The Crisis in Cyprus: When Governments Steal from Their Citizens

by Lear Capital EditorialMarch 27, 2013
man depositing money into ATM

So you go online to check your account at Wells Fargo, Chase, Bank of America or wherever it is that you keep your funds and suddenly 40% of your money is gone. You immediately call the bank and get that message reminding you that the call may be “recorded for quality control purposes” and you think to yourself GOOD, I want witnesses!

The polite but breathlessly mechanized voice message goes on … Press 1 for a lost or stolen card, Press 2 for your available balance, Press 3 for pending transactions … there is no Press 4 for confiscated funds so you frantically hit “0” for “Other” and find yourself audibly yelling for a live operator only to be systematically kicked back to the “Main Menu.”

The sinking reality of this futile electronic exercise is that your money is gone. It has been taken in a Federal heist by your own government to bail out its inability to control itself. Such an action not only shakes your faith in the banking system but violates the sacred trust of civilized societies everywhere. Welcome to the new reality for the citizens of Cyprus!

We have all seen the images of Cypriots standing outside closed banks, lining up at cashless ATM machines, and protesting in the streets for what is rightfully theirs … their life’s savings! How can a government arbitrarily seize money from its citizens? It’s all part of a last-minute deal with international lenders to avoid what has been billed as the country’s complete economic collapse. But, who are these lenders? What do they have to do with the money that these seemingly average folks stashed away each week for years and years? Where were these bankers when these people were working … a little bit harder and a little bit longer to save for their future? Where was the International Monetary fund when these families lived within their means and only bought what they could afford?

It has been a longstanding financial tradition and benchmark of the banking industry that if we “put our money away” it will stay there. But in these days of soaring deficits, collapsing currencies, and indebted nations … we are finding that desperate governments will do desperate things, and the events in Cyprus are a wake-up call for every American.

Some claim that countries like Cyprus are far more vulnerable than the United States simply because when they run low on cash, they can’t print more like we can. But with the purchasing power of the US Dollar declining as much as 95% since the creation of the Federal Reserve in 1913, it’s time that we realize that our hard-earned money has been devalued by endless quantitative easing and a series of Beltway Robberies that equates to a similar seizure of our private savings.

As the Cypriot government made continued assurances to its citizens that their money was safe, there were dissenting voices that warned bank depositors to move to higher financial ground. The official US position on the crisis takes a similar, comforting tone that “it could never happen here,” but we cannot ignore the precedent set by Executive Order 6102 which required all US persons to deliver their personal gold coins, bullion and certificates to the Federal Reserve back in May of 1933.

The bottom line is that federal assurances are easy. They are cheap, and they are free. But they will ring as hollow and ineffectual as the interactive bank voice if you’re caught completely unprepared and wake up one seemingly average morning … to find that you’re money is simply gone.

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