DECLINING FINANCIAL WEALTH FOR MOST AMERICANS SINCE 2001
“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001” -- Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
"For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier."
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The Typical Household During Era of FINANCIAL REPRESSION Now Worth a Third Less
New money is being re-directed to pay increasing debt loads as corporate profits come primarily at the expense of reduced income growth while inflation crushes real disposable income.
Controls +90% of the $5T in currencies traded daily.
FINANCIAL REPRESSION HAS BEEN AGGRESSIVELY PURSUED SINCE THE DOTCOM BUBBLE IMPLOSION
FIAT CURRENCIES ARE BEING DEVALUED IN A COORDINATED MANNER AS PART OF THIS MACROPRUDENTIAL POLICY
This is only evident by measuring a basket of Fiat Currencies in Hard Assets
HIDDEN TAX INCENTIVES
In conjunction with Wednesday's release, the U.S. Treasury department is expected to relax certain accounting burdens on the reporting of gains and losses "to ease the transition to a floating share price".
CREDIT RATINGS REMOVED
Separately, the SEC voted unanimously to re-propose a plan, originally floated in 2011, to purge references to credit-rating firms embedded in the SEC's money-fund rule. The change is a requirement of the 2010 Dodd-Frank financial law that requires federal agencies to scrub their rule books of references to credit ratings, forcing them to find new measures to help investors assess creditworthiness.
Fund managers now have the Legal Right to 'suspend redemptions' by the you on your Money Market Funds
SEC Approves Tighter Money Fund Rules - Plan Allows Money Funds to Temporarily Block Investors from Withdrawing Money in Times of Stress WSJ
It is no secret that unlike other banks who, while directly intervening in the bond market only manipulate equity prices in relative secrecy (usually via HFT-transacting intermediaries such as Citadel), the Bank of Japan has historically had no problem with buying equities outright, traditionally in the form of REITs and equity-tracking ETFs. Which explains why overnight it was revealed that in order to boost the stock market, pardon, economy, the Bank of Japan is preparing to purchase exchange-traded funds based on the JPX-Nikkei Index 400 as an "option to boost the impact of unprecedented easing," according to people familiar with BOJ discussions.
Bloomberg reports that including funds that track the index would broaden the range of shares in the BOJ’s ETF purchases, and encourage companies to deploy cash for investment. That is the official storyline. It goes without saying that what the BOJ is really after is to generate further upside in the Nikkei225 which unlike other stock markets, is still notably in the red, because not only will the primary impetus behind QE - the wealth effect of the 1% - suffer, but also all those new billions in Japanese pension funds reallocated away from bonds and into stocks will continue to lose money. And the last thing the Abe cabinet, its popularity already flailing needs, is the realization that it has gambled the retirement funds of the locals on the biggest Ponzi scheme in Japanese history. READ MORE
THE JAPANESE PEOPLE HAVEN'T FULLY WOKEN UP TO THE FACT THEY HAVE BEEN 'CONNED'
GREAT FOR GOVERNMENT AS DEBT FINANCING GETS CHEAPER
A DISASTER FOR THE PEOPLE HAS REAL WAGES PLUMMET
Research paper on the relationship between European governments & European banks .. the pressure & influence between governments & banks are giving rise to financial repression & regulatory capture:
"Government agencies have been frequently described as being at the mercy of the financial sector, often allowing financial interests to hijack political, regulatory and supervisory processes in order to favoring their own private interests over the public good"
.. & the opposite:
"Governments, which have often been portrayed as subverting markets and abusing the financial system to their benefit, either in order to secure better financing conditions to overcome their own financial difficulties, or with the objective of directing credit to certain sectors of the economy, 'repressing' the free functioning of financial markets and potentially the private interests of some of its participants."
The real danger comes if central banks try to use macropru as a semi-permanent way to keep interest rates lower than normal, as Mr Napier fears. In this case investors will face a double setback: they will not be treated as part of the “real economy” deserving of funds, while state-directed allocation of assets has a terrible history of supporting duds, hurting growth.
The Bank of England has been flashing an amber light for months about the complacency shown by low market volatility, but in house-price obsessed Britain, mortgage excess is the focus of its worry. Last month it became the first of the major central banks to set out to try to control credit using non-monetary tools: in the jargon, “macroprudential measures”. Ms Yellen has been highlighting macropru as the first line of defence against bubbles for a while.
The problem SEEMS simple central bankers. Central bankers want money to lubricate the real economy, not to flow into pointless leverage of existing assets. Higher rates could reduce the incentives to leverage, but at the cost of damage to the real economy. Their solution is to set up barriers inside the banks to direct the flow.
If central bankers ever get serious about using macropru to control bubbles, it will mean limits on more than just mortgages. The obvious place to start is with the froth in junk bonds and the leveraged loans used by private equity houses. It is interesting, therefore, that the Fed’s monetary policy report last week emphasised that the central bank is “working to enhance compliance” with leveraged loan underwriting and pricing standards. If it becomes harder for private equity groups to gear up, they can afford to pay less to buy companies, cutting back one source of demand for shares. READ MORE
COMING TO YOUR LOCAL BANK
BOE’s Carney Leads Push For Bail-Ins - China and Japan Against
Officials led by Mark Carney, the Bank of England governor, are attempting to bridge sharp differences among leading G20 countries as they prepare a landmark set of proposals aimed at tackling the problem of “too big to fail” banks according to the Financial Times today. Talks under the auspices of the global Financial Stability Board (FSB) over the summer are approaching a key stage as officials aim to clinch an agreement on bail-ins and the bailing in of creditors including depositors of banks.
The issue is of major consequence also to depositors who could see their savings confiscated as happened in Cyprus. Bail-ins are coming to banks in the western world with consequences for depositors. READ MORE
The Fed, because of QE, is thinking about how to unleash another new experiment on the U.S. economy — altering the interest rate paid on $2.6 trillion of excess reserves.
Fed Excess Reserve Payments Could Yield Banks More than Equity Yields!
POTENTIALLY INCENTING BANKS "NOT TO LEND" IS THE EPITOME OF FINANCIAL REPRESSION
Why Is Fed Considering Paying Banks Not To Lend To Main Street? 07-18-14 IBD
The Federal Reserve created a monster $4.3 trillion balance sheet, up by $3 trillion from 2008, through quantitative easing. QE ends this fall. Now the Fed is trying to figure out what to do with this monster. Their thinking seems to be that they can maintain control over it by paying banks more money to not make loans.
The implication, in the July 9 FOMC minutes, is that they will likely increase the interest paid on excess reserves when it comes time for the Fed to raise interest rates. Their thinking seems to be that this mechanism will serve an equivalent function of what the federal funds rate did before QE.
The current interest rate on bank excess reserves is 0.25%. But if the Fed needs to eventually raise that to 2% or above to control inflation expectations, it becomes politically unpopular.
READ MORE
FINANCIAL REPRESSION IS AGGRESSIVELY BEING IMPLEMENTED TO STOP FALLING REAL US GROWTH RATES
"In 2004 IBM had $13 billion of net debt. Today the figure stands at just under $37 billion. And why not. IBM’s average weighted cost of debt last year was just shy of 1%. Thank you, monetary politburo!"David Stockman - Former Director OMB
"Under a honest free market in the financial sector, America’s once greatest technology company would not be functioning as a slush fund for Wall Street gamblers" David Stockman - Former Director OMB
IBM is a poster child for the ill-effects of the Fed’s financial repression. In effect, the Fed’s zero interest rate policies are telling big companies to issue truckloads of debt and use the proceeds to buyback shares hand-over-fist. That way fast money speculators on Wall Street are appeased by the resulting share price lift, and top executives collect bigger winnings on their stock options.
In its recently completed quarter, IBM again repurchased nearly $4 billion of stock—which amounted to about 93% of its net income for Q2. Likewise, IBM also reported lower sales versus prior year for the ninth quarter in a row READ MORE
LATEST MACRO ANALYTICS ON FINANCIAL REPRESSION
LATEST UnderTheLens UPDATE ANALYSIS ON FINANCIAL REPRESSION
POLICY CONTROLS (Monetary, Fiscal, Public & Tax Policy)
Fischer worries about macroprudential policy- 07-10-14 FT Mr Fischer’s most interesting remarks relate to his experience with macroprudential policy in Israel. Israel’s bank supervisor used a range of tools to restrict mortgage lending and try to avert a housing bubble. Mr Fischer draws three lessons:
Through the Process of Abstraction the 2012 Thesis outlines how the Global Macro is presently on a well defined path towards a global Fiat Currency Failure and the emergence of a New World Order.
2012 will be highlighted by social unrest during a period of heightened conflict and tension. As economic growth declines and chronic unemployment becomes even more broad based on the world stage, Macro Prudential Policies of Financial Repression will accelerate.
Increasing centralized planning and control by sovereign government will further push advanced societies towards collectism and statism.
ABSTRACTION
TABLE OF CONTENT- (To Assist in your Sectional Download Choices Below the Table)
LATEST LONG Wave TECHNICAL ANALYSIS ON FINANCIAL REPRESSION
Coming in July
STRATEGIC MACRO INVESTMENT INSIGHTS
The Indirect Exchange - The Expert in the Indirect Exchange is Ty Andros, Tedbits
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Financial Repression describes an economic policy in which capital controls and regulations are implemented by governments and central banks, the aim of which is to reduce public debt burdens through the distortion of financial market pricing.
Financial Repression always means a combination of measures that lead to a notable narrowing of the investment universe for investors. Money is thus channeled into specific directions to create a ‘home bias.
1- Strict investment regulations (Solvency II, Basel III)
2- Negative real interest rates g
3- Interest rate ceilings s
4- Open credit dirigisme
5- Nationalizations
6-Regulation of cross-border capital movementst
7- Prohibition of unwanted trading practices such as naked short selling
8- Compulsory loans
9- Prohibition of certain investment assets (e.g. gold)
10- Special taxes (e.g. securities taxes, financial transaction taxes, wealth taxes, higher value added tax on silver, import duties on gold etc.)
11- Direct interventions, such as government intervention in pension funds (Portugal, Ireland, France, Hungary) and subsequent redeployment of investments in favor of government bonds.
12-Growing discrepancy between financing costs of private sector participants versus governments.
The term ‘Financial Repression’ was first employed by McKinnon and Shaw in 1973 and has been rediscovered in the course of the current crisis by Reinhart and Sbrancia in their paper “The Liquidation of Government Debt.”
Federal Reserve Must Print Money To Keep Interest Rates Low - Cliff Küle 05 June 2021
Financial Repression To Accelerate With Increased Desperation- KWN 24 March 2021
Through the Process of Abstraction the 2012 Thesis outlines how the Global Macro is presently on a well defined path towards a global Fiat Currency Failure and the emergence of a New World Order. 
