Special Guest: Mark Thornton PhD – Senior Fellow Mises Institute

ACCUMULATION OF DEBT

Debt levels are now at critical levels:

• Excess accumulation of debt has become a critical burden to the productive capacity of the global economy,
• Significant levels of global investment is presently malinvestment,
• Excess global capacity has been used to produce none-productive assets,
• Lack of Price Discovery and Mispricing of Risk are distorting economies and investment behavior,
• Many parts of the economy are fragile and a recssion is now knocking on the door of the US,
• …. and more

AUSTRIAN PRESCRIPTION

• The Federal Reserve needs to get out of the interest rate markets and allow the markets to work properly,
• The Federal Government needs to balance budgets and cut back spending tremendously,
• The Government needs to signal to markets particpants that they are not going to see their taxes increased significantly,
• The Government needs to demonstrate they are going to do something about the national debt and unfunded liabilities.

These policy positions would begin to incent investment very quickly.

The Central Problem is Unsound Money

FINANCIAL REPRESSION

“A financial scam of the government over the private economy … It is aimed at taking advantage of their citizens, savers and investors.“

Government authorities are:

• Printing money,
• Issuing enormous amounts of debt,
• Suppressing interest rates,

.. all with the intention of exploiting the worker and inflating the value of the goods they buy, as wages fail to keep up. Savers are now receiving negative real rates of returns which is the government extracting resources for themselves at the expense of the common man.

WAGING WAR ON SAVERS

WINNERS: The policies of Financial Repression help:

• Banks
• Large Corporations,
• Government,
• Large Borrowers,

LOSERS: The losers are:

• Savers,
• Consumers,
• Producers,
• Laborers,
• Entrepreneurs

POLICIES: The world wide economy is suffering as a result of the policies which include:

• Inflation,
• Zero Interest Rates
• Quantitative Easing,
• Heavy Regulation (Healthcare and Banks)

This is an enormous problem in the modern context.

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.