European leaders are now openly discussing the use of 'capital controls' as part of a contingency plan. According to Simon Black, co-founder of the asset protection blog Sovereign Man, "Capital controls are the biggest danger to your savings... period. June 26, 2012
According to Simon Black, co-founder of the asset protection blog Sovereign Man, "Capital controls are the biggest danger to your savings... period. Alarm bells should be going off right now around the world."
With Greece dwindling on the edge of national bankruptcy, and everyone from pundits to politicians discussing the country's imminent departure from the eurozone, European leaders are now openly discussing the use of 'capital controls' as part of a contingency plan.
So what exactly are capital controls?
Simply put, capital controls are measures designed to restrict the flow of capital in, out, or through a nation's borders.
In the event of a financial crisis, for example, a government may prohibit foreign exchange transactions, set limits on bank withdrawals, or impose steep taxes on cross border transactions.
"The idea behind capital controls," Black explains, "is to prevent too much money from being pulled out of the country in a panic. Unfortunately, don't address the fundamental problems-- they just end up bailing out the banks and government at the expense of the people."
Black cites the case of BNI in Italy, a large financial institution which was given the green light by the Italian government to suspend its operations and shut customers out of their accounts.
"Most of these banks are insolvent from owning too much Greek debt." Black says, "As customers are finally catching wind of this, they naturally want to pull their money out of the banks. Capital controls prevent them from being able to do this, essentially holding their hard-earned savings captive at an insolvent bank."
From Greece to Italy to Spain and France, government have already imposed some small measures to make it more difficult for bank customers to withdraw large sums.
In Greece, for example, individuals must first prove the tax purity of their funds before transferring money abroad.
In France, meanwhile, La Banque Postal has cut ATM withdrawal limits by up to 50%.
"When you look around Europe, a lot of these measures have already been implemented; they reduce people's freedom, reduce people's options. And I suspect the same thing will happen across the Atlantic when debt problems resurface in the United States."
Black's website, SovereignMan.com, has free resources available for download, including special reports on international banking and gold storage.
As Black writes in his reports, "Diversifying internationally is the best way to protect your savings against government meddling, wealth confiscation, and capital controls."
Black's website, SovereignMan.com, has free resources available for download, including a special report entitled "Globalize Your Gold: the comprehensive guide to Offshore Precious Metal Acquisition, Storage, and Reporting."
As Black writes in the report, "Storing your gold overseas is an insurance policy against government meddling, wealth confiscation, frivolous litigation, and domestic social unrest."
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/6/prweb9631738.htm