Opening a bank account in the Land of the Free today feels like applying for a top secret security clearance.
Banks
often require multiple forms of ID, proof of address, proof of
employment, plus detailed explanations of where your money came from,
what you plan to do with it, and who you plan to send it to.
And
that's just to get the account open. Once you've actually been deemed
worthy of handing over your money to them, the surveillance really kicks
in.
If
you wire money to someone new, prepare for a phone call from the fraud
department. Send a wire to a foreign bank and prepare for your account
to be flagged by compliance.
The
Cato Institute recently published a study showing that banks file 28
million reports to the federal government, flagging customer
transactions as “suspicious”.
Yet
the government’s own data show that 99.98% of these reports were filed
on innocent people for completely frivolous reasons, i.e. people like my
own mother who simply like to deal in physical cash. In the mind of a
financial bureaucrat, using completely legal tender in the United States
of America is suspicious and deserves to be reported.
Banking
is a completely soulless industry devoid of any humanity or common
sense. We recently almost had a bank account shut down because one of
our customers sent us a routine payment for his Total Access renewal.
Unfortunately our customer happens to have the same name as someone on a US government watch list.
Now,
banks obviously shouldn't be doing business with known criminals... so I
have no problem that the transaction was flagged. But our team was
quickly and easily able to prove that it wasn’t the same person. Not
even close. Just two people who happen to have the same name.
But
it didn’t matter. After several days of scrutiny and document gopher
hunts, the bank not only rejected the transaction, but they nearly shut
down our account.
Multiply
that across every account, every business, every wire, every customer.
American banking is now mostly a compliance apparatus that happens to do
some occasional financial transactions on the side. Yet for all the
bureaucratic gauntlet your bank puts you through, the average savings
account in the US pays a measly 0.38% interest right now.
It's one reason why I like crypto.
I'm
not someone who thinks Bitcoin is going to magically become larger than
the GDP of the known universe. But I do like that it's decentralized—
that you can effectively be your own bank, without begging permission
from someone whose entire job is to assume you're guilty.
Ironically, it turns out there's another option; there's at least one place in America to put your money that asks no questions.
They
open accounts in no time with little more than a Social Security
number. They don't demand to know where your funds came from. You don’t
have to fill out 10,000 forms or show a single form of ID.
Frankly,
these guys are deliberately and willfully violating every single
Anti-Money Laundering rule and Treasury regulation on the books.
Fortunately no one is going to haul them off in handcuffs... because I’m talking about the Treasury Department itself!
The US government runs a website called Treasury Direct which allows anyone with a Social Security number to sign up and buy US government bonds.
Of
course, as we discussed a few days ago, it would be insane to buy
long-term bonds and lock up money for thirty years, ten years, or even
five years. The US has nearly $40 trillion in debt, runs $2 trillion
deficits every year, and has no plan to slow either down.
But
the shortest-term security the US government sells is just FOUR WEEKS;
it’s known as the 28-day T-bill. It’s essentially the same as a 1-month
CD, and right now it pays 3.7%.
28
days is no time at all. And while I would in NO WAY be willing to hold a
30 year bond, I’m happy to loan a portion of my funds to the federal
government for a couple of weeks.
Naturally the Treasury Direct website sucks. The User Interface is clunky and looks like a 15-year old designed it in 1997.
But
none of that matters; they make it REALLY easy to sign up and buy
bonds. You link your bank account select which bond you want to buy, and
you can set yourself up for automatic reinvestments or payouts. Crazy
enough, the Treasury Department even allows you to transfer certain
T-bills to third parties... which is effectively the same as making a
cash or wire transfer.
There’s
no hoops to jump through, no one flagging your transaction, no demands
to prove that you’re not a member of Hezbollah or the Russian
government.
The federal government ignores every single one of its own anti-money laundering rules.
And I’d wager that criminals in government and terrorists are using Treasury Direct
to launder and transfer money... because the Treasury Department
literally performs zero compliance checks.
It’s
pretty sad, and deeply ironic. But it’s also the easiest and safest way
to earn a reasonable rate of return on a measly 4-week commitment.
To your freedom,
