• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Think This Can't Happen Where You Live? Think Again...

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man blog,

Throughout history, bankrupt governments in decline almost ALWAYS fall back on a time-tested playbook.

This includes imposing controls on EVERYTHING– wage and price controls, trade controls, capital controls, border controls, people controls. Everything. And this idea goes back to the dawn of human civilization.

The Third Dynasty of Ur in ancient Mesopotamia, for example, built a very early version of a commodities future exchange. People would commit to terms of trade on clay tablets for the future delivery of agricultural crops, then trade the tablets in a secondary market. It was genius.

But when the economy started to turn in earnest, the government set up a bizarre, complex, and increasingly bureaucratic system of regulating such trade and collecting taxes from it. They even started rationing resources and regulating irrigation.

It was debilitating. The market could no longer function, and the society soon collapsed.

Later, in the 4th century AD, Roman Emperor Diocletian infamously failed to control runaway inflation by fixing the prices of everything from labor to food to articles of clothing.

In the 1790s, the post-Revolution French government tried the same trick whilst inflating away their new paper currency. French farmers could no longer grow their crops profitably, and the 1793 ‘Law on Maximum’ created severe shortages of staple foods in the country.

In our modern times, Argentina has become the poster child for these tactics; the government has fixed prices at the grocery stores, banned advertising, prevented people from holding precious metals and foreign currency, nationalized pensions, and restricted beef exports.

Needless to say, these policies have been a complete disaster for the country. But as the rest of the world looks on, people in ‘rich’ countries foolishly believe that ‘it can’t happen here.’

This is wishful, ignorant, dangerous thinking. It can happen. It is already happening.

Just in the past week in the Land of the Free, for example, two pieces of legislation have been quietly introduced.

One, S.435, is an appalling bill that proposes to BAN the exportation of crude oil or refined petroleum products that originate in the United States.

The second bill would follow the European model and introduce a financial transactions tax (FTT) in the US. Like all taxes, they start with a small sum (0.03% in this case). And, like all taxes, we can be certain that this one would rise as well.

The FTT would apply to nearly all financial instruments– stocks, bonds, options, derivative contracts, etc. Everything except, of course, US government debt purchased directly from the Treasury.

To be clear, neither of these is law yet. But both give a very clear idea of how far the political elite is willing to go.

So, again, if you think that gold criminalization, price controls, and IRA/pension confiscation could NEVER happen where you live, think again. The chances of something happening are clearly greater than zero… which begs the question: why take the risk?

If you diversify internationally– establish a foreign bank account, form a Global Self-Directed IRA, store gold overseas, etc.– you substantially mitigate these risks. And no matter what scenario plays out, you won’t be worse off for having done these things.

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Tue, 03/05/2013 - 17:49 | 3302280 eatthebanksters
eatthebanksters's picture

Isn't manipulation just one form of control?


Tue, 03/05/2013 - 18:36 | 3302552 Sudden Debt
Sudden Debt's picture

like a married woman manipulates her husband in any marriage.

Tue, 03/05/2013 - 19:08 | 3302669 mirac
mirac's picture

I believe the term is "pussy-whipped"...

Tue, 03/05/2013 - 19:09 | 3302672 misnomer
misnomer's picture

You call it manipulation, I call it foreplay...;)

Tit for tat.

Tue, 03/05/2013 - 19:47 | 3302798 BigJim
BigJim's picture

Tit for tat?

Isn't that a man's reward when he manages to hoodwink his girlfriend with fake jewellery?

Tue, 03/05/2013 - 21:07 | 3303075 EscapingProgress
EscapingProgress's picture

Look! It's a bird. It's a plane. No! It's Dronebomba!!!

Eric Holder: Yes, Your Government Can Drone You to Death on U.S. Soil



Tue, 03/05/2013 - 23:33 | 3303614 TBT or not TBT
TBT or not TBT's picture

Every kiss begins with Kay?

Tue, 03/05/2013 - 19:10 | 3302681 reTARD
reTARD's picture

Then perhaps he should exercise some self-control. It's doesn't matter whether he is right-handed or left-handed.

Tue, 03/05/2013 - 19:18 | 3302712 toady
toady's picture

Well, in my marriage ...

Tue, 03/05/2013 - 20:22 | 3302948 Buck Johnson
Buck Johnson's picture

Yep, just like that.

Wed, 03/06/2013 - 02:05 | 3303884 TraderTimm
TraderTimm's picture

Bitcoin users not affected.

Tue, 03/05/2013 - 17:51 | 3302285 imbrbing
imbrbing's picture

Here we go with the "store gold overseas" again......

Tue, 03/05/2013 - 17:55 | 3302301 NoWayJose
NoWayJose's picture

The best place for gold is at the fingertips of your left hand, and the reason your left hand is the best place for your gold is that your right hand is already holding a trigger...

Tue, 03/05/2013 - 19:25 | 3302746 imbrbing
imbrbing's picture

I tryed to hypothicate your up arrow count, but I guess banks only have the magic ability for that. Otherwisw I would have given you +1000

Tue, 03/05/2013 - 19:29 | 3302757 johnQpublic
johnQpublic's picture

ambidexterity bitchez

Tue, 03/05/2013 - 19:59 | 3302851 Ness.
Ness.'s picture


Wed, 03/06/2013 - 05:53 | 3304068 Brit_Abroad
Brit_Abroad's picture

Damn, I'm left handed.

Panic, panic....what to do ?sarc

Tue, 03/05/2013 - 17:58 | 3302316 HD
HD's picture

Most here will be storing their gold "under seas" ;)

Tue, 03/05/2013 - 18:04 | 3302359 localsavage
localsavage's picture

What gold?   I don't know what ypu are talking about officer.

Tue, 03/05/2013 - 18:15 | 3302433 Vooter
Vooter's picture

But hey, check out these twin Evinrudes!

Tue, 03/05/2013 - 20:35 | 3302980 Ness.
Ness.'s picture

There is always money in the Banana Stand.  

Tue, 03/05/2013 - 19:21 | 3302730 toady
toady's picture

(gun to your kids head)


Tue, 03/05/2013 - 20:06 | 3302878 worbsid
worbsid's picture

Go ahead, shoot the bastard. 

Tue, 03/05/2013 - 18:38 | 3302564 Sudden Debt
Sudden Debt's picture

I live overseas... why don't you just send me your gold? I'll send you in return a IOU for your gold.

Tue, 03/05/2013 - 18:58 | 3302583 Al Huxley
Al Huxley's picture

Can't I just go to the Comex to do that?

Tue, 03/05/2013 - 19:09 | 3302674 Sudden Debt
Sudden Debt's picture

I'll parfume the paper and you get a free candy to go with it!!!


Wed, 03/06/2013 - 08:29 | 3304219 KickIce
KickIce's picture

Good stuff, thanks for the morning laugh.

Wed, 03/06/2013 - 14:22 | 3305401 Kobe Beef
Kobe Beef's picture

Sudden Debt's offering perfumed letters, but I've got:


Send me your gold, and be the best-equipped muppet on the beach this summer.

Tue, 03/05/2013 - 18:55 | 3302627 AGuy
AGuy's picture

"I'll send you in return a IOU for your gold."

No need for Gold, Uncle same will take care of it for me! Besides they promised me huge entitlements when I retire, which are backed up by Federal IOUs? What better than a US gov't guarenteed IOU? </sarc if you haven't figure it out>


Tue, 03/05/2013 - 18:55 | 3302628 CheapBastard
CheapBastard's picture
10 cities with the most burglaries

While crime rates have been falling across the nation, there are still some bad eggs out there. And if you forget to lock your doors, you may want to avoid Texas.



Tue, 03/05/2013 - 19:11 | 3302678 medium giraffe
medium giraffe's picture

Surprised to see New York only at number 5.  Must not include daylight robbery.

Tue, 03/05/2013 - 20:38 | 3302988 Buzz Hacksaw
Buzz Hacksaw's picture

FBI MSN. Are you kidding?

Tue, 03/05/2013 - 21:06 | 3303083 Umh
Umh's picture

I believe that crime rates have been falling for years. I also believe that crime rates are on there way back up based on local information. I believe this is being caused by the piss poor economy. The crime statistics are a lagging indicator if for no other reason than that they are announced at least 1 year late.

Wed, 03/06/2013 - 01:56 | 3303866 Antifaschistische
Antifaschistische's picture

Yes, and Dallas and Houston have been cursing themselves for importing the Katrina victims every since.  It's sad when you need a fence on TWO borders.

Tue, 03/05/2013 - 23:08 | 3303522 Demonoid
Demonoid's picture

I'll gladly pay you Tuesday for a goldburger today.

Tue, 03/05/2013 - 17:52 | 3302287 WarHorse
WarHorse's picture

There are already quasi-wage controls in the financial sector and strict controls being discussed by the EU (eg, definitive bonus caps).  Say what you want about banker pay but it is not governments role to limit wages in the private sector

Tue, 03/05/2013 - 18:35 | 3302539 Bam_Man
Bam_Man's picture

Bad example.

Since 2008, banking has not been part of the "private sector".

Tue, 03/05/2013 - 18:36 | 3302549 adr
adr's picture

It also isn't the government's job to step in and bail out failed corporations and put a floor under the stock market either.

Say what you want about banker pay, but it probably wouldn't be where it is if the government was out of the picture. You wouldn't need to limit pay because there probably wouldn't be anyone employed there.

The private sector is a lie. The private sector is the mom and pop store selling stuff made by the guy who lives down the street. Anything traded on Wall Street is about as private as two people fucking on a parade float.

Tue, 03/05/2013 - 18:05 | 3302290 medium giraffe
medium giraffe's picture

wage and price controls - check

 trade controls - check

capital controls - check

 border controls - check

 people controls - check

It already happened, no? 

All that is left now is a continuance of policy and a lot of complaining. 


Tue, 03/05/2013 - 19:00 | 3302648 Temporalist
Temporalist's picture

You forgot Gun Control:

The Never Again Campaign


The above was released yesterday from Star Parker of Coalition for Urban Renewal and Education (CURE).



They also spoke out against gun control at a press conference recently:



Tue, 03/05/2013 - 17:58 | 3302291 MoneyThangs
MoneyThangs's picture

As Jim Cramer pointed out on the open this morning "Diamonds, Gold, Masterpeice art and Mansions did great in Zimbabwe and the Weimar republic"

- Nothing to worry about here, all those jewels and Van Gogh's you own should perform well through all this. You'll be fine!

No more dreaded deflation for this humble banker

Tue, 03/05/2013 - 18:26 | 3302489 LongBalls
LongBalls's picture

I gave you an up arrow here (+1) and a down arrow. One up for citing history and the other for citing Jim Cramer. Nothing personal. I just want to shoot myself in the mouth when I hear of Jim Cramer.

Tue, 03/05/2013 - 21:48 | 3303239 Carl Spackler
Carl Spackler's picture

If I could hypothecate here, I'd lever up on your green, up arrows, my good man !

Tue, 03/05/2013 - 18:29 | 3302513 adr
adr's picture

The rich will always buy items of value because they are rich. If you had a Van Gogh you bought with Zim dollars when they were worth something, your Van Gogh is still worth a ton of money in a different currency. The thing is, you were probably already in the 1% club. Very few common citizens can afford to buy anything of real value.

But the guy that got paid in Zim dollars for his labor, who became an overnight trillionaire, and the only use for them was wiping his ass sure has nothing to show for it.

Same goes for the guy that needed a wheelbarrow of cash to buy a cup of coffee.

Sure I could buy ten ounces of gold. In a hyperinflationary environment that gold may end up being worth a trillion dollars per ounce. But that would mean it would cost 1oz of gold to pay for a cup of coffee. Ten cups of coffee probably isn't the best way to spend ten ounces of gold. But a guy like Soros who holds a few tons of gold might use an ounce or two if he really wanted a nice cup of joe. It is impossible for me to ever buy more than a few ounces of gold at a time. I could never dream of buying a few hundred pounds.

The best I can hope for is that my gold will be worth what I paid for it in a different currency, perhaps a bit more. Even if I owned $50k in gold and the dollar collapsed, and somehow I moved to China and they made it through, an equivelent value of $50k probably wouldn't mean much if I couldn't get a job.

The true store of value is skilled labor. If you can build something, you have value.

Tue, 03/05/2013 - 18:42 | 3302575 SilverIsKing
SilverIsKing's picture

There's a big difference between being able to generate an income and storing one's wealth.  You are correct, unless very wealthy, you need to be productive to generate an income but saving some of that income in the form of gold will protect against weakening fiat currencies.  Ultimately, gold may be the only form of money that retains value but it might very well be useless to measure it against other fiat currencies.

Tue, 03/05/2013 - 19:36 | 3302775 johnQpublic
johnQpublic's picture

Rev 6:6-"And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine."

When a laborer went into the field to labor, during the time of Jesus’ walk on the earth, the standard wage for a day’s labor was a penny a day. Of course this is not a “penny” of our day, but a coin of that day. The value of it must be measured it what it represented – Payment for a day’s labor. The rich ate wheat bread. The poor ate barley bread. A “measure” was approximately what a man with large hands could hold in his two hands cupped together. A measure would make a small loaf of bread.



dont measure it against currency

measure it against wheat(et al)

Tue, 03/05/2013 - 21:29 | 3303176 Matt
Matt's picture

So, labourers worked for 3 loaves of barley per day? Somehow, supporting a family on that kind of wage seems kind of doubtful.

Tue, 03/05/2013 - 22:49 | 3303464 gonetogalt
gonetogalt's picture

No, the vision represents food inflation/famine in our time.

Tue, 03/05/2013 - 23:59 | 3303683 horseman
horseman's picture

I sold all my soft white wheat at $9.00 a bushel.

Tue, 03/05/2013 - 19:03 | 3302660 Tinky
Tinky's picture

While I certainly agree that practical skills are ultimately of the greatest value, you (and many others) miss the point that when (not if) gold reaches the bubble stage, those smart enough to sell will gain considerably more than a simple retention of purchase power.

There is a correlation between the degradation of fiat currencies and the ascent of gold values, but it will not remain taught throughout the cycle.

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