04/01/2015 - Swiss Re: Financial Repression has cost U.S. Savers $470 Billion
Swiss Re report highlights how artificially low interest rates have cost U.S. savers U.S.$470 Billion .. the report also explains how financial repression has exacerbated wealth/income inequality .. Swiss Re has also crafted a “Financial Repression Index” – see above .. “Looking ahead, financial repression is likely to remain a key tool for policymakers given the moderate global growth outlook and high public debt overhang. But, as outlined in this paper, financial repression comes with significant costs. Whether the costs outweigh the benefits largely depends on the ability of governments to take advantage of the low interest rate environment by implementing the right structural reforms. So far, their record for doing so has not been comforting, as also noted by the IMF .. Additional research on financial repression could be linked to the impact of an aging society on the broader economic and financial market environment and hence the optimal policy mix. Finally, a largely unexplored area is the consequence – especially longer-term – of public authorities acting as dominant players in their own bond markets. How does this affect private capital markets, and how severe are the distortions in price formation, investment decisions, allocation to productive areas and capital flows more generally?” .. the report includes a Foreward by Swiss Re Group Chief Investment Officer Guido Fürer.
FINANCIAL REPRESSION TAX TO SAVERS HAS BEEN ~$470B SINCE 2000
