Copyright 2012 by John T. Reed

In researching my book How to Protect Your Life Savings from Hyperinflation & Depression,

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I learned that one of the best things you can have during hyperinflation is foreign currency. Gold, in contrast, was barely mentioned by the people writing about what it was really like during hyperinflation in Latin America and Europe.

Accordingly, I have researched various currencies and recommended five:

• Australian dollars

• Canadian dollars

• Danish Krone

• New Zealand dollars

• Swiss francs

You can see the analysis at articles I wrote including:

HSBC—ideal one-stop shopping for foreign currency saver?

A reader recommended HSBC. Looking at their web site, they seemed ideal for the purpose—indeed, one-stop shopping for all five currencies.

Their expat bank is located in Jersey, an island nation affiliated with U.K. The accounts need to be outside of the U.S. These are.

Minimums were:

£10,000 ($16,072) per account

£25,000 ($40,180) per relationship (all accounts combined)

All five of the currencies I recommend are offered. Easy access 24/7 worldwide.

Oh, you live in America? Get lost!

So what’s the problem? They have an on-line application. Start to fill it out. When you give your country of residence—United States—you get a pop-up that says they may not be able to help you and asks you to call them at 011 44 1534616 055.

I did. You can too, 24/7.

I got a British-accented woman who told me that they refuse all U.S.-resident accounts because the U.S. government has imposed overly onerous requirements on them for U.S.-resident accounts. Apparently, residents of every country in the world, or almost every country in the world, can avail themselves of the HSBC Advance savings accounts in 14 foreign currencies—except Americans.

If anyone knows what laws or regulations are inspiring HSBC to have this anti-American policy, I am interested in hearing wthat they are—mildly interested.

But my main focus is what should we mice do to avoid being stepped on by the giant government elephant when it starts flailing wildly around in a few years to save itself from the bond market and the taxpayers/voters. With or without HSBC, I will be getting my money out of U.S. dollars.

Here is a link to an article about foreign banks rejecting U.S. depositors. And here is an article from today’s (5/12/12) Wall Street Journal titled “Tax Rule Provokes Foreign Banks’ Ire.”

The main culprit seems to be FATCA. Here is what Wikipedia says about FATCA in its tax havens article.

With the strong backing of the Obama Administration, Congress quickly drafted the FATCA legislation and slipped it into the vaguely related Hiring Incentives to Restore Employment Act (HIRE) signed into law by President Obama in March 2010.

That is when the Democrats controlled both the House and had 60 votes in the Senate (enoughh to prevent a Republican filibuster).

Elections have consequences.

Will Romney get rid of this? Not when he is being accused daily of having Cayman Island and Swiss bank accounts. Will Obama get rid of it? Not when he is the one accusing Republicans of only being interested in protecting “millionaries and billionaires” from tax.

Consider renouncing your U.S. citizenship. You should not do that lightly, but neither should you let the U.S. government inflate your life savings away to nothing so they can avoid unpopular spending cuts.

One of the American citizens who recently did that was Eduardo Saverin, co-founder and 4% owner of Facebook. He was born in Brazil and was a Harvard Classmate of Mark Zuckerberg. He has chosen Singapore as his residence. I do not know if he has become or will become a Singapore citizens. It is easier than most countries—two years residence rather than the more usual five. Singapore citizens are automatically British Commonwealth citizens. The renunciation will reportedly reduce, but not eliminate, the amount tax he owes on Facebook’s IPO.

A capital control masquerading as a tax cheating preventer

It’s not a tax rule. It is a capital control. The effect of it is to prevent Americans from having foreign bank accounts.The list of countries that prohibit their citizens from having foreign bank acounts is short and ugly. (The list is on page 31 of the pdf document you get when you click on that link.) We are among the few nondictatorships on it. (Actually, we are not on that list in that PDF. We should be.)

This is annoying to we who are trying to hedge gainst U.S. dollar inflation, but it is really a problem for Americans who work abroad. What are they supposed to do, keep cash in their mattresses? The Journal mentions that the number of American renouncing their citizenship quadrupled last year. That is only because the other 313 million don’t realize what is going on.

These laws remind me of periods in Nazi Germany and Communist East Germany when Jews and others were allowed to leave the country for a time, but were not allowed to take any assets with them. In both cases, they finally slammed the gates shut and would not even let them leave with the clothes on their backs.

A famous Nazi case was called The Voyage of the Damned. That was the title of a book and movie. It was a true story. Hitler was criticized for bad-mouthing Jews. To prove that no other countries like them either, in 1939 he put 937 German Jews on the ship M.S. St. Louis and told the captain to find a country that would accept them. None, including Canada and the U.S., would.

Eventually, the ship returned to Europe where The United Kingdom agreed to take 288 of the passengers, who disembarked and traveled to the UK by other steamers. After much negotiation by the ship’s captain, the remaining 619 passengers were allowed to disembark at Antwerp; 224 were accepted by France, 214 by Belgium, and 181 by the Netherlands. Generally, the ones who went to England survived the war; the rest were murdered in Nazi concentration camps when Germany invaded the countries that had accepted them.

Now the U.S. government is driving the nation toward federal bankruptcy as fast as it can and simultaneously making it unattractive for foreign banks to accept deposits from U.S. citizens—the only nation on earth that does that. It is our own Voyage of the Damned for the entire population of the U.S. not just one ethnic group. And we are supposedly a free deocratic conutry, not the situation in Germany before, or East Germany after, World War II.

Radio doctor Dean Edell said his dentist had a sign that said,

Floss only the teeth you wish to keep.

I give you a similar message regarding your cash:

Move only the cash you want to keep out of the U.S.

It’s pretty easy to bring it back into the U.S. if that’s what you end up doing. But it is impossible to restore the purchasing power of your U.S. dollars after hyperinflation hits. Indeed, the U.S. dollar will be replaced by a new currency and the rate at which you can exchange the old dollars for the new currency will reflect the purchasing power of the old dollars the day before the change, not before the hyperinflation wiped out the purchasing power.

No law against your having the account

Is there a U.S. law that prohibits you from having such an account?

Nope. No such laws has been passed by Congress or signed by the president, or even suggested.

Is there an international law that prohibits HSBC from accepting deposits from U.S. citizens? Nope.

But they don’t, do they?

Why not? The U.S. government, including the IRS, has, through laws or regulations or whatever, made you such an unattractive international bank customer that, at least at HSBC and some other banks like UBS (Swiss), “No American residents need apply.”

I can picture the folks at IRS getting questions about this from consumers and denying they are stopping you, then smirking to each other when you hang up the phone. What are you going to do about it? Vote aganist your Congressperson? They will swear they never supported any such law. You gonna vote against the president? He, too, will deny he is responsible. It’s like Fast and Furious. No one did it. on one is responsible. No will will take responsibility. So you cannot get anyone fired or removed or demoted for it. And you cannot get it undone. Doesn’t this make you “proud to be an American, where at least you know you’re free?”

A reader performed an ineresting experiment on the HSBC website and got an interest result. Here is his email:

Other countries that get the same error with HSBC
Isle of Man
New Zealand
Saudi Arabia

I thought you might be interested that NZ is on the list

HSBC may be refusing to do business with Americans because of FATCA, but they are not refusing to do business with New Zealanders for that reason. Apparently, it is hard to run a connsumer friendly web siteforeign currency business in a world with a lot of conflicting or onerous national laws.

Another reader said all my foreign currency plans are a waste of time because of FATCA. Well, if you are looking for an ecxuse not to follow my example or advice, that is as good as any. But I think it’s more likely that we will find that FATCA and the politicians who “slipped” it into law without debate were the wastse of time. I don’t think history will treat the Obama administration kindly. They seemed to have behaved toward being in power like a bunch of kids who broke into their school in the middle of the night.

Told ya

A couple of months ago, I warned readers about this in an article titled “A financial Berlin Wall is going up and you are on the wrong side of it.”

Did you think I was exaggerating? Go to HSBC and start to fill out the application at

See that little box that popped up when you selected United States from the pull-down menu? You are looking at the wrong side of the financial Berlin Wall I warned you about. Has your own government ever sent a chill like that up your spine before?

Financial repression

This is called financial repression, folks. I discovered it when I wrote my book How to Protect Your Life Savings from Hyperinflation & Depression. And I covered it and warned about it in that book. The first sentence in the Wikipedia definition of financial repression is,

…a term used to describe several measures that governments employ to channel funds to themselves, that, in a deregulated market, would go elsewhere.

I hope that sent another chill down your spine. It should have.

Don’t say I didn’t warn you—about twenty times.

HSBC is not the only way to put money in currencies other than the U.S. dollar. I have accounts in Australia, Canada, and New Zealand. But you and I had better find and make use of those other ways—pronto—before they put more of the wall up.

I am already anticipating my future article after the ’flation hits the fan. Working title:

How’s that denial workin’ out for ya?

John T. Reed