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"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

WHAT ARE THE SOLUTIONS TO FINANCIAL REPRESSION?

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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.

 

 

Last Update:  Thursday 8/20/15 11:13 PM

   

CAMP KOTOK VIDEOS:

Video below on Camp Kotok attendee former Philadelphia Federal Reserve President Charles Plosser .. As the Federal Reserve considers a possible hike in interest rates next month, he says normalizing rates following years of a zero-rate environment will be difficult. "We’re in unchartered territory, this is something we’ve never done before, and central banks rarely have done .. I think there’s going to be some learning along the way and we’re going to have to see what techniques or strategies work most effectively. But it’s going to be a challenge." .. video courtesy of The Street

 

or LINK HERE to the Video

Video below on Camp Kotok attendee Stuart Hoffman, Senior Vice President and Chief Economist at PNC Financial Services .. he says the economy is 'cruising' at a 2 to 2.5% range, that's probably the best growth we will experience for a while .. he notes that even though the economy added 215,000 jobs in July, this year's monthly job gains are running below last year's gains of 260,000 jobs each month .. he says that low productivity is keeping wage gains muted .. "Productivity is a fundamental thing that is holding the economy back .. Education, less regulation, but these are cumulative over time. I'm not sure what anyone can do in the next year or two to somehow take us from 2% up to 4% on a sustainable basis." .. video courtesy of The Street

 

or LINK HERE to the Video

Video below on Camp Kotok attendee Natalie Cohen, Managing Director and Head of Municipal Research at Wells Fargo Securities, on the debt crisis in Puerto Rico .. "They have a liquidity crisis, they don’t have enough money .. The pension plan is out of money. So they are paying people as they get cash in, it’s been from hand to mouth essentially. I don’t think that’s been talked about enough." .. The U.S. territory is seeking to restructure its $72-billion of debt, which is widely held by U.S. municipal bond investors because of the debt’s tax-free status .. "Many investors have sold out but there’s still a lot of money that’s in retail hands, there’s still money in mutual funds." - video courtesy of The Street

 

or LINK HERE to the Video

Video below of four experts in economics & markets discuss what's wrong with the job market, what's ahead for the Fed .. Philipa Dunne, Co-Editor of the Liscio Report, says she is discouraged by what’s going on the job market, says while the official government numbers show job gains, wage growth continues to lag, as does confidence. ’If you go out and talk to people who have ordinary jobs, not in certain high-powered jobs, but ordinary workers, they’re still afraid of getting laid off" .. The panel expressed concerns about overall economic growth, in the U.S. and abroad .. "If the U.S. is the global locomotive, and you’re hearing that there’s no wage inflation, there’s no boom in the U.S., the picture outside is even less cheery" says Caroline Miller, Chief Strategist at BCA Research - "There’s just a global deficiency of aggregate demand, whether you are looking in China, Europe, Japan or the rest of the developing world." .. Miller is also concerned about the impact of the strong dollar. - video courtesy of The Street

 

or LINK HERE to the Video

 

Camp Kotok 2015

Camp Kotok is an event held each year at Grand Lake Stream in northern Maine. Some of the best economists, fund managers and industry leaders attend this event organized by David Kotok, the Chairman and Chief Investment Officer at Cumberland Advisors. The event is characterized by a discussion of the economy and financial related issues while doing some fishing.

David provides perspective: "The idea is to bring a whole robust, diverse viewpoint and talk about it in an easy space .. just a gathering." .. Internet service and cellphone voice is intermittent - you have the feeling that you are truly in the middle of nowhere. It all makes for an amazing experience in a relaxing atmosphere.

Financial Repression-Related Observations:

FROM INVESTOR'S BUSINESS DAILY:

Camp Kotok attendee Andrea Riquier of Investor's Business Daily notes that David Kotok sees monetary policies as no longer being coordinated, but competitive - "We have the world upside down and backwards because of negative interest rates." .. Negative interest rates are one of the pillars of financial repression .. David goes on: "Do people become accustomed to negative rates and therefore to get any firepower you need more negative rates? We're seeing it. In Denmark people pre-pay their taxes. Think about that. You prepay because you get rid of cash. You want to get rid of your cash because you are penalized for having it." ..

Attendee Jack Rivkin, CEO & CIO of Altegris is worried about secondary effects of shock-and-awe monetary policy .. Companies that levered up as interest rates stayed at rock-bottom lows may have "accidents" when rates rise, he said .. Yet as long as rates stay low, too many investors reach for yield in ways that may be dangerous, he added .. Rivkin sees the risk of "very draconian" responses if interest rates are not normalized soon, giving rise to "significant volatility in the marketplace."

Attendee Charles Plosser, former Philadelphia Federal Reserve President, often spoke vocally against easy monetary policies. He worries about "unintended consequences" from monetary policy that's entered "uncharted territory."

LINK HERE to the IBD Article

FROM SNL:

Camp Kotok attendee Katie Darden of SNL notes the views of Money Manager Ramiro Lopez Larroy who manages the assets for families & individuals in Argentina, which usually means managing their assets abroad .. "We not only do asset allocation, but we also help them with financial quarterbacking" .. what this means is working with accountants & lawyers to take care of estate & tax planning needs, as well as the financial & real estate portfolios, of high-net-worth & ultra-high-net-worth clients .. it's all about investing in financial repression - regulations, capital controls, loss of purchasing power .. "We have capital controls, and we have a controlled foreign exchange system. Argentinians have for ages devised methods to trade U.S. dollars and euros in different ways. Some ways are legal; some other ways are outside the realm of the law to some extent. The legal approach is where you buy bonds that trade outside Argentina and then you are able to generate a different FX rate. That mechanism generates price discovery, and the price of the peso in that mechanism that is legal is much higher than the official rate. The government doesn't like that, so they try to force people not to use that mechanism. But at the end of the day, the Supreme Court said you can do it. So there's always that tension between the government that doesn't want that price discovery mechanism to exist and the people that want to protect their assets."

LINK HERE to the SNL Article

Additional-Related Observations:

FROM WSJ:

See WSJ article below by Kathleen Madigan with observations by some of the attendees. Former Philadelphia Federal Reserve President Charles Plosser mentioned concern by the Federal Reserve Open Market Committee about the consequences of a prolonged period of 0% interest rates - we have likewise emphasized this on this website and our writings.

LINK HERE to the WSJ Article

FROM BLOOMBERG:

See Bloomberg article below by attendee Barry Ritholtz with his thoughts and observations from some of the attendees .. "I would order the featured topics as follows: employment, commodity prices, wages, inflation, the Republican debate, China, housing and energy. The theme underlying all of these debates was the prospective Federal Reserve rate increase."

LINK HERE to the Bloomberg Article

FROM CITI - BRENT DONNELLY:

See commentary by Brent Donnelly below - he specializes in FX:

"US GDP is becoming less reliable as an indicator. There are a lot of structural changes and other factors that are making GDP data very hard to interpret these days—is the methodology outmoded? Issues include:
a. Seasonal adjustment issues (well-known)
b. Structural changes to the economy (technology, sharing economy: Uber,
Airbnb, etc.)
c. Structurally low rates which favor buybacks over capex and R&D
d. = Lower potential GDP?

LINK HERE to the Donnelly Article

FROM MAULDIN ECONOMICS:

John Mauldin writes in his letter: "Camp Kotok, as it has come to be called, was quite special this year. The fishing sucked, but the camaraderie was exceptional. I got to spend two hours one evening with former Philadelphia Fed president Charlie Plosser, as he went into full-on professor mode on one topic after another. I am in the midst of thinking about how my next book needs to be written and researched, and Charlie was interested in the topic, which is how the world will change in the next 20 years, what it means, and how to invest in it. Like a grad student proposing a thesis, I was forced by Charlie to apply outline and structure to what had been only rough thinking."

LINK HERE to the Mauldin Article

CAMP KOTOK VIDEOS:

Camp Kotok Introduction with David Kotok .. David explains what it is all about .. video courtesy of The Street

or LINK HERE to the Video

Maine Congressman Bruce Poliquin speaks with Rhonda Schaffler at Camp Kotok on the Dodd-Frank Act .. we see this financial regulation as one of the ring-fencing regulations resulting in the unintended consequences of financial repression .. video courtesy of The Street

or LINK HERE to the Video

Video below on Camp Kotok attendee Josh Rosner, the Chief Economist and Strategist at Graham Fisher - he is worried about a potential liquidity crisis: "The last crisis was obviously a credit crisis that ended up as a liquidity crisis .. I think it is entirely likely that it will end up in another crisis, because of how long we've kept rates so low." .. video courtesy of The Street

 

or LINK HERE to the Video

Video below on Camp Kotok attendee John Mauldin who says the next sovereign debt crisis could be in France or Italy .. "There has never been a monetary union in the history of the world that has stayed together, that hasn’t fallen apart, such as the Euro, without having a fiscal union." .. video courtesy of The Street

 

or LINK HERE to the Video

The Financial Repression Authority will publish in-depth interviews with some of the Camp Kotok 2015 attendees here - be sure to sign up for our newsletter, twitter feed and youtube subscriber channel.

   

 

The Unseen Consequences of Zero-Interest-Rate Policy

 

The Unseen Consequences of

Zero Interest Rate Policy

Incrementum's Ronald-Peter Stöferle explains how central banks with a zero interest rate policy (ZIRP) in place are creating unintenddd consequences & associated adverse risks to investors & retirees .. it's financial repression .. "With artificial stimulus like ZIRP, we only end up with a situation in which governments, financial institutions, entrepreneurs, and consumers who should actually be declared insolvent all remain on artificial life support." .. with the unintended consequences being:

1. Conservative investors by nature come under increasing pressure with respect to their investments & take on excessive risks in light of the prospect that interest rates will remain low in the long term. This leads to capital misallocation & the emergence of bubbles.

2. The sweet poison of low interest rates leads to massive asset price inflation (stocks, bonds, works of art, real estate).

3. Structurally too low interest rates in industrialized nations due to carry trades lead to the emergence of asset price bubbles & contagion effects in emerging markets.

4. Changes in human behavior patterns occur, due to continually declining purchasing power.

5. As a result of the structurally too low level of interest rates, a 'culture of instant gratification' is created, which is among other things characterized by the fact that consumption is financed with credit instead of savings.

6. The medium of exchange and unit of account function of money increases in importance, while its role as a store of value declines.

7. Incentives for fiscal discipline decline.

8. Zombie banks are created: Low interest rates prevent the healthy process of creative destruction. 9. Banks are enabled to roll over potentially non-performing loans practically indefinitely & can thus lower their write-off requirements.

9. Newly created money is neither uniformly nor simultaneously distributed amongst the population 

LINK HERE to the Article

   

 

 

The Unintended Consequences of

Financial Repression:

"The Impossibility of

Meeting Return Targets"

Greenwich Associates conducted a study on German institutions .. some quotes from the study:

“The low interest rate environment makes it impossible to meet return targets. We have not yet found a solution.” — German Public Pension Fund.

“Low interest rates are a problem. As a reaction, we have globalized our investments and invested in higher risk asset classes.” — German Foundation

“Primary challenge is the low interest rates. The only chance to avoid this is to do things you didn’t do before.” — German Insurer.

For many institutions in Germany, “doing things they didn’t do before” means investing significant amounts of assets in something other than domestic & government bonds.

 

LINK HERE to the Article

   

 

 

16 June 2021 Swiss Re Meeting:

"Sounding the Alarm

on Financial Repression"

Swiss Re video highlights the recent meeting they held with experts voicing concerns about the ongoing use of unconventional policies .. financial repression is causing financial market distortions & poses a serious risk to financial stability .. These unconventional policies have pushed institutional investors into holding government debt. As a result they have less money available for productive investment, such as infrastructure projects .. "It means that there's a global search for yield. That possibly leads to a misallocation of resources," says Douglas Flint, Group Chairman of HSBC .. Jean-Claude Trichet, Chairman of the Group of Thirty affirms the risks.

LINK HERE to the Article & Video

   

 

 

Is Financial Repression Here to Stay?

The First Chairman of the UK's Financial Services Authority Howard Davies writes an essay on financial repression .. "Maybe it is unreasonable for investors to expect positive rates on safe assets in the future. Perhaps we should expect to pay central banks and governments to keep our money safe, with positive returns offered only in return for some element of risk." .. Davies worries about the consequences of financial repression on the economy .. he sees distortions from the prudential regulation adopted in reaction to the financial crisis - "The question for regulators is whether, in responding to the financial crisis, they have created perverse incentives that are working against a recovery in long-term private-sector investment."

LINK HERE to the Article

   

 

 

 

LINK HERE to the VIDEO

 

 

PAUL BRODSKY talks

FINANCIAL REPRESSION

 

Paul Brodsky introduced himself as a presenter at the Park Plaza Hotel (NYC, NY) to 200 of the world's largest Institutional Investors from large Sovereign Wealth Funds, Pensions Funds, Endowments and Foundations .... "I'm Paul Brodsky, I'm a Gold Bug!" This not only took guts but serious credibility in front of an audience that doesn't consider gold in their portfolio allocation decisions. So why would he do this?

Paul had been asked to present the "Case for Gold". It was 2010 and Gold had just had a run. Though Gold had been the elephant in the room for previous 9 years , Paul surmised the organizers simply felt gold needed some sort of obligatory representation. His presentation focused on the Global Monetary System and sheepishly admits he actually never mentioned the world Gold again! This summarizes the thinking within the community of Global Managers of serious money.

Paul says he felt he got the invitation because of the thrust and struggle of QB Asset Management, the hedge fund he co-founded. It showed in Paul's writings to QB's clients while seeking the truth. He sought an understanding of Price and Value (which are often quite different) in addition to Alpha generation for clients.

FINANCIAL REPRESSION

"Its easy to think there is a grand conspiracy out there is terms of the banking system, the policy makers and politicians in the political dimension. It is very easy to draw lines between all these groups connecting them. I think what we have is a natural set of incentives that are drawn together by how the system works. For example, Politicians usually like to spend money they don't have and the banking system can let them do that! So it is a very symbiotic relationship - one feeds the other - there is little need that a word be said! There is no back room, smoke filled discussions going on."

"After the 1971 Nixon Shock, for the first time ever we had a global monetary system where there wasn't one currency that was 'hard' - that is, backed by anything scarce. What that did was make everything relative. It made currencies relative and it made financial assets relative. Ultimately it made performance relative!"

"When everything becomes relative it makes thing very easy for authorities to manage the system because there is no governor on them to bring things back into balance!"

"What was once "the role of the Fed to take away the punch bowl when the party got going", it was now the Fed that was 'spiking' the punch bowl."

FRACTIONAL RESERVE BANKING

"The system as it is constructed using fractional reserve lending and fractional reserve banking is the real 'bugaboo'!" Paul is quick to point out there are two sides to this argument. "Yes, the hard money crowd is correct - it has allowed us to spend money beyond what may be considered sound, but also this "funny money" for example helped defeat communism and helped fund the dotcom frenzy which left a technology footprint that may not have occurred as quickly without it."

"It has been a terrible flowering of baseless credit, debt that has never been extinguished. It may all come down in a Minsky like debt deflation that is ugly - or it may force the Fed and other central banks around the world to create much more base money through QE and other lines of credit that diminishes the value of not only our currency but all others - that gets us back again to relative value and performance!"

"The central banks are devaluing their currencies and devaluing against themselves in a 'tag team' manner. They are also devaluing against Production. There used to be only four ways you could get a dollar. You could produce something, you could borrow it, you could reinvest what you had already earned or you could steal it. Now banks can make money out of thin air without any discipline. There is nothing on the other side. Debt is created through the loan process and it never has to be extinquished if the monetary authority doesn't demand that."

"We have gone through this great leveraging over the last 35 years. It has been encouraged by Monetary Authorities in the US and elsewhere. Now we are at zero interest rates we can't refinance ourselves to another round of leveraging. We have to find a new outlet for credit or there is going to be some sort of reconciliation. When you ask about Financial Repression, I think it has been forced on Monetary Authorities (though its their own doing). It had to happen. It is a consequence of the past 35 years."

"I think they are boxed, as is everyone else (like the IMF) that is involved"

WHO IS GOING TO STAND UP TO THIS?

"It is also in China and Russia's interest to have a baseless currency and even fractional reserve banks. What it does is centralize power to decide what wealth looks like in their nations and economies."

"My sense is we have to accept that this is the reality. That for the first time ever .... I think there is going to be increasing coordination amongst all sorts of Monetary Authorities and the net loser is going to be the saver or pensioner in real terms. It is not necessarily a negative on equities, real estate or anything that relies on credit. It may be bullish on nominal pricing but bearish on real pricing and value. That is what Financial Repression is bring us."

 

.... there is much, much more in this broad ranging 46 minute interview with a very thoughtful and experienced Wall Street insider telling it the way it really is:

  • Why the death of the infamous Bond Vigilantes occurred and how they got trampled by the Fed,
  • Why we have had a slow migration from Capital producing economies to Credit producing economies or Financialism,
  • Why a policy of unsound money has allowed China and Russia to transition to modern societies without becoming militaristic,
  • Why the global over supply is driving pricing pressures and deflation,
  • The eermergence of China's new private mercantilism system,
  • The political dimension of the $555T global SWAPS market exposure.

 

 

 

   

 

 

BCA Research Chief Economist Martin Barnes:

"Financial Repression is Here to Stay"

BCA Research's Chief Economist Martin Barnes sees financial repression as "here to stay" for the long-term, given the challenges of low economic growth & high debt globally .. Barnes has written a special report to explain why debt burdens are moe likely to rise than fall over the short & long run given demogaphic trends & the low odds of another economic boom .. BCA Research: "If governments cannot easily bring debt ratios down to more sustainable levels, then the obvious solution is to make high debt levels easier to live with. This can be done be keeping real borrowing costs down and by regulatory pressures that encourage financial institutions to hold more government securities. In other words, financial repression is the inevitable result of a world of low growth and stubbornly high debt. Martin argues that central banks are not overt supporters of financial repression, but they certainly are enablers because they have no other options other than to keep rates depressed if they cannot meet their growth and/or inflation targets. A world of financial repression is an uncomfortable world for investors as it implies continued distortions in asset prices, and it is bound to breed excesses that ultimately will threaten financial stability."

LINK HERE to the Article & Link to Report

   

 

 

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

   

Financial Repression -

The Unintended Consequences

LINK HERE to our Article

 

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

   

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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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.”