Wednesday, March 20, 2013

Those Cypriot "Expropriations"

All the wailing and gnashing of teeth in the international press about the EU's "expropriation" of citizens' money is misplaced. If you disagree with me, ask yourself what the alternatives are. The government could, of course, use everyone's taxpayer dollars Euros to bail out the Cypriot banks [and, by extension, its depositors]. Or it could, as Bernanke would almost certainly do, just print the money which would tax everyone in the long term as the purchasing power of their money deteriorated.

The last option is to let the banks fail and the let the depositors lose everything.

People aren't thinking this through.