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The Catastrophic Threat of Bail-Ins - Jeff Nielson

The Catastrophic Threat of Bail-Ins - Jeff Nielson
By Jeff Nielson 3 years ago 12930 Views 31 comments

Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers/investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.

December 23, 2015

It has now been more than two and a half years since the Cyprus Steal , the first “bail-in” perpetrated in the Western world, occurred. Before reviewing the history of this newest financial atrocity, it is necessary to define the terms.

The term “bail-in” describes a scenario in which a bank confiscates private property to indemnify itself for losses it has suffered. A bail-in is a totally lawless theft of assets, as there is no principle of law (of any kind) that could authorize such a seizure of private property. And in fact, there are many principles of law that demonstrate the lawlessness at work here. As with much of the financial crime jargon, “bail-in” is simply another gibberish euphemism like “quantitative easing” or “derivatives.”

As custodians of the financial assets of their clients, banks represent a form of trustee. The purpose of any trust relationship is to provide absolute security to the beneficiary of the trust (i.e., the legal owner of the property). Thus, one of the most fundamental principles of our legal system is non-encroachment regarding the property held in the custody of a trustee.

From a legal standpoint, it is like there is an invisible and impenetrable wall that surrounds the trust property. The only exceptions to this wall (ever) occur when the trust beneficiary makes a legal request for some disbursement or related transaction, when the trust itself directs some form of action (in the interests of the trust beneficiary), or when the trust allows the trustee to manage the trust assets on behalf of the beneficiary.

The idea of trustees using assets for their own benefit or (worse) claiming ownership of any trust assets represents one of the most serious forms of financial crime in Western civilization. Given this context, how did the government of Cyprus respond when its own Big Banks whined and claimed that they “needed” to confiscate deposits in order to pay off their own gambling debts? It meekly rubber-stamped the lawless theft.

How did other Western governments react to the violation of one of the most sacred legal principles in our entire financial system? They simply nodded their heads in unison, and, as a single chorus, called the Cyprus Steal “a precedent” – a template for future systemic financial crime in their own regimes.

Beyond the perfect choreography demonstrated by Western governments immediately after this act of theft, how do we know that the Cyprus Steal was a scripted event orchestrated by the Big Banks? To begin with, all of the Big Money deposit holders in Cyprus had already moved their money out of Cyprus banks before the Big Banks began their pillaging and plundering. The “fix” was in.

Not a single Western government raised the slightest qualm about violating one of the most sacred principles of law in our legal system. Rather, these puppet regimes went about creating their own “rules” as to how/when the Big Banks would be allowed to steal property from the accounts of their own account holders. The Harper regime entrenched “the bail-in” in Canada’s official budget, while other puppet regimes were sneakier and more circumspect when “legalizing” this crime.

Here it is necessary to back up and address the “reason” (excuse) behind this newest form of systemic bank crime. The “bail-in” is the ultra-insane culmination of the “too big to fail” doctrine. By this doctrine, any and all assets, public or private, in our financial system can and will be sacrificed (stolen by the Big Banks) to prevent any of the Big Banks from “failing” – that is, going bankrupt as a consequence of their own reckless gambling .

The legal and economic principles violated by the concept of “too big to fail” are too numerous to list. However, they begin with the following objections:

1) The concept of “too big to fail” is contrary to numerous tenets of capitalism. In any capitalist/free market system, insolvent entities are supposed to fail in order to correct the misallocation of assets. Any entity that grows to become an existential threat to the system is simply too big to exist.

2) Banks should never be allowed to gamble. Period. There would have been no need for the $10’s of trillions in “bail-outs” given to this crime syndicate following the Crash of ’08 if our puppet governments had not previously erased our laws that prevented such gambling.

3) “Too big to fail” is based on an overtly criminal premise called systemic blackmail: “Give us everything we demand, or we’ll blow up the financial system.” It is extortion in perpetuity: financial slavery.

Note how (2) and (3) relate directly back to (1). Why shouldn’t banks gamble with their clients’ assets? Because by doing so they not only jeopardize the property they are holding in trust but also become a threat to the financial system. Why shouldn’t financial entities be allowed to grow so big they become an existential threat to the system? Because size (as we now see) gives these Big Banks the leverage necessary to blackmail our corrupt, limp-wristed governments, perpetually.

So what is the only possible way to put an end to this Big Bank blackmail? Well, should our corrupt governments ever decide to once again enforce our anti-trust laws , we can end the cycle by smashing these Big Banks “down to size,” or down to the largest size allowed by law . Indeed, “too big to fail” is the ultimate example of why we need anti-trust laws and why they need to be vigorously enforced.

Anti-trust laws are anti-corruption laws. For decades, there has been almost no enforcement of our anti-corruption laws. The result is a global economy now almost totally dominated by just one of the major (and illegal) oligopolies that has emerged: the crime syndicate readers know as the One Bank .

It is this crime syndicate that engages in the systemic blackmail of “too big to fail,” supposedly to indemnify its Big Bank tentacles for the losses they incur. However, in almost every case, these “losses” are nothing but an accounting sham: paper losses owed by one Big Bank tentacle to another. No entity could ever be bankrupted by a “debt” owed to its right hand by its left.

The “losses” do not even exist, but the blackmail and fraud is all too real. Having totally depleted the public treasuries of most Western nations with its “bail-out” extortion following the Crash of ’08, the One Bank needed a new mechanism of theft by which to continue its permanent, institutionalized blackmail.

The bankers demanded that they be allowed to steal private assets (already in their custody), directly, any time they claimed to suffer a “substantial loss.” Our puppet governments, as usual, caved to the crime syndicate’s demands, and the “bail-in” was born.

What is at risk with a “bail-in?” According to the (perversely named) Financial Stability Board : any and every paper asset in the custody of the Big Banks and (potentially) any paper asset in the custody/control of our governments. The Financial Stability Board is one of the propaganda mouthpieces of the Big Bank crime syndicate, and its “guidelines” have been directly cited as authority by several of these puppet regimes, including the Canadian goverment.

How do people protect themselves from the massive bail-ins that are imminent as the Next Crash approaches? There is only one way: get your assets (i.e., your wealth) out of all paper instruments. This includes the fraudulent paper currencies of our fiat-currency/ fractional-reserve Ponzi scheme system. Hold only enough wealth in paper instruments to satisfy current cash-flow requirements and short-term “emergencies.”

For the longer term financial Armageddon that is now inevitable, the only secure form of wealth-preservation is the oldest-and-surest tool for that task: precious metals . Rather than offering holders short- or medium-term protection for their wealth, gold and silver represent lifetime security, what people are supposed to have, and what most people still think they have when they entrust their wealth to a bank.

Once upon a time, we had strong, vigorously enforced laws that made a bank the safest place to store paper assets. That is no longer. Now banks are where your wealth is most likely to be stolen – and by the bank itself. Thanks to the bail-in, the term “bank robbery” now has an entirely different meaning.

The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

Dr & Mrs Keith H. 3 years ago at 5:44 PM
The G20 in Australia last Nov/14 voted for legal bail-ins. We in Canada & the U.S. are also being threatened with potential negative interest rates.
Safety deposit boxes are NOT insured either. The Big Banks can no longer be trusted sadly enough. We prefer physical gold & silver to give us peace of mind! Tough days are ahead for nearly everyone & it is advisable to be prepared.
Merry Christmas & Happy New Year!
Dwain Dibley 3 years ago at 8:06 PM
Geez dude, this is not how I understand the bankster system works.
There is no money in any "deposit" account of any type anywhere in all of westernized banking, they are all credited accounts, book keeping entries, signifying how much money the bank owes to (stole from) their depositors. Please explain how a book keeping entry denoting how much money the bank owes to a depositor can be used to bail the bank out??? "Bail-in" is just a euphemism for default on deposit obligations.
Jeff Nielson 3 years ago at 2:24 PM
Good stuff Dwain!

Yes, it is just layer after layer of fraud-and-deception, with the ultimate effect of transforming our entire monetary system and our entire financial system into a ridiculously unstable Ponzi-scheme which WILL implode soon.
New Neandertalien EN 3 years ago at 6:16 AM
Very articulate. But the gold will be confiscated too. In Greece, you have to declare it starting 01.01.2016 according to a Zerohedge article.
Also, in Ukraine, which is another "template" for what will happen in your countries tomorrow, the proles were activated into a civil war against own country. Transporting gold in a civil unrest and civil war is impossible.
The author did not mention the true people responsible for the existence of the banking crime syndicate. These are the elected officials, the parliaments. All parliamentarians who voted "for" bails-in, bails-out, etc should be imprisoned. This will not happen, however, in the current system where the mind controlled majority always votes for the same. The ruling crime syndicate and the mind controlled majority form therefore a kind of a collective inviable organism. This organism is working hard towards its only possible target: self-extinction.
Dr & Mrs Keith H Kerr 3 years ago at 1:08 PM
You are absolutely correct - the general public have been brain washed by the political & financial corrupt leaders of our time! ETHICS & the old CODE Of HONOUR have been thrown out the window! Our forefathers must be rolling in their graves. I agree, unless we change soon we will self- destruct. Do we need a severe Depression to return to what's really important in life- to change greed into true compassion for others & help mankind - more about thee & not me?
Jeff Nielson 3 years ago at 2:40 PM
"All that is necessary for the triumph of Evil is for good men [and women] to do nothing."

-- Edmund Burke

Indeed, we have seen a relentless (and deliberate) erosion of our Moral Compass via the propaganda of the Corporate media, but also in our "entertainment." Here we see not only a continual increase in the glorification of villains, but also increasingly morally-ambiguous "heroes" -- who become harder and harder to DISTINGUISH from the villains.

In our Wonderland Matrix; "right" and "wrong" have ceased to be objective concepts. Instead, they are now SUBJECTIVE LABELS, affixed to the praised or the damned, at the whims of our governments (and their Banker Overlords).
Jeff Nielson 3 years ago at 2:31 PM
New Neandertalien, I have been VERY vocal in warning of the increasing risk/danger that some or all of our corrupt governments may resort to bullion confiscation. Here is my latest warning on that subject:


I would take exception to your remark that I didn't mention the role of our totally corrupt governments:

"Not a single Western government raised the slightest qualm about violating one of the most sacred principles of law in our legal system. Rather, these puppet regimes went about creating their own “rules” as to how/when the Big Banks would be allowed to steal property from the accounts of their own account holders."

...and I have previously suggested that these Traitor Governments might require MORE than merely a few incarcerations in order to get across the "message":


Historically, this is the way the People have chosen to deliver that Message.
Dr & Mrs Keith H Kerr 3 years ago at 4:12 PM
Well said Jeff! We need more ethically minded politicians to insist on punishment of those overly zealous violators - to take them down a peg or two - to deflate their overblown egos - to emphasize how they must SERVE others rather than RULE by their own devious rules. Only respectful service should be honoured!
Dr Keith H Kerr 3 years ago at 6:24 PM
IMO GOOD always triumphs over EVIL! However, the essential factor for this to happen is to have men with backbone & a strong character to stand up for justice fearlessly! On a personal level, my favorite inspiring biblical verse is "I can do all things through Christ who strengthens me"
arthur43 3 years ago at 8:17 AM
What about common shares of gold companies? I assume confiscation of them would be less likely. Thoughts?
Jeff Nielson 3 years ago at 10:26 AM
Arthur, since I started writing I have always preached "diversifying within the sector." I still hold the shares of my battered miners.

Being paper assets, yes, our shares are unlikely to be "confiscated" in that manner. BUT (as this article illustrates) if you hold those shares within an account with some major financial institution, then those shares could DISAPPEAR in a bail-in.
Dr. Keith H. Kerr 3 years ago at 10:24 AM
Jeff - 1st of all Happy New Year!
It's rather interesting that President Xiamen of China has implimented ANTI - CORRUPTION LAWS in their huge 1.3 B population & brought many 1,000's of officials to task for their offenses. Does the U.S. need a DEFAULT before appropriate action occurs?
Also fascinating that only 2 countries have never defaulted - Canada is 1 of them - think the other is either Finland or the Netherlands(?)
Jeff Nielson 3 years ago at 12:04 PM
Keith, the fact that China DOES hand out harsh sentences for serious financial crimes (even capital punishment) is one reason I reject the suggestion by some that China is a part of this whole cabal-of-corruption. As was noted in that previous link, severe punishments for severe financial crimes used to be the norm in our societies.

But not any longer, in the ultra-corrupt 21st century, the banker Oligarchs have convinced their pets in the judiciary that engaging in illegal frauds and manipulations which financially rape MILLIONS is nothing more than a trivial misdemeanor.

The "judges" we have today are a disgrace to more than 2,000 years of Western jurisprudence.
Farmer Bill 3 years ago at 7:58 PM
It was at the end of March 2013 when I sent a letter to Finance Minister Flaherty asking for an explanation of the term "bail-in" that was included in the federal budget. A few months later I received a reply stating, that "in the unlikely event this would occur". To think that something as criminal as stealing money from my grand kids bank accounts is allowed by our Canadian federal politicians still makes my blood boil. That one action shows me our leaders are no better than any other third world tin pot dictators.
Dr Keith H Kerr 3 years ago at 10:21 AM
Unfortunately the big banks of the world have a horrendous leveraged DEBT to HARD ASSET ratio of 20 - 25 to 1. If their hard assets drop 6 - 7 per cent, then they are all BANKRUPT! What then? Raid the hard assets of the innocent people who trusted them! Farmer Bill - you are right - our blood should boil at this real, threatening possibility! Why do we allow such nonsense??? Are we mere puppets on the stage of life or isn't it high time we stood up for justice?
Jeff Nielson 3 years ago at 10:32 AM
Indeed, Farmer Bill, if bail-ins were such "an unlikely event" then why were all these Traitor Governments tripping over each other to see who could draft their "bail-in rules" the fastest?

Our only hopes lie in what OTHER governments in the world do to restrain the Western crime syndicate, and the fact that these psychopath-bankers are destroying their own power-base -- rapidly.
Tim 3 years ago at 12:35 PM
Not that I like Bail-ins but the entire premise here is faulty.
A deposit at a bank is legally a loan to the bank, the funds are the property of the bank, not yours. The bank has only an obligation to repay the note, so you are a creditor not a depositor.
Jeff Nielson 3 years ago at 11:43 AM
Thanks Tim! A couple of readers have pointed out that (legally/technically) depositors don't "own" their money. I even studied the precedent which led to this "precedent". It is very flimsy "law" at best, which falls apart under any close scrutiny, and in no way do previous legal precedents provide any support for "bail-ins".

More to the point; what would happen if the banks TOLD their clients that the BANK "owns" their deposits, and their clients are nothing but "unsecured creditors"? Those clients would clean-out their deposits the next day, and the banks would FOLD.

These charlatan criminals cannot POSE as trusted custodians for peoples' financial assets, and then turn around and STEAL those assets, based upon some absurd and obscure legal technicality. We have a term for such swindles: fraudulent misrepresentation.
Tim 3 years ago at 4:00 AM
Jeff what you makes no sense.
In every legal jurisdiction since banks became legal entities the status of a deposit has always been that of a loan. Even the supreme court in the US has opined on this. Why would it ever be otherwise? The bank takes your money on in order to use it, why would it do so if it couldn't do that, i.e. if you retained ownership? If you want a true deposit relationship, where you keep ownership you can use a safety deposit box, however you have to pay a fee. If the banks came out and told everyone that they are "unsecured creditors" nothing would happen, where else are you going to put your money?
Jeff Nielson 3 years ago at 11:08 AM
Tim, have you ever watched a COMMERCIAL from one of these Big Banks? The Big Bank is your "friend" and "trusted advisor", and devotes all its time/effort into SAFEGUARDING your wealth.

These people are fiduciaries, and cannot PRETEND to be trustees of peoples' wealth, and then turn around and rely upon a legal technicality in order to STEAL that wealth. That is "fraudulent misrepresentation" and it VOIDS the contractual terms which make a deposit "a loan."

Where would people put their "money" (i.e. fiat-paper crap) if not in a bank? Why don't you ask the people of Greece? They TRIED to take all their money out of Greece's corrupt banks, but were prevented from doing so.

Spend a few hundred dollars on a home safe. Make sure it is well-concealed. It's a one time expense, and then you never need to ENDANGER your wealth again by placing it in the hands of the world's worst thieves.
Dr. Keith H. Kerr 3 years ago at 11:54 AM
Jan 1/16 ushers in BAIL- INS for all European Banks! The spiderweb of catching those off guard just seems to be getting bigger & bigger.
2016 is also a leap year - good time to leap out of the dangerous banking system - leaving only monies required to pay bills for a 3 month period.
Maurice M. 3 years ago at 12:37 AM
Jeff, equating public deposits to banks as funds held "on trust" is legally incorrect.

Deposits are nothing more than "unsecured loans" to whichever bank, and the creditor has the same recourse as all other unsecured creditors investing in any endeavour.

There is no concept at all of the funds being held "on trust". They are simply balance sheet liabilities.

Bottom line: If you "invest" your funds in a bank, it no longer has the legal status of being your funds. It is an investment, with the concomitant risk profile.
Jeff Nielson 3 years ago at 11:53 AM
Maurice, please see my reply to Tim's comment above. And kudos to those readers who took the time to present this technical argument.

The banks present themselves to the world as quasi-trustees. Why else would ANYONE entrust a single nickle of their wealth to institutions which no longer even pay "interest" for the privilege of USING the funds that we deposit?

The banks, the bankers, and our sycophant governments regularly assure us of the "safety" of putting our wealth into banks. These individuals/entities are FIDUCIARIES: they have a responsibility to us to tell the TRUTH.

If most or all the readers here were aware of the legal technicality that has been presented by a few, then perhaps I would be persuaded to present that technicality as "the law" -- despite its very dubious legal context.

But when these fiduciaries not only HIDE this technicality from us, but go out of their way to assure us of the "safety" of using banks they have created a "reasonable expectation" in our minds of such safety.

No legitimate Court of Equity would EVER uphold such a flimsy legal technicality -- to the detriment of millions -- for the benefit of actors who enter the Court with the "dirtiest" of hands.
arthur43 3 years ago at 3:45 PM
How weird is this:
1. Our deposits in banks are technically loans to them
2. If negative interest rates make it to these shores and flow down to the level of retail bank deposits, the bank would be charging me to loan them the money in my savings and/or chequing account.
As I understand it, this would be the "soft" form of a bail-in.

Wouldn't this set-up be great for a business loan? Imaginary conversation:
Bill: "Hey Todd, I'm ready to start that new business I was telling you about. Can you loan me a thousand dollars to help me out?"
Todd: "No problem. I'll loan you the thousand and I'll also pay YOU the interest on it."

I thought tulipomania in 17th-century Holland was about as outlandish as a country's money situation could get. We seem to be entering a time that is even weirder.
Jeff Nielson 3 years ago at 5:18 PM
Yes, Arthur, both Tulipmania and our own sordid system represent the ultimate in monetary/financial insanity. But all similarities end there.

Tulipmania was an episode of cultural insanity, and an accident of History. Meanwhile, our system has been deliberately, relentlessly, and sadistically corrupted. The pathetic, political puppets who call themselves our "leaders" PRETEND to operate this system for our benefit. However, in reality, they do nothing but pimp themselves out to the bankers.
Dr. Keith H. Kerr 3 years ago at 12:44 PM
Local Canadian Banks are now encouraging people to spend more money by raising their VISA limits - they don't care if people pay them down - just pay the minium at higher interest rates. When will it stop?
mahatma 3 years ago at 5:04 PM
Let's give those responsible for this unprecedented horror we find ourselves facing a fair trial. Then hang them all for treason.
john buck 3 years ago at 7:18 PM
Hey Jeff;
My hat is always off to you.
You really know your stuff
People need to focus on one major issue , hold the criminals to account .
Right now they control the financial world, the news media, the law makers etc.
Since Obama toke office, the U.S. and the rest of the world that is influenced by it is crumbling.
Under his watch , the U.S. government can not account for 8.5 TRILLION dollars. (yes trillion)
They don't know what happened to one years worth of G.D.P.
This is a joke , right?
These crooks will steal everything they can as in bail in's.
Impeach Obama now , hold him to account.
Jeff Nielson 3 years ago at 5:27 PM
Thanks for the support John!

The bankers conjure so much of this funny-money now (literally near-infinite amounts) that it's no surprise at all that they are now "losing track" of vast sums. They would trip over it, if it wasn't almost all VIRTUAL funny-money.
Dr. Keith H. Kerr 3 years ago at 7:24 PM
I agree John -- WOW - almost 6,000 Views within 14 days. Is this a record?
I suggest a Gold Crown be given to Jeff Nielson for his superb blog & analysis on this critically important subject on Bail-ins!
Do I have a seconder please.
Jeff - we need your head size too.
Jeff Nielson 3 years ago at 12:16 PM

(Misplaced) hero-worship is a large part of the reason why we're currently in such a sorry state: a cultivated/programmed caste society of Serfs and pseudo-Elites.

...and no doubt if anyone told me I was being "fitted for a crown" my head would swell too large, in between the fitting and wearing of said crown.

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