This is just the first of several countries which will implement strict capital controls to stem the cross-border flight of both capital and human resources.
MercoPress.com – The government will restrict daily cash transactions to 1.000 Pesos (231 US dollars) per person, down from 10.000 Pesos, according to a statement in the Official Gazette. The measure affects activity in the stock and bond markets, investment funds and in the futures markets. Operations above the limit will have to be done through Argentine bank accounts that are authorized by the central bank.
The “official” line for this strict new policy is as follows:
The move is aimed at combating money laundering and terrorist financing, according to the statement in the Official Gazette.
The reality is that Argentina’s central bank has lost control of the economy. Their misguided monetary tinkering has resulted in a complete loss of faith by Argentine citizens. There is rampant inflation gripping the entire nation and this last (soon to fail) attempt to “control prices” will blow up in their face. Ask yourself a simple question: When the US Government comes out and tells you that your maximum CASH transaction can only be $1000, what are you gonna do?
Already we’re seeing major capital flight problems affecting Swiss banks and EU citizens.
From Bruce Krasting: Note that 59% of all bills outstanding are of the 1,000 CHF denomination. This is crazy. It’s the same as having $1,000 bills in the USA. Can you imagine going into a Starbucks to buy a paper and a coffee and tendering a $1,000 bill? It wouldn’t work in the US. The SNB provides the obvious explanation for the huge float in large denominations.
The high proportion of large denominations indicates that banknotes are used not only as a means of payment but also – to a considerable degree – as a store of value.
From Le Temps 2/6/2012:
- A distinguished lady had hidden 65,000 euros in the heels of her shoes and her bra.
- A Labrador is trained to sniff out banknotes in Chiasso.
- A motorist was caught in early February with more than 200,000 euros hidden at the bottom of his suitcase.
- In a survey of “the great capital flight”, the daily La Repubblica suggests a rise of 50% of receivers of property along the border with Switzerland in late 2011 over the summer.
The reality is that as the banking system forces austerity and laws upon the citizens of the world, Banks and Politicians will seek to forbid the flow of capital outside of the banking system. The flow of capital outside of the fraudulent fractional banking system is detrimental to their system. As we are seeing in Argentina, cash transactions outside of the banks reduce the Central Bank’s ability to “control” the economy. And ultimately, the Banks that run the government are hindered by this free flow of cash.