People ask us quite seldom why is that we are so paranoid. And we always answer in the same manner: it is not paranoia if there are people out to get you. However, in order to be able to distinguish true conspiracies from mere background noise, you must take a step (or two) back and look at historical developments over long periods of time. Is it only through this process that non-trivial forecasts can be made. This is possible because we are not forecasting economic events but peoples' plans. To be precise, politicians' and bureaucrats' plans and these are forecastable indeed.
IN THE BEGINNING
Only a few years back, perhaps a decade, nobody would fathom that banking secrecy would not only be violated but also raped, strangled, disembowelled, dismembered and scattered by political wolfs to the four winds. Yet, here we are. And so the question is this, how did we get here?
Believe it or not, we need to assign blame to the guilty and in this case the guilty party is the USA, without any question or doubt.
Some time ago, politicians in USA began to realize that several long term and self-inflicted phenomena will have a destructive negative effect on the US economy (and on the power elite's profits). Among them they counted:
- High taxes (low tax competitiveness)
- High state debt (including off-book liabilities)
- Challengers to the primacy of the US Dollar
- Decreasing manufacturing capacity through lack of competitiveness due to high wages
- Vast budget wastes due to overblown and ongoing military expenses
And many others
Thus, they decided to "do something about it". But what to do? Given the current state of affairs in which the US finds itself, no fix is possible. The US has passed the point of no return. And so, if the US could not be propped-up then the rest of the world must be sunk or at least depressed. Basically, the power elite in US wants to stay at the top of whatever is left, whatever it takes.
FIRST ATTEMPT
The initial plan involved forcing countries to raise their taxes thus suddenly making the US competitive. This plan was created in 1996 when the OECD was tasked to "develop measures to counter the distorting effects of harmful tax competition on investment and financing decisions and the consequences for national tax bases". If you are interested in this subject, search Google for a document called "Harmful Tax Competition An Emerging Global Issue", which was issued by the OECD. In it you will be able to find in all its gory the idiotic nonsense on which everything that followed is based on.
In bureaucrateseWhat this meant that the OECD was ordered to create a mechanism to force countries (particularly tax havens) to raise their taxes to US and key EU country levels (this is, astronomically). Of course, in order to get good PR, they called it "harmful tax competition". To which we can't but ask, harmful to whom? Certainly not to people choosing to store and invest their money in those places, because, after all, believe it or not, it is their money and not government's money. Why would other countries have to have high taxes if they were doing OK the way they were? What would they gain in so doing? Nothing. Or, more precisely, a drop in economic competitiveness. Bingo!
Yet, the OECD had limited success in this area simply because it had no way to "enforce" these ridiculous measures.
STICK AND MORE STICK
In a moment of epiphany (probably prompted by their well-paid think tanks), they realized that sinking all countries could be accomplished with relative ease by means of taxing everybody they could possibly tax and making sure everybody would do the same. If people (i.e. US citizens) could be taxed efficiently, anywhere in the world, this would force other countries to do the same. No politician can say no to extra revenue.
In this manner relative economic power would be regained. This was not impossible; this was simply a logistical problem.
The US had already passed ridiculous tax laws whereby if you are a US citizen you get taxed on your world income regardless of where you live. Furthermore even if you are not a US citizen but you have US assets and you die, your estate will have to pay inheritance tax to US. And many such ridiculous concepts.
But there was a problem. People were not stupid and they took their money into places were privacy was taken seriously; particularly bank secrecy. Those places were beyond US's reach. So, what did the "power elite" do?
ENTER FATCA
If you are not a US citizen with assets outside the US, chances are you probably never heard about this ridiculous law. It is called the Foreign Account Tax Compliance Act and it demands (yes, demands), that all global non-US (Foreign) Financial Institutions (FFI's) search their records for suspected US persons and report their assets and identities to the US Treasury. Can you imagine the arrogance?
No, we are not making this stuff up. It is real. You can look it up yourself in Wikipedia.
Consider this for a second. A US law applies to all US citizens regardless of their country of residence and to all financial institution outside the US regardless of their country of operation!!
This is so incredible as to be mindboggling.
- Screw sovereignty!
- Screw international law!
- Screw country law!
- Screw the world!
Yet, they got away with it. One by one tax havens began to fold to US power. Why did it happen? How did the US accomplish this? Simple. They threaten all "non-compliance" banks to cut them off from SWIFT (Society for Worldwide Interbank Financial Telecommunication) which happens to be the world-wide network that transfers electronic funds from A to B. Without this network all banks are sitting ducks because they can't move their money. But was this all? No. This was only part of the threat. SWIFT can be bypassed (with efforts) and there are also other systems such as the IBAN. What nobody could resist was the threat to cut banks off from the US financial system. A financial system that generates unfathomable amounts of the principal fiat currency in the world; the US dollar.
TREATY ANYONE?
Once this was done, the floodgates of blackmail were open. The US used The OECD A Bureaucratic Organization You Should Know to do its bidding. They order it to create "standard" Tax Information Exchange Agreements and get their Public Relations machine into high gear. You may remember that all this feeding frenzy about tax havens and tax justice and tax equality and tax evasion started recently. This is a new phenomenon. Well, this is OECD's doing. With the trap set the US proceeded to sign TIEAs with as many countries it could "convince". With this process they took a step forward to destroy bank secrecy. However, this wasn't enough. TIEAs were slow, manual and clunky. Thus the US tasked again the OECD to come up with a new treaty, the AEOI (Automatic Exchange Of Information, formally known as the "Standard for Automatic Exchange of Financial Account Information in Tax Matters"). This treaty would replace the TIEA's (which were manual and on demand) for an automatic system which will be operational by default.
At this point many countries have been "softened" enough with previous blackmails as to accept the AEOI without blinking.
Note: please see the Glossary if you are unfamiliar with certain words.
