Doug
Casey Interviewed by Louis James, Editor, International
Speculator

Recently:
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All Banks Are Bankrupt

In a wide-ranging
interview with Casey Research editor Louis James, Doug Casey discusses
why it’s imperative to start diversifying one’s assets today, and
provides some guidance in considering countries to diversify into.

L: Doug,
we’re getting a lot of questions from readers on how to follow your
advice to diversify assets politically. I know it’s a prickly subject,
but what can you tell us about getting our money out from behind
the new iron curtain that seems to be descending?

Doug: First
– and I can’t stress this enough – you’ve got to accept the grim
reality of impending currency controls. The modern era of foreign
exchange controls really started with the perversely Orwellian-named
Bank Secrecy Act of 1970. For the first time, that made it obligatory
for US citizens to report any foreign bank or brokerage accounts
they had to the government.

But the threat
is older than that, of course, going back to 1933, when Roosevelt
confiscated Americans’ gold. Interestingly enough, only gold bullion
held by Americans within the United States was confiscated. If you
had gold outside the United States, you were insulated.

L: I
didn’t know that – if history repeats itself, that could be a key
tactical factor for our readers to consider.

Doug: Yes.
There are no guarantees, of course. Those in government today think
they can do absolutely anything they deem necessary and expedient.
But at least if it’s out of their physical bailiwick, it improves
your odds.

L: Why
do you think they allowed that exemption last time? I doubt it was
because they had any shred of respect for private property – maybe
they just recognized that trying to seize gold overseas would be
impractical.

Doug: Good
question. Well, the 1930s were a different era. Communication, for
one thing, was vastly slower and more expensive than it is now.
And you have to remember that though we had an income tax in the
1930s, since 1913 actually, very few people were paying it – even
among those allegedly legally obligated to pay it. It was hard for
the government to find out who they were, and how much they were
earning, and so on. Even though there were only 140 million people
in the country then, the absence of computers and much less centralization
made it very hard for Washington to keep tabs on them.

L: The
income tax really was a voluntary tax back then!

Doug: [Laughs]
Much more so than now – it really was a different era. At any rate,
based on this history and that the juggernaut is building momentum
towards the bottom of the ditch, I have to reiterate my advice on
the most important investment decision you can make. And it isn’t
one among the different classes of investment; it’s political and
geographical diversification. Simply put, that’s because no matter
where you live, your government is the greatest threat to your wealth
today.

If you’re a
high-income earner, the state basically takes 50% of what you earn,
and then from what’s left, you have to pay your real estate taxes,
sales taxes, and many, many other kinds of taxes. Government is
without question the biggest danger to your financial health. You’ve
got to diversify your assets so they are not all under any one government’s
control.

L: You
say that in almost every speech you give these days, and you said
it in one of our interviews a couple of weeks ago.

Doug: Yes,
and it bears repeating, constantly. It’s the elephant in the room
that very, very few people pay any attention to, and it’s going
to stomp most people to death, for just that reason.

L: Okay,
so give us a primer. For those who want to avoid getting crushed
by the elephant, where do they begin?

Doug: To
start with, it makes all the sense in the world to have a foreign
bank account. Not a hidden one – I’m not advising anyone to break
any laws. You report it on your annual tax filings. So, the government
will know about it, but if it’s a foreign bank account, they can’t
just step in and lock down your assets in an instant.

L: Does
Canada count as a foreign country for Americans?

Doug: I’ll
probably get hate mail for saying so, but it’s important for investors
to recognize that Canada is a sort of “USA Light.” When Washington
says, “Jump!,” Ottawa says, “How high?” Nonetheless, if only for
the sake of formalities and legal pleasantries, US citizens would
have some degree of insulation with a Canadian bank account. And,
as a general rule, Canadian banks are more solvent than US banks,
so setting up a Canadian bank account is an easy first step for
many US investors.

The second
thing to do would be to set up a Canadian brokerage account. Unfortunately,
the SEC has made it so that no Canadian broker will open an account
with an American unless they have a US subsidiary. That, in effect,
makes your Canadian brokerage account like a US brokerage account.
That doesn’t help you much from an asset-protection point of view,
but it does let you trade directly in many of the stocks we recommend
in the International Speculator and the Casey
Energy Report (not through a US market-maker via the pink
sheets).

Third, I think
that having a safe deposit box in Canada is vastly preferable to
having one in the US. You probably do remember that when Roosevelt
confiscated gold in 1933, he also sealed safe deposit boxes in all
US banks. No American could visit a safe deposit box for some time
without a government agent accompanying him. That could certainly
happen again.

And all of
this is true in other countries around the world.

But yes, as
an easy place to start, Canada is a sort of plain-vanilla jurisdiction
that’s worth giving a try.

L: So,
what would be the French vanilla, or even the Bailey’s Irish Cream
jurisdiction? Is there such a thing as a tax haven anywhere in the
world anymore? Even the Swiss have caved… I just heard that they
just started handing over new account info to US authorities.

Doug: Yes,
apparently there were some 50,000 accounts UBS had, owned by US
citizens. UBS, a multinational bank with a very substantial presence
in the United States – and therefore exposure to extortion by US
authorities – was going to hand them all over. The Swiss government
stepped in, saying they would prosecute UBS officials if they violated
Swiss law by doing that. But the Swiss worked out some sort of compromise
with the US authorities, so only about 5,000 accounts are being
handed over. On what basis they picked these 5,000 is uncertain.

So, the first
tax-haven rule is to never go to a place that’s obviously a tax
haven. If I were interested in bank privacy, I’d forget about places
like the Bahamas or the Caymans. It makes no sense at all today.
All those little island republics are totally under the thumb of
the US at this point. And they’ve always been infiltrated with stooges.
They may have bank secrecy laws, but they don’t have a tradition
of privacy like Switzerland has – although that’s no longer what
it was.

You’ll recall
how the German government bribed a Liechtenstein banker to steal
account names and information. The Germans then turned over relevant
data to the UK, US, and other governments, who were quite happy
to receive stolen goods. And there was about zero protest over the
appalling theft. It’s a testimony to how thoughtless and ethically
complacent most people are; when a state commits a crime, they just
overlook it.

L: Are
you saying that all of the little havens are unreliable?

Doug: Well,
I don’t know of any that are reliable.

Instead, I
would recommend places that are geographically distant from the
US – and culturally distant as well. To me, the best places to be
are in the Orient. That’s partially because the Chinese and other
Oriental civilizations are much less prone to roll over and do what
they are told. National pride ensures that, if nothing else.

But if you
go this route, with, say, an account in Hong Kong, you certainly
would not want to use a bank like HSBC. It’s got branches all over
the world, prominently in the US – so, like UBS, they’ll do what
they are told.

Actually, there
are still Swiss banks that will open an account for a “US person,”
if you can convince them to do it. But you definitely do not want
a Swiss or Liechtenstein bank that has any presence in the US. The
same would be true in the Orient – so forget about HSBC. You want
a real Chinese bank. That way, when the US government calls, the
phone will be answered in Chinese and no one will speak English
with them.

The best places
are the least obvious places. Malaysia is interesting. Thailand.
These are completely non-tax-haven types of places – and that might
make them suitable.

L: What
about step two, getting a brokerage account?

Doug: Well,
it’s tough these days. If you want to trade in US and Canadian stocks,
you pretty much have to have an American or Canadian broker. But
one thing that can be done that is completely legal (and reportable)
is to open up a foreign company. Then the company can open up a
brokerage account. That way, you do have a level of insulation I
think is very valuable, both from a practical and a legal point
of view.

L: I
gather you’re not talking about the banana republic IBCs I see peddled
on the Internet?

Doug: Right.
Most of what you see on the Internet offering to open up an IBC
– which is just an offshore company – are just scams, if not stings.
The fees are too high. The people are usually sleazy. They often
come up with all sorts of cockamamie tax-avoidance schemes. You
may be encouraged to do things that are illegal. They are just disasters
waiting for you to walk into. I strongly encourage people not to
even consider such offerings.

If you want
an offshore company for the purpose of convenience or a measure
of privacy, completely reportable and within the law, the best thing
to do is to go to the jurisdiction you’ve picked and see a lawyer
who deals in that sort of business. Cut out the middleman. Ideally,
the jurisdiction would be one that meets the criteria I outlined
above, but is also a place you’d actually enjoy spending time in.

L: So,
you hop on a plane to, say, Panama, and… how do you go about finding
a reliable attorney to set up your corporation?

Doug: That’s
the intelligent way to do it. There’s nothing illegal, nor particularly
tricky about it; you just find a lawyer who specializes in it, pay
the fees, and off you go.

How do you
find a good lawyer? Same way you do at home; you go and start interviewing
lawyers until you find one that impresses you as being sound.

Panama, by
the way, is probably the best place to do this at this moment. The
British Virgin Islands may be another. And, of course, if you’re
an Australian or a New Zealander, you should think about Vanuatu
– it’s only a two-hour plane ride from Sydney or Auckland.

Back in the
Western Hemisphere, the only other reasonable alternative I see
is Uruguay. It’s always been promoted as the “Switzerland of South
America” – and there’s a lot of truth to that. Uruguay is a small
country, about the same size and with the same size population as
Switzerland, and a very big part of its national income is foreign
banking. It has no tax on foreign-earned income – though, unfortunately,
it recently instituted a tax on domestic-earned income. Too bad.

Another unfortunate
thing about Uruguay is that when you import gold there – such as
by carrying Krugerrands in your briefcase – their customs form asks
you to report it. It’s not against the law, but for some ridiculous
reason, they want to know.

L: That’s
really all it takes? Find a lawyer and pay the fees?

Doug: Yes,
though there can be nuances worth paying attention to. For example,
there are various jurisdictions with different tax treaties that
can be used to your advantage. The Dutch Antilles being a famous
example, as far as dividends treatment goes. This is a specialist
area that, well, you should discuss with a specialist. But you should
definitely give it some thought.

Oddly enough,
you can import gold into Argentina with no problems nor reporting
requirements, and you can buy and sell gold in Argentina just as
easily. It’s much easier than in Uruguay, but I wouldn’t dream of
doing any significant banking in Argentina – and neither do Argentines.
The government is just completely untrustworthy when it comes to
things like bank accounts.

So, it’s rather
perverse; you can deal easily in gold in Argentina, but not bank
accounts, and you can’t deal in gold easily in Uruguay, but bank
accounts are easy.

Frankly, the
best place to look for one-stop financial services shopping is Panama.
Banking is easy, and there’s no gold reporting.

And yes, you
can still take gold in and out of the US without reporting it. It’s
like stamps or rare coins. The exception would be, if you had enough
of them, to remember that Double Eagles have a face value of $20,
and the new Eagles have a face value of $50.

L: What
about your cash, once you have your offshore bank account set up?
You have to declare it if you take more than $10,000 on your person,
but can you wire whatever you want?

Doug: Yes,
you can send any amount of money you want, currently. It gets reported,
but it’s basically unregulated. And by the way, the $10,000 limit
doesn’t cover gold, but it does cover stock certificates and other
financial instruments – but you can still send those by Federal
Express.

L: I
wonder how long that will last…

Doug: I’m
sure they’ll get ’round to closing all the loopholes. So, the time
to act is now. We’ll keep monitoring the situation, but when this
happens, the Powers that Be won’t want anyone to see it coming,
so it will zing in from left field. Your only chance to protect
your wealth is to start diversifying its exposure to any one particular
predatory state as soon as possible.

I have to stress
again the urgency of diversifying the political risk your assets
are exposed to: do it now.

L: Okay,
Doug – thanks!

Doug: You’re
welcome.

Your first
step toward internationally diversifying your wealth is to tune
in to a Casey Research webinar on the subject. Internationalizing
Your Assets premiers at 2 p.m. Eastern Time on Tuesday, April
30. Doug Casey – Casey Research chairman and a New York Times
best-selling author – highlights a blue-ribbon cast of financial
experts who will reveal their favorite strategies for protecting
your wealth abroad.  Get
more information and register now.

April
12, 2013

Doug
Casey (send him mail)
is
a best-selling author and chairman of Casey
Research, LLC., publishers of Casey’s
International Speculator.

Copyright
© 2013 Casey
Research

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