Bail-outs, Bail-ins, Negative Interest Rates….Oh My!

bailout-money

As the global economy fails due to heinous banking practices, bankers are devising more and more ways to extract money from people’s pockets.  These events are happening faster than before, and the scope of who it applies to is increasing as well.   Will these practices happen in the good ol’ USA?  My answer…most definitely yes.  It may not be the exact sample mechanism of action for wealth extraction, but wealth extraction nonetheless will occur:

Per a recent Zero Hedge Article – Germany Blesses “Bail-In” Deposit Confiscation…

One year earlier than required, the German government approved plans to force creditors into propping up struggling banks across Europe. As WSJ reports, Germany “leads the way” in Europe by implementing European rules quickly and “creates instruments that allow the winding-down of big systemically relevant institutions without putting the financial stability at risk.” What this means is that taxpayers (theoretically) will not be on the hook (though in reality we are sure the mutually assured destruction defense will be played – especially if Deutsche runs into problems) but as German authorities explain, “This ensures that in times of crisis mainly owners and creditors will contribute to solving the crisis, and not taxpayers.” As a gentle reminder – creditors includes depositors… remember Cyprus?

So, let us rehearse some terminology here.  When the US had the bank “bail outs”, the government took tax payer funded money to prop the banks back up.  Now, while we like to call it “our tax payer funded money”, it is really not that personal.  As our income tax is extracted with every paycheck, we have a very impersonal relationship with it.  Bail-ins are a completely different story.  In a bail-in scenario, the banks are permitted to extract money directly out of your credit and savings accounts!   If you are unfamiliar with this term, read this article about how it has happened in Cyprus.  Those individuals with bank institutions in Cyprus that had over 100,000 euros had 47.5% of their wealth completely extracted by the banks.  Can you imagine having 50% of your bank savings simply taken away by banking criminals?!

So, while the above article says that taxpayers will not be on the hook for any more bank “bail outs”, almost everyone is still in scope of wealth confiscation…just by a different mechanism of action.

Another ridiculous scheme happening in Europe is negative interest rates on deposits.  For a moment, I will not get into how the entire banking system is a fraud and will explain negative interest rates in a more honest manner.  When you make a deposit into your savings account at the bank, you are allowing the bank to loan out your money to other customers.  In exchange, they will pay you a marginal interest rate for allowing the bank to use your money in that manner.  Imagine now that they will no longer pay you money to use your money.  What if you had to pay the bank for them to loan out your money?  Pretty ridiculous eh?  Well, that is what is occurring.

Could this happen in the USA?

These events are not happening in the USA at the moment because the dollar is the world reserve currency.  As it is used across the globe, we have a free pass on the printing presses.  When we need more money, we simply jump start the printing presses with help from the Federal Reserve & Treasury and POOF, there are funds.  With smaller more dependent nations like Cyprus or other states in the European Union, they cannot control a Euro printing press.  Therefore, the only funds available to the country are those that reside directly within it (e.g. – taxes, bank accounts, property, etc.).

These events will occur if the dollar ever loses its reserve status.  And if you’ve been following the news lately, countries across the world are starting to dedollarize.

In the meantime, how will the US take our money?  Well, you have multiple mechanisms that might play out:

  1. Confiscation of retirement funds.  Some examples are: Detroit confiscation of pensions for bankruptcy, Obama’s MYRA program, proposal for government to manage 401Ks, etc.
  2. Simple overtaxation
  3. More bail-outs but for different institutions (e.g. – Obamacare insurance bailouts, student loan bubbles, etc.)

The trend is clear…we are headed for very difficult times.  Our wealth will at some point be extracted by one mechanism or another, forcing the majority of the middle and lower class onto the streets.  Prepare accordingly!