Helaine’s Blog

Cyprus is no reason to hide your money

March 22nd, 2013 | via The Guardian

Right-wing pundits are scaremongering over fears the US will be the next Cyprus, which is is totally out of the question

My late Tante Bessie had a bank account. In fact, she had more than one. Like a lot of people who lived through the Great Depression as adults, she didn’t really trust the banks. She liked to spread her Social Security and pension checks around.

Just in case all those institutions went at once – or Ronald Reagan decided to call a bank holiday – Tante Bessie also kept some cash around the house. But don’t think Tante Bessie kept her money under the mattress. She was way too savvy to pick such an obvious spot. Instead, she wrapped it in tinfoil, labeled it “chicken liver” and placed it in her freezer.

This is no apocryphal family saga. I know. My mother made me clean out Tante Bessie’s refrigerator and freezer after she moved into an assisted living residence. I unwrapped every last piece of frozen meat.

So let me take this moment to issue a personal plea. Don’t let the recent events in Cyprus scare you into becoming my Tante Bessie.

Yes, I shouldn’t need to tell you this. Hell, Federal Reserve Chairman Ben Bernanke should not have had to remind a press conference yesterday that the US provides insurances on bank deposits – and, in 2008, the United States actually increased investor protections to stop bank runs.

However, you might be worried about the sanctity and safety of your funds right now if you are getting your info from a number of conspiracy-oriented blog sites, not to mention a certain television news network that claims to offer “fair and balanced” information.

In the view of these news sources, the situation in Cyprus was not a cock-up of the first order – despite the fact that European regulators were attempting to force the nation’s parliament to approve a plan to tax all bank account holders anywhere between 6-10% to pay for serious funding shortfalls in the country’s banks, and instead succeeded in setting off what promises to be a serious bank run whenever the institutions are finally allowed to reopen.

No, this was a trial balloon, some misleading pundits say. Today: Cyprus. Tomorrow: the world.

Just listen to anchor Stuart Varney: “Well, who’s next? Which other governments, which have run up enormous debt, will also go toward seizing private bank accounts? Who else is next? Maybe Spain, maybe Italy, how about America? Is it out of the question totally?”

Actually, yes. It’s out of the question.

Let me explain where a lot of this scare mongering is coming from. There has been an on-again, off-again rumor since the 2008 campaign that Barack Obama has a secret and diabolical plan to confiscate our retirement savings to plug holes in the federal budget. That supposed fact has been repeated by Rush Limbaugh numerous times and is generally believed by the sort of people who remain convinced that the current United States president was really born in Kenya.

Okay, we expect this stuff from nether reaches of right wing radio and the Internet. Alex Jones, who also argues that the United States government was in on 9/11, hosted my favorite doomsayer Gerald Celente earlier this week, who proclaimed, “You’re hearing now from the American Banking Association, from DC, don’t worry about it, Americans. Your money is insured. Yeah, just like it is insured over there in Cyprus.”

Another, more obscure website led off a post on Monday with the subject head, “When Dear Leader pulls a Cyprus and seizes 24% of your 401(k) don’t say I didn’t warn you.”

10%, 20%, what’s the difference when the government plans to filch your savings?

Okay, we all know the Internet is a sewer for this sort of stuff. No one is inviting Alex Jones to a White House or Federal Reserve press conference any time soon. And unless you go looking for it, you are unlikely to simply stumble onto this sort of talk online.

Our television networks, on the other hand … if you have cable television, you just need to turn it on and, voila! There you are, flipping channels and you can hear Washington Post columnist Charles Krauthammer proclaim on that station that claims to be fair and balanced, “America’s … headed the way of Cyprus.”

Nice. Let’s scare the viewers. Maybe a few of them will run to the bank or their brokerage account, withdraw all their money and think “chicken liver.”

To be fair, fear is a normal response to what occurred in Cyprus this week. You don’t have to be a conspiracy theorist to understand why breaching sovereign guarantees on the absolute safety of money deposited in banks should be a no-go zone – even if some of that money belongs to Russian oligarchs who likely obtained it in less-than-honest ways.

That’s why it is so flamingly irresponsible for a major network to rile people up about this rather ghastly event. The fact is the United States is in a very different position from Cyprus and, for that matter, the other European countries thought to be most at risk of being next in the crisis parade: Portugal, Ireland, Italy, Greece and Spain. Why are we different? The United States government controls its own currency. This is what has allowed the Federal Reserve to engage in round after round of quantitative easing to bring the United States economy back from the brink in 2008.

So there is no way another country could come along and tell us we need to “tax” our account holders. Nor would our government do it either. Why would it? It can just print more of it. Cyprus, when it went over to the Euro and gave up control of its currency, lost that right.

So skip the chicken liver. If nothing else, you don’t want to do that to your loved ones. Trust me. It was no fun cleaning out that freezer.

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