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Capital Controls & Confiscation - The Most Important Strategy Investors Ignore

Tyler Durden's picture




 

Submitted by Jeff Clark via Casey Research,

“If I scare you this morning, and as a result you take action, then I will have accomplished my goal.” That’s what I told the audience at the Sprott Natural Resource Symposium in Vancouver two weeks ago.

But the reality is that I didn’t need to try to scare anyone. The evidence is overwhelming and has already alarmed most investors; our greatest risk is not a bad investment but our political exposure.

And yet most of these same investors do not see any need to stash bullion outside their home countries. They view international diversification as an extreme move. Many don’t even care if capital controls are instituted.

I’m convinced that this is the most common—and important—strategic investment error made today. So let me share a few key points from my Sprott presentation and let you decide for yourself if you need to reconsider your own strategy. (Bolding for emphasis is mine.)

1: IMF Endorses Capital Controls

Bloomberg reported in December 2012 that the “IMF has endorsed the use of capital controls in certain circumstances.“

This is particularly important because the IMF, arguably an even more prominent institution since the global financial crisis started, has always had an official stance against capital controls. “In a reversal of its historic support for unrestricted flows of money across borders, the IMF said controls can be useful...”

Will individual governments jump on this bandwagon? “It will be tacitly endorsed by a lot of central banks,” says Boston University professor Kevin Gallagher. If so, it could be more than just your home government that will clamp down on storing assets elsewhere.

2: There Is Academic Support for Capital Controls

Many mainstream economists support capital controls. For example, famed Harvard Economists Carmen Reinhart and Ken Rogoff wrote the following earlier this year:

Governments should consider taking a more eclectic range of economic measures than have been the norm over the past generation or two. The policies put in place so far, such as budgetary austerity, are little match for the size of the problem, and may make things worse. Instead, governments should take stronger action, much as rich economies did in past crises.

Aside from the dangerously foolish idea that reining in excessive government spending is a bad thing, Reinhart and Rogoff are saying that even more massive government intervention should be pursued. This opens the door to all kinds of dubious actions on the part of politicians, including—to my point today—capital controls.

“Ms. Reinhart and Mr. Rogoff suggest debt write-downs and ‘financial repression’, meaning the use of a combination of moderate inflation and constraints on the flow of capital to reduce debt burdens.”

The Reinhart and Rogoff report basically signals to politicians that it’s not only acceptable but desirable to reduce their debts by restricting the flow of capital across borders. Such action would keep funds locked inside countries where said politicians can plunder them as they see fit.

3: Confiscation of Savings on the Rise

“So, what’s the big deal?” Some might think. “I live here, work here, shop here, spend here, and invest here. I don’t really need funds outside my country anyway!”

Well, it’s self-evident that putting all of one’s eggs in any single basket, no matter how safe and sound that basket may seem, is risky—extremely risky in today’s financial climate.

In addition, when it comes to capital controls, storing a little gold outside one’s home jurisdiction can help avoid one major calamity, a danger that is growing virtually everywhere in the world: the outright confiscation of people’s savings.

The IMF, in a report entitled “Taxing Times,” published in October of 2013, on page 49, states:

“The sharp deterioration of the public finances in many countries has revived interest in a capital levy—a one-off tax on private wealth—as an exceptional measure to restore debt sustainability.”

The problem is debt. And now countries with higher debt levels are seeking to justify a tax on the wealth of private citizens.

So, to skeptics regarding the value of international diversification, I would ask: Does the country you live in have a lot of debt? Is it unsustainable?

If debt levels are dangerously high, the IMF says your politicians could repay it by taking some of your wealth.

The following quote sent shivers down my spine…

The appeal is that such a task, if implemented before avoidance is possible and there is a belief that is will never be repeated, does not distort behavior, and may be seen by some as fair. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away.

The IMF has made it clear that invoking a levy on your assets would have to be done before you have time to make other arrangements. There will be no advance notice. It will be fast, cold, and cruel.

Notice also that one option is to simply inflate debt away. Given the amount of indebtedness in much of the world, inflation will certainly be part of the “solution,” with or without outright confiscation of your savings. (So make sure you own enough gold, and avoid government bonds like the plague.)

Further, the IMF has already studied how much the tax would have to be:

The tax rates needed to bring down public debt to pre-crisis levels are sizable: reducing debt ratios to 2007 levels would require, for a sample of 15 euro area countries, a tax rate of about 10% on households with a positive net worth.

Note that the criterion is not billionaire status, nor millionaire, nor even “comfortably well off.” The tax would apply to anyone with a positive net worth. And the 10% wealth-grab would, of course, be on top of regular income taxes, sales taxes, property taxes, etc.

4: We Like Pension Funds

Unfortunately, it’s not just savings. Carmen Reinhart (again) and M. Belén Sbrancia made the following suggestions in a 2011 paper:

Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of ‘financial repression.’ Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks.

Yes, your retirement account is now a “captive domestic audience.” Are you ready to “lend” it to the government? “Directed” means “compulsory” in the above statement, and you may not have a choice if “regulation of cross-border capital movements”—capital controls—are instituted.

5: The Eurozone Sanctions Money-Grabs

Germany’s Bundesbank weighed in on this subject last January:

“Countries about to go bankrupt should draw on the private wealth of their citizens through a one-off capital levy before asking other states for help.”

The context here is that of Germans not wanting to have to pay for the mistakes of Italians, Greeks, Cypriots, or whatnot. Fair enough, but the “capital levy” prescription is still a confiscation of funds from individuals’ banks or brokerage accounts.

Here’s another statement that sent shivers down my spine:

A capital levy corresponds to the principle of national responsibility, according to which tax payers are responsible for their government’s obligations before solidarity of other states is required.

The central bank of the strongest economy in the European Union has explicitly stated that you are responsible for your country’s fiscal obligations—and would be even if you voted against them! No matter how financially reckless politicians have been, it is your duty to meet your country’s financial needs.

This view effectively nullifies all objections. It’s a clear warning.

And it’s not just the Germans. On February 12, 2014, Reuters reported on an EU commission document that states:

The savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis.

Reuters reported that the Commission plans to request a draft law, “to mobilize more personal pension savings for long-term financing.”

EU officials are explicitly telling us that the pensions and savings of its citizens are fair game to meet the union’s financial needs. If you live in Europe, the writing is on the wall.

Actually, it’s already under wayReuters recently reported that Spain has

…introduced a blanket taxation rate of .03% on all bank account deposits, in a move aimed at… generating revenues for the country’s cash-strapped autonomous communities.

The regulation, which could bring around 400 million euros ($546 million) to the state coffers based on total deposits worth 1.4 trillion euros, had been tipped as a possible sweetener for the regions days after tough deficit limits for this year and next were set by the central government.

Some may counter that since Spain has relatively low tax rates and the bail-in rate is small, this development is no big deal. I disagree: it establishes the principle, sets the precedent, and opens the door for other countries to pursue similar policies.

6: Canada Jumps on the Confiscation Bandwagon

You may recall this text from last year’s budget in Canada:

“The Government proposes to implement a bail-in regime for systemically important banks.”

A bail-in is what they call it when a government takes depositors’ money to plug a bank’s financial holes—just as was done in Cyprus last year.

This regime will be designed to ensure that, in the unlikely event a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.

What’s a “bank liability”? Your deposits. How quickly could they do such a thing? They just told us: fast enough that you won’t have time to react.

By the way, the Canadian bail-in was approved on a national level just one week after the final decision was made for the Cyprus bail-in.

7: FATCA

Have you considered why the Foreign Account Tax Compliance Act was passed into law? It was supposed to crack down on tax evaders and collect unpaid tax revenue. However, it’s estimated that it will only generate $8.7 billion over 10 years, which equates to 0.18% of the current budget deficit. And that’s based on rosy government projections.

FATCA was snuck into the HIRE Act of 2010, with little notice or discussion. Since the law will raise negligible revenue, I think something else must be going on here. If you ask me, it’s about control.

In my opinion, the goal of FATCA is to keep US savers trapped in US banks and in the US dollar, in case the US wants to implement a Cyprus-like bail-in. Given the debt load in the US and given statements made by government officials, this seems like a reasonable conclusion to draw.

This is why I think that the institution of capital controls is a “when” question, not an “if” one. The momentum is clearly gaining steam for some form of capital controls being instituted in the near future. If you don’t internationalize, you must accept the risk that your assets will be confiscated, taxed, regulated, and/or inflated away.

What to Expect Going Forward

  • First, any announcement will probably not use the words “capital controls.” It will be couched positively, for the “greater good,” and words like “patriotic duty” will likely feature prominently in mainstream press and government press releases. If you try to transfer assets outside your country, you could be branded as a traitor or an enemy of the state, even among some in your own social circles.
  • Controls will likely occur suddenly and with no warning. When did Cyprus implement their bail-in scheme? On a Friday night after banks were closed. By the way, prior to the bail-in, citizens were told the Cypriot banks had “government guarantees” and were “well-regulated.” Those assurances were nothing but a cruel joke when lightning-fast confiscation was enacted.
  • Restrictions could last a long time. While many capital controls have been lifted in Cyprus, money transfers outside the country still require approval from the Central Bank—over a year after the bail-in.
  • They’ll probably be retroactive. Actually, remove the word “probably.” Plenty of laws in response to prior financial crises have been enacted retroactively. Any new fiscal or monetary emergency would provide easy justification to do so again. If capital controls or savings confiscations were instituted later this year, for example, they would likely be retroactive to January 1. For those who have not yet taken action, it could already be too late.
  • Social environment will be chaotic. If capital controls are instituted, it will be because we’re in some kind of economic crisis, which implies the social atmosphere will be rocky and perhaps even dangerous. We shouldn’t be surprised to see riots, as there would be great uncertainty and fear. That’s dangerous in its own right, but it’s also not the kind of environment in which to begin making arrangements.
  • Ban vs. levy. Imposing capital controls is a risky move for a government to make; even the most reckless politicians understand this. That won’t stop them, but it could make them act more subtly. For instance, they might not impose actual bans on moving money across borders, but instead place a levy on doing so. Say, a 50% levy? That would “encourage” funds to remain inside a given country. Why not 100%? You could be permitted to transfer $10,000 outside the country—but if the fee for doing so is $10,000, few will do it. Such verbal games allow politicians to claim they have not enacted capital controls and yet achieve the same effect. There are plenty of historical examples of countries doing this very thing.

Keep in mind: Who will you complain to? If the government takes a portion of your assets, legally, who will you sue? You will have no recourse. And don’t expect anyone below your tax bracket to feel sorry for you.

No, once the door is closed, your wealth is trapped inside your country. It cannot move, escape, or flee. Capital controls allow politicians to do anything to your wealth they deem necessary.

Fortunately, you don’t have to be a target. Our Going Global report provides all the vital information you need to build a personal financial base outside your home country. It covers gold ownership and storage options, foreign bank accounts, currency diversification, foreign annuities, reporting requirements, and much more. It’s a complete A to Z guide on how to diversify internationally.

Discover what solutions are right for you—whether you’re a big investor or small, novice or veteran, many options are available. I encourage you to pursue what steps are most appropriate for you now, before the door is closed.

Learn more here…

 

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Wed, 08/06/2014 - 21:59 | 5057031 LetThemEatRand
LetThemEatRand's picture

So why do I want to create an enormous paper trail of where I stashed my bullion (if I had any)?  These articles crack me up.  The IMF wants your gold, so put it overseas and fill out a bunch of paperwork.  Okay.

Wed, 08/06/2014 - 22:04 | 5057044 robertsgt40
robertsgt40's picture

Correct. If you don't hold it, you don't own it. You want me to trust someone on the other side of the planet? I don't think so.

Wed, 08/06/2014 - 22:11 | 5057077 bag holder
bag holder's picture

"the most common—and important—strategic investment error made today" is "not owning enough of what the author owns".

Thu, 08/07/2014 - 00:05 | 5057472 Save_America1st
Save_America1st's picture

WATCH and LISTEN then PASS IT ON.  Excellent interview with Marine Colonel Pete Martino:  I See Something!

This is the TRUTH, "Folks"!!!

https://www.youtube.com/watch?v=OUTXnnVTInA

Thu, 08/07/2014 - 02:25 | 5057684 Mister Ponzi
Mister Ponzi's picture

Understand that this advice is not only for Americans. In many developed countries there are no reporting requirements for wealth stored abroad, only for interest earned on this wealth. Therefore, gold holdings stored abroad do not need to be reported. While having some of your gold at hand is absolutely necessary, it makes sense to have some of it outside your country. How could you have taken a huge amount of gold with you if you had to leave your country overnight? Maybe to Americans it seems unrealistic that this may happen. Lucky you! Here in Europe we have learned in the last century that it may happen anywhere anytime. Sure, if you store gold abroad you have to trust a custodian. Make your due diligence and diversify custodianship. There is no such thing as 100% safety.

Thu, 08/07/2014 - 05:24 | 5057829 zhandax
zhandax's picture

Let's examine this logically from a US point of view.  The current penalty for early withdrawal from a structured 401K is 10%.  Also this is now income, and will be added to your regular income, for tax rate purposes.  In the US, you have to pay income taxes on it at some point since it was tax sheltered for the term it was invested.  So the penalty is 10%, plus the bump in overall tax rate compounded by the present value of the acceleration of the tax due on the income.  There will be a point at which you will become indifferent to paying the tax now, or in the future.  People finding themselves beyond this point will discover that they prefer control over their money to subjecting it to further abuse.  Essentially, in terms of AUM, this will stick a fork in 401K plans.  The only argument .gov has is most peeps are idiots.  And this argument has successfully? driven policy for the last 50 years.  As usual, allowing the smart money out of the trap before it is sprung.

Thu, 08/07/2014 - 08:07 | 5058005 N2OJoe
N2OJoe's picture

Also remember that if you were not self employed, then the company likely matched your contributions so when you pay your income tax +10%, then you may be right around breakeven with your own money if you're around the 40% bracket.

Thu, 08/07/2014 - 08:19 | 5058035 Pee Wee
Pee Wee's picture

Your comment made me laugh.  Pay the 10%, pay the taxman and get the hell out of your 401k.

401k's are the bagholders.

You will lose everything in them - everything.

Wed, 08/06/2014 - 23:23 | 5057350 Kirk2NCC1701
Kirk2NCC1701's picture

Cash, bullion. When the levy breaks.

Thu, 08/07/2014 - 05:40 | 5057845 commander gruze?
commander gruze?'s picture

The only logical solution in this case is bitcoin. As much as I love PMs, transactability with gold and silver is problematic due to divisibility problems. Sure, you can break up a coin into two, four, or more pieces but how do you quantify each of them without having a scale handy? Bitcoin is naturally divisible into very fine units, each equal "size" - 1/100,000,000th of a bitcoin is called satoshi. Also, getting your local community to switch to bitcoin would be much simpler than getting them to deal with physical pieces. Think cash registers that can only take money, but not dispense it therefore eliminating the risk of theft (by petty thieves, not the gov't). And finally, bitcoin cannot be confiscated even when some guys with guns and badges raid your shop, in which case all the shiny metal would have been lost.

Thu, 08/07/2014 - 06:53 | 5057915 Australian Economist
Australian Economist's picture

How do you spend your bitcoins when the power goes out?

Thu, 08/07/2014 - 07:34 | 5057966 commander gruze?
commander gruze?'s picture

By relaying the transaction directly to the merchant via bluetooth or NFC. Aren't portable solar phone chargers essential part of a prepper's kit?

Thu, 08/07/2014 - 08:08 | 5058009 N2OJoe
N2OJoe's picture

I like the ease of transaction but I just don't have any confidence that people will value bitcoin in a crisis any more than any existing(read: collapsing) fiat currency.

Wed, 08/06/2014 - 23:03 | 5057297 Dennisen
Dennisen's picture

Greetings.

My name is Trey Mallory and I own and manage the International Repository Of Bullion in Harare, Rhodesia. You can rest assured that your bullion, once it's shipped to us by courier will be safe and secure from intrusive governments and estranged spouses. For more information, visit us at our website.

www.I.ROB.com

Thank you.

Wed, 08/06/2014 - 23:53 | 5057436 August
August's picture

FWIW there are still some rather vanilla jurisdictions where you can walk into the bullion store with a briefcase of folding money, and walk out with bullion.  No name or ID required.

Wed, 08/06/2014 - 22:06 | 5057045 Atomizer
Atomizer's picture

Serves you right. Back during the housing collapse, the UK was breaking into safety deposit boxes and stealing wealth. This is coming to America. The only problem, guns and death of people stealing money from people who preserve wealth opposed to gambling it in the stock market. 

Wed, 08/06/2014 - 22:05 | 5057050 Latitude25
Latitude25's picture

Regretably I lost all my PMs in a boating accident in the Bahamas.  How's that for diversification?

Wed, 08/06/2014 - 22:14 | 5057085 Atomizer
Atomizer's picture

You shouldn't have been boating with PM's. Did you have escorts on the boat?. Clearly, you could have used Zimbabwe currency to hide the transaction. 

/lmfao

Wed, 08/06/2014 - 23:37 | 5057401 potato
potato's picture

POTATO: BOOYAH'eh Kramer, potato here from Canuckistan. Long-time viewer, first-time caller.

KRAMER: BOOYAH! Are you ready to play!

POTATO: Abso-boooyah-lutely. My five boating accidents were: off the coast of the Bahamas, in a Chinese canal, one over Deepsea Horizon, another near Bikini Atoll, and the final one off the coast of Ebolastan. AM---I---DIVERSIFIED??

Wed, 08/06/2014 - 22:08 | 5057067 Cliff Claven Cheers
Cliff Claven Cheers's picture

I hope the US institutes a one time tax, enough to wipe out the 18 trillion dollar debt.  Think about it, if we were paying as we went there would be 18 trillion less in savings/assets, etc.  Why should my children and grandchildren pay for money spent on their behalf with no benefits (odious debt)?  The suckers that benefited in the last 10 years should pay for it.  Confiscation: bring it.

Wed, 08/06/2014 - 22:12 | 5057078 fonzannoon
fonzannoon's picture

A one time tax? How about we just massively cut down the liabilities that a bunch of people voted themselves that we could never deliver on? 

I own gold, hyperinflation: bring it.

Wed, 08/06/2014 - 22:20 | 5057104 Cliff Claven Cheers
Cliff Claven Cheers's picture

When I floated this the other day a guy said we need to apply a tourniquet to stop the bleeding before we give the patient a couple more pints of blood. 

The problem is no one will stand up to all this spending until it hits them in the pocketbook.  Plain and simple Americans are apathetic until it has real costs to them.  Just simply confiscate 18 trillion across the board and pay off the debt that we should have paid all along and people will be out in the streets with burning busses and shit then Congress will reform the out of control spending.

Look at Bush, he says I am going to give you a tax cut and at the same time a drug benefit with medicare and people said well that sound great.  Well it was all paid for with borrowed money. 

Look at the Wars, people didnt give a rats ass because we borrowed all the money.  If they had to pay for it all up front people would have been out it in the streets with buring buses and shit.

Wed, 08/06/2014 - 22:43 | 5057212 Greenskeeper_Carl
Greenskeeper_Carl's picture

It will happen one way or another for one very simple reason: that which can't be paid, won't be. But you are sure to get some angry boomer responses to that post. "You can't do that, I paid for my SS and Medicare!!!"

Wed, 08/06/2014 - 23:11 | 5057321 Cliff Claven Cheers
Cliff Claven Cheers's picture

Judging by the down votes the baby bums are already pouting.  Think about it they spent it they should pay for it now.

Wed, 08/06/2014 - 22:22 | 5057112 J Pancreas
J Pancreas's picture

Then payup now, bitch. Donate your fiat to .gov, nothing is stopping you. Even a link on the treasury site. If your offspring think like you then the best part of your seed must have ran down the back of mommies asscrack on the way to the shallow end of the gene pool where you came from.

Wed, 08/06/2014 - 22:24 | 5057125 Cliff Claven Cheers
Cliff Claven Cheers's picture

Obviously you missed the critical thinking part of the comment.  IF WE HAD TO PAY FOR IT AS WE WENT ALONG THERE WOULD NOT BE AN EXTRA 18 TRILLION IN ANY FUCKING SAVINGS ACCOUNTS.  Its fucking idiots like you that got this country in the fucking mess it is in.  D-nozzle.

Wed, 08/06/2014 - 23:21 | 5057351 Help Is Not Coming
Help Is Not Coming's picture

While it would be true that if we paid for it originally by raising taxes to cover the amount spent at the time then there would be no debt, I think you are missing something here.

Federal Reserve Notes are "to be issued at the discretion of the Board of Governors of the Federal Reserve System" and "the notes shall be obligations of the United States". So essentially the Federal Reserve creates the debt notes, spends the newly created money buying Treasuries and we have to pay for the interest in taxes. Now, I know you probably already knew that.

However, I think the part that you might be missing is that if the United States is a sovereign entity (which it is) why doesn't the government issue the currency directly from the Treasury and cut out the Federal Reserve? There would be neither debt nor interest associated with the the creation of the Treasury issued currency. Google "US Notes". So there would be no national debt in the first place.

There would still be inflation since the Gov't would be printing money faster than the economy grew but you wouldn't have this parabolic debt growth thing going on.

Oh and Federal Reserve Notes can't be used to pay off the national debt (ie. Treasuries) because you literally can't pay off a promise to pay with another promise. You can discharge your own debts with FRNs but you can never pay off your debts since there is no money with which to pay. But that is a completely different discussion.

Wed, 08/06/2014 - 22:39 | 5057184 Tinky
Tinky's picture

Umm, you really need to get a better grasp on the size on numbers.

If you were stack a trillion dollars worth of $1000 bills together:

1 billion dollars = 364 feet high

1 trillion dollars = 63 miles high (give or take)

In others words, ain't no one-time tax gonna wipe out $18t in debt. Also, the unfunded liabilities dwarf the current $18t. figure.

Thu, 08/07/2014 - 06:58 | 5057923 nmewn
nmewn's picture

And to think Keynesians thought they could print/inflate their way out of the mess they made...lol.

They actually still teach that shit in college ya know ;-)

Wed, 08/06/2014 - 23:26 | 5057368 Kirk2NCC1701
Kirk2NCC1701's picture

Cliff, glad to see you're staying in form with your TV character. And having fun with it.

Thu, 08/07/2014 - 00:27 | 5057517 bunnyswanson
bunnyswanson's picture

Confiscation and liquidation plus your kids will still be able to get the "slave" experience when the entire country part and parcel is owned by private and international entities who have the last word.  Only hope is reparations.   At this point, we are dancing as fast as we can.  It is extremely disappointing to read your lack of empathy for your fellow citizens during the collapse of your country.  The bad guys are sitting in very fine homes with a million dollar view.  But this is proof of the blinders we put on to get a paycheck.  Pep rallies to pump up the morale of cleaning the bones of the oppressed masses surely take place regularly.  You may want to die on your knees but there are those of us who realize the point of no return coming up.

Thu, 08/07/2014 - 00:35 | 5057530 theonewhowaskazu
theonewhowaskazu's picture

Even if they confiscated all the (fractional) reserves of every bank in America, denominated in US and foreign currency, and converted it all to US Dollars, they wouldn't have enough money to pay down the debt to 0. In fact, they wouldn't have enough to even a quarter of the $17T debt. 

And if they did do this, they would be confiscating from the people who saved, in spite of the government's odious actions, rather than those who took public aid because  of those actions.

In order to pay down the national debt, they would have to confiscate ALL the fractional reserves of every bank in America, PLUS all credit those banks are owed. Then, they'd have to pay back a fraction of the debt. Then they would have to hope that that money flowed back into America, into the hands of those who owe to the holder of the assets the government confiscated from the banks. Even if every dollar they paid out in bonds went to one such borrower, that STILL would only cover approximately half the debt. So they would have to repeat this process of paying back bonds, and hoping that those that owe them get their hands on the newly paid-out money, about three times before they could pay off the $17T debt. Of course, during this interim, there would have to be not 1 more single loan issued to anyone in America because, of course, all the money is gone (confiscated). 

Long story short: that's not gonna happen. They're either going to print their way out of it, or simply default, likely the former. Maybe they'll confiscate some if inflation happens, to reduce the money supply and help them along. But I highly doubt confiscation will make up a large portion of what they do to pay down the debt. We should be far more concerned about inflation.

Thu, 08/07/2014 - 06:06 | 5057865 Global Observer
Global Observer's picture

Yes, a one time tax of 100% on the savings invested in US treasuries i.e complete debt repudiation. Those who lend to profligate sepnders with no means to repay should bear the cost of such foolish decisions.

Thu, 08/07/2014 - 14:31 | 5060319 t_swiper
t_swiper's picture

I've got bad news and worse news mate.

Bad news, even if the tax rate of this one time tax 100%, it still wouldn't be enough.

Worse news, well I recommend setting down before looking at your true dept.

http://www.zerohedge.com/news/2014-08-04/us-bankrupt-blasts-biderman-we-...

Wed, 08/06/2014 - 22:14 | 5057088 AdvancingTime
AdvancingTime's picture

 The really big earners in recent years have benefited greatly from the surging stock prices as much of their income has come from financial markets and gains in equities. Many people seem to think this is the hope of our future.

When you have more than you need or want to put money away for a rainy day where do you store it? If you rated people on a "wealth chart" by how many tangible assets they owned you might be shocked to find much of the wealth people own is in paper and this is full of risk. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/08/where-wealth-is-held.html

 

Wed, 08/06/2014 - 22:19 | 5057097 Cliff Claven Cheers
Cliff Claven Cheers's picture

.

Wed, 08/06/2014 - 23:14 | 5057335 PoliticalRefuge...
PoliticalRefugeefromCalif.'s picture

I've stopped even mentioning it anymore, If Homer and Marge are just too stupid to even question the simply understood fiscal instability of hopeless instruments like FDIC then how are you ever going to convince them the currency they have given the banks is considered the property of the lenders..

The Government actually believes that the greenback is their own property on loan to the individual, so what is a leap to consider property in general as the same in a post Constitutional era?

..and what is to prevent them from congering up a war to protect the reserve status- oh well, that's just silly talk, who would believe that?- haha, it's just me talking through my aluminum hat again..

..it's like teaching pigs to sing.

It wastes your own time and annoys the pig.

Thu, 08/07/2014 - 07:13 | 5057931 Help Is Not Coming
Help Is Not Coming's picture

"The Government actually believes that the greenback is their own property on loan to the individual, so what is a leap to consider property in general as the same in a post Constitutional era?"

Well legally it is their property and hence they do own everything that has ever been paid for with a FRN. I didn't really understand this either until I ran across this video on youtube. If you have a hard time wrapping your brain around the legality of how all of this works it is a good place to start.

The gist of the video is that legally you own the things for which you have paid. Since FRNs are promises to pay you can't pay for something with a promise. Okay, I get that. What I didn't get was legally who actually DID own it since I appeared to to be in possession of the thing that I thought I owned. Toward the end of the second video he does a great legal explanation of discharging of debts, alienation of goods and legal ownership of the good by the person who issued the notes accepted for the exchange.

My whole point is that the legal owner of any goods accquired with Federal Reserve Notes are the issuer of the note, ie. the Federal Reserve. You don't OWN anything because you never PAID for anything because you can only pay for something with Money. And since there isn't any money in our current monetary system it is all legally owned by the people who issued the note. You are just the holder in due course.

Thu, 08/07/2014 - 19:21 | 5061798 Idaho potato head
Idaho potato head's picture

Well, one thing that I have yet to see is a hearse pulling a uhaul.

Wed, 08/06/2014 - 23:30 | 5057382 potato
potato's picture

What if this administration is the "throw the baby out with the bathwater" administration? What if Obama is the most unpopular scape-goat under whose reign a wealth-tax will be instituted? We have two years for that to happen. The next puppet administration will be able to blame Obama and, in effect, nothing will happen. The people got their "change," the blame was assigned, but so what... now there's a new president on the throne.

Thu, 08/07/2014 - 09:22 | 5058342 d edwards
d edwards's picture

Bullshit!

 

0baMao isn't a "victim" he's the perp-the marxist sob is doing everything he and his corrupt party can do to destroy our economy and set it up for total collapse.

Thu, 08/07/2014 - 00:17 | 5057503 boeing747
boeing747's picture

I say it again " rent a 5x5 storage on Canada side close to US-Canada border, put your valuables and PMs over there. Bill your credit card monthly. Move in winter time when rates are lowest, it may cost you only $40 a month.

Thu, 08/07/2014 - 00:36 | 5057531 potato
potato's picture

I know crime in Canadistan isn't as bad as in USSA, but you can't be serious. You'd be better off burying it in a national park.

If you insist, i would hide it in an old TV or radio.

Thu, 08/07/2014 - 06:28 | 5057885 Gunga
Gunga's picture

We the people are not liable for the onerous debt contracted between corrupt politicians and criminal financial institutions.

Thu, 08/07/2014 - 09:32 | 5058395 GoldenTool
GoldenTool's picture

Double deleted

Thu, 08/07/2014 - 09:33 | 5058396 GoldenTool
GoldenTool's picture

I believe the king was pretty good at stacking on odious debt back in the day.  Seems like not much has changed but the curtains around here and ignore that man behind there.

Thu, 08/07/2014 - 09:42 | 5058465 Gideon Gono
Gideon Gono's picture

This piece is typical Casey bullshit.  None of this stuff is as easy as Clarke makes it sound.  A second citizenship even through brithright will take over a year to do and it is frought with administrative hurdles and roadblocks along the way.  Also, anyone here tried to set up a bank account in another country where you don't work or have a residence?  If you no of one please let me know.

Thu, 08/07/2014 - 11:13 | 5058912 Mr. Ed
Mr. Ed's picture
Yyyyuup!

It's gonna so bad that either your money will be worth less than toilet paper (hyperinflation) or TPTB will dip into your account with their dirty fingers (bail-in).  Whatever you do, GET YOUR MONEY OUT OF THE BANK!!!!!!

And even if the advice in this article on what do with it is a little impractical... the point is still clear: GET YOUR MONEY OUT OF THE BANK!!!!!!

But what to do with it?  Hmmm... did I hear someone say BUY REAL ESTATE?  Well, not in the article, but Casey's website does (in another country, of course).

Who's behind this?  Angelo Mozillo?  The NAR?  Wells Fargo?  Is it the current administration?  Is the idea to push the price of real estate so high you can dump that POS REO property on the books at break even (for WF)?  Is the idea to just get some money movin around to juice retail another few months (the curr admin)?  Is it to support prices a little bit longer so that Richie Rich and his buddies can finish dumping their soon-to-be-worthless RE?

Yeah, and the whole time, Joe Blow's thinkin: geez, everything I look at seems to cost 10x what it's worth... but if my money is gonna become worthless layin in the bank or get stolen by the gov... maybe I'm better off pullin my money outta the bank and buyin that overpriced hardpan/salt flat property out in the middle of freakin nowhere.  At least I'll be able to say I got sumpin' after the SHTF.

Thu, 08/07/2014 - 11:16 | 5058955 Gideon Gono
Gideon Gono's picture

You don't think you could get a 10% tax bill for the estimated value of your real estate?

 

Anything on the books is susceptible to a wealth tax.  Cash or bullion stashed outside the banking system  is about it, and even then you are susceptible to script changes and manipulation of PMs through paper instruments (like what has been happening).  There is no where to hide.

Thu, 08/07/2014 - 11:32 | 5059028 Mr. Ed
Mr. Ed's picture

You have good point!  But, I read so much of this kind of thing Casey's selling (for $99...that's a discount!) and then I see people paying insane prices for all kinds of assets: RE, PM's, stockss, collectibles, etc... I keep wondering what the connection might be.

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