COMING TO AMERICA ...................................
Your
Savings, 401(k) and Retirement Are in Danger
“I went
to sleep Friday as a rich man. I woke up a poor man. I lost all my money.” That
was the tearful lament of 65-year-old John Demetriou, who lives in the fishing
village of Leopetri on Cyprus’ southern coast. In one fell swoop, he lost his
life savings — the result of 35 years of hard work and thrift — in the
“capital levy” imposed on Cyprus by the International Monetary Fund, the
European Commission, and the European Central Bank (ECB), a trio commonly known
as the Troika.
In March
of last year, the Troika announced that as part of
its deal for resolving the Cypriot banking/financial crisis, Cyprus would have
to impose a “one-off capital levy,” a one-time tax on savings deposits in
Cypriot banks. This was sold to the public globally and in the EU as a
necessary and just solution because Cyprus had become a haven for money
laundering and Russian “oligarchs.” However, it was small depositors, not the
big speculators, institutional bondholders, or Russian billionaires, who took
the hit.
According
to reports from Cypriot, Italian, and German media, as much
as 20 billion euros fled Cypriot banks in the early months of 2013, with 4.5
billion euros taking flight in just the week before the banks were closed and
accounts frozen. Some of the “smart
money” folks who were in the early capital flight, undoubtedly, were merely
savvy savers who could see the writing on the wall and wisely moved their
assets before the politicians could grab them. But credible reports charge that
Cypriot president Nikos Anastasiades and Troika officials warned
insider banking friends about the coming “haircut,” thus allowing those most
responsible for the financial debacle to escape the levy, and leaving
Demetriou, and tens of thousands like him, to foot the bill.
“It’s
not Russian money, it’s not black money. It’s my money,” Demetriou told the Sydney
Morning Herald. Demetriou fled to Australia from Cyprus with his
wife and children in the early 1970s, during the country’s war with Turkey.
Starting with nothing, he worked long hours six and seven days a week selling
jewelry in the Sydney area markets. He retired to his native Cyprus in 2007,
having amassed a respectable nest egg of nearly $1 million. He intended to
build a home and have sufficient money to live comfortably and take care of his
medical expenses. But those hopes and dreams have been largely wiped out; he
may end up losing up to 90 percent of his savings.
Demetriou is but one of
the many victims devastated by the Cypriot “haircut.” For many of them,
especially elderly pensioners unable to go out and work to recoup the losses, a
more accurate description would be “amputation,” or
even "decapitation.”
However,
regardless which anatomical metaphor is adopted, the key
point is that the IMF-imposed “levy” should be named for what it truly was: a
very brazen form of state confiscation, theft, robbery, plunder. And it represents
a dangerous new phase in the politico-economic development of the “new world
order.” It is not mere chance that the “capital levy” for common
depositors was first tried on tiny Cyprus. With a population of barely a
million and accounting for merely 0.2 percent of the eurozone GDP, Cyprus is an
easy mark, and — from the standpoint of the Troika globalists — a good
experimental case.
But to
those who are paying attention, the signals are unmistakable
that the lords of finance in the central banking fraternity do not view this as
a “one-off” event; they plan to use this “tool” very broadly in the coming
months. Indeed, the IMF and top central banking maestros have already said so,
as we will show. And we are already seeing permutations of this (as in Poland)
with the nationalization of private pension funds, and replays (as in Canada
and New Zealand), with proposals for Cyprus-style depositor “bail-ins.”
But the
big prize being eyed, of course, is the United States. If you
think that what has happened to Cyprus and Poland can’t happen here, you may
end up, tragically, like John Demetriou, destitute and pauperized. Not only
that, but you may find that, like the Cypriots, you have lost your
freedom, your independence, and national sovereignty; that the policies
affecting you most directly are being dictated by international bankers and
bureaucrats beyond accountability through elections and national laws.
What the Cyprus/Poland
experiences have very dramatically shown is that when the IMF and its allied
politicians, economists, and central bankers start talking about “capital
levies” it’s time to hide every penny you can. What they really mean is they
intend to confiscate anything they can find: savings accounts, checking
accounts, investments, pensions, home equity. But that is not all. In addition
to a globally coordinated wave of “capital levy” taxation, the IMF/central
banks axis of evil is also pushing an agenda of global inflation (under the
labels of “stimulus” and “quantitative easing”) and global regulation (under
the label of “macroprudential policy”). Global taxation, inflation, and
regulation — all of which are aimed at confiscating global economic wealth —
are a path to concentrating, and then confiscating, global political power.
Taking the Cyprus Tax Global
In October 2013, a
study in the IMF’s Fiscal Monitor entitled
“Taxing Times” sent shivers and shocks through the financial world. Among the
most jarring proposals in the 107-page report is the suggestion of a “one-off
capital levy.” Following so closely on the heels of the IMF’s Cyprus levy, the
implications are ominous, to say the least. According to the IMF’s “Taxing Times”:
The
sharp deterioration of the public finances in many countries has revived interest
in a “capital levy” — a one-off tax on private wealth — as an exceptional
measure to restore debt sustainability. The appeal is that such a tax, if it is
implemented before avoidance is possible and there is a belief that it will
never be repeated, does not distort behavior (and may be seen by some as fair).
There have been illustrious supporters, including Pigou, Ricardo, Schumpeter,
and — until he changed his mind — Keynes.
Get
that? It has to be sold as a one-time event that will never be repeated, an
“exceptional measure” for “sustainability.” And it has to be sprung suddenly,
so that savers can’t run to the bank and pull out their funds. That involves
imposing “bank holidays” and other “capital controls,” which we will discuss
further on.
So, how much are they
planning to take? The IMF authors state:
The tax
rates needed to bring down public debt to pre-crisis levels are sizable:
reducing debt ratios to end-2007 levels would require … a tax rate of about 10
percent on households with positive net worth.
Romain
Hatchuel, the managing partner of asset-manager Square Advisors, warns that the
IMF proposal signals a huge danger. In a Wall Street Journal article of
December 3, 2013, entitled “The Coming Global Wealth Tax,” Hatchuel noted that
the IMF levy would be much higher for the United States than 10 percent, and
could surpass 70 percent! Hatchuel explained:
As the
IMF calculates, the ... revenue-maximizing [tax] rate ... is around 60 percent,
way above existing levels.
For the
U.S., it is [between] 56% and 71% — far more than the current 45% paid … by
those in the top tax bracket....
From New
York to London … powerful economic players are deciding that with an
ever-deteriorating global fiscal outlook, conventional levels and methods of
taxation will no longer suffice. That makes weapons of mass wealth destruction
— such as the IMF’s one-off capital levy ... — likelier by the day.
Weapons
of mass wealth destruction indeed — and wealth transfer to
those who are politically connected. And if you believe that
this would be a one-time (or “one-off”) event, you probably still believe the
promises that the Greek bailout would be a one-off event, or that under
ObamaCare if you want to keep your current insurance plan or your current
physician, you can keep them. Period.
The IMF
study reignited the fears and fury that had erupted months earlier, in March,
owing to remarks by eurozone chief Jeroen Dijsselbloem that the Cyprus levy on
bank accounts could be a template for dealing with similar banking crises
across Europe. In a March 25 interview with the Financial
Times and Reuters, Dijsselbloem said the Cyprus gambit would
be repeated elsewhere “if necessary.” Those remarks triggered immediate
declines in European markets, prompting the eurozone finance ministers to come
up with a reversal on March 26 asserting, “The Cypriot program is not a
template, but measures are tailor-made to the very exceptional Cypriot
situation.”
However,
three months later, on June 26, the eurozone finance ministers reversed their
reversal and confirmed that more capital levies (which they sometimes
euphemistically refer to as “stability fees” and “stability levies”) would
indeed be the model for dealing with troubled banks. “For the first time, we
agreed on a significant bail-in to shield taxpayers,” Dijsselbloem announced,
after a seven-hour, late-night huddle with the other finance ministers.
Bailout or Bail-in?
“Bail-in.” That’s
another of the crafty neologisms the weasels of finance have coined to throw
off the bumpkins who are rebelling against further taxpayer-funded bank
bailouts. In a bail-in, supposedly, the bondholders (mostly institutions) and
bank shareholders, followed by savings depositors, would foot the bill for
risky bank portfolios (toxic mortgage-backed securities, for instance) that go
sour. But as we’ve seen over and over again, the big insider institutions most
responsible for the speculative bubbles get off the hook and leave others
holding the bag.
The
usual enablers in the establishment media choir have been assisting in the
subterfuge, pitching the new EU policy on capital levies as a boon relief to
taxpayers and a long-overdue squeeze on “wealthy” investors and savers. “The
European Union agreed ... to force investors and wealthy savers to share the
costs of future bank failures, moving closer to drawing a line under years of
taxpayer-funded bailouts that have prompted public outrage,” reported Reuters
on June 27, 2013.
“The
European Union spent the equivalent of a third of its economic output on saving
its banks between 2008 and 2011,” noted the Reuters story, “using taxpayer cash
but struggling to contain the crisis and — in the case of Ireland — almost bankrupting
the country.”
“But,”
Reuters continued, “a bailout of Cyprus in March that forced losses on
depositors marked a harsher approach that can now, following [the June 27]
agreement, be replicated elsewhere.” Can now ... be replicated elsewhere —
as the IMF study proposes.
The
voters/taxpayers are supposed to be so relieved by the announcement that their
torturers will stop turning the thumbnail screws that they miss the follow-up
message: The torture team will start pulling toenails instead. But Team Hannibal
Lector at the IMF/ECB/EU Troika would, no doubt, put it more delicately: They
will be switching from a stability manicure to a stability pedicure!
How
credible are the assurances that the new EU capital levies will be aimed at the
big institutional gamers and not at the small depositors, the middle class
savers? About as reliable as all of the previous broken promises that the
politicians and central bankers have made regarding one bailout after another.
After all, only one month before the Cyprus bail-in, Dijsselbloem cobbled
together a 3.7 billion euro taxpayer bailout/nationalization of SNS Reaal, the
fourth-largest bank in the Netherlands, that was stuffed with zombie real
estate loans. In that deal, Dijsselbloem protected SNS Reaal’s senior bondholders,
using the “too big to fail” argument in his explanation to the Dutch
Parliament. The banking maestros realized that public anger over this and
previous bailouts had reached the point that required a new fleecing strategy.
Voila!: the “bail-in” was born and packaged as the taxpayers’ friend.
However,
many economists, investors, financial advisors, economic analysts, pundits, and
“plain Joes” recognize the confiscatory capital levy/bail-in for the
government-sponsored theft that it truly is. Among the naysayers is famed
investor/author and commodities tycoon Jim Rogers. Following the annual meeting
of central bankers in Jackson Hole, Wyoming, in August 2013, Rogers expressed
his belief that the confab presaged a massive taxation and inflation plundering
campaign on the global level. “They’re going to take money wherever they can,”
he warned. “They’re going to take our bank accounts and retirement accounts.”
The
“they” he refers to are the central bankers and their insider commercial banker
colleagues — and national governments, which serve as the collection agencies
for the bankers. “This is the first time in recorded history all the banks are
printing money at the same time.... This is the first time we’ve had massive
debasement [of currencies], and it’s going to end very badly no matter what
they say,” Rogers said in a remote video interview with Greg Hunter of
USAWatchdog.com.
“Whether
they keep printing or stop printing money globally, it is going to end badly,” Rogers
continued. Rogers concluded by saying, “We’ve had perilous
times, and it’s going to get worse.... It’s coming, be worried, be careful.”
As we
mentioned above, expropriating depositors’ bank savings is but one of the
“capital levy” options available to insatiable governments and central banks;
state pensions and private pensions are also increasingly irresistible targets.
Argentina’s President Cristina Kirchner kicked off the practice in 2008 with
the nationalization of $30 billion in private pension holdings to pay off
government debts. (To this she has added capital controls, such as limiting
cash withdrawals using credit cards, which has led to massive foreign and
domestic capital flight from Argentina, South America’s second largest
economy).
In 2009,
the Irish government raided the National Reserve Pension fund of 4 billion
euros to rescue troubled banks. Then in 2010 it came back to clean out the 2.5
billion euros that were left to cover government spending. Hungary followed the
same course in 2010. Nationalizing private pensions was the beginning of a
series of nationalizations of private companies to pay government debts. Prime
Minister Viktor Orban has pushed government takeovers of energy, auto parts
manufacturing, waterworks, and more. In September 2013, Poland’s Prime Minister,
Donald Tusk, announced his government’s confiscation of bonds held in private
pension funds. It is using these resources to feed the government’s ravenous
appetite. With help and encouragement from the IMF and central banks — and with
virtually all governments on non-stop spending binges — this trend is all but
certain to escalate.
In his
January 28, 2014 State of the Union address, President Obama provided a warning
of things to come, announcing that he (without any authorization from Congress)
was directing the U.S. Treasury to launch a new retirement savings bond
program, the MyRA. He didn’t say “If you like your current IRA or pension plan,
you can keep it — period,” but does he need to? After the ObamaCare experience,
anyone above room temperature should be able to recognize another mandatory,
statist program coming their way.
Globalized Inflation
But direct
confiscation of assets isn’t the only — or even the chief — plan of the ruling
elites to purloin your wealth; the more traditional means by which governments
accomplish this is by increasing the money supply (inflation), which robs
everyone by stealing some of the value of each dollar in each wallet, purse,
mattress, savings account, checking account, pension fund, mutual fund, IRA,
etc. Since the start of the 2008 financial crisis, the world’s central banks
have been pumping out trillions of dollars, euros, pounds, yen, and other
currencies in an unprecedented coordinated orgy of global “stimulus.”
Nevertheless, say the money maestros, even more of the same is urgently needed
to spare us from the imminent threat of deflation! The new year was barely out
of the starting gate when Christine Lagarde, managing director of the
International Monetary Fund, announced at a speech in Washington, D.C., that
she has set her sights on slaying the “ogre of deflation,” a term she mentioned
more than once. Speaking at the National Press Club on January 15, 2014, the
IMF chief warned: “With inflation running below many central banks’ targets, we
see rising risks of deflation, which could prove disastrous for the recovery.”
“If inflation is the genie,” she said, “then deflation is the ogre that must be
fought decisively.”
“This
crisis still lingers,” said Lagarde, but continued: “Yet, optimism is in the
air: the deep freeze is behind, and the horizon is brighter.”
But
attaining that bright horizon will mean empowering Lagarde and her fellow
banking maestros with vast new authority — and mountains of cash. “Getting
beyond the crisis still requires a sustained and substantial policy effort,
coordination, and the right policy mix,” declared the IMF’s panjandrum. Key
ingredients of that mix, she has said again and again, are expanded government
spending (i.e., “stimulus”) and expanded money supply (i.e., “quantitative
easing”). Lagarde and her central banker cohorts refer to these policies as
“unconventional monetary policies” or UMP.
Quantitative
easing, or QE, has become a fairly familiar term to many Americans since the
Federal Reserve System introduced it in 2008. It began with the purchase of
hundreds of billions of dollars of toxic mortgage-backed securities from
troubled institutions. By June of 2010, the Fed purchases had ballooned to more
than $2.1 trillion and included mortgage-backed securities, bank debt, and U.S.
Treasury securities. By November 2010, the Fed was ready to launch QE2, the
second round of “quantitative easing,” resulting in purchases of more hundreds
of billions of dollars of bad loans and Treasury bonds. In September 2012 the
Fed launched one of its most audacious UMP programs, which became known as QE3,
to begin an open-ended, indefinite monthly purchase of mortgage-backed
securities and Treasury debt instruments. Critics dubbed it “QE-Infinity.”
After only three months, the Fed bumped up its purchases from the already
astronomical sum of $40 billion per month to $85 billion per month. In December
2013 the Fed announced that it would be “tapering” its monthly purchases to $75
billion per month beginning in January 2014.
From the
start of QE1, millions of Americans recognized that it was a gigantic fraud
through which the Fed was transferring the loss of trillions of dollars in bad
loans and government debt from the “too big to fail” banks on Wall Street to
the middle class/working class folks on Main Street. Millions more Americans
began to catch on when a partial audit of the Fed by the General Accountability
Office (GAO) in 2011 — thanks to legislation sponsored by congressman and
presidential candidate Ron Paul — pried open the Fed’s secret records and
revealed that trillions of dollars had been funneled into the world’s biggest
and wealthiest banks and corporations: JPMorgan Chase, Citigroup, Morgan
Stanley, Merrill Lynch, Bank of America, Barclays, Bear Stearns, Goldman Sachs,
HSBC, Royal Bank of Scotland, and others.
The Fed
is not the only central bank that is plundering the savers and taxpayers for
the benefit of the banking and corporate elites; the European Central Bank
(ECB), the Bank of England (BOE), and most other central banks have joined in
the extortion game, insisting that the UMP bailouts and “stimulus” programs are
necessary to avoid “systemic risk,” “contagion,” and “global meltdown.” But
every dollar that the Fed creates out of thin air subtracts a dollar’s worth of
value from the supply of dollars already in existence and transfers that value
to the government, or to the central banks and their commercial banking
colleagues. And we’re talking about tens of trillions of
those dollars created in the past six years. Everyday Americans eventually
experience the pain of the eroding value of the dollar in the form of price
increases on everything from food, gasoline, clothing, appliances, and cars to
housing and utility bills.
The “Parked Reserves” Avalanche
What has mystified
many market observers is that despite unprecedented levels of money creation by
the central banks since the beginning of the 2008 crisis, the inflationary
effects of all that activity have not materialized as expected. Gold prices and
other commodity prices are down, defying conventional wisdom. Why? The answer
is UMP — unconventional monetary policy. More specifically, it is the Fed’s UMP
decision to pay interest on “excess reserves.” As we have explained previously
in these pages (“Now, More Than Ever, Time to Audit the Fed,” February 20,
2012), in 2008 the Fed began an unprecedented policy of paying commercial banks
billions of dollars in interest to keep trillions of dollars “parked” in what
are known as “excess reserves,” rather than lending those dollars out to
individuals and businesses.
Doug
French, president of the Mises Institute, explained the excess reserves
situation in a December 2013 article for Casey Research entitled “A Fed Policy
Change That Will Increase the Gold Price.”
“Commercial
banks are required a keep a certain amount of money on deposit at the Fed based
upon how much they hold in customer deposits,” French noted. “Banking being a
leveraged business, bankers don’t normally keep any more money than they have
to at the Fed so they can use the money to make loans or buy securities and
earn interest. Anything extra they keep at the Fed is called excess
reserves.”
French
continued:
Up until
when Lehman Brothers failed in September of 2008, excess reserves were
essentially zero. A month later, the central bank began paying banks 25 basis
points on these reserves and five years later banks — mostly the huge
mega-banks — have $2.5 trillion parked in excess reserves.
“I heard
a bank stock analyst tell an investment crowd this past summer the banks don’t
really benefit from the 25 basis points,” said French, “but we’re talking $6.25
billion a year in income the banks have been receiving courtesy of a change
made during the panicked heart of bailout season 2008. This has been a pure
government subsidy to the banking industry, and one the public has been
blissfully ignorant of.”
“But now
everything looks rosy in Bankland again,” French noted. “The banks collectively
made $36 billion in the third quarter [of 2013] after earning over $42 billion
the previous quarter — showing big profits by reserving a fraction of what they
had previously for loan losses.”
Yes,
while Main Street businesses have been unable to get loans, the Wall Street
cronies with ties to the Fed have had no trouble with liquidity. And the banks
have no incentive to make loans, as long as the Fed keeps paying them not to.
However,
the Fed could stop paying interest and cause those excess reserves to be
released. And the Fed could spring that on us at any time, with calamitous
results for everyone — except, of course, for Fed insiders, who would know
ahead of time and could reap huge profits from everyone else’s losses. Steve
Hanke, professor of applied economics at Johns Hopkins University, explains
that the Fed creates roughly 15 percent of the money supply (what he calls
“state money”), while the banks create “bank money,” which is the
remaining 85 percent of the money supply. This is the fraudulent “magic” of fractional-reserve
banking under the Fed, which allows banks to issue several dollars in loans for
every dollar actually held in reserve. When the pent-up “parked excess
reserves” are let loose, they could expand to several times $2.5 trillion,
unleashing an inflationary avalanche.
The
European Central Bank, the Bank of England, and other central banks have been
pursuing parallel actions. “The continental European and US experiences with
excess reserves since the onset of the present crisis have been similar,”
writes Walker F. Todd in The Problem of Excess Reserves, Then
and Now, published by the Levy Economics Institute of Bard College
in May 2013. According to the Todd study, “The ECB experience has been roughly
comparable to the Fed’s experience: Much monetary creation and much expansion
of the balance sheet and monetary base producing comparatively little credit
expansion.”
And,
like the Fed, the ECB could reverse its excess reserve policy at any moment,
swamping markets with pent-up euros. Considering the size of the excess reserve
overhang, the unprecedented nature of the central banks’ payment of interest on
them, and the devastating potential of their release, it is incredible (and
unconscionable) that the mainstream media financial reporters and pundits have
almost completely ignored this elephant hiding under the doily. Ditto for the
politicians (both liberal and conservative) who prattle on about the financial
crisis, denouncing corruption and special interests, while prostrating
themselves in obeisance before the banking lobby.
Macrofraudential Policies
Over the past century,
virtually every nation has established a central bank, and all have adopted the
fraudulent practice of fractional-reserve banking. And like the U.S. Federal
Reserve System, they tend to operate under a veil of secrecy, exempt from the
audits that all other government agencies and private corporations are
subjected to. Many of them, like the Federal Reserve, have an enormous conflict
of interest built into them in that they are hybrid monstrosities, neither fish
nor fowl. The Federal Reserve banks are privately owned but enjoy special
government-conferred privileges and status.
The
activities of the world’s central banks have become increasingly coordinated
and knit together on the global level through the Bank for International
Settlements (BIS) in Basel, Switzerland, the European Central Bank (ECB) in
Frankfurt, Germany, and the IMF, which is based in Washington, D.C. The BIS,
ECB, and IMF have been working hand-in-glove with the Fed and the major Wall
Street banksters to craft “macroprudential policies” that now threaten everyone
on the planet. In order to promote stability and protect ourselves against
“systemic risk” say the “macro” advocates, we must grant central banks — the people
and institutions most responsible for the global financial crisis — more powers
to regulate every aspect of economic life.
The
Committee on the Global Financial System (CGFS), headquartered at the BIS in
Basel, has taken the lead on macroprudential policies. William C. Dudley is
chairman of the CGFS; he is also president and chief executive officer of the
Federal Reserve Bank of New York (and former chief economist for Goldman
Sachs). In May 2010, the CGFS issued “CGFS Papers No 38: Macroprudential instruments
and frameworks.” The IMF, the Fed, the Bank of England, the ECB, and other
central banks and their pet economists in academe have been jumping on board
the macroprudential wagon. This is an expanded replay of the deception that
resulted in the creation of the Federal Reserve System 100 years ago. As today,
people were furious at the Wall Street banks, following the financial Panic of
1910-11. The Federal Reserve Act, which was packaged and marketed as a means to
put a leash on the Wall Street “Money Trust,” was actually secretly written by
and supported by the leading players of the Money Trust. In reality, the act
put a choke collar on the American economy and handed the leash to the Wall
Street banks that own and control the Fed. It was one of the biggest reverse
plays in history. Now the successors of the same Money Trust are trying to
invest the IMF with the same powers on a global scale, as amply detailed, for
instance, in G. Edward Griffin’s The Creature From Jekyll Island (1994).
They know if they can centralize and concentrate global financial power, global
political power will follow, as night follows day.
In 2010,
the U.S. House of Representatives overwhelmingly passed Rep. Ron Paul’s “Audit
the Fed” bill. The Wall Street manipulators and their bankster cronies at the
Fed, the U.S. Treasury, and the world’s central banks were in a panic. They
pulled out all stops and sabotaged the bill in the Senate, watering it down to
a one-time, partial audit. Nevertheless, that “audit” revealed such breathtakingly
gigantic plundering of the economy and such rampant corruption and criminality
that it could not be quickly swept under the rug. For the first time since the
creation of the Fed a century earlier, Congressman Paul and liberty-minded
forces were able to focus public attention on the globalist financial mafia
that is stealing our wealth, our national sovereignty, and our liberty. The
stakes are even higher now, and the American public may be more ripe than ever
before to force a full audit of the Fed — as a first step to, ultimately,
abolishing it, as well as terminating our membership in and contributions to
the IMF.
That
means relentlessly pressing your U.S. senators and congressman to support,
cosponsor, and vote for the Federal Reserve Transparency Act of 2013 (S. 209 in
the Senate and H.R. 24 in the House).
