Don’t put it past our politicians to try it in a financial emergency. The breaking of contracts by the U.S. government, unfortunately, has happened before, and what’s under way in Cyprus shows that feckless politicos will continue to try such things. In 1933–34, amid the depths of the Great Depression, the U.S. government seized the American people’s gold holdings. From that point, until 1975, it was illegal for Americans to own gold, other than in some forms of jewelry or collectors’ coins. In the panic of the Depression years the courts upheld this unconstitutional confiscation.

In the early 1970s President Richard Nixon annulled contracts selling soybeans to Japan.

In 2009 the Obama Administration pushed through a brazenly political restructuring of bankrupt General Motors and Chrysler, and huge payoffs were made to the United Auto Workers, a pro-Obama union, at the expense of bondholders. Banks signed off on the deal because they had no choice—their survival depended on the whims of Washington. Once again the courts turned their backs on this patently unconstitutional exercise.

There have been rumblings from some revenue-hungry Democrats about finding ways to tap into individuals’ retirement accounts. Several years ago Argentina nationalized the private pension plans of its populace, and recently Cyprus has been talking about taking similar action. Why not integrate them with Social Security and then means-test the benefits?

Slapping a special “emergency” levy on these assets will become an irresistible temptation for politicians as the pot of assets gets bigger. Impossible? Your Social Security “contributions” are made with aftertax dollars, and it was promised that those benefits would be tax free, but Washington started chipping away at that vow back in the 1980s. Today millions of Social Security recipients find a portion of their benefits subject to the IRS.

The monumental stupidity in what the EU and IMF have done to Cyprus becomes more and more glaring. To protect herself from charges that bailing out Cyprus would be like bailing out rich Russian oligarchs, German Chancellor Angela Merkel went along with the initial scheme to seize a portion of the Cypriots’ bank deposits. After this, all it will take is just a hint of a financial crisis to send Spaniards, Italians, the French and others scurrying to ATMs and banks to pull out their cash. Even in the absence of a disaster individuals and companies will be looking to park at least a portion of their money outside the banking system.

The sobering truth is that there is no safe hiding place to stash your cash.

Congress might be tempted to propose something that has surfaced all too often in Europe: a wealth tax. In France, for instance, you tote up the value each year of everything you own and pay the government a 1% tax on the amount above a certain threshold.

Liberty requires eternal vigilance, as Thomas Jefferson and others have said. Its foundation is a healthy respect for property rights and a constitutional-based rule of law. Heightened vigilance is badly needed now.

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