Hopey Change Imposes Capital Controls

by Dave Blount | March 29, 2010 12:43 pm

By piling outrage upon outrage at a maniacal pace, our socialist rulers have made it difficult even to keep track of their assaults on our liberty, much less resist them. Barely noticed by anyone, they have stretched out their insatiably greedy claws to exert control over private funds in overseas banks[1]:

On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487)[2], brilliantly goalseeked by the administration’s millionaire cronies to abbreviate as HIRE[3]. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions – Subtitle A — Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation’s domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It’s the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose — the law now says so. Capital Controls are now here and are now fully enforced by the law.

The last time America came this close to degenerating into a socialist dictatorship, FDR banned citizens from owning gold. But under Hopey Change, even the Great Depression could come to resemble an era of economic liberty.

One thing we are confused about is whether this law is a preamble, or already incorporates, the flow of non-cash assets, such as commodities, and, thus, gold. If an account transfers, via physical or paper delivery, gold from a domestic account to a foreign one, we are not sure if the language deems this a 30% taxable transaction, although preliminary discussions with lawyers indicates this is likely the case.

And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.

This appalling law [PDF[4]] will also make it difficult[5] to invest in real estate overseas. Already Israeli banks are urging American clients to close their accounts[6].

Soon productive citizens will be reduced to dragging suitcases stuffed with their life savings across the southern border, in hopes of escaping Change before our tyrannical federal government can reduce them to paupers in the name of Social Justice. That’s when the Feds will discover that we need border security after all.

On tips from Marasmius. Cross-posted at Moonbattery[7].