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 Guests: Mark O’Byrne – Founder & Research Director, Goldcore

(Servitude: Impoverishment & Financial Imprisonment)

Mark O’Byrne feels that holding a Degree in Greek and Roman Civilization with a focus on their economic and monetary history. This gives O’Byrne insights into the cyclical nature of societies that few other writers have. It is these insights that Mark shares in this 35 minute video. Bank Bail-Ins are only a modern day indicator of financially collapsing societies. “Unfortunately, we don’t learn the lessons of history to our own downfall!”

FINANCIAL REPRESSION

“Given the large amount of debt in the world today we are seeing almost ‘anti-free market philosophies’ whereby the governments don’t like price signals and the pricing mechanism, so they are trying to repress this to repress interest rates.”

“By artificially suppressing the pricing mechanism, similar to forcing an inflated beach ball under the water, it will shoot up in another direction and can go in the opposite direction to what is initially intended!”

BANK BAIL-INS

“We are told Bail-Ins are to protect the taxpayer from the government having to bail-out the banks. But the depositors are the tax payers? Bail-Ins are just to protect the Senior Secured Debt holders!”

This is wrongful deception as people belief their money is safe in the bank It is intended to protect the assets of the Senior Secured Creditors within the banks capital structure. Private individuals and depositors are not holders of Senior Secured Credit to the banks which is strictly the realm of select international banks.

CONFISCATING DEPOSITORS FUNDS MEANS DEFLATION

“If you confiscate depositors funds (in a Bail-In) you will cause deflation like you would not believe!”

If you follow Mark O’Byrne’s analysis you quickly realize that Bail-Ins are both economically very dangerous and basically nothing more than regulations to protect elements of the bank financial structure. The question may be: are regulations today to protect tax payers from the banks or to protect the banks from taxpayers (depositors)?

“Maybe today we need to come to the obvious realization that the government is no longer regulating the banks, but rather the banks are regulating the government!” Gordon T Long

INTERNATIONAL DIVERSIFICATION IS THE ANSWER – While the Doors are Still Partially Open

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.

Global Macro Investor’s Raoul Pal and Vulpes Investment Management’s Grant Williams discuss essentially what we have classified as the 4 pillars of financial repression: repressed interest rates, forced inflation, obfuscation and ring-fencing regulations. The terms they use are a bit different, but the basic concepts are the same.

They discuss the systemic risks to the financial system including the loss of faith in money itself. They explain how massive money printing has distorted financial markets and prices worldwide, especially through the suppression of bond yields by central bank policies.

They also discuss their suggested solutions to investing in this environment – physical gold held outside of the financial system, cryptocurrencies, assets held outside of the concentration of risk in the financial system, investments in the monsoon regions of the world.

This is a fascinating must-watch discussion which will help you understand what is currently happening in the financial markets, the banking system, the investment world and the global economy.

LINK HERE to the Podcast

If you want to subscribe within the podcast – Apply Our Discount Code – we are partnered with Real Vision TV and we offer the maximum discount you can get anywhere .. Our Discount Code is as follows:   FRA-RV

FREE REALVISIONTV PROGRAM SHOW DISCUSSION BETWEEN RAOUL PAL AND GRANT WILLIAMS ON FINANCIAL REPRESSION – NOW AVAILABLE AT NO COST – SIMPLY CLICK THE PODCAST LINK BELOW.

CLICK HERE Subscribe to REAL VISION TV at the lowest possible price: Real Vision was launched to combat the dumbed-down approach to finance in traditional media. It is the world’s first on-demand video channel for finance and our driving ambition is to deliver the highest quality economic, financial, and geopolitical content available. This obsession affords us access to the world’s finest financial minds. Want to see it? See THE RESET by linking here.

If you want to subscribe – Apply Our Discount Code – we are partnered with Real Vision TV and we offer the maximum discount you can get anywhere .. Our Discount Code is as follows:  FRA-RV 

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: Ronald-Peter Stoeferle

DOWNLOAD FULL REPORT PDF

In Gold We Trust 2015 – Extended Version (e) by Financial Repression

Today, the 2015 edition of the gold report “In Gold We Trust” was launched. It is the 9th edition (read the 2013 and 2014 edition). With a global reach of some 1 million readers, it is probably the most read gold report worldwide. The In Gold We Trust 2015 is written by Ronald Stoeferle. He is the managing partner of a global fund at Incrementum AG in Liechtenstein, focused on the principles of the Austrian school of Economics.

2015 EDITION: “IN GOLD WE TRUST”

The gold price has stabilized in 2014, after its collapse in April and June of 2013. Investors’ interest in the yellow metal is los. Hence, market sentiment vis-à-vis gold is standing at a multi-year low, maybe even a multi-decade low. History learns that extreme underperformance usually lasts for one year. If history is any guide, than there should be a recovery in the gold price in the foreseeable future. Even with the severe underperformance since 2013, gold is up approximately 9% per year since it started to trade freely in 1971. As seen on the next chart, depending on the currency in which it trades, the average yearly performance is excellent for investors with a long term horizon. In other words, gold does what is always has done throughout history: preserve value and purchasing power.

Preservation of wealth is the primary reason why one should hold gold nowadays. Monetary policies of central banks are extremely unusual. The U.S. Fed could be talking about “normalization,” but with 7 years at zero percent interest rates we are nowhere near “normal” conditions. The most extreme monetary conditions, today, are being seen in Japan. It is really no coincidence that the gold price in Yen is near its all time highs. The gold price in Yen is simply reacting on the extreme expansion of the monetary base by the Japanese central bank. As the next chart shows, the balance sheet of the Bank Of Japan (BOJ) is approximately 65% of the country’s GDP. In other words, the assets that the BOJ is holding nears 2/3 of the total economic output of the country. When compared to other regions, it is clear that is a monstrous amount. It seems that Japan is near its endgame.

One of the “reasons” gold has gotten so little attention in the last two years is that investors have been focused on stock markets around the world. The U.S. stock market has seen a huge rally since October of 2012, European stocks catapulted higher when the European version of QE was announced earlier this year, Japan keeps on making multi-year highs in the wake of an ever expanding monetary policy. Meantime, however, stocks are not cheap anymore. On a historic basis, when expressed in a  price/earnings ratio according to the Shiller method, the stock market in the U.S. sits at relatively high levels (although no extremes). Although it is not given that the stock market is about to go south, there always is a possibility that the top is set in which case gold should see positive returns. As the next chart shows, during periods of the worst performance of the S&P 500, stocks and commodities have lost significant value while gold remained steady.

A correction in the stock market is certainly in the cards. Why? Because traditionally the gold/silver ratio is mostly negatively correlated with the S&P 500. In other words, as the gold/silver ratio goes down which means there is a disinflationary environment, stocks come down as well. Over the last 25 years, that correlation has held very well, but started to diverge strongly 3 years ago.

Gold is underperforming in a disinflationary environment. That has been one of the key observations in the last In Gold We Trust reports. There was enough evidence in the datapoints so far, but the most up-to-date chart says it all (see below). While the real rates were standing at -4% in 2011, they have gone up steadily since then, and are again in positive territory this year. The gold price has moved in the opposite direction in that same time period. The In Gold We Trust Report 2015 focuses, among many other things, on the correlation between the gold price and inflation expectations. Gold is an inflation sensitive asset. The U.S. 10-Year real yields provide an indication of inflation expectations. As readers can see, a strong divergence is in place since 2013, arguing for a strong revaluation of the gold price as inflation expectations are in an uptrend since then.

Suppose, however, that inflation expectations will change their trend … would that be bad for precious metals? The answer to that question is to be found in the last chart. During deflationary periods, like the ones starting in 1814 or 1864, the Great Depression of the 30ies or the financial crisis of 2008, gold did remarkably well. It is during those periods of “financial stress” that gold shows its real value, i.e. preserve wealth and provide protection against other assets.

The themes in this years 2015 “In Gold Trust Report” are the real value of gold as a financial asset and the end of gold’s underperformance.

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: Mike “Mish” Shedlock, MICH’S Global Economic Trend Analysis

MISH SHEDLOCK COMES OUT SWINGING ON: State of Illinois, Public Pensions and Greece

STATE OF ILLINOIS & CITY OF CHICAGO –Never Ending Financial Obfuscation

From Seven Illinois cities, to the City of Chicago, to the State of Illinois, Public Pensions are bringing the proud ‘Land of Lincoln’ to its “financial knees”!

Decades of politically expedient l promises and over generous Public Pension concessions to appease powerful public unions have left all levels of government with few financial alternatives. Many are now be forced to consider bankruptcy.

The Fourth Financial Repression Pillar of “Obfuscation” has been the practiced tactic for some time which has camouflaged this cancer. This obfuscation involved many clever accounting games which according to Mish Shedlock:

“Illinois’ Pension Plans are funded on average something like 39% and of course that creates a conflict of interest after judges have ruled on Pension Plans. The courts ruled that a bill Governor Rauner signed is unconstitutional and now sends things back to the drawing board. That (the bill) was supposed to save Illinois about $2B per year. Judges were in on it, Actuaries were in on it, the Rating Agencies – everyone was in on it.”

“Moody’s cut Chicago’s rating to junk. The City of Chicago promptly removed Moody’s from rating its bonds and instead hired another third party to rate its bonds. This is “rate shop whoring” and that is what I call it! The same process goes on with “actuarial whoring” because no city wants to admit that their pensions are as underfunded as they are!”

“Many of the pensions allow workers to retire at 50 after putting in 20 years of service, or whatever the requirement was. What do they do? They retire, collect their pension and then go to work for another government agencies and accrue benefits for yet another pension! – The whole system is untenable!”

“The taxpayers in Cook County are paying 50% of the tax revenues – not for services – instead it goes towards interest and pension obligations!”

… and IT’S STEADILY GETTING WORSE!

SOARING STATE TAXES – Sacrosanct Public Pensions Are Forcing Increased State Taxes

LOCAL PROPERTY TAX INCREASES

“To shore up Chicago’s Pension System they would have to hike Illinois property taxes by approximately 50%. – My (Mish’s) property taxes are already $14K/year!”

City, Local & Town Taxes in America are about Property Taxes. We can expect to see and explosion going forward in property taxes to pay unfunded public pensions.

Could this be a potential Death Knell For Real Estate Prices?

Could this trigger a collapse in ‘Tax Free’ Muni Bond Values?

GREEK CRISIS HAS COME TO A HEAD – Public Service Pensions A Major Sticking Point

“You have to actually wonder if the Greek Government is giving Greeks time to get their money out of the banks – only the dumb money is now left?”

….and much, much more in this fast paced 30 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.

Special Guest: Paul Brodsky – Investment Strategist, Wall Street Veteran

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.

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.

Charles Hugh Smith & Gordon T Long discuss the unsustainability of pension funds for U.S. public employees, the challenges of ordinary retirees to be able to retire given the financial repression on interest rates & low yields .. while everyone is beginning to agree that most people will not be able to retire, but must keep working, many do not realize that there are already “means-testing” in place for the U.S. social security benefits because if you & your spouse keep working & make at least $44,000 per year, your U.S. social security retirement benefits will be reduced by 85%! .. 26 minutes

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.

Wall St For Main St interviews financial expert Ed Butowsky created the Chapwood Inflation Index to better accurately measure inflation in the U.S. compared to the Bureau of Labor Statistics’ Consumer Price Index (CPI) .. discussion on the problems with the CPI and why it no longer measures inflation accurately .. an example of obfuscation – one of the pillars of financial repression  .. 29 minutes

Ed Butowsky: Double Digit Annual Inflation In Many US Cities

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: Jordan Eliseo – Chief Economist, ABC Bullion, Australia

FINANCIAL REPRESSION

“The subsidizing of debtors and the attempt to provide essentially a fake support for asset prices – while punishing savers and mis-allocating capital!”

“In Australia we have some of the highest debt levels in the world. Some people in Australia like Financial Repression because it is making it easier for them to pay off their mortgage (or at least afford their mortgage). The flip side is retirees, or people trying to live off fixed income and the like, are finding life very very difficult now because they have taken a very significant “pay cut” on the income which they were able to earn on the capital that they had been able to save throughout their working lives.”

WHAT’S DIFFERENT IN AUSTRALIA?

“Australia is effectively “catching down” to the rest of the world. – it is approximately four to five years behind western word.”

“Australia was incredibly fortunate the first time around to. We had a huge stimulus from China which lead to quite literally an unprecedented boom in capital investment in our mining sector. Trades stayed incredible strong because iron ore, coal prices and even gold was supported from a long time. Also because even at this point Australia has a a government debt level that is still quite manageable”.

“Imbalances have continued to build over this period and now that the mining boom is over, iron ore prices are closer to $60 dollars (not $160) and capital investment is drying up – we are finding we don’t have anything to re-balance to with private debt levels preventing any real pickup in consumer spending in any meaningful way!”

“Australia is about to enter a fairly serious “lull”‘

EXPECT DECLINING STANDARDS OF LIVING

The next phase in Australia that Jordan Eliseo expects “is where people begin to lose faith with Central Banks and start to more fully appreciate the complete lack of connection of what is going on in the real world / real economy and what is going on in asset / financial markets.”

“I think that when that happens financial markets have a lot of “catching down” to do!”

“The road that the government and central banks have led us down is actually a road that is going in the wrong direction! Standards of living are going to continue to decline as we go down that road and it is going to be a very difficult period for investors and individuals just trying to maintain their standard of living.”

WALL STREET IS DISCONNECTED FROM MAIN STREET!

“The end result of current economic policies have caused the disconnection (between Wall Street and Main Street). You can understand the emergency measures that were taken during the financial crisis but all it has done is fuel rampant asset speculation. We haven’t seen any meaningful growth in corporate capital investment or a rise in full time job creation (with a real living wage).”

“If you look at what is happening around the world we are seeing the prioritization of asset speculation over actual investment. It is impacting everyone from individuals, to CEOs, to Boards in making decisions around dividends / stock buybacks versus investing in their own operating businesses!”

“People in Australia on paper are more wealthy because their house price keeps going up, but they have less money to spend because the money they earn on their term deposit & savings continues to decline!”

… and much, much more in this 36 minute VIDEO interview on global macro issues …

• Why the Central Bank play book is very clear for investors,
• Why we will see a growing appetite for Precious Metals & why it is now imprudent not to acquire some element of precious metals within portfolios,
• Why we have $5T in Negative Nominal Sovereign Bonds,
• Why Superannuation is the only investment for 22M people in Australia,
• Why lower interest rates are ahead for Australia,
• Why Financial Diversification. Liquidity and Internationalization have become so important.

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.

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.

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.

Greg Hunter interviews Gordon T Long .. “We have run out of runway, but never underestimate the ingenuity of a trapped politician and central bankers to come out with new policies and new ways to extend this. We are going to see some pretty violent volatility and corrections. We are going to be in there guaranteeing collateral because our issue is . . . there is a shortage of collateral. The Fed sucked all of the bonds out of the market. There is a shortage of them. So, we have a major liquidity problem. That’s the runway we are running out of, and flows are starting to slow dramatically. Now, that says it’s getting unstable, but that doesn’t mean the world is coming to an end. It does mean we are going to do something else, and one of those things is negative nominal rates and cashless society. That’s the reason why we are going to have a cashless society. You are going to see this (cashless society idea) accelerate in the next six months.” .. 30 minutes

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.

“The free market provides the prospect of an escape from the fiscal police state that seeks to stamp out the use of cash [financial repression] through either depreciation of central-bank-issued currency combined with unchanged currency denominations or direct legal limitation on the size of cash transactions. As Carl Menger, the founder of the Austrian School of economics, explained over 140 years ago, money emerges not by government decree but through a market process driven by the actions of individuals who are continually seeking a means to accomplish their goals through exchange most efficiently. Every so often history offers up another example that illustrates Menger’s point. The use of sheep, bottled water, and cigarettes as media of exchange in Iraqi rural villages after the U.S. invasion and collapse of the dinar is one recent example. Another example was Argentina after the collapse of the peso, when grain contracts priced in dollars were regularly exchanged for big-ticket items like automobiles, trucks, and farm equipment. In fact, Argentine farmers began hoarding grain in silos to substitute for holding cash balances in the form of depreciating pesos.”
– Dr. Joseph Salerno, The Mises Institute

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.

Sovereign Man explains how Argentina’s government is bankrupt & has been implementing countless sets of controls including exchange price controls, media controls, exchange controls & capital controls [financial repression] .. “When governments find themselves in financial trouble because of the stupid decisions that they’ve made, their first response is to award themselves even more power to make even stupider decisions. And among the stupidest decisions that any government can make is imposing capital controls .. something that Argentina has in abundance.” .. these capital controls include prohibitions to leave the country with more than U.S.$10,000 in cash & significant paperwork & bureaucracy to wire funds out of the country .. also there is a 30% difference in the official exchange rate with the market exchange rate so that your wired funds leaving the country are effectively 30% less than you think .. “What happens with capital controls: you see a rapid decline in your standard of living as the government traps your savings in a bankrupt system .. It’s like lying on the ground with a blindfold on while the government builds a coffin all around you .. Little by little they fasten together all the sides, and then the top, nail by nail. Capital controls are like a coffin for your savings.”

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.

Michael Snyder highlights what is happening in the European Union – they are rushing legislation (financial repression) for all European Union countries & threatening that if a country does not enact “bailin” legislation within the next 2 months, it will face legal action .. what is a bailin? – it’s when creditors like bank depositors or shareholders lose something to help bail out a bank, instead of the government bailing out the bank .. why 2 months? – because you have Greece ready to default & it could send contagion effects all across Europe .. “Greece will only be just the beginning. In the end, I expect major banks to fail all over Europe as we head into the greatest financial crisis that Europe has ever seen. Bank account holders all over the continent could end up having to take ‘haircuts’, and that would just make the coming deflationary cycle in Europe a lot worse. And I actually expect events in Europe to start accelerating greatly by the end of this calendar year. Apparently the top dogs in the European Union are also concerned about the immediate future, because they are rushing to get ‘bail-in’ legislation passed in every nation in the EU by the end of the summer.”

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.

John Rubino highlights the recent emergence of BitGold & its purchase ofGoldMoney .. points out this is not the first service or facility of using gold as a payment system – Peter Schiff’s Euro Pacific Bank already allows non-U.S. customers to buy gold and/or silver, store it for free at Australia’s Perth Mint & then use a debit card to spend it .. Rubino: “Not so long ago the U.S. was where innovations emerged before spreading to the rest of the world. But in the realm of sound money and individual financial freedom at least, this is now Siberia. Foreign banks won’t accept American customers because they’re terrified of IRS agents showing up on their doorsteps with subpoenas. And now gold-backed payment systems that are apparently legal everywhere else are closed to Americans. So we’ll have to watch the merger of sound money and modern technology from the sidelines. Outside the U.S., however, gold-backed currency has the feel of an idea whose time has come. And to repeat an assertion made in yesterday’s piece on BitGold, widespread acceptance of these payment systems might generate a positive feedback loop that sends gold much, much higher. So their success will benefit all owners of precious metals, not just the early account-holders.” .. it’s financial repression on Americans especially.

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: Jean Marie Eveillard – Former Fund Manager & Legendary Investor

FINANCIAL REPRESSION

“One characteristic of Financial Repression is extremely low interest rates. That is what the Federal Reserve, ECB and Bank of Japan have done over the past few years in reaction to the financial crisis of 2008. They have in a sense manipulated interest rates by doing what they call Quantitative Easing, which is the purchasing by the central banks of a number of fixed income securities – in the process taking short term interest rates and long term yields down as much as possible. In doing so they are trying to encourage investors but it is of course detrimental to savers!!”

“In a way they are being pushed into equities … the authorities have created what I think is a bubble in stocks, bonds, high end real estate and art”

REGULATORY “RING FENCING”

“By forcing the banks to inflate their capital, the banks are being forced into buying sovereign securities!”.

This type of regulatory policy chicanery helps finance the growing government debt at the expense of savers, retirees and small business. Eventually sovereign economic growth is affected.

NEGATIVE UNINTENDED CONSEQUENCES

There are many unintended consequences and moral hazards of such policies. They lead to mal-investment, lack of price discovery and the mispricing of risk. Jean Marie Eveillard cites “economists have warned about potential mal-investment and today we are right there with the problem …. there is no ambiguity when they say they will do whatever it takes!”

“SAVE & INVESTMENT” VERSUS “LEND & SPEND”

“Today the emphasis of economists is to consume, versus save and invest!”

“Sustained cheap money increases supply much more than it does demand. We presently have over investment resulting in global over supply. This is not being matched by only moderate global demand based primarily on consumerism. This mismatch leads to a lack of pricing power, which eventually defeats policies of Quantitative Easing and ZIRP which were never intended by their academic architects to be sustained policies.” Gordon T Long

LINK HERE to the PODCAST

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: Jayant Bhandari – Global Mining Analyst, Anarcho Capital

“Economic Repression is a fact of the day everywhere in the world”

FINANCIAL REPRESSION

“There are two parts of the world in my opinion. One is the western developed civilization and the other is the non-western civilization. The western civilization was primarily based on reason and respect for the individual. This has considerably deteriorated over the last few decades. Increasingly the coming of the police state in particularly the USA. In the West-European part of the western civilization the regulatory controls have become particularly horrendous as well. The welfare system of these economies is deteriorating these societies now. Culturally the western civilizations are increasingly on a slippery slope.”

“The non Western civilizations have adopted the consumerism and wealth creating mechanism of the western civilizations, but I am not sure they have really adopted these things properly! Democracy has not done well in these countries. As a result consumerism is making these countries very unstable. The only countries I feel relatively positive about right now are China and some of the smaller countries like Singapore, Hong Kong, Mauritius – these countries are doing very well.”

HARD ASSETS & NATURAL RESOURCES

The problem is with the investors who have over-funded mining. They shouldn’t have ramped up mining as much as has been done!

‘The places to invest are places like Canada, Scandinavia, Australia and parts of South America. You need consistency in the political climate. You want the stability for people to invest billions of dollars in these countries.”

“I don’t think global demand has fallen. If you look at Iron Ore the world is using three times more Iron Ore. The world requires three times more Iron Ore than it used to 10-15 years ago. What is changed is that we have started to supply more commodities than the world demand is there for it. The problem is with the investors who have overfunded mining. They shouldn’t have ramped up mining as much as has been done!

PERVASIVE GLOBAL OVER-REGULATION

“Global western economies are stagnating and this is a direct result of over regulating business in those countries.”

“Businesses are suffocating in the west now. There is pretty much zero growth. You need to understand the off balance sheet liabilities these businesses have, and continue to increase. They have benefited from technological evolution and the low hanging fruit over the last twenty years.” This has now changed.

The US$ shows that though the US is deteriorating according to Jayant Bhandari “it is deteriorating slower than the rest of the world!”

“Economic repression is a fact of the day everywhere in the world”

Where growth is happening it is because of increasing consumerism and this is not good for the future because growth should be happening as a result of the increase in supply of products – which would mean we should be saving more – which would mean we should be producing more than we are consuming!”

INCREASINGLY BULLISH ABOUT GOLD

“I have never been too bullish about gold but increasingly I am very bullish about gold. The reason is a lot of people misunderstand why Indians buy gold. The reason Indians and Chinese buy so much gold is that for example in India the yield on investment is negative. It pays them to invest in something that gives them positive real yield. In my view India is going to increase its consumption of gold and the Chinese will keep doing it.”

“Once the US$ becomes too over-valued people will begin putting their money in precious metals!”

…. and much more in the video interview. Listen to the whole interview.

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.

Financial Sense’s Cris Sheridan interviews Gordon T Long* on financial repression .. Gord explains how financial repression is not about conspiracy theories, nor is there some official government policy for financial repression .. it’s happening from macro prudential government policies focused on reducing & controlling government debt .. click on the above chart to enlarge – in the middle you will see the 4 pillars of financial repression – negative interest rates, inflation, ring-fencing regulations & obfuscation .. “Financial repression uses a combination of inflation and government control of interest rates in an environment of capital controls to confiscate the purchasing power of much of the nation’s private savings.” .. discussion on how to protect your investments in such an environment .. 43 minutes podcast .. courtesy thanks to Financial Sense for making this available

LINK HERE to the Podcast

“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

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 Podcast

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: Puru Saxena – Founder & CEO, Puru Saxena Wealth Management

FINANCIAL REPRESSION

“We have been through a huge financial crisis in 2008 which brought the world’s banking system to it knees. The US housing market was on it knees. It was the worst recession, if not depression that the US faced in a long time. It affected all the global markets. So rightly or wrongly –wrongly in my view – the central banks decided to bailout everyone in site by keeping interest rates near zero and launching Quantitative Easing programs (which is essentially bond buying or asset swapping) which is printing new money and buying toxic bonds from the banks and thereby cleaning up the banks balance sheets – making sure the banking system survives.”

“In the process they have held interest rates at zero for a long long time, not only in the US, Europe and a lot of other countries in the developed world, which is penalizing the savers to the benefit of the borrowers and debtors. They are especially hurting people at retirement or close to retirement because suddenly their passive income which they had worked so hard to accumulate all their life disappears!“

“It is essentially a transfer of wealth from savers to the borrowers and debtors.”

“This has managed to stabilize the system temporarily but is really not good for society!”

UNINTENDED CONSEQUENCES

“The problem is everyone has become accustomed to being bailed out! Now there is no such thing as a bankruptcy! Everyone knows (especially the banks), if they make mistakes someone will bail them out either the central banks or the government. It has increased risk taking.

“It has increased risk taking.“

“I never felt QE was capable of increasing business activity because this is not really a supply side problem but a demand side problem. You have households all over the world already choking on debt. The last thing they want to do is borrow more money even if you drop rates to zero or give them money to borrow, they just are not going to do it!

A DEMAND PROBLEM

“When people ask why QE hasn’t caused inflation or hyperinflation, the answer is simple: households in the west were in no position to borrow money at even zero interest rates. The aggregate demand for new debt or credit was simply not there. By swapping assets the central banks have managed to cleanup the banking system but they have not been able to ignite the risk appetite at the household level”.

“We have a Demand problem, NOT a Supply Side problem!”

This is a global problem! “Even in Hong Kong, 2 years ago it was teaming with mainline Chinese tourists which now are simply not coming. Retail sales in Hong Kong have fallen significantly. Spending is hurting as the middle class has been obliterated! The rich have become richer as assets have increased and savers have been penalized. This policy of QE and Financial Repression has really helped the elite of the world – who have had access to financial leveraging.”

LOW GROWTH ECONOMIC ENVIRONMENT

The core problem to Puru Saxena is:

1. The low growth economic environment we find ourselves in,
2. The deflationary pressures in Europe and Japan

“Historically we have seen, whenever an economy passes through an extremely slow growth, sluggish environment where there is a lack of aggregate demand and you have deflationary pressures, long term interest rates have always gone down. The tendency of long-term interest rates is to drift lower in this environment. Long-term interest rates are normally set by the rate of economic activity as well as the real rate of inflation. At the moment we don’t really have much inflation or at least forces on inflation anywhere in the developed world and economic activity is zero or even negative!”

Long-term interest rates are price appropriately for the current economic activity!

There is much, much more in this 31 minute macroeconomic view of the world and the investment opportunities it presents.

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.