Forbes posted essay on the emerging clash between the plans of Alibaba to develop their financial offerings in China & the Chinese state policy of financial repression .. Alibaba’s plans are to expand their offerings in the financial sector include offering loans at 5.5% .. China has a deliberate policy of financial repression forces savers to buy property, buy life insurance or deposit money into a bank account . the savings deposit rates are very low, typically 1% .. inflation is higher than that, so depositors are losing money by depositing .. “Financial repression is not bullying people into giving you their money, it’s restricting options so that interest rates stay low. And as I say this is a deliberate public policy in China, to ensure that interest rates do stay low by limiting those savings options .. All of which makes this a most interesting little scenario. The current financial repression means that if Alibaba is able to continue with its plans then it will have a very successful product on its hands. But of course, there are those who benefit from the current repression and will they allow them to continue? In the long run the end of those limitations upon how the Chinese may save will benefit everyone. And they’ll almost certainly happen as well, in that long run. The question is going to be well, what happens in the short term?”

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.

“The Canadian government has had to warn its citizens not to carry cash to the USA because the USA does not presume innocence but guilt when it comes to money. Over $2.5 billion has been confiscated from Canadians traveling to the USA, funding the police who grab it .. If you are bringing cash to the land of the free .. they are FREE to seize all your money under the pretense you are engaged in drugs with no evidence or other charges .. It costs more money in legal fees to try to get it back so it is a boom business .. only one in six people ever try to get their money back .. Money confiscated is usually allowed to be kept by the department who confiscated it .. This is strangely working its way into funding police and pensions .. This is identical to the very issue that resulted in the final collapse of Rome when the armies began to sack cities to pay for their pensions.”

– 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.

WallStrForMainStr Interviews Gordon T Long:

“We have over 250 interviews with top guests in discussion. The Gordon T Long discussion is over an hour long and one of the best ones we’ve done all year.”

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

American Thinker posted essay on the fusion of government & major corporations we have come to call “crony capitalism” .. the essay takes the position that crony capitalism evolves as the private sector’s creative powers gradually decay amidst a government intent on the confiscation & redistribution of wealth .. “As the political state is incapable of creating wealth, as wealth can only arise in the private sector, the very act of confiscation and redistribution of that private sector wealth severely inhibits the investment that sustains the private sector’s creation of it. The result is that the private sector’s creative powers gradually decay. The source of new wealth cut off, wealth depletes. This degradation can only be delayed, not abated, by some sort of crony capitalism in which the state attempts to force private investment either by mandates and penalties or giving special subsidies; by picking winners .. I’ve come to the conclusion that no matter how far left the political philosophy that guides political decisions, the net depletion of economic wealth to be distributed will always lead to some sort of crony capitalism. As wealth depletion continues from weak private investment, confiscatory taxation, restrictive labor laws and the like, the welfare state relies ever more heavily upon coercion, both social and legal, and upon economic subsidies to favored firms to sustain itself .. France exemplifies this system.”

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.

“The G20 Central Bankers and Finance Ministers met in CAIRNS, Australia, Sept 21st, 2014. This Summit reflects the attitudes about manipulating the economy where they just do not get it .. I warned what Obama was up to with the pension funds in trying to create an Infrastructure Fund ….. Calpers,California pension fund, is selling off $4 billion of hedge funds to divert that money to be wasted in Obama’s dream project – the infrastructure fund .. This idea was floated and endorsed at CAIRNS ..  These are being called Public Private Partnerships (PPP), and will be extremely critical in the future for here lies the final destruction of the pension funds precisely as Japan bankrupted the Japanese Postal Saving Fund using that private money for political purposes to try to stimulate the economy, which failed. With PPP, public funds will be sold to the public as being a highly professional long-term investment that will further shrink economic growth and liquidity. They cannot possibly work .. How do pension funds make money on repairing infrastructure? Toll booths will pop up everywhere.”

– 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.

Special Guest: Mike (Mish) Shedlock – MISH’S Global Economic Trend Analysis

Mish Shedlock talks Financial Repression with Gordon T Long.

FINANCIAL REPRESSION

“Financial Repression is a set of fiscal & monetary policies for the express benefit of the ruling class – the politicians, the banks, and the already wealthy at the expense of everyone else”

THE GOAL

“It is about coercing the government into doing things that are in the express interest of the ruling class. The already wealthy are the ones who gain the most”

MISH ON “WAR”

“War is another example of Financial Repression. Who benefits?  The war mongers – the banks, politicians and wealthy. You can’t even get elected if you don’t support war because the whole Military-Industrial Complex is behind it and you will be labeled ‘weak on defense’”

THE COMING CURRENCY CRISIS

Mish believes a currency crisis is coming which is most likely to start outside the US in likely Europe or Japan.

“This environment fosters banks and the wealthy to speculate. When it ends badly and we have to bail them out the average guy on the street is going to pay for it – again”

FINANCIAL BUBBLES

“Financial Bubbles are a direct result of all these policies for the benefits of the banks and wealthy …. That is what the Fed does. That is what central banks do. They blow bubbles over time for the benefits of banks and wealthy”

MISH ON KEYNESIAN ECONOMICS

“No one has gone back and proven how idiotic it all is. This idea that you can pay to dig a ditch and then have someone else fill it back up and this will add economic benefit is lunacy! Yet the average Keynesian believes that. A sixth grader would find in inherently ridiculous!”

MISH’S VIEW ON HOW INVESTORS CAN PROTECT THEMSELVES

“Don’t participate in bubbles!! Get out of the financial markets. Buy some Gold and wait.”

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: Douglas E. French – Author, Past President of the Ludwig von Mises Institute and noted Casey Research Contributor

“The biggest bubble we have is US Treasuries. The believe you can’t get hurt is a quality you always see in a bubble. The idea that lending an entity, that is $17T and going to $18T and beyond in debt, and will never be able to pay that back and the idea that you will get 2.5% for 10 years and it is ‘return free risk’ is certainly bubble territory!“

FINANCIAL REPRESSION

“You have PhD’s at the Fed trying to create economic growth with inflation and low rates. The repression is that people like you and I won’t ever be able to retire because we won’t be able to get any return on our money so we can prop up the government and keep it in business.”

This is the overall Macro Strategy of the government but central planning has never worked! ….. They are essentially trying to print their way out of a jam! ……. Because of Financial Repression almost ¾ Trillion dollars has gone to the government that should be in private hands!!!”

FRENCH WARNS INVESTORS

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 Ponzi Economy (from John Hussman)

The central point is this. The U.S. economy has shifted course from one of productive capital accumulation to a reliance on continuous expansion of debt in excess of the economic ability to repay it. Call this the Ponzi Economy.

The U.S. Ponzi Economy is one where:

1. Domestic workers are underemployed and consume beyond their means;
2. Household and government debt make up the shortfall;
3. corporate profits expand to a record share of GDP as revenues are sustained by household and government deficits;
4. Local employment is replaced by outsourced goods and labor;
5. Companies refrain from productive investment, accumulate the debt of other companies and issue new debt of their own, primarily to repurchase their own shares at escalating valuations;
6. Our trading partners (particularly China and Japan) become our largest creditors and accumulate trillions of dollars of claims that can effectively be traded for U.S. property and future output;
7. Fed policy encourages the yield-seeking diversion of scarce savings toward speculation in risky securities; and
8. As with every Ponzi scheme, everyone is happy as long as nobody seeks to be repaid.

LINK HERE to the article chart taken from

HUSSMAN: Though a certain amount of disruption resulting from overvalued financial markets, compressed risk premiums, and excessive debt issuance is baked-in-the-cake, there is also a ray of hope. Regardless of the point the U.S. economy has arrived to, there is room to improve matters by making each next decision well. Those next decisions should include ……

“an abandonment of financial repression by the Federal Reserve and a gradual normalization of interest rates that would increase savings, discourage speculative yield-seeking, and allow the markets to signal supply and scarcity without distortion“

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.

Austrian School Economist & Director of International Development withEuro Pacific Capital firm Dickson Buchanan compares the relative safety between the so-called safe-haven investments of government bonds versus the “barbarous relic” of gold .. sees the government bond market as being under endless interest rate suppression (financial repression) .. “Today we live in the monetary madhouse erected by our central banks. Distortion and irregularity prevail, not clarity and stability. Instead of private investors looking for win-win profit opportunities in a free market for money and credit, we have central banks using ‘forward guidance’ to dictate where capital should flow. Today’s bond market and the giant balance sheet of the Fed are a direct result of their intervention .. Government debt is simply not a safe play in today’s markets. It’s either speculative or it’s suicidal. On the other hand, there is no speculation about gold. The yellow metal’s value has remained relatively stable for thousands of years without a government’s promise. Gold is no ‘barbarous relic’ – it’s our financial salvation.”

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.

Bloomberg article highlights how reckless derivative speculation is in big banks which are being supported by the government .. Danielle Park comments on this article: “When we don’t learn, we are doomed to keep suffering…the investment banks are still backed by the public purse today and are now bigger and bolder in concentrated risk bets than ever before.” ..Bloomberg notes that Citigroup now has the largest stockpile of interest rate swap derivatives – a type of derivative that can swing in value when central banks raise rates: “More than 92% of the bank’s derivatives don’t trade on exchanges, making it harder for regulators to spot dangers in the market .. financial repression of interest rates is making it harder to profit from interest rate swap derivatives: “Reduced volatility associated with Fedpolicies to suppress interest rates is making it harder to profit from swaps.”

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.

BMG Bullion’s Nick Barisheff sees government policy described as financial repression as a hidden form of taxation & a hidden method of transferring wealth from investors to the government .. advises investing in gold as the most effective solution to financial repression .. “Financial repression is a hidden form of taxation and a hidden method of transferring wealth from investors to the government. Again, this makes sense when we accept that the debt owed to privately owned banks, like the Federal Reserve, must be addressed through indirect means. Without the option of austerity, blatant direct taxation and increasing interest rates, governments are forced to employ the three methods of debt reduction available to them in a more secretive way” – indirect taxation inflation; the involuntary assumption of government debt by its citizens; debasement or inflation brought about through unbridled currency creation & capital controls.

Nick Barisheff BMG Bullion www.bmgbullion.com

LINK HERE to the paper

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.

St. Gallen Symposium with UBS, HSBC, Credit Suisse, Zurich Insurance Group.. a year old but still relevant

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’m looking at the enormous risk of holding money or other assets in a bank. We know that banks were bankrupt, and since then nothing has changed. The balance sheets haven’t improved at the banks. The only thing that has happened is the banks now have the right to value toxic debt at maturity rather than at market value. We know that if they valued these toxic assets at market value, most banks would not survive .. Banks are paying almost zero interest to most customers, and after fees it could even be a negative return. And the risk of holding your money in the bank is bigger than ever .. Governments have increased their debts and saved the banks. But after Cyprus most countries have adopted the bail-in principle. This means that next time around, and there will be a next time, anyone who has assets in the bank is likely to lose either much or all of them. But we won’t just have bail-ins. There will also be forced saving or even confiscation of investor money. Governments will force investors to put a major part of their funds in the bank into government securities to finance the increasing deficits that we will see in the next few years .. Coming back to the massive derivatives positions held by banks in the U.S., they have an unimaginable several hundred trillion dollars’ worth of derivatives. The largest part of this potentially lethal derivatives bubble is in government bonds. That’s the backstop. So it’s critical for governments to keep bond rates as low as possible to keep the banks solvent, because if rates go up, the derivatives implosion will destroy the banking system. This would have horrific consequences for the world .. So governments are doing all they can to keep interest rates low. But they will fail. Because of the money all governments, including the U.S. government, will print in the next few years, at some point we will see the derivatives implosion that will trigger the end of the current financial system.”

– Egon von Greyerz

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.

7.6M AMERICANS LIVING ABROAD feel like they are now being “treated like crooks” by being cut off by banks and brokerages as a result of US FINANCIAL REPRESSION.

“A U.S. crackdown on money laundering and tax evasion is the excuse for the blatant and punitive abuse”.

Many registered firms are being forced to close accounts for Americans abroad or decline to open new ones, in order to avoid:

• Increased compliance costs,
• The consequences for potential errors (punitive US regualtory fines).

FOREIGN ACCOUNT TAX COMPLIANCE ACT (Fatca).

• Congress enacted it in 2010 after learning that foreign banks, especially in Switzerland, had profited by encouraging U.S. taxpayers to hide money with them abroad. The main provisions of Fatca took effect in July.
• As a result, foreign financial firms must report to the Internal Revenue Service investment income and balances above certain thresholds for accounts held by U.S. customers.
• Nearly 100,000 banks and other companies have registered with the IRS.
• If they hadn’t, all their customers would have 30% withheld from income received from U.S. sources, such as interest and dividends.
• A bank official must sign a statement guaranteeing compliance with Fatca. “Banks look at this from a liability perspective,” he said. “The less the bank has to report to the IRS, the less risk there is.”

AGGRESSIVE ENFORCEMENT

The heightened enforcement of rules is against so-called illicit finance, such as money laundering or financial transactions that breach U.S. sanctions. Enforcement is again intensifying after a pause during the financial crisis, making it more expensive or difficult to move money from one country to another. Among those affected by the tightened policies are retirees of modest means

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

LINK HERE to the article

BEING INTENTIONALLY PUT IN PURGATORY?

Americans abroad are also encountering troubles with U.S.-based investment accounts. In recent months, firms including Fidelity Investments, Charles Schwab Corp., T. Rowe Price and others have told overseas investors and advisers they may no longer buy or trade mutual funds.

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.

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.

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.

$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….

THE POWERS TO BE ARE GETTING DESPERATE!

Expect FINANCIAL REPRESSION to accelerate & become more aggressive.

Keynesians See FINANCIAL REPRESSION

as the only option.

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.

“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.

Guess where most of the new mothers below shop??

Any Correlations Here?

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 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:

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.