June 24, 2017

Economic Red Flags Abroad

I posted these articles on the forum and on Facebook.  For those who don’t check either, I want to share my thoughts on them with you.  I am not an economics guy but I do learn from history.

Last weekend, Cyprus delayed a vote on whether or not to confiscate 10% of the bank accounts of private citizens; Rueters states:

“In a radical departure from previous aid packages, euro zone finance ministers want Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, which has been financially crippled by its exposure to neighboring Greece.”

In another report from TheAge.com from an article that has since been taken down), there was run on ATM machines:

“In a move that could set off new fears of contagion across the eurozone, anxious depositors drained cash from ATMs in Cyprus on Saturday, hours after European officials in Brussels required that part of a new €10 billion ($12.6 billion) bailout must be paid for directly from the bank accounts of savers.”

There have been reports that Cyprus is under a bank holiday until Thursday, and possibly for the rest of the week.  I have also read reports that Italy or Greece may be next and that the national government of New Zealand wanting to try a  Cyprus-style solution.  I just saw a report that the Cyprus lawmakers rejected confiscating funds, good for them.  I do not think this is the last time we have seen this tried.

Some might say this kind of thing won’t be passed through the House and Senate of our government.  To this I would point out that our leaders in the House and Senate used some pretty sleazy tactics to pass “Obama care” and other legislation.  I would also point out that we have a president who likes to use executive power, and there is precedent for the president to use executive power to confiscate money.  Franklin Delano Roosevelt used Executive Order 6102 to confiscate gold.

Am I saying it will happen here?  I don’t know, but it truly wouldn’t surprise me.  There are many in our government who would like to see us move more toward a European model of government and society.  The precedent has now been set that private bank accounts might be up for grabs.

I’m not saying to take all your money out of the bank and stuff it in the mattress, but these things should be an alarm for us.  Before things would get that bad here, I assume we will see more warning signs.  Since people far smarter than I have been warning for years that there is a very good chance our economic future might look like that of multiple European countries, I would not be surprised to see one of our more leftist leaders to suggest this.  It will be railed against, but the Overton Window will move a little.

If I were asked what we should do, I would say we should make sure we have some cash on hand.  If something like this does occur, ATM’s will run dry quickly.  Above all, make sure you have a minimum of two weeks food and medications on hand.  I don’t think in this, or multiple other scenarios that the dollar will immediately lose its purchasing power.  So don’t be afraid of holding some.  If you have some money to invest in precious metals, I personally would stay away from gold and would buy silver instead.

Pray we never see this or worse but prepare like we will!

**Update**

I was thinking about the possibility of this ever happening here and wanted to share another thought.  I think someone in the USA will bring the idea up, and it will be shot down, at least initially. If the economy gets worse and worse it might be brought up again. How many companies have asked their employes to take a pay cut so they can keep the doors open? Eventually enough people might drink the kool aid and think this sounds like a good idea.

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Comments

  1. The confederates stuffed a lot of their money in the mattresses and it ended up being in vain because the confederate dollar had no value after the war. What a sticky situation. They are going to push people to a cashless society where your money is numbers in an account on a centralized computer. Dollars won’t be worth anything just numbers in a computer with your name assigned to it. Of course you will have to have some form of accessing it through a chip, a card, etc Then the government will be able to confiscate these numbers they call money when they want.

    • Chris Ray says:

      If I’m not mistaken the dollar has been re-valued a time or two, and lost some of its value than as well.

      I agree that we are being pushed to a cashless society, so much easier to see who is spending what and where they are doing it. The White House just gave the CIA the authority to do just that.

      • Actaully just last month I received a notice that my husband’s and my business accout would start incurring fees for using cash – imagine that – a bank charging me extra for using cash! There will be no fees on electronic or paper transactions, but there will be fees on all cash transactions.

    • so cyprus tried this with peoples money. now with the assault weapons ban and gun control being a hot topic it leads one to wonder if this was the original intent for it. take the guns people can’t fight back when we take their money, food or whatever else they have for the good of the whole ie federal government. time to have some other asset besides money. gold or silver. mine is in brass and lead

  2. We have done exactly that Chris. I do not really trust the banks anymore. Actually the Federal Reserve and the Govt. So we have enough to last us at least 6 months and 6 months worth of medicine. Hopefully we have a years worth of groceries on hand, our water supply won’t last that long. I just keep plugging away. I made one of those homemade Berkley filter systems I think you had on your news letter once. If we have another drouth this year, water is going to be scarce. I fill every empty detergent container, like your Tide container with water so we will have soapy water for hand washing etc. It is scary times indeed!

    • Chris Ray says:

      Good for you Penny.

      Water is a hard one for many people, we can have a means to purify it, but if we can’t find it, we’re in a very tough spot.

      • We live in high desert that is a dry climate with little rainfall. But we have two rivers within 6 miles of our house.

        Something we’ve got in our back yard is a large above-ground pool, which gives us an additional 5k gallons of good water if needed. That, plus rain catching, a handful of 55 gal water barrels, and if all that’s not enough, I’ve talked to neighbors about armed runs to the river to re-stock the water barrels, carried on a trailer behind or in the back of an EMP resistant truck.

        I’ve also considered putting in a well that could be run off a generator or hand pump. That’s next on the list.

        • Chris Ray says:

          You’ve got a pretty decent set up for water for living in a dry climate.

          A pump run off solar might be a good option too.

  3. I’m done with big banks and have started using credit unions. Your bank accounts are too easily drained by fees & “vendors” requiring a lot of time to defend. I’ve been locked out of my “big bank” accounts several times until I proved my identity to the bank. So, whose money is it?

    Now, I keep several months of cash available & I cost average silver/gold purchases. Banks are not paying much interest so storing it in non-electronic form is safer. Besides, gold/silver are becoming easier to use as money. Finally, think about this: Internet connected banks trade convenience for high risk (worldwide security issue).

    • Chris Ray says:

      We’ve had two accounts for years, one at a traditional bank, and one at a credit union. Both have miscellaneous fees, but the credit union has far fewer, so we have decided to move to it.

      You mention gold and silver are becoming easier to use as money, how are you doing this? I know of many places that will buy gold and silver, but are you actually using them to purchase goods or services without a middleman?

  4. Chris,
    Do not know if you have seen this before…
    Six step plan for attitudinal change.
    The Six Step Attitudinal Change Plan works like this:

    1)Some practice so offensive that it can scarcely be discussed in public is advocated by a RESPECTED expert in a RESPECTED forum.
    2)At first, the public is shocked, then outraged.
    3)But, the VERY FACT that such a thing could be publicly debated becomes the SUBJECT of the debate.
    4)In the debate, sheer repetition of the shocking subject gradually dulls its effect.
    5)People then are no longer shocked.
    6)No longer outraged, people begin to argue for positions to moderate the extreme; or, they accept the premise, challenging, instead, the means to ACHIEVE it.
    (http://www.cuttingedge.org/ce1002.html)

    This has already been done with a lot of social issues, in particlular, the gay agenda.

    This cypres issue is just step one!

    • Chris Ray says:

      Good info, thanks John. I haven’t seen it put like that, but it makes perfect sense.

      looking back over the years as you mentioned, I can see several social issues this was used on.

      thanks again.

  5. Interesting you should post this right now. Just yesterday I pulled a few k out of savings, and put the cash in my safe, where I already stock enough cash to live on for 4+ mos, along with other things that should be in a safe. I also bought more silver last week, (that was pretty cheap) even though in a real SHTF scenario, you can’t eat, drink or shoot silver or paper dollars.

    I believe they’re still potentially valuable if/when society rebuilds itself economically.

    • Chris Ray says:

      I think cash will have use in the beginning of an event, and depending on the severity and length goods and services will be used for barter with some precious metals. I think the same hods true for post event, with precious metals seeing more usage.

      • I agree. In our Go or Get Home Bags, we keep a bunch of $1 bills, because if things shut down, CCards are no good, and stores probably won’t be able to make change for larger bills.

  6. Hamilton Chant says:

    Hi Chris – thought you might be interested – I was in cyprus about 6 weeks ago. There was talk of this coming even then. The authorities were still denying anything like this was on the cards right up to last week. Oddly enough they are now saying the same about other EU countries with major debt problems.
    But if they were clearly lying about cyprus – the sensible people in europe are going to be assuming they’re lying now.
    Even in England there is real talk now about pulling savings out of the banks, no-one trusts the EU anymore. There is a big change just around the corner. This cyprus issue may just be the catalyst that sparks the revolution.

    • Chris Ray says:

      Hi Hamilton,

      I’m surprised it didn’t break sooner than it did. It however doesn’t surprise me to hear rumors in other EU countries.

      I wonder how long it will take before China comes to collect US debt and suggests this as a means of doing so. Whether that happens or not, I agree with you that something big is on the way.

  7. Although I don’t keep much in bank accounts, I for one am skeptical about holding on to very much cash. If/when panic and subsequent hyper-inflation hits, what may be a month’s worth of cash now, will be practically worthless in a very short amount of time. There is the story told of a woman who carried all her cash in a wheelbarrow, during hyper-inflation in Germany post-WW1, to buy groceries at the store. She found that she couldn’t bring it all into the store, so she left it at the front door. The cash had become so worthless, that it was left at the door, but the wheelbarrow was stolen! I highly recommend the book – “When a Nation forgets God – 7 Lessons we must learn from Nazi Germany.” History repeats itself, so all you have to do is look back less than 100 years to learn more about the path we are headed down.

    I’d rather put my money with today’s value, into prep items for use or barter. I’m not fully convinced that even gold or silver will be of great value if the breakdown of society is extended for a long period. You can’t eat/drink gold or silver! If there is no one willing to sell you food or water, any amount of these commodities won’t matter. However, IMO if the economic recovery eventually happens, gold & silver would be worthwhile in helping us get back in business.

    • Chris Ray says:

      My take on hyperinflation is that IF we see it, it won’t happen over night, there will be plenty of warning signs that it’s on its way.

      While true you can’t eat or drink precious metals, what if I have items you want, but you don’t have anything I want? If you have silver, I can take that and trade it to someone else for something that I do want. These things have always been used to make purchases.

      I will say that they should not come before you have your other preparations squared away.

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