There has been some talk lately about future currency controls in the US.  What we don’t realize is that we already have currency controls.  Have you ever flown outside of the US and had to fill out that form asking you to declare any currency over $10,000?  Do you know why they want to know this?

It is a means of controlling the outflow of hard currency outside of the US.  The government is trying to prevent you from taking a suitcase with $100,000 to your bank in Panama or Switzerland.  They don’t want a flight of capital from our domestic economy.  This is a form of currency controls.

In 2008, a law was enacted that forces all US citizens to pay estate tax and 10 years of income taxes upon expatriation.  For those of you that don’t know, expatriation is when you give up your citizenship and leave the country.  The purpose of this legislation was to stop wealthy citizens from leaving the US with their money in the midst of an economic crisis.  Yet another current form of currency controls.

What our policymakers don’t realize is that by enforcing currency controls like this, it has the opposite affect of the desired legislated purpose.  The purpose is to keep hard currency in the country, but smart entrepreneurs and investors know how to protect their assets.  They know how to move money and they look at early stages of currency controls as a warning sign of more serious, future currency controls.

9 Responses

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