One day after Congress passed a short-term resolution to fund the government, and raise the debt ceiling through the beginning of the year, an interesting new monetary policy was being created by one of the largest banks in the country. On Oct. 17, Chase Manhattan issued letters to their depositors that beginning in November, capital controls would be implemented on their accounts and money, limiting them to total cash transactions of $50,000 per month, and halting wire transfers outside the U.S. for most depositors.
These new policies, which will devastate small business and place a burden on anyone wishing to purchase high end items with cash only, is being done primarily because the banks have reached the end of their liquidity, and according to the Guerrilla Economist, are completely broke and insolvent.
Joe Hagmann: Officially starting Nov. 17, there will be no more international wire transfers from one bank. From Chase Manhattan, they are limiting cash withdrawals and deposits from their banks to $50,000.
Why are they implementing these controls?
V, Guerrilla Economist: The thing is this... they're doing this because they're insolvent. They're doing this because they have no more money.
Think about it... you can only deposit, and have total cash transactions for a whole entire statement cycle, which is about 30 days, of only $50,000. How much you deposit, how much you take out, how much you write checks on, all of this, can only have a cash transactional total of $50,000.
They're doing this because of the simple fact that the're insolvent... they're broke. - Hagmann and Hagmann, Oct. 16
The primary consequences of these new monetary policies will be the restriction of the American people to have free access to their money as they see fit, and devastate small businesses who perform financial services of more than $50,000 per month. Small businesses have already been crushed since the 2008 credit crisis as over 200,000 have shut their doors due to the limitations of credit that was readily available before the bank bailouts.
Yet, U.S. financial institutions are not the only ones creating new policies to help stave off insolvency. On Oct. 14, the IMF proposed a new program by which they would confiscate 10% of all monies held by depositors in all banks to support current and future sovereign and bank liquidity crises.
The American people are now beginning to find out why 15 bank CEO's visited the White House immediately after the government shutdown took place, and why the President chose not to meet with Congress to work out an immediate solution. Besides using the 16 day shutdown to save the bond market and housing bubble the Federal Reserve was propping up, it now appears that the two week period also allowed banks like Chase Manhattan to stave off a potential default themselves, and use the time to institute capital controls meant to protect their own business interests, which will be a disaster for depositors and small businesses.