Christine Lagarde, chair person of the IMF, has called for making the “Cyprus Solution” of confiscating portions of savers’ cash in bank a common government policy.
Piggybacking on last week’s call by the IMF for setting up an agency that would be responsible for either closing or salvaging troubled banks across the continent, Mrs Lagarde’s proposed “funding” such an agency with money drained from savings held by bank customers. Mrs Lagarde’s ingenuity and arrogance seems to be boundless, to say the least. (It is equally obvious that her knowledge of real-world economics, on the other hand, is painfully limited.)
The proposed move which can only be seen as a departure of “civilised” nations’ governments from the rule of law is nothing short of an announcement that governments will be committing outright theft in the near future. Gone are the days when they at least tried to conceal their acts and disguise them in the form of taxes, even frivolous ones, for some “common good” — which in light of the real purpose for tax money being spent on, namely paying interest on bonds issued for central banks’ and private banks’ money creation also known as “fractional reserve lending”, had become increasingly questionable anyway.
Wolfgang Schäuble, finance minister of Germany, had already suggested that governments should help themselves at will after the Cyprus precedent earlier this year.
Under the proposed wider scheme, a suggested figure of ten percent of savings should be confiscated in order to bail out struggling banks (that are cash-strapped although they already hold client monies but only failed to manage their affairs properly). It should be noted here that client monies held at banks were already subjected to taxation (in order to pay for the ever-day business of the banks which is money creation through “fractional reserve lending”, resulting in inflation which is effectively another “tax” and takes another percentage out of the value of those monies; as a result, private households already paying twice for government and banking mistakes at present ought to be forced to pay for them out of their pockets for a third time). Any bank holdings, including even smallest amounts, ought to be affected equally.
Tiny little details like whose property cash in bank is and that savers are only loaning out their money to the bank to receive some interest in turn (or not) do not seem to matter here. Neither does property law (nor criminal law), as it seems.
Whether or not this is a good idea and will increase stability in society at a time of possible turmoil remains to be seen. One might be tempted to make an educated guess though (which obviously is a lot more than an IMF head is capable of).
That move should make it obvious to anyone that Asset Protection is a necessity for each and everyone, starting with “fortunes” as little as €500 or €1,000 or currency equivalent. No one likes nor can afford to lose ten percent of their holdings, be it an actual loss of €50 or €5m, and therefore needs to prepare appropriately for their individual situation. Suitable strategies include cashing out of any bank holdings, bonds, stocks, mutual funds, ETFs or similar — in fact everything that needs to travel as paper money through a bank account — and moving these amounts into tangibles. Real estate is only a partial solution as it may be heavily affected by any ensuing additional economic downturn (or breakdown) with prices particularly for overvalued residential properties vulnerable to severe corrections and losses. Commodities-based investments as well as anything of intrinsic value might be suited best for weathering any economic storm as is investing in businesses that provide essential products or services and will be operative even during “hard times”.