But you still need a 'Plan B', so you have stored the remainder of your liquid assets overseas in Switzerland in the event of widespread bank runs, bank failures, or bank holidays. If all else fails, you have determined to pack up and jettison the sinking Titanic for another shore. There is only one catch: The US government doesn't want you to leave.
In 2008, over two million US citizens fled the United States for greener pastures, and while this figure still represents less than 1% of the total US population, the trend is astounding. Between 2006-2008, the average number of US permanent resident filings stood at roughly 1.1 million/year, placing the legal inflow at negative 900,000 people. In a country of immigrants, the trend is emigration, not immigration. Even the Mexicans are beginning to think twice. (See: Mexican immigration to US hits 10-year low: study)
The US government is monitoring this exodus closely. Using the pretext of anti-money laundering and the Patriot Act, restrictions on foreign assets are becoming ever more totalitarian. A business associate of mine recently requested information on opening a bank account in an insignificant Latin American country, but was told by the bank agent that the process for US Citizens was "extremely difficult" because of US government regulations. The bank essentially declared "we are not interested in the business of United States citizens." Who can blame them? Switzerland's largest bank, UBS, remains entangled in a bitter lawsuit with the US Government concerning the account details of 52,000 of its US customers. The US government claims that this information is critical to "tax evasion" cases. Tax evasion by 52,000 US clients?
American privacy is no longer a matter of rights. The law now states: "If you or your partnership, corporation, estate, or trust is a "U.S. person," you must report the existence of all "foreign bank, securities or "other' financial accounts" if the aggregate value of those accounts exceeded US$10,000 at any time during the preceding year. Those failing to do so face a fine up to US$250,000, imprisonment up to five years, or both."
Since most financial experts anticipate massive dollar depreciation in the not-too-distant future, the question becomes: what will be the government's next move? It is a question that has already been answered for us, care of the International Emergency Economic Powers Act (IEEPA). Section 1702 of the IEEPA empowers President Obama, with the stroke of a pen, to enact foreign exchange controls under "Unusual and extraordinary threat; declaration of national emergency". You can expect, with certainty, harsher foreign exchange controls in the near future and strict, preventative measures against mass evacuation out of the dollar.
International Emergency Economic Powers Act (IEEPA).
Summarized by Wikipedia: the IEEPA "authorizes the president to declare the existence of an "unusual and extraordinary threat... to the national security, foreign policy, or economy of the United States" that originates "in whole or substantial part outside the United States." It further authorizes the president, after such a declaration, to block transactions and freeze assets to deal with the threat. In the event of an actual attack on the United States, the president can also confiscate property connected with a country, group, or person that aided in the attack."
EXCERPT
1702. Presidential authorities
(a)(1) At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise--
(A) investigate, regulate, or prohibit--
(i) any transactions in foreign exchange,
(ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof,
(iii) the importing or exporting of currency or securities, by any person, or with respect to any property, subject to the jurisdiction of the United States;
(B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States;
If you maintain that you will flee the US if the situation worsens, I might remind you that you will not get very far without your checkbook. May I further remind you that the repatriation of capital investment may soon be labeled a form of "economic patriotism" whether you like it or not. There are presently only a few foreign assets protected (implicitly, though not legally) from repatriation. I will explore those alternatives in my next article.
Til next time, that's my Saab Story.
