This Is Exactly How You Destroy A Banking System

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man blog,

You might not realize it, but yesterday was a very important date.

Yes, of course, it was Cinco de Mayo. But possibly more important, it’s also the deadline for banks around the world to sign up for information-sharing agreements with the IRS.

Think about it like this: imagine that the King of Saudi Arabia decreed that NO grocery store chain in the United States was allowed to sell pork products to citizens of Saudi Arabia.

Crazy, right? Arrogant? Of course.

But that’s essentially what the US government has done.

Passed back in 2010, the Foreign Account Tax Compliance Act (FATCA) makes it mandatory for banks around the world to share information about their depositors with the US government.

In other words, Congress expects for banks that aren’t even in the United States to comply with US laws… even if US laws happen to violate the banks’ own local laws!

It’s the height of arrogance. And by passing and enforcing such pitiful regulations, the US government is only shooting itself in the foot.

Right now, the US banking system is at the center of the global banking system.

When a wholesaler in Bangladesh sends money to a supplier in Ghana, that money transfers through the United States.

Both the bank in Bangladesh and the bank in Ghana would have an account in New York– they’re called ‘nostro’ accounts in banking parlance.

Having this common hierarchy makes it easier for banks to transact with each other because they both have a common intermediary. And for now, that common intermediary is the US banking system.

But the US government seems to be going OUT OF ITS WAY to destroy the advantages of this system.

In fact, if you were to advise the US government what to do if they wanted to destroy the banking system, the list would pretty much include everything that they’re already doing:

  • Having inadequately capitalized banks
  • Destroying the federal government balance sheet
  • Destroying the central bank balance sheet
  • Using credit rating agencies for political games
  • Bailing out the banks at everyone else’s expense
  • Passing absurd regulations and demand compliance through fear and intimidation

Uncle Sam is practically begging the rest of the world to create an alternative banking system that doesn’t depend on Wall Street or the US government.

And this alternative system is already forming.

More and more nations are starting to engage in currency swap arrangements, and banks around the world are setting up their own network of interbank accounts.

This is a major issue that is unfolding before our very eyes.

If the US banking system loses its prominence, suddenly the dollar becomes less relevant. As the dollar becomes less relevant, then US Treasuries less relevant.

And if foreigners lose interest in US Treasuries, who will buy that slice of the US government’s debt?

Simple. You.

Explore this further with me in today’s Podcast: How to destroy a banking system. Give it a listen here:


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TeamDepends's picture

Shrinko de pie-o

Manthong's picture

I think Simon forgot the “Retain and immunize overtly criminal management” bullet.

Vampyroteuthis infernalis's picture

As rest of the world is developing to our standards they would naturally build alternative monetary systems. I guess the US gubimint wants to hasten this process. This is also going to drive many more to the black market.

fonestar's picture
This Is Exactly How You Destroy A Banking System



CH1's picture

Bitcoin is a bypass of the cartel system. Those who hate it are aiding the cartel.

Bindar Dundat's picture

People like you said the same thing about the internet in the early days.  


Go back to your cave CH1

Bemused Observer's picture

Well, unless the Bitcoin users are able to bypass the cartel system's control of the internet (yes they CAN cut you off..) how do the users plan on retaining access to their 'money'?

MillionDollarBoner_'s picture


Would that be the "Shitcoin" which is down 10% in the last two weeks?

Or another "Shitcoin"?

fonestar's picture

That's right moron.  When silver goes down you should buy more and when BTC goes down you should sell out, right?

Smart virtual men will be adding to their stacks of BTC as the selling seems to be over.

Bindar Dundat's picture

As the apps develop we will be able to become our own banks.  

Reggie Middleton is even coming up with a way of betting on stocks using BTC.

Math based currency is here to stay -- so get over yourselves and open your cartel minds....


Bemused Observer's picture

The Bitcoin crowd seems to place an awful lot of faith in their ability to access their digital currency in the event of an economic collapse. Do they ever consider that, in the event of something on the scale of economic collapse, they might LOSE access to the internet? There are governments NOW that restrict access in their own countries, what leads anyone to believe that wouldn't happen on a much larger scale when governments get desparate to retain control?

How does Bitcoin help you when you have no service?

Bemused Observer's picture

Once a significant number are using a 'black market' system, it's over. Loss of faith in the banks means people don't put their money there. So, making it easier to seize is irrelevant in the long term, because it won't be there.

And cracking down on a large black market would be a logistical nightmare. You can't go after it electronically, you have to put boots on the ground and physically visit these people, and try and take their stuff. Good luck with that, in a nation of over 300 million, many of whom are heavily armed and pissed off.

I see no "master plan" here. I only see a bunch of elites who have NO clue what they're doing, and are just reacting to stuff TODAY without any thought of tomorrow.

pods's picture

Fractional reserve currency systems by design are not stable.

Not sure how this new law makes it any worse. Unless it sells information packets about using Alpacas to move PMs through the mountains?


Skin666's picture

I totally agree. And how are the FEMA camps and surveillance gonna function with toilet paper as currency? Once they lose control of the dollar, it's game over. Then it's up to the American people...


Good luck

Sheppy's picture

So exactly what happens to people's paychecks? Will they not be direct deposit anymore, or will they just withdraw the money after the deposit? CAnnot the FED seize what it needs, much like now, prior to your recieving it? I can see the banks collapsing, and the dollar being worthless, but as long as paychecks are being handed out in dollars and not hrivnas, the FED will pull the strings on how money is doled out, and what they keep for themselves. At the point of total collapse, black market currency will be the least of the problems.

Bemused Observer's picture

A black market bypasses the official economy, so that money won't BE these for seizing. As to paychecks from those who ARE still working in the official economy, yeah, they are pretty much up for grabs. The FED and other powers DO have control over the official economy, but the black market is out of their hands.

Even if TPTB attempt to rein it in by messing about with the currency, the black market will simply switch to something else easily traded. PM, barter, any number of things can be used. It is the whole nature of a black market to find the work-arounds...that's why it exists in the first place.

And, the very EXISTENCE of a black market is a strong signal that your economy is on life-support, so yeah, the black market currency IS the least of anybody's worries.

RafterManFMJ's picture

And if foreigners lose interest in US Treasuries, who will buy that slice of the US government’s debt?

Simple. You.
But I don't want to buy treasuries! What's that? A "Patriot Bond"? Well, since you put it that way...

FeralSerf's picture

We're buying them in huge amounts already via the Fed. Every time you deposit money in a bank or pay down your mortgage you buy this trash whether you want to or not.

Did anyone claim we were going to buy them VOLUNTARILY?

espirit's picture

I lost my real money in an unfortunate boating accident.

What little legal tender they hold on my behalf is as uselful as an old Sears catalog for wiping my ass.

LawsofPhysics's picture

Shit, it much simplier than that Simon.  Just build the system on nothing but FAITH and remove the RULE OF LAW.

done and done motherfuckers...


Stoploss's picture

Boy, it's a good thing i didn't out my paper in an overseas bank.....

motorollin's picture

Come on bitchez, let's stock up on USTs in our MyRA's!

Grande Tetons's picture

Once every ounce of capital appreciation has been sucked out and they are yielding .50 accross the yield curve. 

Hey folks here is your fucking will earn .5 pecent on your money while spending 500 bucks to fill up your tank. You will thank my later. 


Uncle Sam

Rastadamus's picture

Don't worry, we can keep our banking system supreme with the help of the US Military HOO-RAHH!

espirit's picture

If  you like your banking system, you can keep yor banking system.


buzzsaw99's picture

<-- fuck simon black

<-- fuck the banks

cifo's picture

This was a good post.

Second Class Citizen5's picture

They want to make sure they can confiscate all deposits. Even the ones held outside of the US.

Arrowshot's picture

"And by passing and enforcing such pitiful regulations, the US government is only shooting itself in the foot."


I would rather they shot themsleves in the head. Several times to be sure. Any volunteers????

Peter Pan's picture

First the bankers and now the government are shooting themselves. Hopefully with a nail gun. 

thethirdcoast's picture

It's all about that total spectrum dominance.

kchrisc's picture

Sub-head: How broke are the criminals of the DC US?!

max2205's picture

Crap in your mayo...hummmm

pashley1411's picture

Like having Uncle Sammy partyline on your every phone call and e-mail worked so well.

Now HE looks at your bank statements, and income, and expenses.




Cannon Fodder's picture

With this foreign banking compliance law, what strategies are left for Americans who want to live outside the US? If an American cannot open a bank account outside the US, does this effectively trap all US citizens within the confines of the US?

(or else you have to be COMPLETELY detached from the US banking system and not require ANY kind of financial transaction)

LawsofPhysics's picture

Please, ever travel in south america?  We all know how things really work as "laws" that cannot be enforced are not really "laws" at all.

Cannon Fodder's picture

My limited understanding is that banks outside the US were not opening accounts for Americans. I assume you are saying this is easily by passed in more third world nations?

Carl Popper's picture

Set up a foreign LLC or LLP for 200 bucks and every bank will gladly take your money

LawsofPhysics's picture

There you go.  "Limited liability" bitchez... corporation=person

MillionDollarBoner_'s picture

"Ummm...Hi there...eeerrrr, I mean 'Hello, old chap. We would like to open a bank account. US citizens? No, we most certainly are not..."

(Whispers) "Jeez, ya thunk they believed us? yuk yuk..."

Dr. Engali's picture

I'm sure the next oligarch controlled system will be better than this one.

"This is the sixth time we have destroyed Zion and we have become exceedingly efficient at it. "

The Architect.

imapopulistnow's picture

So how am I gunna launder my money now?

RafterManFMJ's picture

Well if you're a Cartel boss just set up an account at BoA or HSBC - the way to launder money for the last 2 decades.

They even have custom size boxes that fit perfectly thru the teller windows.

Set up an account this month and get a free, special edition "Fast and Furious" AR-15; act now as supplies are limited.

Peter Pan's picture

Can someone remind me if the US congress is still exempt from insider trading laws?

mmm. .... I thought so.

Will this also apply to tax havens where close to $30 trillion is stashed?

mmmmm.....I thought not.

LawsofPhysics's picture

Can't wait to see what happens to those "tax havens" should the flow of real commodities stop...


waterhorse's picture

No need to worry.  Banksters and politicians will be made whole.  And you can take that statement to the bank!

RazorForex's picture

This is why anon cryptocurrencies like Darkcoin are going to explode in value when everyone realises there is nowhere else to run. The US is trying to clamp down on foreign bank acc, but by then everyone will migrate into digital cash and then all bets are off.

Tinky's picture

Yeah, right. As soon as people realize that their paper promises are worthless, they'll flock to buy digital promises.

RazorForex's picture

Digital promise?? WTF are you talking about?