The Breaking Point

by James Dale Davidson

  I don’t suggest that such savings are available only in Costa Rica by some quirk of that country’s health care system. An Organisation for Economic Co-operation and Development (OECD) report from 2008 concluded that the potential savings between US inpatient prices and other countries range from a 75 percent to 90 percent reduction in price depending on the type of the procedure and location.21 The report also found that cost was not necessarily the main driver, suggesting that “availability and quality are the major factors for many medical tourists.” This helps explain why many American retirees move to Costa Rica and elsewhere, notwithstanding the fact that Medicare benefits are restricted by an absurd requirement that they are not payable outside the United States (where costs are dramatically lower).

  This restriction, like Obamacare itself, is a crony capitalist confection that guarantees you must pay the world’s highest costs for medical care. It is also a barrier blocking the expatriation of retirees. Before FATCA, many of the private hospitals and dental practices in Costa Rica had been owned and managed by Americans. That law, however, had made it increasingly difficult for American entrepreneurs to operate or live abroad. I have found with my own humble entrepreneurial efforts that most foreign banks will no longer open accounts for companies with which I am affiliated, much less for my personal use.

  For example, in the years since Obama has been in the White House, I have incorporated two private companies doing business in Brazil. The first of these became a public company. It took the better part of a year to assemble the “Know Your Customer” paperwork formalities to launch this enterprise. The second company began life as a joint venture with the largest insurance company in Brazil to provide safe transit within that country for incoming tourists and businesspeople. I thought the World Cup and the Olympics, following in 2016, created a great opportunity for such an enterprise. My German partner and I initially incorporated our enterprise in the British Virgin Islands, historically an excellent jurisdiction for companies that have no particular business nexus in the United States.

  Ours was obviously a real company, formed by seasoned entrepreneurs in conjunction with a blue-chip, 7.7 billion reais ($4.3 billion) Brazilian company. Yet to my amazement, it took us almost all of 2013 to locate an offshore bank that would open a commercial account for our enterprise. We were repeatedly told that even if our business grew to be highly successful, opening an account for us could not be lucrative for banks—normal banking fees would not offset the exorbitant costs they expected to suffer due to harassment by the US government. This harassment was expected simply because I hold a US passport. (My German partner had no particular relish for subjecting our enterprise to US corporate taxation at some of the highest rates in the world when we did not even plan to conduct business in the United States.)

  Bizarrely, a government that would be first in line with its hand out to seize a share of any profits I managed to make was preventing the business from getting off the ground in the first place. This reflects a sharp departure from the past. Through the end of the last century, it was relatively simple for an American to start a foreign business. I had experience in doing so as I helped launch about a dozen natural resource companies outside the United States. We did business all over the globe—from Africa, to South America, to Asia.

  In those days, incorporating a company and opening a bank account could be done in a single day, in a matter of hours. No longer. Former president George W. Bush went a long way toward gumming up the channels of entrepreneurship with the so-called Patriot Act, one of the more pernicious pieces of legislation ever conceived.

  Although ostensibly aimed to counter terrorism, it really marked a momentous shift in the nature of the American experience. From that point forward, you were guilty until proven innocent. The shift of the security state’s focus away from defense against other states as enemies to nongovernmental organizations such as al-Qaeda—those that do not exercise a recognized monopoly of force over any territory—became a de facto death knell for freedom.

  This was most evident when you traveled. Going through an airport, you were presumed to be a terrorist intent upon a suicidal act of sabotage until government agents scrutinized your laptop, your shoes, your belt, and every piece of lint in your pockets. The extremes to which the government has gone in the name of security have given the force of law to a lot of nonsense.

  To the best of my knowledge, there is no record of any Episcopalian Baby Boomer like myself ever even attempting an act of terrorism. But this doesn’t matter to a government intent on treating all of its own subjects as potential enemies. Even old ladies in walkers have been made to crawl through x-ray machines as if they were Osama bin Laden clones. I still chuckle when I recall my then eight-year-old daughter’s remarks after she was taken aside for frisking as we went through an airport in 2002. “Dad, what is the matter with these people? Are they too stupid to see that I’m a child?”

  Unfortunately, yes. The conceit that any and every American is equally likely to be a “terrorist” rationalizes the cancellation of your constitutional rights and your innate rights as a human being, as so brilliantly articulated by Thomas Jefferson (see the Declaration of Independence, as well as the passage quoted at the top of this chapter).

  Big Brother Is Watching

  Once upon a time, the United States was a free country. No longer. If you still think of the United States as a free country, it is time you updated your perceptions. Go to Amazon or the library (you can find it on Google Maps) and get a copy of George Orwell’s classic 1949 novel, Nineteen Eighty-Four.

  Set in a backwater province of a future superstate in a world of perpetual war and omnipresent government, Nineteen Eighty-Four details the story of an everyman character, Winston Smith, as he wriggles under the thumb of a dystopian tyrant, Big Brother. You’ll see if you read the story again that Big Brother is almost a libertarian in comparison to Barack Obama.

  According to a 2013 article in The Guardian, German Chancellor Angela Merkel told President Obama in a heated discussion that spying by NSA was similar to that undertaken by the Stasi, the secret police of the former East Germany.22 Julia Angwin, who reports on security issues for the Wall Street Journal, went further. In a radio interview with WNYC, she said, “The US surveillance regime has more data on the average American than the Stasi ever did on East Germans.”23 In fact, the US government is compiling more information on you and other Americans than Stalin had on Russians, Hitler on German citizens, or any other government has ever collected on its people.

  This includes the capture and storage of virtually every telephone call you make, records of all your purchases and savings down to the penny, email, text messages, Internet searches, social media communications, health details, employment history, travel, and student records. Everything. The government is spying on virtually everything you do.

  According to the authoritative German magazine Spiegel, the National Security Agency (NSA) has a fifty-page catalog of “backdoor penetration techniques” that it employs to spy on you.24 Digital security expert Jacob Applebaum, who helped Spiegel prepare its revelations, detailed how the NSA uses software known as “Dropout Jeep” to implant software on your Apple devices. This software enables the government to remotely retrieve your contact list, listen to your voicemail, locate you, capture your camera, retrieve your SMS files, and do dragnets on all your log-ins and passwords. They can turn on the microphone on your iPhone remotely and listen to any private conversation you hold in the vicinity of your cellphone, even if you are not making a call.

  According to Bill Binney—a thirty-two-year veteran former top spy at the NSA who created the agency’s mass surveillance program for digital information—the US government is collecting 100 billion emails per day and 20 trillion communications all told. As reported in an interview with Binney by the WashingtonBlog in 2013, if you land on the government’s “enemies list,” that stored information will be used to target you.25 If the government decides i
t “doesn’t like” you, it analyzes the collected data on you and your associates over the prior ten years to build a case against you.

  More ominously, Binney explained that the NSA shares its collected information with federal, state, and local agencies that then use that information to prosecute petty crimes, such as drugs and taxes. The agencies are instructed by the NSA to claim they received this information in a more legitimate way while hiding its source from defense attorneys and judges. Binney concluded that the government use of data collected through spying is “a totalitarian process.”26

  All the data that are being collected on you are not just being stored for some potentially menacing use in the future. You wish. Some government bureau or agency could be targeting you right now.

  And remember, if they decide they want to get you for something, they can.

  You Unknowingly Committed Three Felonies Today

  The number of laws and regulations in the United States is literally beyond counting. According to the CCH Standard Federal Tax Reporter, in 2013, it took 73,954 regular 8½ × 11 sheets of paper to spell out the US federal tax code. A 2011 report in the Wall Street Journal, “Many Failed Efforts to Count Nation’s Federal Criminal Laws,” estimated that there are 10,000 to 300,000 regulations that can carry the force of federal criminal law. Experts believe that if you are like the average adult, you unknowingly commit about three felonies a day.

  The Journal also quoted John Baker, a retired Louisiana State University law professor who had tried counting the number of new federal crimes created in recent years, as saying, “There is no one in the United States over the age of 18 who cannot be indicted for some federal crime. That is not an exaggeration.”

  Lavrentiy Beria, the head of Stalin’s secret police, famously bragged, “Show me the man and I will find the crime.”27 That is now easier for the US government since they have your every act recorded and filed away to use against you. If by some happy turn of fate, you were the rare person who could not be indicted and incarcerated for committing some infraction forbidden by the many unintelligible laws proliferated in the United States, the Obama administration has secured the legal authorization to jail you without charge, without trial, and without a day in court. The 2012 National Defense Authorization Act (NDAA), sections 1021 and 1022, authorizes the indefinite military detention of any person even suspected of an affiliation with terrorism.

  The government under Obama has gone to great lengths to expand the definition of “terrorist”; it is no longer someone convicted of blowing up buildings or trying to sabotage airplanes in flight. The government’s updated definition of “terrorism” includes anyone suspected of thinking for herself or himself—you for instance.

  Multiple documents from the FBI, the Department of Homeland Security, the Department of Defense, and other agencies broaden the concept of terrorist to include people who are “reverent of individual liberty,” “suspicious of centralized authority,” and “anti-federalists.”28 Such individuals, like you, might be inclined to oppose whatever benighted measures the government intends to impose on the United States in the wake of the coming economic collapse.

  If you’ve ever said anything in a telephone conversation or written anything in an email that betrays an inclination to think for yourself, you are a candidate for imprisonment without trial because the government can’t be sure you will go along with the gag. And remember, they have been listening to all your conversations and reading all your emails, combing through them for keywords and phrases that hint you may be disgruntled with the status quo. If they found any, then you could be on Obama’s list of undependable persons.

  If you believe in anything enough to have mentioned it, you may be a target. If you were against the wars in Iraq or Afghanistan or expressed an opinion against bombing Syria, if you’re a Constitutionalist or a Ron Paul supporter, if you are opposed to GMO foods, if you expressed sympathy for the Tea Party or Occupy Wall Street, whether Democrat or Republican—you could be on their terrorist list.

  Believe it or not, complaining about the quality of your tap water could be interpreted as an act of terrorism. According to a June 2013 Network World article, when more than one hundred residents of Mount Pleasant, Tennessee, complained that children were becoming ill from drinking the local tap water, they were cautioned by Sherwin Smith, deputy director of Tennessee Department of Environment and Conservation’s Division of Water Resources, “We take water quality very seriously. Very, very seriously. But you need to make sure that when you make water quality complaints you have a basis, because federally, if there’s no water quality issues, that can be considered under Homeland Security an act of terrorism.”29

  In other words, almost any complaint “for the redress of grievances” can be construed under Obamaspeak as an act of terrorism. Have you spoken out against fracking, complained about the imperiling of bobcats in the Mojave, or questioned Obamacare? Are you a born-again Christian? Welcome to the club. And God forbid that you share the revolutionary beliefs of George Washington or Thomas Jefferson. Government files could classify you as a “person suspected of an affiliation with terrorism.”

  It doesn’t matter whether that designation makes any sense or not. It would not necessarily have to be tested in court. The whole point of sections 1021 and 1022 of 2012’s NDAA seems to be the suspension of the right of habeas corpus.

  Why FATCA?

  Notwithstanding the fact that they are already listening to all your phone conversations and reading all your emails, their surreptitious spying lacks one important feature that FATCA provides. Spying on your private life and your business may impose significant long-term costs on you by destroying the rule of law—while placing you under the economic yoke of the crony capitalists, their hired lackeys, and the useful idiots who run the government—but that would not immediately prohibit you from moving abroad and starting a new life.

  FATCA does.

  The lockdown FATCA regulations not only apply to some 7.5 million individual Americans already residing in foreign countries, who can no longer open bank or brokerage accounts, purchase insurance products, or obtain mortgages on foreign properties; they also impose disabling costs on foreign companies and businesses owned by Americans wherever they live. Any bank, brokerage, or insurance company that deals with a company or partnership operating outside the United States that is even 10 percent owned by an American is subject to all the costly bureaucratic reporting requirements imposed by FATCA.

  Barack Obama and his FATCA program have compounded the obstacles, pioneered by George W. Bush, for Americans doing business in other countries.

  European banks have quite reasonably concluded that having Americans as clients for financial services, even indirectly, is not worth the exorbitant costs of the heavy-handed extraterritorial regulation imposed by the US government.

  Questions for Your Future

  FATCA raises a host of questions. In one respect, it makes you scratch your head over the loss of freedom in the United States. Did we ever believe what we were taught a lifetime ago in high school civics class? Then America was said to be “the land of the free.” The animating spirit of America, beautifully articulated by Thomas Jefferson, involved a keen appreciation for the natural rights of individuals to freely choose where to live, where to work, and presumably even where to bank. FATCA is an obvious contradiction of everything Jefferson thought the American Revolution stood for.

  At another level, there is the puzzle about why foreign banks pay any heed at all to extraterritorial US regulations that threaten to impose costs of hundreds of millions on individual banks and total costs that could mount above $1 trillion. Why, indeed.

  QE as a Surreptitious Subsidy of Foreign Banks

  When you look carefully, you see a situation that is not what it seems. QE was at least partly an expedient for the surreptitious subsidy of foreign banks. A big part of the reason those banks play along with extraterritorial US laws like FATCA is that they have been
paid to do so (particularly big foreign banks).

  European banks have become the hirelings of the US government. Part of the desperate effort to preserve the US imperium, and maintain the US dollar as the world’s reserve currency, involves back door bailouts and lavish subsidies to foreign banks that continue to deal in the last great manufactured product in which the United States retains a competitive advantage—the US dollar.

  A hint about why banks everywhere feel obliged to kowtow to authoritarian US regulations is provided by the experience of banks dealing with Iran under US sanctions. While the United States accounts for only 12 percent of world trade, more than 35 percent of international transactions are conducted in dollars, including about $2.7 billion a day in dollar based derivative trades, many of which do not involve Americans or American firms.

  Under these conditions, any foreign bank or financial institution that defies heavy-handed US regulations could have their access to the American banking system denied, just as those banks that violated US sanctions against Iran did. Under those conditions, the foreign bank would be unable to offer dollar accounts and dollar payments that rely on links to corresponding American banks. Because of the importance of the dollar, most banks, big and small, feel that they must do as the US dictates, particularly as they are paid to do so.

  At a deeper level, FATCA raises questions of profound importance to you as an investor. What does FATCA tell you about the terminal crisis of US hegemony and how economies are likely to be reconfigured in the next stage of world capitalism?

  Quite a bit.

  There is a metamessage in “financial repression” in all its forms. It says that the system is fragile, and “the powers that be” dare not let you enjoy financial freedom lest the system collapse. That is the message of QE in its many guises.