Article & interview on perspective by Tim Price on financial repression insight on UK Tip TV .. Rather than saving the global economy, very low interest rates are a ’coiled spring’ for trouble ahead .. very low interest rates are implementing financial repression, which involves deliberately holding down interest rates below inflation & keeping government borrowing costs low .. “People are piling into stocks because they’ve frankly got no other choice, but I think we’ve seen how this film ends.” .. Price thinks that investing in Asia is the best bet to deal in this environment.

LINK HERE to the source article and 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.

Pater Tenebrarum essay on the adverse unintended consequences of banks imposing negative interest rates on deposits, all a result of financial repression .. he points out how banks have recently started to charge interest on bank deposits in Germany, & now banks elsewhere are doing the same: “Other banks were presumably watching to see if depositors would flee, and when that didn’t happen, Commerzbank decided to go down the same road.” .. the essay quotes Austrian School Economist Ludwig von Mises on what happens when interest payments are abolished or go negative – owners of capital will begin to consume their capital & society will become impoverished: “.. there cannot be any question of abolishing interest by any institutions, laws, and devices of bank manipulation. What can be abolished by laws and decrees is merely the right of the capitalists to receive interest. But such laws would bring about capital consumption and would very soon throw mankind back into the original state of natural poverty.”

LINK HERE to the source 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: Axel Merk

FINANCIAL REPRESSION

“In a nutshell, it is ways governments are trying to deprive you of purchasing power because the government has too much debt and must debase the value of the debt.”

“Through the backdoor the government is trying to take some of your net worth …. It is a wealth TRANSFER from savers to those who have piled up a excess debt” “It is most commonly done through negative real interest rates!“

CENTRAL BANK INFLATION GOALS

“You often don’t have enough inflation in the world when you have too much debt”.

This is why the US, the EU and Japan are trying frantically get inflation up, despite it being bad for the average citizen or saver.

Axel Merk believes that if in 10 years we were to get back to historic bond level,s then there would be an addition $1 trillion in government interest rates. The fed is simply not going to allow that and therefore interest rates are realistically not going up.

NEGATIVE REAL INTEREST RATES

Even a Fed Funds Rate of 1.75 next year would likely still mean we would have negative real interest rates.

SOCIAL UNREST & POLITICAL INSTABILITY

“Policy makes never blame themselves for the problems they have. They always blame a minority, the wealthy or foreigners”

When you have too much debt political stability declines. In parts of the world where food and energy are bigger part of their disposable income you can expect social unrest as these inflation policies take on greater roles.

It is a fact that austerity policies fail at the polls as we have seen in Europe. In the US we are electing increasingly more populist politicians which means entitlement reforms have a slim chance of happening. Therefore “Kicking-the-Can-Down-the-Road” and reliance on the central bank to keep rates low.

We have former super powers on the decline and emerging super powers on the rise. We can only hope that this transition will be peaceful. A central banker told Axel prior to his starting his funds that “We can only hope the adjustment process will be slow and gradual”

JAPAN IS AHEAD OF US IN THIS EVOLUTION

“Liquidity has dried up in the JGB market which means that at some point it is easier to have some sort of crisis”

REGULATION

Regulations in general are about barriers to entry. Therefore it limits risk taking which inevitably leads to less economic growth. By simply keeping interest rates low it doesn’t put sufficient pressures on the system for structural reforms. As low interest rate policies continue to fail the political bias will be to “double down” which means the problems get even worse. Eventually the structural changes required becomes too great to be politically possible without hiding behind a major crisis.

SWISS NATIONAL GOLD REFERENDUM

The Swiss are fiercely independent and don’t like the dependencies which the Euro peg to the Swiss Franc are creating. They don’t like the debt an unelected central bank is piling onto the nation. What is important is that the referendum is trying to force more discipline into monetary policy.

WHAT INVESTORS MUST REALIZE

Cash is no longer safe anymore! The purchasing power of cash is at risk. Once investors realize this the investment world is open! They then need to invest based on the risk spectrum.

• EQUITIES – Prices are elevated because of the actions of central banks ,
• BONDS – “I wouldn’t touch with a ten foot pole in the current environment.
• DIVERSIFICATION suggests adding Currencies and Precious Metals.
• BE ALERT – Have your own opinion after building your own framework

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.

Brinker Capital Senior Investment Manager, Jeff Raupp, CFA, provides commentary on the issues surrounding the debt burdens of many developed governments today, how this era of financial repression may impact investors .. 5 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.

Article from Korean news source (in English) highlghts how low interest rates mean Koreans are struggling to save .. “Low interest rates on time deposits mean that Koreans can’t save the way they used to .. Until the 1990s, when the average interest rate hovered at around 10%, a common way to build up assets in Korea was to set aside a portion of wages in the bank every month as a time deposit – after a while, you would be able to buy property with the savings .. not any more .. “Korean consumers will have to live with such low-interest bank savings for a substantial period of time as the country’s central bank is likely to keep its benchmark interest rate in response to the continued quantitative easing of major economies like Japan and the European Union.” .. when you take into account the inflation rate in Korea, you have negative real interest rates, characteristic of financial repression.

LINK HERE to the source 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.

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.

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: 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

1. “Hold onto your hat” – Things are going to get real interesting starting in 2015,
2. Doug sees turmoil coming which we haven’t seen since the start of the Industrial Revolution or the French Revolution,
3. Hold gold and silver. Some should be in coins in your possession.

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.

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.

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

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 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

1. A complete breakdown in central bank credibility lies ahead,
2. A complete collapse of the financial system will occur when interest raters normalize. The Fed won’t initiate this normalization but rather the free market will,
3. A resulting global economic collapse will wipe out tax bases and therefore debts and deficits will skyrocket
4. Because of this threat, more QE, more financial repression and further market intrusions lie ahead.

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.

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.”

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.

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.

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: 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:

Tim believes Japan is presently the ‘dress rehearsal’ and the rest of the world will be the main event.

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.

Bill Gross, the 69-year-old billionaire co-founder of Pacific Investment Management Co., told Bloomberg Radio – AUDIO

Click to Play

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

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.

“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

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.

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

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.

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

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.

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

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.

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.

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: 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”

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.

Special Guest: Chris 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:

1. Austerity,
2. Default on the Debt or
3. Financial Repression

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.

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.