What Will Happen in the USA as the Financial Crisis Worsens?

Executive Summary – The financial crisis, which hit the USA hard, is going to impact on the freedoms in the USA. Here are some of things to look for. These things have all happened in other countries and are currently this way in other countries right now. When the civil unrest starts it will be 9/11 all over again with more loss of freedom. When new currencies begin the USA will become nervous regarding capital flight and more tightening of the borders and banks will result. The IRS is no longer a cost effective taxing agency. The obvious answer will be a VAT so savings and borrowed money can be taxed. We try to illustrate some of the things to look for that the mainstream media will never discuss.

Crossing Borders - Once again the best advice we can give you is to leave fast. They will eventually follow all the other police states in the past and lock down their borders. They do not want money leaving in cash, credit cards or even being spent abroad on tourist travel. Exit visas will be needed. You will have to show cause justifying your trip. Possibly you will need to go for an interview and bring supporting documents. You will need to show that you have substantial assets in the country and possibly family members left behind. People will be kicking themselves for not leaving when they could. Think this is far fetched look at the USA now.

A few years ago, before 9/11 anyone could just drive from the USA to Mexico or even Canada. Mexico checked nothing, not even stopping your car or talking to you. Canada maybe wanted a driver license. Now you need a passport and they have soldiers 2 or 3 miles inside the USA checking passports for those leaving into Mexico. If you do not pay child support, or if you are charged but not convicted of a crime they take your passport away routinely etc. The no fly list, which now has one million people, does not require any probable cause as a requisite for getting on the list.

If you are not friendly to some federal agent they can put you on the list. Getting off the list, come on you have to be kidding. How long do you think it is going to be until the no fly list is applied to leaving the USA by land or foot? Think about it. What about needing an IRS clearance to leave the USA. This would be bound to keep people in the USA and cut tourist dollars leaving. It also would raise collections for the IRS. If the IRS disagrees with you on something and you dispute it, you might not be able to leave until it is resolved which could take years. An alternative would be to post the amount they claim is due as collateral for leaving. Do you think if the IRS already has your money they might be inclined to fight hard to keep it? If the IRS claims you owe more then you can possible pay well then forget your travel plans indefinitely. Did someone just say they are going to short Carnival Cruise Lines stock?

Banking - Money will also be locked down. They will require you to convince the bank that you have a valid invoice to pay before money can be sent out of the country by wire. This is not going to be that easy since the bank will be subject to fines if they wire money out for an invoice that does not meet the requirements or is bogus. For many years banks have been the servants of the government. Checks will not be able to be cashed from outside the country. Visa cards will not work outside the country.

ATM cards will not work outside the USA. There will be two types of Visa cards - one in the local currency anyone can get and one that works in foreign currency too like the one you have now. Only the rich and privileged will have the foreign currency capable cards, which will be the only ones that work outside of the USA. You will have strict controls on how much money you can take outside of the USA. Law enforcement people will be convinced that enforcing these currency controls are vital to the integrity and security of the country.

Gold and Silver – It is very likely that these precious metals will become illegal to hold except as jewelry and religious artifacts. The USA has done this several times before and is fully capable of doing it again. When their currency dwindles in value gold can go to $5000 an ounce and scare people away from wanting to use the currency opting for gold instead. Same for silver but silver may go to $1200 an ounce. They cannot have this so it is an easy matter to make gold and silver illegal to hold thus destroying its value for speculation against the dollar.

Generally one would be forced to redeem the gold with the government getting paid whatever they want to pay you for it. Last time they did it the price was $35 an ounce. They will give you their fiat money and in return get your gold. This will increase their gold reserves and would help them significantly convince other nations their country was stronger asset wise. Of course you wind up selling your gold to them for a pittance, which is something a little better than confiscation of gold. Think about it.

Firearms – As the civil unrest sinks in there will be a cry for the greater control of firearms and ammunition. Hard to say how they will play it but they have been after the confiscation of guns since 1968. There is a lot of resistance to such legislation so they may dispense with the niceties of passing a law and deal with it through some sort of martial law/executive order. Perhaps it will be done on a city-by-city basis or a state-by-state basis, or maybe the entire country at once. All they need is an alibi like some riots in a few cities where guns get used and they are on the road to confiscation. Think about it.

Real Estate – Property values will continue to plummet, expect at least another 25% drop, more in some markets. Eventually foreigners will start to see this as a fire sale and begin to buy resort homes in USA. There will still be beaches, five star restaurants, hotels, amusement parks, ski resorts, national parks, hunting, fishing in lakes, springs and oceans, museums, plays, theater, universities for foreign students, etc. The USA will make it easier for foreigners to lawfully stay there and not pay taxes if they do not work there. They will create tax incentives for foreigners to come and start businesses in the USA. If the dollar cheapens enough the cost of labor will be cheap enough for this to happen on a big scale.

The USD will eventually be relegated down to its rightful place amongst the currencies of the world, low. This is called turning America into a third world country. See it unfolding before your eyes. Wait until you see people you knew your whole life get jobs as maids, chauffeurs, cooks and nannies for these foreigners moving into the USA. Eight hundred a month with room and board sounds real good when there is no other work. They may even get more because the foreigners are going to pay in cheap USD, which they can buy a lot of for their stronger currencies.

Immigration – This will open up and fast. They will let anyone in with modest money to invest that will create jobs. This works best when the local currency (the USD) is cheap so wages are low. There are a lot of skilled workers in the USA. Expect there to be immigration programs based on investing money in a piece of residential real estate. This will get some of the unoccupied homes sold. You will see all sorts of creative tax breaks in the early years to attract foreign investment. Prospects are bleak for Americans. There is no light at the end of the tunnel. Obama cannot spend the country out of a depression caused by over spending to start with. The bankers who caused the problem to start with can never be relied on to fix the problem. They have a compromised vested interest in protecting their own interests. Think about it.

Taxes and the IRS – The IRS is good at taxing income as in the term income tax. With an eye towards the IRS not being able to get blood from a stone lets look at the current usefulness of the IRS. The real unemployment rate in the USA is somewhere between 25% and 32%. The government published figures only count those receiving unemployment benefits, not those who had their benefits run out, never qualified for unemployment because their former employer is fighting their claim to keep his rates down, took a part time job, left the USA, were self employed and not covered, or they are not able to work and cannot get disability, or the poor folks just gave up.

These figures, which are growing monthly, make the IRS not as cost effective as it used to be. The money the IRS collects from paychecks is down by about thirty percent and getting worse. The big corporations are in the tank. They are facing bankruptcy. The revenue the IRS gets from these corporate sources is down substantially. As a guess at least 80% of what they used to collect from corporate profits is no longer coming in as in what profits. They will never release these figures because then the world will really see how far they have fallen but rest assured the USA government is aware of these figures. The capital gains tax collections from stock market profits is probably down by 90% with the few short sellers being just about the only ones paying any taxes on stock market profits. With extremely low interest rates the capital gains tax from bonds and savings accounts, money markets, etc. is off probably 75% compared to the better days in years past.

The IRS tax system involves employers making deductions from paychecks and sending the money into the IRS. Since there are much fewer employers and even fewer employees the system is no longer cost effective when you consider the six digit size of the IRS work force and do not forget their benefits and retirement packages, their computers, their courts, their buildings, their training academies, etc. The IRS is not pumping in enough money to pay for itself. This situation is not likely to change for many years and may be the case forever.

IRS Collection Tactics - The biggest weapons the IRS has to enforce tax compliance is to garnish wages, attach bank accounts, attach stock brokerage accounts, lien houses, cars and boats. Savings in banks have been diminished greatly, which reduces the size of this source of collection. Many people are unemployed so fewer wages to garnish. Housing prices have dropped radically so there is no equity left to recover after an expensive and time consuming IRS auction, so forget house confiscation to satisfy taxes. Equity in used boats, cars, motorcycles is gone due to a bad market and an abundant amount of fire sales taking place every day so forget confiscating these assets to satisfy a tax debt.

Stock brokerage accounts will have greatly diminished equity due to the declining market. The point is the IRS has lost its ability to collect debts (old or new) and scare people into tax compliance. You can’t get blood from a stone. They can’t go around attacking whatever little the people have left. They will drive people to a homeless state and that is going to make for grumbling, discontent people and eventually civil unrest. Combine this with a bad economy and you will have an extremely horrible environment for the IRS to keep people in compliance. The independent contractors, self employed and business owners will be doing lots of things to avoid paying taxes or else just not paying the taxes altogether offering no justification to the IRS. The people will be quick to say heck the government can print all the money they want why should I suffer to pay taxes? It could be I am about to lose my house and if I pay them the taxes I will not be able to keep my house. It could be the car, the boat, pay for the kids college, pay for medical insurance etc.

There are a lot of people in the USA hanging on by their fingernails, one or two paychecks from foreclosure. These are not prime collection candidates for the IRS. The people that do have jobs and assets that owe the IRS should be extremely worried. They will be trying to justify their existence and go after anyone they can, sort of a them or me attitude. What ever happened to working for the constituents that pay these civil servants salaries?

The Vat Tax – VAT mans value added tax. This is what we think the government will go to in that the IRS is no longer cost effective. Every time a purchase is made the merchant adds on the VAT just like sales tax and turns it in monthly. It will be in addition to state and city sales tax. If they go to a VAT tax, they tax on consumption. Compliance is easy in that you just have to occasionally audit some of the merchants to keep them in line. This way they can tax unemployed and retired people as they spend their savings. Do not forget with a VAT they could now tax borrowed money from credit cards as it gets spent. Think about it.

To keep the poor voters sedate they issue them rebates to offset what they spent on the VAT tax. The thinking is that they are so poor they should not pay taxes. It is more cost effective to reimburse them is the easy answer. When there is a VAT foreign tourists can avoid paying the tax by presenting their foreign passport. The number of the passport is recorded with the sales slip and thus no tax need be collected so the US can set itself up as a tax haven discreetly this way. If they do this the capital gains tax may be eliminated to further encourage investment. Foreigners now pay no capital gains tax but if they became a resident they would have to pay capital gains. With the VAT system they could be a resident or a citizen and no pay capital gains. Remember they would eliminate probably 85% of the IRS this way so there would be no IRS staff to go after the capital gains money so may as well eliminate the capital gains tax to encourage foreign investment which would be the most profitable way to go.

If you are wondering what is going to happen to the IRS employees that get laid off, don’t ask. Their chances of getting a job in the private sector are probably about equal to that of a paroled child sex offender. Their public image is very negative and that is putting it mildly. It is so bad they have taken to issuing their employees credentials using aliases to protect their real identities. That’s bad. When the USSR collapsed their intelligence agents and national law enforcement agents went rogue pursuing a career in crime. We can only hope this does not happen as the USA progresses deeper and deeper into their financial plight. The world has enough sophisticated criminals now.

Your Best Move – Leave. It is not going to recover and go back to being the great nation it once was. The world is full of many nice countries you can live in as a free person who will be glad to have you. The option of leaving is one that will soon be gone.

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