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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Tue, 02/12/2013 - 12:26 | 3236836 DaveyJones
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but the Pope is pooped

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

Tue, 02/12/2013 - 12:34 | 3236864 Pairadimes
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He's giving up Pope for Lent.

Tue, 02/12/2013 - 12:38 | 3236879 DaveyJones
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he was going to give up meat, but that has less impact when you can't chew

Tue, 02/12/2013 - 12:42 | 3236891 Pladizow
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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.
Tue, 02/12/2013 - 12:43 | 3236897 flacon
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Lemmy for Pope.

 

Pope Lemmy I:

 

http://tinyurl.com/anp43yp

http://tinyurl.com/aofkx2k


Tue, 02/12/2013 - 13:15 | 3237010 Overfed
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I'd become a Catholic!

Tue, 02/12/2013 - 14:30 | 3237256 Troll Magnet
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Pladizow,

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

...

Nevermind.  What's that hotline's number?

Tue, 02/12/2013 - 18:03 | 3237976 Boris Alatovkrap
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USSArgentina

Tue, 02/12/2013 - 13:27 | 3237050 The Gooch
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The Ace Of "Hades"

(pronunciation is important here)

Tue, 02/12/2013 - 12:49 | 3236902 francis_sawyer
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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?

Tue, 02/12/2013 - 13:47 | 3237106 zapdude
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I need MOAR bitcoin.

Tue, 02/12/2013 - 12:51 | 3236926 A Lunatic
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Excellent. + 2,347 (why 2,347?.........why not.)

Tue, 02/12/2013 - 13:27 | 3236993 TheGardener
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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...

Tue, 02/12/2013 - 15:06 | 3237378 Scro
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Very funny. I sent this to my friends ????

Tue, 02/12/2013 - 17:43 | 3237895 A Nanny Moose
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Including Altar Boy?

Tue, 02/12/2013 - 12:29 | 3236847 PGR88
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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.

Tue, 02/12/2013 - 12:37 | 3236871 DaveyJones
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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.

Tue, 02/12/2013 - 13:19 | 3237023 unrulian
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Holy Fuck.... F_S is screwed :)

Tue, 02/12/2013 - 12:39 | 3236876 The Limerick King
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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

Tue, 02/12/2013 - 12:41 | 3236888 DaveyJones
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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

Tue, 02/12/2013 - 12:56 | 3236937 A Lunatic
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...........

 

Tue, 02/12/2013 - 13:16 | 3237011 Imminent Crucible
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.

 

 

Tue, 02/12/2013 - 13:40 | 3237087 francis_sawyer
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I once tried to rhyme using 'orange'

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

 

Tue, 02/12/2013 - 13:21 | 3237025 Likstane
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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

Tue, 02/12/2013 - 14:02 | 3237144 Hulk
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The wife they can have

she's been very bad

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

Tue, 02/12/2013 - 12:28 | 3236850 Cognitive Dissonance
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But.....but.....but that could NEVER happen in the good old USA.

Right?

/sarc

Tue, 02/12/2013 - 14:29 | 3237252 Winston Churchill
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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.

Tue, 02/12/2013 - 12:29 | 3236851 ninja247
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Picture of Joseph Smith as a snake oil salesman?

Do I sense anti-mormon sentiment?

Tue, 02/12/2013 - 12:31 | 3236856 WhiskeyTangoFoxtrot
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You beat me to it!

Tue, 02/12/2013 - 12:55 | 3236936 ninja247
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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.

Tue, 02/12/2013 - 12:56 | 3236941 espirit
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Nah, it's just that I wouldn't vote for anyone named "Willard".

Tue, 02/12/2013 - 12:54 | 3236933 earleflorida
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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

Tue, 02/12/2013 - 12:58 | 3236949 A Lunatic
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Looks like Alexander Hamilton to me........

Tue, 02/12/2013 - 13:28 | 3237049 Ahmeexnal
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They envy you for your harems.

Tue, 02/12/2013 - 12:34 | 3236862 reader2010
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It's all based on faith (aka not willing to accept facts) because "In God We Trust."

Tue, 02/12/2013 - 12:34 | 3236865 The Federal Farmer
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Fiat is never good. As the old saying goes, "It ain't worth a Continental."

Tue, 02/12/2013 - 20:39 | 3238569 Diogenes
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They call it Fiat because it depreciates like a rusty Italian car.

Tue, 02/12/2013 - 12:41 | 3236866 hedgeless_horseman
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...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!

Tue, 02/12/2013 - 12:44 | 3236898 adr
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.

Tue, 02/12/2013 - 13:14 | 3237005 catacl1sm
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Jesse Ventura for Pres!

Tue, 02/12/2013 - 12:42 | 3236882 Quinvarius
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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?

Tue, 02/12/2013 - 12:52 | 3236931 ATM
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THEY aren't ignorant! THEY know exactly what they are doing. THEY know that the PEOPLE are the stupid and will underestimate their cunning. 

Tue, 02/12/2013 - 13:01 | 3236961 Quinvarius
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Maybe.  But in the age of the internet, the biggest moron in America can become a currency collapse expert in an hour or two.

Tue, 02/12/2013 - 12:41 | 3236885 Inthemix96
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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.

Tue, 02/12/2013 - 12:42 | 3236894 chaartist
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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.

Tue, 02/12/2013 - 12:44 | 3236903 jumped_ship_and_swam
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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?  

 

Tue, 02/12/2013 - 12:48 | 3236913 hedgeless_horseman
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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.

Tue, 02/12/2013 - 13:04 | 3236976 jumped_ship_and_swam
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I fear, before we were born.

Tue, 02/12/2013 - 12:50 | 3236920 adr
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.

Tue, 02/12/2013 - 13:10 | 3236992 Imminent Crucible
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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.

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