FATCA could stand for “For Americans Toiletpaper Costs Alot”.
FATCA is a shoot yourself in the foot legislation. If banks around the world decide they won’t or can’t comply, then it will require that transfers to purchase goods will be subject to a 30% withholding. If I am not mistaken, to buy manufactured goods and resources, foreign companies which use non-compliant FFIs, could be subject to a 30% withholding and US retailers will have to pay 30% (grossed up) just to put products on their shelves, because no foreign company is going to be rich or stupid enough to let the IRS have 30% of their gross sales until income tax time, and there is after all, international competition for products and resources. Walmart, which fills its shelves with barge after barge of goods from East, won’t be cheap if China refuses to comply with FATCA.
Simon Black writes the following about FATCA, in post, The Despicable truth emerges about FATCA:
Here’s the kicker. Foreign banks who thumb their nose at the US government and do not enter into the information sharing agreement face a steep penalty: a 30% tax will be withheld on US-source income that goes to, or through, their bank.
So let’s say XYZ Bank in some offshore jurisdiction doesn’t enter into the agreement. The next time a payment goes from JP Morgan to any account holder at XYZ Bank, JP Morgan will withhold 30% of it.
John Williams of Shadowstats (see video below) predicts that hyperinflation will soon be a problem. He recommends that Americans stock up on basic items that they need, such as canned foods and toilet paper, whose inflating prices will give American’s better nominal return on investment than a bank account. It is true that stocking up on food and other items with real value and rotating their inventory is a means of storing wealth. I bought Toronto public transit tokens at $2.00 each about seven years ago. They are now worth $3 each. Thus, they gained 50% in nominal dollars, and zero % in actual value. No savings account has done that well in the same period. And that’s in Canadian money, which does not function as the world’s soon-to-fail reserve currency. But Williams is only thinking about monetary policy. He does not include the devastating impact that FATCA (For Americans Toiletpaper Costs Alot) will have on prices.
Hat tip: Monty Pelerin