The tiny island of Cyprus is demonstrating that government money is nothing more than the people's money and to make the point, we are now watching as the European Union is set to seize private citizen's bank accounts to pay off debt that is a result of bad monetary policy and unchecked spending.
Yahoo Finance reports,
The surprise decision by euro zone leaders to part-fund a bailout of Cyprus by taxing bank deposits sent shockwaves through financial markets on Monday, with shares and the bonds of struggling euro zone governments tumbling.
The bloc struck a deal on Saturday to hand Cyprus rescue loans worth 10 billion euros ($13 billion), but defied warnings - including from the European Central Bank - and imposed a levy that would see those with cash in the island's banks lose between 6.75 and 9.9 percent of their money.
Parliament in Cyprus put off a vote on the measure - which has shaken depositors' confidence in banks across the continent - until Tuesday, however, and with public anger at the deal widespread the government said it was already looking to ease the pain for small savers.
Without the rescue, Cyprus would have be unable to avoid a default. That would have undermined the promise that Greece's debt writedown last year was a one-off, but the unprecedented move to hit depositors adds a radical new dimension to the crisis across the euro zone.
Peter Dixon, global financial economist at Commerzbank said, "If I were a saver, certainly in Spain or maybe Italy, I think I'd be looking askance at these measures and think this could yet happen to me."
On might ask themselves the same about if you are an American, especially if you comprehend how our debt actually works. For an excellent primer on that, take a look here.
While Cyprus has about the same GDP as the state of Vermont, look at the massive implications it is having upon Europe.
In America we've already been hearing talks about government eyeing private 401k savings accounts.
Then the Washington Times came out and told us exactly what is about to happen. Remember, liberals float the idea of what they are going to do, "poo poo" it when people begin to question, and then do it.
Mike Shortridge writes,
The $19.4 trillion sitting in personal retirement accounts like the 401K may be too tempting an apple for a government that is quite broke, both monetarily and morally. The U.S. Consumer Financial Protection Bureau director Richard Cordray recently mentioned these accounts in a recent interview, stating "That's one of the things we've been exploring and are interested in, in terms of whether and what authority we have."
This agency, created by the 2010 Dodd-Frank-Act, is very concerned about how safe your retirement savings are. They are apparently concerned that retiring baby boomers may become victims of financial scams.
If the government takes control of retirement accounts, it will not be called "nationalization." There will most likely be an indecipherable document that provides an opt-out option (initially), but why would you want to do that? The US government only wants to ensure the safety of your retirement funds; they did after all create a new bureaucracy for that specific purpose. And what could be a safer investment than US bonds?
Dr. Gary North writes, "Gold rose on the news from Europe. Stock markets plunged around the world. So did the price of oil. Over the weekend, Eurozone bureaucrats at a closed meeting came up with a plan. The committee demanded that the government of Cyprus impose a tax of 6.7% on all bank accounts under $130,000, and close to 10% on all accounts over $130,000. If the government refuses, the Eurozone will not provide a $13 billion bailout for the banks of Cyprus."
North went on to point out the obvious problem. "The story is all over the European press, for good reason. The Eurocrats had always said that bank accounts would be sacrosanct. This announcement says, 'We lied.' But they also assured depositors that this will never happen again. 'Trust us.'"
"The president of Cyprus on Sunday begged the parliament to impose the tax," he writes. "He admitted that he had promised depositors that he would never, ever tax their accounts. He had said this at his inauguration speech: 'absolutely no reference to a haircut on public debt or deposits will be tolerated."' To make himself perfectly clear, he added: 'such an issue isn't even up for discussion.'"
He then translated it for his readers into three words: "You dumb clucks."
This is why we must get a handle on monetary policy and spending as was mentioned yesterday. In the end the Eurozone leaders are doing the exact same thing America's leaders are doing. They pretend to be calm and act like the system isn't coming apart at the seams. Then when they make a major announcement like they have made, it indicates that the entire house of cards is about to come down around our ears.Don't forget to Like Freedom Outpost on Facebook, Google Plus, & Twitter. You can also get Freedom Outpost delivered to your Amazon Kindle device here.