Chicago Gold and Silver Investing Fan Blog

They Cyprus Effect Hits Australia

Zero Hedge reports that:

"the Australian government has just announced new rules which penalize citizens who have responsibly set aside savings for their own retirement.Any income over A$100,000 drawn from a superannuation fund (the equivalent of an IRA in the United States) will now be taxed at 15%. Previously, all such income was tax-free."

It seems like 100,000 seems to be becoming a magic number. In Cyprus, the talk was taht any deposits over 100,000 Euros would be assigned a levy and would be confiscated. In Australia, they are doing something similar in that if you draw any income over 100,000 Australian dollars, the government will tax it or another wasy of saying confiscate it.

This is a potentially dangerous trend. The government confiscation of depositor accounts made world wide news. This news in Australia to their tax code has barely made a ripple of news anywhere. Yet the effects are the same. That is if you are a saver, the government can legally take some of your money. The confiscation in not new. What is new is that government stealing your money through supposedly legal means could become common news and acceptable to the eyes of many.


State sponsored secret police or terror groups is not new. What I fear maybe new is public acceptance of state sponsored theft by the government.

An extreme example of this is the Cheka in 1919 Russia or the Gestapo in Nazi Germany. Those were state sponsored and state approved police terror groups. The Cheka could legally arrest, torture, and even do summary executiions to enemies of the state at any time. The Gestapo could listen the priests sermon and if the priest publicly denounced the regime, they could arrest the priest and send him to a concentration with maybe at most a show trial.

Governments today are not doing summary executions. What they are doing are state sponsered theft. And the worse part about it is that unless there is any kind of public outcry, they will continue to steal with impunity.

Central Bank: 5th plank of Marx's Communist Manifesto

Karl Marx's Communist Manifesto is the doctrine for those seeking a socialist dictatorship.

The United States and much of the rest of the world have a central bank. The the 5th plank of the Communist Manifesto actually calls for the establishment of a central bank.

When we have a central bank as advocated by the Communist Manifesto, how much of the banking system is actually dictated by free market conditions and how much of it is centrally controlled?

So why do socialist like central banks? It is about a control. A central bank controls the moneytary system. So as John Butler says in his article, "Marx and Lenin actually encouraged inflation as a means to confiscate wealth from the capitalists and concentrate it in a central bank owned and run by the state. The establishment of a central bank was plank 5 of Marx’s Communist Manifesto."

Cyprus Could Be the Snow Flake That Starts The Avalanche

All it takes is one snowflake in a tenuous mountainside to trigger an avalanche.

Cyprus could be the snowflake that starts a world wide run on banks and collapse the current fragile financial system.

Some people will blame Cyprus for agreeing to the crazy IMF terms. Some people will blame Germany for putting Cyprus against the wall and force them to make their decision. Some people will blame the Russians for using Cyprus as a tax haven.

It's not any of them. It is the powder keg that was created over the years.

As I right this, no one in mainstream America is even aware of the grave danger they are in. See, the United States is in an even bigger financial mess than Cyprus. One day - maybe much much sooner than anyone even thinks it could all blow up over here. One day Americans could wake up and see that their own governments have nationalized all banks and have confiscated- better yet stolen some of their wealth.

The United States government is already taking- no stealing - its citizens wealth. Maybe not as direct as the Cyprus government is doing. But they do it much more stealthily through currency devaluation, through interest rate manipulation, through various capital controls, through inflation, and more. The average American is not even remotely aware of the scam being perpetrated on them. The smart money is aware. The average middle class and average rich person has no clue.

One day a Cyprean type of event will happen here. When that happens there will be a scape goat. They could blame the conservatives, the Tea Party, the Republicans, the Democrats, the liberals, the Chinese, God, Wall Street greed, the Fed, George Soros, the banks, and/or a mutitude of other scape goats. But they cannot blame them, Americans must only look at themeselves, for only they are to blame because this is a situation that could have been prevented a long time ago. With courage, with strength, with conviction of doing the right thing.

Those who are smart, will take action before their money is confiscated and before their world collapses. The rest will have their money stolen and see their world collapse before their eyes and try to blame someone. Too late. A smart Cyprinian could have seen it all coming and got their money out of Euros and into something else of value. Now it is too late. Their money is gone and it won't be given back to them. The Russians will be very mad. They will not forget this. They will take corrective action and when they do some people will be even angrier.

 

Reichsfluchtsteuer

In extreme (and not so extreme) economic times, countries impose capital controls. What is a capital control? It is basically government intervention in the marketplace.

One rather extreme example of this is the policy of Reichsfluchtsteuer or Reich Flight Tax implemented in 1931 by Weimer Germany. The law basically was a tax or a seizure of a certain percentage of your assets if you left Germany. At first it was 25%, then it steadily increased to up to 96% by September 1939- the month and year Germany invaded Poland and started World War 2.

Jews were leaving Germany due to persecution. And what better way to fill the Nazi coffers than to seize the assets of Jews.

While this is a rather extreme example of a government sponsored capital control. It just shows you the extent an unrestrained government can do to its people.

Governments today are spending like mad and getting itself into unsustainable level debts. To pay for its spendthrift ways, they must seize from its citizens. Governments cannot produce wealth on its own they have to take it from someone else.

As individual countries get in worse financial shape look for more capital controls and seizure of wealth and income from its citizens or anyone that it can. It could take many forms: default, devaluation, inflation, government intervention in the marketplace, nationalization of certain industries, even more money printing,even more debt, and a host of other tactics. All of which are designed to take from others to pay for promises that they cannot keep.

Fortunately there is a bright side to this madness. Eventually, it fails. Nazi Germany and the Soviet Union were both socialist countries. Both viewed the state as almighty. There was no such thing as individual rights. In both regimes if you hoarded gold and money, kept extra grain or vegetables, or even said or thought anything negative against the state you could be sent to a concentration camp, a Gulag, exciled, or outright shot.

Nazi Germany and Stalin's Soviet Union are examples of government given to much control and abusing their power to where everyone- including it's own citizens were expected to be servants of the state.

Both regimes failed. In the case of Nazo Germany, foreign entities had enough of their tyranical and murderous ways and defeated them. In the case of the Soviet Union, inefficiency and social unrest led to a break up of the Soviet Union.

Today, the United States, Europe, Japan have gotten themselves into too much debt, have created too many promises they cannot fulfill, and are now seizing wealth from its citizens. Eventually their citizens will rise against the tyranny, or their fiat bases Keynesian economc system they have developed will collapse under its own doomed policies.

When that happens, hopefully a more sane market driven, less government intervention, gold (or something valuable) backed based currency system will take its place. Or we could go back to restart and do this madness all over again.