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09/19/2014 - FINANCIAL REPRESSION NOW TARGETING AMERICANS ABROAD

Expats Left Frustrated as Banks Cut Services Abroad 09-11-14 WSJ

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.


09/18/2014 - Financial Repression Through Currency Devaluation and Inflation

In his latest commentary, John Rubino* explains how inflation & currency devaluation are forms of “default” of a country on its debt .. on the effects of currency devaluation: “Savers now accepting 0.5% interest on bank CDs will be shocked to find out that the government is explicitly trying to devalue the currency by 5% a year, giving those CDs a -4.5% annual return and making saving for retirement — or even preserving capital — impossible.” .. highlights the secondary & tertiary effects of currency devaluation or inflation to address a big debt problem – there is actually more debt taken on .. worries about the potential for what Austrian economics calls a “crack-up boom” – when a critical mass of people figure out the government is going to make the currency worth less each year for a really long time: “Individuals and businesses lose interest in holding the currency, instead spending it on real stuff as fast as it comes in, thus setting off an asset bubble/hyperinflation.”

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.


09/13/2014 - Quantitative Easing (QE) Allowing Governments To Finance Its Deficit Spending At Very Low Interest Rates

Economist Richard Duncan* explains why he thinks the Federal Reserve will soon be launching another round of quantitative easing (QE) .. in recent years,QE has been allowing the government to finance its deficit spending at very low interest rates (financial repression) .. over the last few years, the U.S. government has borrowed approximately $5.8 trillion to finance its budget deficits – during that time, the Fed acquired $1.9 trillion worth of government bonds: If the Fed had not bought those bonds, either the government would have had to spend $1.9 trillion less, which would have removed $1.9 trillion of aggregate demand from the economy, or else the government would have had to borrow the $1.9 trillion from the financial markets. That would have drained liquidity from the system and pushed up interest rates Higher interest rates would have further damaged the economy – “QE allowed the government to boost aggregate demand through deficit spending and to finance its deficit spending at very low interest rates.” .. the Fed also bought mortgage debt to stop the collapse in property prices .. Duncan sees the stock market runup as being fueled by QE, helping to relfate the economy .. It is not at all certain, however, that the economy will remain ‘reflated’ when QE ends in October. In fact, the odds are quite high that it will begin to deflate again. Should that occur, the Fed would then have to decide whether to do nothing and allow everything it has accomplished to unravel in a process most probably leading back to severe recession and deflation or else to launch yet another round of Quantitative Easing. I believe it will be an easy decision for the Fed to make.After all, what’s a few trillion dollars more (shared) among friends?”

– Economist Richard Duncan

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.


09/12/2014 - A NATION IN DECLINE .. and Running Out of RUNWAY! After..

$6 Trillion of Budget Deficits

Fed Funds Rate at 0% for nearly 6 Years

$3.5 Trillion of Fiat Money Creation

$25 Trillion Expansion of Household Net Worth (thanks to QE)

We have managed to achieve this….

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THE POWERS TO BE ARE GETTING DESPERATE!

Expect FINANCIAL REPRESSION to accelerate & become more aggressive.

Keynesians See FINANCIAL REPRESSION

as the only option.

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Read Yellen Speech Fisher’s Speech

SEE: Financial Repression Archives – 07-20-14

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.


09/11/2014 - Unintended Consequence of Financial Repression: Investments Shifting To Private Assets

“With returns on government bonds at historical rock-bottom prices, sovereign wealth funds (SWFs) are emerging as part of the trend that shifts confidence and capital from the Public to the Private sector .. we see both sovereign wealth funds as well as central bank reserves moving into the stock market markets and other higher-yielding assets like real estate at a rate that private investors have not even contemplated. The traditional talking-heads are completely lost ranting on and on about bubbles yet they cannot grasp that the retail speculative element is not yet in the marketplace .. The capital flows are in themselves being altered as government capital itself has been forced to look further afield to grow public pension money and to maintain some diversification in central bank currency reserves as the euro has reduced the number of currencies that can be used for diversification. The resulting tide of money flows is becoming starkly different as governments themselves are being forced into private investment that is interestingly creating a danger of distorting stock markets to escape the narrowing opportunities to achieve diversification in currencies and the collapse in interest rates that defeats pension funds as a whole. These two converging trends are causing prices to reflect political priorities rather than traditional financial reality.”

– Martin Armstrong

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.


09/10/2014 - Wal-Mart Can’t Match Government’s Rate of FINANCIAL REPRESSION

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Guess where most of the new mothers below shop??

Any Correlations Here?

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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.


09/09/2014 - Governments, IMF, Central Banks Implementing ‘Financial Repression’

imf_logo_390_1801International Man article on how western world indebted governments need money, how they will protect the big banks at the expense of the citizens withfinancial repression ..  The International Monetary Fund (IMF) published a horrifying paper, called The Fund’s Lending Framework and Sovereign Debt. That paper in turn was based on one from December 2013, called Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten .. The December 2013 document, right at the start, says that financial repression is necessary: “The claim is that advanced countries do not need to resort to the standard toolkit of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression .. As we document, this claim is at odds with the historical track record of most advanced economies, where debt restructuring or conversions, financial repression, and a tolerance for higher inflation, or a combination of these were an integral part of the resolution of significant past debt overhangs.” .. The IMF report goes on to say: “Governments can stuff debt into local pension funds and insurance companies, forcing them through regulation to accept far lower rates of return than they might otherwise demand .. Domestic defaults, restructurings, or conversions are particularly difficult to document and can sometimes be disguised as ‘voluntary’ .. The Fund would be able to provide exceptional access on the basis of a debt operation that involves an extension of maturities .. That means that 30-day notes can be instantly turned into 30-year bonds.” – this last sentence means the ability to change 30-day notes into 30-year bonds, effectively holding the money captive for a much longer period of time .. here are some more examples globally:

* In 2009, the government of Ireland swiped €4 billion from its National Pensions Reserve Fund in order to prop up its insolvent banks. The following March, they stole the remaining €2.5 billion for another bailout.
* In November 2010, the French parliament took €36 billion from a reserve pension fund to pay the debts of a “social” fund.
* Also in November 2010, the government of Hungary effectively took 2.7 trillion forints ($13.5 billion) from 3 million retirement accounts.
* The government of Poland nationalized one-third of future contributions to individual retirement accounts. That money will almost certainly disappear into the state treasury, robbing savers of some $2.3 billion per year.

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.


09/08/2014 - FINANCIAL REPRESSION THROUGH SHRINKFLATION

Financial Repression Using Shrinkflation: “As ‘shrinkflation’ becomes no longer viable, it will soon reveal itself in the form of higher consumer prices. And with central banks around the world creating inflation as a policy measure so as to inflate away the world’s massive debt pile, the question remains as to whether the central banks will be able to control this deliberately induced inflation in an environment where ‘shrinkflation’ no longer works.”

– Pippa Malmgren

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.


09/07/2014 - FINANCIAL REPRESSION BY THE STATE: GOVERNMENT PUNISHES SAVERS TO SUPPORT DEBTORS

quote-fascism-should-more-appropriately-be-called-corporatism-because-it-is-a-merger-of-state-and-benito-mussolini-133350“The entire problem we face going ahead stems from the very idea of Karl Marx that government is capable of managing the economy either through communism or autocratic-socialism where the state dictates to the economy under the pretense of caring for the people, that has truly become a derivative of fascism where the state comes first. This is even reflected in the conviction rate .. that has risen from 72% in the 1970s to virtually 99% today eliminating fair trials. We also see it taking shape in the militarization of the police that actually do not protect society, but rather protect the state from the people .. This is autocratic-socialism where the state pretends its abuse of the people is for their benefit when in fact there is always a profit that falls to them ..Savers are being exploited by government under the pretense of managing the economy. You see many retired people back in the work force doing service jobs because they can no longer earn income on their savings for life. Savers receive no return on their life savings because central banks punish savers and subsidize the debtors assuming that borrowing is required for economic growth. This core assumption that government even possesses the mental capabilities to manage the economy is extremely dangerous for it then creates a fascist state where society is supposed to worship the state as all-knowing and caring where its survival takes precedent over the individual.”

– Martin Armstrong

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.


09/06/2014 - FINANCIAL REPRESSION IS ABOUT CONVINCING A CAPTIVE AUDIENCE OF BUYERS TO HOLD GOVERNMENT DEBT AT VERY LOW YIELDS

“Merely setting interest rates below inflation, however, won’t fully achieve the desired result. The second part of financial repression is convincing a captive audience of buyers to hold government debt at exceedingly low yields. This can be done through the regulation of banks and pensions, capital controls, and good old-fashioned arm twisting…It isn’t hard to find examples of these tactics. The Basel III regulations give banks strong incentives to hold sovereign debt to satisfy their capital requirements. Ireland has pressed their National Pension Reserve Fund into service purchasing government securities and recapitalizing their banking system. Japan Post, the world’s largest pension plan, continues to buy JGBs apace.”

– “Financial Repression: Why It Matters”, Shane Shepherd, Research Associates , April 2013

LINK HERE to the article with additional quotes also

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.


09/05/2014 - FINANCIAL REPRESSION LIKELY TO BE AROUND FOR A LONG TIME

Dutch economists Sylvester Eijffinger & Edin Mujagic see western countries implementing policies aimed at reducing or at least slowing down the level of public debt .. “In times of slow economic growth, policymakers’ options are grim .. many Western policymakers are seeking alternative solutions – many of which can be classified as financial repression .. Financial repression occurs when governments take measures to channel to themselves funds that, in a deregulated market, would go elsewhere. For example, many governments have implemented regulations for banks and insurance companies that increase the amount of government debt that they own.” .. this can be done through regulations like Basel Accord which require banks to set aside enough cash to handle unexpected events – the cash is encouraged to be in the form of government bonds .. also another mechanism of financial repression: “Western central banks are using another kind of financial repression by maintaining negative real interest rates (yielding less than the rate of inflation), which enables them to service their debt for free.” .. also there is the mechanism of raiding pension funds: “In many countries, including France, Ireland, and Portugal, governments have raided pension funds in order to finance their budget deficits. The UK is poised to take similar action, “allowing” local government pension funds to invest in infrastructure projects.”

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.


09/04/2014 - EUROPEAN CONFERENCE IN VIENNA ON FINANCIAL REPRESSION – from late last year but still relevant

“We are now in an age of financial repression and, as observed by Edin Mujagic, an academic on the matter from Tilburg University, “we have moved into a new stage where we are setting up institutions specifically created for financial repression.” .. Financial repression causes all savers – institutional as well as individual — to lose money. In short, “individual savers are being punished for doing the right thing whereas the people responsible are not” .. 9 minutes

LINK HERE to the 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.


09/03/2014 - FINANCIAL REPRESSION IN ACTION “SAFEGUARDS” BLATENTLY CORRUPTED

The Federal Reserve, under pressure from lawmakers and state officials, is considering allowing banks to use certain types of municipal debt to satisfy a new postcrisis financing rule.

U.S. regulators are expected to finalize safeguards requiring that banks hold enough liquid assets—such as cash or those easily convertible to cash—to fund their operations for 30 days if other sources of funding aren’t available. Municipal securities issued by states and localities wouldn’t count as “high-quality liquid assets” under the rule, meaning such securities wouldn’t qualify for use under the new funding requirements.

States and localities have warned that excluding their securities could cause banks to retreat from a $3.7 trillion market in which they have increasingly become an important player, which could driving up borrowing costs to finance roads, schools and bridges. Banks have nearly doubled their ownership in municipal securities over the past decade to more than 11%, according to Fed data.

HOW DOES THIS PROTECT THE PUBLIC

WHEN MUNICIPAL DEBT IS THE PROBLEM?

LINK HERE to the article

MUNICIPAL DEBT IS THE PROBLEM!

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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.


09/03/2014 - Egon von Greyerz with the FRA

A former banker, Corporate Vice Chairman of a FTSE 100 corporation and founder of Matterhorn Asset Management AG, Egon von Greyez “strongly believes there will be massive wealth destruction in the next few years”.

Von Greyerz personally defines Financial Repression in practical terms as the “manipulation and interference by government in the running of the economy and the lives of normal people”. What this will inevitably lead to he feels will be the “total control of the people and a police state – that is the way we are going in some countries!”

He has been worried about what is presently unfolding since the 1980’s and is very troubled about what he has witnessed and what he clearly saw was coming. “All this was inevitable. It is ridiculous for the central bankers to say they didn’t see this coming. Anyone with just a little bit of intelligence could have seen this coming (of course you can’t be a politician who never see things coming and central bankers are politicians)”.

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.


09/02/2014 - Financial Repression is in preparation for the inevitable that is now clearly visible.

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FINANCIAL REPRESSION IS

THE ONLY SOLUTION

(FROM THE GOVERNMENT’S PERSPECTIVE)

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How will these deficits be financed when the present budget debates causes such Congressional wrangling & gridlock?

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.


09/01/2014 - Surviving The Age of Financial Repression

Mark Yusko, founder and CEO of Morgan Creek Capital Management, shares his perspective on how institutional investors make money during gloomy economic times at Thomson Reuters‘ PartnerConnect East conference– conference last year, but principles still applicable .. If you invested $10 million in U.S. Treasuries seven years ago, you could expect an annual return of $480,000, but today you see a return of just $24,000 a year, Yusko points out .. “In this age of financial repression, we have to think differently about how we invest .. Surving the Age of Financial Repression.”

LINK HERE to the 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.


08/31/2014 - Federal Reserve Vice Chairman Says U.S. Preparing Bank Bailins

“The Great Recession is a near-worldwide phenomenon, with the consequences of which many advanced economies continue to struggle. Its depth and breadth appear to have changed the economic environment in many ways and to have left the road ahead unclear .. Work on the use of the resolution mechanisms set out in the Dodd-Frank Act, based on the principle of a single point of entry–though less advanced than the work on capital and liquidity ratios–holds the promise of making it possible to resolve banks in difficulty at no direct cost to the government .. As part of this approach, the United States is preparing a proposal to require systemically important banks to issue bail-inable long-term debt that will enable insolvent banks to recapitalize themselves in resolution without calling on government funding–this cushion is known as a ‘gone concern’ buffer.”

– Federal Reserve Vice Chair Stanley Fischer
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.


08/30/2014 - Renunciation of U.S. Citizenship About To Get More Expensive: From $450 to $2350 America’s Corralito Tightens

With an exponentially increasing number of Americans & U.S.-based companies renouncing their citizenship, the U.S. State Department is now looking to raise the cost of renunciation from U.S.$450 to U.S.$2350on individuals .. [Cliff Note: Expect similar regulations or rule changes soon to keep U.S. corporations from renouncing their citizenship through overseas corporate inversions, like what Burger King is doing now .. America’s corralito tightens .. ]

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.


08/29/2014 - For the first time in history, (based on FRED data), the 30Y constant maturity yield is below the real GDP growth level.

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FINANCIAL REPRESSION IS

COMPLETELY DISTORTING

THE PRICING OF BOND RISK

(The RISK is in FIAT US$ CURRENCY)

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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.


08/29/2014 - Jeff Berwick – Financial Repression

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The founder of the well recognized Canadian web site Stockhouse Media Corporation and CEO until 2002, Jeff Berwick says “around 2003 I woke up and started studying and learning (and I am still doing that to this day) and the more you learn the deeper this ‘rabbit hole’ gets! We are living under a financial system that is completely not real! People are going to find this out pretty soon!”

 

 

LINK HERE for MP3 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.