Blog

08/07/2014 - REAL GOVERNMENT BORROWING COSTS CLOSE TO ZERO

FINANCIAL REPRESSION

STRIPS SAVERS, PENSIONERS,

PRUDENTIAL INVESTING &

REAL DISPOSABLE INCOME

TO FINANCE GOVERNMENT SPENDING

Ten year constant maturity Treasury yields (blue), ten year constant maturity yields minus ten year (median) expected inflation (red +), and ten year constant maturity TIPS (black). NBER defined recession dates shaded gray. Source: Federal Reserve via FRED, Survey of Professional Forecasters, and author’s calculations.

08-05-14-US-MONETARY-10_UST-TIPS-420

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.


08/06/2014 - Central-Planners Herd Money Market Funds Into Government Financing

“We’re definitely worried about breaking the buck,” Verett Mims, assistant treasurer at Chicago-based Boeing, said in a telephone interview on July 30. “That’s our biggest problem, the notion of principal preservation.”

READ MORE

As Bloomberg reports,

one of the biggest winners in the push to make money-market funds safer for investors is turning out to be none other than the U.S. Government.(no surprise to the Financial Repression Authority!!!)

Rules adopted by regulators last month will require money funds that invest in riskier assets to abandon their traditional $1 share-price floor and disclose daily changes in value. For companies that use the funds like bank accounts, the prospect of prices falling below $1 may prompt them to shift their cash into the shortest-term Treasuries, creating as much as $500 billion of demand in two years, according to Bank of America Corp.

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.


08/04/2014 - The Amphora Report Investing In Financial Repression

READ: Amphora Report

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.


08/04/2014 - Why the Fed Has Declared War on Your Money America’s Roots WERE In Sound (Honest) Money

Daily Reckoning essay explores the roots of sound (also referred to as ‘honest’) money in the U.S

READ MORE

Alexander Hamilton, America’s first Secretary of the U.S. Treasury under U.S. President George Washington faced the challenge of restoring the U.S. economy that had been devastated by the U.S. Revolutionary War

LFT_07-31-14_1-378x580.. “When money serves as a stable measure of value, it most clearly expresses the value of everything in terms of everything else.”

.. Hamilton boosted the U.S. economy with legislation for the U.S. federal government to assume & pay off all the debts of the states, establishing the foundation for U.S. creditworthiness

.. the essay describes the historical success with the gold standard: 

“Fixing a nation’s currency to gold assures that the currency maintains astable long term value, without inflation, or deflation. That enables a nation’s money to serve as a measure of value, like a ruler measures inches, or a clock measures time. Such a stable measure of value, in turn, means money can best perform its most essential function in facilitating transactions .. The termination of any link between the dollar and gold immediately inaugurated worsening boom and bust cycles of inflation and recession in the 1970s, with inflation soaring into double digits for several years. Inflation peaked at 25% over just two years in 1979 and 1980.”

 

 

Campaign poster showing William McKinley holding U.S. flag and standing on gold coin “sound money”, held up by group of men, in front of ships “commerce” and factories “civilization”. (Photo credit: Wikipedia)

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.


08/03/2014 - U.S. & China Financial Repression Is Preventing Their Economic Recovery China’s Risky Play in the U.S. Debt Market

READ: China’s Risky Play in the U.S. Deb t Market Caixin Online 07-31-14

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.


08/02/2014 - More Financial Repression To Pay Down Debt

READ: Asset Forfeiture – How Cops Continue to Steal Americans’ Hard Earned Cash with Zero Repercussions libertyblitzkrieg.com 07-28-14

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.


08/01/2014 - The Typical Household During Era of FINANCIAL REPRESSION Now Worth a Third Less

New money is being re-directed to pay increasing debt loads as corporate profits come primarily at the expense of reduced income growth while inflation crushes real disposable income.

 A study financed by the Russell Sage Foundation.

07-27-14-US-CATALYSTS-DI-Inequality-2-350

DECLINING FINANCIAL WEALTH FOR MOST AMERICANS SINCE 2001

“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001” — Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

07-27-14-US-CATALYSTS-DI-Inequality-3 “For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.”

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.


07/30/2014 - FINANCIAL REPRESSION HAS BEEN AGGRESSIVELY PURSUED SINCE THE DOTCOM BUBBLE IMPLOSION

FIAT CURRENCIES ARE BEING DEVALUED IN A COORDINATED MANNER AS PART OF THIS MACROPRUDENTIAL POLICY

This is only evident by measuring a basket of Fiat Currencies in Hard Assets

08-28-14-MACRO-ANALYTICS-CURRENCIES-GOLD-3

THE CURRENCY CARTEL

Controls +90% of the $5T in currencies traded daily.

08-28-14-CURRENCY_CARTEL

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.


07/29/2014 - Fund managers now have the Legal Right to ‘suspend redemptions’ by the you on your Money Market Funds

SEC Approves Tighter Money Fund Rules – Plan Allows Money Funds to Temporarily Block Investors from Withdrawing Money in Times of StressWSJ

SEC Votes Through Money Market Exit Gates Zero Hedge

07-22-14-THESIS-FINANCIAL_REPRESSION-IMAGE-mmf-Exit_fees

HIDDEN TAX INCENTIVES

In conjunction with Wednesday’s release, the U.S. Treasury department is expected to relax certain accounting burdens on the reporting of gains and losses “to ease the transition to a floating share price”.

CREDIT RATINGS REMOVED

Separately, the SEC voted unanimously to re-propose a plan, originally floated in 2011, to purge references to credit-rating firms embedded in the SEC’s money-fund rule. The change is a requirement of the 2010 Dodd-Frank financial law that requires federal agencies to scrub their rule books of references to credit ratings, forcing them to find new measures to help investors assess creditworthiness.

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.


07/27/2014 - “Relying upon Macroprudential Supervision to prevent financial instability provides an artificial sense of confidence!?”

READ: The Danger of Too Loose, Too Long With an improving labor market and an uptick in inflation, the danger now is to wait too long to tightenRichard W Fisher 07-27-14 WSJ

“I have grown increasingly co. ncerned about the risks posed by current monetary policy. First, we are experiencing financial excess that is of our own making. There is a lot of talk about “macroprudential supervision” as a way to prevent financial excess from creating financial instability. But macroprudential supervision is something of a Maginot Line: It can be circumvented. Relying upon it to prevent financial instability provides an artificial sense of confidence”.

07-28-14-THESIS-FINANCIAL_REPRESSION-Macroprudential_Supervision-420

“There are some who believe that “macroprudential supervision” will safeguard us from financial instability. I am more skeptical. Such supervision entails the vigilant monitoring of capital and liquidity ratios, tighter restrictions on bank practices and subjecting banks to stress tests. All to the good. But whereas the Federal Reserve and banking supervisory authorities used to oversee the majority of the credit system by regulating depository institutions, depository institutions now account for no more than 20% of the credit markets”.

Mr. Fisher is president of the Federal Reserve Bank of Dallas. This article is excerpted from his speech on July 16 at the University of Southern California’s Annenberg School for Communication & Journalism.

 

Low interest rates and abundant availability of credit in the nondepository market, the bond markets and other trading markets have spawned an abundance of speculative activity

“The Fed has been running a hyper-accommodative monetary policy to lift the economy out of the doldrums and counteract a possible deflationary spiral. Much of what we have paid out to purchase Treasurys and mortgage-backed securities has been put back to the Fed in the form of excess reserves deposited at the Federal Reserve banks. As of July 9, $2.517 trillion of excess reserves were parked on the 12 Fed banks’ balance sheets, while depository institutions wait to find eager and worthy borrowers to lend to. But with low interest rates and abundant availability of credit in the nondepository market, the bond markets and other trading markets have spawned an abundance of speculative activity. ” — Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.

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.


07/24/2014 - Which Is Better For Getting People To Understand The Economy’s Problems?

A Classic Comedic Metaphor? from

montyp

Or Graphic Statistical Analysis?

In his latest Hmmm, Grant Williams* makes the analogy of an episode from Monty Python’s Flying Circus, to the ‘line’ we are being fed by the Fed & other central banks .. highlights the example of Europe where the central bank has encouraged the buying of bond of bankrupt countries – “we’ll make sure you don’t lose money” – financial repression European-style .. “European banks loaded themselves to the gills with peripheral European debt as part of the quid pro quo with Draghi, but making free carry off the desperate central bank is hardly what used to pass for banking. Remember when banking used to be about things like making loans?” This is a thoughtful piece with graphs to substantiate the commentary. Don’t miss it.

Click on “Hmmm July 28” to download the report (may have to provide your email address), or hit “View Fullscreen” far below next to the ‘S’ icon to enlarge the viewing .. John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore .. permission granted by Grant Williams to us to post the below, courtesy of www.vulpesinvest.com funds.

Get a load of the first one that shows European banks are not lending to people anymore. On the second one, understand that above 0 means the math of it all is getting worse, even with austerity.

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.


07/22/2014 - Opinion – Macropru is credit rationing by another name

07-22-14-THESIS-FINANCIAL_REPRESSION-IMAGE-Macropru_IS_Credit_Rationing

The Bank of England has been flashing an amber light for months about the complacency shown by low market volatility, but in house-price obsessed Britain, mortgage excess is the focus of its worry. Last month it became the first of the major central banks to set out to try to control credit using non-monetary tools: in the jargon, “macroprudential measures”. Ms Yellen has been highlighting macropru as the first line of defence against bubbles for a while.

The problem SEEMS simple central bankers. Central bankers want money to lubricate the real economy, not to flow into pointless leverage of existing assets. Higher rates could reduce the incentives to leverage, but at the cost of damage to the real economy. Their solution is to set up barriers inside the banks to direct the flow.

If central bankers ever get serious about using macropru to control bubbles, it will mean limits on more than just mortgages. The obvious place to start is with the froth in junk bonds and the leveraged loans used by private equity houses. It is interesting, therefore, that the Fed’s monetary policy report last week emphasised that the central bank is “working to enhance compliance” with leveraged loan underwriting and pricing standards. If it becomes harder for private equity groups to gear up, they can afford to pay less to buy companies, cutting back one source of demand for shares. READ MORE

07-22-14-THESIS-FINANCIAL_REPRESSION-IMAGE-Macropru_IS_Credit_Rationing-2 The real danger comes if central banks try to use macropru as a semi-permanent way to keep interest rates lower than normal, as Mr Napier fears. In this case investors will face a double setback: they will not be treated as part of the “real economy” deserving of funds, while state-directed allocation of assets has a terrible history of supporting duds, hurting growth.

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.


07/22/2014 - Government Pension Investment Fund (GPIF) Asset Reallocation

07-24-14-THESIS-FINANCIAL_REPRESSION-GPIF_Reallocation

Bank Of Japan Prepares To Buy Nikkei-400 ETF To Boost Stocks 07-09-14 Zero Hedge

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.


07/21/2014 - Japan’s Plan By Its Central Planners For Financial ‘Repression’ Of The People: Central Bank To Buy Bonds, Pension Funds To Buy Stocks

Japan is moving to get its pension funds to sell Japanese government bonds (JGB) to its central bank, then use corporate governance & regulatory changes to force the pension funds to buy stocks

.. “A return to more normal JGB interest rates of above 3% – which will prove loss-making for present holders such as the BoJ – is not likely for at least two years. Part of the Bank of Japan (BoJ)/Ministry of Finance (MoF) strategy of encouraging Japanese private sector portfolio shifts away from JGBs into equity-type assets is that the BoJ can bear such losses far more easily than other investing institutions. One of the most important moves concerns redeployment of assets held by the $1.2tn government pension investment fund (GPIF), where decisions are imminent on investing more in domestic equities rather than government bonds.”

READ MORE: Japanese QE to continue as inflation rise slows Abe’s impatience spurs reform drive

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.


07/20/2014 - WHAT FINANCIAL REPRESSION LOOKS LIKE IN JAPAN

GREAT FOR GOVERNMENT AS DEBT FINANCING GETS CHEAPER

07-24-14-JAPAN-MONETARY-Real_Rates

A DISASTER FOR THE PEOPLE HAS REAL WAGES PLUMMET

07-24-14-JAPAN-MONETARY-Real_Wages_Fall

07-24-14-THESIS-FINANCIAL_REPRESSION-Scam

THE JAPANESE PEOPLE HAVEN’T FULLY WOKEN UP TO THE FACT THEY HAVE BEEN ‘CONNED’

07-24-14-JAPAN-MONETARY-Abenomics-Sentiment-2

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.


07/19/2014 - BOE’s Carney Leads Push For Bail-Ins – China and Japan Against

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.


07/18/2014 - POTENTIALLY INCENTING BANKS “NOT TO LEND” IS THE EPITOME OF FINANCIAL REPRESSION

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.


07/18/2014 - Europe Between Financial Repression and Regulatory Capture

07-22-14-THESIS-FINANCIAL_REPRESSION-IMAGE-European_PaperResearch paper on the relationship between European governments & European banks .. the pressure & influence between governments & banks are giving rise to financial repression & regulatory capture:

“Government agencies have been frequently described as being at the mercy of the financial sector, often allowing financial interests to hijack political, regulatory and supervisory processes in order to favoring their own private interests over the public good”

.. & the opposite:

“Governments, which have often been portrayed as subverting markets and abusing the financial system to their benefit, either in order to secure better financing conditions to overcome their own financial difficulties, or with the objective of directing credit to certain sectors of the economy, ‘repressing’ the free functioning of financial markets and potentially the private interests of some of its participants.”

READ PAPER

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.


07/16/2014 - FINANCIAL REPRESSION IS AGGRESSIVELY BEING IMPLEMENTED TO STOP FALLING REAL US GROWTH RATES

07-21-14-US-INDICATORS-GROWTH-GDP_Growth_Rate-2

FINANCIAL REPRESSION IS AGGRESSIVELY BEING IMPLEMENTED TO STOP FALLING REAL US GROWTH RATES

BEFORE DEBT IMPLODES FROM BEING

UNPAYABLE & INEXTINGUISHABLE

07-15-14-THESIS-FINANCIAL_REPRESSION-Post_Dotcom_Era-2

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.


07/15/2014 - FINANCIAL REPRESSION HELPS IBM HIDE THIS

07-21-14-US-ANALYTICS-BUYBACKS-IBM_revenue_Y-Y In 2004 IBM had $13 billion of net debt. Today the figure stands at just under $37 billion. And why not. IBM’s average weighted cost of debt last year was just shy of 1%.Thank you, monetary politburo!”David Stockman – Former Director OMB

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.