The global roll-out of thieving from citizen savers continues. I missed this three days ago, but I’m grateful to a US Slogger for pointing it out to me: on March 22nd, Federal Reserve Chairman Ben Bernanke refused to say that the United States will not use Cypriot techniques of taxing the people by confiscating a percentage of their savings accounts.
During a press conference held to explain his view on economic conditions in the United States, Bernanke said his meetings with the Federal Open Market Committee drew him to the conclusion that the economic outlook is “following its own pre-established expectations”….which could of course mean down a mineshaft or up in an Atlas rocket.
However, when pressed about whether an EC-style approach to Cyprus (involving taking money from savers) might be on the cards in the US, Bernanke spoke less than plainly.
The government of Cyprus last week accepted the principle of stealing funds from private citizens as a condition to get a so-called ‘bailout’ from the five-humped camel of eurozone aid. “I was wondering if you can tell me,” one reporter asked optimistically, “how if a run on the banks happens in Cyprus, how that might affect U.S. markets. And also is it possible for the U.S. to levy a tax on regular deposits here? Or why not?”
Bernanke replied somewhat oddly, “the only trigger for actions such as the ones taken in Cyprus would be if depositors panicked”. I say ‘oddly’ because surely the catalyst for panic would be, um, if news leaked that the US Government was indeed about to rob depositors.
Either way, by not stating clearly whether it could happen in the U.S. or not, Bernanke effectively suggested that the door is open for money-seizing in the U.S.
Bernanke added that he believed it to be unlikely that a Cyprus’ scenario could replicate in the United States. He then reminded the audience that in the U.S. the FDIC insures savings and that this fact is an assurance for depositors who may be concerned. However, as The Slog revealed two days ago, the FDIC recently wrote a paper jointly with the Bank of England openly suggesting depositor haircuts.
Indeed, in February 2012 President Obama expressed concern about the FDIC’s ability to meet its obligations, suggesting that the entity could easily become insolvent. On March 4, Congresswoman Chairman Sheila Bair went further in saying that the FDIC was on its way to becoming insolvent, and that its job to insure bank deposits must therefore be in danger.
In the case of Cyprus, its own government’s word came to nought, because European bankers had that government by the balls: it is they who decided what would be done in Spain, Greece, Portugal, Italy, and latterly in Cyprus.
The lesson from this and previous posts on the subject is crystal clear: we can no longer trust any banking institution to defend our savings against State rape. Indeed – when in dire straits – they will actively encourage it.