Spain Limits Cash Transactions to its Citizens

By LUIS MIRANDA | THE REAL AGENDA | JUNE 27, 2012

The country of Spain, now completely under the control of Brussels central bankers, has decided to limit the amounts of money people can take out of cash machines and other transactions. The measure comes just after the government led by Mariano Rajoy decided to officially request a financial rescue of its banking system, a plan under which the country surrenders complete control of its sovereignty to the European central bankers who will funnel the money to Spain’s banks in an orderly fashion. This decision, said Rajoy, comes as the nation of Spain seeks to make the right decisions to ‘grow and progress’ in the middle of Europe’s financial collapse.

The government of Spain has already implemented several other measures to secure monies from the taxpayers such as the limits imposed on the amount people can withdraw from their bank accounts, reductions in the salaries paid to those who work for the government, cuts in the payments of pension funds, an increase in the retirement age, and other obligations imposed on Spain as conditions to receive the money with which its banks will be ‘rescued’. The main limitation to people who work with banks in Spain is the prohibition to carry out commercial activities that go over 2500 euros. This new limitation applies to both businesses and individuals.

According to FOREX News, the new rules imposed by the government in Brussels, also contemplate fines for people or businesses who do not report the existence of bank accounts outside Spain. The fine will have a minimum of 10,000 euros and people will be accused of trying to evade the payment of taxes over those funds. This is seen as another attempt from the bankers and the government of Spain to track down every single penny that individuals and businesses possess so that it can be easily taken away should they not comply with upcoming rules dictated by the European bankers. Spanish people had already begun moving their money to accounts outside the country in anticipation to their government’s intent to confiscate it in the future. Countries like the United States have also admitted publicly that the federal government will go after people who have moved their assets to other countries to avoid paying taxes on those earnings.

“Keeping an eye on foreign accounts is common in other countries, but comes at a time when many expats living in Spain are moving money out of the country,” explains FOREX News. It remains to see of this new rule will be applied equally to all Spanish people and foreigners who live in Spain, or if it will be selectively enforced as it has happened in the past. Under that selective application, only people in the middle and upper middle classes are actually persecuted and penalized for trying to maintain their hard earned money away from the hands of the governments, while the rich class, those who create this type of rules, are allowed to keep 100 percent of their cash.

An interesting aspect to point out is how did the government of Spain, or in this case the government of Brussels, come up with the 2500 euros figure? The intention of the limitation is clear right now, although that is not the case for the figure itself. Why not 1000 euro or 10,000 euro? A wild guess could be that the richest businesses and individuals perform transactions that would most likely violate the limit of 2500 euros, but those individuals or business will most likely get a pass from the government, an exception, such the grip would be tightened on those people or small businesses that exchange money for services or products on a daily basis, not the very rich.

Past decisions taken in various countries, rules such as the limitation in cash transactions, commerce with certain companies or industries and deals with certain nations have been selectively enforced to favor the very reach over those business or individuals who actually need to move amounts of money that are larger than 2500 euros in order to keep their businesses functioning. The official explanation is that governments have limited cash transactions in the past and in the present, in order to avoid the fast flow of capital. However, this would not seem to make sense in an economy where the governments are able to print or electronically create money out of thin air.

As history shows, limitations to cash transactions are usually followed by bans on money withdrawals from bank accounts, which again are only applied to the average citizen who needs his or her money to purchase food or pay for basic services. This scenario was seen in Argentina in 2000, when the measures imposed on that country by the International Monetary Fund (IMF), just as it’s happening today with Spain and Greece, cause the country to collapse into a generalized state of social chaos. Whenever Greece and Spain exit the euro zone along with other nations such as Italy and Portugal — which are waiting in line for their turn — limitations such as the ones announced by Spain and Greek governments will increasingly limit the people’s choice to access their money as well as what to do with it.

It is likely that the ban on all access to bank accounts will not be announced until the banks have closed their doors, just as it happened in Argentina, leaving no room for account holders to withdraw any cash for day to day survival. When will this action take place? It is hard to set a date, but it’s not difficult to see the path that leads towards the moment in time. In fact, there are sequence of logical steps that central bankers will follow which will allow anyone paying attention to foresee the moment when banks will close their doors to the public in what is usually called a bank holiday.

And so what will come out of a bank holiday? That is also uncertain, although if one goes by what history shows, most likely the value of the currency held in savings, checking or other kinds of accounts will be exponentially devalued and whatever remains of those funds will only be returned to its lawful owners in the form of an account with very limited access and in a different currency than the one it was originally saved. This in turn will strongly reduce the purchasing power of individuals who will see their very survival in danger.

With no jobs and no funds to buy food, water or to pay for basic services, the outcome will repeat itself once again: riots on the streets, with police slamming people on their heads while others rob and attack fellow slaves trying to get their hands on food and whatever else they can get to survive through the final collapse. If you don’t believe it, ask an Argentinian.