At this afternoon’s FOMC Press Conference in response to a question posed as to whether the Fed would ever impose depositor haircuts as was attempted this week in Cyprus, Fed Chairman Ben Bernanke confirmed that Cyprus style depositor haircut wealth confiscation is possible here in the US if the Cyprus event or another event in Europe were to become contagious and the people lose confidence in the US dollar.
At 3:18 PM EST Bernanke was whether a seizure of deposits could happen to US depositors as in Cyprus, if the economy gets worse?
Beranke’s translated response: Only if the Cyprus event or another event in Europe were to become contagious and the people lose confidence in the US dollar.
While QE to infinity will be pursued as long as possible, the entire Cyprus fiasco is now officially on the table when it comes down to it if unlimited counterfeiting fails. (and gold revaluation which is the next tool in Bernanke’s toolbox)