11/22/2014 - FINANCIAL REPRESSION for DUMMIES
Gordon T. Long has been sounding the alarm on Financial Repression for quite some time. Unfortunately most people have been unaware that their wealth is being stripped away before their very eyes. But Gordon and his associates have devised a number of strategies that can be exercised to avoid this fate. Before you can solve a problem, you’ve got to admit that it exits.
11/20/2014 - Doug Casey – A Financial Repression World Tour
Special Guest: Doug Casey – Casey Research
“MODERN CURRENCIES ARE FLOATING ABSTRACTIONS”
Developed economies’ currencies “are turning into toilet paper”.
“JAPAN IS A GIANT ACCIDENT WAITING TO HAPPEN!”
“If you are looking for a one way street, perhaps the best speculation in the world today would to be short Japanese government bonds denominated in Yen”. The demographics in Japan are the worst in the world.
“THE EU WILL CEASE TO EXIST“
Its really a horrible conglomeration of countries which should be simply a free trade area with the government in Brussels making it impossible. It is totally dysfunctional and will breakup.
DOUG’S RECOMMENDATIONS
Best-selling author, world-renowned speculator, and libertarian philosopher Doug Doug Casey speaks out on FINANCIAL REPRESSION
Doug sees the world in the “eye of a gigantic financial hurricane”. It entered the hurricane in 2007-2008 and will likely see the next stage in 2015. Here are just some of Doug’s views and statements from this fascinating and exclusive interview with Gordon T Long.
REALISTICALLY SEES WAR AHEAD
“The US is being provocative with its military bases in 125 countries around the world and is provoking the Russians in the Ukraine.” The US is now a country in a continuous state of war. “The US military is out of control.”
“AMERICA DOESN’T EXIST ANYMORE!”
“America has turned into a police state”. It is the most dangerous entity in the world today and has become hated globally because of its militarism.
“THE REAL RISK TO INVESTORS IS ‘POLITICAL'”
US Investors must urgently diversify their assets abroad while it is still possible. More restrictive regulatory policies lie ahead.
US STANDARD OF LIVING & RESPECT IN THE WORLD HAS FALLEN
Today the US is more taxed and regulated than ever before, which limits its abilities to solve its problems.
11/18/2014 - Here is the Official G20 Document Approved By the G20 Countries for Banks To Confiscate Your Bank Deposits
See page 5 of the document below for the signed & agreed piece which allows banks to simply take your bank deposits, under certain conditions, in the event of a bank crisis: “The Key Attributes describe the powers and tools that authorities should have to achieve this objective. These include the bail-in power, i.e., the power to write down and convert into equity all or parts of the firm’s unsecured and uninsured liabilities of the firm under resolution or any successor in a manner that respects the creditor hierarchy and to the extent necessary to absorb the losses. Hence, the resolution strategies that are being developed for G-SIBs provide for a recapitalisation by a way of a bail-in (with or without use of a bridge institution) to support the orderly resolution or wind-down of a G-SIB in a manner that maintains at a minimum continuity of critical functions. As set out in the July 2013 FSB Guidance on the Development of Effective Resolution Strategies, one crucial consideration in the development of effective resolution strategies is the availability in resolution of lossabsorbing capacity in sufficient amounts and at the right location(s) within a group.”
G-SIB = global systemically important bank
LINK HERE to the source article
11/17/2014 - Mike Pento: Speaking Out on Financial Repression
Special Guest: Mike Pento – Pento Portfolio Strategies LLC
Michael Pento speaks out strongly by saying: “We cannot allow the whims of a small group of unelected people to depreciate the value of currencies without any accountability whatsoever. Who gave Mr Bernanke and Ms Yellen the authority to do all these QEs? Who voted them into power? Why do we believe deflation is a bane on the American populous? Why do we want real incomes to fall and prices to go up? We cannot allow these people to to destroy the American middle class and American consumer!”
FINANCIAL REPRESSION
“Any attempt by government to make sure debt service payments remain serviceable.”
That is the key. “Whether it is to force people into the bond market, whether it is to keep interest rates artificially low – whatever they need to do to make sure they don’t have to use the tax base to pay their debt and deficits. They utilize artificial methods to make sure they can make debt service payments.”
JAPAN IS MICHAEL PENTO’S FAVORITE EXAMPLE
“In Japan they have been able to take the entire JGB market and monopolize the whole entire thing! There is nothing that occurs there unless the government is a buyer. There are days on end where there is no trading because their 10 year note is .005%.”
“Japan is an insolvent nation that has taken its interest rates down to levels where there is no private market for their debt – it is a ticking time bomb ….. The danger here is the Yen can unravel here and become intractable.”
“If interest rates go up just 1% the nation is completely insolvent. The Yen could unravel very quickly and cause the economy of Japan to collapse, which would be massively disruptive to all economies and markets across the globe.”
FREE MARKET SYSTEM HAS BEEN COMPLETELY VANQUISHED
“No one knows what the prices are of anything any longer! Capitalism has been annulled, cancelled and abrogated by government and central banks (which are one and same thing)”.
WHERE WE ARE HEADED
11/16/2014 - Financial Repression: Wealth Confiscation & Bailins Relating to Bank Deposits & Gold
International Man essay explores the growing trend of governments & banks to setup “bailin” mechanisms which effectively confiscate a certain percentage of bank depositor deposits at banks in the event of a banking crisis .. the European Union (EU) has now setup this type of bailin mechanism to start soon in Europe – All the banks in the EU will be given the freedom to perform their own bail-in: they may absorb any deposits that exceed €100,000 .. “Following the Cyprus bail-in, we believe that Cyprus was intended as a trial-balloon, that a similar bail-in would later be created for the EU, the US, and a host of other jurisdictions. That prediction seems to be panning out.” .. this essay suggests a similar movement may happen to the paper-gold market – potentially: “Banks could be given the go-ahead to simply cancel the paper-gold certificates that they have sold. This will enrich the banks by billions of dollars, and the only losers will be the greedy rich who have so much money to burn that they have purchased gold certificates.” .. banks doing this would be “praised” by governments for taking the action for the “Greater Good.”
11/15/2014 - Financial Repression: Central Banks & ‘Officials’ Will Force Banks To Buy More Government Bonds
Just as the Federal Reserve has stopped its quantitative easing program, the Bank of Japan stepped up to the plate to take over the bond buying .. now the New York Times reports that the Financial Stability Board, a panel made up of central bankers, finance officials & top regulators from the world’s largest economies, announce proposals this week that would double the amount of money that large banks would be required to have on hand to absorb losses .. the idea minimizes the possibility of governments to have to bail out their banks, plus makes banks buy government bonds at the same time – a double whammy to help governments with their debt & deficit burdens [Cliff Note: They call it ‘financial repression’. We think it would be more honest to call it ‘exploitation’ … Words can affect perception & make reality seem more innocent than it is. As an expression, ‘financial repression is similar to the expression ‘Quantitative Easing’ .. which sounds innocent until you call it for what it really is: creating new money from thin air for the benefit of those who are in control of the money system.] .. “The new rules would require global systemically important banks to hold twice as much capital, 6%, as required by the Basel III rules. In addition, banks would be required to have capital equal to at least 16 percent and as much as 20% of their outstanding loans, derivatives portfolios and other assets, after adjusting for risk. Part of this capital could be borrowed from investors who would earn interest, but would lose their money if the bank got into trouble. Combined with the impact of other new regulations, the rules would require banks to increase their capital to 25% of assets adjusted for risk.” .. the article emphasizes bank lobbyists will push back vigorously on these proposals.
11/15/2014 - Tim Price – Speaking Out on Financial Repression
Special Guest: Tim Price – PFP Group
Tim recalls the words we last heard in the dark days of 2008:
“When you’re a distressed seller of an illiquid asset in a market panic, it’s not even like being in a crowded theater that’s on fire. It’s like being in a crowded theater that’s on fire and the only way you can get out is by persuading somebody outside to swap places with you .”
This is precisely what occurs when the regulatory pressures and un-natural forces of FINANCIAL REPRESSION finally ends
“Financial Repression is government stealing from savers and the future!”
“The single biggest problem of our times economically, is that for the last 40 years there has been an unsustainable buildup of credit expansion throughout the developed world … and we have reached the end of the road new. Every policy by governments and their agents (the central banks) is too a) Kick the Can Down the Road and B) to steal from savers to keep this bandwagon rolling!”
THREE ALTERNATIVE APPROACHES TO ATTEMPT A RESOLUTION:
Approach #1 and #2 or no longer realistically viable, leaving governments with only option #3. The last options has historically always been the option governments of fiat based systems have resorted to throughout the ages because of a lack of “political will and discipline”.
Tim believes Japan is presently the ‘dress rehearsal’ and the rest of the world will be the main event.
11/13/2014 - “WE’RE GOING TO BE FINANCIALLY REPRESSED FOR DECADES!”
Bill Gross, the 69-year-old billionaire co-founder of Pacific Investment Management Co., told Bloomberg Radio – AUDIO
Feeble returns on the safest investments such as bank deposits and fixed-income securities represent a “financial repression” transferring money from savers to borrowers, says Bill Gross.
Workers 65 and older, struggling with years of depressed yields, are the only group of Americans who are increasingly employed or looking for jobs, according to Labor Department participation-rate data.
Federal Reserve interest-rate policy that aims to cut borrowing costs. “I hate to be gloomy, but, yes, for the next 10 years, the oldsters, and I’m in that camp, are going to be disappointed in terms of the policy rate.” About 75 million baby boomers, born from 1946 to 1964, are starting to retire and face meager returns as a byproduct of the Fed’s decision to hold its benchmark rate near zero since December 2008. Policy makers also have quadrupled the central bank’s balance sheet to a record $4.22 trillion to drive down borrowing costs.
LETTER: FEDERAL GOVERNMENT ‘AGGRESSIVELY ENGAGED’ IN FINANCIAL REPRESSION 11-02-14
The $17.5trillion recognized federal government debt is one of the prime reasons why so many Americans, especially seniors, are having trouble making ends meet and why many of the young can’t save.
What’s happening is that since 2008, Washington has been aggressively engaged in a process called financial repression.
Financial repression is a deliberate policy by which deeply indebted governments, like ours, have historically used to discharge their otherwise unpayable debt. It’s a combination of chronic inflation coupled with artificially imposed low interest rates. What this effectively does is transfer wealth from savers to government.
One of the beauties of financial repression from Washington’s perspective is that it’s complex enough that the average person doesn’t understand how it works. This allows the government to keep taking vast sums of private wealth year after year without having to suffer any political consequences. That is, those in power stay in power.
Since the financial crisis of 2008, financial repression has been responsible for the yearly stealth transfer of hundreds of billions of dollars from the private sector to Washington.
The rationale is that it’s better to take something from everyone to resolve the financial predicament which the government regards as a societal problem.
One of the negatives of this hidden tax is that the prudent saver is punished. Another drawback is that financial repression makes it very difficult for people to save and thus accumulate some wealth.
I have been following events since the 1970s, and one of the things that stand out for me is the cavalier and even reckless ways in which government spends money. No responsible person would ever run their household the way politicians have run the government. So now we’re paying the piper for our collective spendthrift ways.
Peter Skurkiss, Stow
11/12/2014 - Federal Reserve Policy is “Financial Repression At Its Finest”
“I side with Hussman and have been in his camp for a number of years. Make calls like this and you look foolish until the bust happens. To paraphrase John (I cannot find the exact historical quote) ‘The choice is whether one looks foolish during the runup, or during the inevitable decline.’ .. Fed policy certainly represents financial repression at its finest. It’s very much behind the income inequality that Fed Chair Janet Yellen moans about all the time .. Forcing stock, bond and other asset prices higher only helps those who hold stocks, bonds and assets (the wealthy, not the poor) .. When stocks rise, it also drives CEO pay higher and higher via performance incentives and stock options. That money is not taken back when stocks crash. The irony is stunning. If Yellen wants to understand the central cause of income inequality, all she has to do is look in a mirror.”
– Mish Shedlock
11/12/2014 - Financial Repression: Wealth Taxes
CATO’s Dan Mitchel essay identifies the developments & evolution in thinking by politicians & the general public toward confiscating or taxing wealth .. emphasizes politicians want more money & deal with wealth inequality concerns .. on the consequences of wealth taxation/confiscation .. concludes: “A wealth tax is a very misguided idea. And that’s true whether it’s a permanent levy or a one-time cash grab by politicians .. The wealth tax will probably be a real threat in the not-too-distant future. America’s long-run fiscal outlook is very grim because of a rising burden of government spending, and other nations are in even worse shape .. When fiscal policy begins to deteriorate, even semi-rational politicians will join their leftist colleagues in a desperate search for more revenue. In a political world where inequality is a driving force and in an economic world where other tax sources have been exhausted, people with assets will have real reasons to worry.”
LINK HERE to the source article
11/08/2014 - Central Bankers in a State of Panic: Central Banks & Governments Are Using Financial Repression To Help Manage Their Debt
Peak Prosperity’s Chris Martenson* essay on the fear, panic & desperation of the central bankers of the world’s indebted countries, with a particular focus on the Federal Reserve & the Bank of Japan .. emphasizes how they are watching with trepidation as their policies & metrics fail to respond .. “They are so far over the tips of their skis right now that there’s nothing they won’t do. They’ve summarily thrown granny under the bus because they have this idea that negative real interest rates are the cure. The cure for what? The massive amounts of debts and imbalances their prior policies caused. So savers are punished in the pursuit of policy. You know, ‘for the greater good’ and all that .. They’ve spurred the greatest wealth gap ever in U.S. history, greater even than at the extremes of the Great Depression, apparently without the slightest concerns for Plutarch’s ancient admonition that ‘An imbalance between rich and poor is the oldest and most fatal ailment of all republics.'” .. in Europe, central bankers have forced negative nominal interest rates on savers .. “The Federal Reserve, theBank of Japan (BOJ), and the ECB have decided that they want you to take your money out of your bank account and place it into the stock market” or they encourage policies to encourage you to spend your money .. every hard asset has been price suppressed except for houses – which asset requires you to borrow from banks & that is considered good for the economy .. Martenson explains how financial repression is being used by central banks & governments to help governments manage & pay down their debt – “Negative real rates serve to confiscate purchasing power from the general population and transfer it to other parties. Those parties include the big banks.” .. the essay focuses on the insanity of the Bank of Japan’s recent actions – throwing the equivalent of $3 Trillion of thin-air money .. “Whether we call this the largest bond bubble in history, ‘reckless’, ‘mad’ or ‘insane’, Japan has truly jumped the monetary shark. There’s no way back and no way forward that will be pain-free and this terrifies the BOJ. The best advice I have is that when you see your central bank panic, you should panic too and avoid the rush.”
LINK HERE to the source article
11/08/2014 - Japan Doing Financial Repression Similar To Bernanke’s Financial Repression
Yra Harris provides several considerations on why Japan is now becoming even more aggressive on QE .. notes that Japan seems to exert pressure after international meetings: “The IMF and G7 and G20 ended in mid-October so either the Japanese wanted to avoid criticism about depreciating its currency or it received the GREEN LIGHT from the G7 members to get more aggressive on its QE efforts. Readers of NOTES FROM UNDERGROUND can revisit a blog post from October 15, 2012 when I noted that the G7 communique seemed to give the Japanese authorities a ‘wink’ in its efforts to weaken an overvalued YEN.” .. Yra Harris lists other factors as well on why the big push on QE now: a belief that it will work synergistically with implementing higher consumption taxes to drastically reduce the massive public debt .. also another hope is taking actions similar to what Bernanke did to encourage risk asset buying from financial repression: “The Government Pension Investment Fund (GPIF), Japanese insurance firms, banks and annuity investors will have offloaded JGBs to the ultimate buyer of last resort, THE BOJ. It seems Governor Kuroda has initiated Bernanke’s PORTFOLIO BALANCE CHANNEL and it’s pension funds are disposing of riskless assets and undertaking the purchase of domestic and foreign equities, as well as foreign bonds, an ‘all in’ play by the BOJ. Bernanke used financial repression to motivate private investors to take on more risk while its public sector entities buying equities in Japan.”
LINK HERE to the source article
11/07/2014 - Chris Martenson on Financial Repression
Podcast discussion on how the Federal Reserve is destroying consumer savings, how central banks will be to blame for the coming bond collapse, how trying to keep gold & silver prices ‘corralled’ is part of the official plan.
11/07/2014 - The Amphora Report’s John Butler Talks Financial Repression
Special Guest: John Butler – Amphora
“The whole point of financial repression is to make it difficult or impossible for an investor to protect themselves”
John feels Financial Repression “is now extremely broad based (globally) and in fact you have to look very closely to find countries not actively pursuing some mix of Financial Repression policies.”
A NEGATIVE SUM GAME
Butler has argued in his Amphora Report that competitive currency debasement is “is not a zero sum game but rather a negative sum game because policy makers don’t realize that by trying to devalue against each other, unseen they are undermining the very credibility of unbacked fiat currencies generally.”
Increasing the BRICS are “becoming increasingly wary of where all this is going and as a consequence are diversifying not only their fiat currency reserves but are diversifying into gold, oil fields and real assets generally.”
HOW INVESTORS PROTECT THEMSELVES
“The only free lunch in economics is DIVERSIFICATION. The problem is that in a world of Financial Repression, the way you diversify yourself is very different than a world where financial represion is not an issue.”
“There is no way out but Currency Debasement”
11/07/2014 - Chris Martenson Talks Financial Repression
Special Guest: Chris Martenson PhD – PeakProsperity
FINANCIAL REPRESSION
“When governments get into too much debt there are only so many ways to get themelves out from under the debt.” There is:
In reality, the third is the only politically viable solution. Financial Repression ” the cornerstone involves taking a little from everybody and giving it to a couple of favored parties”. To do this involves three basic elements:
THE COMING CRISIS
True wealth NEVER gets destoyed, it only gets transferred!”
Chris points out that wealth is never destroyed. but rather it is the claims on wealth which are destroyed during a crisis. “A profound currency accident is coming” according to Chris where he “would not be surprised to see the Yen be completel obliterated just like the the Zimbabwe dollar.” His strong recommendations are:
Wealth can no longer be stored in paper currency or “paper” claims in a Fiat Currency System.
11/06/2014 - Japan Committed To Financial Repression 
“Whether or not BoJ governor Haruhiko Kuroda’s ‘shock and awe’ will provide the necessary uplift to the economy remains to be seen but he has certainly committed himself to ‘financial repression’ more than any other nation. Furthermore, with the Fed ending its QE program, Japan is at the forefront of leading the currency wars.”
– Sean Darby, strategist at investment bank Jefferies
LINK HERE to the source article
11/05/2014 - Tim Price on Into The Unknown: Central Bank Financial Repression Will Go On …
In his latest letter, Tim Price stresses the price distortions in the financial markets .. emphasizes that although Federal Reserve asset purchases have abated (for now), central bank financial repression “will go on” .. on investments, Price sees bond prices as being “grotesquely expensive”, continues to like only quality listed businesses trading at or well below a fair assessment of their intrinsic worth .. “Pretty much everything else amounts to nothing more than paper, prone to arbitrary gusts from some very powerful, and very windy, bureaucrats. We note also that former Fed chairman Alan Greenspan, no doubt looking to polish his legacy, managed to front-run the Fed’s QE announcement by pointing to the merits of gold within a government-controlled, fiat currency system. Strange days indeed.”
LINK HERE to the source article
11/04/2014 - Governments Using Financial Repression To Pay Down Debt
“Financial repression always consists of a combination of different measures, which lead to a significant narrowing of the universe of investable assets for investors. Money, which in a more liberal investment environment would have flowed into other asset classes, is channeled in a different direction. The goal of financial repression is an indirect reduction of government debt by means of the targeted manipulation of the cost of government debt, most of the time accompanied by steady inflation. Financial repression is ultimately a government-imposed transfer of wealth .. A preferably “quiet debt reduction” is supposed to be achieved by the following measures:
One of the most important goals of financial repression is to hold nominal interest rates below the rate of price inflation. This lowers the government’s interest expenses and contributes to a reduction in the real value of the debt burden.
– Ronald-Peter Stoferle, Incrementum AG Liechtenstein
LINK HERE to the source article
11/04/2014 - STRANGE THINGS ARE HAPPENING IN THE BOND MARKET!
“There is a very simple lesson that when the markets finally break through the manipulation they move to price in deflation and not inflation. This is key because it means financial repression has failed.”Analyst Russell Napier
The Economist’s Buttonwood column described it as:
“Letting go of Daddy’s hand,” and cautioned, “[W]e may indeed get to see QE4 rolled out. Daddy might have let go of the market’s hand for the moment but he’s still close by.”
“That coinage nicely speaks to the juvenilisation to which markets have been reduced during six long years of:
Financial Repression,
Interest Rate Manipulation, and
The Unprecedented Expansion of central bank balance sheets.
Only the asset purchases have abated (for now): the Financial Repression, one way or another, will go on. Whether the asset purchases have really disappeared or merely been suspended will be a function of how risk markets behave over the coming months and years.
And
“Although our crystal ball is no more polished than anyone else’s, we would not be surprised to see petulant markets rewarded with yet more infusions of sweets. Our fundamental views are clear:
LINK HERE to the source article
11/04/2014 - IT BEGINS! GERMAN BANK CHARGING NEGATIVE INTEREST TO RETAIL CUSTOMERS
On November 1st, the first European bank has passed along these negative interest rates to its retail customers.
So if you maintain a balance of more than 500,000 euros at Deutsche Skatbank of Germany, you now have the privilege of paying 0.25% per year… to the bank.
We’ve already seen this at the institutional level: commercial banks in Europe are paying the ECB negative interest on certain balances.
And large investors are paying European governments negative interest on certain bonds.
Now we’re seeing this effect bleed over into retail banking.
It’s starting with higher net worth individuals (the average guy doesn’t have half a million euros laying around in the bank). But the trend here is pretty clear – FINANCIAL REPRESSION is coming soon to a bank near you.
It almost seems like an episode from the Twilight Zone… or some bizarre parallel universe. That’s the investment environment we’re in now.
Bottom line: if you’re responsible with your money and set some aside for the future, you will be penalized. If you blow your savings and go into debt, you will be rewarded.
If we ask the question “cui bono”, the answer is pretty obvious: heavily indebted governments benefit substantially from zero (or negative) rates.
Case in Point:
the British government just announced that they would pay down some of their debt that they racked up nine decades ago.
In 1927, then Chancellor of the Exchequer Winston Churchill issued a series of bonds to consolidate and refinance much of the debt that Britain had racked up from World War I and before.
This debt is still outstanding to this day. And the British government is just starting to pay it down– about $350 million worth.
Think about it– $350 million was a lot of money in 1927. Thanks to decades of inflation, it’s practically a rounding error on government balance sheets today.
This is why they’re all so desperate to create inflation… and why they’ll stop at nothing to make it happen. (It remains to be seen whether they’ll be successful, but they are willing to go down swinging…)
What’s even more extraordinary is how they’re trying to convince everyone why inflation is necessary… and why negative rates are a good thing.
On the ECB’s own website, they say that negative interest rates will “benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.”
I’m not sure a more intellectually dishonest statement could be made; they’re essentially telling people that the path to prosperity is paved in debt and consumption, as opposed to savings and production.
LINK HERE to the source article
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