The Jobs Bill was sold to the public as a bill that would stimulate jobs in the U.S. I didn’t pay much attention to the job bill because anytime lawmakers promise that they are going to create X number of jobs I just assume these jobs are going to be associated with some wasteful government spending. After reading a piece posted on Zero Hedge (via Panama Investor Blog), I wish that all there is to complain about is wasteful government spending.
Embedded within the legislation (H.R. 2847) contains new rules that govern how foreign banks can operate in the U.S. and new rules that could potentially destroy the privacy of some wealthy Americans. Here are a few of the eye-opening new rules associated with the so-called “Jobs Bill”:
- The new law requires foreign banks to have 30% of the total money they want to withdraw from their U.S. operations withheld (which means that money must stay in the U.S. for a long period of time). (Sec. 1471)
- The law requires foreign banks to send the U.S. government all the information they have about U.S. clients that have overseas accounts, including who they are, where they live, how much money they have in their accounts, etc. This effectively makes possessing an overseas account undesirable for Americans unless they don’t mind losing a lot of their privacy. (Sec. 1471)
- The new law gives the U.S. government the ability to shutdown overseas accounts belonging to U.S. citizens when a foreign bank refuses to share their U.S. client information with the U.S. government (Sec. 1471). This could take place involving foreign banks headquartered in countries that forbid them to share this type of information with another government.
- This new law represents a step by the U.S. government to tighten the noose on Americans who are trying to take steps to protect themselves in case they have to leave the country. By making it uncomfortable for Americans to own foreign accounts the U.S. government has effectively taken away one way Americans could prepare to leave the country in case of emergency.
- This new law either illustrates how lawmakers can hide insidious rules in legislation or illustrates how lawmakers have no idea what’s in a piece of legislation before they vote on it.
- This new law is a small step towards the U.S. government deciding what Americans can and cannot do with their money.
This revelation about what is in the Job Bill is a big deal because it means that the U.S. is now willing to implement capital controls. More stringent capital controls enacted by the U.S. government in the future could effectively “trap” Americans within the U.S. because they could be unable to take their money with them overseas. Therefore, the use of capital controls can be used by the U.S. government (or any other government that wishes to enact stringent capital controls) to restrict the movement of people entering or leaving the country.
As the economic and financial situation in the U.S. deteriorates in the next few years you should see more open attempts by the U.S. government to implement more stringent capital controls. Why would the U.S. government seek to implement more stringent capital controls? Here are a few reasons that I’ve thought of on top of my head.
- To prevent foreigners from rapidly removing their money out of the U.S. This slows down the decline in U.S. asset prices and a run on the U.S. dollar.
- To prevent wealthy Americans from leaving the country with their fortunes.
- To encourage or force Americans to “invest” their money in U.S. government debt at a time when foreigners are reluctant about adding to their U.S. government debt positions and as U.S. government needs to raise money to finance its deficits.
After reading all of this I hope you have some understanding about why I felt this news was important to write about. I recommend you take a look at Zero Hedge’s write up on this as well. They go into more detail about other things embedded in the so-called “Jobs Bill”.
