Cyprus Bank Grab Happening in US, Slowly

Thomas Sowell: The fed is subtly making the money you've saved less valuable

By Kevin Spak,  Newser Staff

Posted Mar 26, 2013 1:39 PM CDT

(Newser) – When Cyprus came up with its plan to take money out of its citizens' bank accounts, many Americans were aghast. Could such a thing, they wondered, ever happen here? "Yes and no," writes Thomas Sowell at RealClearPolitics. "The US government is very unlikely to just seize money wholesale," he argues, but "there are more sophisticated ways for governments to take what you have put aside for yourself and use it for whatever the politicians feel like using it for."

The big difference between the US and Cyprus is that the US government can simply print more money when it's in trouble—and it has. The ongoing "quantitative easing" process is basically the Fed "creating money out of thin air," causing inflation. Prices rise, and "this new money buys just as much as the money you sacrificed to save for years." Meaning that, while all your money is still in the bank, it's less valuable. "Is that really different from what Cyprus has done?" Click for the full column.

Cypriot students shout slogans as they stand at an entrance of the presidential palace in capital Nicosia, March 26, 2013.
Cypriot students shout slogans as they stand at an entrance of the presidential palace in capital Nicosia, March 26, 2013.   (AP Photo/Petros Giannakouris)
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