Will We Be Able To Take It With Us When We Leave for Pastures New?

What do these countries have in common?  There are a few possible answers, so take a moment and come up with a few possibilities.

Argentina

Armenia

Bahamas

Barbados

Belize

Brazil

China

Cuba

Egypt

Fiji

Georgia

Iceland

India

Iran

Israel

Libya

Malaysia

Mauritius

Morocco

Myanmar

Namibia

Nepal

Nigeria

North Korea

Pakistan

Papua New Guinea

Russia

Samoa

Sri Lanka

Seychelles

South Africa

Sudan

Tunisia

Ukraine

Uzbekistan

Venezuela

Zimbabwe

What did you come up with?

Weak bonds? Past debt defaults? All non-western nations? Third world developing nations? Low democracy locations? High inflation at some point in times past?

The answer I’m looking for is that these are all countries with Foreign Exchange Controls of some sort (according to Wikipedia : https://en.wikipedia.org/wiki/Foreign_exchange_controls ). Wiki conveniently define Forex Controls as:

>>>Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Common foreign exchange controls include:

  • Banning the use of foreign currency within the country

  • Banning locals from possessing foreign currency

  • Restricting currency exchange to government-approved exchangers

  • Fixed exchange rates

  • Restrictions on the amount of currency that may be imported or exported

Countries with foreign exchange controls are also known as "Article 14 countries," after the provision in the International Monetary Fund agreement allowing exchange controls for transitional economies. Such controls used to be common in most countries, particularly poorer ones, until the 1990s when free trade and globalization started a trend towards economic liberalization. Today, countries which still impose exchange controls are the exception rather than the rule.<<<

So now look at these countries again, and with their common economic features in mind. If you had to consider who will be the next additions to the above list, which country would you pick?

There are a few issues which are pertinent:

Generally speaking the western nations are the ones that “believe “ in free world trade, after all it usually works in the favour of “their” large global or multinational corporations interests.

Historically, the International Monetary Fund (IMF) held the view that foreign exchange controls, or capital controls on a country’s citizens and businesses would reduce economic output. So the IMF, World bank, etc were “against” such controls.

The truth is that these kind of restrictive laws are used by weak trading nations to conserve currency from leaking away, so heavily indebted countries, or countries with weak developed economies tended to impose them. This was of course opposed by the developed nations who had big business exporting into the less developed, and often smaller country.

Well, that was then .... a time before the western nations got themselves deeply in debt. All of a sudden the arguments change, and new views seem to be emanating from the think tanks of the west. By a strange coincidence, as the west’s nations debts grow, their interest in capital controls increase. Aaah, watch how the accepted economic religions can be changed so easily. All that is required is shortage of money "need" and the justifications all shift accordingly. Then a new economic philosophy/religion appears to provides validation for rules to protect money. Protectionism is bad .... but only when the other guys are doing it.

So after decades of IMF (and western) pushing free trade, free movement of capital policy to trade on the world, their giant corporations trading with (predating upon) weaker trading nations we see new economic papers being published, and new supporting stories in the media. Stories like these are in the news:

Guardian: The IMF's welcome rethink on capital controls

Bloomberg: IMF Officially Endorses Capital Controls in Reversal

And they are describing recently published IMF Papers like this one below:

IMF: Fiscal Monitor Oct 2013 : Taxing Times

It's an evolution away from the opposite view which was held more or less since Bretton Woods.

Here are some words from the Executive Summary of the recent IMF Paper:

>>>Broadening the base of the value added tax ranks high in terms of economic efficiency .....

....improving compliance remains a central challenge

There is a strong case in most countries, advanced or developing, for raising substantially more from property taxes ..... their past performance is far from encouraging, but this could change as increased public interest and stepped-up international cooperation build support and reduce evasion opportunities.<<<

Now we know from experience that taxation of property holdings is aimed at the wealthy, but they're too few and the numbers don’t add up, and with the amounts they need to get out of a hole, those property taxes will be applied to everybody, and as for VAT, well that’s for everybody too, though it hits poorer people harder per capita.

So what do you think big money thinks about ideas like these? The answer is they don’t like it at all, not a tiny little bit. Here is a story in Forbes on this matter:

The International Monetary Fund Lays The Groundwork For Global Wealth Confiscation

Now I seem to have this dim memory that a certain Dominique Strauss Kahn mentioned taxation of big money in the past. big money disapproved apparently. He wasn’t around for all that long in his IMF job afterwards before he had to resign for some strange reason.

So here we have the political masters looking for extra cash, and beginning to turn towards their sponsors (and lobbyists) to get some. Let me see .... how many trillion$s are sitting on those multinationals' balance sheets, that would solve a lot of problems for the western governments? Is it seven $T? Somebody has undoubtedly checked and reported back to the bosses. "Levelling the taxation playing field" is a nice way of saying "removing safe areas for expatriates and multinationals".

I assume deals will be made with the most favoured parties which the average man in the street will eventually pay dearly for. But that’s life I guess. However policy will definitely move that direction in coming years. Homes as hard asset inflation hedges? Hmmmm. That property tax will only rise, but the tenants can pay a higher rent, right? House owning is soooo twentieth century!

As Dylan wrote all those years ago, and it definitely applies today: The times they are a changing.

Now if only the western governments could turn on the banksters so promptly. Ah but I dream and am getting too far ahead in the future. In the currency war we are living through the banks are weaponized, and they therefore enjoy similar status and protection as, say, a vital Pentagon Department, or Special Services Regiment. I’m sure we’ll have to wait a good bit longer for that particular event to come due.

In the meantime - or as Monty Python once said "During the Meanwhile" -  I appreciate that precious metal owners are waiting for the inevitable inflation to appear. It seems to be taking so long. But you have to wait until all the dominos are lined up, and that takes time. Setting up the Capital Control Laws, and policies to make a reversal of the Free Trade Doctrine acceptable is one such domino in my humble opinion. That list will look so much more ... complete ... with UK, USA, Japan and various EU countries added, don't you think.

Kicking and screaming with every step, that's how they're being dragged to eventually acknowledge reality!

Argentus Maximus

The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author & his work can be found here: RhythmNPrice.

91 Comments

erewenguy's picture

wut??

First?

edit:

"....improving compliance remains a central challenge"

translation- we are hell-bent on taking from you

Silvergunn's picture

Deuce

Interesting how things change...

as is said in China, "May you Live in Interesting Times"!

Bongo Jim's picture

3!

The bronze
 

DeaconBenjamin's picture

China’s Monumental Ponzi: Here’s How It Unravels

by David Stockman • March 28, 2014

China is the greatest construction boom and credit bubble in recorded history. An entire nation of 1.3 billion has gone mad building, borrowing, speculating, scheming, cheating, lying and stealing. The source of this demented outbreak is not a flaw in Chinese culture or character—nor even the kind of raw greed and gluttony that afflicts all peoples in the late stages of a financial bubble.

Instead, the cause is monetary madness with a red accent. Chairman Mao was not entirely mistaken when he proclaimed that political power flows from the end of a gun barrel-–he did subjugate a nation of one billion people based on that principle. But it was Mr. Deng’s discovery that saved Mao’s tyrannical communist party regime from the calamity of his foolish post-revolution economic experiments.

Just in the nick of time, as China reeled from the Great Leap Forward, the famine death of 40 million and the mass psychosis of the Cultural Revolution, Mr. Deng learned that power could be maintained and extended from the end of a printing press. And that’s the heart of the so-called China economic miracle. Its not about capitalism with a red accent, as the Wall Street and London gamblers have been braying for nearly two decades; its a monumental case of monetary and credit inflation that has no parallel.

At the turn of the century credit market debt outstanding in the US was about $27 trillion, and we’ve not been slouches attempting to borrow our way to prosperity. Total credit market debt is now $59 trillion—-so America has been burying itself in debt at nearly a 7% annual rate.

But move over America!  As the 21st century dawned, China had about $1 trillion of credit market debt outstanding, but after a blistering pace of “borrow and build” for 14 years it now carries nearly $25 trillion.  But here’s the thing: this stupendous 25X growth of debt occurred in the context of an economic system designed and run by elderly party apparatchiks who had learned their economics from Mao’s Little Red Book!

That means there was no legitimate banking system in China—just giant state bureaus which were run by  party operatives and a modus operandi of parceling out quotas for national credit growth from the top, and then water-falling them down a vast chain of command to the counties, townships and villages.  There have never been any legitimate financial prices in China—all interest rates and FX rates have been pegged and regulated to the decimal point; nor has there ever been any honest accounting either—-loans have been perpetual options to extend and pretend.

And, needless to say, there is no system of financial discipline based on contract law. China’s GDP has grown by $10 trillion dollars during this century alone—that is, there has been a boom across the land that makes the California gold rush appear pastoral by comparison.  Yet in all that frenzied prospecting there have been almost no mistakes, busted camps, empty pans or even personal bankruptcies.  When something has occasionally gone wrong with an “investment” the prospectors have gathered in noisy crowds on the streets and pounded their pans for relief—-a courtesy that the regime has invariably granted.

So in two short decades, China has erected a monumental Ponzi economy that is economically rotten to the core. It has 1.5 billion tons of steel capacity, but ”sell-through” demand of less than half that amount— that is, on-going demand for sheet steel to go into cars and appliances and rebar into replacement construction once the current pyramid building binge finally expires.  The same is true for its cement industry, ship-building, solar and aluminum industries—to say nothing of 70 million empty luxury apartments and vast stretches of over-built highways, fast rail, airports, shopping mails and new cities.

In short, the flip-side of the China’s giant credit bubble is the most massive malinvesment of real economic resources—-labor, raw materials and capital goods—ever known. Effectively, the country-side pig sties have been piled high with copper inventories and the urban neighborhoods with glass, cement and rebar erections that can’t possibly earn an economic return, but all of which has become “collateral” for even more “loans” under the Chinese Ponzi.

China has been on a wild tear heading straight for the economic edge of the planet—-that is, monetary Terra Incognito— based on the circular principle of borrowing, building and borrowing. In essence, it is a giant re-hypothecation scheme where every man’s “debt” become the next man’s “asset”.

Thus, local government’s have meager incomes, but vastly bloated debts based on stupendously over-valued inventories of land. Coal mine entrepreneurs face collapsing prices and revenues, but soaring double digit interest rates on shadow banking loans collateralized by over-valued coal reserves. Shipyards have empty order books, but vast debts collateralized by soon to be idle construction bays. Speculators have collateralized massive stock piles of copper and iron ore at prices that are already becoming ancient history.

So China is on the cusp of the greatest margin call in history. Once asset values start falling, its pyramids of debt will stand exposed to withering performance failures and melt-downs. Undoubtedly the regime will struggle to keep its printing press prosperity alive for another month or quarter, but the fractures are now gathering everywhere because the credit rampage has been too extreme and hideous. Maybe Zhejiang Xingrun Real Estate which went belly up last week is the final catalyst, but if not there are thousands more to come. Like Mao’s gun barrel, the printing press has a “sell by” date, too

http://davidstockmanscontracorner.com/2014/03/28/chinas-monumental-ponzi-heres-how-it-unravels/

DeaconBenjamin's picture

Italian Police stop men with billions of fake bonds

Vatican police on Saturday apprehended an American and a Dutch man who were trying to deposit billions of euros and US dollars in fake bonds in the Vatican bank.

The men were stopped by the police when they approached one of the guarded gates at the Vatican and asked to be let through to the Institute for Religious Works (IOR) as the bank is formally known, Vatican spokesman Federico Lombardi told AFP.

The bonds were discovered in a briefcase they were carrying and the men were handed over to Italy's financial police, who found false passports and other fake documents in their hotel rooms.

The haul came a day after Italian prosecutors said two former top executives at the Vatican bank will go on trial for money laundering in a case that led to the seizure of €23 million ($32 million).

IOR press officer Max Hohenberg said the American and Dutch man "are neither clients of the bank, nor were they expected".

The bank, which handles the accounts of Catholic clerics and congregations around the world, has a murky reputation but the Vatican has vowed to clean it up and bring it in line with international laws.

Lombardi said Saturday's episode "shows the controls are working. But I don't think we're talking about a plot by criminal masterminds if they managed to get caught at the first hurdle."

The IOR has a troubled history, including the collapse of the Banco Ambrosiano, in which the Holy See was the main shareholder, and which had been accused of laundering money for the Sicilian mafia.

The chairman of Banco Ambrosiano, Roberto Calvi -- dubbed "God's Banker" in the press -- was found hanging from Blackfriars Bridge in London in 1982 in a suspected murder by mobsters.

In February, Pope Francis created a new finance ministry to oversee the Holy See's economic affairs in a move the Vatican said was aimed at increasing transparency.

http://www.thelocal.it/20140330/police-stop-men-with-bilions-of-fake-bank-bonds

DeaconBenjamin's picture

Repsol approves $5bn Argentina payoff

Spanish oil giant Repsol said on Friday its shareholders had approved a deal to accept $5 billion in compensation from Argentina for the country's seizure of its subsidiary YPF.

The deal seeks to repair the financial hit taken by Repsol when Argentina's President Cristina Kirchner ordered the nationalisation of Repsol's 51-percent stake in YPF in April 2012.

"We have worked very hard to obtain a just compensation. Our efforts have been rewarded with a guaranteed agreement that creates value for our shareholders and strengthens the company's financial position," Repsol president Antonio Brufau said after shareholders approved the deal at an annual general meeting.

"Today we embark on a new phase, full of hope and growth prospects for Repsol," he added in a statement.

The compensation is to be paid in Argentine government bonds. The deal still must be approved by Argentina's parliament.

The expropriation soured relations between Argentina and Spain and sparked international outrage including from Spain's European Union partners.

Kirchner blamed it on Repsol's failure to make agreed investments in the firm. Spain saw it as a blow to its strategic interests.

The nationalisation of its subsidiary in Argentina hit Repsol's profits hard in 2013, falling by 90 percent over the previous year to €195 million.

Repsol said the expropriation of YPF forced it to make provisions of  €1.28 billion in 2013, hitting its financial results.

Settlement of the dispute could help to lure investment to the vast Vaca Muerta shale oil and gas field in Argentina, discovered by YPF in 2010.

It is estimated to contain the equivalent of 22.8 billion barrels of oil, described by Repsol at the time as the largest discovery in its history.

http://www.thelocal.es/20140329/repsol-approves-5bn-argentina-payoff

silver66's picture

7th

Governments should be self supporting thru their own contributions...oh wait.... they don't contribute anything. Oh well I guess they will keep squeezing

Silver66

urout's picture

Here's a Capital Control

How about we go back to sound Money! 

Oh Gawd what am I thinking.

argentus maximus's picture

A reading of that IMF paper

A reading of that IMF paper shows a great desire that the developing nations increase their taxes.

This obviously to reduce their attractiveness when compared (in the future) to the exhorbitant taxes which will be imposed in the western nations. The logic? Fewer people will try to escape if everywhere else seems similarly oppressive.

Dagney Taggart's picture

Israel and Iran. LOL!

Rothschild central bank control/desire for control?

It's too bad the Holy Land isn't immune from Rothschild satanism influence.

https://en.wikipedia.org/wiki/Rothschild_Boulevard

El Gordo's picture

Rich vs. poor

There are a lot more poor people out there than there are rich people.  Today's liberal talk of income equality, wealth redistribution, and the like would assume the Robin Hood theory of stealing from the rich and giving to the poor.  If everyone is equal in having the right to vote, whether it be for issues or for representation, doesn't it stand to reason that eventually the more numerous poor will have a greater political standing than the rich?  If these assumptions are correct, how long do you expect the rich to sit around and have their pockets picked before they amass their resources and those of their peers and disappear to some place that would offer them asset protection?  Thus, the rich get richer and the poor masses get poorer as eventually the poor are forced to feed off of each other as was the case in most of the urban centers in this country before the introduction of mass transit, which then afforded the criminals a cheap means of invading and looting the suburbs while returning to the relative safety of the hood upon completion of a day's work.  Now that the police and the gun control advocate are running interference on their behalf, the invaders face even less resistance than ever, and if there is any booty left over, the government itself shares in the spoils.   So where do the rich go next?

Mr. Fix's picture

Ronald Reagan once said…

If America falls, there will be no place left on the planet to hide.

America has fallen, now they are commencing with the part that says…

At least now I'm glad I'm not an ex-patriate sitting in the middle of nowhere. 

Mr. Fix's picture

Starting in 20 min.:

Tonight on The Common Sense Show, Dave will be joined by ex-CIA agent, Dr. Jim Garrow for the entire three hours. They will be discussing the coming World War, the existence of a possible military coup against Obama, the crisis in Ukraine, the increasing isolation of America from her allies and a lot of other ground breaking topics in what could prove to be the most explosive interview, this year, on The Common Sense Show. New Director, Annie DeRiso will be joining Dave and participating in the interview.

Dagney Taggart's picture

@Fix

Just to clarify:

Ronald Reagan was an out of control spending liberal idiot. See the US debt (edit: % increase is what matters most). I am so lost at all the Reagan pole-smoking I hear from "conservative" radioheads on my southerly travels.

America fell first in 1871 and was finished off in 1913.

The US corporation took its place. This is about to be destroyed.

America will rise again. That's my bet.

PS. I'm also betting the expats are going to regret leaving (edit: entirely).

GuerrillaCapitalist's picture

@ Dagney Re: America Will Rise Again

Neighbors:

I'm with Dagney. I get a bit tired of the worship at the clay feet of Reagan. I haven't had respect for a President since Jefferson, Jackson and Kennedy.

The United States of America has an untapped bounty of fierce patriots that will rise to the occasion and prevail. I was one of those patriots in a mighty band of brothers in the snake filled jungles of South East Asia that took up the challenge of our deluded, demented and unelected leaders and won every battle while they lost the war. It'll be a damned sight different this time.

The one thing that's kept my family from fleeing this land, beyond the fact that we've been here since before it was a British colony or a Spanish adventure is the fact that I don't like the idea of being an immigrant in an unfriendly land. I'll stand on our farm and keep doing what generations before me have done. That said, there's still a twin engined, long range turbo prop, regularly flown and  in the hangar ready to get us the fuck out of dodge.

Mr. Fix's picture

Dagney, what you say is true,

But I still have a soft spot in my heart for Ronald Reagan.  Even if it's completely senseless, he made me feel good.

As far as America rising again, I'm counting on it, that's why am here.

Dagney Taggart's picture

Speaking of Inflation

Toby Connor on Commodities and Gold http://goldscents.blogspot.com/2014/03/commodities-another-leg-upgold-set-up.html

Most here know I'm the queen of commodities so DYODD. You also know my position on various uranium explorers/producers and nuclear energy companies. I'm standing by it for the rest of 2014.

Face it save-the-planet zero-growth nutjobs: you die too without nuclear power.

AlienEyes's picture

Dagney, you ignorant slut....

Your recollection of Reagan is typically that of a brainwashed mindless foreign devil.

Jimmy Carter was all that you attributed through your glaringly ignorant and probably drunken statement to Mr. Reagan. Now that you have shamed yourself for all time, you might want to dump some palladium and spend the proceeds to check into a drunk tank....err.... rehab facility, you goofy communist lush !

(No offense)

and a pox on your palladium !

Dagney Taggart's picture

@Fix

Actors do that.

Barack Obama made a lot of white middle-aged women feel good too, from what I read. Everybody blames blacks and Jews for electing him but the fact is this is the largest voting demographic in America and nobody wins your national election without 45-65 white women support.

DeaconBenjamin's picture

I haven't had respect for a President since Kennedy

Approving unions for federal government workers makes you all weak in the knees?

DeaconBenjamin's picture

AlienEyes: recollection of Reagan

My former boss was a campaign worker and political appointee of Reagan.  While acknowledging the limits of what Reagan could do with a bought and paid-for Democrat House of Representatives, he made it clear that his campaigning for Reagan was time wasted. 

AlienEyes's picture

Kennedy ?

He was a whore mongering, rich kid from H a r v a r d....and he damned near got us all killed.

Dagney Taggart's picture

@Alien

I assume you're drunk and being sarcastic.

But if not, anybody can look at the US national debt and do the math. The NWO liberal Bush Sr. being his VP was just a coincidence I suppose.
 

DeaconBenjamin's picture

The NWO liberal Bush Sr. being his VP was just a coincidence

No, actually the word was he was imposed on Reagan at the convention.

Dagney Taggart's picture

Switzerland

Just a side note:

If hard-core zealots around the world would look at themselves and others as the Swiss do where all that matter are facts and how loudly one beats their chest means nothing, the world wouldn't have nearly the problems it does.

One of the joys of being a non-emotional (typically) woman.

PS. @Deacon. About Bush, I was being sarcastic. I suppose Reagan being shot was a coincidence though.

AlienEyes's picture

you dunce

Ending the cold war and bringing down the Berlin wall didn't count, right? You myopic gold digger.

I assume you never saw any of the early Saturday Night Live episodes with Dan Aykroyd and Jane Curtin.

https://search.yahoo.com/search;_ylt=Ak0rXYz5MZ8nW4UtPtHVy2.bvZx4?p=Dan+Acroid+and+Jane+Curtin.&toggle=1&cop=mss&ei=UTF-8&fr=yfp-t-745

(look in at the one minute mark of the first video)

GuerrillaCapitalist's picture

@DeaconBenjamin

GO FUCK YOURSELF! You must be a typical, one issue 'merricun. 

I admire Kennedy because of his opposition to increased troop placement in Vietnam, his careful, studied diplomacy with Kruschev(sp) that would have stopped the Cold War in it's tracks and his decision to dismantle the CIA. Not to forget his intention to dismantle the Federal Reserve.

Dagney Taggart's picture

Berlin Wall

Seriously? That's your comeback for his out of control deficit spending? I dare you to sell that to the Swiss, Alien.

Another American phenomenon observed by a concerned neighbor: Using the opposing political party to distract from one's own party's BS hypocrisy. For instance, blaming Carter for Reagan's deficit-spending liberalism. I don't see how he's relevant being 1980.

I'm tired and this is boring. This is all about as intellectually-retarded as Obama zealots continuing to blame George Bush for a recession 6 years ago. You have much bigger problems, Americans, than your politicians.

AlienEyes's picture

For the record

For the record, Kennedy started the deployment of US troops to Viet Nam.

Jimmy Carter was responsible for our first taste of runaway inflation and high gas prices. 

Kennedy was far more interested in porking movie stars than running the country. Only the deluded, pathetic members of the Kennedy cult think otherwise.

As for the half assed "pole smoking" statement above, you can rest assured that every single talk radio personality that has a reverent respect for Reagan is far more educated in US history than you will ever be. Your ignorance shows like a super nova at a distance of less than one light year.

It's a sad fact that those who bitch about brain washing are often completely unaware that they are classic examples of what they hate.

edit : Don't worry, dag. The "intellectually-retarded" part will be mitigated when you go to bed. 

Urban Roman's picture

Talk radio personality?

Educated?

Ba hahahahahahahahahaha!

Don't let them put fluoride in your water, Alien! Maintain your precious bodily fluids!

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