The US Government Tells The Whole World To Go FATCA Themselves
Submitted by Simon Black of Sovereign Man blog,
If you want to gather honey, don’t kick over the beehive.
This was how Dale Carnegie titled the first chapter of his 1936 personal development masterpiece—How to Win Friends and Influence People.
Carnegie had sensible advice: if you want to keep people on your team, first and foremost don’t piss them off. Duh. Seems pretty obvious.
I think the US government could use a little Dale Carnegie right about now (I actually just ordered a copy and had it sent to the President. You’re welcome, BO.)
Because based on the way they’re acting, you’d think they were test-driving an entirely different manuscript—How to Lose Friends and Alienate People.
Exhibit A: FATCA.
Four years ago, the US government passed this absurd law requiring every bank in the world to enter into an information-sharing agreement with the IRS.
Those who don’t will be subject to a 30% withholding tax on certain funds that get routed through the United States banking system.
What’s more, every bank on the planet is somehow supposed to simultaneously keep track of every other bank in the world and know precisely who is / is not in compliance with the law.
Banks that are in compliance are supposed to withhold the 30% tax on any funds transferred with banks that are not in compliance… otherwise they risk the withholding tax penalty themselves.
The whole thing is enough to make your head spin. Needless to say, the mere thought of complying with this law is enough to drive banks crazy.
This isn’t a way to treat friends. And today’s the day it comes into force.
Exhibit B: BNP Paribas.
Uncle Sam just slammed this French bank with a massive fee and threats of criminal penalties for doing business with a country they don’t like.
In doing so, the US has given BNP… and France… nine billion reasons to abandon America. Again, this isn’t the way you treat friends.
I think politicians fail to realize how important the US banking system is to holding together the US economy.
Right now, the entire world uses the US banking system.
If a merchant in Angola wants to do business with a merchant in India, for example, that transaction is cleared through banks in New York.
This, by default, creates demand for people to hold dollars, giving the US billions of people to splay their inflation onto.
It’s the only reason why the Federal Reserve has been able to print $3.5 trillion over the last five years; nearly any other country does that and you get hyperinflation.
You’d think they would guard this dearly. You’d think the US government would treat their friends… their customers… respectfully.
But no. Instead they’ve dropped a steaming hunk of dung on the entire system, and everyone in it.
With law and behavior this dumb, they’ve gone and kicked over the beehive. No bankers want the hassle of dealing with America anymore, and everyone is looking for a better option.
Chinese renminbi trade settlement is growing like a weed, constantly posting record levels. Everywhere you look there are countries and big companies looking to hold and conduct trade in renminbi.
Even Canada and the UK are now angling to become major centers of renminbi settlement. Everyone else seems to get it… everyone but the US.
With all of its debt and all of its money printing, the US banking system was one of America’s last economic competitive advantages.
But now we are going to see more and more foreigners curtailing their use of the US banking system… and by extension… the dollar.
Without that mass of people to export dollars to, inflation will really kick in back home.
It’s not going to happen overnight. But as yet another insane law comes into force today, it represents one of the final nails in the coffin for the US, and the end to one of its last remaining advantages.
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