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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