Fear of 7/1 stalks offshore depositors

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Get short in dollars, long in gold, land, durable goods

What does it matter to we the people of the pavement, the paycheck and the payments if multinationals, money managers and moguls suddenly find they can’t stash their cash offshore without paying a huge penalty?

The pundits make it sound like the end of the world because, they say, the dollar will take yet another nose dive off the high dive into an empty pool of evaporated liquidity.

The result? No longer will it be necessary for the world’s trading nations to deal in dollars before investing their currency in consignments of petroleum or wheat, cocoa or sugar, coal or liquid propane.

Europeans and Asians will be free to breeze on by the Treasury and the Fed with their noses in the air, free of fear of the fate of such foolhardy souls as Saddam Hussein, people who thought they could demand payment for their products – in Hussein’s case, it was petroleum, and he wanted euros – in currencies other than the once high and mighty U.S. Dollar.

What’s all the fuss about?

When the nation emerged from a near bankruptcy and bail-out flurry of banks too big to fail and manufacturers too vital to give up valuable market share to foreign brands, when the orgy of borrowing for wars of attrition on two fronts to save big oil’s bacon was drawing down to a close in 2010, Congress acted to close the loopholes top earners have been using to dodge the tax man by transferring their profits to foreign banks in other countries. Then they offset the scene by four years.

Title V of HR 2847 says it short and sweet.

Come out of the huddle with that raunchy old end run after July 1, 2014, and you will face a 30 percent penalty payable to the IRS, and it’s collectable by guess who. The banks themselves are obligated to report on who does what, to collect the dough, and then turn it over to the tax man. If they don’t comply and turn in their customers and the information the tax police need to impound their shekels, they face the choice of being banned from the American playing field. That’s not good; because, for awhile, it’s going to be the hottest scene on the planet – for bankers. For the rest of us, if you smell bacon frying, it’s probably you know what and you’ll know whose it is when you smell it broiling on the griddle. Bon appetit!

The 2010 law is two-pronged. Called the HIRE Act, its immediate concern was to give tax credits to construction oufits who would agree to employ long-term unemployed workers and keep them on the job for 12 months or more, saving them 6.2 percent in employers’ contributions to the Social Security Trust Fund. A dream of the Democratic Senate Committee, it was crafted for the purpose of rebuilding a nation in disrepair.

The goal? To rebuild highway and bridge infrastructure neglected during the wars for big oil, when the tax man collected the full pop of motor fuel use taxes, and the politicos refused to spend it on upkeep of the roads the motorists and truckers use.The problem:

If the dollar loses its status as the world’s reserve currency, the world’s traders in key commodities are no longer forced to convert their cash into dollars in order to buy the daily basket of goods it takes to make their national economies run.

Where does that leave we the people of the pavement, the paycheck and the payments?

That’s an easy question to answer. It’s like this.Every hour of every day – including weekends and holidays – Uncle Sam borrows $200 million he flat does not have in order to spend it on fixed costs he must cover. In two months, the U.S. borrows more than the total earnings of the top 100 corporations in the world.

Where does the money come from?

Quite simply, the Federal Reserve Banks loans it to the Treasury, and they won’t quit doing that when the bottom falls out due to the new regulation on offshore banking by fat cat corporatists and big-time traders, as analysts from every stripe predict it sure will. So, in the midst of this conundrum, the thing to be is a member of the Federal Reserve. Those banks will be the only ones making any real money. All the rest will be getting paid in play money, confetti, oceans and oodles and stacks and bales of pretty paper printed in intricate patterns with big numbers that mean nothing much other than you know what.

To cover the action, the Fed will then in turn order the Treasury to print more dollars, and we’re off to the races.

That means your savings, 401 K plans, holdings in stocks and mutuals, and anything else that is tied to the worth of the dollar will become worth less and less in inflated currency – by the hour. In the past fiscal year alone, the borrowing to cover the national debt has increased exponentially, to a sum of $3,500 billion from a previous flat line of only a small particle of that amount.

How do you bring a once proud nation of earners to its knees, begging for scraps? Make their currency worthless, bankrupt the people by making them fight other nations for the privilege to starve out faster, and count your coupons.

Cheerio. – The Legendary

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