November 13, 2013
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Greetings FutureMoneyTrends.com Member,
I recently had a chance to discuss wealth confiscation with John Rubino of DollarCollapse.com.
He reminds us of what governments do when under pressure, time and time again we have seen wealth confiscation. Inflation is an easy way to steal from your population, you have taxes, laws altered to take your money, and then as things get worse, the wealth confiscation just gets more extreme.
Citing a few examples from the Roman Empire, John also covers a few things that have happend in U.S. history.
1942, after entering World War II, FDR moved all Japanese citizens living in the U.S. to concentration camps and sold off their property. The detainees were released in 1945, given $25 and a train ticket home – without being reimbursed for their losses.
During the U.S. Civil War, Lincoln with the help of Congress passed laws confiscating property used for “insurrectionary purposes” and of citizens generally engaged in rebellion.
1933, FDR banned the private ownership of gold, gave those who surrendered it $20.67 per ounce and then devalued the dollar to $35 an aounce, effectively stealing 70% of the wealth of those who surrenderd their gold.
Obviously you want to diversify your assets here in the U.S. and offshore in multiple countries.
My favorite store of value
The biggest advantage to holding precious metals (Gold, Silver, Platinum, & Palladium) is that no one really knows you have them. They are liquid assets outside of the system, easily portable, and are rare metals that have to be mined giving them a real and lasting value.
I recommend 5-10% of your networth in physcial precious metals, think of gold specifically like an insurance policy. Many people ask me all the time about what the gold price is going to do next… To me, this is like expecting a return on investment from my auto insurance, healthcare, or ADT alarm system that protects my house. Gold is a protector of wealth, it is your financial insurance, don’t let the day to day price consume you, because you don’t want gold to pay out!
Believe me, you do not want gold $10,000. That puts oil in the hundreds of dollars, gas over $15 a gallon, and who knows what we would be paying for food.
However, if we were to see a major systemic shock to the sytem, like a disorderly end to the U.S. dollar, owning gold will be one of the most prudent decision you ever make in your life.
Please take the time to watch or read the transcript below. Wealth confiscation from government is a real threat, even to Americans. In fact may be to Americans more than anyone since we are so unpreparred for it.
On a side note, as the middle class continues to shrink, I would expect more civil litigation to rise as people want to put the blame for their own obstacles on someone else, so be careful, and actively take steps to protect your wealth.
FutureMoneyTrends.com: Greetings and thank you for joining us at FutureMoneyTrends.com. I’m here with John Rubino, Dollarcollapse.com. I recently read an article that he actually posted on his site and also that hit on ZeroHedge. Thank you for joining us today John.
John Rubino: Oh hey Dan. It’s great to be back.
FutureMoneyTrends.com: Alright John, so in your “They’re coming for your savings” article, he started off with governments that are under pressure become thieves and today’s governments are under a lot of pressure. And I’d like to go over just a few of these things you said. You talked about ancient Rome, and maybe take us all the way to the mid-1940s.
John Rubino: Sure. Well, it’s important to understand that when governments panic, throughout history they’ve behaved in basically the same way. They go after the assets of their citizens in order to survive as an entity. A really good example is the Roman Empire. After the death of Julius Caesar there was a power struggle in Rome. And one group needed more money to finance an army, so they basically drew up a list of rich Romans, and accused them of crimes, executed them, and took their assets. They used that money to build an army which eventually won and they founded the Roman Empire. They turned what was a republic into a dictatorship. And in France, post revolution, 1789. The new government needed money again, and so they confiscated the lands of the Catholic Church and used that, used those resources to back a new currency, which they proceeded to print into oblivion. It caused a hyperinflation and brought about the rise of Napoleon. And in 1933, the U.S. Was deep into the Great Depression, FDR needed revenue, and he banned the ownership of gold for American citizens and ordered them all to turn in their gold to the government. And after he did that, he devalued the dollar versus gold, which is basically a confiscation of the real wealth of the people who had gold originally. Another interesting one was 1942, when soon after we had been attacked by Japan, the U.S. rounded up all the people of Japanese descent in the U.S. And put them in concentration camps and sold off a lot of their property. And then after the war when they released the people who had been interned, they didn’t reimburse them fully for the assets that they took. So the government basically used their assets for the war efforts and never fully reimbursed them.
FutureMoneyTrends.com: That is shocking, and I’m surprised that’s not more of a bigger deal in our history. We talked about the Japanese concentration camps, but I had no idea that they were taking their businesses and their property. John I wanted to ask you, in wealth confiscation, I know you obviously cited some of the articles, or things in history that stood out to you. Did you consider the IRS? Because prior to the income tax in 1913, Americans didn’t pay an income tax. That is a form of wealth confiscation, would you agree?
John Rubino: Yeah, absolutely. That, though, because it’s a law passed by congress and held up to the voters in each successive election, is at least something that happened through the political process and wasn’t just sprung on people. And the income tax does have a rationale. I would rather have a tax system that focuses on consumption or something like that, but I think that there is an argument that it was an unconstitutional act at the time, but since that time it’s been deemed constitutional by the Supreme Court, and it’s really a fact of life. But yeah, had there not been an income tax, the government wouldn’t have been able to grow to the point that it is today, and a lot of our problems of currency debasement and excessive regulation and the global military empire where we’re invading everybody around the world, that wouldn’t have been possible, because they wouldn’t have had such a nice, clean, huge source of revenue.
FutureMoneyTrends.com: Now it seems that the most convenient way of confiscation would be inflation, or like what you had cited in ancient Rome where they just changed laws and made people criminals. Just to give you an example of all these laws that are out there, I mean everybody knows there are thousands that we’re not aware of, but I was involved in an automobile accident out of state. About a month later I received something from my state that they’ve suspended my license and that they want me to pay them 200 dollars because I didn’t notify them that I was involved in an accident out of state. And I had no idea that I had to report to my own DMV when I’m involved in an accident when the insurance companies and everything’s kind of been taken care of. I can see laws like this where they’re just like booby traps. Especially with the tax code. You can end up missing something on your taxes, and these guys, I don’t know if you’ve ever received something from the IRS, John, but it’s like the mafia. They just tell you what your penalty is, what your interest is, there’s no questions, there’s no defense. Don’t you think that the confiscation will be more likely to be not so obvious or do you think they’re gonna come out with this IMF 10% super tax?
John Rubino: Well, inflation, as you said, is a way of secretly confiscating assets from people, because you print some extra money and it makes the existing currency that’s out there go down in value a little bit, and that comes off the top of people’s savings, but it does so secretly. You don’t really know that that’s what’s happening. So that’s the most politically palatable way to do that, but that had a limited life span, because inflation leads to instability, which really panics governments, and then they get direct. And as you mentioned, the IMF has proposed a 10% tax on Euro’s own household savings. In other words, they would come in to every financial account in the Euro zone and just take ten percent off the top. Which, by the way, wouldn’t solve their problems. If they did it once they’d have to come back again. But there’s an amazing quote in the IMF proposal, which is that the appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior and may be seen by some as fair. In other words, if they do it by surprise, and nobody can evade it, then it’ll be seen as a fit a company by the markets, and it might not even cause a market panic, or any real political distress. So, which is really, that’s fascist thinking there. They’re gonna spring it on us and hope we put up with it, because they’re going to promise to only do it this one time.
FutureMoneyTrends.com: I was just going to say, I love what you put at the end of your article, interesting that the buildup of asset confiscation is coinciding with the coordinated take down of gold and silver, because that is, gold and silver, a lot of people talk about as an inflation hedge, insurance, all kinds of things, supply and demand. But one of the things that doesn’t get talked about a lot is nobody knows you have it, and that is awesome when it comes to owning gold and silver, is that it’s basically outside the banking system. It’s off the record. It’s lawsuit proof essentially, nobody knows you have it. So getting into things that you can protect yourself with, what are some things that you can do to avoid? Is gold and silver just your best bet?
John Rubino: Well, normally there’s a range of hard assets that do well in times of inflation. You know, farm land, other kinds of real estate, oil wells, commodity based equities, things like that. But those things are all visible to the government, and if the government is in an asset confiscation mood, they can see this stuff, and they can tax you 10% of your farmland’s value, and go into your IRA and insist that you convert your oil stocks in there to government bonds. Or whatever. Because they can see that stuff and you can’t really get away from it. And so, in times when people start to suspect that stuff like this is going to happen, then gold and silver held at home, or stored somewhere else, outside the reach of the government, it’s sort of the logical last hope. That’s where you go when you can’t trust financial assets and you can’t trust real assets that are not portable. So I think that it’s curious, but not all that surprising that gold and silver are being forced down via some really obvious manipulation. At a time when a lot of this other news is coming out, when they’re doing bank bail-ins, when the bank gets into trouble with you, you have to put up the money to bail the bank out, so your account isn’t really yours, it’s an unsecured loan to that bank, and they can take as much of it as they need to to keep themselves in business. When stuff like that becomes front page news, people logically look for alternatives. So it’s not a surprise that the government is trying to tarnish probably the best alternative, the historically most frequently run to asset when things get crazy. So yes, it’s all part of a very coherent tapestry of stuff, when you think about it this way. Because they’re doing what is very logical from their point of view. They’re building up to some kind of asset confiscation, and they’re trying to make the alternatives look as unappealing as possible as the buildup happens.
FutureMoneyTrends.com: It’s psychological warfare, because I have people who have purchased a lot of precious metals, and now they’re sitting there scratching their heads, doubting themselves, and you know, it’s like nothing’s really changed of course, it’s all gotten worse. And around the crisis we had seven or eight trillion in debt, and today we’ve got 17 trillion. So the fundamentals for gold and silver are still there, they’re better than ever, but people are starting to doubt them. At least a lot of people that I know. Now, you did mention the 401k and the IRA and this is a big topic for anybody who is trying to prepare and preserve their wealth. How would a 401k in your mind, or an IRA be subject to some type of confiscation. Would they outright take it? Have there been any ideas out there like that, or do you just mention in passing about maybe them taking just your oil stocks or something.
John Rubino: Well, there are lots of ways to do it now. We’re seeing this bank bail-ins and this wealth tax being proposed. They could just say, well, you’ve got 400,000 dollars in your 401k. We’re going to take 10% of that, in other words, you cash out ten percent of your stocks and you send the cash to the government. That would be the IMF proposal for the Eurozone. That’s how that would work. But there’s also a constitutional rationale now to allow the governme nt to force you to convert assets in an account from one thing to another. With the new healthcare plan that’s just now being implemented. They gave the right to force you to buy something. Now it’s a crime not to buy health insurance in the U.S. The first time we’ve ever forced people to make a purchase. And that passed the Supreme Court, which gives the government the go ahead to do that. So it’s not a big step to say, well, it’s in the national interest to have people buy government bonds to get us out of this deficit. So now, in your retirement accounts, you’ll now be required to hold 40% of those assets in treasury bonds. In other words, you have to sell your Exxon stock, or your Google, and use the cash to buy 20 year treasuries. And that now is constitutional; they can actually do that and get away with it if they choose to do it. So that really fits with the pattern of bank bail-ins and wealth taxes. And the reason it might happen with these retirement accounts is that’s where the money is. There’s several trillion dollars in untaxed capital sitting in 401k’s and IRAs. So that’s the biggest pot of free cash that the government’s going to view that exists out there. So it wouldn’t be a surprise to see that be the target.
FutureMoneyTrends.com: I’ve always thought the 401ks and the IRAs were almost like real estate. That’s where the middle class, you start to piss them off, the big group. Do you have any first world countries that you can cite where they’ve messed with people’s retirement accounts and they didn’t have any kind of uprising.
John Rubino: Well, so far Cyprus is the big example. When the Cypriot banks got into trouble, the government took something like 47.5% of the bigger accounts, the accounts that were above the limit of deposit insurance. And they got away with it. You know, a lot of that money was Russian deposits, off shore deposits from Russia. So it didn’t directly impact as many voters as it would have taken that much from every account, but they did get away with it. So there’s no reason to think that it’s not possible, and you know, maybe they do the ten percent wealth tax next, where they just spring it on people. It happened this morning, before you even got up your account was ten percent less than when you went to bed, and what can you do about it. I would hope that there would be a huge political backlash from this, and whoever proposes it in the U.S. Is drummed out of office that day. But that won’t stop them from trying necessarily. It will make them do it in a secretive, surprise manner, and hope the next election is, say, a year and a half away, and in the meantime they’ll be able to get enough votes to stay in office.
FutureMoneyTrends.com: It’s very scary times, especially as people become poorer, this type of confiscation becomes more acceptable. John, if someone would like to reach out to you or see your work, they can go to dollarcollapse.com. You have a great Zimbabwe article up right now. How often do your articles come out, and then what else do you have going on over there at DollarCollapse.com.
John Rubino: I post a new thing of my own every three or four days, usually. The big draw of dollarcollapse.com, I think, is a list of links of the stories on the subjects we talked about today. Updated daily. So you can go there and you can get most of the news on the dark side of the financial world all in one place.
FutureMoneyTrends.com: John, thank you so much for joining us. We appreciate your time, and we hope to talk to you later next month. Hopefully nobody gets their wealth confiscated, and we get through this crisis somehow, someway.
John Rubino: Yeah, hopefully.
FutureMoneyTrends.com: Alright John, thanks so much for your time, you have a good day.
John Rubino: Sure, you too.