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The Financial Repression Authority

MACROPRUDENTIAL POLICY ADVISORS

"Financial repression is not a conspiracy theory, it is rather a collective set of macroprudential policies focused on controlling and reducing excessive government debt through 4 pillars - negative interest rates, inflation, ring-fencing regulations and obfuscation - to effectively transfer purchasing power from private savings." - The Financial Repression Authority

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Dear Reader, 
Please find below our posts from this week. We hope you find them insightful and informative. Check out our many interviews with key industry analysts, economists and fund managers - click on LINK to our Interviews.

 

LINK HERE to our Interviews

How can I Protect from Financial Repression?

 

Last Update:  Wednesday 5/13/15 2:11 PM

   

 

 

TROUBLING ISSUES

  • $555T INTEREST SWAPS
    • All Interest Swaps are trading "hinged" on Bond Collateral which is in a massive bubble,
    • Something may be up when the Plunge Protection Team takes up increasing residence in Chicago where Bernanke is now consulting to Citadel (the largest High Frequency Trading player in America) also in Chicago.
  • $72T SHADOW BANKING
    • The source of the 2008 Financial Crisis has mutated to new instruments to borrow short to finance Student Loans and Car Loans. The Shadow Banking Systems now "hinges" on Repos, Collateral Transformations and Rehypothecation.
  • USD CARRY BLOWING UP
    • The $9T US$ carry Trade is hinging on ~$5T in merging Markets which ar now on the wrong side of the trade as the US dollar spikes,

"When it gets serious you can expect the central bankers to lie!"

 

 

GRAHAM SUMMERS TALKS

FINANCIAL REPRESSION

FINANCIAL REPRESSION

"When I think of repression I think of the Psychological concept that repression is the suppression (or pushing back) of something that is too painful to deal with in sort of a conscious way. That is exactly what the central banks of the world have been doing essentially since 2008. What we had in 2008 was the beginning of a debt deleveraging cycle o the dreaded debt deflation. The economists often like to argue that deflation is terrible but they are being overly general because deflation is actually a wonderful thing (we all want to have things we want to buy be cheaper) but the issue for the economists or Keynesian's is 'debt deflation'".

When debt begins to deflate you run the risk of becoming insolvent particularly in the bond market.

"Because we have been in this debt leveraging cycle for over 30 years ( a bond bubble would be the simplest way of putting it) the central banks are all terrified of a bond bear market because that means that almost instantly all developed nations are bankrupt because the way they have papered over the decline in living standard is by issuing more debt. It has gotten to the point now where because we don't have the money to pay the debt back we are issuing new debt to roll over the old debt (or pay back the old debt)."

"It sounds like a Ponzi scheme and it actually is! It works relatively well while the bond or underlying asset is rising in value because the debt is getting cheaper and the yield is falling

"When it reverses if you don't have the money to pay back the bond so you start to enter a deflationary cycle which is what we had in 2008.

WATCH WHAT THE FED DOES - NOT WHAT IT SAYS

"Most of what the central banks talk about is nonsense. If you watch their actions it is about how do we stop the bond bubble from blowing up? They have done that by three ways:

  1. They cut interest rates down to zero. By doing this they made it much easier to finance debt.
  2. They began engaging in Quantitative Easing (QE). They essentially print money and buy large assets from the banks. It started out as Mortgaged Backed Securities (MBS) because they were the assets devaluing fastest. The second and third rounds were just attempts to keep the whole thing afloat. By Buying bonds you are basically broadcasting to the world I am going to be buying this asset in the near future. The most obviously trade is then for you to buy the bond before you and then turn around and sell it to you for a profit. Globally investors have essentially been front running the central banks.
  3. They suspended accounting standard. This was so banks weren't forced to sell devaluing products but could maintain using them as collateral at higher required values.

"Essentially Repression was the Central Banks trying to repress the terror of debt deflation!"

"All of this has manifested a sort of financial perversion where you seeing capital doing all sorts of crazy things and flowing into areas it would have never gone to before because risk has been so mis-priced by the market."

 

LINK HERE to the VIDEO

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BY DESIGN

"I'm afraid I believe at the very top it is devious! If I connect all the dots together I cannot feel it is by accident - it by design. I think the president wants to distribute American wealth around America, but even worse is to distribute American wealth around the world. Its killing the economy and its kiliing America."

"It means (eventually) everyone is going to look towards the government for solutions - that is when totalitarian governments come in (to existence)"

 

"The only solution is single term politicians - Turkey's don't vote for an early Thanksgiving!"

 

 

JOHN BROWNE TALKS

FINANCIAL REPRESSION

FINANCIAL REPRESSION

"It is the financial repression of the ordinary individual in America. It is happening through three main avenues or arteries.

  1. POLITICALLY - The government is increasing its power almost everyday and repressing the public individual and particularly the rights of the individual. Always under the guise that it to help you! Published statistics are highly questionable; growth rates, inflation rates, unemployment rates. They are confusing people and today I read how they are forcing people out of using cash!
  2. ECONOMICALLY - We have had an enormous, unprecedented injection of cash into the economy with a $3.8T QE program. Its an experiment! It was initiated in Japan where two decades ago the BOJ said it wouldn't work but the politicians insisted they do it. After two decades it still hasn't worked. We are now doing it on a grand scheme without a pilot program. It is creating a (liquidity) trap. It is a major distortion and is crushing savers.
  3. FINANCIALLY - ZIRP is (also) crushing savers! It is savings which forms investment for the future. 62% of employment comes from small businesses where formation must be incented. That needs capital from savings. This along with increasing regulation is not only killing the consumer but the incentive to start a small business which is the key to the creation of jobs, which is key to the creation of income which is then key to savings and growth in the economy. It has all been killed by these policies.

"I don't believe the central bank is necessarily evil, just unbelievably Irresponsible!

LIQUIDITY TRAP

"I think we are now seeing a situation which you could call a liquidity trap. There is so much money around that if they start to raise interest rates they are going to discourage people even more from spending. Ordinary individuals have low wages (wages have been flat for six years at least) yet taxes are going up (the number of taxes) as well as charges (licenses and fees)"

"They are pushing on a string. It isn't liquidity that matters but wages and income!"

"How does the Fed create income without just giving us cash in the post (mail) by just sending us checks?

 

LINK HERE to the VIDEO

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Financial Repression in Australia

Will Likely Lead to Investments

in Precious Metals

ABC Bullion Chief Economist Jordan Eliseo essay on the Australian Superannuation industry, & investment in gold & precious metals .. he sees increasing numbers of Australians as choosing to self-direct their retirement portfolios in the direction of physical gold & silver "as a natural choice in a low to negative real rate environment, and as the ultimate portfolio protection in an era of financial repression" .. also he expects at some point for institutional players to eventually adopt a strategic allocation to precious metals .. "Record low bond yields, stretched valuations in certain sectors of the equity market, and the prospect of further interest rate cuts will force these funds in this direction. One need not be a raging gold bull to recognise that a more robust and prudent asset allocation strategy for the coming years simply can’t continue to completely overlook the asset at the bottom of Exeter’s Pyramid."

LINK HERE to the Article or view below

Jordan Eliseo article

 

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The Era of Financial Repression:

Norway's Sovereign Wealth Fund says

Monetary Policy is a Risk to Watch

“Monetary policy does affect pricing in today’s market to such an extent that monetary policy itself has been a risk you have to watch .. Investors are focused more on monetary policy changes than has been generally the case, than at any time, as far as I can remember .. As anything that moves prices is a risk that has to be monitored, here the effects of monetary policy affect prices dramatically .. It’s of course always been the case with long rates, and now more significantly with the currency. That’s just a fact of the current market."

- Yngve Slyngstad, chief executive officer of Norway’s $890 billion sovereign-wealth fund

LINK HERE to the Article

"Financial repression is not a conspiracy theory, it is rather a collective set of macroprudential policies focused on controlling and reducing excessive government debt through 4 pillars - negative interest rates, inflation, ring-fencing regulations and obfuscation - to effectively transfer purchasing power from private savings." - The Financial Repression Authority

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LINK HERE to enlarge the Above Diagram

"Financial repression is not a conspiracy theory, it is rather a collective set of macroprudential policies focused on controlling and reducing excessive government debt through 4 pillars - negative interest rates, inflation, ring-fencing regulations and obfuscation - to effectively transfer purchasing power from private savings." - The Financial Repression Authority

 

Financial Repression Tutorial:

It's about Macro Prudential Policies to

Control and Reduce Government Debt

Financial Sense's Cris Sheridan interviews Gordon T Long* on financial repression .. Gord explains how financial repression is not about conspiracy theories, nor is there some official government policy for financial repression .. it's happening from macro prudential government policies focused on reducing & controlling government debt .. click on the above chart to enlarge - in the middle you will see the 4 pillars of financial repression - negative interest rates, inflation, ring-fencing regulations & obfuscation .. "Financial repression uses a combination of inflation and government control of interest rates in an environment of capital controls to confiscate the purchasing power of much of the nation's private savings." .. discussion on how to protect your investments in such an environment .. 43 minutes podcast .. courtesy thanks to Financial Sense for making this available

LINK HERE to the Podcast

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The Big Macro Picture of Financial Repression:

"Financial repression is not a conspiracy theory, it is rather a collective set of macroprudential policies focused on controlling and reducing excessive government debt through 4 pillars - negative interest rates, inflation, ring-fencing regulations and obfuscation - to effectively transfer purchasing power from private savings." - The Financial Repression Authority

The chart below shows the linkages and relationships between the good intentions by governments, central banks and regulators translating into the 4 pillars of financial repression - ultimately presenting risks to the investors - savers, retirees, pension funds, endowments and sovereign wealth funds. Link to our ISSUES and SOLUTIONS pages to find out how to address these challenges and protect in this environment.

 

TUTORIAL WITH GORDON T LONG and DOLLARCOLLAPSE'S JOHN RUBINO:

 

 

TUTORIAL WITH FINANCIAL CONSULTANT DAN AMERMAN:

 

TUTORIAL WITH ALLIANZ U.S. CHIEF STRATEGIST KRISTINA HOOPER:

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TERMS OF USE

Neither Gordon T Long nor the FInancial Repression Authority (nor any of its operating entities) is 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. 

THERE IS RISK OF LOSS IN TRADING AND INVESTING OF ANY KIND. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS.

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.

 

FAIR USE NOTICE  This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

 

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 2010-2015 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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"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

The 4 Pillars of Financial Repression:

1- Inflation
2- Negative Interest Rates
3- Ring Fencing
4- Obfuscation and Mis-information
 

Posts are A JOINT INITIATIVE OF

GordonTLong.com and CliffKule.com

 
 
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.

"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

"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

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

"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

“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

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.”