On July 1, 2014 an important federal law takes effect. It will require foreign banks and financial institutions to report all accounts held by American citizens to the IRS. It is going to get harder for Americans to hide money and dodge taxes. It is also going to make offshore banks consider the options, do we want to become ensnarled in the United States arcane tax system and report our transactions to the IRS? Or would we rather stay clear. Staying clear would mean these banks might just opt to not let Americans have accounts with them any longer. This is going to make it difficult for many American citizens to conduct business overseas. This is going to be another step toward replacing the dollar as the global reserve currency. When that happens our economy could take a beating. Just look at what happened in Great Briton after WWII when British Sterling was replaced by the US dollar after being the global reserve currency for about 200 years.
The US will not be able to just print more money to keep our economy going because foreign investors will no longer be attracted to buying our bonds. We won't be able to keep spending more than we make. Government spending will be cut, many programs will cease, most of us are going to loose money and our lifestyle is going to take a hit.
Some gloom and doom pundits are already predicting the collapse of our economy. Of course these guys want you to buy their reports detailing hot you can save yourself. I guess you could buy gold or trade some of your dollars for Chinese yuan? Or invest in foreign companies, or buy land. It gives you something to think about. What is sad to me is why so many Americans feel the need to hide money in foreign accounts to escape the IRS in the first place. Perhaps instead of forcing offshore banks to report to the IRS we should be overhauling our tax system so Americans don't need to hide assets overseas in the first place.