by Jeff Thomas
25 January 2016
The image above is of a World War II German Panzer tank. So, what
does that have to do with tax havens? I'll get to that soon.
But first, let's look at the
Isle of Jersey, one of the islands in
the English Channel. Most people think of it as a British tax haven,
but it's not, strictly speaking, a part of the UK and not a member
of the EU.
It's a self-governing parliamentary
democracy under a constitutional monarchy and has its own legal,
judicial, and, most importantly, financial systems. For decades,
it's been a choice location for those who seek to avoid taxation.
Income tax was first created in England to pay for the Napoleonic
Wars (maximum: 10%) and was raised in World War II to a maximum of
99.25%, again to pay for warfare. It was reduced after the war, but
climbed again (on investment income over £20,000) to a maximum of
98% in 1974.
Jersey emerged as a tax haven as a result. Since Jersey was not
obligated to pay tax to the UK, Britons increasingly deposited their
It's important to mention at this juncture that most of the world's
tax havens first sprouted as a result of similar situations - supply
created in response to a clear need. Most people will abide low to
moderate taxation but, whenever governments have become truly
rapacious in taxing their people, those people have sought to escape
enslavement from their own governments.
Sometimes, this has meant physically
leaving the country (as so many Britons did in the 70's) and,
sometimes, this has meant moving one's money to a jurisdiction that
has either low, or no, direct taxation.
Tax havens have a long history and, since the 70's, as taxation in
much of the world has been on the rise, havens have unsurprisingly
Not surprising, then, that the blowback from the most rapacious
governments has grown.
The Organization for Economic
Cooperation and Development (a euphemism if ever there was one),
OECD, has led the charge, funded
primarily by the US but based in Paris and utilized heavily by the
EU as well as the US.
The OECD claims to have as a primary goal the elimination of money
laundering in the world. It has successfully convinced most of the
world that money laundering (the practice of keeping parasitical
governments from stealing your wealth) is a criminal activity and
must be stopped.
However, the true objectives of the OECD are the following:
To eliminate the individual
right of privacy with regards to wealth.
To force minimum tax levels on
all sovereign nations, so that they cannot offer freedom
from excessive taxation to anyone.
But, lest we're tempted to sympathize
with the OECD, it's important to mention that it also fully accepts
the fact that its member-countries have their own tax havens which
don't comply with OECD minimum standards.
Seen in this light, the OECD is exposed
as more of a shakedown organization than a "force for good."
Still, the OECD is powerful and it's taken its toll on tax havens.
Every two or three years, it puts the squeeze on a selection of the
world's tax havens, demanding new or revised minimum standards. It
places them on a blacklist or graylist until they cave in to the new
standards. Then, two or three years later, it goes after another
selection of havens, thereby steadily ratcheting down economic
freedom in the world.
One of their foremost successes has been the Isle of Jersey.
By forcing tax equalization on Jersey,
Jersey has had to decide whether to increase taxation for offshore
depositors, or decrease taxes for locals. It chose the latter and,
as a result, has experienced a shortfall in the government kitty,
resulting in layoffs for public service workers, cuts in funding for
road repair, sewage services, education, etc.
Jersey appears to be
on the ropes as a result.
So the big question is,
"Will the OECD reach its goals?"
In five or ten years' time, will the
only tax havens be in places like
Delaware, where the
government-sanctioned tax haven follows the "bad practices" that the
OECD has called "criminal"?
At present, no one has the answer to
that question, but what we can say is that we're witnessing The
The economies of all the OECD
member-nations are in trouble. Having destroyed their own economies
through massive debt, they're grasping for every tax dollar they can
get their hands on to keep the house of cards from collapsing. The
inevitable collapse is getting ever closer, so the hope is to scoop
up as much wealth by whatever means possible before the fall.
This is critical as, after the fall, the
credit will evaporate. The governments will no longer be able to
fund the costly agencies necessary to track down and confiscate the
wealth of their citizens.
This is therefore a race against time, which brings us back to the
Panzer in the photo.
The Panzer tank was critical to German advance in World War II.
In the 1940's, if you heard one coming,
you ran like hell. But they ran on gasoline. The Nazi command
recognized early in the war that, unless they captured the oil
fields in Russian-held Romania, the German war machine would
literally "run out of gas."
As risky as it was, it was essential to attack Russia. The attack
became increasingly desperate, since the Germans fully understood
that their end was on the horizon if they did not succeed (Can we
see any similarity between this and a government near us?).
The Germans failed to conquer Romania. Then, in 1945, at the Battle
of the Bulge, the advance by Panzer tanks came to a halt. Had they
reached the front lines, they would have won the day for Germany.
But, instead, they ran out of fuel in
As decisive as that event was, to my mind, there is a connected
event that's more significant to us today. When the tanks ran out of
gasoline, the crews left the tanks and simply began to walk back to
Most were later rounded up by the Allies and they went
The great significance of this event is that, no matter how much
bluster a political or military leadership presents, and no matter
how obediently the soldiers respond to such posturing, once it's
clear that the game is up, the pretence amongst the soldiers
evaporates. If an army learns in advance that an end is inevitable
and has had the requisite time to think over the situation in
advance, it simply awaits the tipping point.
When that occurs, they're less likely to
make a panicked, futile last stand. The foreknowledge informs them
to be prepared in advance to simply walk away.
So, to return to The Great Race by many governments today, what we
are witnessing is a last-ditch effort to squeeze as much wealth as
possible from their citizens before those governments run out of gas
or, in this instance, run out of credit.
At some point in the not-so-distant future,
creditors will dump
treasuries back into the EU and US markets
stock and bond markets
currencies will crash
debt defaults will take place
banks that are seemingly too big
to fail will fail and there will be no fund from which to
bail them out
What we can expect will be an increasingly desperate attempt to rob
people of their personal wealth.
The situation will ramp up to a
draconian level. Then, quite suddenly, the crisis will be upon us.
The dreaded tanks will run out of fuel - the governments will lose
the economic power to continue their advance against economic
The goal for each individual who values his freedom might then be to
avoid being the low-hanging fruit until that day, so that he might
come out intact on the other side.
Casey Research founder Doug Casey has
been warning of a currency collapse. He believes a collapse of major
currencies could wipe out trillions of dollars in wealth, including
It's going to be much more severe,
different, and longer-lasting than what we saw in 2008 and
2009… The U.S. created trillions of dollars to fight the
crisis of 2008 and 2009.
Most of those dollars are still
sitting in the banking system and aren't in the economy. Some
have found their way into the stock markets and the bond
markets, creating a stock bubble and a bond super-bubble.
The higher stocks and bonds go, the
harder they're going to fall.
Unlike most people, Doug Casey has actually lived through a
currency crisis. He was in Argentina when its currency collapsed
in 2001 during the largest sovereign debt default ever.
By making smart investments, he even
managed to make a large gain on his money in the aftermath of