Dateline: Makati, Philippines

In an interesting turn, it has become a little easier for foreigners to open bank accounts here in the Philippines. Yesterday, I popped into three different banks that were all too happy for me to park US dollars or Philippine pesos with them.

Is the Philippines some new offshore banking safe haven? No, of course not. However, the Philippines does tick a number of boxes for me, and the fact that the once unfree market in banking is loosening a bit with the larger national banks is positive.

While I’m a fan of no government, I can’t exactly see many of my “new safe havens, pulling the nonsense they are pulling in Spain.

There, in a country with greater than 50% youth unemployment, the government is onto the latest tool in their wealth confiscation tool chest.

In a clear regressive move to steal money from citizens, Spain has now introduced a .003% tax on all bank deposits.

Think .003% is no big deal?

The idea is similar to the Cyprus debacle: a “bail-in” that would bring $546 million, or 400 million Euros to the state coffers, robbing people blind and essentially charging them to hold money in a bank.

Oh, and here’s the kicker: like all good government scams, it is retroactive.

The law will take place in arrears to January 1, 2014.

Don’t you wish you could force all of your customers to pay extra on purchases they already made? Or that you could undo a deal you didn’t like? That’s what is happening on Spanish bank deposits.

This is a classic tactic of skimming a little off the top and hoping no one person notices. (If they do notice, simply call them a “traitor”.)

It’s reminiscent of ancient Rome, and their version of stealing from the people: coin shaving and debasement.

How did coin debasement work in ancient Rome?

In 277 BC, the Romans created the denarius- a silver coin that made it 250 years before its silver content declined significantly. During this time, the silver content went from the original 66 grains of silver to 60 grains- around the time Julius Ceasar took over.

But this is where the trouble began. Julius Ceasar created the “aureus”, a gold coin that was 125 grains of gold. This was used to support the Emperors and pay the army. The denarius (silver) was used for international trade, and copper was reserved for the lowly common people.

Later, in 54 AD, Emperor Nero debased the value of Rome’s money. 14.3% of silver was taken out of the denarius and 11% of the gold out of the aureus. He replaced precious metals with base metals- without the citizens of Rome catching on. Debasement was Rome’s “quantitative easing”, almost no one understood it, and the debased coins looked and felt the same as the full content gold and silver coins of previous generations.

By 193 AD, only 26 grains of silver was left in the denarius – a 61% devaluation from the original 66 grains. Subsequently, Rome’s denarius stopped being accepted in trade by the rest of the world. By 268, the denarius was just base metal with a thin silver coating.

The trickery continues with modern-day emperors, known as presidents, prime ministers, Federal Reserve heads, congress, or parliament.

In 1965, all the silver was taken out of US coins and replaced with base metals. As quarters and dimes felt exactly the same as the ones made from 90% silver, most citizens were none the wiser, and accepted their fate of debased currency, just like their Roman counterparts had centuries earlier. History repeats then repeats again and again.

In 1971, President Nixon infamously took the US off the gold standard completely. Since then, the dollar has been backed by nothing but the “good faith” of the US government. Nixon was able to do in an instant what took Roman emperors hundreds of years to accomplish- complete debasement of the currency.

The penny, by the way, has been debased by 97.5% and only has a thin copper coating. Government success at its best.

Currency debasement is commonplace around the world these days, with central banks in control.

Welcome to the new age of bail-ins

And as if debasement weren’t enough theft inherent in the system, we now have government reaching their grimy hands into the bank accounts of anyone they choose in their country.

Cyprus led the way with the bail-in generation of governing. Account holders with over 100,000 euros had 9.9% of their monies lifted, while those with less than 100,000 euros had 6.75% of their accounts vanish. There was no warning, no vote, no choice in the matter. The money was simply gone by the time the banks reopened for people to access their accounts.

Now Cyprus-style heists are commonplace.

In Poland, private pension funds were raided.

In Iceland, all guarantees that the government would keep its hands off domestic financial institutions are in jeopardy, as the latest proposal was to eliminate the guarantee for accounts of over 100,000 euros.

In New Zealand, the government is proposing a Cyprus-style bail-in, resulting in small depositors losing some of their savings to support bailouts of big banks.

Even Canada isn’t in the clear. On pages 144 and 145 of the “Economic Action Plan 2013”, the new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks in Canada.”

And now we have Spain with their tax on bank deposits. Is this part of the trend, or is it too small to matter? Given that this grab is retroactive to January 1, 2014, I would be a little concerned.

The USA Patriot Act also assures that your accounts are not safe. Bank accounts can be seized for any reason by US government officials. There is no clause saying there must be due process, and there is no clause saying that you even have to be suspected of a crime. If you open a bank account today, you will need to sign something agreeing to this, or you cannot have a bank account.

And this includes “safe” deposit boxes as well.

As world governments become more desperate, they will continue to find any way they can to take the money away from saving citizens.

The idea is to not keep all your wealth in one place, waiting for a policy to change and watch your money vanish.

Don’t let history repeat itself on your account. Make your diversification plan before bail-ins happen to a country near you.

Andrew Henderson
Last updated: Dec 29, 2019 at 4:50AM