Circulation credit means that banks lend money, and thereby expand money supply, without backing them by real savings (or reduction of consumption). This circulation credit is creation of money “ex nihilo”. Booms as well as busts are damaging because they slow down long-term investments with the consequence that resources in fluctuating economies are lacking.

According to Mises, the problem is not low consumption but low saving.

Why Fiat Money Is “A Large-Scale Fraud System” 07-11-14 Ryan McMaken of Mises Economic blog,via ZH

The Center for Financial Studies in Frankfurt reports on a recent talk given by Thorsten Polleit:  

READ MORE: Thorsten Polleit on the “planned chaos” of money

A Core Tenet is the De-Incentive & Discouragement of SAVINGS

We had CAPITALISM:

SAVINGS was reinvested as CAPITAL INVESTMENT

We now have CREDITISM:

CREDIT is created and spent on CONSUMPTION

According to Mises, the problem is not low consumption but low savings

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.

Expropriation Is Back on the Policy Table as Global Economic Woes Worsen –  Martin Armstrong of Armstrong Economics,

I have gone on record that the most dangerous organization is the now French led IMF with Christine Lagarde at the helm, which has presented a concept report that debt cuts for over-indebted states are uncompromising and are to be performed more effectively in the future by defaulting on retirement accounts held in life insurance, mutual funds and other types of pension schemes, or arbitrarily extending debt perpetually so you cannot redeem. Yes you read correctly, The new IMF paper is described in great detail exactly how to now allow the private sector, which has invested in government bonds,  to be expropriated to pay for the national debts of the socialist governments.

I have been warning that there is an idea that has been running around behind the curtain that the national debt of the USA could be settled by usurping all pension funds in the country. Here is a remarkable blueprint that throws all previous considerations concerning the purchase of government bonds over the cliff. The IMF working paper from December 2013 states boldly:

Read More

 Is Christine Lagarde The Most Dangerous Woman In The World?

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.

Regulators Ready Money-Fund Rules 07-10-14 WSJ

FINANCIAL REPRESSION REGULATIONS WILL PREVENT YOU FROM EXITING YOUR MONEY MARKETS (CASH) AT TIME OF TURMOIL

SEC Vote Could Come as Early as This Month

Money funds are cash-like instruments used by millions of individuals, businesses and municipalities to safely park cash.

The plan would allow money funds to temporarily block investors from withdrawing their money in times of stress, or require a fee to redeem shares.

Other regulators, including members of the Financial Stability Oversight Council, have said such redemption restrictions could spur, rather than curb, investor stampedes.

Yellen called for what she termed:

“A more robust macroprudential approach.”

In fact she used that word macroprudential no fewer than29 times. For those not fluent in Fedspeak, what she meant is that we can deal with financial instability through increased regulation procedures

Monetary Policy and Financial Stability – Remarks by Janet L. Yellen Chair Board of Governors of the Federal Reserve System

The 2014 Michel Camdessus Central Banking Lecture International Monetary Fund Washington, D.C.

July 2nd, 2014

In closing, the policy approach to promoting financial stability has changed dramatically in the wake of the global financial crisis. We have made considerable progress in implementing a macroprudential approach in the United States, and these changes have also had a significant effect on our monetary policy discussions. An important contributor to the progress made in the United States has been the lessons we learned from the experience gained by central banks and regulatory authorities all around the world. The IMF plays an important role in this evolving process as a forum for representatives from the world’s economies and as an institution charged with promoting financial and economic stability globally. I expect to both contribute to and learn from ongoing discussions on these issues.

• *YELLEN: `WE HAVE MUCH TO LEARN’ IN MACROPRUDENTIAL OVERSIGHT
• *YELLEN: MACROPRUDENTIAL RULES SHOULD BE MAIN STABILITY DEFENSE
• *YELLEN: STABILITY BEST PROMOTED BY MACROPRUDENTIAL OVERSIGHT

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 principal victims of the Fed’s policies are those at or near retirement who face a Hobson’s Choice of gambling in the stock market or getting nothing at all. A summary of these deleterious effects on retirement income security, explained in more detail below, includes the following:

1. Increasing income inequality. Zero rate policy represents a wealth transfer from prudent retirees and savers to banks and leveraged investors. It penalizes everyday Americans and rewards bankers, hedge funds and high-net worth investors.

2. Lost purchasing power. Zero rate policy deprives retirees and those nearing retirement of income and depletes their net worth through inflation. This lost purchasing power exceeds $400 billion per year and cumulatively exceeds $1 trillion since 2007.

3. Sending the wrong signal. Zero rate policy is designed to inject inflation into the U.S. economy. However, it signals the opposite – Fed fear of deflation. Americans understand this signal and hoard savings even at painfully low rates.

4. A hidden tax. The Fed’s zero rate policy is designed to keep nominal interest rates below inflation, a condition called “negative real rates”. This is intended to cause lending and spending as the real cost of borrowing is negative. For savers the opposite is true. When real returns are negative the value of savings erodes – a non-legislated tax on savers.

5. Creating new bubbles. The Fed’s policy says to savers, in effect, “if you want a positive return invest in stocks.” This gun to the head of savers ignores the relative riskiness of stocks versus bank accounts. Stocks are volatile, subject to crashes, and not right for many retirees. To the extent many are forced to invest in stocks, a new stock bubble is being created which will eventually burst leaving many retirees not just short on income but possibly destitute.

6. Eroding trust and credibility. Economics has been infused in recent decades with the findings of behavioralists and social scientists. While this social science research is valid, the uses to which it is put are often manipulative and intended to affect behavior in ways deemed suitable by Fed policy makers. This approach ignores feedback loops. As retirees realize the extent of market manipulation by the Fed they lose trust in government more generally.

 The Fed has resorted to repetitive bouts of cheap money for extended periods. This monetary ease has found its way into inflated asset values that in turn provided collateral for debt-driven consumption. These binges drove the economy until the inevitable asset bubble collapses caused a contraction in consumption and launched another cycle. At no time were savers rewarded for prudence.”

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 Global Hunt for Taxes IceCap

IMF’s Recommendation for a Global Wealth Tax

FULL IMF REPORT

“A sharp deterioration of the public finances in many countries has revived interest in a “capital levy” – a one-off tax on private wealth – as an exceptional measure to restore debt sustainability”

Read More

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.

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.

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.