You
guys remember this? November 7, 2012
There are currently so many scandals popping up that
it is almost impossible to keep up with them all.
Buried
somewhere down in the middle of them is the July 1, 2014 implementation date
for a little known law called Foreign
Account Tax Compliance Act, or FATCA. What the heck is that?
Well, it was signed into law by President Barack Obama in 2010 in order to force foreign banks to disclose what Americans had accounts with them and how much they have in those accounts.
It was originally marketed by the administration to the public as an effort to “stop tax evaders hide money overseas”. Now in terms of Americans putting money in private overseas accounts is a debate for another day. For now, we need to focus on the potential (and probable) impact on the U.S. Dollar when this new law takes effect.
Mind you, just like the Affordable Care Act (aka Obamacare) the Administration has announced that it will delay strict enforcement until after the 2015 year. One could make the assumption that this is for fear of the disastrous impacts these new laws could have on the elections, once the public sees the full cost and consequences.
Nevertheless, the law requires all foreign banks to scour accounts for Americans and provide full disclosure of those accounts to the United States Department of Treasury, ultimately to the IRS.
What’s the big deal you ask? Well, besides the obvious overreach of the Federal Government, this could have terminal consequence upon the U.S. Dollar. This law places the U.S. Dollar and an even HIGHER risk of losing its current status as the world’s reserve currency.
"The amount of time remaining to achieve the effective, full implementation of Fatca is woefully inadequate," SIFMA warned in an April letter to the Treasury. "If banks and securities firms are not afforded sufficient time for an effective implementation of FATCA, [the association] believes that adverse consequences could include severe disruptions to global and U.S. financial markets."
Well, it was signed into law by President Barack Obama in 2010 in order to force foreign banks to disclose what Americans had accounts with them and how much they have in those accounts.
It was originally marketed by the administration to the public as an effort to “stop tax evaders hide money overseas”. Now in terms of Americans putting money in private overseas accounts is a debate for another day. For now, we need to focus on the potential (and probable) impact on the U.S. Dollar when this new law takes effect.
Mind you, just like the Affordable Care Act (aka Obamacare) the Administration has announced that it will delay strict enforcement until after the 2015 year. One could make the assumption that this is for fear of the disastrous impacts these new laws could have on the elections, once the public sees the full cost and consequences.
Nevertheless, the law requires all foreign banks to scour accounts for Americans and provide full disclosure of those accounts to the United States Department of Treasury, ultimately to the IRS.
What’s the big deal you ask? Well, besides the obvious overreach of the Federal Government, this could have terminal consequence upon the U.S. Dollar. This law places the U.S. Dollar and an even HIGHER risk of losing its current status as the world’s reserve currency.
"The amount of time remaining to achieve the effective, full implementation of Fatca is woefully inadequate," SIFMA warned in an April letter to the Treasury. "If banks and securities firms are not afforded sufficient time for an effective implementation of FATCA, [the association] believes that adverse consequences could include severe disruptions to global and U.S. financial markets."
Most of
these foreign financial institutions are not only worried about the loss of
customers, but also the sheer cost. A recent
survey of major members of industry group the Securities Industry and Financial
Markets Association, or SIFMA, showed that banks would spend about $1 billion
in 2013 and 2014 on FATCA compliance. Or somewhere in the neighborhood
of $7,000 per account.
Why would a bank want to pay that kind of cash just to make the
IRS happy? Could it be cheaper to just stop doing business in the U.S. Dollar
all together and create a global currency to replace it?
Most think so……
What would that do to the dollar? Loss of the reserve status would be the last struggle of breath for the old greenback. Get ready....
Most think so……
What would that do to the dollar? Loss of the reserve status would be the last struggle of breath for the old greenback. Get ready....
