CYPRUS, EXAMPLE OF UNREGULATED SYSTEM
NICOSIA, CYPRUS ECONOMIC HUB, WAS CONSIDERED ONE OF THE WORLD’S AFFLUENT CITIES
CYPRUS, EXAMPLE OF FREE ECONOMIC SYSTEM WITH LITTLE REGULATION
Cyprus, until recently was rated by the World Bank as a “high income economy”, and boasted that its “Open free market economy, based upon a service economy with some light manufacturing is a bridge between east and west.”
Street reports suggest that some of the oligarchs of Russia have made Cyprus adepository for hundreds of millions of dollars.
Indeed,stressing an economy with little regulation, and banks that had an “open doorpolicy” of accepting large deposits from international investors, Cyprus, inmany ways reflects the economy of the U.S.A.Note this language from Wikipedia, written by Cyprus promoters:
“With dynamic services,industrial and agricultural sectors and advanced physical and social infrastructure. Cypriots are among the most prosperous people in the Mediterranean region, with GDP per capita reaching $30,000. Their standard of living is reflected in the country's"very high "Human Development Index" ,and Cyprus is ranked 23rd in the world in terms of the Quality-of-life Index. However, after more than three decades of unbroken growth, the Cypriot economy contracted in 2009.”
It would seem that the nation flourished with an economic promise of limited regulations, liberal lending from banks, who were the recipients of huge deposits from other nations. With hundreds of millions of deposits coming in from other nations, it’s banks were eager to lend, and the nation went on a 30 year binge of growth and high lifestyle. The Euro,particularly, Germany, frowned upon the Cypriot system, German bankers frowned upon large sums of money flowing into Cyprus instead of Germany, and the Euro frowned upon the Cypriot lifestyle.
In truth,as we have proven over 30 years of international research, “There is no free lunch” and “Free market economies, also tend to experience, free fall economic declines, when there is no regulatory standard or system to form and maintain rules of stability.” Total free market economies, tend to invite instability, booms and busts, recessions and recoveries, all at the whim of the “free market”. When Cyprus determined to base its growth on a service economy and a banking sector dependent upon funding from foreign and sometimes questionable sources, which would then provide cheap loans and unreported depository arrangements, to fuel economic growth, Cyprus signed a deal with the devil which led to it’s current crisis.
Now, this tiny little nation, which was by many considered a refuge or hiding place for money, to avoid taxation, may be a trigger to cause a general lack of confidence in banking. Banking as an industry, depends upon, confidence.Cyprus has already done its damage.Millions of people who, in the past have kept their significant savings and investment cash in banks, are now seeing a system, whereby government negotiations can arbitrarily take a part of their money away, if the nation has unpaid deficits. This thought, the very idea, is toxic to the Western banking system and its foundation philosophy. “If you cannot run your nation in accordance with standards set by the Euro block, we will take 10% of your money directly from your bank account”.What an insane message. It is a message which falls directly into the goals of the many nations of the world,who hate and would destroy the western economic system. Whoever dreamed this up, whether they are from Germany, Cyprus, or wherever, may have shot the banking system in the foot. Indeed, people throughout the world, with their life savings in bank accounts, now will always have the thought…” my funds could be at risk of seizure” in commercial banks. No doubt, we will now hear a response from leaders of nations and from banks, telling us how “secure” deposits are in their banks. But the fact is, that any nation, including the government of the United States, has a legal right to seize banks and their assets, in the name of national security.
Will this lead to a promulgation of private banks, public banks, or even private vaults and private companies to store money and treasure? Possibly.It is another of the ironic results of a system that preaches that “austerity” is a solution for economic growth. As the World Bank learned, over a 40 year history of trying, imposing “Austerity” on nations in return for financial loans and grants, never works. Austerity only brings more recession.
Whatbrings economic growth is production.Production means creation, building or making something.
Production,is the opposite of a service economy.
Productionis the opposite of an economy built by unregulated bank deposits.
There area few ways that production can happen.
Ahura Mazda, the ancient deity of the Zoroastrians stated it clearly. Those to be imitated grow food, livestock and have reverence for productive earth, Water, Fire (energy), and production were to be “imitated” because those who produced would find “the peoples of the earth knocking at their door begging for help” when there is crisis.
Cyprus, frankly,has not been a nation based upon new production. It evolved into a service economy, with little regulations, therefore subject to the whims of an always changing global economy.
Perhaps there are lessons to be learned from Cyprus.