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The Financial Repression AuthorityTM

A Joint Initiative of GordonTLong.com and CliffKule.com

Investments of any kind involve risk.  Please read our complete risk disclaimer and terms of use below by clicking HERE

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LINK HERE to our interviews

 

Last Update:  Wednesday 5/13/15 2:05 PM

   

 

 

 

 

Obfuscation - one of the

Pillars of Financial Repression

BMG Bullion Group's Nick Barisheff writes a great essay on how the mainstream media omits facts & distorts the truth to suit their agenda - this is particularly true in the negative media barrage against gold .. "Anyone who cares to look outside of the mainstream media propaganda will conclude that the drop in gold prices was clearly an orchestrated event, first in 2011 with a one day drop of 7.2%, and then in April 2013 for an 8.5% drop. In the early morning hours of January 6th, 2014, 12,000 gold contracts representing $1.5 billion of naked short selling was forced onto the paper gold COMEX market. Without speculating about who did it or why, it should be obvious that no trader would sell that much gold into the market at one time, effectively minimizing their sales proceeds." .. also highlights the connection between paper COMEX markets & the exchange-traded fund GLD, & how this ETF negatively affects gold prices in times of naked short selling (selling gold without physically having it) - LINK HERE to understand more about the GLD ETF & these problems .. Barisheff dismisses the obfuscation by maintaining "when the manipulation of gold prices can no longer be sustained, gold will skyrocket as the public loses confidence in all fiat currencies." - see the recommended 20 minutes video below on this .. presents the following factual-based chart showing the positive effect of having gold in your portfolio - see left or link below.

LINK HERE to the ARTICLE

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Dr. Pippa Malmgren:

Governments are Imposing Prices

on the Market

Matterhorn GoldSwitzerland interviews former financial market adviser in the U.S. White House .. discussion on how there is no price discovery anymore by the market, & governments are imposing prices on the market .. also a discussion on the closer ties between Russia & China, Germany's gold reserves, the phenomenon of financial repression .. 38 minutes

LINK HERE to the video

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Financial Repression:

U.S. Interest Rates are Low

Because the U.S. Government

is Over-Leveraged

James Turk sees the Federal Reserve as constantly warning that interest rates will rise eventually - but it never seems to happen .. "The obvious strategy the Fed has employed is to delay raising rates as long as possible, but to keep the markets on a knife-edge by saying that rates will rise eventually. They always tie it to something, like the level of unemployment or when the economy improves or inflationary pressures become greater or whatever is the latest benchmark. Former Fed Chairman Ben Bernanke repeatedly said that the Fed would raise interest rates when unemployment fell to 6.5%. We are below that level — at least by the number reported to the public. But the Fed has done nothing about raising rates except to continue jawboning that it will happen." .. will it happen & when will it happen? .. Turk emphasizes the Federal Reserve never wants to admit the real reason why interest rates are low - it's financial repression to keep interest rates low & erode the purchasing power of the currency to lessen the burden of debt .. "Interest rates are low because the U.S. government is over-leveraged and cannot afford to pay a fair interest rate." .. Turk reasons: therefore if the Federal Reserve raises interest rates, then interest payments on the national debt will escalate money printing even faster to the point of hyperinflation. 

LINK HERE to the ARTICLE

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MyRA to Become

TheirRA?

Speaking at AARP headqusrters in Washington, President Obama will announce ORDERS to the Labor Department to write new rules for financial managers who handle retirement accounts for working Americans. 

THE COVER

As USA Today reports, The White House says the goal is to end "hidden fees that hurt consumers and back-door payments that help Wall Street brokers," deals that costs retirees billions of dollars in savings.

THE AGENDA

White House officials said they want new fiduciary standards that would require financial advisers to put clients' interests ahead of their own... and "buy our bonds."

We wonder how long before there will be an official asset allocation by dictat...??

ABOVE EXTRACTED FROM > ARTICLE

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Kevin Warsh on

Financial Repression

"In this environment, policy makers are finding their authority, credibility and firepower being tested. In turn, they are finding it tempting to pursue 'financial repression'—suppressing market prices that they don't like. But this is bad policy, not least because it signals diminished faith in the market economy itself. In environments of financial repression, businesses are keener to retrench than recommit their time, energy and capital to new projects. Trillions of dollars of private capital remains on the sidelines. And the private-sector engine that drives prosperity sputters .. Financial repression is sometimes the effect of policy even if it is not the intent. It manifests itself, for example, when policy makers react more forcefully to declines in asset prices than to increases. Price increases tend to be treated with benign indifference. But declines often lead policy makers to respond with force, deploying fiscal stimulus and monetary accommodation. Market participants then conclude that governments have their backs .. The Federal Reserve's continued purchase of long-term Treasury securities risks camouflaging the country's true cost of capital .. With financial repression at play, we risk missing early warning signs from markets that our debt burden is intolerable .. Financial repression embeds the wrong incentives—obfuscation begets delay, and a robust recovery becomes unattainable .. Financial repression is a tactic that may help get us through the week or month or year. But it will come at a substantial cost to our long-term prosperity."


- Kevin Warsh, Former Federal Reserve Governor,  a distinguished visiting fellow at Stanford University's Hoover Institution, on the Steering Committee of the Bilderberg Group

LINK HERE to the ARTICLE

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THERE ARE NO LONGER COUNTERVAILING POWERS IN WASHINGTON

With the destruction of the manufacturing jobs in America through off-shoring, it has reduced the power of the unions and destroyed the Democrats independent source of campaign funds.

"You now have two parties with the same head and reporting to the same masters. There is no longer any countervailing power"

You no longer have the Democrats supporting workers against the Republicans supporting business. Both parties represent them.

"This is the reason you can't do anything about Financial Repression!"

NEO-CONSERVATIVE CONTROL OF FOREIGN POLICY - $6T TRILLION IN WAR DEBT

We have been in 14 years of wars and added $6T of national debt to finance these wars "without adding five cents of investment for the country having taken place."

"We now have the Neo-Conservatives driving the conflict with Russia (which is insane), with China (which is insane). The United States doesn't have the power to try and dominate Russia / China. Especially now that the two countries have a strategic alliance"

"You have much of the world turning away from the United States because of Washington's

  • Abuse of the Dollar as the World's Reserve Currency,
  • Abuse of the dollar based payment system,
  • Imposing unilateral sanctions which are acts of war,
  • Threatening people with expulsion from the clearance mechanism and people saying we won't have any part of this,
  • The BRIICS establishing their own version of the IMF,
  • The Impact of the Spy Scandals and people saying they will build their own internet,

All of this is not only going to effect business it is going to effect American power. It is going to start shriveling!"

"If you have these crazed Neo-Conservatives demanding control of the world, faced with declining power, you don't know what they will do! It is a very, very dangerous situation. I'm surprised it has taken the world so long to realize the threat the US poses to the rest of the world."

"The US Dollar payment system is essentially a system for looting. This, Globalization and Neo-liberal economics are tools of American economic imperialism. Countries are beginning to realize this. The looting of countries by American imperialism has now reached the point where it is turning on itself - Greece for example."

 

 

Dr. PAUL CRAIG ROBERTS talks with the FINANCIAL REPRESSION AUTHORITY

Dr. Paul Craig Roberts is extremely meticulous in examining the central problems facing America and the developed economies today. You may not like nor agree with what he says but there is little double as a former high level Treasury official, academic professor and Wall Street Journal editor, that he knows what he is talking about.

FINANCIAL REPRESSION

"It is going on on several fronts conducted by different people for their own agendas, though they all seem to be mutually supporting.

1-FINANCIALIZATION OF THE ECONOMY by the Big Banks. - "What that means is that they are converting the entirety of the economic surplus to paying interest on debt. They are draining the economy of all vitality! There is nothing left for the expansion of consumer demand, business investment and old age pensions. It expropriates the economic surplus that is created beyond the maintenance of the current living standard into interest on debt.

2-OFF-SHORING OF MIDDLE CLASS JOBS by Corporations & Wall Street - "What the Corporations and Wall Street have achieved by off-shoring manufacturing jobs and tradable professional job skills such as software engineering & information technology. What they have done by moving these offshore is to recreate the labor market conditions and wage exploitation of the late 19th century."

3-MANIPULATION OF THE BULLION MARKETS by the Futures Market Bullion Banks - "There is no free market in the futures markets. These are markets that are manipulated."

COLLUSION BETWEEN PARTICIPANTS

"I think there is a lot of collusion. For example the government colluded with the banking system in financial deregulation. For example they repealed Glass-Steagall. They expressed this absurd claim that financial markets are self regulating."

"They turned the financial system into a gambling casino where the bets are covered by the tax payer and central bank."

The cancer which started in the US Financial System has spread globally. The carriers of the cancer has been the International Banks.

WASHINGTON ANSWERS TO WALL STREET

"Some of the Financial Repression is collusion of government serving the financial interests because Wall Street is a huge supplier of political campaign funds which you are highly dependent on to get re-elected. So you answer to the donors. You don't answer to the public interest. It doesn't give you any money."

"You answer to:

  • Wall Street,
  • The Military-Security Complex,
  • The Agri Business like Monsanto,
  • The extractive Industries (Oil, Timber, Mining)

These are the powerful interest groups that use the government to serve their interests."

LINK HERE to the video

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As Dylan Grice from Societe General notes:

when you include unfunded liabolities, this problem is endemic throughout the Western world and has been for years.

 

 

GRAHAM SUMMERS on

Financial Repression

"QE was never meant to create jobs or generate economic growth… it was a desperate ploy by Central Banks to put a floor under the bond market so rates wouldn’t rise.

... It’s also why Central Banks have kept interest rates at zero or even negative. They cannot afford to have rates rise.

In the US, every 1% increase in interest rates means between $150-$175 billion more in interest payments on our debt per year.

LINK HERE to the ARTICLE

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Paul Brodsky on

Financial Repression

Boom Bu$t .. discussion with Paul Brodsky on how financial repression seems to be the order of the day on monetary policy, with negative interest rates rife throughout government bond markets in Europe - explains where financial repression is leading central banks & explains what kinds of strategies you can devise to get around it .. 1/2 hour total program

LINK HERE to the video

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PIMCO: "Financial Repression is now

a Truly Global Phenomenon."

PIMCO viewpoint on how financial repression has compressed & highly correlated yields on government bonds from developed countries .. "With the Fed acknowledging international developments in their last Federal Open Market Committee (FOMC) statement, financial repression is now a truly global phenomenon."

LINK HERE to the article

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Insurance Companies Will Be

Raising Insurance Premiums

Because of Financial Repression

Dr. Marc Faber* says central bankers are professors who never worked a day in their lives & whose easy-money policies will ultimately be disastrous for markets .. That's why he says he thinks gold could be the "trade of the century" & why he recommends additional exposure to gold through junior miners. He explains his investing strategy today on Commodities .. says insurance companies will be raising insurance premiums to much higher levels due to the financial repression of very low interest rate & low yields .. thinks sovereign wealth funds will begin investing in gold .. 7 minutes

LINK HERE to the video

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Pension Obligations in Times of

Financial Repression

Allianz report gives great insight for pension fund risks & challenges in this era of financial repression - negative interest rates, low yields, inflation, regulatory challenges, capital controls ... 

LINK HERE to the article

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THE ROAD AHEAD: FATCA, IGAS AND THE CRS

The costs of FATCA Compliance will be USD 1 to 2 trillion worldwide. The bulk of these costs will be incurred in the customer outreach required to obtain the required documentation.

There will also be considerable customer backlash to FATCA and the documentation it requires. In the age of social media this matters, if this sounds like hyperbole please have a look at this URL

At a most basic level FATCA, the IGAs and the CRS are about making tax part of standard KYC/AML procedures and then reporting, for tax purposes, to those jurisdictions, in which the account holder has tax residence or citizenship.

 

 

THE GLOBAL "DOOMSDAY" BOOK

Haydon Perryman talks GATCA / FATCA

 

"This a modern day "Doomsday" Book, the same as William the Conqueror implemented in 1066 after conquering England. He needed to know where the wealth was so he could tax it"

 

"This is Not Really About Tax There are Easier Ways to Solve Tax Tracking - Its about a Common Reporting Standard. Its about the ability to track Capital"

"FATCA is a decoy for the Common Reporting Standard"

"There is an incredibly aggressive urgency of implementation - an unprecedentedly quick agreement between 57 governments"

Why?

Either to Tax it , Expropriation it or Control Its Free Movement

"Era of Banking Secrecy is Over!"

"A Complete Misunderstanding by Banks"

 

LINK HERE to the podcast

EVERYTHING YOU NEED TO KNOW ABOUT GATCA / FATCA

DOWNLOAD THE 525 PAGE REPORT

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PENSION AND INSURANCE "MODELS" - In Serious Trouble

The pension plans and Insurance industry is in deep trouble. They are basically forced to speculate on something. That speculation will end very badly!

WHAT SHOULD INVESTORS DO?

Dr Faber says quite honestly,

"I am an economist, strategist and investor. The answer to the question of what should an investor do is - I DO NOT KNOW! But people expect me to know so I can tell you what I would do. In the absence of knowing precisely how the end game will be played we should invest in a diversified portfolio of different assets. Some in real estate, some in equities, some in cash & bonds, and some in precious metals."

"For an investor to not own some precious metals at this point is almost irresponsible!"

MORE QE IS COMING

"I don't believe we have currency wars but rather the central bankers, one after the other, prints in a 'round about'"

"Money printing has never ended well in history. It can postpone the problems, but it will make the end result even worse."

"I believe the Fed will intervene at some point with another round of QE!"

 

 

Dr MARC FABER

talks FINANCIAL REPRESSION

Dr Marc Faber feels strongly that the current money printing policies "will not end well"!

He feels that:

"Governments are not smart enough to have thought the current scheme out. The professors, academics (who have never worked a day in their lives in the private sector) and central banks think by having artificially low interest rates you can solve problems. Actually, they aggravate the problems!"

"When central banks print money nothing begins to make sense!" -- "It is no longer a free market. Markets are now manipulated by governments and notably by their agents, the central bankers." 

FINANCIAL REPRESSION - An "Expropriation"

"Basically what central banks have done around the world is to push interest rates to extremely low or even negative rates. I don't call it a repression. I call it an expropriation of the savers because before the intervention of the banks occurred post 2008, a saver got a decent rate of interest. Now they get nothing at all! So either they speculate or they lose purchasing power over time!"

The purchasing power of money is depreciating. Financial Repression or what Dr Faber calls "expropriation", he feels is very negative for the middle and working class.

The current government and central bank policies "are leading to huge asset bubbles in stock, real estate, commodities, collectibles, art and so forth." Inflation and Deflation work much the same way according to Marc Faber. All prices do no go up or nor decline at the same time.

"We had the collapse of the Nasdaq after March 2000. Then the Fed created the housing bubble and after it collapsed after 2007, it had a devastating impact on a very large number of households. Then in 2008 we had a commodities bubble with oil going to $147/bl and now you know where oil is trading at. Its now 1/3 of what it was at that time basically. The Money printing leads to bubbles which they deflate and hurt the majority at the expense of a few people. This is not going to help the economy in the long run - PERIOD!"

 

LINK HERE to the podcast

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LINK HERE for more info on GoldSwitzerland

 

LINK HERE for more info on GoldSwitzerland

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Subscribe to our Mailing and Alert System - to receive timely updates on important developments relating to financial repression:

 

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LATEST MACRO ANALYTICS ON FINANCIAL REPRESSION

 

LATEST UnderTheLens UPDATE ANALYSIS ON FINANCIAL REPRESSION

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FINANCIAL REPRESSION TIMELINE - LONGER TERM

FINANCIAL REPRESSION TIMELINE - NEAR TERM

2014

2015

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Q4
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BAIL-INS-EU
YELLEN / FISHER ON RECORD
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** Current Details Below

CURRENT FINANCIAL REPRESSION INITIATIVES

MONEY MARKET FUND GATES (SEC REGULATIONS)
  • “Redemption Gates” for Money Market Funds Acting Man --"The adoption of 'redemption gates' effectively means that money market fund boards will be able to suspend the property rights of their customers. Once again, this creates a big disadvantage for the money market fund industry in favor of banks, since demand deposits will continue to lack such 'redemption gates', in spite of the fact that banks are de facto unable to actually pay out all demand deposits, or even a large portion of them, 'on demand'. It is an interesting detail that retail customers are to be exempt from this regulation based on the idea that they are basically too addled to react to crisis conditions. Why are such regulations held to be required at all? Are regulators implying that the system has not been 'made safe' by adopting several telephone book-sized tomes of additional regulations?"
  • SEC Votes Through Money Market Exit Gates Zero Hedge -- the SEC has adopted the news rules designed to curb the risk of money market investor runs .. "Among the changes, funds will have to switch to a floating share price instead of the current $1/share (hence the term breaking the buck). But the key part: 'The SEC's rule will require prime money market funds to move from a stable $1 per share net asset value, to a floating NAV. It also will let fund boards lower redemption 'gates' and fees in times of market stress." .. suggests this may send money market investor rushing out & into other asset classes - the SEC, the Federal Reserve & the U.S. Treasury hope that asset class is stocks to keep the stock market rising .. "Clearly, everyone understand that the only purpose behind implementing 'gates' is to redirect the herd. And with some $2.6 trillion in assets, money markets can serve as a convenient source of 'forced buying' now that QE is tapering if only for the time being. The only question is whether the herd will agree to this latest massive behavioral experiment by the Fed, and allocate their funds to a stock market which is now trading at a higher P/E multiple than during the last market peak."
  • U.S. SEC poised to adopt reforms for money market funds Reuters
  • Fund managers on alert over money market shake-up FT -The SEC is looking to drive money market funds to only government securities, especially institutional money market funds - this means money market funds will be helping to pay for the government debt ..  The SEC is also planning to allow fees and restrictions on redemptions in times of stress, but it is not clear how widely these will be applied across the money markets - FT: "Any restrictions on redemptions may not be severe at first, but the regulations will only become more restrictive over time. Don't waste time thinking you are going to monitor the situation and get out later. Get out now, when the getting is easy."

 

Do you know the difference between a money market fund and a money market account? CNBC Personal Finance Reporter Sharon Epperson explains the big difference

BAIL-IN (GLOBAL - G20 LEGISLATION)

  • Australia: 'Bail in' Rules May Be Inevitable In Australia - August 22, 2021 Bail in' rules may be inevitable, says David Murray of the Financial Systems Inquiry Chair in Australia .. "It appears there’s a wide consensus that bail-in would considerably expand the buffer, would further assist in the mechanisms for the protection of depositors, and importantly would create a system where it is less likely that the government would be dragged into a crisis." .. Australia may have little choice but to adopt “bail-in” rules that expose bank creditors to losses, due to our dependence on foreign capital .. more financial repression.
  • Canada: Department Of Finance Releases Proposal For Canadian Bail-In Regime Canada's government is looking to implement a bail-in regime to limit exposure to a government bailout - the idea is for troubled banks to shaft bank depositors of their bank deposits first .. "The G-20, including Canada, endorsed the Financial Stability Board's Key Attributes of Effective Resolution Regimes for Financial Institutions in 2011, a set of best practices for the resolution of financial institutions which contemplates the establishment of a bail-in regime."

PENSION CONTROLS

CAPITAL CONTROLS (CASEY RESEARCH ON COMING CAPITAL CONTROLS)

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POLICY CONTROLS (Monetary, Fiscal, Public & Tax Policy)

  • January 2015 Financial Repression - New IMF Paper on The Liquidation of Government Debt New IMF paper by Carmen Reinhart & M. Belen Sbrancia .. presents how public debt is often reduced through the use of financial repression - a tax on bondholders & savers via negative or below market real interest rates .. from abstract:High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or below-market real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt .. Financial repression is most successful in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were ne gative ½ of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5% of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies."
  • October 2014 - Financial Repression is Very Low Interest Rates for a Very Long Time The 16th annual Geneva Report by the International Centre for Monetary and Banking Studies & written by senior economists including 3 former senior central bankers, predicts interest rates across the world will have to stay low for a "very, very long" time to enable households, companies, & governments to service their debts and avoid another crash .. The report's authors expect interest rates to stay lower than market expectations because the rise in debt means that borrowers would be unable to withstand faster rate rises .. "Global debt-to-GDP is still growing, breaking new highs .. At the same time, in a poisonous combination, world growth and inflation are also lower than previously expected, also – though not only – as a legacy of the past crisis. Deleveraging and slower nominal growth are in many cases interacting in a vicious loop, with the latter making the deleveraging process harder and the former exacerbating the economic slowdown. Moreover, the global capacity to take on debt has been reduced through the combination of slower expansion in real output and lower inflation." 
  • October 2014 - Financial Repression is the likely approach for Governments to pay down debt Great insightful article on financial repression by Daniel Amerman .. questions how the U.S. federal government can pay down its enormous debt .. sees 4 primary options that the government can take: 1) Decades of austerity with higher taxes and lower government spending. 2) Defaulting on government debts. 3) Inflating away the value of the debt through rapidly slashing the value of the currency. 4) Using "Financial Repression", a process that is complex enough that the average voter never understands how it works, thus allowing governments to use this potent but subtle method of taking vast sums of private wealth, year after year, decade after decade, with almost no political consequences. The essay reminds readers the 4th option is the likely approach, points out the world took this approach in the 1940s through the 1970s to pay down government debt .. "Because of the sheer size of the problem – most of the population must be made to participate, year after year. Financial Repression therefore uses an assortment of carrots and sticks to ensure that investors have little choice but to participate – on a playing field that has been rigged against them as a matter of design – even if they are among the small minority who are aware of what is being done to them."The essay covers 4 areas of financial repression: 1) Inflation (Shearing #1)  2) Negative Real Interest Rates (Shearing #2) 3) Funding By Financial Institutions (Fence #1). 4) Capital Controls (Fence #2). 
  • September 2014 - Governments Implementing Financial Repression International Man article on how western world indebted governments need money, how they will protect the big banks at the expense of the citizens with financial repression ..  The International Monetary Fund (IMF) published a horrifying paper, called The Fund’s Lending Framework and Sovereign Debt. That paper in turn was based on one from December 2013, called Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten .. The December 2013 document, right at the start, says that financial repression is necessary: "The claim is that advanced countries do not need to resort to the standard toolkit of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression .. As we document, this claim is at odds with the historical track record of most advanced economies, where debt restructuring or conversions, financial repression, and a tolerance for higher inflation, or a combination of these were an integral part of the resolution of significant past debt overhangs." .. The IMF report goes on to say: "Governments can stuff debt into local pension funds and insurance companies, forcing them through regulation to accept far lower rates of return than they might otherwise demand .. Domestic defaults, restructurings, or conversions are particularly difficult to document and can sometimes be disguised as 'voluntary' .. The Fund would be able to provide exceptional access on the basis of a debt operation that involves an extension of maturities .. That means that 30-day notes can be instantly turned into 30-year bonds." - this last sentence means the ability to change 30-day notes into 30-year bonds, effectively holding the money captive for a much longer period of time
  • Monetary Policy & Financial Repression in Britain, 1951 - 59 New book coming out by William Allen on Monetary Policy and Financial Repression in Britain, 1951 - 59 .. this book explores the politics of formulating monetary policy in the 1950s, the tools implementing it & discusses the parallels between the present monetary policy & that of 1951 .. "Drawing on official archives, this study describes how monetary policy was decided on, implemented and communicated at a time when the government was struggling with massive post-war debts while maintaining welfare and military spending and cutting taxes. It discusses the roles of the Governor of the Bank of England, Cameron Cobbold, and of successive Chancellors R.A. Butler, Harold Macmillan, Peter Thorneycroft and Derick Heathcoat Amory, and Macmillan's continued dominance of monetary policy after he became Prime Minister. It explains the intimate relationships between monetary policy, government debt management and fiscal policy, and the use of 'financial repression'."
  • Low Interest Rates & Inflation To Address Financial Repression Article points out the worse things get on the European financial/economic crisis, the more pressure there is on the European Central Bank (ECB) to print money - stocks will likely go up as this happens on the anticipation that the ECB will given in & start money printing .. "The ECB would print money and use it to buy eurozone government bonds, in order to prop up the region’s banking sector, and to encourage more risk-taking by lenders and investors. Of course, any hint of more money-printing always cheers the market, and European stocks reacted well to the news." .. the article points to how U.S. & UK stocks have similarly reacted positively on all the money printing .. whether all this money is good for the economy or whether it even benefits the economy in any positive way is another question .. the article emphasizes the approach of financial repression taken by the U.S. & UK in keeping interest rates down & allowing inflation to rise in order to pay off some government debt via inflation, rather than by defaulting or cutting back spending .. most western world governments are in this bind, so that "we could see interest rates staying lower than markets expect for some time. And in the longer run, we could see a lot more inflation than we’ve been used to as well" .. in terms of investing, the article suggests sticking with countries that are looking to do more money printing & that have relatively inexpensive stock markets, such as Europe or Japan.
  • This Is Going To Destabilize The Entire World Financial System Ronald-Peter Stoferle, Incrementum AG "Bond prices in practically all industrialized nations are near all-time highs. Never before have interest rates been this low on a global basis. If one examines these events more closely, it becomes clear that the underlying problems cannot be solved by global zero interest rate policy, but that the natural selection process of the market is instead being undermined .. Interest rates are the heart, soul and life of the free enterprise system .. This truth is however veiled and distorted at the moment. Governments, financial institutions, entrepreneurs and consumers that are acting in an uneconomic manner are thus kept artificially afloat. As a result, instead of them being punished for their errors, these errors are perpetuated. Protraction of this process of selection leads to a structural weakening of the economy, and a concomitant increase in the system's fragility .. Declining interest rate levels make a gradual increase in public indebtedness possible, while the interest burden (as a share of government spending) does not grow .. Without negative real interest rates, the steadily growing mountains of debt would long ago have ceased to be sustainable. Central banks are increasingly prisoners of the policy of over-indebtedness .. Central banks and governments are currently trying to create an increase in prosperity out of nothing. Such a monetary perpetuum mobile would be quite desirable for humankind, however, historically such attempts have at best led to a brief sugar high followed by a major hangover.
  • Alasdair Macleod On The Markets: Keep Calm & Carry On "Investment is now all about the trend and little else. You never have to value anything properly any more: just measure confidence. This approach to investing resonates with post-Keynesian economics and government planning. The expectations of the crowd, or its animal spirits, are now there to be managed. No longer is there the seemingly irrational behaviour of unfettered markets dominated by independent thinkers. Forward guidance is just the latest manifestation of this policy. It represents the triumph of economic management over the markets .. Doubtless there is a growing band of central bankers who believe that with this control they have finally discovered Keynes’s Holy Grail: the euthanasia of the rentier and his replacement by the state as the primary source of business capital. This being the case, last month’s dip in the markets will turn out to be just that, because intervention will simply continue and if necessary be ramped up .. But in the process, all market risk is being transferred from bonds, equities and all other financial assets into currencies themselves; and it is the outcome of their purchasing power that will prove to be the final judgement in the debate of markets versus economic planning."
  • The Fed's Financial Repression At Work: How Big Blue Was Turned Into A Wall Street Slush Fund David Stockman -- "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."
  • BoJ To Engage In 'Financial Repression'; We Stay Long USD/JPY - BNPP 07-11-14 eFX News "Japan now has one of the highest inflation rates in the G10. Our economists expect the BoJ to engage in ‘financial repression’ to restrain the rise in JGB yields that results from Japan’s fiscal dynamics," BNPP says as a rationale behind this view. "A larger overshoot in Japan’s inflation rate would also see the yen weaken. If inflation gets out of hand, we could, our economists suggest, see an ‘operation twist’ policy in Japan – similar to that witnessed in the US. This would entail aggressive purchases of JGBs coupled with interest rate hikes to stave off inflation. The resultant inversion in the yield curve, along with the upside shock to inflation, is a risk scenario for Japan and the ensuing adverse growth-inflation paradigm would necessarily entail a weaker yen," BNPP argues. "In addition, a re-allocation in the government pension investment fund (GPIF) and a likely pick-up in Japanese outflows will mean JPY weakens," BNPP adds.
  • MyRA
    MyRA - More About Getting Votes Than Helping Middle Class
    The Three Stooges Debunk myRA - Zero Hedge
    The MyRA Propaganda Begins A Start To A Secure Retirement Promises Treasury Secretary
    .
    .
    Obama To Unveil Treasury IRAs, Or Planning For A Post-Monetization World
    The Next Shoe To Drop On Your Retirement Account
    Default, Deflation and Financial Repression
    ECB Seriously Considering Negative Interest Rates; New Central Bank Mottos
    First It Was Bail-Ins And Now EU Sees “Personal Pension Savings” As “Plug” For Banks
    Furious Backlash Forces HSBC To Scrap Large Cash Withdrawal Limit
    .
    .
    We Are From The Government And We Are Here To Offer You A No Risk, Guaranteed Return Investment Product
    .
    Theft Is Deflationary - Especially The Crony-CapitalistState Kind
    When Saving Interest Rates Go Negative

REGULATORY CONTROLS & ENFORCEMENT

  • U.S. Pushing Banks On Dodd-Frank Act To Make It Easier For Government To FREEZE YOUR MONEY - Financial Repression Via Regulations "The U.S. wants big banks to simplify their Dodd-Frank Act resolution plans so it's easier for government to freeze your money." .. Bloomberg reports on the progress made by Wall Street banks developing their "living wills" as part of the Dodd-Frank Act legislation attempting to minimize "too big to fail" banks .. Bloomberg: "The Federal Reserve and Federal Deposit Insurance Corp. told 11 of the largest U.S. and foreign banks, including JP Morgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), that they botched their so-called living wills. The agencies ordered the banks to simplify their legal structures and revise some practices to make sure they can collapse without damaging the wider financial system." Jim Rickards:
  • 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:
  • Basel Accord II and III - 05-16-14 Cliff Küle

PUBLIC & PRIVATE PRESSURES & PENALTIES

Placing the Government Debt on the back off Savers & Pensioners

(ie the 75M Baby Boomers About to Retire)

REPORTING DISTORTIONS (Economic & Gov't Statistics)

  • September 2014 - Financial Repression Through Shrinkflation Financial Repression Using Shrinkflation: "As ‘shrinkflation’ becomes no longer viable, it will soon reveal itself in the form of higher consumer prices. And with central banks around the world creating inflation as a policy measure so as to inflate away the world’s massive debt pile, the question remains as to whether the central banks will be able to control this deliberately induced inflation in an environment where ‘shrinkflation’ no longer works."

CAPITAL & FOREIGN EXCHANGE CONTROLS

POLITICAL SUASION (Political Pressures & Quid Pro Quo)

EXPROPRIATION

 

OUR THESIS PAPER

ABSTRACT

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)

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TERMS OF USE

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

THE CONTENT OF ALL MATERIALS:  SLIDE PRESENTATION AND THEIR ACCOMPANYING RECORDED AUDIO DISCUSSIONS, VIDEO PRESENTATIONS, NARRATED SLIDE PRESENTATIONS AND WEBZINES (hereinafter "The Media") ARE INTENDED FOR EDUCATIONAL PURPOSES ONLY.

The Media is not a solicitation to trade or invest, and any analysis is the opinion of the author and is not to be used or relied upon as investment advice. Trading and investing  can involve substantial risk of loss. Past performance is no guarantee of future returns/results. Commentary is only the opinions of the authors and should not to be used for investment decisions. You must carefully examine the risks associated with investing of any sort and whether investment programs are suitable for you. You should never invest or consider investments without a complete set of disclosure documents, and should consider the risks prior to investing. The Media is not in any way a substitution for disclosure. Suitability of investing decisions rests solely with the investor. Your acknowledgement of this Disclosure and Terms of Use Statement is a condition of access to it.  Furthermore, any investments you may make are your sole responsibility. 

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Gordon emperically recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, he  encourages you confirm the facts on your own before making important investment commitments.
  

DISCLOSURE STATEMENT

Information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities.

Please note that Mr. Long may already have invested or may from time to time invest in securities that are discussed or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

 

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If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.   

COPYRIGHT  © Copyright 2010-2011 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

 

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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.
"When things get bad enough, governments will do anything." – Jim Rickards
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HOW IT HAPPENS

"People ask if we'll have a 'bail-in' in the United States .. Given ATM limits, foreign wire limits and Federal Reserve exit fees on bond funds, I'd say it's already here." - Jim Rickards

1- Negative Real Rates
2- Disruption of Price Discovery
3- Mispricing of Risk
4- Sustained Financial Distortions
5- Restrictive Financial Choices
6-Confiscation of Wealth Through Inflation
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.
TOOLS USED

The next bailout will be the U.S. government. They will seize all pension funds and 401Ks to absorb the debt. They are realizing that as the war cycle turns up, less and less foreigners will buy U.S. debt ... The solution – forced loans." - Martin Armstrong

1- Monetary Policy
2- Distortions - Statistics, Reporting
3- Fiscal Policy - Budget Deficits
4- Moral Suasion - Political Pressures
5- Taxation - ROE, ROI
6-Regulators - Financial Requirements & Enforcement
7- Stealth Credit Spreads
8- Capital Account & Financial Excahnge Controls
PILLARS OF FINANCIAL REPRESSION

"We’re going to take your pension plan and give you government bonds so that you have a guaranteed return .. That’s how they’ll rationalize taking our money. They know where all the pension plans are because we have to report it, so they’re easily accessible by governments. They know where they are, what they are, and they’ll be able to snatch them away. Who knows what they’ll do, but they’ll certainly find some way to take our money when things get worse, they always have." – Jim Rogers

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.

13- Haircuts on deposits (e.g. Cyprus)

OUR COMMENTARY

"This manipulation of the yield on government debt is the answer for the government, and socially, it is so much more acceptable than the alternatives. Whatever you think of the history of hyperinflation, austerity, default and deflation, they are socially incredibly disruptive, incredibly socially dangerous, and many of those market-driven events have led to warfare or massive domestic social unrest. I think in the grand scheme of things when the government sits down and decides which avenue to pursue, this avenue of repression .. will always be more socially acceptable than the market-driven events of austerity, hyperinflation, deflation, devaluation." - Russell Napier, CLSA

THE BUYBACK TAX RUSE Its a Free Tax Ride for Corporations - 07 July 2021

Financial Repression Goes Global - 05 June 2021

 

From the U.S. standpoint, it’s now a case of 'inflate or die,' and much of the world knows this. Thus if the U.S. decides not to default on its massive debts, it will have to resort to hyperinflation. If this happens, the U.S. will single-handedly tear the world monetary system apart. What worries me is that governments will do whatever they have to in order to remain in power. This can result in confiscation of the assets of U.S. citizens .. America's massive debts will ultimately upset the world’s monetary system." - Richard Russell

PRESENTATIONS

 

GRAPHICS

"There will be future bail-ins [loss of deposits] and other types of confiscation of wealth in the eurozone, without a doubt .. There's no other realistic way forward if politicians continue to fail to deal with the basic indebtedness problem across Europe." - Lars Christensen, the Head of Saxo Bank

Click Graphics to Enlarge

VIDEOS

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth.. “..There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”-John Maynard Keynes

 

 

 

 

PODCASTS
EDUCATIONAL AIDS

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

Monetary Policy Under Financial Repression: China's Long-Term Outlook Financial Sense 20 Dec 2021