Is the U.S. Burning? Well Is It?

Over two years ago I asked if the U.S. is Burning? Here's another reason Mexico is calling. In this piece from the latest Gartman newsletter, Dennis cites historians, Will and Ariel Durant, on the decline of the Roman Empire.

Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with the imminent danger of barbarian invasion, he issued in A.D. 3 an edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government – which already owned most mines, quarries, and salt deposits – brought nearly all major industries and guilds under detailed control. “In every large town,” we are told, “the state became a powerful employer, standing head and shoulders above the private industrialists, who were in any case crushed by taxation.” When businessmen predicted ruin, Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely with external danger.

The task of controlling men in economic detail proved too much for Diocletian's expanding, expensive, and corrupt bureaucracy. To support this officialdom – the army, the courts, public works, and the dole – taxation rose to such heights that people lost the incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. Thousands of Romans, to escape the tax gatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all their debts and taxes had been paid. In this and other ways medieval serfdom began.

Sound familiar? The U.S. is following the same path and the outcome will be the same as Rome's. I think a prudent man would take his family out of harm's way.

We are farther down the path. We are just waiting for an excuse: "...the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure."

Then there is the Princeton Study: A new study from Princeton spells bad news for American democracy—namely, that it no longer exists.

Asking "[w]ho really rules?" researchers Martin Gilens and Benjamin I. Page argue that over the past few decades America's political system has slowly transformed from a democracy into an oligarchy, where wealthy elites wield most power.

Capital Controls Coming On January 1st!

One of my predictions for 2012 was this:

We are heading for economic Tyranny and Capital Controls and Restricted exits and failed currency.

Now, Attorney-entrepreneur-investor Joel M. Nagel, who is a frequent writer and speaker on asset protection concepts, has written that January 1, 2013 may be the start of capital controls. A law was passed in 2010 that goes into effect on January 1st, that requires foreign banks withhold 30% of any deposit from the U.S. and send it to the IRS.

Under Section 1474 of the bill, the law makes banks, as a third party, responsible for the enforcement of government tax policy. The banks are liable for the customer’s tax obligation on transferred funds, if they don’t withhold the required 30 percent to cover any possible tax liability. The banks essentially become the tax police, working for the government as hammers to bring about individual compliance.

Nagal writes that if you were to purchase a home in Panama for $100,000, you would need to send $142,000. Less 30% would net you $100,000. That my friends is an effective way to limit capital from leaving the country. One more freedom gone!