Submitted by Phoenix Capital Research on 07/04/2014 15:56 -0400
The biggest problem with the epic Central Bank rig of the last five years is that propping up a bankrupt financial system by printing money only works for so long.
The reason for this is that no one, whether it be a country, company, or person, can defy mathematics.
A loan can be extended, it can be restructured, or it can be finagled in countless financial ways. But at the end of the day, if your creditors lost faith in your ability to repay it… it's GAME OVER.
History has shown many times that countries try to inflate their debts away until the inevitable restructuring occurs. As Argentina is now showing us, when the "D" word becomes palpable, markets move quickly.
Anyone who is truly concerned about their wealth in the coming years needs to assess what has happened in Europe: higher taxes on top earnings and bail-ins (meaning your bank deposits are raided to fund bank bailouts).
Indeed, the IMF recently proposed a "global wealth tax" to "restore debt suatainability."
Here's the critical quote:
Indeed, in the case of Cyprus, the proposed wealth tax of 7% of all deposits over €100,000 quickly rose to an incredible 47%! Those individuals whose deposits were seized received equity in the banks themselves.
This scheme has been used in Spain multiple times… though the press has yet to note that when the banks FAIL, that equity is worth ZERO.
Cyprus has since released some of these funds though they are subject to capital controls (READ: YOU CANNOT GET YOUR MONEY OUT OF THE COUNTRY).
1) Cyprus staged a bail-in, froze accounts, and took 47% of wealth over the first €100,000.
2) EU Finance ministers announced this policy will be a "template" for bailouts going forward.
3) The IMF hints that a global wealth tax might be a good thing.
Connect the dots...