“The US already has exchange controls in place on Dollar”

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for The Q Wealth Report

I’ve written a lot about the difficulties these days in buying physical gold, and why I recommend buying real physical gold as opposed to paper certificates etc. Very soon we’ll be releasing here news of my “Gold Report” which will be available for download to Q Wealth members.

But today I want to tell you about something I noticed during the past year that very few people have commented on, but that lots of people I have talked to have noticed. They have noticed it but have not thought fully about the consequences. It is the opposite problem – people don’t want US dollars any more!

Have you tried to exchange US dollars for local currency in a foreign country recently? Or to deposit US cash in a foreign bank? Then you probably know what I’m talking about. Various petty restrictions. $50 or $100 bills with certain serial numbers are not accepted in many countries. In others if you want to spend a $50 or $100 bill a supervisor in the store has to approve it and record your passport number.

Today, for the first time in my life, I actually saw a money exchange business that simply won’t accept US dollars cash any more. This was in Cancun, Mexico. They were welcoming Canadian dollars, Euros, Swiss Francs etc… but saying “no thanks” to the greenback. I asked why, and they said they will still exchange USD for clients who are registered (ID, utility bills etc) but not for tourists. (So they didn’t exactly answer my question, but I think the cashier was one of those people who don’t always think about ‘why’)

So, tourists get sent to the bank around the corner. They will still exchange USD cash, but not more than $500 for non-clients.

The superficial reason for these restrictions is the paranoia surrounding money laundering and fake bills. Most Latin American countries have far more dollars coming in than flowing out (at least in cash) – some of this may be due to drug money, but the vast majority is completely legitimate money related to travel, tourism, remittances by emigrant workers and so on. So casas de cambio (money exchange houses) have to dispose of their excess dollar cash by somehow depositing it into the banking system, which has become nigh on impossible because of pressure from correspondent banks in the USA.

But the pendulum has certainly swung too far. If an American tourist in Cancun has to spend an hour in different lines and be limited to spending $500 per day, then surely this is no different from the pre-Thatcher era in the UK for example when exchange controls were in place? Other places with exchange controls today, like South Africa or Venezuela, also have official daily limits in place on spending by their nationals traveling overseas.

Yes, my friends, the USA has well and truly already succeeded in introducing exchange controls by the back door. The consequences of this, given the USD’s status as a global reserve currency, are simply incredible. It’s amazing that so few people have noticed or commented on this yet!

In case you are thinking this only applies to cash, remember there are ATM daily limits of various sorts (imposed by both card-issuing banks and by local ATM networks around the world such as in Brazil or Argentina) and banks from US, UK and elsewhere have a habit of just blocking accounts for “potential fraud” if anyone spends more than a few hundred dollars outside their home country. Then the cardholder has to make a lengthy international call pressing buttons, listening to music and finally convincing a bank officer that their card has not been compromised before he can start spending his own money again.

Yes, sure, there are ways around all this. Of course you can travel with 10 different ATM cards or you can acquire offshore debit cards and offshore credit cards with much higher daily limits, even in USD. You can buy foreign currency before you leave the US. You can use travelers checks. You can spend a day of your vacation visiting 10 different banks and exchanging a small amount in each. That is not the point. The point is that for the average good-citizen American tourist or business traveler, let’s say the man on the bus in Cancun, it is going to be difficult to spend more than a few hundred dollars a day of their own money overseas. That is why I say “exchange controls are already in place.”

Many of you will already have heard the rumors about the Amero, or about supposed plans to have different colored dollars for internal and external use. Personally, I don’t buy such rumors. They are conspiracy theories. There is a lot of merit in the ideas behind them, but if as the evidence above proves, for all practical purposes exchange controls are already in place, why would the Federal Reserve risk the political backlash of explicitly imposing exchange controls?

What will happen in 2009? How much worse can this get? And how can you protect yourself and your family from the global consequences of USD exchange controls – whether or not you are American? These are questions we answer in depth in each quarterly issue of The Q Wealth Report. If you are not yet a subscriber, you should be! We will show you how to build wealth and take advantage of real money-making opportunities presented by the drastic changes taking place in the global financial system. Subscribe today!

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5 thoughts on ““The US already has exchange controls in place on Dollar””

  1. This actually only applies to *CASH* and does not in any way apply to wire transfers.

    This is not an issue of "back door exchange controls" so much as a war on Cash. It's just too easy for a foreign country to set up an operation to start printing US Dollars, and with sufficient time and resources (something sovereign countries tend to have) they can produce counterfeit Dollars at such a level that they are acceptable to banks everywhere.

    These are known as "Super-Bills" and they are a great concern to the US Government.

    Currency exchange controls prevent people from exchanging money through regular banking channels, such as wire transfers or deposit of checks in foreign bank accounts. Cash transactions account for such a small percentage of international exchange that it's not really an issue. A HUGE transaction with cash is $500,000 but a wire transfer of the $100 million level is a daily occurrence. If and when currency exchange controls are put in place, the current global financial markets will come to a screeching halt.

  2. Expaticus, I think you missed the point of the article. I personally believe the forgery article is spurious. Why for example would the US be incapable of producing secure bills when far more valuable bills like the 100, 200 and 500 Euro or the $10,000 Singapore dollar bills don't have this kind of problem?

    No, this is a definite attempt to stop people using cash dollars. This is to force them to use regular banking channels. If people use cash, currency controls can't be implemented effectively because there is so much US cash floating around outside the USA. But if people use the banking channels it is possible to monitor and spy on every transaction.

    But the most important point is your last sentence, which I must say I agree with entirely. "If and when currency exchange controls are put in place, the current global financial markets will come to a screeching halt." Well my whole hypothesis is that currency controls are already in place and, er, what happened to the global financial markets over the last year or two???

    Good debate!

    Kind regards

    Peter

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