Prepper Recon

Cyprus Bail Out Sparks Bank Run

Cyprus Bail Out to Cost Savers Billions of Euros

Happy days are here again! The Dow hit a new high last week and the storm clouds seem to have disappeared. Not so in Cyprus. The Island near Greece  has been struggling to stay afloat. Euro Zone finance ministers are finished with throwing good money after bad. They are demanding that Cypriots have some skin in the game if they are going to pony up capital to bail the country out. Cypriot President Nicos Anastasiades issued a stern caveat if the bail out failed. He stated that Cyprus’ two largest banks would likely fail without the assistance from the other European Central Bank members.

The terms agreed upon for the bail out are that bank deposits have a onetime tax levied against them at the rate of 9.9% for deposits of over 100,000 Euros and 6.7% for those under the 100,000 Euro threshold. The levy is set to take effect on Tuesday morning after a bank holiday on Monday. As soon as the news leaked out, Cypriots ran to ATMs to withdraw as much cash as possible. ATMs were drained within hours of the run.

Cyprus Bail Out Bank Run

It Could Never Happen Here

We are fortunate to live in America where nothing like that could ever happen. We can continue to enjoy a soaring stock market despite the economic pain felt by the rest of the globe. Well, better them than us, right? I just feel so bad for the people of Cyprus being taxed out of their savings by the government to bail out banks and bureaucracies. It is too bad the government of Cypress could not have come up with a method of taxing Cypriots with out them knowing. Perhaps if they had their own currency instead of Euros, they could have had their own central bank print the money out of thin air. In fact, this magical bank could have printed the 9.9% that they needed for the bail out. Sure, it would have devalued the purchasing power of those accounts by the exact same amount as the tax levy, but the depositors wouldn’t have know it. Ignorance is bliss.

It Already Has

As I write this, it sounds like a familiar scheme. Where have I heard this before? Oh! That’s right! The Federal Reserve! They have promised to print $85 billion a month or $1.05 trillion a year through at least 2015. With our current M2 money supply at roughly $10 trillion, that devalues the currency by 10% this year, 10% next year, and 10% the year after that. Wow! I should move my accounts to  Cyprus. Compared to the  30% stealth tax over the next 3 years by the Fed, 9.9% doesn’t seem so bad.

So why don’t we see the bank runs like Cyprus is experiencing right now? Because ignorance is bliss. Americans are too caught up in American Idol and sports to realize they are being fleeced. Not to say they always will be. More and more Americans are waking up to the fact that their currency is being devalued at a phenomenal rate. We may someday experience a run on the banks like we are seeing in Cyprus. That is why we recommend keeping some cash in a well secured place like a home safe that you can access quickly. Inflation is the addition of new money to the money supply. Price increases are the eventuality of that increase in the money supply. To protect ourselves from the constant increase in the money supply,  we keep a portion of our assets in gold and silver. I purchase my gold and silver from JM Bullion as I have found they offer the lowest over spot price for bullion. Prepper Recon readers get $5 off all orders of $300 or more from JM Bullion with the coupon code PR5.

If you are new to prepping or would like to kick it up a notch, read out 7 Step Survival Plan. It will help you to be better prepared for everything from a hurricane to a complete currency collapse.

Happy Prepping!