Special Guest: Martin Barnes – Chief Economist, BCA Research

FRA Co-Founder Gordon T. Long sits with BCA Research Chief Economist, Martin Barnes, a highly decorated and well renowned economist of 40+ years to talk Financial Repression and Barnes most recent work, Low Growth and High Debt: Financial Repression is Here to Stay.

FINANCIAL REPRESSION

Barnes defines Financial Repression as,

“An environment where interest rates are kept below levels which most people would consider being normal.”

In a recent publication, Low Growth and High Debt: Financial Repression is Here to Stay, Barnes focused on the problems of continued high debt levels and argues Financial Repression as a legitimate solution to the global debt crisis.

“If you can’t easily get your debt burdens down, then at a minimum you have to make the debt easier to live with, and the only way you can make your debt easier to live with is through Financial Repression. In other words, financial repression is the inevitable result of a world with low growth and stubbornly high debt.”

CONSEQUENCES OF LOW INTEREST RATES

“If money is free, very clever people at some point are going to do stupid things with it. There is no question that low interest rates will encourage some misbehaviour, and speculation. However it is hard to make the claim that today’s interest rates are low enough to be causing economic problems.”

Despite already low interest rates, economic growth around the world has been relatively low. Barnes states, “Economies should be booming with current interest rates but they’re not, we are living in a world that I would argue needs lower interest rates.”

“The by-product is financial distortion which has powerful implications for certain groups of people such as people trying to live off of fixed incomes. But you can’t push interest rates up to protect the interest of those people if the global economy is screaming for even lower rates. We cannot have a level of interest rates that will have everyone happy.”

THE PENSION FUND DILEMMA

A major mistake with the development of pension funds is that governments did not increase the pension age with the increase life expectancy.

“In a world of low returns, and people living much longer, the promises that were made a long time ago can no longer be kept. Everyone needs to understand that at some point those promises have to change, either by raising retirement age or increasing contribution rates. The logic behind these pensions is unsustainable and therefore it must change.”

SITUATION IN CANADA

In the midst of falling commodity prices, devalued currency and the housing market bubble, Barnes states the Canadian economic situation

“…is not disastrous; just like so many other economies, we are stuck in low growth. Exports are battling against moderate global growth and world trade. The big drop in the Canadian dollar has not lead to a big pick up in exports as we would have hoped. We are very tightly linked with the US economy and they are slowly growing so that is a positive.”

“Housing by every standard is incredibly overdone, especially in Toronto and Vancouver, it’s hard to get away from the fact that house prices are extraordinarily high here and it will likely erode.”

“China is moving away from its commodity oriented growth to a more service oriented model. The world is moving away from its commodity dependence which is not great for Canada, but we’ll adjust to that.”

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Karan Singh

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.

Special Guest: David Berson – Senior Vice President & Chief Economist, Nationwide Mutual

David Berson is the senior vice president of Nationwide Mutual. Before now, he has worked as a College professor, at the Fed and for 20 years he was the chief economist at Sallie Mae. He has also worked at Nationwide Mutual insurance for the past three and a half years.

To David depending on where you are in the financial system financial repression will mean different things to you. According to him,

“Financial repression is holding interest rates below the level where they would naturally go.”

He explains that there are two sides to holding down the interest rate, a positive and a negative side. The positive with reducing the interest rate and applying quantitative easing include the addition of liquidity to the economy. According to him, most of the models used by macroeconomists indicate that monetary expansion helps the economy a bit at first but only a period of time. David says the expansion policy helped boost the economy out of recession and is responsible for the modest growth we see now. But the downside to it all is that keeping rates lower than it should naturally be results in savers being hurt due to the extremely low interest rates. At the same time borrowers are at an advantage. It also makes it difficult for investors to have a reasonable return. David agrees that low interest rates push investors to riskier assets but also insists that it is one of the points of having an expansionary monetary policy. He further reiterates that the upside to the artificial reduction in rates is the increased liquidity, which moves the economy a bit upwards.

“They need to concentrate on what’s happening in the domestic economy, they are the US central bank, they are not the central bank of emerging market countries even if those countries are greatly affected by what we do”

According to David, what’s happening in terms of the fall in commodity prices is not directly as a result of what the Fed does. He believes it is as a direct result of the rapid growth in china’s economy as they move to become an industrialized economy. He explains that the primary force driving the fall of commodity prices is the slowing down of the Chinese economy that is occurring now.

On what the Fed will do, David thinks the Fed will tighten this September although he also mentions that with the recent market volatility, the chances of that happening is less than 50%. He believes the Fed should tighten this September as he believes that such an action will help the economy.

On the disappointing recovery of the economy, David explains that there is an excess of government oversight on the economy, which has further contributed to the slowing down of the economy. If you look at what he calls the core GDP, which includes private sales and private purchases minus volatile inventory, trade and government, he is convinced that growth has picked up better than the overall GDP suggests and much closer to historical averages.

“One of the reasons why economic growth has been weaker in this expansion than others is a lack of government spending now I think that in the short-term negative in the long run I think a move in resources from the government sector to the private sector is positive but it takes a while for that to manifest itself in stronger overall GDP growth”.

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.com

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.

Special Guest: James Bianco – President, Bianco Research LLC

Bianco research started in 1998 and is affiliated with Arbor research and training. It is an independent research company with James Bianco as its president.  Bianco research specializes in macro, fixed income and equity research.

James views financial repression in light of what Ben Bernake said in his November 12 op-ed in the Washington post:

”the purpose of QE2 is the fed buys bonds, force down interest rates, that would make them relatively unattractive for most bond investors, seeking alternatives they would move further out the risk curve and they would not buy .They would push up those assets prices, create a wealth effect expecting a cycle in which the wealth effect creates economic growth to justify those higher prices”.

The forced down interest rate will not bode well for individuals who need certain rates of return to guarantee things like pension and retirement. You end up taking more risk by buying riskier assets which pushes up its price causing you to feel wealthier. He explains that when a government body in this case the CBN steps in and sets price at levels where they would not ordinarily go by themselves, they are repressing the price of interest rate, inflating the price of risk assets. They argue it is a greater good because of the wealth effect that comes from that.

James doesn’t think that the wealth effect occurs as a result of that. According to him, Milton Friedman in 1915 developed the permanent income hypothesis which states that if an asset goes up in price for example a house, you treat it as another form of permanent income. One the other hand, if your stock portfolio goes up, you perceive as temporary due to what you read in the paper.

“That’s why we obsess over the fed because we think all this stuff is temporary and we want to find out how temporary it is, because when the fed raises rates… I guess to mix my metaphors a little bit with the old warren buffets’ old line that we find out that we are swimming naked when the tide goes out”.

That’s why a rate hike is such a big deal in the financial markets.
What will the Feds do?

“There are two things to keep in mind concerning what the feds will do. There’s the economic data and the market pricing of it”.

He says that based on the economic data, the fed has set up some parameters for itself and from a data dependent point of view, they have everything they need, but James believes that what will hold back the feds will be market instability. Currently, there is a great deal of volatility and uncertainty in the Chinese and emerging markets. He believes the instability in these markets will cause the feds will to maintain interest rates because they are hoping that things would calm down enough by Dec. He mentions that part of the reason for the unstable markets is due to the Feds insistence on raising rates.

EU

On his view of the EU, James Bianco has this to say:

“The history of the Europe is for the last thousand years is every generation they try to kill each other and the last one was in World War 2”.

Then they decided to get closer in order to prevent more wars. This led them to create the euro. According to him, the problem with the euro, is that you have 17 different countries in different cycles using the same currencies. He says that Draghi’s plan is to get interest rates to below zero and continue trying to stimulate the economy. He goes further to explain that the current refugee crisis that the EU is facing will have a huge negative impact on their economy. He doesn’t think Draghi’s plan will work because people think it’s temporal and as long as they think that, the permanent income hypothesis will take effect.

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.com

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.

LINK HERE to the Article

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.

LINK HERE to the Article

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.

Special Guest: Adam Andrzejewski – Chairman, American Transparency and Editor, OpenTheBooks.com

ADAM ANDRZEJEWSKI DISCUSSES HIS PUBLIC INITIATIVES TO BRING MORE TRANSPARENCY OF GOVERNMENT SPENDING AT ALL LEVELS TO THE ELECTORATE.

FRA Co-Founder Gordon T. Long interviewed Adam Andrzejewski, the Chairman of American Transparency and Editor, OpenTheBooks.com. on his personal goals which prompted his launch of these public projects.  Mr Andrzejewski’s American “Heratio Alger” story needs to be told.

In October 1997, Adam Andrzejewski founded an independent publishing business with his brother, Abram Andrzejewski. The publishing company, HomePages Directories, employs nearly 150 people and has an annual revenue of nearly $20 million. Adam Andrzejewski also started a grassroots initiative to enable local counties and school boards to post their check register online.

On March 1, 2009, Adam Andrzejewski announced his intent to run for the office of Governor of Illinois. Andrzejewski was one of four Republicans to file with the Illinois State Board of Elections to be placed on the ballot, submitting over 14,000 signatures. On 25 January 2010 Andrzejewski received an endorsement from Lech Wałęsa, former Polish President and Nobel Peace Prize Laureate. On 1 February 2010, Andrzejewski was endorsed by talk radio host Rush Limbaugh. On 2 February 2010 Andrzejewski was defeated by a significant margin in the Republican primary for Governor of Illinois.

His platform was based on government transparency. His campaign slogan was “Every Dime Online in Real Time.” Today as Chairman of American Transparency and Editor, OpenTheBooks.com. he is following through in a high profile and aggressive manner on his campaign platform and his personal goal to bring visibility of all levels of public government spending to the voting public.

Adam believes it is this visibility which will force accountability and responsibility from elected officials charged with the fiscal decisions of local, city, state and federal government offices.

“Open The Books” has become a national rallying cry for transparency in public spending. U.S. Senator Tom Coburn, sponsor of the 2006 “Google Your Government Act,” recognized Adam’s work,

“Open the Books is doing the work I envisioned when the Coburn-Obama bill became law. Their innovative app and other tools are putting sunlight through a magnifying glass.”

LEARN MORE & SUPPORT OPEN THE BOOKS

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.

LINK HERE to the Article

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.

Special Guest: Chris Casey – Managing Director, WindRock Wealth Management

CHRIS CASEY DISCUSSES TYPES OF FINANCIAL REPRESSION, THE MYTH OF MONETARY VELOCITY, AND WHAT IT MEANS FOR INVESTORS.

FRA Co-Founder Gordon T. Long interviewed Chris Casey of Windrock Wealth Management on the monetary policy aspects of financial repression.  Mr. Casey, an Austrian economist, is a frequent speaker and writer on macroeconomic topics and their related investment implications.

TYPES OF FINANCIAL REPRESSION

“Financial repression can best be described as government intervention in the financial markets which causes distortions not only within financial markets, but throughout the economy.”

According to Mr. Casey, financial repression can take direct and indirect forms.  The most damaging form of indirect financial repression is the expansion of the money supply decreases interest rates.  The artificially lowered interest rate structure causes widespread malinvestment within an economy.

All of this would perhaps be tolerable if monetary policy actually stimulated the economy, but Mr. Casey states that even Federal Reserve economists have recognized the ineffectiveness of the multiple quantitative easing programs.

THE MYTH OF MONETARY VELOCITY

Mainstream economists believe inflation is currently mitigated by today’s historically low monetary velocity (“the number of times one dollar is spent to buy goods and services per unit of time”), so the money supply can be expanded without the damaging effects of inflation.  Chris Casey takes issue with this as well as the very concept of velocity.

“Velocity has no impact whatsoever, in fact it is a meaningless statistic.”

Worse, the theoretical construct from which the concept of velocity derives, the Fisher Equation of Exchange, is equally faulty.  This equation attempts to explain the price level within an economy, but while it includes the supply of money, it ignores the demand for money which renders it useless.   A useless theory in the wrong hands can create disastrous policy:

“The real danger is that by looking at velocity, by being focused on velocity, mainstream economists have been focusing on a false measure which creates false decisions which is going to have a very real impact on investors.”

WHAT SHOULD INVESTORS DO?

Where may the faulty policy decisions lead the U.S. economy?  Chris Casey believes that “the endgame eventually will be a massive inflationary recession.”  Gordon T. Long then asked Mr. Casey:

“What could you suggest to our listeners that they should be doing or thinking about to protect themselves in this environment?”

After recommending investors consider becoming fairly liquid, Chris Casey addressed how to profit from the coming economic environment:

“Build a portfolio of hard assets.  You want to look at anything from precious metals to certain types of real estate such as rental residential real estate to farmland.  You potentially want to look at foreign currencies to diversify from the U.S. dollar despite the dollar’s strength over the last year.”

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.

Special Guest: Ramiro Larroy – Partner & Director, Integras Capital

RAMIRO LARROY DISCUSSES HIS VIEWS ON WHAT LESSONS THE WORLD CAN LEARN FROM RGENTINA ABOUT INVESTING IN AN ERA OF FINANCIAL REPRESSION

FRA Co-Founder Gordon T. Long interviewed Ramiro Larroy, Partner & Director, Integras Capital in Buenos Aires, Argentina.

FINANCIAL REPRESSION

“Financial Repression globally is basically governments keeping interest rates below the rate of inflation as a way of taxing savers”

Ramiro suggests that in Argentina it is much more direct it its enactment by governments. “We had many experiences throughout the years where depositors in banks were ‘bailed-in’ and forced to take on debt as opposed to their deposits”

“IT IS A TAX! It was applied a little differently in Argentina than how it is being achieved by governments in developed countries.”

THE ARGENTINIAN EXPERIENCE

“When Argentina regained democracy in 1983 we had a government that from an economic standpoint did not do that well. They ran fiscal deficits and prices of exports were poor. By the end of this government in 1989 the country was heavily in debt with inflation. At the same time they paid high interest rates on deposits so people kept deposits in the bank. With these deposits the banks were able to buy government debt. In 1990 enacted (like at midnight!) a program where everyone that had deposits received a bond.” Literally, overnight with no recourse.

“Maybe people were able to earn a rate higher than inflation before, but all of a sudden they lost everything!” The government did not have the money to pay the money owed on the bonds it had issued. This was a way to reset and issue a new long term bond.” Argentinians have experience in their bank deposits being taken from them.

CHANGED INVESTMENT SENTIMENT

“These banking actions resulted in a huge change in the mind set of investors! It is now very difficult for a family to have a substantial part of their assets to be held locally or exclusively in the banking sector. Though rates may be ‘ok’ in the banks, people are not comfortable with the risks they are taking! Pretty well everyone has developed OTHER WAYS OF STORING WEALTH, from Real Estate, to buying Gold to buying physical US Dollars.”

“The more wealthy individuals and families have their wealth outside of Argentina as a way of protecting those assets. It is not about higher returns, but rather not wanting to lose the wealth.”

STORE OF VALUE STRATEGIES

“Store of Value Strategies are so prevalent that on this day we are talking, in the morning paper of one of the largest newspapers in Argentina, the major story is “8 Strategies Not to Lose Your Wealth in the Upcoming Depreciation! Need I say more!”

.. there are many lessons to be learned in this broad 35 minute interview discussion. Maybe the most important is that Argentina is 15-20 years ahead in regard to Financial Repression investor strategies. Government actions are very predictable when debt becomes too large for officials to handle.

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.

Special Guest: Danielle DiMartino Booth – Former Federal Reserve Advisor, Chief Market Strategist, The Lisco Report

Having done lots of fishing this summer at Camp Kotok in northern Maine, Danielle DiMartino Booth is here interviewed by FRA Co-Founder Gordon T Long. Danielle is a former Dallas Federal Reserve Bank Advisor and now the Chief Market Strategist of The Liscio Report. She takes an Austrian School of Economics viewpoint on economic and financial matters.

Danielle emphasizes how she understands financial repression “in her bones” because she worked in “The Financial Repression Factory”, referring to the Federal Reserve. She understands the level of malinvestment, mispricing and lack of price discovery as the unintended consequences of repressive and obfuscating monetary policies of central banks. She thinks the Federal Reserve “does not have a deep enough appreciation of malinvestment .. as if Ludwig von Mises never walked the planet.”

She is angered by the considerable level of savings which has been foregone thanks to the quantitative easing (QE) policies of the Federal Reserve. Gone are the days of retiring on a Certificate of Deposit paying a decent level of interest income, due to the virtually 0% interest rates.

Danielle says there must be a renewed emphasis on education and innovation in America for it create jobs and jobs that are higher-paying generally than is currently the case.

Check out her recent speech – subscribe to our Mailing and Alert System and we will email you the PDF or view the Scribd below:

July 2015 Speech by Danielle DiMartino Booth

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.

Special Guest: Peter Schiff – CEO & Chief Global Strategist, Euro Pacific Capital Inc.

PETER SCHIFF TALKS FINANCIAL REPRESSION, CRYPTOCURRENCIES AND MORE.

Continuing with our series on financial repression, today we have Peter Schiff here with us who is being interviewed by FRA’s Gordon T long. Peter Schiff in his own words has been in the industry his whole life. He is also one of the few people to predict the financial crisis and was vocal about it in 2008.

FINANCIAL REPRESSION.

According to Peter one of the ways in which the government represses its citizens financially is through the banking system. He talks about the lack of privacy that arises from the opening of a bank account.

“In America today, if you have a bank account you have no privacy anymore. Your banker is basically an unpaid spy working for the government trying to monitor your activities for anything suspicious so they can turn you in to the government!”

Other ways include inflation, which erodes the value of one’s assets over time and government taxation in its many forms.

BAIL-INS AND CASHLESS SOCIETY.

“Bail-ins are a function of government deposit schemes which really don’t work!”.

He goes on further to explain that the reason they don’t work is due to the safety nets which these schemes provide. A situation is created where the banks “know that the depositors couldn’t care less how risky the bank is”. He alternatively suggests that market forces be allowed to reign in the banks so that banks compete on the basis of how much risk they can mitigate.

“People are looking for an alternative to the fiat currency created by governments”.

He mentions is one of the basis on which bitcoin was formed, although he doesn’t believe in its longevity going as far as likening it to a Ponzi scheme. The flaw in bitcoin according to peter Schiff is its lack of intrinsic value, unlike gold.

EURO PACIFIC BANK

“How do I spend my gold?”

Peter Schiff asserts this is a problem faced by consumers around the world and his bank Euro Pacific provides a solution to this problem. Customers are provided with gold and silver backed accounts with which they can access their gold 24/7. This works by using a 2-step process in which the customers have to open their account and sell off gold before they can swipe their card. Ultimately, he plans on streamlining this 2-step process into a 1-step process. This will work by converting gold in real time at the market value when customers swipe their debit cards.

Peter Schiff mentions how the real benefit from this system will be the ability of customers to save their gold since it holds on to its value and spend their fiat currencies. He goes on to compare his system and that of bitgold saying that the concept of giving out free gold which bitgold uses is not a viable business plan.

Check out his interview with Gordon T Long which covers much more of this.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.com

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.

LINK HERE to the Article

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.

LINK HERE to the Article

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.

LINK HERE to the Article

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.

LINK HERE to the Article

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.

Special Guest: Guillermo Barba – Mexican Economist, Blogger & Forbes Mexico Writer

A Mexican Economist, Guillermo Barba never heard of the Austrian school of economics until after graduating. Mexican University teaching still focuses on Marxist philosophy and Keynesian thinking. His subsequent exposure to the Austrian school of Economics was an eye opener which started him on a road which he hopes to help others in Mexico and Latin American become exposed to. He believes that the socialist thinking which South American universities are still oriented towards is one of the cancers in the world and hurting economic development.

“I became a real economist after I met the Austrian School of Economics!”

“The Austrian School has a framework to explain the current ‘economic mess’ in the world today!”

Barba’s popular Mexican blog is focused on financial intelligence because he felt the truth was not being told and it needed to be.

FINANCIAL REPRESSION

“Mexicans know perfectly what Financial Repression means! Living in Mexico means living in the neighborhood of the United States of America. That is a lot of financial repression!”

“The entire world is suffering from Financial Repression because there are Financial Repressors. That is the problem. Who are those financial repressors? As Hugo Salinas Price told him, the entire world is controlled by a group of about 1000 people and a smaller core group control most of the decisions. Most of them are bankers”

Barba believes that t he global reserve system which is based on the US dollar “is basically a scam”. According to Barba, to keep the whole system working the powers to be must get people into debt. Debt must grow exponentially.

IMPORTANCE OF SAVINGS

“Pushing people to spend and taken on debt versus savings is insane! Savings is the base and the cornerstone of development. Savings are the cornerstone of capital! The world needs capital accumulation, not debt accumulation!

“Debt accumulation is not sustainable. Capital accumulation is sustainable!”

Guillermo Barba believes the powers to be simply don’t know what to do other than just ‘print more money’. He also sees the US dollar getting much, much stronger as people generally won’t know what to do to protect their wealth. This will offer opportunities to use inflated US dollars to buy real estates at attractive prices.

….. there is much more in this interview on the Mexican and South American economies.

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.

Special Guest: David Morgan – Silver Expert, Publisher: Morgan Report, Silver-Investor.com

An Aeronautical Engineer by training, David brings these analytic skills to his analysis of financial and commodities markets. He believes the inability of the majority of people to properly understand the significance of mathematical science such as the exponential curve is one such important example. A “hockey stick” of debt growth is simply and fundamentally unsustainable!

FINANCIAL REPRESSION

Keeping interest rates low is central to debt ridden governments surviving. Acording to David Morgan the government must keep rates low as long as possible but believes a reset of some sore is inevitable. David sees the mechanics and policies of keep rates repressed as fundamentally defining Financial Repression.

Financial Repression is like a big coffee press, pressing everything down and has suppressed the ability for us to have a free market and thereby enjoy the fruits of our intellect, labor, creativity and purpose as humans.”

POTENTIAL RISING INTEREST RATES

Many believe that rising interest rates will hurt gold. David fully expects the Fed to increase rates but sees it as being nothing more that “showmanship”. David suggests that:

“his experience shows that it is when REAL RATES get positive that you COULD see gold impacted from an increase in interest rates”

“What you really need to know is what are the real rates versus nominal rates which you see iin the newspapers.”

GOLD-SILVER RATIO

The current gold-silver ratio implies to David Morgan is that silver is presently undervalued relative to gold.

According to Morgan the Gold-Silver Ratio is telling us something else that is important.

“If you have a real economy with sound money you get a deflationary trend. This means your money is worth more over time. It is beneficial to almost everybody. Silver is the best inflation edge and not the best deflation hedge. Gold is the best deflation hedge. Silver anticipated this huge inflationary environment back when QE2 was announced and moved from $26/OZ to $48/OZ. What happened was all that anticipated inflation didn’t get into the market place because all the increased debt only resulted in re-liquifying the banks. They forced the money into the banking system and not out into the public sector.”

David believes silver is currently a better buy than gold. He still believes silver will outperform gold.

“We are not out of the woods. There is a place for precious metals in your portfolio. 20% for “metal bugs” and 10% for the average public.”

There is much, much more in this 32 minute interview with this well respected precious metals and silver expert.

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.

Special Guest: Jeff Berwick

Jeff Berwick, based in Acapulco, Mexico, has formerly been interviewed in this series (https://www.youtube.com/watch?v=O20n_oDUx54 ). He founded the StockHouse Media Corporation in 1994 and was its CEO until 2002. He is publisher of the dollar vigilante website (https://www.dollarvigilante.com/ ), which went online in 2010. Back then, he predicted the complete collapse of the US Dollar and the world financial system within the next five to ten years. He thinks that we are a lot closer now. He recently predicted a massive breakdown for September 2015 based on the seven year “Shemitah cycle“ (http://surviveshemitah.com/ ).

Jeff is concerned about the dependence of governments and financial market institutions on extremely low interest rates, even negative interest rates, which he calls “complete Keynesian insanity”. What is happening in Greece right now is just the beginning. It will eventually happen in other eurozone countries like Spain, Portugal, Italy, France and in countries all around the world, including the US.

Government debt in most countries has become so high that minor increases in the interest rate would lead to immediate default. The explicit US debt is above $18.3 trillion, as shown in the figure below. This however does not include implicit debt and liabilities that the US government has accumulated over the years, for example in the form of social security. Total debt and liabilities according to Jeff amount to $95 trillion.

“All it takes is, for example, for the Federal Reserve to raise interest rates by .25 per cent and they can bankrupt the entire financial system. This is where we are now. It’s been complete insanity. They tried to fix the 2008 crisis by printing money and going into more debt, which is why they got into that problem in the first place. And we are starting to see the next wave of major collapses and crises.”

As a response to the ongoing war on cash, Jeff suggests to go out of large cash holdings as soon as possible. He sees one potential solution in BitGold and even more so in Bitcoin, as a completely decentralized money and payment system. The price of bitcoin has been rising during the recent Greek crisis, whereas gold and silver have fallen. However, Jeff points out that the prices for gold and silver are systematically distorted on a “very manipulated market.”

“There is no Bitcoin office, there is no BItcoin servers. So no matter what the government does, unless they turn off the internet entirely, they can’t stop Bitcoin. That’s the beauty of Bitcoin.”

Jeff also recommends the internationalization of assets as a hedge against oppressive interventions by individual countries (suggested links:http://tdvwealthmanagement.com/ and http://tdvoffshore.com/ ).

Although Mexico is often portrayed as a dangerous third world country, Jeff can tell from personal experience that it is in many respects a better place than the US, as there is far less government involvement in private and business affairs. Mexico will nonetheless face serious problems, because of their close economic ties to the US. The collapse of the American economy will inevitably spill over to Mexico.

“But I think people here [in Mexico] are more used to it. So, for example, they had their peso collapse in the 90s and people lived through it. But Americans aren’t ready for what’s coming. They haven’t seen it in their lifetime. And as you know, half the people in the US are on government assistance now, and a lot of those are on welfare and food stamps. When those EBT cards get shut down, I wouldn’t want to be anywhere near any major population center in the US.”

Jeff generally sees potential in other Latin and South American countries like Columbia, Chile and even Nicaragua, as well as some Asian countries, but definitely not in North America, Europe, Japan or Australia, which all share the same problem: the biggest cohorts of their populations looking for  unsustainable entitlement payments in the near future.

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.

Special Guest: James Turk – Founder & Managing Director, GoldMoney.com

With a career in International Banking, including managing the Abe Dubai Investment Authority’s Commodities Portfolio, James Turk is an experienced professional whose insights should be thoughtfully considered. He feels strongly that the US needs to return to the sound money principles the framers of the US Constitution outlined and which the US has unfortunately and perilously veered away from.

FINANCIAL REPRESSION

“Financial Repression is government intervention in the market system which distorts the market’s signals. …. Government intervention not only distorts the markets but in fact is counter-productive because many times it is government policies which the market are reacting to!”

Instead of changing the policies, governments try and convince the markets (through intervention) that the policies they are following are the correct ones, when in fact they are not.

James feels strongly that governments need to be outside the markets and be primarily focused on maintaining the ‘rule of law’ and ensuring there is a level playing field for competitive capitalism to operate on. Government intervention results in distorting that playing field to the advantage of themselves and their special interests.

“(Governments & Central Banks) are following policies that basically are not sustainable!”

“The government’s ‘make believe’ is that they are creating wealth through creating currency and distributing it through their various programs. That is not creating wealth, but rather debasing the currency. When you debase the currency this is the worst type of financial repression because you are essentially destroying people’s ability to interact entirely voluntarily within the market place, as we fulfill our needs and wants.”

UNDERSTANDING WEALTH

There is only so much wealth in world. It needs to come from somewhere if it is to be distributed in a meaningful way. James Turk believes wealth fundamentally comes in two forms: Tangible Wealth and Financial Wealth.

Financial Wealth comes with counter-party risk and the exposure to insufficient cash-flows required to support the leverage that inevitably comes with pyramiding and the interconnection of financial wealth.

James Turk believes we are presently destroying wealth. Financial Wealth gets destroyed because of the eventuality of insufficient cash-flows (Free DCF) to support the over financialization of the economy.

…. there is much, much more in this fact filled 24 minute Video.

WAR ON CASH & BAIL-INS

• The Holy Alliance
• Perpetuating the Welfare State
• Why we can’t trust the banking sytem anymore.
• How banks have become Hedge Funds versus lending institutions,
• Why we need to separate the banks function of being a payments system versus being investment fund managers.

CRYPTO CURRENCIES

• What is the real purpose is of money,
• How the current environment is a historical aberration. We have moved away from a sound money system as the constitution framed.
• Why we need to return to the wisdom of the framers of the US constitution,
• Why Gold and Silver’s proven historical track record is important.

GoldMoney & BitGold MERGER

• Why GoldMoney and BitGold Merged,
• What James sees the future to be for the merger.

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.

Special Guest: Joseph Salerno – Austrian Economist, Professor of Economics, PACE University, VP Academic MISES Institute

Professor Joseph Salerno is a noted Austrian Economist who spoke with the Financial Repression Authority on Financial Repression and his growing concerns with what is referred to as “the War-On-Cash”, which he sees leading America and other developed countries in the wrong direction. He sees it as presently gaining momentum in senior policy levels around the world as global debt problems become more acute.

FINANCIAL REPRESSION

“A combination of Deliberate Inflation and very low Interest Rates. Interest rates which are kept low by a variety of what are called “Unconventional Monetary Policies“.

“There is talk now of having:

• Negative Nominal Rates,
• Governments taking over Pension Funds,
• Varies ‘privileging’ of government debt as part of bank capital.

..so it (Financial Repression) is a series of interferences in the financial markets by government with the end being to push interest rate lowers so they can inflate away their debt! They do that by having interest rates even lower than the rate of inflation.”

“What Financial Repression does is transfer surreptitiously resources and coming wealth from savers and retirees to the government and its crony banks. I think it exists, it is dangerous and I think many people are being hurt by it!”

WAR-ON-CASH – GETTING TO NEGATIVE NOMINAL BOND RATES

Professor Salerno believes the government wants Negative Nominal Rates but as he points out: “The only way they can do that is to lock peoples deposits into the banking system – that is where the War-on-Cash comes in! They would love to restrict or even abolish the use of cash within the United States if they could. That means they would have to use deposits.”

“This is another way of propping up a very unsound and dangerously flawed banking system!”

Professor Salerno has spoken out extensively on this subject, most recently at the Mises Circle event in Stamford, Connecticut

Governments, at least modern western governments, have always hated cash transactions. Cash is private, and cash is hard to tax. So politicians trump up phony reasons like drug trafficking and money laundering to win support for bad laws like the Bank Secrecy Act of 1970, which makes even small cash transactions potentially reportable to the Feds.

Today cash is under attack like never before. Ultra low interest rates are the norm for commercial bank accounts. In Europe, as the ECB ventures into negative nominal interest rates, certain banks threaten to charge customers for depositing cash. Meanwhile, certain European bonds now pay negative yields, effectively turning them into insurance products rather than financial assets. And some economists now call for the outright abolition of cash, which shows just how far some will go in their crazed belief that economic prosperity can be commanded by forcing us to spend rather than save.

The War on Cash is real, and it will intensify.

PUBLIC FOREIFEITURE

Both bank deposits and withdrawals of cash are now carefully scrutinized by banks and police agencies across America. Safety deposit boxes are seeing increasing restrictions on what can be held in them in the way of cash. People depositing cash often find themselves facing public asset forfeitures and seizures by the police. In some cases when cleared as being innocent then have serious difficulty in getting their seized assets returned. Professor Salerno expounds on this and other troubling new developments in America.

….there is much, much more in this fact filled 29 minute Video.

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.