Home » Creeping Fascism » They’re Coming For Your Savings

They’re Coming For Your Savings

by John Rubino on October 12, 2013 · 30 comments

Another of history’s many lessons is that governments under pressure become thieves. And today’s governments are under a lot of pressure.

Before we look at the coming wave of asset confiscations, let’s stroll through some notable episodes of the past, just to make the point that government theft of private wealth is actually pretty common.

• Ancient Rome had a rule called “proscription” that allowed the government to execute and then confiscate the assets of anyone found guilty of “crimes against the state.” After the death of Julius Caesar in 44 BC, three men, Mark Anthony, Lepidus, and Caesar’s adopted son Octavian, formed a group they called the Second Triumvirate and divided the Empire between them. But two rivals, Brutus and Cassius, formed an army with which they planned to take the Empire for themselves. The Triumvirate needed money to fund an army of its own, and decided the best way to raise it was by kicking the proscription process into overdrive. They drew up a list of several hundred wealthy Romans, accused them of crimes, executed them and took their property.

• In the mid-1530s, English king Henry VIII was short of funds, so he seized the country’s monasteries and claimed their property and income for the Crown. As historian G. J. Meyer tells it in The Tudors: The Complete Story of England’s Most Notorious Dynasty:

“By April fat trunks were being hauled into London filled with gold and silver plate, jewelry, and other treasures accumulated by the monasteries over the centuries. With them came money from the sale of church bells, lead stripped from the roofs of monastic buildings, and livestock, furnishings, and equipment. Some of the confiscated land was sold – enough to bring in £30,000 – and what was not sold generated tens of thousands of pounds in annual rents. The longer the confiscations continued, the smaller the possibility of their ever being reversed or even stopped from going further. The money was spent almost as quickly as it flooded in – so quickly that any attempt to restore the monasteries to what they had been before the suppression would have meant financial ruin for the Crown. Nor would those involved in the work of the suppression … ever be willing to part with what they were skimming off for themselves.”

• Soon after the French Revolution in 1789, the new government confiscated lands and other property of the Catholic Church and used the proceeds to back a new form of paper currency called assignats. The resulting money printing binge quickly spun out of control, resulting in hyperinflation and the rise of Napoleon.

• During the US Civil War, Congress passed laws confiscating property used for “insurrectionary purposes” and of citizens generally engaged in rebellion.

• In 1933, in the depths of the Great Depression, president Franklin Roosevelt banned the private ownership of gold and ordered US citizens to turn in their gold. Those who did were paid in paper dollars at the then current rate of $20.67 per ounce. Once the confiscation was complete, the dollar was devalued to $35 per ounce of gold, effectively stealing 70 percent of the wealth of those who surrendered their gold.

• In 1942, after entering World War II, the US moved all Japanese citizens within its borders to concentration camps and sold off their property. The detainees were released in 1945, given $25 and a train ticket home – without being reimbursed for their losses.

Since the 2008 financial crisis, various kinds of capital controls and asset confiscations have become common. A few examples:

• Iceland required that firms seeking to invest abroad get permission from the central bank and that individual Icelanders get government authorization to buy foreign currency or travel overseas.

• Greece pulled funds directly from bank and brokerage accounts of suspected tax evaders, without prior notice or judicial due process.

• Argentina banned the purchase of U.S. dollars for personal savings and required banks to make loans in pesos at rates considerably below the true inflation rate.

• The US Fed proposed that money market funds be allowed to limit withdrawals of customer cash in times of market stress.

• Cyprus, a eurozone country, responded to a series of bank failures by confiscating 47.5% of domestic bank accounts over €100,000.

• Poland in September responded to a budgetary shortfall by confiscating the assets of the country’s private pension funds without offering any compensation.

• Spain was recently revealed to have looted its largest public pension fund, the Social Security Reserve Fund, by ordering it to use its cash to buy Spanish government bonds. Currently 90% of the €65 billion fund had been invested in Spanish sovereign paper, leaving the fund’s beneficiaries dependent on future governments’ ability to manage their finances.

Now for the big one, reported by Automatic Earth on Saturday October 12:

The IMF Proposes A 10% Supertax On All Eurozone Household Savings
This is a story that should raise an eyebrow or two on every single face in Europe, and beyond. I saw the first bits of it on a Belgian site named Express.be, whose writers in turn had stumbled upon an article in French newspaper Le Figaro, whose writer Jean-Pierre Robin had leafed through a brand new IMF report (yes, there are certain linguistic advantages in being Dutch, Canadian AND Québecois). In the report, the IMF talks about a proposal to tax everybody’s savings, in the Eurozone. Looks like they just need to figure out by how much.

The IMF, I’m following Mr. Robin here, addresses the issue of the sustainability of the debt levels of developed nations, Europe, US, Japan, which today are on average 110% of GDP, or 35% more than in 2007. Such debt levels are unprecedented, other than right after the world wars. So, the Fund reasons, it’s time for radical solutions.

The IMF refers to a few studies, like one from 1990 by Barry Eichengreen on historical precedents, one from April 2013 by Saxo Bank chief economist Steen Jakobsen, who saw a 10% general asset tax as needed to repair government debt levels, and one by German economist Stefan Bach, who concluded that if all Germans owning more than €250,000, representing €2.95 trillion in wealth, were “supertaxed” on their assets at a 3.4% rate, the government could collect €100 billion, or 4% of GDP.

French investor site monfinancier.com talks about people close to the Elysée government discussing how a 17% supertax on all French savings over €100,000 would clear all government debt. The site is not the only voice to mention that raising “normal” taxes on either individuals or corporations is no longer viable, since it would risk plunging various economies into recession or depression.

Here’s what the October 2013 IMF report, entitled Fiscal Monitor : Taxing Times, literally says on the topic, in the chapter called:

Taxing Our Way Out Of – Or Into? – Trouble
The sharp deterioration of the public finances in many countries has revived interest in a capital levy, a one-off tax on private wealth, as an exceptional measure to restore debt sustainability. (1) The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

There have been illustrious supporters, including Pigou, Ricardo, Schumpeter, and, until he changed his mind, Keynes. The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away (these, in turn, are a particular form of wealth tax on bondholders that also falls on non-residents).

It should probably be obvious that there is one key sentence here, one which explains why the IMF is seriously considering the capital levy (supertax) option, even if it’s presented as hypothetical:

The appeal is that such a tax, if it is implemented before avoidance is possible, and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair).

It all hangs on the IMF’s notion – or hope – that it can be implemented by stealth, before people have the chance to put their money somewhere else (and let’s assume they’re not thinking of digging in backyards, and leave tax havens alone for now). Also, that after the initial blow, people will accept the tax because they are confident it’s a one-time only thing. And finally, that a sense of justice will prevail among a population, a substantial part of whom will have little, if anything, left to tax.

Some thoughts
Will more countries introduce capital controls or asset confiscations in the next few years? Duh, of course. Debt levels are unmanageable, so they have to be lowered. And there are only three ways to do it: deflationary collapse that wipes out the debt through default, inflation that wipes out the debt by destroying the world’s major currencies, or stealing enough private sector wealth to reset the clock. Option one – depression – is political poison so will be avoided at all costs. Option two is being tried and is failing because the deflationary effect of trillions of dollars of bad debt more or less equals the inflationary impact of trillions of dollars of new currency.

That just leaves door number three, demonize the successful and take what they’ve accumulated. Recall from the historical list that opened this post that governments like to pick on members of society who 1) have lots of money and 2) have lots of enemies or can easily be framed for crimes. This time around it will be “the rich” who are living well at the expense of the rest of us. The trick will be to define “rich” down far enough to make possible the confiscation of middle-class IRAs and 401(K)s, since that’s where the real money is.

Interesting that the build-up to asset confiscation is coinciding with a coordinated take-down of gold and silver, the two assets that will be hardest to steal when the time comes.

 

  • Bruce C.

    This is a really evocative piece, both from AE’s analysis and JR’s, and it reminds me of several other articles that acknowledge the creative ways in which financial elites find a way to keep things going by “kicking the can” again and again.

    So in that spirit, rather than get all upset about the evils of collectivist thinking, I’d like to suggest a possible fourth way to deal with unmanageable sovereign debt levels, something that was not possible in the past but now is – at least in theory – thanks to all the world using purely fiat currencies: The central banks of the world, after buying up as much debt as the markets will bear, simply declares a debt jubilee on all of its holdings.

    After all, the money paid by central banks for bonds, or any other “asset” for that matter, is purely fictitious. It is literally created by double-entry accounting that nets to zero. Something real and objective, like gold or silver, was not paid out (like in the past) and so there is no “real” debt as far as the CBs are concerned. And what bond issuer (e.g., the US Treasury/taxpayers) would object to suddenly not having to pay monthly interest (and ultimately repay the principle) to the bond holding central banks?

    I suppose there would be some people who would find that pretty outrageous and potentially problematic, but frankly I don’t know what to expect from “people” any more. The fact that things have gotten this extreme and screwed up under “our” watch really begs the question. Furthermore, if the IMF is inclined to believe the geniuses cited above, that people would accept a stealth confiscation of wealth from the rich as a one-off event that is maybe even justified, then I submit “the people” would never ever understand a central banking debt jubilee being anything other than an altruistic gesture.

  • PaperIsPoverty

    Excellent piece, that’s a great list of historic confiscations….

    On the post-2008 list, we could add Hungary and Bulgaria, which have taken control of private pension funds: http://bit.ly/fnn1AO . Just a few days ago, Russia seized close to $8 billion in private pension monies (just “temporarily” — for a year — in order to “carry out inspections”): http://on.wsj.com/17x65s1 .

    It’s frightening that the IMF is suggesting implementing this tax suddenly and without warning, because governing bodies usually prefer to be incrementalists. Normally they’d rather impose a tiny tax at first and gradually increase it. They’d rather put us into cold water and bring us to a boil slowly, so we don’t protest. If they’re now talking about a 10% or more confiscation to be slapped on the public suddenly, then they are really afraid and the situation behind closed doors must be even worse than we’d imagined.

  • DaveZiffer

    Thanks PaperIs for your additions to the great points made in this article. I might also add that we don’t have to wait for confiscation to happen here in the U.S. because it’s already in progress. “Quantitative easing” is a combined act of theft and fraud. It’s theft because the Fed is stealing the income that savers would be earning at higher nominal interest rates. It’s fraud because the Fed is intentionally mispricing the values of the securities in which it is “investing” (with the stolen money from the savers). So the confiscation is already well underway. The only question at this point is how they will ramp it up to the next level.

  • Pingback: They’re Coming For Your Savings | Engelhard SilverEngelhard Silver()

  • Pingback: They’re Coming For Your Savings | Silver CoinsSilver Coins()

  • Easy E

    Taking private assets would be helpful…if there were enough. Theres not.

    Taxes…limited default…bond restructuring…

    Or war

    Drink up

  • tom

    In America, people don’t trust the government. They’re also heavily
    armed. There is no way the government is going to start stealing bank
    accounts. In a fiat system it’s not needed.

    The real issue for D.C. is ridding the government of debt. The easiest path will be taken. One that offends the fewest people and presents the least political blowback. The US government inflated in the 60s and 70s rather than default because the dollar was quasi-backed by gold. Today, it’s all fiat everywhere. We are in a deflationary environment and this will continue for decades.
    With little risk of inflation, QE can continue for a long time. The easiest path is what they’re doing and will continue to do. The Treasury issues debt and the Fed buys it. One day they’ll just do a debit and a credit and it all disappears. Problem over. There’s no need to confiscate anyone’s 401k.

    The real issue for anyone with wealth is how to invest it. QE and negative interest rates will likely continue for 20 years or more until the baby boom generation dies off and the social spending problem (SS, Medicare) dissipates. With unlimited money printing, spending and negative rates ahead but held in check by low money velocity, holding cash will be a slow motion disaster. They government has to prop up the stock market and pension systems and municipalities regardless. So, they’ll inflate financial assets while debasing the money. Properly managed it will work.

    I believe a person should hold about 25% of assets in physical gold as disaster insurance. A disaster is a possibility; I’m not ignoring that. Invest the rest in real estate and stocks. Hold 25% in cash. Can things all do to hell? Sure. But then your gold will soar.

    • LoungeLizard

      “In America, people don’t trust the government. They’re also heavily
      armed.” – That didn’t stop the government Gold confiscation in the ’30s.

      Have you been taking much notice of how your local Police ‘enFORCEment’ dept has been ‘Tooling’ up just recently?

      I agree with Max Keiser on this one (In an interview with Alex Jones). I’m paraphrasing but it went something like this – “If the Gun lobby truly believed in the second amendment and the use of arms in the face of tyranny then they would have already used them by now”.

      “With little risk of inflation, QE can continue for a long time.” – You’re joking right? I take it you haven’t been the main purchaser of groceries and energy in your household for very long.

      It’s not just stock prices that have been pushed up by QE. With a statement like that one assumes your salary is also directly index linked to the Fed bond purchasing scheme.

      “I believe a person should hold about 25% of assets in physical gold as disaster insurance. A disaster is a possibility; I’m not ignoring that. Invest the rest in real estate and stocks. Hold 25% in cash. Can things all do to hell? Sure. But then your gold will soar.” – I’ll agree with your sentiment on Gold, but I wouldn’t go near stocks, cash (Aside from a running float) or real estate in the event of a real crash (Not the 2008 fabricated kind, but a proper 1930’s ‘guys jumping out of windows’ event).

      Farmland is the place to be. All those poor & hungry mouths are going to need feeding…(That’s when your firearms may come in useful).

      In times such as these I spare a thought for the Amish. Doesn’t seem such a bad lifestyle when all things considered…(Except the religious bit).

    • pipefit9

      My guess is that guns will be confiscated at some point in the near future. Probably right after the coming hyperinflation.

      The possibilities are almost endless. Here’s one. They will announce that a biological agent will be released to kill all the filthy terrorists infiltrating our country. Come forward, with all your guns, to get your vaccine, and to put your guns into safekeeping. You must pass a lie detector test to get the vaccine.

      They could confiscate gold in the same way. Far better to assemble a basket of tangible goods, so the confiscation of one or two items doesn’t break you.

  • Pingback: It's the Weekend Thread - Oct 12th & 13th - - Page 2()

  • EdwardUlyssesCate

    One more warning today:

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10374998/US-banks-no-longer-too-big-to-fail-says-Tucker.html

    “The deputy governor of the Bank of England has declared an end to the era of taxpayer bail-outs for the world’s giant lenders.”

    Now come the bail-ins.
    Sigh.

  • Frank

    I like this nonsense, “The appeal is that such a tax, if it is implemented before avoidance is
    possible, and there is a belief that it will never be repeated, does not
    distort behavior (and may be seen by some as fair).”

    I think people would alter their behavior just a little bit, like taking all of their money out of the bank.

    • Whose on first.

      what about pensions there slick.

  • http://www.olduvaiblog.wordpress.com/ Steve

    It is often said that “history doesn’t repeat itself, but it sure can rhyme.” While I agree with your analysis and prediction regarding confiscation of ‘the rich,’ one wonders whether the super-elite would be touched; you know, the ones who pull the strings: banking cartel, military-industrial complex, etc..

  • Pingback: Guest Post: They’re Coming For Your Savings | DailyDeceit()

  • Pingback: Guest Post: They’re Coming For Your Savings | peoples trust toronto()

  • Pingback: They Are Coming … “IMF Proposes A 10% Supertax On All Eurozone Household Savings” … For Your Savings!()

  • Pingback: Guest Post: They’re Coming For Your Savings | FXCharter()

  • Pingback: Guest Post: They’re Coming For Your Savings – The News Doctors()

  • Pingback: Guest Post: They’re Coming For Your Savings | IndyInAsia-Pacific()

  • Pingback: WHAT IS YOURS….WILL BE OURS, AND WHAT IS OURS….WILL NOT BE YOURS « The Burning Platform()

  • Pingback: They’re Coming For Your Savings – By John Rubino | The Freedom Report()

  • Pingback: Prepper News Watch for October 14, 2013 | The Preparedness Podcast()

  • Pingback: They’re Coming For Your Savings - Freedom Gold Group()

  • Pingback: Governments are Coming For Your Savings | unaxe.wordpress.com()

  • David

    Another way that they can confiscate your savings will be requiring some percentage of your IRA or 401K be invested in US Bonds. Oh it will be pitched and sold as a financial security measure, that stocks are too risky, people need to diversify, etc and will will all be made to sound like a good thing.

  • orneryold guy

    I think that the most obvious way to reduce the debt would be to simply spend less. However i suppose that will never be considered.

  • Pingback: Guest Post: They’re Coming For Your Savings ~ ZeroHedge | 2012 The Awakening()

  • Pingback: Guest Post: They’re Coming For Your Savings ~ ZeroHedge | sweetwillowman()

  • CryThyBelovedCountry

    Who will recieve all this money that is stolen by government? Who are the people that this money is owed to?


[Most Recent Quotes from www.kitco.com] [Most Recent USD from www.kitco.com] [Most Recent Quotes from www.kitco.com]