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Take the Red Pill

US citizens can find it increasingly hard to open financial accounts overseas. Why...?

UNTIL LAST NIGHT, I hadn't watched The Matrix in several years, writes David Galland, managing director at Casey Research.

And just as the movie makers intended, the film serves as stark metaphor of the world as we know it. Or, put another – more appropriate – way, as we think we know it.

The average US citizen, if asked, would likely describe their life in entirely ordinary terms. They work at such-and-such a in this or that place...and enjoy one activity or another, and so on.

All in all, they enjoy a life of self-directed activity, designed to sustain themselves and their families in a satisfactory way. But if we could actually take a "red pill" of the sort offered by Morpheus in The Matrix – and by so doing awaken to the truth of our situation – I believe a different reality might be revealed.

This thought was reinforced by emails I received from attentive readers after writing another article recently, The Road to Detroit. I urged people to get serious about international diversification, stressing the following remarks about Canada:

"For a US citizen, if you did nothing more than opened up a Canadian bank and brokerage account, you'd be well ahead of the game. While Canada has its own share of problems, the banking system there is in far better shape than here, and as a 'foreigner' you are far less susceptible to government intrusions into your affairs. Oh, and for the record, the Toronto Stock Exchange has outperformed the S&P 500 in eight of the past nine years in nominal terms, and by a considerable margin when you also consider how much stronger the Canadian currency has been compared to the US Dollar in recent years."

As some Casey Research readers pointed out, thanks to energetic efforts by the US government, it is now difficult for an American to open up foreign bank and brokerage accounts in Canada as well as pretty much everywhere else.

That said, based on my personal experience and that of many Americans I know, you can open a Canadian bank account – maybe not with all Canadian banks, but at least two of the majors that I'm aware of. That doesn't mean they will definitely open an account for you, however. Rather, it means that they have no restrictions prohibiting them from doing so.

Whether they open an account for you or not will largely depend on how you present yourself. More specifically, once you have identified a Canadian bank that will open accounts for US citizens (a quick phone call should suffice to find this out), you will have to present yourself in person, along with all the appropriate documentation. The banker will then ask you some questions to better get to know you and your purposes for opening a Canadian account. In my case, the answers were simply that I make investments in Canada and prefer to do my transactions in Canadian Dollars held in a local institution, rather than go through the time, hassle, and costs of currency exchange and cross-border money transfers.

If, on the other hand, you showed up unshaven and muttering about the damn US government, asking if the Canadian bank ever reported any account information to the US authorities, then I can assure you an account would not be opened.

As for a stock brokerage account, that is far more difficult – and in fact, my Canadian accounts are technically domiciled in the US, because of an agreement forced on the Canadians by the US financial authorities. That said, if you are willing to jump over a couple of fairly high hurdles (and preferably with the help of competent professional advice) there are ways to legally get around the restrictions. You could use, for example, a foreign trust or a foreign LLC.

Since there is a fair amount of costs and complexity involved, such measures are typically only for individuals looking to diversify significant assets. But if you do have significant assets, then it is becoming increasingly important to get educated on diversification. Because it's not just Canada. Pretty much every country in the world kowtows to the US government today.

Case in point: I tried to open a personal account in Uruguay, as an experiment, a couple of years ago. Despite being accompanied at each of my prearranged appointments by a well-known Uruguayan, a man of considerable influence at the highest echelon of Uruguayan society, none of the native banks would open an account for me. The only one that would was an Israeli bank with large headquarters in NYC. I passed.

So back to my theme...namely, that once the scales drop from your eyes, an unpleasant reality materializes. In the case of the human inhabitants of The Matrix, it was that they were drugged and raised in pods to serve as a renewable energy source for the machines that had taken over. In the United States and elsewhere, the reality is that while we are not raised in pods – but rather allowed to live our lives as free-range humanoids – the net result is much the same. In the eyes of officialdom, our best and highest purpose as individuals is to provide the fuel that keeps the bloated state operating.

I know that might sound extreme. But if so, then please explain to me why my own government should have even the slightest influence over whether or not I open overseas financial accounts, let alone why it's actively taking steps to pressure international financial institutions not to accept my account?

It is time to wake up...time to take the red pill, so to speak. Don't do anything illegal, and never try to avoid your taxes – the Matrix is almost all-seeing at this point – but if you have significant assets to protect, you need to begin a course of serious study as to your options. Buying property overseas is one approach you can take; another is to research securing another passport and look into off-shore trusts and LLCs. In all cases, keep caveat emptor in mind.

Alternatively, take the blue pill and settle back into your routine, knowing that the odds are good you'll end up broke and discarded once Big Brother's machine is done with you.

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Doug Casey is a world-renowned investor and author, whose book Crisis Investing was #1 on the New York Times bestseller list for 29 consecutive weeks, a record at the time.

He has been a featured guest on hundreds of radio and TV shows, including David Letterman, Merv Griffin, Charlie Rose, Phil Donahue, Regis Philbin, NBC News, and CNN; and has been the topic of numerous features in periodicals such as Time, Forbes, People and the Washington Post.

His firm, Casey Research, LLC., publishes a variety of newsletters and web sites with a combined weekly audience in excess of 200,000, largely high net worth investors with an interest in resource development and international real estate.

See full archive of Doug Casey articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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