On Capital Controls

Tyler Durden's picture


Submitted by Simon Black of Sovereign Man

It starts: the government’s plan to steal your money

There are consequences to being flat broke.

There are consequences to investing any level of confidence in a financial system underpinned by debt and the creation of paper currency.

There are consequences for ignoring reality and pretending that everything is normal.

This is one of them: European officials yesterday flat out admitted that they were discussing rolling out a series of harsh capital controls across the continent, including bank withdrawal limits and closing down Europe’s borderless Schengen area.

Some of these measures have already been implemented sporadically; customers of Italian bank BNI, for example, were all frozen out of their accounts starting May 31st upon the recommendation and approval of Italy’s bank regulator. No ATM withdrawls, no bill payments, nothing. Just locked out overnight.

In Greece, the government has taken to simply pulling funds directly out of its citizens’ bank accounts; anyone suspected of being a tax cheat (with a very loose interpretation in the sole discretion of the government) is being releived of their funds without so much as administrative notification.

It’s no wonder why, according to the Greek daily paper Kathimerini, over $125 million per day is fleeing the Greek banking system.

European political leaders aim to put a tourniquet on this wound in the worst possible way.

So what are capital controls?

Simply, capital controls are policies which restrict the free flow of capital into, out of, through, and within a nation’s borders. They can take a variety of forms, including:

- Setting a fixed amount for bank withdrawals, or suspending them altogether
- Forcing citizens or banks to hold government debt
- Curtailing or suspending international bank transfers
- Curtailing or suspending foreign exchange transactions
- Criminalizing the purchase and ownership of precious metals
- Fixing an official exchange rate and criminalizing market-based transactions

Establishing capital controls is one of the worst forms of theft that a government can impose. It traps people’s hard earned savings and their future income within a nation’s borders.

This trapped pool of capital allows the government to transfer wealth from the people to their own coffers through excessive taxation or rampant inflation… both of which soon follow.

The thing about capital controls is that they’re like airine baggage fees; ultimately, all governments want to do it, they’re just waiting on the first guy to impose them so that they can shrug their shoulders, stick it to the people, and blame ‘industry standards’.

Moreover, capital controls were a normal part of the global economic landscape for most of the 20th century, right up to the 1970s. It’s been a long time coming for governments to return to that model.

Since the inception of this letter, it has been a constant theme for us to talk about the increasing threat of capital controls. Your money, your savings, your livelihood are all under attack by insolvent governments, and it’s critical to take steps to reduce your exposure.

When European financial leaders all openly admit that they’re making plans to establish continent-wide capital controls, it really begs the question– what additional warning sign does one need?

The dominos have already started falling. Iceland. Ireland. Greece. Spain. Portugal. Italy. Cyprus. Soon even France and the rest of Europe. And it will come to the United States as well. There are over 15 trillion reasons why.

So what are the most critical steps to take now?

1) Buy precious metals and store in a secure jurisdiction.

Holding gold and silver overseas is a great way to (a) ensure your savings is protected against inflation, and (b) ensure that your precious metals cannot be confiscated in the event that gold ownership is criminalized in your home country.

I strongly recommend Singapore, Hong Kong, and Abu Dhabi as three potential safe jurisdictions for your gold and silver.

2) Open a foreign bank account.

For funds that need to be maintained within the financial system (as opposed to precious metals), make sure you have a safe home for your money abroad in a safe, well-capitalized bank.

3) Have a place to go overseas

Economic turmoil brought on by governments stealing people’s savings generally goes not bode well for social stability. If things get hairy, you’ll want to have a place to wait it out. And you don’t want to be deciding on the location while you’re packing your bags.

As an example, I’ve picked up an 1100-acre farm in central Chile that won’t skip a beat when the financial system implodes. The sovereign debt bubble does not affect whether or not my trees will bear fruit or my vegetables will grow.

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Tue, 06/12/2012 - 12:29 | 2518375 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Your Central Planners know best.

Move along....

Tue, 06/12/2012 - 12:40 | 2518410 Leopold B. Scotch
Leopold B. Scotch's picture

You, Sir, are advocating economic terrorism.

Get used to that phrase. Notice how the officials making the statement were clear that this would not be done for economic reasons, but rather for national security and citizen safety reasons.

You know... You gold bugs are terrorizing currencies = our national security. You're either with us, or you're against us.

Tue, 06/12/2012 - 12:42 | 2518421 Pladizow
Pladizow's picture

"Money power denounces, as public enemies, all who question its methods or throw light upon its crimes." - Jennings Bryan

The ultimate capital control will be to turn your imbedded chip off.

Tue, 06/12/2012 - 12:42 | 2518426 AnAnonymous
AnAnonymous's picture

Your Central Planners know best.

Move along....

They have built 'America'

Tue, 06/12/2012 - 12:51 | 2518462 Tirpitz
Tirpitz's picture

They've built America - stacking card on card... And now the wind is freshing up.

Tue, 06/12/2012 - 14:00 | 2518705 tocointhephrase
tocointhephrase's picture


Tue, 06/12/2012 - 12:31 | 2518377 kindape
kindape's picture

i think you will eventually see a different type of 'capital controls'.  I suspect that futures trading of things like oil and corn will be limited to producers and real hedgers (e.g airlines or food processors).  And currency trading will be restricted to those who actually take delivery of the currency. This is in the cards. It will certainly dampen liquidity but will also (in the long run) dampen the pure 'finance' side of our economies. Look for at least a partial start to these rules within a year

Tue, 06/12/2012 - 12:40 | 2518419 walküre
walküre's picture

That would hurt the pigmen. Don't see that happening.

Tue, 06/12/2012 - 15:52 | 2519203 johnQpublic
johnQpublic's picture



Tue, 06/12/2012 - 19:25 | 2519918 They Tried to S...
They Tried to Steal My Gold's picture

Or instead of confiscating gold - they put a 50% tax on any sales other than to the government. You should also consider which countries will basically collude and extradite financial information. If the US is doing this, you can bet assure they'll have all of the EU doing the same at the same time. 

Tue, 06/12/2012 - 12:33 | 2518393 Stoploss
Stoploss's picture

Wait until the ATM's get ripped out of the walls.. LOL!!

Good luck with the cap controls!

Tue, 06/12/2012 - 13:04 | 2518503 Winston Churchill
Winston Churchill's picture

Would not suggest that.

Made the original prototypes for NCR.

If you get it out of the wall,the cash incinerates as a failsafe.

Tue, 06/12/2012 - 13:29 | 2518596 XitSam
XitSam's picture

Proof? I've seen news reports over the years of ATM wall yanking and none of them said anything about incineration.

Tue, 06/12/2012 - 13:36 | 2518619 Winston Churchill
Winston Churchill's picture

I think they modified it later on to;

out the wall and opened.

The ones I worked on were the very first ATM's back in the 70's.

That had a mercury switch.

I'm sure the feature is still in there.The bank just returns the metal

strips in the money to the CB and gets refunded.See what happens if

you try it.

Tue, 06/12/2012 - 14:36 | 2518881 Ratscam
Ratscam's picture

nowadays they use ink that soakes the paper to make it almost illegible.
Good luck paying with them.

Tue, 06/12/2012 - 15:19 | 2519070 XitSam
XitSam's picture

Dye packs probably make more sense. thanks for replying to all

Tue, 06/12/2012 - 23:33 | 2520330 Bringin It
Bringin It's picture


Lot's of people talkin this down.  What's up with that?  Maybe the banks want a monopoly on robbing?

Tue, 06/12/2012 - 12:35 | 2518396 GeneMarchbanks
GeneMarchbanks's picture

The sovereign debt bubble does not affect whether or not my trees will bear fruit or my vegetables will grow.

That is correct. Just make sure you stockpile cucumbers as high as the sky. Also, do not under any circumstance share it with the government nor the locals, for it is the American way.

1) Steal underpants

2) ?

3) Profit

Excellent stuff.

Tue, 06/12/2012 - 12:34 | 2518397 Matt
Matt's picture

OT - how can you confirm if a stock is in the HFT Tractor beam?

ZNGA is moving sideways with higher than average volume, with movements of $0.01 at a time it seems.

Where do you get 25 ms stock charts from?

Tue, 06/12/2012 - 12:46 | 2518436 Possible Impact
Possible Impact's picture

Where do you get 25 ms stock charts from?



follow   https://twitter.com/#!/BadAlgo  for fun HFT algo news



Tue, 06/12/2012 - 13:03 | 2518497 iDealMeat
iDealMeat's picture

Can't up tick you PI..  so, +1 thx..

Tue, 06/12/2012 - 12:47 | 2518447 fuu
fuu's picture

Check out CLWR.

Tue, 06/12/2012 - 12:34 | 2518398 newsguy68
newsguy68's picture

Yes the govt is going to steal our money. hell they are going to limit how much you can withdrawl in the eu soon.


Tue, 06/12/2012 - 12:41 | 2518422 Tirpitz
Tirpitz's picture

Indentured servants shouldn't feel any need to own money.

Tue, 06/12/2012 - 12:34 | 2518400 ruffian
ruffian's picture

Hold PM's outside your home country...........easier said than done

Yea, I feel safe with my gold 5000 miles away

Ruffian says........keep your PM's close !!!


Tue, 06/12/2012 - 12:43 | 2518429 Jack Sheet
Jack Sheet's picture

Yeah as a citizen of Dog Breath, Michigan, I've just flown to Singapore and back to deposit my 5 Eagles outside USG jurisDICKtion

Tue, 06/12/2012 - 13:59 | 2518701 Thomas
Thomas's picture

Yup. My metals are within reach on short notice. I am sure I can find a way to move them across a border if I have to.

Tue, 06/12/2012 - 15:55 | 2519221 johnQpublic
johnQpublic's picture

might need a couple just to bribe those border guards

Tue, 06/12/2012 - 17:16 | 2519582 Real Estate Geek
Real Estate Geek's picture

Keister the rest!

Wed, 06/13/2012 - 06:16 | 2520724 Gief Gold Plox
Gief Gold Plox's picture

The first line from that link reads: "Deciding to buy physical gold or silver is a no-brainer."

I believe the author just called most of the people I know, or ever met for that matter, brainless. How could he have known?

Tue, 06/12/2012 - 12:43 | 2518433 Pladizow
Pladizow's picture

Do both and more!

Tue, 06/12/2012 - 12:49 | 2518458 SilverTree
SilverTree's picture


Always take delivery! !! Fuck, just take delivery!! If you can't hold it you don't own it!!

Tue, 06/12/2012 - 14:06 | 2518734 tocointhephrase
tocointhephrase's picture


Tue, 06/12/2012 - 13:02 | 2518492 Gringo Viejo
Gringo Viejo's picture

...and your enemies closer, huh?

Tue, 06/12/2012 - 13:03 | 2518496 Sudden Debt
Sudden Debt's picture

Send them to me! I'll give you a paper that says they're yours!

Tue, 06/12/2012 - 17:55 | 2519695 TheGardener
TheGardener's picture

I agree with you ruffian, Simon Black sounds like Karl Marx,
good analysis but wrong conclusions and horrible calls for action. Save jurisdictions, foreign bank accounts, odd city states that years ago announced full cooperation with OECD
demands on so called money laundering... so much 90`s and
a parody of what to do now : back to your tribe and make
sure everything and everyone dear is close.

Tue, 06/12/2012 - 12:35 | 2518402 lolmao500
lolmao500's picture

It's coming everywhere.

Tue, 06/12/2012 - 12:39 | 2518404 The Big Ching-aso
The Big Ching-aso's picture



WTF, Black.  Yeah sure so many of us can PU an 1100-acre farm in Chile for shitsake like it's buying a donut 2 ride this out.

Tue, 06/12/2012 - 12:44 | 2518432 ArkansasAngie
ArkansasAngie's picture

I live in Arkansas

Does Oklahoma qualify as a foreign territory?

Thank God for Mississippi ... eh?

Tue, 06/12/2012 - 12:59 | 2518481 Uncle Remus
Uncle Remus's picture


Tue, 06/12/2012 - 15:57 | 2519227 johnQpublic
johnQpublic's picture

shit, arkansas damn near qualifies as a foreign country itself

Tue, 06/12/2012 - 12:45 | 2518437 FullFaithAndCretin
FullFaithAndCretin's picture

Yeah Simon, tell us where your farm is and we'll all move in with you when the shit hits the fan. 1100 acres, you'll hardly know we are there.

Tue, 06/12/2012 - 13:00 | 2518487 Uncle Remus
Uncle Remus's picture

Can you get a double-wide in Chile?

Tue, 06/12/2012 - 13:03 | 2518495 percolator
percolator's picture

Well at least until the Chilean Gov't confiscates it.

Tue, 06/12/2012 - 12:50 | 2518455 BlueCollaredOne
BlueCollaredOne's picture

Black likes to frequently remind us in his posts that he is more well off than us.  He is the guy who tweets "Fuck, I crashed my Range Rover so Im stuck driving the Mercedes to the golf course today."

It most likely boils down to an issue with penis size.



Tue, 06/12/2012 - 14:22 | 2518813 akak
akak's picture

Well, you know, once you go Black you never go back.

Tue, 06/12/2012 - 19:05 | 2519879 Uber Vandal
Uber Vandal's picture

Perhaps Black is the inspiration for the "Most interesting man in the world" Dos Equis beer commercials.

At museums, he’s allowed to touch the art. . . .  Sharks have a week dedicated to him. . . . He once had an awkward moment, just to see how it feels. . . . The police often question him, just because they find him interesting. . . . . His small talk has altered foreign policy. . . . Even his enemies list him as their emergency contact

Tue, 06/12/2012 - 12:39 | 2518413 Jonas Parker
Jonas Parker's picture

Seizing PMs in the US might be a problem... at least in Texas.

Tue, 06/12/2012 - 12:44 | 2518435 LoneStarHog
LoneStarHog's picture

"Seizing PMs in the US might be a problem... at least in Texas."


Seizing PMs in the US will be a problem... especially in Texas.



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