increased 215% in the past three years.

 

* Driven the value and purchasing power of the currency down by 50%. Street-level inflation is now 30%+ per year.

 

* Made a mockery of official statistics, comically understating the level of Argentine inflation and unemployment. She even began punishing economists for publishing private estimates of inflation that didn't jive with the government figures.

 

* Taken over control of one industry after another, most notably the nationalization of Spanish oil firm YPF's Argentine assets.

 

* Imposed export controls of agriculture products from beef to grains, forcing growers to sell at artificially lower domestic prices.

 

* Imposed capital controls, reducing her citizens' capability to dump their poorly performing currency and hold gold, dollars, euros, or anything else.

 

* Imposed a two month 'price freeze' on items in the supermarket, and encouraged retail consumers to rat out any grocer that doesn't abide by the government order.

 

* Imposed controls over the media, most recently ordered an advertising ban in Argentine newspapers (weakening their financial position).

Cristina's policies here are leading to shortages in everything from food to fuel to electricity. Hardly a month goes by without major strikes and disruptions to public services. The purchasing power of their currency is diminishing rapidly. And most people are completely trapped.

Of course, there were a handful of people who saw the writing on the wall. They learned the important lesson never to trust their government. They moved their savings to stable foreign banks. They purchased property abroad. They bought gold and silver, and stored it overseas. They were prepared when the plundering began.

The developed West is rapidly heading down this path. Europe is beginning to impose capital controls, and the IMF has sanctioned them. The US is rapidly printing its currency into oblivion, and confidence is eroding quickly. Russia just purchased an historic amount of gold, choosing real assets over more US dollar reserves.

It would be foolish to think the same things can't happen in the West. And even if it never happens, would you be any worse off for taking some of these basic steps?

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DaveyJones's picture

but the Pope is pooped

and unlike the Central Banks, he knows when to quit pretending

Pairadimes's picture

He's giving up Pope for Lent.

DaveyJones's picture

he was going to give up meat, but that has less impact when you can't chew

Pladizow's picture
Over five thousand years ago, Moses said to the children of Israel , "Pick up your shovels, mount your asses and camels, and I will lead you to the Promised Land." Nearly 75 years ago, (when Welfare was introduced) Roosevelt said, "Lay down your shovels, sit on your asses, and light up a Camel, this is the Promised Land." Today, Congress has stolen your shovel, taxed your asses, raised the price of Camels and mortgaged the Promised Land! I was so depressed last night thinking about Health Care Plans, the economy, the wars, lost jobs, savings, Social Security, retirement funds, etc .... I called a Suicide Hotline. I had to press 1 for English. I was connected to a call center in Pakistan . I told them I was suicidal. They got excited and asked if I could drive a truck...... Folks, America is screwed.
Overfed's picture

I'd become a Catholic!

Troll Magnet's picture

Pladizow,

there's hope, my friend.  Obama's got this!

...

Nevermind.  What's that hotline's number?

The Gooch's picture

The Ace Of "Hades"

(pronunciation is important here)

francis_sawyer's picture

Selling Snake Oil... EUREKA! Simon ~ You're finally living up to your potential in life...

~~~

I'm wondering though ~ Would you more recommend the Uruguayan 'snake oil'?... Or the snake oil from Gstaad?

A Lunatic's picture

Excellent. + 2,347 (why 2,347?.........why not.)

TheGardener's picture

Thanks for lighten us up Pladizow !

I just got depressed about that black simon operation going
on here, after his dubious coming out he gets even more moronic...

Scro's picture

Very funny. I sent this to my friends ????

PGR88's picture

I've felt for a few years now that the best way to understand the USA's future is to look at Argentina's recent past.

DaveyJones's picture

as CD points out, it is now a federal offense to compare the US to any other people, country, economic, military or historical moment. If you do, they can search your hard drive without a warrant.

unrulian's picture

Holy Fuck.... F_S is screwed :)

The Limerick King's picture

 

 

The Kleptos are in a big hole

And soon will be taking control

Your money, your life

Your sexy young wife

That's just how The Kleptocrats role

DaveyJones's picture

The kleptos have come to pass

They already have your ass

Hide the kids and the wife

Keep a gun and a knife

That's a lesson for any young lass

A Lunatic's picture

 

 

I new a man called Simon Black

Who was undoubtedly hooked on crack

In each article he told

us to export our gold

but once gone it would never come back...........

 

Imminent Crucible's picture

I once knew a Limerick King

Who could rhyme just about anything

I tried hard to model

His impudent twaddle

But somehow my last lines always turned into crap.

 

 

francis_sawyer's picture

I once tried to rhyme using 'orange'

But... But... But then I stopped & decided to do rap lyrics instead...

 

Likstane's picture

The gold price is starting to slack

reading ZH while continuing to stack

about some dude named droner

and bankers taking over

at least I'm not simon black

Hulk's picture

The wife they can have

she's been very bad

and the money's as worthless as poo is !!!

Cognitive Dissonance's picture

But.....but.....but that could NEVER happen in the good old USA.

Right?

/sarc

Winston Churchill's picture

CD

Already happening.Try wiring any ammount overseas from  a bank now.

What took two hours to arrive,now takes two days.

Nice new Treasury reporting form the banks have to fill out.

Seems the Govt. is also prepping.

ninja247's picture

Picture of Joseph Smith as a snake oil salesman?

Do I sense anti-mormon sentiment?

ninja247's picture

It would be kind of cool if WB7 would include some old Mormon clippings like this.

His Mitt Romney stuff is awesome. I don't like the garment/underwear pics though.

Your pic is awesome, BTW.

espirit's picture

Nah, it's just that I wouldn't vote for anyone named "Willard".

earleflorida's picture

Nothing more than the duplicated/ plagiarized religion of ancient 'Zoroastrianism `ism?-- when it comes to money, finance, elitism and hypocracy!           http://www.wikipedia.org/wiki/Zoroastrianism

A Lunatic's picture

Looks like Alexander Hamilton to me........

Ahmeexnal's picture

They envy you for your harems.

reader2010's picture

It's all based on faith (aka not willing to accept facts) because "In God We Trust."

The Federal Farmer's picture

Fiat is never good. As the old saying goes, "It ain't worth a Continental."

Diogenes's picture

They call it Fiat because it depreciates like a rusty Italian car.

hedgeless_horseman's picture

 

 

...imposing capital controls, exchange controls, wage controls, price controls, trade controls, border controls, and sometimes even people controls.

 

Welcome to Duloc such a perfect town here we have some rules, let us lay them down;

Don't make waves, stay in line, and we'll get along fine, Duloc is a perfect place. 

Keep your feet off the grass, shine your shoes, wipe your........face;

Duloc is, Duloc is, Duloc is a perfect place!

adr's picture

Well Duloc does look better than Idiocracy, I mean at least it was clean. Of course getting a "Hot Latte" any time you want seemed good at first, but being force fed Brawndo isn't much of a life.

On the other hand having the WWF Champion as president would be preferable to Obama.

catacl1sm's picture

Jesse Ventura for Pres!

Quinvarius's picture

Our current politicians are so ignorant, they can only make the same mistakes that have already been made.  If you are not buying this dip in gold, you are nuts.

One month of QE shows up: http://research.stlouisfed.org/fred2/series/BASE  How about the next 12?

ATM's picture

THEY aren't ignorant! THEY know exactly what they are doing. THEY know that the PEOPLE are the stupid and will underestimate their cunning. 

Quinvarius's picture

Maybe.  But in the age of the internet, the biggest moron in America can become a currency collapse expert in an hour or two.

Inthemix96's picture

Its time to start the hangings in my opinion.

These fuckers need sorting out, and it will be left to us good folk to do so.

God damn fucking swines.  And while I'm on, fuck you pope, and fuck you bernanke.  I hope its me who pulls the chair away as you fucking swing you dwarf bastard.

chaartist's picture

I understand that it will happen the same way as in history with different background music. Distractions all around. Pope. Japan with China, Russia with Japan, North Korea on demand tests, Syria, Africa invasion, Iran playing chessgame. What else do we need. I feel hopeless, even those who can understand the root cases fall into apathy of not wanting to know more.

jumped_ship_and_swam's picture

Argentina's course was set by Juan Peron in the 1950s.  Among other things, he made voting mandatory.  People who make no contribution, only take, are required to vote.  Needless to say, they are careless in their voting.  They sell their votes, and give them to politicians who pander to them.  Since Peron there have been his widow Isabel Peron, a military government, and a succession of populist governments who have given it all away.  They have had financial crises about every three years, severe ones about every twelve.  Time is ripe for a severe one.

And now -- Eric Holder speaks of making voting mandatory in the United States.  The disenfranchised will attempt to make themselves rich by stealing from the rich.  It does not work that way.  Wealth is the ability to make money, not the money itself.  Even after they rob all the productive members of society blind, the plunderers will remain idiots.  See Zimbabwe for a model.

There must remain some sane country in the world where people understand these fundamentals.  New Zealand?  Finland?  

 

hedgeless_horseman's picture

 

 

There must remain some sane country in the world where people understand these fundamentals.

Not a place you seek, rather a time, probably after we are all dead.

adr's picture

nope, can't think of a single place. Iceland is about the best of the bunch.

I'm thinking you get 100 people together and take over an island in the Bahamas.

Imminent Crucible's picture

The Bahamas? Fine, if you're rich. Have you seen the price of broccoli down there?

I'm planning on invading and occupying Baja California, and forming a benign dictatorship where all shall love me and despair.