Tuesday, February 4, 2014

Our Bank Accounts are NOT Safe

Government & Banks Targeting Private Accounts in Several Ways

Think your deposits are safe? Don't bank on it. For example, last month Stephen Cotton walked into the British building where he had banked for 28 years, a branch of London-based giant HSBC. He filled out a withdrawal slip for £7,000 he owed to his mother. The bank refused to let Mr. Cotton have money from his account.

“When we presented them with the withdrawal slip, they declined to give us the money because we could not provide them with a satisfactory explanation for what the money was for. They wanted a letter from the person involved,” Cotton said. Mr. Cotton was understandably upset about the situation, “I've been banking in that bank for 28 years. They all know me in there. You shouldn't have to explain to your bank why you want that money. It's not theirs, it's yours.”

However, according to new banking laws, he is mistaken. Your deposits belong to the bank. All you 'own' is a deposit receipt, an IOU. And the banks have no responsibility to share this information with their customers. This has just become the scariest moment I've ever seen to keep money in an American bank account. Our politicians are desperate for more money and are considering several ways to grab the more than $20 trillion now in private bank accounts.

A 'perfect storm' is putting our bank accounts in danger. Here are five of the many forces creating this high-risk storm for savers:

1. The U.S. and other Western governments have agreed that future bank crises will be handled not by taxpayer bailouts but by “bail-ins” that first seize banks' “unsecured assets” to pay the government.

Did you know that when you make a bank deposit, your money legally becomes the bank's money, part of its 'unsecured assets?' All you get in return is the bank's IOU promising repayment. But if government seizes the bank's funds, you can kiss your assets goodbye.

Do you believe your accounts are insured by the Federal Deposit Insurance Corporation?  The FDIC has only $27 billion, less than one percent of what might be needed to cover more than $7 trillion of deposits that could be lost in a national financial panic and storm.

The FDIC and Bank of England in a December 2012 joint document agreed that government could seize customer deposits as part of a bank's property. Three months later, in early 2013, savers on the Mediterranean island of Cyprus awakened to find their banks locked and savings seized exactly this way.

You no longer own your bank accounts. The bank you trusted, controlled by government rules and regulations, does. If government wishes, it can now grab banks' accounts.

2. When President Barack Obama controlled both houses of Congress, Democrats created a powerful new regulatory agency, the Consumer Financial Protection Bureau, funded not by Congress but directly by the Federal Reserve. The CFPB's Obama-appointed director boasted that he is “exploring” ways to control Americans' 401(k)s, IRAs and other retirement plans.

"The runaway, unaccountable regulators at the Consumer Financial Protection Bureau would like to 'protect' the IRAs of U.S. citizens by making them into a $20 trillion ATM for the government,” warned famed financial author George Gilder.

This happened in 2008 in Argentina. Savers woke one morning to find that the money in their retirement savings had been replaced by government bonds of the same face value. Trouble was the real market value of Argentina's government bonds was only 27 percent of face value, so by this gimmick the government stole almost three-quarters of Argentines' retirement accounts.

American savers might likewise soon “be forced to buy Federal debt” by having their savings seized and replaced with government bonds,” wrote Forbes Magazine columnist William Tucker.

This certainly could now happen here because shortly before Christmas 2013, the Democrat-controlled U.S. Senate suddenly erased a 225-year-old rule allowing filibusters against certain presidential appointees. President Obama immediately used this change to pack the D.C. Circuit Court of Appeals with judges who share his ideology.  This is the second most important court in America, the court that prevents regulators from abusing their power. This change removed the last barrier preventing President Obama from ruling via regulatory agencies, and from taxing without the Congress by imposing huge regulatory fines and seizing trillions in bank accounts.

It was no exaggeration that experts called this Senate power grab 'the Nuclear Option.' It just blew much of what was left of our Constitution to smithereens and opened the door to the President confiscating the wealth of savers and banks.

3. President Obama's regulatory agencies in recent weeks also forced more than $15 billion in penalties out of one bank, JPMorgan Chase. In January 2014 Federal regulators opened a new probe in JPMorgan and three other giant American banks, a probe that almost certainly result in billions more in fines and penalties.

Depositors at JPMorgan and at five other of the biggest banks – which, combined, control more than 50% of private American bank accounts – reportedly have had difficulty withdrawing or wire-transferring funds from their accounts. I wonder if these reports might be early signs of "capital controls" these banks expect very soon to be ordered to impose.

We all remember an early Supreme Court Chief Justice writing that "the power to tax involves the power to kill." We're about to learn that government's power to regulate is also the power to kill.

4. In the United States and other major Western nations, easy-money-addicted spendaholic politicians able to print debased money have run up what a December 2013 International Monetary Fund (IMF) Working Paper by two famous Harvard University economists describe as the greatest "debt in 200 years."

The best way to deal with "the endgame" to this "global financial crisis" of stratospheric debt, propose Carmen M. Reinhart and Kenneth Rogoff, is a combination of debt restructuring, deliberate inflation, a “variety of capital controls under the umbrella of macroprudential regulation,” and “an opaque tax on savers” using “financial repression” to siphon off the purchasing power from saver bank deposits.

This confiscatory tax, targeting private savings accounts, is in keeping with the theories of late British economist John Maynard Keynes, who wrote that the “paradox of thrift” is that when thrifty people save money, they slow its velocity through the economy and make their nation less prosperous. 

President Obama's Keynesian economic policymakers have targeted American savings accounts not only because this is where most of the last vast pools of private wealth are – but also because their aim is to punish thrift and transfer saver wealth into the hands of Big Government spenders for redistribution.

5.  Another IMF study published in October 2013, titled “Taxing Times,” calls for a global “'capital levy' – a one-off tax on private wealth.” This tax, the study advises, ought to be “implemented before avoidance is possible,” apparently by surprise against the assets of the wealthy. And what are the assets easiest for government to locate, lock up and easily confiscate? Bank saving accounts.

You might not think of yourself as wealthy, but if you earn more than $34,000 per year, you are among the top one percent of income earners on earth. The world's current astronomical debt crisis could be solved, this IMF study predicts, with a one-time levy “of about 10 percent on households with positive net wealth.”

As Forbes columnist Bill Frezza noted, this IMF tax will go after everybody with property or bank accounts, “everyone with retirement savings or home equity... would have their assets plundered under the IMF's formulation.”

Financial wealth is mobile,” write the IMF experts, who call for “enhanced international cooperation to make it harder for the very well-off to evade taxation by placing funds elsewhere.” International tax havens, as the banks of Cyprus were before the regulators and financial controls took them over in 2013, must be ended to achieve “a revenue-maximizing approach to taxing the rich....”

There is a surprisingly large amount of experience to draw on, as such levies [on the wealthy] were widely adopted in Europe after World War I,” write the IMF experts.

And we all know how well that worked out,” retorts Bill Frezza.

Many successful Europeans fled with their wealth, leaving poverty and politicians behind. Germany's Weimar Republic sought prosperity as today's governments have – not through productivity but a printing press churning out endless debased currency that enriched speculators, not producers. The resulting devastation of conservative values such as thrift paved the way to a Great Depression and Adolf Hitler.

If you wish to save your savings, withdraw them now before the perfect storm strikes and confiscates them. Convert a surviving remnant of your cash into something of proven, solid value that the politicians cannot run off a printing press. You can already see the perfect storm converging, the flashes of its lightning, and the evidence that its targets include your bank account. It is already siphoning the purchasing power from your savings because “financial repression” is a deliberate policy holding the interest rate you receive lower than the rate of government-created inflation. You may have only hours or days before this storm strikes your savings account. But if you free your money now from the traps of paper currency and the bank, your life savings will suddenly be much safer.

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