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We Can Make Mexico Pay for the Wall

Summary:
Just declare an International Emergency. From US Treasury, U.S.C. annotated, Title 50. War and National Defense Chapter 35. International Emergency Economic Powers : § 1701. Unusual and extraordinary threat; declaration of national emergency; exercise of Presidential authorities (a)(1) At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise– (A) investigate, regulate, or prohibit– (i) any transactions in foreign exchange, (ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof, (iii) the importing or exporting of

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Just declare an International Emergency. From US Treasury,
U.S.C. annotated, Title 50. War and National Defense Chapter 35. International Emergency Economic Powers :

§ 1701. Unusual and extraordinary threat; declaration of national emergency; exercise of Presidential authorities

(a)(1) At the times and to the extent specified in section 1701 of this title, the President may, under such regulations as he may prescribe, by means of instructions, licenses, or otherwise– (A) investigate, regulate, or prohibit– (i) any transactions in foreign exchange, (ii) transfers of credit or payments between, by, through, or to any banking institution, to the extent that such transfers or payments involve any interest of any foreign country or a national thereof, (iii) the importing or exporting of currency or securities, by any person, or with respect to any property, subject to the jurisdiction of the United States; (B) investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States; and (C) when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals, confiscate any property, subject to the jurisdiction of the United States, of any foreign person, foreign organization, or foreign country that he determines has planned, authorized, aided, or engaged in such hostilities or attacks against the United States; and all right, title, and interest in any property so confiscated shall vest, when, as, and upon the terms directed by the President, in such agency or person as the President may designate from time to time, and upon such terms and conditions as the President may prescribe, such interest or property shall be held, used, administered, liquidated, sold, or otherwise dealt with in the interest of and for the benefit of the United States, and such designated agency or person may perform any and all acts incident to the accomplishment or furtherance of these purposes.

As I read it (I’m no lawyer), we could confiscate all assets of Mexico and Mexican nationals in the U.S., and put directly to use in building a really special and beautiful concrete wall, as promised in February 2016:

“I’m talking about precasts going up probably 35 to 40 feet up in the air. That’s high. That’s a real wall.”

As of June 30, 2017, Treasury estimated Mexican holdings of US securities at $97 billion. As of end-2017, BEA estimated another $18 billion Mexican foreign direct investment in the US (at historical cost). That’s close to $120 billion we can seize, in order to fund a wall costing something like $12-40 billion  (of course that number was pre-steel-tariff cost).

All we have to do is hope that nobody seizes any US assets abroad…and nobody frets about the safe haven aspects of US dollar-denominated assets … and so forth. The question is… Does Donald Trump feel lucky?

P.S.: I am reasonably confident this act would catapult the world economy into recession.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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