{"id":72145,"date":"2015-05-07T13:52:55","date_gmt":"2015-05-07T17:52:55","guid":{"rendered":"http:\/\/countingpips.com\/?p=72145"},"modified":"2015-05-07T13:52:55","modified_gmt":"2015-05-07T17:52:55","slug":"a-powerful-weapon-of-financial-warfare-the-us-treasurys-kiss-of-death","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/05\/a-powerful-weapon-of-financial-warfare-the-us-treasurys-kiss-of-death\/","title":{"rendered":"A Powerful Weapon of Financial Warfare&#8211;The US Treasury&#8217;s Kiss of Death"},"content":{"rendered":"<div id=\"inves-1350896459\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">May 7, 2015<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><h4><span style=\"font-size: small;\">By Nick Giambruno<\/span><\/h4>\n<div id=\"article-body\">\n<p>It\u2019s an amazingly powerful weapon that only the US government can wield\u2014kicking anyone it doesn\u2019t like out of the world\u2019s US-dollar-based financial system.<iframe loading=\"lazy\" src=\"http:\/\/trk.caseyresearch.com\/f\/?content_id=1252&amp;code=PIP&amp;editorial=a-powerful-weapon-of-financial-warfare-the-us-treasurys-kiss-of-death-1\" width=\"1\" height=\"1\" frameborder=\"0\"><\/iframe><\/p>\n<p>It\u2019s a weapon foreign banks fear. A sound institution can be rendered insolvent at the flip of a switch that the US government controls. It would be akin to an economic kiss of death. When applied to entire countries\u2014such as the case with Iran\u2014it\u2019s like a nuclear attack on the country\u2019s financial system.<\/p>\n<p>That is because, thanks to the <a href=\"http:\/\/www.internationalman.com\/go\/uqn5a-2\/PIP\" target=\"_blank\"><strong>petrodollar regime<\/strong><\/a>, the US dollar is still the world\u2019s reserve currency, and that indirectly gives the US a chokehold on international trade.<\/p>\n<p>For example, if a company in Italy wants to buy products made in India, the Indian seller probably will want to be paid in US dollars. So the company in Italy first needs to purchase those dollars on the foreign exchange market. But it can\u2019t do so without involving a bank that is permitted to operate in the US. And no such bank will cooperate if it finds that the Italian company is on any of Washington\u2019s bad-boy lists.<\/p>\n<p>The US dollar may be just a facilitator for an international transaction unrelated to any product or service tied to the US, but it\u2019s a facilitator most buyers and sellers in world markets want to use. Thus Uncle Sam\u2019s ability to say \u201cno dollars for you\u201d gives it tremendous leverage to pressure other countries.<\/p>\n<p>The BRICS countries have been trying to move toward a more multipolar international financial system, but it\u2019s an arduous process. Any weakening of the US government\u2019s ability to use the dollar as a stick to compel compliance is likely years away.<\/p><div id=\"inves-2895709425\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>When the time comes, no country will care about losing access to the US financial system any more than it would worry today about being shut out of the peso-based Mexican financial system. But for a while yet, losing Uncle Sam\u2019s blessing still can be an economic kiss of death, as the recent experience of Banca Privada d\u2019Andorra shows.<\/p>\n<h3><strong>Andorra, a Peculiar Country Without a Central Bank<\/strong><\/h3>\n<p>The Principality of <a href=\"http:\/\/www.internationalman.com\/go\/uqn8b-2\/PIP\" target=\"_blank\"><strong>Andorra<\/strong><\/a> is a tiny jurisdiction sandwiched between Spain and France in the eastern Pyrenees mountains. It hasn\u2019t joined the EU and thus is not burdened by every edict passed down in Brussels. However, as a matter of practice, the euro is in general use. Interestingly, the country does not have a central bank.<\/p>\n<p>Andorra is a renowned <a href=\"http:\/\/www.internationalman.com\/go\/uqntc-2\/PIP\" target=\"_blank\"><strong>offshore banking<\/strong><\/a> jurisdiction. Banking is the country\u2019s second-biggest source of income, after tourism. Its five banks had made names for themselves by being particularly well capitalized, welcoming to nonresidents (even Americans), and willing to work with <a href=\"http:\/\/www.internationalman.com\/go\/uqnwd-2\/PIP\" target=\"_blank\"><strong>offshore companies<\/strong><\/a> and <a href=\"http:\/\/www.internationalman.com\/go\/uqnze-2\/PIP\" target=\"_blank\"><strong>international trusts<\/strong><\/a>.<\/p>\n<p>One Andorran bank that had been recommended prominently by others (but not by <em>International Man<\/em>) is Banca Privada d\u2019Andorra (BPA).<\/p>\n<p>Recently BPA received the financial kiss of death from FinCEN, the US Treasury Department\u2019s financial crimes bureau. FinCEN accused BPA of laundering money for individuals in Russia, China, and Venezuela\u2014interestingly, all geopolitical rivals of the US.<\/p>\n<p>Never mind that unlike murder, robbery and rape, money laundering is a victimless, make-believe crime invented by US politicians.<\/p>\n<p>But let\u2019s set that argument aside and assume that money laundering is indeed a real crime. While FinCEN seems to enjoy pointing the money-laundering finger here and there, it never mentions that New York and London are among of the busiest money laundering centers in the world, which underscores the political, not criminal, nature of their accusations.<\/p>\n<p>And that\u2019s all it takes, a mere accusation from FinCEN to shatter the reputation of a foreign bank and the confidence of its depositors.<\/p>\n<p>The foreign bank has little recourse. There is no adjudication to determine whether the accusation has any merit nor is there any opportunity for the bank to make a defense to stop the damage to its reputation.<\/p>\n<p>And not even the most solvent foreign banks\u2014such as BPA\u2014are immune.<\/p>\n<p>Shortly after FinCEN made its accusation public, BPA\u2019s global correspondent accounts\u2014which allow it to conduct international transactions\u2014were closed. No other bank wants to risk Washington\u2019s ire by doing business with a blacklisted institution. BPA was effectively banned from the international financial system.<\/p>\n<p>This predictably led to an evaporation of confidence by BPA\u2019s depositors. To prevent a run on the bank, the Andorran government took BPA under its administration and imposed a \u20ac2,500 per week withdrawal limit on depositors.<\/p>\n<p>However, it\u2019s not just BPA that is feeling the results of Washington\u2019s displeasure. FinCEN\u2019s accusation against BPA is sending a shockwave that is shaking Andorra to its core.<\/p>\n<p>The ordeal has led S&amp;P to downgrade Andorra\u2019s credit rating, noting that \u201cThe risk profile of Andorra\u2019s financial sector, which is large relative to the size of the domestic economy, has increased beyond our expectations.\u201d<\/p>\n<p>For comparison, BPA\u2019s assets amount to \u20ac3 billion, and the Andorran government\u2019s annual budget is only \u20ac400 million. There is no way the government could bail out BPA even if it wanted to.<\/p>\n<p>The last time there was a banking crisis in a European country with an oversized financial sector, many depositors were blindsided with a bail-in and lost most, or in some cases, all of their money over \u20ac100,000.<\/p>\n<p>While the damage to BPA\u2019s customers appears to be contained for the moment, it remains to be seen whether Andorra turns into the next <a href=\"http:\/\/www.internationalman.com\/go\/uqdkf-2\/PIP\" target=\"_blank\"><strong>Cyprus<\/strong><\/a>.<\/p>\n<p>BPA is hardly the only example of a US government attack on a foreign bank. In a similar fashion in 2013, the US effectively shut down Bank Wegelin, Switzerland\u2019s oldest bank, which, like BPA, operated without branches in the US.<\/p>\n<p>To appreciate the brazen overreach that has become routine for FinCEN, it helps to examine matters from an alternative perspective.<\/p>\n<p>Imagine that China was the world\u2019s dominant financial power instead of the US and it had the power to enforce its will and trample over the sovereignty of other countries. Imagine bureaucrats in Beijing having the power to effectively shut down any bank in the world. Imagine those same bureaucrats accusing BNY Mellon (Bank of New York is the oldest bank in the US) of breaking some Chinese financial law and cutting it off from the international financial system, causing a crisis of confidence and effectively shuttering it.<\/p>\n<p>In a world of fiat currencies and fractional reserve banking, that is a power\u2014a financial weapon\u2014that the steward of the international financial system wields.<\/p>\n<p>Currently, that steward is the US. It remains to be seen whether or not the BRICS will learn to be just as overbearing once their parallel international financial system is up and running.<\/p>\n<p>In any case, the new system will give the world an alternative, and that will be a good thing.<\/p>\n<p>But regardless of what the international financial system is going to look like, you should take action now to protect yourself from getting caught in the crossfire when financial weapons are going off.<\/p>\n<p>One way to make sure your savings don\u2019t go poof the next time some bureaucrat at FinCEN decides a bank did something that they didn\u2019t like is to offshore your money into safe jurisdictions.\u00a0And we&#8217;ve put together an in-depth video presentation to help you do just that. It&#8217;s called, &#8220;Internationalizing Your Assets.&#8221;<\/p>\n<p>Our all-star panel of experts, with Doug Casey and Peter Schiff, provide low-cost options for international diversification that anyone can implement &#8211; including how to safely set up foreign storage for your gold and silver bullion and how to move your\u00a0savings abroad without triggering invasive reporting requirements. This is a must watch video for any investor and it&#8217;s completely free.\u00a0<u><a href=\"http:\/\/www.internationalman.com\/go\/uqdpg-2\/PIP\" target=\"_blank\">Click here to watch Internationalizing Your Assets right now.\u00a0<\/a><\/u><\/p>\n<div class=\"clear-me\"><\/div>\n<\/div>\n<div id=\"xvMdV95u77zU\" style=\"clear: both;\">The article was originally published at <a href=\"http:\/\/www.internationalman.com\/go\/uqdah-2\/PIP\">internationalman.com<\/a>.<\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n<div style=\"clear: both;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>By Nick Giambruno It\u2019s an amazingly powerful weapon that only the US government can wield\u2014kicking anyone it doesn\u2019t like out of the world\u2019s US-dollar-based financial system. It\u2019s a weapon foreign banks fear. A sound institution can be rendered insolvent at the flip of a switch that the US government controls. It would be akin to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-72145","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/72145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=72145"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/72145\/revisions"}],"predecessor-version":[{"id":72146,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/72145\/revisions\/72146"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=72145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=72145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=72145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}