Normal 0

While preparing to pay off the thieves and extortionists, oops, I mean filing my taxes, I found this notice from my bank:

"Beginning September 18, 2009, all financial institutions are required by the Office of Foreign Asset Control (OFAC), an agency of the U.S. Treasury Department, to screen all electronic deposits to your deposit account that are initiated outside the United States. If we receive this type of transaction, the screening process may delay or block the posting of the electronic deposit to your account.”

The government has coerced domestic financial institutions into participating in some sort of currency control scheme. I have a hunch, but haven’t verified, that this originated in one of the “stimulus” or “bailout” packages. Previously, OFAC has scrutinized transactions between the US and certain countries that were not strong-armed into adopting US government financial regulations. Now, all foreign transactions are presumed to be involved in illicit activity. I am sure that the banks also went along with the new rule rather than challenge it and risk retribution from the government.

What other snares do we not know about and could innocently run afoul of? Is this a sign of things to come when the government prevents capital from leaving the country, as seen in third world countries? Not only that, government regulations forbid those who are thought to engage in suspicious activity from being warned!

(Update: Check out these excellent articles by Gary Barnett at Lew Rockwell.com: The Government's War on Money Laundering and We Are All Terrorists Now! )

In fact, just last month, PayPal, acting either under the guise of such anti-money laundering regulations or on the order of government thugs, accused one of my neighbors, Howard Katz, at The One-Handed Economist <www.thegoldspeculator.com >, of “suspicious activity” and froze his assets. The following is Howard’s account of what happened:

“I had a bizarre incident with regard to Paypal (the internet payment company) this past week, and I think that it should become a public issue. Suddenly and without explanation Paypal, with whom we had done business for 1½ years, suddenly froze our accounts and refused to forward money which you had sent (via them) to pay for subscriptions. When we pressed for an explanation, we were met with questions which suggested that we were somehow engaged in money laundering or some other illegal activity (“suspicious increase in account activity”). This “suspicious” increase was probably due to the fact that I was hitting the gold market very well late last year, and you nice people were increasing your subscriptions. Of course, that is what every business in the world is trying to do, increase its revenues.

It seemed to be (my judgement) that Paypal was acting as front man for some government agency which I had offended and which was trying to construct a case against me based on their powers under the Patriot Act. When I proved that I was a businessman in good standing, their case collapsed, and Paypal rescinded the freeze.

I understand that Paypal did not initiate this attack. However, they were only too willing to play ball with the (unknown) Government agency. It is the job of a business to provide goods or services to its customers, not to conduct sting operations against them or to entrap them. If anyone wants to investigate me, then they have to show the legal authority to do so and not hide behind a front.

Paypal seems to have an enormously inflated ego. They provide a very minor service in speeding up your transmission of money to us. On the other hand, it is not in my interest to do business with companies who do not show good will toward me, who act as shills for the Government and who are trying to entrap me into the commission of a crime. Paypal seems to have forgotten that there are good, old-fashioned ways of sending money, such as the U.S. Post Office. Indeed, I think that Paypal has put a big one over on all the businesses which use it. These businesses have fallen into the trap of accepting a lower profit on their Paypal customers than their other customers. They have set up an incentive for people to use Paypal, and the cost is borne by those who do not. I have been making this mistake (inadvertently), but that policy is now ended. From now on, all subscribers who do not require us to pay the Paypal fee will receive a $5.00 discount from the normal $300 subscription price.  I will continue my association with Paypal for the sake of those subscribers who are too distant to receive prompt mail service, but they are definitely on trial with me, and if they have committed any illegalities in their harassment of me, I intend to pursue justice.  Be on notice.”

It is bad enough to have accounts frozen on mere suspicion of “illegal activity” without due process. Randomly and arbitrarily cutting off a business from its funds, however, can ruin it.   

On a different note, inflation is now rearing its ugly head. Over the past couple months, I have noticed prices going up on goods and services. I have seen products in the store that were received on different dates and the more recent shipment marked with a higher price. I have been asking merchants for their thoughts and they tell me that their suppliers are planning price increases. I am not a financial advisor (nor do I play one on TV) but it may be a good time to buy silver and gold, though even these transactions may be scrutinized by the Treasury Department.