The EU’s bailout of Cyprus took a chilling turn over the weekend when it required (more or less) the Cyprian government to confiscate a minimum of 6.75% of deposits in Cyprian banks as part of the deal. The confiscation rate is 9.9% of balances above 100,000 Euros, resulting in a total seizure of $5.8 billion Euros (7.6 billion US dollars). Put another way, the government is taxing wealth to pay its debts. Considering that Cyprus is an EU nation and not a despot-run third world country, this move should send chills down the spine of every American that doesn’t believe a similar measure could actually happen here at some point.<\/p>\n
To be fair, there is some context worth noting. In short, several EU countries like Germany are tired to footing the bailout bill for less responsible countries. They are pressuring countries receiving the aid to experience more of the immediate pain. This is understandable–to a point.<\/p>\n
But the larger lesson here is simple. Sooner or later, a nation that cannot pay its debt must seize the wealth of its citizens directly through taxes or indirectly through currency devaluation, or go bankrupt. What makes the Cyprian wealth tax so scary is that the government is simply taking the money. At least tax increases and government budgets can be widely debated before being passed into law. What’s happening in Cyprus is a confiscation of wealth in the dark of night. They’re calling it a “one time” tax, but only fools believe it can’t happen again, or in other nations.<\/p>\n
Could a similar move occur in the U.S.? Consider the fact that individual 401(k) plans contain about $4 trillion in balances. A “one time” 9.9% tax could generate about $400 billion in revenues right away. The left might see this as “fair” because it steals only from the “rich” who could “afford” to put away money for retirement in the first place.<\/p>\n
To be clear, the U.S. and Cyprus are not in the same financial situation. But while Cyprus is further down the road, we are traveling along the same highway<\/em>. Given ongoing $1 trillion deficits and a burgeoning national debt, a spike of inflation would put the U.S. treasury into a serious quandary. The available options will be limited when this happens, including some many Americans never expected to be on the table.<\/p>\n As for Cyprus, stay tuned…Some are proposing alternative bank deposit levies with lower rates for balances under 100,000 Euros and higher rates for balances above 100,000 Euros. In the end, most of the pain will be felt by those who are most productive.<\/p>\n","protected":false},"excerpt":{"rendered":" The EU’s bailout of Cyprus took a chilling turn over the weekend when it required (more or less) the Cyprian government to confiscate a minimum of 6.75% of deposits in Cyprian banks as part of the deal. The confiscation rate is 9.9% of balances above 100,000 Euros, resulting in a total seizure of $5.8 billion […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/629"}],"collection":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=629"}],"version-history":[{"count":0,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=\/wp\/v2\/posts\/629\/revisions"}],"wp:attachment":[{"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/battle4liberty.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}