Cyprus "Deposit Tax"
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I've got mixed feelings from this one. Typically, when countries hit unsustainable debt levels, they either try to inflate their way out of it, or devalue the currency. The Euro common currency has taken the option of devaluation out of the picture. So this would seem like a way to achieve the same result. Let’s be honest, inflation, currency devaluation or taxing deposits all have the same effect, they take from the savers. It’s one of the big risks of holding cash (as opposed to stocks / real estate).
What worries me is that while the effect is the same, the psychology of it is likely to lead to a fair old run on the banks, which are already in a poor state. Sounds like a pretty sure fire way to bring on an additional banking crisis. See how it goes, but there might be some opportunities to deploy some excess liquidity into stocks soon!
<edited for multiple typos>
What worries me is that while the effect is the same, the psychology of it is likely to lead to a fair old run on the banks, which are already in a poor state. Sounds like a pretty sure fire way to bring on an additional banking crisis. See how it goes, but there might be some opportunities to deploy some excess liquidity into stocks soon!
<edited for multiple typos>
Apparently Berlin is demanding this as Cyprus is a notorious tax haven for the Russian mafia and the like. Which is no doubt true, but it seems a very reckless gamble to hit ordinary savers and risk a bank run. Apparently Osborne is going to compensate some of the many Britons who live there, but will be of no comfort to the cypriates. http://m.bbc.co.uk/news/uk-21820237
It would be interesting to determine how much money in Cyprus banks is illicit. They have been a notorious money laundering country for quite awhile.
@Seneca
Actually, Secretwealth should be telling you to just drop it. His first comment in no way brings up this argument, but you insist on bringing it up anyway. Then you purport to be the "bigger man" by pretending Secretwealth started it, when he is just responding to you. What is this grade school?
@Seneca
Actually, Secretwealth should be telling you to just drop it. His first comment in no way brings up this argument, but you insist on bringing it up anyway. Then you purport to be the "bigger man" by pretending Secretwealth started it, when he is just responding to you. What is this grade school?
- jennypenny
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Western European and North American governments have various levels of debt distress and demographic challenges but all have Them. This problem is not going away soon and it will impact ERE living.
They are dealing with it in different ways as bigchrisb points out. The US is doing it in the manner I originally, if inelegantly, posted for now. Income, not savers. That could definitely change.
There is little way to predict these things other than to pay attention and be ready to adapt quickly. Diversification is certainly a proven strategy.
They are dealing with it in different ways as bigchrisb points out. The US is doing it in the manner I originally, if inelegantly, posted for now. Income, not savers. That could definitely change.
There is little way to predict these things other than to pay attention and be ready to adapt quickly. Diversification is certainly a proven strategy.
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Wealth tax ("savers" tax).
Property tax.
Income tax.
Consumption tax (sales tax, VAT).
Use tax (toll roads).
None of it matters.
If I were a Russian oligarch laundering money through Cyprus, I'd be annoyed and adapt, but I'd still be playing the game because accumulation of wealth is still better than having no wealth.
In the USA, accumulating enough wealth to opt out of the working class and become one of the investor class will decrease your taxes. You can do it quicker by decreasing expenses.
Property tax.
Income tax.
Consumption tax (sales tax, VAT).
Use tax (toll roads).
None of it matters.
If I were a Russian oligarch laundering money through Cyprus, I'd be annoyed and adapt, but I'd still be playing the game because accumulation of wealth is still better than having no wealth.
In the USA, accumulating enough wealth to opt out of the working class and become one of the investor class will decrease your taxes. You can do it quicker by decreasing expenses.
This would cost me about $375 (unless they raided cash in retirement accts)...
I'd probably start banking with my mattress (hope it was worth it, Cyprus!) but I'd take this over some of the things the "safe" US has done any day:
https://en.wikipedia.org/wiki/Executive_Order_6102
Not only did you have to go turn in formerly legal tender, which was subsequently devalued by 75%, but you were threatened with $800k (adjusted) fine and 5-10 years for noncompliance.
I'd probably start banking with my mattress (hope it was worth it, Cyprus!) but I'd take this over some of the things the "safe" US has done any day:
https://en.wikipedia.org/wiki/Executive_Order_6102
Not only did you have to go turn in formerly legal tender, which was subsequently devalued by 75%, but you were threatened with $800k (adjusted) fine and 5-10 years for noncompliance.
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Gold can be confiscated. Cash can be confisc... ahem, "taxed". Bonds can be defaulted upon. Stocks can go bankrupt. Real estate can be seized via eminent domain.
No need to pick on the PP. Once the government decides they want your money, there's no such thing as a risk-free investment.
But FWIW, situations like this are why the PP advocates holding some gold coins outside of your home country.
No need to pick on the PP. Once the government decides they want your money, there's no such thing as a risk-free investment.
But FWIW, situations like this are why the PP advocates holding some gold coins outside of your home country.