Robert Wenzel warns US citizens to move their money out of the banking system

The US banking system appears to be in preparation for a Cyprus like deposit bail-in/capital controls by making withdrawals in the banking system more difficult.

Writes Austrian economist Bob Wenzel at the Economic Policy Journal: (hat tip Lew Rockwell)

I am now advising that your money be moved outside the US banking system. Within the last 24 hours, I have learned of two major banks that are making it difficult for you to send international wires or draw out large amounts of cash. Both JPMorganChase and HSBC USA have instituted new policies which will make it difficult for you to withdraw your funds in certain ways. This is not good. There are apparently some workarounds relative to these policies, but just try setting up those workarounds when you want to move your money during some kind of panic.

This is what you will face:

Bank line in California in 2008 at IndyMac Bank

Totalitarians don't take away all your freedoms at once. They do it in incremental measures. Watch the movie The Pianist to understand how many Jews ended up in gas chambers by shrugging off early totalitarian measures.

The prevention or delaying of certain customers from sending international wires, and JPMorganChase stopping some accounts from withdrawing large amounts of cash,  is a serious signal that we are well along the way to a banking sector that doesn't respect its customers and has no compunctions about preventing customers from pulling out their money, if the banks deem it in their interest to prevent such withdrawals.

Bottom line: You are playing with fire if you keep any serious amount of money in a US bank.

The above echoes Sovereign Man’s Simon Black’s warning on the imposition by the Consumer Financial Protection Bureau (CFPB) to “limit cash withdrawals and ban business customers from sending international wire transfers” as I earlier posted here.

If the US economy has indeed been booming, then why has US political authorities been resorting to discreet imposition of capital controls? Don't be misled by the market melt-up, the above are signs of desperation rather than of optimism.  

UPDATED TO ADD: To my US based readers, pls take all the necessary precaution.

Video: Robert Wenzel on the Collapse of the Soviet Union: Facts versus Myths

At the recent Austrian Economics Research Conference held in the Mises Institute, Economic Policy Journal's Robert Wenzel gives an excellent speech examining the real factors that led to the collapse of the Soviet Union.

Quote of the Day: Prices and the Myth of Energy Budgets

There is no "energy budget" any more than there is a lumber budget, coffee budget, iron budget or oatmeal budget. There are supplies of these products, which can increase or decrease depending upon prices, but to call these supplies "budgets," suggests A. a fixed amount and B. something that needs to be managed at some national level.

Anyone who understands free markets, would not for a minute be concerned with the amount of energy that is used by various consumer products. Prices will simply dictate limitations of use of products.. For example, gold is a perfectly functional metal that could be used in the construction of bridges. It is not because gold is valued more as jewelry and as a safe non-inflationary alternate medium of exchange. This is reflected in its price. There is no need for any thinking about a "gold budget." The price of gold provides the knowledge to bridge builders that gold should not be used in the building of bridges.

In the same way, it is economic ignorance to be thinking about an "energy budget." Prices will signal to us how energy sensitive our products need to be. That plenty of people use  full-sized HD television sets and X-Box Consoles + a TV, suggests that the energy used for these products is not prohibitive for most…concern about a "world energy budget" belongs up there with the concern for the "world jock strap" budget. It's a complete central planning notion that results from the failure to understand how prices signal uses and production.

This is from Robert Wenzel at the Economic Policy Journal. 

The point is to understand the essence of market price signals than to fall for political demagoguery.

Quote of the Day: The Volcker Rule is a Bad Idea

what the Volcker Rule does is drive banking from the private sector and toward the government sector. Thus, this rule, rather than limiting credit, simply pushes banks to use funds to invest in and provide more liquidity for the government sector.

If credit is to be created by the Fed, I would rather have those funds directed to the private sector, or see banks blow themselves up with synthetic instruments, than have the funds directed toward more investments in the government sector, which will do nothing but allow the state to grow. Thus, the Volcker Rule is a bad idea.

That’s from Austrian economist Bob Wenzel.

Like the Basel regulations, banks are being directed by statute to channel private sector savings to finance the government than to the private sector.

This legislation seems to be a component of the unholy grand scheme of financial repression—the plunder of private sector’s resources for the use of politicians through the banking system. [yeah and politicians and their sycophants have the effrontery to call out on “inequality” when much of the private sector resources have already been absorbed by them.]

And this is why banks end up in cohabitation with governments, as well as, why central banks have been there to provide a backstop on them when private sector resources have been squeezed dry.

Corruption is indeed rooted on arbitrary and repressive laws.

An Austrian Economist’s Message to the US Federal Reserve: Lock the Doors and Leave the Building

Austrian economist Robert Wenzel in a stirring speech in front of central bankers at the New York Federal Reserve has a poignant message for them: Abandon Ship.

Mr. Wenzel's closing statement:

Let’s have one good meal here. Let’s make it a feast. Then I ask you, I plead with you, I beg you all, walk out of here with me, never to come back. It’s the moral and ethical thing to do. Nothing good goes on in this place. Let’s lock the doors and leave the building to the spiders, moths and four-legged rats.

Read Mr. Wenzel’s provocative speech here.

Quote of the Day: Fallacy of Animal Spirits

From Bob Wenzel

Markets clear. If consumer products are out there, they will be purchased, and a production-consumption structure will emerge based on those prices. Steve Jobs isn't successful selling iPads and iPhones because consumers are confident. He is able to sell them because first he produced the products, second consumers desire the products he has produced, and third the products are sold at a price where the market clears, which also happens to be at a price where Apple can make a profit.

Consumers can be totally unconfident about the economy to the point where iPads and iPhones have only consumer demand at $1.00. If all other products are also bid at such an overall low price level, the factors of production will adjust to the new low price level and products will continue to be produced. Keynesian concerns about "confidence", "animal spirits" etc. have no place in an economy where markets are allowed to clear through pricing.

Again beware of the fallacy of mistaking effects (confidence-fear, greed) as causes.