As of Friday, March 22, 2013
© Copyright 2013
The government of Cyprus is debating a tax on all savings accounts in order to bail out the bankrupt government. While many people believe something like that could never happen here, it's already happening here every day with a hidden "tax" called inflation.
Whenever we hear the Federal Reserve talk about "quantitative easing," this is nothing more than a fancy way of saying "printing more money out of nothing." As more money is created, the less valuable it becomes because it dilutes money already in existence. This means higher prices/inflation. Because Cyprus can't simply print money to pay its debts like the U.S., they will either have to default, borrow euros from another country or the ECB, or leave the euro and go back to using their old currency.
To think that an individual and/or country can live beyond its means by endless borrowing and spending is naive at best. Printing money to pay for debts only delays the inevitable of a currency collapse/hyperinflation. No unbacked paper currency has ever survived the test of time.