mises.org / Ron Paul / Oct 18, 2016
During the 2008 economic crisis, Iceland’s government froze offshore accounts held by foreign investors in that country’s currency, the krona. Recently, the government of Iceland announced it would unfreeze the accounts if the account holders paid a voluntary “departure tax,” which could be as high as 58 percent. Investors who choose not to pay the departure tax would have their investment “segregated” into special funds that only invest in CDs issued by Iceland’s central bank. These CDs are expected to only provide a rate of return of at most 0.5 percent a year. So investors in offshore accounts can thus choose between having their money directly seized via the departure tax or indirectly seized via the inflation tax.
Iceland’s freezing of offshore krona accounts was part of a “stabilization and recovery” program implemented under the guidance of the International Monetary Fund (IMF), which also provided Iceland with a $1 billion loan. So US taxpayers not only helped the IMF bail out Iceland’s government, they may have helped the IMF advise Iceland on how best to steal property from American investors!
The IMF’s role in Iceland’s seizure of the property of foreign investors shows the hypocrisy of IMF officials, who recently expressed concerns about the increasing support for protectionism supposedly exemplified by the Brexit vote. However, freezing of assets held by foreign investors is a particularly harmful form of protectionism, while Brexit was more about rejecting the European Union’s bureaucracy than rejecting free trade. Perhaps what the IMF and its supporters are really worried about is losing their power to use taxpayers’ money to force other countries to adopt IMF bureaucrats’ favored economic policies.