Even though the Central Bank of Cyprus is showing the world – in stark naked detail – how governments will deal with their debt problems, there is no general panic.
Panicos Demetriades the governor of Cyprus’ central bank goes about his business… like Ben [Bernanke] and Mario [Blejer head of the Argentine Central Bank]… ripping off savers to protect the feds’ access to easy cash. In Cyprus, they even stab their major industry – banking – in the back to… what?
Protect their economy? Nope.
They do it to protect the power of the government. The economy can go to hell, which is what will happen in Cyprus.
Who will want to keep money in a Cyprus bank now? Only a fool… Or someone who reads the newspapers.
Read the papers, take them seriously, and you are ready to believe anything. The problem is partly a language barrier. The newspapers will tell you that that the authorities “saved” Cyprus… and the entire European financial system.
That is the trouble with the language of public information. The words mean little or nothing. It is just noise. Events are often exactly opposite in meaning to the description given them in the press.
Mots Justes
Someone cuts you off in traffic, and you know just what to say. You have the mot juste on the tip of your tongue even faster than you can raise your middle finger.
But what do you say to ZIRP (zero interest rate policy), which cuts off the earnings from your savings? What do you call QE3, which potentially undermines the value of your savings and your earnings by adding billions to the money supply?
We barely have words for the kind of premeditated larceny done by central banks and central governments. The meaning of them is hidden behind gobbledygook descriptions and noisy public information.
As an aside, the same is true in geopolitical and military matters. One generation learns that attacking one’s neighbors is bad business. The next forgets… and begins to invent nice new words to describe bad old habits. We have “surgical drone strikes” now, not assassinations! And we have “enhanced interrogation techniques,” not torture.
But it’s as hard to come up with something new in military affairs as it is in literature and economics. “Enhanced interrogation techniques” is a direct translation of the Nazis’ Verschärfte Vernehmung, right out of the Gestapo handbook.
Income vs. Capital
One of the rarely cited advantages of having money is that you’re less beholden to others who have it too. The more you have, at least in theory, the more you can ignore the other fellow with it, and go about your business. Nor need you drink the same cocktail or rush to the same mall so you can outfit yourself in the same duds.
In short, with a little capital of your own you can do what you want.
But we’re talking capital, not cash flow. The trouble with cash flow is that it doesn’t spring ab ovo from nowhere. It comes to your hands from the greasy mitts of someone else.
If they don’t keep the cash flowing, you may not have any. Unless you’re a government employee or a tenured professor, a job is just a job. You serve at the pleasure of others. If you give them displeasure, they can cut off your income.
Capital is different. If you have enough of it, you don’t have to work for anyone. You can go fishing, pick your teeth and maintain unpatriotic opinions.
Capital frees you from politics too. According to the most recent numbers, nearly half of U.S. households now rely on other people’s money for some or all of their income. They are beneficiaries of one or more of the feds’ transfer programs. Money is taken from others; it is transferred to them, as if to a getaway car.
The feds even have the chutzpah to give the recipients of this stolen loot an electronic card called the “Independence Card.” Independent is exactly what these people aren’t. Instead, says Charles Hugh Smith over at OfTwoMinds.com, they are like feudal serfs.
“The core of American liberty is widespread private ownership of property,” he writes. If you want to be free you have to have your hands on the “means of production.” Otherwise, you’ve got to learn to bend.
Imagine that you have zero equity in the house you own, Hugh Smith suggests. How free are you then?
Or imagine that you need to buy a house and need a mortgage. The mortgage market is almost 100% controlled by the feds. How free are you?
The Rise of “Neo-Feudalism”
But imagine that you rely on the feds for unemployment benefits, food stamps, healthcare or Social Security. Are you a free man? Or a serf?
Smith says we live in a condition of creeping “neo-feudalism.” A few people own a lot of property. Most own very little. His attention is focused on housing, where he believes the feds are quietly taking more and more property out of private hands and putting it in the hands of rich, concentrated elites.
He’s probably right about that. But it seems to us that even more neo-feudalism is taking place right out in the open — where large groups now depend on the feds… and on Fed’s EZ money… to maintain their current standards of living.
Balance the federal budget? Stop the Fed’s printing presses? Let interest rates rise to a normal level?
Forget it. The serfs can’t afford it.
About The Author
Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day: Surviving the Soft Depression of the 21st Century , Empire of Debt and Mobs, Messiahs and Markets.
His free daily e-letter Bill Bonner’s Diary of a Rogue Economist is your gateway to Bill’s decades of accrued knowledge about history, politics, society, finance and economics. Sometimes funny, sometimes frightening – but always entertaining and packed with useful insight, Diary of a Rogue Economist can help you make sense of the complex world we live in today.
See Also:
- NYSE Rate of Change (ROC)©
- Gold vs Oil Chart
- So Long, US Dollar As World’s Reserve Currency
- Bank Runs Can’t Happen- Right?
- Germany Will Exit Euro
This article is a compilation of two writings by Bill Bonner. The original articles originally appeared Here
Image courtesy of Sattva / FreeDigitalPhotos.net
