Worried About a Cyprus-Style Raid on Your Savings? Too late

Worried About a Cyprus-Style Raid on Your Savings? Too late

stphillips/iStockphoto

Your governments are already helping themselves.

One question I’ve heard several times after the shocking Cyprus bank raid was, “How can a government just grab money out of its citizens’ bank accounts?” Another common question is, “How long until it happens in America?”

For those questioners, it’s bad news. It’s pretty easy for governments to take people’s money. And it’s happening right now.

The big difference between Cyprus and America or Britain, is that Britain and America have their own currencies. They’ve got all kinds of underhanded ways of taking citizens’ money. Cyprus can’t do that, so it had to be up front.

I’ll prove it to you. It’s slightly technical, but bear with me. This is how governments get away with it. They take the money in a complicated way and are safe in the knowledge that most people won’t notice.

We all know about inflation. A shopping trolley full of food used to cost $100. Now it costs $110. The price goes up. Another way of looking at it is that the dollar gets less valuable each year. In 2013, a dollar will only buy you about 90 percent of what a dollar would buy you at the start of 2008, before the financial crisis.

Let’s say you set $10,000 aside in a savings account at the start of 2008. And let’s imagine that since then, if you live in America, you’ve had one of the best interest rates available: 1 percent a year (the national average for a U.S. savings account is 0.12 percent, according to bankrate.com). By the start of 2013, you’d have just over $10,500 in your bank account.

But what used to cost $10,000 in 2008 now costs $11,000. You money isn’t worth as much—inflation has eaten away at it. In terms of 2008 values, you only have $9,554. Someone has taken $446 of your money!

Who’s Taken It?

That someone is the government. When Cyprus tried to take 6.75 percent out of people’s banks accounts, there were protests. But if you live in America, the U.S. government has gotten away with taking 4.46 percent of yours (and perhaps more, as we’ll see later).

Here’s how the famous economist John Maynard Keynes described it, as he paraphrased Lenin’s point of view: “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

They’ve done this through money printing. Since the start of the financial crisis, the government has been printing money at a huge rate. But printing money does not create wealth. The amount of wealth the nation owns stays the same. But all the dollars that everyone owns become less valuable. Money printing takes money away from everyone else, and gives it to those in control of the money machine.

The money printing is called quantitative easing (QE). In this day and age, when money is a number in a computer, the government doesn’t need to literally print the money. It conjures it up digitally. Quantitative easing involves the central bank using this new money to buy government bonds and other debt. This artificially lowers the interest rate—it makes it cheaper for the government to borrow money. It doesn’t have to spend as much on interest payments. It benefits. But you pay, as you get next to no interest on the savings in your bank account and your dollar becomes less and less valuable.

Around the time Cyprus hit the headlines, the British government announced that it was going to do more to grab its people’s savings. But because its way of doing it is indirect and complicated, it didn’t get anywhere near the attention. The Bank of England is supposed to be aiming to keep inflation at 2 percent. In reality, it’s been ignoring that target for months. But on March 20, British Chancellor George Osborne announced that he wanted the Bank of England to focus more on growth, and less on inflation. This is tantamount to giving it a license to print as much money as it wants. His announcement means that British savers will lose far more than the 6.75 percent that was up for grabs in Cyprus.

Central banks argue that QE is not money printing because it will be reversed. This means (in terms of old-fashioned printed money) that the bank promises that it will round up all its newly printed money a few years down the line, and burn it. In the long term, no new money is created because they’ll destroy it all later, they argue.

Can you imagine Britain or America, with their huge national debts, doing this?

If they did, it would have the opposite effect to printing the money. It would become more expensive for the government to finance its debt. Britain and America have not used the current low interest rates to get their finances under control. Instead they’ve been borrowing even more. They’re becoming reliant on this printed money keeping their interest costs down.

Leading financial figures are already admitting they’re not going to burn their newly printed money. “We must tell people that if necessary, QE will turn out to be permanent,” said the former head of Britain’s Financial Services Authority, Lord Turner.

“Quantitative easing will never be reversed,” wrote the Telegraph’s international business editor, Ambrose Evans-Pritchard. “It really is the same as printing money.”

How Much Money?

Now we come back to the question of how much money the government has taken out of Americans’ bank accounts. Our earlier calculation concluded that it was around 4.46 percent. Is that accurate?

Anyone who’s ever been shopping understands inflation. It’s simple. Measuring inflation is not. What used to cost you $100 now costs you $110. But I spent my $100 on a different basket of goods, and for me to buy those items now, it costs $115. For another person’s basket of goods, it now costs $105. How much inflation has there been?

But it gets worse. We used to watch movies on vhs tapes. Now we watch dvds. dvds, at least when they first came out, cost more than video cassettes. Is that inflation—because we now have to spend more to watch movies? Or do we need to find some way to take into account the fact that dvds are better? If so, how much better are they? Fifty cents better? One dollar better?

Unfortunately, measuring inflation is not as simple as reading a number off a machine somewhere. It involves all kinds of value judgements. There are several different types of inflation statistics. Who is in charge of deciding how the official figures are put together? Ultimately, the government.

There’s a huge conflict of interests here. The government has a big incentive to use an index that makes inflation look smaller—so it can get away with printing more money.

So let’s take another look at the $10,000 tucked away in a bank account in 2008. Even including the interest we received, that money will only buy us what $9,554 bought in 2008. That’s according to the government’s inflation index. But, if you look at it in terms of food prices, it’s worth $8,965. When put in those terms, the government’s taken $1,035, or 10.35 percent. That’s more than Cyprus was planning on taking from those with over €100,000.

But even this doesn’t represent all the government has taken.

In 2012, the U.S. government spent just over $3.5 trillion. Through QE, the Federal Reserve has printed $2.7 trillion. That’s a huge amount of money. The dollar is being destroyed before our eyes.

The 4.46 percent, or even the 10.35 percent missing from your bank account is not the full amount the government has taken. It is just the trickle of water that has seeped through the crack in the dam wall. Soon, the whole wall will break and the dollar will end up worthless.

Britain’s and America’s financial policies are destroying their currencies and silently robbing their citizens.

For more on how the government’s out-of-control spending is destroying the economy, see the latest From the Editor section of the Trumpet print edition, titled “We Don’t Have a Spending Problem.”

Tension Rises in Korea

Tension is rising on the Korean peninsula. Following recent North Korean threats toward South Korea and the United States, Washington has activated its missile defenses in the region. But what is really preventing peace between the Koreas?

On Wednesday, South Korea’s foreign ministry said the prospect of a North Korean missile launch is “considerable” and could happen at any time. Historically, North Korea seeks to draw the world’s attention with dramatic displays of military power on April 15, marking the birthday of its founder.

North Korean officials have not announced plans to launch a missile, but have told foreign diplomats in Pyongyang that they will not be able to guarantee their safety after April 10. Officials also have urged tourists in South Korea to take cover, warning that a nuclear war may be imminent.

Japan, too, is deeply concerned. The Japanese government said on Wednesday that it was on high alert and has deployed missile interceptors in key locations around Tokyo.

U.S. military officials have announced that American defenses are capable of intercepting a North Korean ballistic missile. The U.S. military has a Patriot missile air defense system deployed 50 miles from the North Korean border at the Osan Air Base. It has also moved two of the Navy’s missile-defense ships closer to the Korean peninsula, and another land-based system is being deployed to the Pacific territory of Guam.

The Chinese foreign ministry urged for “calm and restraint” on the Korean peninsula. But beyond words, China has done little to help end the conflict.

Beijing has been North Korea’s most consistent ally since 1950. The isolated, rogue state receives much of its oil, consumer goods, food and military support from China. With this dependency, China could immediately stop North Korea. But China is literally keeping North Korea alive for a very specific reason: to serve its own ambitions, regionally and globally.

North Korea’s continued provocations reveal that China is not an American ally, but an enemy.

For a more detailed and prophetic explanation on this issue, read “Why China Won’t Stop North Korea.”

Muslims and Christians Clash in Egypt

Clashes between Egyptian Muslims and Christians erupted early on April 6 in a town near Cairo. Security officials reported that at least four Christians and one Muslim died.

Police said the fighting began when young Muslims drew inflammatory symbols on an Islamic institute and a local mosque. Christian onlookers began arguing with Muslims nearby. Soon, residents wielding guns began firing on one another.

The Muslim Brotherhood, led by President Mohamed Morsi, condemned the sectarian strife.

Egypt’s Coptic Christians have long accused the state of discrimination. Copts comprise about 10 percent of the country’s 85 million people. They are the largest Christian community in the Middle East.

Egyptian Christians fear that the new Muslim Brotherhood leadership gives ultraconservative Islamic clerics and extremists a freer hand to attack Coptic churches and property.

Expect violence against Christians to spread in the Middle East as radical Islam gains power in the region. Then look for the Vatican to step up its defense of Christians within the region.

For more information, read “The Coming War Between Catholicism and Islam.”

Why Most People Don’t Understand Bible Prophecy

Biblical prophecy is a mystery even to most who read the Bible. The reason for that is that people lack the vital key that opens understanding of those prophecies. Did you know that it all revolves around the identity of the lost 10 tribes of Israel? You need this all-important key!

Benedict XVI—a Question of Time?

Benedict XVI—a Question of Time?

VINCENZO PINTO/AFP/Getty Images

Is the pope emeritus long for this world?

They say where there’s smoke, there’s fire. Barely weeks following the appearance of the white smoke out of the Vatican confirming the election of Pope Francis, his predecessor, Benedict xvi, is heavily rumored to be significantly ill.

Official Vatican sources deny that Benedict is suffering from any serious ailment. Certain journalists, however, are going public with the story.

Is there any truth in it? It’s hard to say.

Right now with Vatican sources remaining mum on the subject, there’s little to go on to confirm that there’s any truth to the story that emanated chiefly from the Spanish newspaper El Pais.

Journalist Paloma Gómez Borrero writing for El Pais indicated that Benedict will make no further public appearances and stated her belief that Benedict may not be long for this world.

The Telegraph’s Damian Thompson chimed in, using what appeared to be almost epitaph language: “I think all of us were distressed by the fragility of Pope Emeritus Benedict xvi when we saw him greet his successor, Pope Francis. The footage was almost too painful to watch. … His condition has apparently continued to decline. … [M]any of us regard [Benedict xvi] as the most inspiring pope of modern times. No pontiff for centuries has written and preached so brilliantly about the relationships between liturgy, evangelism and the shape of history” (April 10).

Catholic World News commented briefly, “Pope Emeritus Benedict has lost a significant amount of weight in recent weeks. He walks with increasing difficulty, reportedly has nearly lost vision in one eye, and has a history of cardiac problems. Nevertheless the Vatican has said that Benedict does not have any immediate life-threatening illness. He plans to move into his new residence inside the Vatican in May” (April 10).

The most reliable report on this subject appears to be from the National Catholic Register of April 10, which says that “Vatican doctors had noted with concern how he had become much thinner back in January, before he resigned. He had also begun to tire quickly and his personal physician, Dr. Patrizio Polisca, said his blood pressure was having strong fluctuations. He advised the pope to avoid air travel.”

Otherwise the Register follows the Vatican line on the subject.

Whatever the truth concerning Benedict’s state of health, one thing is for sure, he will continue to be a strong influence on the direction of the papacy of Pope Francis until the day he either dies or loses any capability of continuing to use his powerful intellect in the service of mother Rome.

Peace Is Coming to the Middle East!

EDMOND, OKLA.—On April 12, students of Herbert W. Armstrong College and Imperial Academy attended a performance of Shesh Besh at Armstrong Auditorium. The Arab-Jewish ensemble consists of three members of the Israel Philharmonic Orchestra alongside four of the finest musicians from Israel’s Arab community. Shesh Besh is a model of tolerance and mutual respect in a turbulent, violent Middle East. They were the recipients of the 2007 European Medal of Honor—Prize for Tolerance.

Shesh Besh’s appearance at Armstrong Auditorium was fitting. The concert hall is named after the late Herbert W. Armstrong, who was a supporter of peace and understanding between all nations. Mr. Armstrong oversaw several projects in the Middle East, including an archeological dig on the Temple Mount and initiatives to promote peace and understanding between Israelis and Palestinians.

The beautiful music performed by Shesh Besh in Armstrong Auditorium is a small foretaste of the eternal peace that is soon to come to the Middle East and the entire world. Many biblical prophecies point to this time of peace that will soon break out in the Middle East and across the Earth.

If you want a real picture of what this coming world of peace will be like, please request a free copy of our booklet The Way of Peace Restored Momentarily and a free copy of Herbert W. Armstrong’s inspiring booklet The Wonderful World Tomorrow—What It Will Be Like.