News Briefs

The Fed is raising rates. Now what?

Seven years ago, to the day, the Federal Reserve made history when it moved its benchmark interest rate as low as it could…nearly to zero. By that point, the housing bubble had burst, major financial institutions had failed (or were bailed out), and the U.S. economy was rapidly contracting. The Great Recession was underway.

In the story linked here, written by Andrew Flowers, the following four questions are discussed:

  • Will inflation ever get back to normal?
  • How fast can the economy grow?
  • Is another bubble imminent?
  • Will interest rates return to zero?

As rates do begin to inch up, conversations about monetary policy will shift from what’s felt like a single-minded focus on when the Fed’s rate hike would come over to a broader set of questions about what happens now.

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Automatic information exchange going global

Last week, a client of ours asked whether it was true that European banks were starting to automatically exchange information on the taxpayers of the respective countries. And whether it was true that the IRS received digital information about U.S. taxpayers’ foreign accounts from governments and firms around the world, sending information on foreigners’ U.S. accounts to government authorities abroad. That must be a hoax, right?

Unfortunately NOT. That’s the new world we live in, constructed in accordance with the US boilerplate model for “taxpayer transparency”, FATCA. The whole world of bankrupt governments watched in awe what the IRS was able to do with its citizens. They are now implementing similar rules across the board. And, the US Internal Revenue Service is actively showing the way.

Have a look at the link provided below. It will give you a taste of what is going on. Under the OECD’s prominent slogan, “Better Policies for a Better World” (argghh!!), Automatic Exchange of Information (AEOI) is becoming the new global standard.

This should make us all choke! Much blood was shed, here in Switzerland and elsewhere, to get rid of bloodsucking aristocrats and governments over the centuries. Now, we are quietly watching them plucking away at our rights, one by one.

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Americans: Pay your taxes, or lose your passport

The U.S. government plans to enact a law allowing your passport to be revoked or denied if you owe more than $50,000 in taxes. Starting in January, the State Department will block Americans with “seriously delinquent” tax debt from receiving new passports and will be allowed to rescind existing passports of people who fall into that category, The Wall Street Journal reported.

First they make rules that are hard to grasp and abide by. Then they put the shackles on you!

Wake up America! Your federal government is expending a lot of time and showing much “creativity” in creating rules and regulations of confiscatory nature. As the US deficits and debt grow continuously, financial repression is getting out of control. Americans need to defend their rights and protect what’s theirs – NOW. 

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The Swiss win a big victory for bank privacy

There’s lots of scuttlebutt in the mainstream press – and beyond – about how bank secrecy is dead. But to paraphrase Mark Twain, “The rumors of my death are greatly exaggerated.”

To be sure, there’s an element of truth to this assertion. Thanks to laws like the Foreign Account Tax Compliance Act (FATCA), for instance, every non-US financial institution in the world must now identify their US clients. And once they do, they must share details of those clients’ transactions with the IRS.

So, it’s safe to say that if you’re a US citizen, offshore bank secrecy no longer exists when it comes to the IRS. But it’s certainly not dead for other purposes, and a recent case out of Switzerland proves my point.

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Chinese yuan included in the SDR basket of international currencies

Last week, the IMF announced that the yuan (also called the renminbi) would be part of the Special Drawing Rights (SDR) basket. There was no overwhelming reaction from markets, possibly because the OPEC and ECB meetings overshadowed the event and because the move was expected.

In the short-term, this will have no impact whatsoever in international currency markets. However, there may be several long-term implications of the yuan’s inclusion in the SDR basket.

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Schengen: not working in that “unionized” way they promised…

The migrant crisis is putting considerable pressure on the Schengen Agreement, which abolished the EU’s internal borders, enabling passport-free movement across most of the bloc.

As the number of refugees entering Europe rises, the number of countries breeching the Schengen rules rises as well. Border controls are being introduced across the Union. Yet another “Union” project seriously challenged in practice.

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