Coin Shortage

As if the global economic disaster caused by the Chinese Covid-19 viral pandemic was not bad enough, the looming global “coin shortage” and the “unknown pneumonia” (Covid-20?) in Kazakhstan are here. https://www.msn.com/en-us/news/world/kazakhstan-chinese-officials-warn-of-new-unknown-pneumonia-that-is-deadlier-than-coronavirus/ar-BB16yZ3C

Why exactly do we have a coin shortage?

-          Banks tell us that the Fed are not releasing enough coins.

-          Armstrong Economics wrote that faith in governments has been eroded. It sees governments as promoters of the idea that money is dirty, and the solution is to eliminate coins and paper money even though physical money as a medium of exchange has been in circulation for centuries.

-          The U.S. Treasury reported a disruption in the coin supply chain and its velocity of circulation due to the lockdowns and the huge reduction in consumption in the last four months of forced lockdowns in all 50 states. People shopped mostly for food and avoided all other venues of direct commerce for fear of Covid-19 infection and because so many places were closed. Many shopped online or in large retailers like Costco, Target, Walmart, and Amazon.

-          Allegedly, the U.S. Mint has minted less coins to protect employees from COVID-19. It is an interesting issue to ponder since minting coins and printing paper currency are highly automated operations, with expensive computers driving the printing and minting presses and requiring very few employees, mostly in checking roles to make sure the machines run properly and the mint/print are done correctly, as well as controlling the quality of each batch that is bound and packaged for distribution and circulation.

-          Some central banks are sterilizing money with UV light to prevent the spread of viral infections.

-          The Fed purportedly quarantined for ten days U.S. dollars returning from Europe and Asia. https://www.armstrongeconomics.com/armstrongeconomics101/economics/hoarding-cash-2/

The U.S. Treasury sees the current coin shortage in U.S. businesses as a decrease in velocity of various coins in circulation. The Treasury estimated the value of coins in circulation in April 2020 of $47.8 billion as an adequate coin supply, larger than last year’s supply of coins by at least half a billion. But the closing of retail shops, many permanently, bank branches, transit authorities, and laundromats due to Covid-19 fears, eliminated the typical places where coins enter circulation.

Nobody knows exactly if people are hoarding coins on purpose or if the businesses that have closed temporarily or permanently have cleared out all their cash registers of coins and paper currency.

“The coin supply chain includes many participants, from the U.S. Mint who produces new coin, to the Federal Reserve who distributes coin on the U.S. Mint’s behalf, to armored carriers, banks, retailers and consumers, all of whom have a role to play in helping to resolve this issue.” 

On June 11, the Federal Reserve announced the Strategic Allocation of Coin Inventories which was a temporary coin order allocation in all Reserve Bank offices and Federal Reserve coin distribution locations effective June 15, 2020.

The Federal Reserve also established a U.S. Coin Task Force in early July to deal with disruptions to normal coin circulation.  All interested parties participated – U.S. Mint, Federal Reserve, armored carriers, American Bankers Association, Independent Community Bankers Association, National Association of Federal Credit Unions, Coin aggregator representatives, and retail trade industry. https://www.frbservices.org/news/communications/063020-federal-reserve-convenes-us-coin-task-force.html

The Federal Reserve said that “it is confident that the coin inventory issues will resolve once the economy opens more broadly and the coin supply chain returns to normal circulation patterns, however, “it recognizes that these measures alone will not be enough to resolve near-term issues.”

Bailout, Bailins, and the Greeks' Trojan Horse

Istanbul Archeological Museum Trojan Horse (Wikipedia)

While Americans are eagerly signing petitions to ban the American flag on the heels of Louis Farrakhan’s Nation of Islam leader call to ban the Stars and Stripes “due to its links to racism” or are busily banning anything attached in any way to the Confederate flag and our history, the United States and the world are in serious financial trouble driven by out-of-control debt, particularly the most visible nation of all, Greece.

Healthcare for illegals, gay marriage, and other non-stop crises occupy the American overwhelmed minds, while the Trojan Horse of huge national debt and loss of sovereignty to the globalist Transpacific Partnership (TPP) mystery “committee” are ignored.

Greece is bringing to the forefront the issue of debt, what happens when it spends 60 percent of GDP, lives from borrowed billions, and refuses to curtail spending on entitlements, expecting more bailouts from the EU, essentially Germany.

Banks and the stock exchange are closed for the week, issuing a 60 euros limit per withdrawal. Not unexpectedly the euro fell against the dollar and the British pound. Sky News reported Prime Minister Tsipras as blaming the European partners and the European Central Bank for the debacle because creditors “have refused a request to extend Greece’s international bailout beyond Tuesday, until after the referendum.” The move risks a Greek default on 1.5 billion euros payment to the International Monetary Fund.

Tsipras claims that the bank deposits of the Greek people are fully secure and the payments of wages and pensions are guaranteed. I am not so sure that is the case since Greece is carrying a government debt load of over 175 percent of its GDP.  Countries cannot service such level of debt without printing money. http://www.tradingeconomics.com/greece/government-debt-to-gdp

The European Central Bank will maintain its “emergency cash lifeline to Greece’s banks” without an increase. The Emergency Liquidity Assistance (ELA) on which Greek banks depend, if lowered, may force the country out of the Eurozone.

There were many economists, of course, who questioned the wisdom of accepting Portugal, Italy, Greece, and Spain into the EU because their monetary policies were plagued by high inflation. Others believe that a return to the drachma may not be such a bad idea.

Expecting the worse after banks announced closings, Greeks stood in long lines to withdraw cash from ATMs and many horded gasoline and food. After five years of various bailouts, demonstrations, protests, refusals to adopt more austerity measures, negotiations between the leftist government of Prime Minister Alexis Tsipras and Brussels creditors have broken down. For months economists have predicted Greece’s pull out from the Eurozone.

In preparation for the national referendum on July 5, police patrols are more visible especially around ATMs. Tsipras asked voters for a “yes” or “no” vote on the bailout proposal considered by his government as confiscatory. The plan would “raise taxes and hurt pensioners,” forcing Greeks to “an endless cycle of austerity.” But the Greeks have been told few details of the deal – nobody really knows the implications of a “yes” vote or a “no” vote and everyone fears they “would become Venezuela.”

But the well-off Greeks, fearing the election of the leftist Syriza, have already moved money out of Greece or took cash out and stored it elsewhere.

The Tsipras government favors a “no” response to the referendum because the bailouts terms are “humiliating” and would deepen Greece’s economic recession. But without bailouts, “most Greek banks would have totally collapsed by now.” http://www.dailymail.co.uk/article-3141480/Hundreds-queue-outside-banks-fears-Grexit-grow-ahead-MPs-vote-bailout-referendum.html

It has been reported that withdrawals of 500-600 million euros have emptied more than 2,000 ATMs.  When the austerity referendum was announced, people started withdrawing money. When the Greek banks reopen, would they need bail-ins like the Cypriot banks? Would the depositors be forced to accept worthless I.O.U.s for their cash?

The European Union has required its member countries to enact bail-in legislation. Bail-ins force creditors and shareholders to rescue troubled banks. Cyprus citizens holding private bank accounts had to take “haircuts,” a form of wealth confiscation. Private pension funds were raided in Poland. http://www.dcclothesline.com/2013/09/25/cyprus-style-wealth-confiscation-is-now-starting-to-happen-all-over-the-globe/

Bailouts forced taxpayers to financially rescue big banks that had engaged in risky financial activity, using the infamous “too big to fail” excuse.

How much longer can Germany sustain the very shaky European Union? Should they bring back their own currency, the Deutsche Mark? As more large deposits and capital leave Greece when banks reopen, corporate asset controls may emerge. The Greek market may be shocked and defaults of various debt instruments may emerge.

A Romanian friend, Florina, explained the Greek crisis in terms that most people can understand. “I loaned money to a family in a time of financial crisis so that they can survive, and the family did not curtail their spending, they blew the money on unnecessary stuff; now the family is holding a meeting to vote if they are going to pay me back or not. That’s Greece now.”

 

 

Cyprus and the European Union Excess

For the past two years, the EU has struggled to keep its tenuous union intact, a union based on a common currency adopted by some of the members. As Italy, Spain, Greece, and Portugal economies downturned, it did not surprise many because their admission into the EU was questionable at the time – there is a reason why they were called the PIGS (Portugal, Italy, Greece, and Spain) - they never ran their socialist economies responsibly, spending on social welfare with abandon.

Cyprus is the first chip to fall in the confiscation of private property initiated by the socialist government as directed by EU although Germany denies that claim. The government devised a plan to levy a 10 percent tax of all citizens’ savings in order to bail out the struggling nation.  This ill-advised plan sparked panic across the globe, causing stock markets to fall sharply.

The government of Cyprus made the decision to contribute to EU’s bailout package 10 percent of all citizens’ bank deposits, savings and checking, punishing the savers and rewarding the careless spenders, thus forcefully redistributing wealth to salvage the overspending of the Cypriot government.

The euro fell in value against the dollar and a justifiable fear grew that citizens across the Eurozone might start withdrawing their funds from various banks causing runs.

Stunned Cypriots found out on Saturday morning that their parliament in Nicosia would levy a tax on bank deposits, 10 percent across the board and possibly less for smaller savers. The ATMs were emptied quite fast. Bank holidays were declared on Monday and Tuesday in order to prevent citizen from withdrawing all their money. Electronic transfers were also stopped.

According to Reuters, the original proposed levies were 9.9 percent for those with deposits of 100,000 euros and 6.7 percent on lesser amounts. (Michele Kambas, March 17, 2013)

The Eurozone finance ministers have decided to lend Cyprus a 10 billion euro aid package if Cypriot savers would give up a portion of their deposits. This came as a surprise to many investors since the Euro zone has not attached such conditions before to any of the previous bailouts to other member countries. Why Cyprus? The small island has been affected financially by its exposure to the financial mismanagement of its neighbor, Greece.

It is worthy to mention that all of these nations that are in trouble financially, Portugal, Italy, Greece, Spain, and Cyprus are run by socialist governments who cannot control their spending on lavish social programs, citizens do not like to pay taxes, many participate in the underground economy, and the unemployment rates are quite high, especially in Spain with a whopping 25 percent. It is also rumored that Italy may pursue the same venue, confiscating people’s savings in order to save their struggling economy, without making any changes to its out-of-control spending.

The troika of lenders, European Commission, the International Monetary Fund, and the European Central Bank asked for a percentage of deposits which would raise 6 billion euros, but it had to be ratified by parliament. Since there is no clear majority of any party, if the parliament does not ratify the confiscation of wealth, President Nicos Anastasiades warns that Cyprus’s two largest banks will collapse, including the Cyprus Popular Bank. Is this an American style “too big to fail” bailout?

Euro zone officials said that it was the only way to salvage Cyprus’s financial sector. They were not going to pony up any more money without serious collateral and the government is broke.

The anti-bailout Syriza party leader of Greece, Alexis Tsipras, was quick to blame Angela Merkel’s “criminal strategy.” Tsipras wants the German Chancellor to forgive the debt in a pan European debt conference, thus forcing German citizen to foot the bill for the rest of the Euro zone irresponsible spending.

The President of Cyprus, Anastasiades, a socialist elected three weeks ago, promised that savers will be compensated by shares in banks guaranteed by future natural gas revenues. Cyprus may be sitting on vast amounts of natural gas worth billions but the results of the offshore drilling appraisal will not be made public until later in the year.

The IMF director, Christine Lagarde, approved the deal and asked the IMF board in Washington to contribute to the bailout. If the law is approved, any depositor who fails to pay will receive up to three years in jail and a 50,000 euro fine. Europeans and rich Russians, who live on the island and would be subjected to the levy, are livid, standing to lose a lot of money. The British military personnel on the island will be compensated by their government.

The blame game has already started, and fingers are pointing at Germany because they have benefitted the most from the European Union by being the main exporter to the EU. Germany has a relatively low unemployment rate thanks to its large exports. However, these countries with socialist governments forget to point fingers at their own problem – socialism gone amuck. As Margaret Thatcher so aptly said, “the problem with socialism is that eventually you run out of other people’s money.”  The French are not wising up either. Instead of reducing their welfare spending and reducing the heavy tax on the rich, they are blaming unemployment on their socialist “darling” President, Francois Hollande, whose approval rating has dropped to 37 percent.

There is another twist to the European Union saga. While ordinary citizens are asked to adopt austerity measures and they should, the powers that be across the 27 member states are fighting hard and dirty to join the EU administration in Brussels. Why? The technocrats have voted a law to pay themselves lavish pensions. Every EU technocrat can now retire at the age of 50 with an average pension of 9,000 euros a month.

Here are some examples of technocrats and their lavish pensions paid by hapless member countries:

-         Giovanni Buttarelli, who was the Assistant Supervisor of Data Protection is going to receive 1,515 euro a month after only one year and 11 months of service with EU

-         Peter Hustinx, with a 5 year renewed contract, will receive 9,000 euros a month upon retirement from EU service.

-         Roger Grass, Justice Court clerk, 12,500 euros per month

-         Pernilla Lindh, Judge of the Court, 12,900 euros per month

-         Damaso Ruiz-Jarabo Colomer, attorney, 14,000 euros per month

A list in French shows the names of some EU technocrats/bureaucrats, their titles, the EU body they work for, the length of service, and the pensions they receive when their terms expire. (http://www.kdo-mailing.com/redirect.asp?numlien=1276&numnews=1356&numabonne=62286)

The maximum time these technocrats are required to serve, after which they can fully retire, is 15 years, pensions are huge, and they contribute nothing to the pension fund, it is provided by the rest of the European Union members.

At the same time, while presiding over the collapse of the retirement systems in the 27 member countries, the one world EU technocrats/bureaucrats recommend longer employment for ordinary citizens - 37 years, 40 years, 41 years (in 2012), and projected 42 years in 2020. Assuming that a person starts their working career at 21, European retirement age is still earlier than the American retirement age of 65.

Le Point.fr gives more details about the EU bureaucrats’ retirement system. It is reminiscent of our Congressmen who receive full benefits after serving one term, vote lavish benefits for themselves, including a separate Cadillac health care plan, while asking the rest of us to tighten our belts and to accept the destructive Obamacare. (http://www.lepoint.fr/economie/les-retraites-en-or-de-l-europe-19-05-2009-344867_28.php)