Asset Protection BLOG - Mark Nestmann

International Man Interviews Mark Nestmann

I’ve long been an admirer of Doug Casey, author of The International Man and Crisis Investing for the Nineties.  Doug’s unapologetic libertarian philosophy and his refusal to bow to conventional thinking has led me to read just about everything he’s written over the past two decades.

Doug’s well into his sixties now, but he has a lot of much younger men and women following in his footsteps.  One of the savviest is Simon Black, who publishes a blog called International Man. It’s a little hard to describe International Man, but perhaps the simplest characterization is that it combines a travelogue and investment recommendations overlain with an unabashed capitalist outlook.

In any event, I was pleased when Simon’s partner Matt, who happens to be a client of mine, contacted me and asked if he could interview me for Without Borders.  We conducted the interview earlier this week and you can listen to it free by clicking here—--scroll down for the interview. 

Matt’s a pretty bright guy and caught me a little off-guard with some of his questions.  I think you’ll enjoy listening to our give and take.  Again, here’s the link.

Forfeiture 101: Intro to Asset Forfeiture Legal Defense

One of the causes I feel most passionate about is reform of America's notoriously unfair forfeiture laws, under which people guilty of no crime whatsoever can lose their property.  

Reform isn't likely anytime soon, particularly given the funding crisis facing the U.S. government. And that makes it especially important to understand the legal tools available to fight these unjust laws.

As the Treasurer of the forfeiture reform organization Forfeiture Endangers American Rights (F.E.A.R.), I feel especially proud of this organization's latest contribution to teach attorneys and forfeiture victims about the legal tools they have available to fight back against these monstrous laws: Forfeiture 101.

Forfeiture 101 is the first in a series of F.E.A.R.'s clear, concise and informative DVD courses on substantive forfeiture law and procedure. It is a course that qualifies licensed attorneys for continuing legal education credit while educating them on the intricacies of asset forfeiture law. 

Lawyers taking on their first forfeiture case find that law school never prepared them for the maze of complex proceedings that adhere to Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions.  To add even more complexity to the mix, some forfeiture proceedings are subject to the reforms of the Civil Asset Forfeiture Reform Act of 2000.  But others aren't.

If you're a defense attorney, Forfeiture 101 will help you expand your practice to meet the needs of the vastly increasing number of victims of the government's ever-broadening overreach for assets and money judgments.

Forfeiture victims will find this DVD to be a  godsend – especially those forced to represent themselves because they can't afford counsel.

This entertaining and informative two-hour DVD serves as a crash (or refresher) course in forfeiture law, as well as an interactive computer research tool.  Pop the DVD in your computer and click the menu for the chapter you need to research. As you listen to a narrative overview of the issues, you can pause at any time and note the case and statute citations that appear on the screen accompanying the narration.

Here's a rundown of the contents of Forfeiture 101:

• Chapter 1: Dangerous Misconceptions About Forfeiture
• Chapter 2: Historical Origins of Forfeiture's Quirky Procedures
• Chapter 3: The Ever-Growing Number of Forfeiture Laws
• Chapter 4: Defenses Against Forfeiture
• Chapter 5: Which Track: Civil or Criminal Forfeiture?
• Chapter 6: Civil Forfeiture: A Torturous, Treacherous Trail
• Chapter 7: A Fork in the Path:  CAFRA or Customs Procedures?
• Chapter 8: An Alternate Route: Criminal Forfeiture

To learn more about Forfeiture 101, follow this link: http://www.fear.org/whatsnew.shtml.

You can purchase Forfeiture 101 before July 4 for the special price of only $100 plus $8 shipping! Or save even more with FEAR's special introductory forfeiture package deal: Forfeiture 101 DVD with the F.E.A.R. Asset Forfeiture Defense Manual, plus a one-year subscription to F.E.A.R.'s bank of legal briefings ("Brief Bank") for only $300 plus $12 shipping.

Even if you don't purchase Forfeiture 101, be sure to check out F.E.A.R.'s informative Web site at http://www.fear.org.  It's a great source of hard-to-find information on civil forfeiture--and a wonderful antidote to the avalanche of pro-forfeiture propaganda on the Internet.

Get Ready for Exchange Controls! [Part II]

In my most recent blog entry, I described how exchange controls—laws restricting private ownership of, or transactions in, foreign currencies and gold—are spreading from third world countries to the industrialized world.  Since exchange controls proliferate in economic crises, they may be coming to your country. 

How do governments impose foreign exchange controls?  In most cases, it is a step-by-step process.  The first step is already complete, in the form of laws in effect in every country.  These laws prohibit citizens (or anyone else) from exchanging their national currency for a fixed quantity of gold through the national Treasury or central. 

The second step is to impose rigorous reporting requirements for moving cash into and out of the country, and for foreign accounts.  These laws are also in effect in most countries, purportedly to fight "money laundering." 

The third step is to expand the reporting requirements to any transfer of assets in or out of the country, not just in cash or cash equivalents.  Many countries have these laws in effect as well.  In the United States, Congress has authorized the U.S. Treasury to study this initiative.

Once these reporting requirements are in place, the government can impose more stringent controls very quickly.  In the United States, President Obama can impose exchange controls with the stroke of a pen, via an executive order.  The enabling legislation is already in place, via the International Economic Emergency Powers Act (IEEPA). 

First, President Obama would issue a "declaration of economic emergency" under the IEEPA.  He would then issue an executive order giving the U.S. Treasury control over all movements of money into or out of the United States.  Transfers deemed vital to the U.S economy would likely be exempted from this requirement.  However, any person or company making "non-vital" transfers would have to route them through the U.S. Treasury.  After going through whatever approval process the executive order describes, the Treasury would convert your U.S. dollars to whatever currency you desire.  It would then send the payment along to its ultimate destination.  Funds coming to you from abroad would be subject to the same process. 

Requiring Treasury approval of many inbound or outbound financial transfers would be enormously disruptive to international commerce (not to mention financial privacy).  But the most important aspect of foreign exchange controls is that the Treasury would convert dollars and foreign currencies at an official, fixed rate.  That rate may differ markedly from the market rate.

For instance, in Venezuela, the central bank trades U.S. dollars for "new" Venezuelan bolivars at the rate of 2.15 per dollar.  (The "old" bolivar was valued at 21,500 per dollar, so the government simply lopped three zeroes off.  This is something governments that impose foreign exchange controls to fight inflation do frequently.)  But on the black market, a dollar buys five or more bolivars.  The Venezuelan government forces its citizens to exchange foreign currencies for bolivars at less than half the market rate, or risk fines and imprisonment. 

Exchange controls always end up causing more problems than they solve.  The most serious problem is that the controls permit the government to continue irresponsible financial practices far longer than they would otherwise be able to do if not constrained by market forces.  In addition, graft and corruption always accompany foreign exchange controls.  Treasury officials and those with political connections always commit the most serious violations. 

Nonetheless, under his mandate for "change," President Obama may well decide to strengthen exchange controls further if the original ones aren't effective in preventing capital flight.  This initiative could take forms such as:

• Requiring that U.S. persons close all foreign bank accounts and repatriate the assets to the United States at the official exchange rate, unless the first apply for and receive a license to hold the account
• Prohibiting the purchase or sale of gold, and requiring the sale to the Treasury of privately-held gold at the official exchange rate
• Formally declaring a two-tiered currency conversion rate: a market rate for foreign purchasers of U.S. Treasury debt (perhaps backed by forcibly sold gold) and a below-market rate for U.S. residents.

Whatever the form foreign exchange controls take, you need to prepare for them.  I'll describe some steps you can take to protect yourself in my next blog entry.

Copyright © 2009 by Mark Nestmann

Feds Seize Innocent Creditors' Assets in $380 Million Swindle

Yes, New York attorney Marc Dreier's alleged US$380 fraud (details here) is chump change compared with Bernie Madoff's US$50 billion Ponzi Scheme.  But it's still a lot of money.  And even more noteworthy is how federal prosecutors have trampled on the rights of Dreier's clients and other unsecured creditors of his firm.

Authorities investigating the Dreier affair have already seized most of his property and frozen his personal and corporate accounts.  While a judge may award a portion of the proceeds of these sales to unsecured creditors (such as clients awaiting payments from Dreier's escrow account), they're not first in line.  And they may have to wait many years to even make a claim for their money.

Under U.S. criminal forfeiture law, title to forfeitable property vests to the government at the time of a defendant's criminal act.  The government—not unsecured creditors—therefore has first dibs on the Dreier's assets.  As presumably innocent third parties, the unsecured creditors can petition the court for recovery of their assets.  However, under the procedural rules for criminal forfeiture, they can do so only after Dreier's trial.  That could be many years away.

Naturally, Dreier's unsecured creditors aren't happy about this.  They've petitioned a federal bankruptcy judge for permission to hire attorneys specializing in criminal forfeiture.  Presumably, they'll try to persuade the judge in Dreier's criminal case to apply bankruptcy law, rather than criminal forfeiture law, when divvying up the seized assets.  But there's no guarantee they'll prevail. 

This isn't a new problem.  Back in 1992, federal prosecutors seized more than US$400 million in assets belonging to John McNamara, a wealthy entrepreneur in New York.  McNamara's creditors—more than 6,000 in all—were then confronted with unpaid loans and a debtor whose assets had been seized by the government. 

It's highly unlikely that McNamara's creditors assessed the likelihood of the government seizing his assets when they granted him credit.  They also assumed—wrongly—that they could use well-established bankruptcy procedures to reclaim their assets if McNamara defaulted on his obligations.   They had no idea that forfeiture laws might trump their claims.

The bottom line: if someone owes you money, just hope they're never arrested for a crime punishable by criminal forfeiture (more than 400 federal statutes and thousands of state statutes).  If they are, you may not be able to make a claim for what you're owed for years—and your interests may well take a back seat to the government's interests. 

Copyright © 2009 by Mark Nestmann

Why Wasn’t Elliot Spitzer Prosecuted for Money Laundering?

About a year ago, former New York governor Elliot Spitzer made a series of cash withdrawals from his own bank account.  The total amount he withdrew came to more than US$15,000. 

Spitzer used the cash to pay a company called Emperors Club VIP to procure high-priced prostitutes.  After Spitzer’s bank identified the withdrawals as “suspicious transactions,” the IRS began an investigation, culminating in Spitzer’s resignation as governor. 

It’s richly ironic that the so-called “Sheriff of Wall Street’s” political career ended due to a series of liaisons with prostitutes.  But the aftermath of the investigation is also worth examining.

On November 6, Southern District of New York U.S. Attorney Michael J. Garcia announced that his office had no plans to prosecute Spitzer for “any offense” connected to patronizing prostitutes.  Garcia claimed there was “insufficient evidence to bring changes against Spitzer for any offense related to the withdrawal of funds for, and his payments to, the Emperors Club VIP."

Garcia supported his decision by stating that his office had a longstanding practice of not charging individuals for soliciting prostitutes unless minors were involved.  But he said nothing about why his office declined to prosecute Spitzer for a much more serious charge: money laundering. 

An obscure law called the “Bank Secrecy Act” requires that banks report the withdrawal of more than US$10,000 to the U.S. Treasury.  The form they must file is called a "Currency Transaction Report" or CTR.

Spitzer made obvious efforts to avoid having his bank file CTRs for the cash withdrawals he made.  And that could constitute a very serious crime called structuring—a form of money laundering. 

Structuring is the act of making an effort to avoid this filing requirement by breaking up a series of related cash transactions into smaller amounts.  If prosecutors had brought structuring charges against Spitzer, he could have faced a five-year prison sentence and a US$250,000 fine.  He could also have lost every dime in his bank account, under the law's severe civil forfeiture sanctions.  And he faced possible loss of his law license if indicted and convicted.

To be fair, federal prosecutors don’t use the structuring statute very much, and there is considerable debate as to whether Spitzer’s pattern of cash withdrawals met the legal threshold for the offense.  Perhaps Garcia didn’t indict Spitzer for structuring because he felt he had a weak—or non-existent—case. 

However, just because Spitzer escaped prosecution for structuring doesn’t mean you will if you engage in similar conduct.  Merely violating the law is sufficient to be imprisoned.  You need not be aware that structuring is specifically a crime.  Nor does it matter if every dime you structure is legally generated money that you paid tax on.  Merely seeking financial privacy is a crime!

To enforce the structuring and other money laundering laws, banks have set up sophisticated surveillance mechanisms.  This surveillance net caught Spitzer red-handed. 

The bottom line: If you’re depositing or withdrawing more than US$10,000 in cash from your domestic bank account, let the bank know what you’re doing and inform them to kindly submit whatever “paperwork” is required.  Don’t try to break down transactions so that no single transaction exceeds US$10,000.  You may not be politically connected enough to avoid prosecution and forfeiture if you fail to heed this advice.

Copyright © 2008 by Mark Nestmann

Congress Wants Your Retirement Plan to Bail Out Uncle Sam

Bailing out Wall Street, not to mention paying for promised benefits to Social Security and Medicare recipients isn’t cheap.  Neither is fighting two wars on the other side of the globe.  Nor is national health insurance, one of the cornerstones of President-elect Barack Obama’s campaign.

How can the government pay for all these promises when deficits are at an all-time high, and in the midst of the worst economic downturn since the 1930s?  One pool of capital is an increasingly tempting target to congressional do-gooders: your retirement plan.

Even after the massive downward moves in markets worldwide in the last few months, Americans have more than US$10 trillion in IRAs, 401Ks, and other types of private retirement plans.  That’s a lot of dough.  And, Congress is already working on a plan to tap those funds, in the guise of “protecting” your retirement plan from greedy capitalists.

Last month, the House Education and Labor Committee heard testimony from Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York.  In the name of fairness, Ghilarducci wants to eliminate the preferential tax treatment of the popular retirement plans.  Instead, she proposes that the government create "Guaranteed Retirement Accounts" for all workers. 

Each year, the government would deposit US$600 (indexed for inflation) into your GRA.  You would also be responsible for depositing 5% of your paycheck into it.  The government would “guarantee” a 3% tax-deferred return on these assets. 

If Ghilarducci gets her way, you could keep your current IRA, 401K, etc.  However, the gains would no longer be tax-deferred.  To give workers an incentive to convert existing retirement plans to GARs, she suggests letting workers trade in their retirement plan assets for GARs, with no tax liability. 

If this plan becomes a reality—and it may, as it has influential backers in both major parties—do you actually think that Congress will be able to resist the temptation to tap GARs for its own purposes?  That’s exactly what’s happened to the non-existent Social Security trust fund.  In reality, there is no trust fund—only an obligation backed up by IOUs to pay off tens of millions of retirees in the years ahead. 

Instead, GARs will become yet another piggy bank—ATM may be a better analogy—for Congress.  Your retirement funds might be spent in reconstructing Iraq, bailing out U.S. car manufacturers, or on any other purpose that congressional solons find politically expedient.

Bad as it is, this proposal is not the end of private retirement accounts.  Nor is there any suggestion that Congress emulate the example of Argentina, which last month nationalized US$30 billion worth of private pensions.  However, in the next few months, you may need to make a choice: begin paying tax on the gains in your existing retirement plan, or convey the funds to the Feds for a promise of 3% annual tax-deferred gains. 

I know what choice I’ll make—and it won’t be for another government “guarantee.”

Copyright © 2008 by Mark Nestmann

Can the Federal Government Literally Seize the Shirt off Your Back?

I'm a long-time critic of state and federal civil forfeiture laws.  These laws, supposedly derived from an obscure passage in the Bible, permit police to seize your property without ever charging you with a crime, much less convicting you of one.

Based on the flimsiest imaginable evidence (perhaps provided by a "confidential informant"), police can seize your bank accounts, security accounts, your vehicle—even your home—if it's allegedly purchased with, connected to or "facilitates" any one of more than 300 crimes.

And now, according to prosecutors, they can literally seize the shirt off your back.

Last month, federal prosecutors in California authorities filed an indictment charging 79 members of the Mongols, a West Coast motorcycle gang, with various racketeering, drug and money laundering offenses.  As is typical in organized crime cases, a key part of the indictment is a request for forfeiture of supposedly criminally derived assets. 

Among other assets the Feds want to seize is the Mongols’ trademark, which portrays a pony-tailed warrior with a handlebar mustache wearing sunglasses. According to Thomas O’Brien, the U.S. Attorney prosecuting the case, “If any law enforcement officer sees a Mongol wearing his patch, he will be authorized to stop that gang member and literally take the jacket right off his back.”

I can certainly appreciate O’Brien’s desire to shut down what the indictment describes as a tightly organized group routinely engaging in murder, torture, drug trafficking and other offenses.  But if the government can seize any article of clothing containing a Mongol patch, why can’t it then ban—and subsequently seize—other items containing unpopular symbols? 

I can think of numerous items that many people find objectionable: Confederate flags, Nazi swastikas, or robes worn by the KKK, among others.  Could the government ban ownership of these items based on an indictment of certain people who display them?  Or if the government decided to seize a popular retail brand like The Gap, could police fan out and start seizing teenagers’ baseball caps and T-shirts? Under O’Brien’s logic, the answer would be yes.

And there’s an additional problem: the Mongols don’t even own their trademark! Back in April 2008, the Mongols transferred its trademark to Shotgun Productions, LLC, a company that isn't even named in the indictment.

Until federal prosecutors brought this case, the government at least had to allege that your property was used for an illegal purpose. But in Thomas O’Brien’s world, you can lose your property simply because it has the wrong logo on it.

Civil forfeiture is one of the most insidious legal procedures ever devised by mankind.  I hope that the ramifications of this case give Congress an incentive to enact significant reforms, if not abolish it altogether.  It’s about time!

Copyright © 2008 by Mark Nestmann

How to Survive the Coming Economic Emergency [Part III]

In my last two blog entries, I described some of the powers the U.S. President has if he declares an “economic emergency.”  I also described one scenario that could lead to foreign exchange controls or even outright confiscation of wealth: a death spiral in the value of the U.S. dollar.

If you have property that you believe may be at risk for some future expansion of emergency or wartime controls, you still may legally take action to protect it.  Here are some ideas:

• Transfer funds outside the United States and outside the U.S. dollar.  It's still possible to legally transfer funds from the United States, but it may not be if the U.S. imposes foreign exchange controls. This could occur in the event of another terrorist attack on the United States, or if the U.S. dollar falls sharply due to a terrorist incident or financial panic.  That possibility may seem remote at the moment, because the U.S. dollar has appreciated sharply in the last few weeks in response to the global economic crisis.  But this gives U.S. investors a rare opportunity to invest offshore and convert their dollars to foreign currencies, or to gold, at the most attractive exchange rates in more than a year. 
• Use offshore structures to hold non-U.S. investments.  This strategy may not only provide protection against domestic judgments, but may also provide a legal means to avoid future foreign exchange controls.
• Hold investments that aren't subject to U.S. jurisdiction.  The most vulnerable investments are those located within the United States.  But as this report documents, foreign investments may also be vulnerable, particularly those denominated in U.S. dollars.  The least vulnerable foreign investments are foreign real estate and gold, silver or collectibles held outside the United States.  Certain contractual relationships, such as insurance contracts and trusts, may also be configured to avoid U.S. jurisdiction.
• Avoid electronic transactions in U.S. dollars through U.S. clearing networks. Most electronic transfers of U.S. dollars clear through a U.S. clearing bank and ultimately the Federal Reserve.  U.S. courts have ruled that funds involved in such transactions are subject to U.S. jurisdiction and thus to possible confiscation.  A growing number of countries have set up dollar clearing facilities to clear their own domestic U.S. dollar electronic transactions. Such foreign clearing networks are at far less risk from the U.S. legal system than U.S. clearing networks.
• If you’re a foreign investor with U.S. interests, assess your risk to U.S. emergency or war controls. Investors from any country accused of "sympathizing with" or "harboring" terrorists are at particular risk.  So are investors in countries or financial institutions through which terrorists have been accused of operating bank and trust accounts.
• U.S. persons not wishing to live under emergency controls are understandably interested in relocating to lower profile jurisdictions.  Many countries welcome affluent retirees or other financially self-sufficient persons.

The prospect of emergency financial controls may appear to be remote.  But as I described in Part I of this series, they’ve been imposed many times in U.S. history.  And, as this financial crisis deepens, they may be imposed once again.

Copyright © 2008 by Mark Nestmann

How to Survive the Coming Economic Emergency [Part II]

In my last blog entry, I described the awesome power of the U.S. President to under an “economic emergency.”  That authority includes, among other measures, the power to restrict or even prohibit the transfer of dollars outside the United States.

One possible scenario for emergency economic controls would be a run on the U.S. dollar. That may not seem likely given that the dollar has sharply appreciated in recent months.  However, that appreciation may not continue given the enormous sums of money the U.S. government has spent trying to deal with the ongoing and deepening financial crisis: over $1 trillion since the beginning of 2008, and increasing by hundreds of billions of dollars each month. 

At the end of 2007, the world's central banks held an estimated US$3.4 trillion in U.S. dollar reserves.  China holds the largest share—about US$1 trillion—followed by Japan with US$700 billion or so. 

In today's digital marketplace, dollar owners don’t hold them in cash, but in electronic form; blips on a computer screen.  Traders can buy (and sell) dollars by the billions at the click of a mouse.

As long as the value of the dollar is relatively stable, central banks are content holding trillions of them.  They earn interest on them by using them to purchase dollar-denominated assets such as U.S. Treasury bills. However, one or more of the central banks holding a few hundred billion dollars—or more—could suddenly decide to convert them to gold, or to other currencies.  Or a hedge fund manager could use options and derivatives to make a massive bet against the dollar, hoping to profit on the dollar's collapse. 

Whichever way it begins, a dollar selling panic would be expressed in many different ways.  A dollar sell-off would devastate foreign investors with a future claim denominated in dollars.  The value of dollar-denominated bonds and other financial claims would plummet as investors rush for the exits. 

A dollar panic would also seriously restrict all dollar-denominated international trade and commerce.  For instance, foreign persons owning property scheduled for future delivery to the United States (e.g., oil supertankers with cargos worth US$200 million or more) would likely refuse to accept payment in dollars. 

Faced with the worst financial crisis in its 200-year history, the U.S. government would certainly impose emergency financial controls.  Indeed, the public will demand that it do so.  And President Bush (or his successor) has many tools at his disposal to deal with such a crisis.  Besides those I mentioned in Part I, they include:

• Foreign exchange controls restricting the ability to convert U.S. dollars to other currencies
• Restriction on foreign investors seeking to repatriate dollar profits or investments to their home countries
• Restrictions on foreign investment as U.S. property become much less expensive in foreign currency terms.  (The controversy over the proposed purchase by a Dubai company of operating rights for several U.S. ports will seem mild by comparison).
• Restrictions on international travel
• Rationing of imported goods, especially gasoline and oi

This isn't a prediction, and I hope this scenario never develops.  But given the turmoil on the international financial markets, anything is possible. 

How can you adapt your portfolio to the ongoing economic emergency, and the prospect of a dollar selling panic?  My next installment will provide several suggestions you can put into place immediately. 

Copyright © 2008 by Mark Nestmann

How to Survive the Coming Economic Emergency [Part I]

As the global economy implodes, governments throughout the world have responded.  So far, that response hasn’t impressed global investors.  Stock markets are in free-fall, major banks collapse daily, and even creditworthy consumers and companies find it difficult to borrow money. 

In the United States, Congress, the Securities & Exchange Commission, the Treasury Department, and the Federal Reserve Board have imposed various emergency measures intended to shore up the economy.  Congress has approved a $700 billion Wall Street bailout, now enacted into law by President Bush. The SEC has banned short selling of financial stocks.  The Fed has exchanged hundreds of billions of dollars of banks’ distressed mortgage debt in for Treasury bills. 

However, we’ve only seen the tip of the iceberg when it comes to measures the government can impose to deal with the economic conditions we now face.  Today, without further legislation, the President can at the stroke of a pen declare a “state of national economic emergency” of potentially unlimited duration.  Once he does so, under existing law and precedent, he may:

• Impose a national banking "holiday" closing all U.S. banks or restrict and ration cash withdrawals and the cashing of checks or drafts.  President Franklin Roosevelt used this authority in 1933 to closet the U.S. banking system after a run of bank failures.
• Shut down all stock and commodity exchanges.  President Wilson invoked this authority in 1914 to shut down U.S. financial markets for four months.
• Impose punitive taxes on inbound or outbound foreign investments.  President Kennedy invoked this authority in 1962 to shrink U.S. capital deficits and support the U.S. dollar.
• Investigate, regulate, or prohibit the importing, exporting or holding of currency, securities or precious metals.  President Franklin Roosevelt used this authority in 1933 to order the sale of all privately held gold in the United States to the federal government.  President Nixon invoked similar authority in 1972 to end the ability of foreign central banks to exchange U.S. dollars for gold.

With few exceptions, the U.S. Supreme Court has repeatedly upheld such seemingly unconstitutional takings as a valid exercise of the president's war or emergency authority.

I don’t believe President Bush will assert any or all of these powers unless he feels that he has no choice.  However, one event that he won’t be able to ignore would be if the U.S. dollar were to suddenly and sharply decline in value. 

The dollar has sharply rebounded in value against other currencies in the last few months.  However, foreign central banks hold more than US$3 trillion in U.S. dollars.  You can imagine what might happen to the value of the dollar if these central banks begin selling dollars en masse.

What might set off a dollar panic?  I’ll address that in my next blog entry.

Copyright © 2008 by Mark Nestmann

(Find out more about how the government's emergency financial powers can destroy your hard-earned wealth, and how you can protect yourself.  Click here to learn more.)