Wednesday, June 29, 2011

New Note From Jonny Bahrain, Gold Confiscation

Update!  One of my readers liked an important piece of Jonny's analysis (via email):


Damn, I wish I could figure out how to post on your site.....

I think he's right about FEMA.  This organization has been built up
for a reason.  I'm so glad I'm not a US resident.  I hope I can manage
to stay that way.

Bright and alert reader "Jonny Bahrain" critiques some of FOFOA's analysis of confiscation of gold.

The only comment I have for the moment on the below is that confiscation would likely STOP RIGHT AWAY after 20 - 50 cops / IRS thugs were shot by homeowners...

I will study Jonny's analysis more and come back later.

Jonny's note:

After reading FOFOA’s Confiscation Anatomy Parts 1 & 2, I agree that in the long run a global exchange (with each country’s currency valued relative to the price of gold in that country) is a likely result of the USD losing its global reserve currency status. But whilst I find FOFOA’s reasoning persuasive I think they ignore the increasing fascist tendencies of the USG, the USG’s geo-strategic achievements to date and the effects of civil unrest that would likely occur from a collapse in the USD.

I can certainly think of motive for the USG wanting to confiscate private gold: namely the USG has reportedly loaned out most of its gold to banks (in order for them to sell and suppress the price) and only has IOU’s which it still books as physical bullion, so who knows how low its real reserves are. Also I read an interesting comment somewhere on the FOFOA blog that when all the bad bank debts have been transferred onto sovereign balance sheets then governments will allow Freegold to wipe out said debts: gold confiscation could be enacted to allow the USG to write off the national debt.

Anyway, I will now list FOFOA’s main arguments as headings and then give my comments under them:

Lots of privately held gold was sent out of the US before the previously announced 1933 confiscation deadline
The USG will not give a deadline or any indication any form of controls are about to be implemented, regardless if they wanted to confiscate gold or not. Capital/currency controls would be implemented suddenly and without warning in the name of stabilizing the country. If the USG was to introduce capital controls to prevent a further sudden decline in the USD why would they not include PM controls at the same time as well as restrictions on bank transfers and foreign exchange transfers? In fact, FOFOA states: “And third, it made gold ownership illegal in the US, a capital control move to prevent capital flow out of paper and into physical gold on the open market.” (My emphasis added)

The USG is unlikely to go after private investors; rather they would go after soft targets such as bullion banks
I agree it would be easier for the government to go after bullion banks but I see no reason why they would stop there. Thanks to recent international money laundering legislation there are much better records kept of people who have bought bullion – I know in the UK when you buy PM’s from bullion banks you have to send copies of your passport. Safe deposit boxes also require similar records to be kept. It would not be too difficult for the government to find out who bought PM’s on internet sites such as eBay.

FOFOA’s claim that just because ‘jackboots’ have never seized gold from people in the past means it  will never happen doesn’t really justify it enough in my view. The USG has become considerably more fascist since 1933 and its powers much more absolute. I notice FOFOA does not refer to any legislation that would prevent the USG from interfering with PM markets or attempt to justify the rights of the private citizen have strengthened since 1933. The answer for this is obvious: countless constitutional rights have been/continue to be revoked, especially following the introduction of the Patriot Act.

Confiscation would cause civil unrest
If the USD collapses and widespread civil unrest occur the USG would not have to worry about causing this after introducing PM confiscation laws/controls because it would have already happened prior!

At this point, I suggest anyone who does not know about Executive Orders and FEMA (Federal Emergency Management Agency) should look them up as it would their job to deal with civil unrest once a State has declared a state of emergency and requested Federal assistance.

“FEMA was created in a series of Executive Orders. A Presidential Executive Order, whether Constitutional or not, becomes law simply by its publication in the Federal Registry. Congress is by-passed … Originally conceived in the Richard Nixon Administration, it was refined by President Jimmy Carter and given teeth in the Ronald Reagan and George Bush Administrations … This government organization has more power than the President of the United States or Congress: it has the power to suspend laws, move entire populations, arrest and detain citizens without a warrant and hold them without trial, it can seize property, food supplies, transportation systems, and can suspend the Constitution… FEMA has been given responsibility for many new disasters including (…) urban riots …. FEMA has even been given control of the State Defense Forces, a rag-tag, often considered neo-Nazi, civilian army that will substitute for the National Guard, if the Guard is called to duty overseas … under the FEMA plan there is no contingency by which Constitutional power is restored.

So if FEMA take charge to quell civil unrest the US could be locked down tighter than a Supermax prison and there is NOTHING anyone could do about it! I find Robert Mix’s parallel with the Nazis most poignant because the potential for pure dictatorial rule is apparent.

PM controls would ostracize the US and cause the USD to be shunned by the new global currency exchange
I agree if the USG implemented PM controls the new global exchange system would ostracize the USD, which would normally be associated with a drop in its purchasing power and the inability to use the currency on international markets. But the US has long been positioning its military in key geo-strategic areas and energy rich regions across the world. It also has numerous governments in these areas which rely on the USG’s patronage for their survival and who receive favourable trade links with the US. Governments that wish to avoid being toppled in CIA sponsored coups will likely continue to trade their natural resources with the USG regardless of the currency being shunned. For this reason I think the potential isolation of the US could be ameliorated by its strategic ties and alliances.

The USG will expose itself to claims for gold by BIS and other CB’s if it confiscated gold at a set USD value, or would face thousands of internal law suits if it confiscated gold without a dollar backing
I do not know enough about the central clearing function of the BIS and hence cannot argue against the remark that the BIS and CB’s will demand dollars for gold at prices from when the dollar was convertible to gold. My only response is that the USG would almost certainly be aware of this and would take it into account before choosing any course of action. I would also question how successful internal law suits would be given the USG’s increasing willingness to override the constitution and the rule of law, especially if FEMA take control of the country.

In closing, I am not saying the USG will definitely interfere with PM markets and I agree USG agents going door-to-door seizing people’s gold coins sounds like something out of a Hollywood movie; I only aim to demonstrate the USG has a greater capability to this today than in 1933, particularly given the likelihood of widespread civil unrest occurring following a USD collapse. Having said that I do not think you can totally rule out the possibility for PM controls/confiscation being implemented on the grounds of ‘they just can’t do that’ or ‘it didn’t work before’ or naively thinking the USG will interfere without thinking things through thoroughly. In short I believe the USG in 2011 is a much stronger and more sinister beast than it was in 1933. 


  1. i feel it would be a worthless cause to go around to the millions of homes only to find a minute fraction of them containing a small bullion position. If it got down to civil unrest, I'm sure the gov/military would have plenty of other things on their hands than raiding the 'shrimps' houses.

    It more realistically seems that those with unallocated gold or paper gold will in a way have their wealth confiscated as they will never be able to receive physical from those.

    I also think FOFOA's analysis of the extreme taxation on mining in a post Freegold environment to be much easier to enforce.

    Also, throughout many of his articles FOFOA describes how part of the Freegold system entails that the public need to have gold for it to work, and that gov's would want us to have gold.

  2. "I only aim to demonstrate the USG has a greater capability to this today than in 1933, particularly given the likelihood of widespread civil unrest occurring following a USD collapse."

    My thoughts exactly... How hard is it to get the bullion dealers' lists of customers and details? It's for the Patriot Act and "Poof!" a warrant. Easy pickings.

  3. Nick: I totally agree USG agents randomly trawling neighbourhoods would be pointless. But I cannot see them going about things in such a random manner. If something like this were to be implemented it would likely be a much more targeted campaign with lists of people who have been known to have bought bullion.

    It is important to understand the effect a complete societal breakdown will have on people's mental state. For a start individuals will tend to be much more compliant with authority as they look to it for assurance. Also people in such a fragile and vulnerable mindset are much more susceptible to irrational ways of thinking as they look for someone to blame for their current predicament. Friends, neighbours and even family members can turn on each other - look at what happened with the Jews in Nazi Germany. The USG only has to get its PR machine going and evoke that good old American patriotism: "everyone needs to come together and help recapitalize the country; those that hoard PM's are delaying the country getting going again and are prolonging people's suffering. They are traitors of the American people." I think you would be surprised by how many people would volunteer information, perhaps in return for an extra hour of electricity or another loaf of bread.

    Personally I think it would be a prudent move to let everyone you know think you have sold your PM's. Keep in mind the US WW2 adage: LOOSE LIPS SINK SHIPS.

    Robert: if Executive Orders were to be implemented what's to say you will be allowed to keep your firearms? That is one of the first things I would outlaw if I was FEMA. And once homeowners hear how other citizens' entire houses were peppered with bullets (which could even be a staged Psy-Op with fake video footage being circulated), I think most would hand over their weapons or gold or anything else without much resistance.


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