The South China Morning Post reports Chinese customs agents arrested a “surprisingly plump” man as he tried to leave the country. The “spare tire” around his waist turned out to be six hand-sewn inner pockets… holding $74,000 in U.S. cash.
Chinese law prohibits anyone from taking more than $5,000 outside the country without declaring it. And unless you’re a well-connected party crony, these declarations almost always result in denial. The government’s strict capital controls are a result of China’s deteriorating economy.
Regular Daily readers know this man is yet another casualty of the global War on Cash…
Governments hate cash because they have a hard time controlling its movements and taxation. Central banks hate cash because it’s a private, liquid alternative to their negative interest rates and asset bubbles around the globe.
As we reported in January, Chinese citizens have gotten creative with fighting back in this war. One of their favorite methods to circumvent capital controls is to buy internet domains in China, travel overseas, then sell the domains for local currency.
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An even more popular method lets anyone use cryptocurrencies—in particular, bitcoin—to convert his savings into a digital currency accepted around the globe.
There are no money-changing fees, no customs declarations, and no trackable paper trails. It’s perfect for a Chinese demographic terrified of a massive devaluation in their native currency (the yuan).
Reuters reports 95% of global bitcoin trading happens on Chinese exchanges. The cryptocurrency spiked to two-year highs in late May… as millions of Chinese exited the yuan in favor of a private, digital currency their government cannot devalue.
Bottom line: More currency devaluations lie ahead… not just for China, but for an entire globe mired in too much debt. That creates a powerful tail wind for alternative currency solutions, like bitcoin.
If you’re interested in digital currencies, PBRG editor Teeka Tiwari highlights his favorite cryptocurrencies in a recent report. They hold the promise of privacy and flexibility in the digital age. Palm Beach Letter subscribers can click here to review Teeka’s cryptocurrency recommendations.
Others can click here to learn more about this new monetary frontier… as the global War on Cash rages on.