In 1932, FDR stole money from US savers. He declared a Bank Holiday during wich he removed the right of individuals to exchange dollars for gold at the existing fixed rate of exchange. When the banks reopened the dollars available to US savers were devalued in terms of gold. Individuals were not allowed to hold gold bullion even at the reset rate.
Yesterday, using the weekend and a new Monday Bank Holiday to effect its theft, the Government of Cyprus essentially followed the example of FDR. In order to secure an EU bailout, the Cypriot government agreed to steal significant sums of money from everyone – Cypriot or not, who is sufficiently foolish as to deposit savings in a Cypriot bank. For deposits below E100,000 accounts will be reduced by 6.7 per cent. For deposits at E100,000 and above, accounts will be reduced by 9.9 per cent.
FDR’s bank raid did not provoke open rebellion, as well it might have, even in New York and Washington, D.C.. The question hanging over Cyprus, when the Banks reopen on Tuesday next, is whether deposit holders will gun down members of the government in an attempted coup d’etat, or whether they will simply generate a bank run as they attempt to withdraw all deposits from a den of thieves.
How much new investment in Cyprus do you think that this theft will generate?