Greece has revealed it is to introduce a surcharge for all cashpoint withdrawals and financial transactions in a desperate attempt to prevent citizens withdrawing their money from the country’s beleaguered banks.
Let that sink-in. The government is taxing people if they choose to withdraw their own money!
Greek citizens were taxed when they made the money. They got taxed on any money their money made (interest.) Now the government is making a last ditch effort to slow the run on the banks by taxing the people’s money if the people decide they’d like to keep it.
Greece would not need this new tax if they had not just elected an anti-austerity government that has spent months thumbing its nose at the EU nations that had lent is so much money.
As the Greek economy teeters on the verge of bankruptcy, millions of panicking citizens have completely cleared their accounts – pulling more than €28 billion out of banks and pushing the total cash revenue held in the country’s financial institutions to a 10-year low.
The question is, could it happen in America? And the answer is YES – easily.
Many Americans keep precious little cash on them and even less in personal stores (outside banks.)
Recently the largest American banks are telling customers that they can neither store cash in safe deposit boxes or use cash to pay bills owed to the bank.
Deflation is the most-urgent concern of the Fed, which is why several re-wordings, interest rates have stayed scarily near zero.
It won’t take much of an alarm to scare U.S. account holders into pulling their cash from the bank. In a fractional reserve system – that spells trouble.
To avoid a bank run, the Fed could push for regulations making it too expensive to withdraw cash – the Greek withdrawal tax being an excellent example. More than likely, this would start a panic and a 1930’s -style bank run.