MONEYWEEK.COM article points out the worse things get on the European financial/economic crisis, the more pressure there is on the European Central Bank (ECB) to print money

– stocks will likely go up as this happens on the anticipation that the ECB will given in & start money printing

.. “TheECB would print money and use it to buy eurozone government bonds, in order to prop up the region’s banking sector, and to encourage more risk-taking by lenders and investors. Of course, any hint of more money-printing always cheers the market, and European stocks reacted well to the news.”

.. the article points to how U.S. & UK stocks have similarly reacted positively on all the money printing

.. whether all this money is good for the economy or whether it even benefits the economy in any positive way is another question

.. in terms of investing, the article suggests sticking with countries that are looking to do more money printing & that have relatively inexpensive stock markets, such as Europe or Japan

.. the article emphasizes the approach of financial repression taken by the U.S. & UK in keeping interest rates down & allowing inflation to rise in order to pay off some government debt via inflation, rather than by defaulting or cutting back spending

.. most western world governments are in this bind, so that “we could see interest rates staying lower than markets expect for some time. And in the longer run, we could see a lot more inflation than we’ve been used to as well”

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.

Businessweek reports that earlier this month, the Russian government seized its citizens’ pension contributions – 6% of Russians’ salaries is invested in financial markets, earmarked for their retirement, but this year that $8 billion in contributions will finance Russian spending instead .. “Russia is not the first country to confiscate pension assets to pay its bills, and it probably won’t be the last .. For governments facing financial pressure, billions of dollars of pension assets proved too tempting to resist.” .. Argentina recently “nationalized” $30 billion of pension assets & Hungary, Poland, Portugal, & Bulgaria have done the same ..
LINK HERE to the article

“In most countries, it’s extremely unlikely that the government will outright seize pensions. In America, it’s nearly impossible to change Social Security or Medicare benefits, and the idea of the U.S. government confiscating everyone’s 401(k) is unimaginable to all but the most ardent conspiracy theorists.

However, it’s not unrealistic to think that the American government could take a bigger bite out of individuals’ 401(k) assets with higher tax rates: Income taxes are at historic lows, and if the American government needs to raise revenue in the future, taxes on 401(k) withdrawals may be higher (along with taxes on everything else).

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.

Casey Research’s Nick Giambruno sees an emerging pattern of wealth confiscation globally, identifies Portugal as a likely next country candidate in this regard .. “It starts out with government officials telling you everything is all right—when clearly everything is not all right.” .. here is a summary of the pattern:

1. COUNTRY GETS INTO SERIOUS FINANCIAL TROUBLE

2. OFFICIAL GOVERNMENT DENIALS

3. SURPRISE BANK HOLIDAY/CAPITAL CONTROLS

4. CONFISCATION

Portugal is clearly at the first stage in the pattern—serious financial trouble .. recommends taking your money out of Portuguese banks while you can .. “When it comes to protecting yourself from confiscations, capital controls, bank holidays, and other desperate measures of an out-of-control government, it’s absolutely essential to take action before it’s too late .. While the window is still open for those in the U.S. to protect themselves, the warning signs are clearly there. And the writing is on the wall.” .. another example of financial repression.

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.

“‘Since the financial crisis, the world’s central banks have collectively put more than $10 trillion into the financial system. This kind of money printing is literally unheard of in modern history. And it has set the stage for a roaring wave of inflation.’ — Graham Summers, analyst .. With the world in a deflationary recession, I now doubt we’ll see new highs in the D-J Averages. But with enough QE, it might be possible .. With deflation enveloping the world, investors have been racing to buy Treasury bonds, whose yields have sunk to record lows. My survival choice in investments continues to be silver and gold .. Today it finally happened: I received an advertisement from a firm featuring a scare I’ve been waiting for. There are two ways for the government to handle its outrageous debts. The first is reneging, as per Argentina, but this is unthinkable. The second way is via inflation — inflate enough and your debts appear to shrink. Ah, but there’s a third way, and it’s confiscation of wealth. Don’t think this is impossible, because governments will do whatever they have to to remain in power. How about confiscating all individual wealth above $200,000, for which the government will give you stubs which will say IOU. This will be a switch on the 1933 confiscation of gold. This time it may be confiscation of cash. Finally, something new to worry about.” .. it’s default or financial repression, take your pick.

– Richard Russell*

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.

• WHOLESALE SECURITIZATION OF LOANS
• REPO COLLATERAL ACTIVITES OF THE SHADOW BANKING INDUSTRY

NOT THE RETAILING OPERATIONS OF MAKING (EXPENSIVE) SMALL BUSINESS LOANS!

Small Business has historically been the life blood of America.

It no longer is for a consolidated banking industry.

THE BANKING INDUSTRY

IS NO LONGER EFFECTIVELY

SERVING AMERICA!

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.

Government Policy was about:

“positively incenting & directing actions”

Government Policy is now about:

“negatively forcing & impeading actions”

READ: Treasury Officials Prepare Options to Address Inversions 08-19-14 WSJ

Treasury Department officials are assembling a list of administrative options for Secretary Jacob Lew to consider for ways to deter or prevent U.S. companies from reorganizing overseas primarily to avoid paying federal taxes

Some Democrats in Congress believe lawmakers should pass a stopgap measure to deter companies from pursuing the deals, while some Republicans have said the only way to stop inversions is through an overhaul of the tax code.

others believe the White House has ample flexibility to step in and have raised different ideas for administrative actions, including

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.

Now the government is forcing Public Pensions into Stocks

Some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys

UNDERSTAND

“SHORTING” & “PUT DERIVATIVES”

to know how

THE GREATEST WEALTH TRANSFER IN HISTORY

IS BEING SET-UP TO EVENTUALLY BE EXECUTED

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Its Called FINANCIAL REPRESSION

When an Unelected, Private Institution (The Federal Reserve), Owned by the Banks, Controls the Money Supply & Interest Rates this occurs

“Permit me to issue the money of a nation, and I care not who makes it laws”

Mayer Amschel Rothchild, Banker 1790

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.

READ: 4 Ways the Government Is Set to Take Your Money

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CENTRAL PLANNING & CONTROL

A EURO BOND IS COMING

&

THE UNIVERSAL TAXATION TO SUPPORT

ITS DEBT

READ MORE

Bloomberg Brief Reports:

“A new supervision framework is required to revive the euro area’s single financial market with the assurance that it will yield more benefits than costs. So far, balkanization of banking rules among assorted national supervisors has been a barrier for cross-border lending. This will be lifted with the ECB taking the role of a new single supervisor on Nov. 4.

As Draghi pointed out, “There will no longer be a distinction between home and host supervisors for cross-border banks. Instead, there will be a single supervisory model and eventually a single supervisory culture, rather than one per country.”

As a result, banks could see a reduction in compliance costs and an increase in opportunities for economies of scale, even if taxes will still differ according to member states’ fiscal policies. For the longer term, the authority given to the single supervisor may also improve the monitoring of systemically relevant banks, helping to curb sector excesses and risk.

The transfer of power to a single European bank supervisor should be a game changer.

The ECB is hoping to do more than simply strengthen financial stability. It also envisions unified authority as a tool to repair the broken channels of monetary policy transmission, prompting banks to make their comeback at the periphery and improve credit conditions there. The central bank timidly expressed this wish in its latest financial integration report, stating that “the banking union is expected to contribute indirectly to the return of cross border credit flows.”

When Dead Beat Peripherals Can no Longer Pay there is only one solution.

Tax The Entire Union

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BUT DESTROYED THE US MIDDLE CLASS

FINANCIAL REPRESSION

Accelerated the Decline of America

AMERICA Now A Two Class Society

“Haves & Have Nots”

& Maybe More Concerning

A Culture of

“SOCIAL DEPENDENCY”

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CENTRAL PLANNING & CONTROL

Moving towards Control of YOUR Pensions

through Control of Insurance Industry

READ MORE

Other non-banks to face ‘designation’ as “systemic risks to the financial system”

The Fed has insisted that the Dodd-Frank financial reform bill forced it to apply bank capital standards to non-banks. In response, the Senate recently passed a bill that would give the Fed the room to apply capital standards that are tailored for the insurance industry

• Life insurer MetLife is waiting to see if it will be designated this year, while its smaller rival

• Prudential Financial was deemed a systemic risk last September.

• LARGEST ASSET MANAGERS: On July 31, FSOC decided for now to lift the threat of systemic risk designations for the largest asset managers, but said it would focus on the industry’s products and activities.

• PRIVATE EQUITY & HEDGE FUNDS: The review of asset managers came after an FSOC-commissioned report on the industry, which also said it was reviewing private equity and hedge funds, prompting predictions that those sectors could be next on the council’s agenda.

Fed gives preview of future non-bank scrutiny 08-11-14 FT

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THERE ARE

$84T OF UNFUNDED RETIREMENT ENTITLEMENTS

The Biggest Ponzi Scheme on the Planet-The U.S. Government “American Economic Exceptionalism Explained” by John W White USAPonzi May 2013

US is Bankrupt: $89.5 Trillion in US Liabilities vs. $82 Trillion in Household Net Worth & The Gap is Growing. We Now Await the Nature of the Cramdown 08-04-14  Chris Hamilton via Charles Biderman TrimTabs’ blog, via ZH

America’s Hidden Credit Card Bill Laurence Kotlikoff: The Government Should Report Its ‘Fiscal Gap,’ Not Just Official Debts LAURENCE J. KOTLIKOFF

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FINANCIAL REPRESSION

Initially Forced Fund Managers Into

Junk Bond Yields

THE SET-UP

STEP 1: EXCESSIVE LIQUIDITY

STEP 2: EXCESSIVE RISK TAKING

STEP 3: BAD MONEY FORCES OUT GOOD MONEY

NOW THE SQUEEZE

STEP 4: THE PANIC

THE FLIGHT TO PERCEIVED SAFETY

STEP 5: ACHIEVE GOAL -> CHEAPER GOVERNMENT FINANCING COSTS

“Wolf Richter’s essay posted on Stockman’s Contra Corner sees junk bond investors running for the hills, “But there no hills” .. In the latest week, investors yanked $7.1 billion out of junk bond funds, a record amount, according to Lipper – this exodus has been going on since early July, junk bond prices have dropped, yields have jumped from all-time lows, yield spreads have suddenly widened .. “After having been inflated to dizzying proportions, the junk-bond bubble has been pricked. And the hot air is hissing out of it .. Neither glorious economic fundamentals nor corporate financial engineering caused investors to pile helter-skelter, eyes-closed into this high-yield junk. The Fed’s financial repression did .. The Fed has made it impossible for yield investors to earn a noticeable return above the rate of inflation with low-risk paper. So they chased after whatever yield they could get and they held their noses and ventured deeper and deeper into a swamp they normally wouldn’t want to be in. They did that in unison. The demand they created for junk drove up valuations and repressed yields further into low-yield purgatory, where potential losses are huge and potential gains very meager. Exactly as the Fed had wanted them to .. But the Fed has changed its mind”CliffKule.com

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.

“.. we have moved far away from free markets. The authorities have established endless ‘detours’ (via policies such as Financial Repression) that restrict free market capitalism. We have reached the point that all the manipulations interfere with the innovations & growth that free markets would produce. We are living through ‘Capitulation of all the Manipulation’ (the ‘Keynesian Endpoint’). The manipulations of the last 5 or 6 decades have stifled the ‘invisible hand’ that makes free markets superior to centrally planned economies. In other words, Adam Smith has been defeated. Our system is more like Karl Marx’s, but not in the way that most people think. A small group of wealthy ‘capitalists’ ended free markets when they were awarded monopoly control over the creation & distribution of the money. They called their group ‘Federal’ even though it is no more Federal & just as private as Federal Express. They used the word ‘Reserve’ even though they create money from no reserves at all. Their government contract to control America’s money was the beginning of a long slippery slope away from free market capitalism to a centrally planned economy. Think about it: Free Markets When Money Is Privately Controlled? That is an OXYMORONIC. That is our system & it is OXYMORONIC.” CliffKule.com

FINANCIAL REPRESSION’S REGULATORY DETOURS ARE INCREASINGLY TAKING US AWAY FROM THE ‘SELF CORRECTING” POWER OF FREE MARKETS

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FINANCIAL REPRESSION

STRIPS SAVERS, PENSIONERS,

PRUDENTIAL INVESTING &

REAL DISPOSABLE INCOME

TO FINANCE GOVERNMENT SPENDING

Ten year constant maturity Treasury yields (blue), ten year constant maturity yields minus ten year (median) expected inflation (red +), and ten year constant maturity TIPS (black). NBER defined recession dates shaded gray. Source: Federal Reserve via FRED, Survey of Professional Forecasters, and author’s calculations.

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As Bloomberg reports,

“one of the biggest winners in the push to make money-market funds safer for investors is turning out to be none other than the U.S. Government.” (no surprise to the Financial Repression Authority!!!)

Rules adopted by regulators last month will require money funds that invest in riskier assets to abandon their traditional $1 share-price floor and disclose daily changes in value. For companies that use the funds like bank accounts, the prospect of prices falling below $1 may prompt them to shift their cash into the shortest-term Treasuries, creating as much as $500 billion of demand in two years, according to Bank of America Corp.

“Whether investors move into government institutional money-market funds or just buy securities themselves, there will be a large demand” for short-dated debt, Jim Lee, head of U.S. derivatives strategy at Royal Bank of Scotland Group Plc’s capital markets unit in Stamford, Connecticut, said in a telephone interview on July 28. “That will lower yields.”

He predicts investors may shift as much as $350 billion to money-market funds that invest only in government debt.

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.

READ: Amphora Report

In his latest report, John Butler sees a long-term stagflationary environment similar to the 1970s but it could be worse .. sees stagflation as the inevitable result of the aggressive, neo-Keynesian policy responses to the global financial crisis .. this report discusses the causes, symptoms & financial market consequences of the new stagflation .. “Stagflation is a hostile environment for investors .. Keynesian policies require that the public sector siphon off resources from the private sector, thereby reducing the ability of private agents to generate economic profits. So-called ‘financial repression’, a more overt seizure of private resources by the public sector, is by design and intent hostile for investors.”

He recommends avoiding financial assets & cash altogether – instead accumulating real assets like gold & oil .. “Some readers might be skeptical that, from their current starting point, gold, oil or other commodity prices could rise tenfold in price from here. Oil at $100/bbl sounds expensive to those who remember the many years when oil fluctuated around $20. Gold at $1,300 also seems expensive compared to the sub-$300 price fetched by UK Chancellor Brown in the early 2000s. In both cases, prices have risen by a factor of 4-5x. Note that this is the rough order of magnitude that gold and oil rose into the mid1970s .. But it was not until the late 1970s that both really took off, leaving financial assets far behind .. If anything, a persuasive case can be made that the potential for gold, oil and other commodity prices to outperform stocks and bonds is higher today than it was in the mid-1970s.”

Stagflation Is A Keynesian Phenomenon

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Alexander Hamilton, America’s first Secretary of the U.S. Treasury under U.S. President George Washington faced the challenge of restoring the U.S. economy that had been devastated by the U.S. Revolutionary War

.. “When money serves as a stable measure of value, it most clearly expresses the value of everything in terms of everything else.”

.. Hamilton boosted the U.S. economy with legislation for the U.S. federal government to assume & pay off all the debts of the states, establishing the foundation for U.S. creditworthiness

.. the essay describes the historical success with the gold standard: 

“Fixing a nation’s currency to gold assures that the currency maintains astable long term value, without inflation, or deflation. That enables a nation’s money to serve as a measure of value, like a ruler measures inches, or a clock measures time. Such a stable measure of value, in turn, means money can best perform its most essential function in facilitating transactions .. The termination of any link between the dollar and gold immediately inaugurated worsening boom and bust cycles of inflation and recession in the 1970s, with inflation soaring into double digits for several years. Inflation peaked at 25% over just two years in 1979 and 1980.”

Campaign poster showing William McKinley holding U.S. flag and standing on gold coin “sound money”, held up by group of men, in front of ships “commerce” and factories “civilization”. (Photo credit: Wikipedia)

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READ: China’s Risky Play in the U.S. Deb t Market Caixin Online 07-31-14

CATO Institute Senior Fellow James Dorn explains how & why China has been picking up the pace of its purchases of U.S.Treasury Bonds recently, but “both it & the U.S. would be better off if China relied less on the accompanying investment & export-led model”

.. China is supporting U.S. Treasury bond prices from a desire to stimulate its export growth & to protect its state-owned enterprises, not out of the goodness of its heart to help the U.S. to finance debt & deficits

.. “Financial Repression in China and in the United States (with negative real interest rates) distorts the global allocation of capital. China, as a capital-poor country, should not be a net exporter of capital. By controlling capital flows, suppressing interest rates and pegging the exchange rate, China continues to rely on investment and export-led development. That model of development, with the central role of state-owned banks and enterprises, is not sustainable, as China’s leaders have noted 

.. It is in China’s long-run interest to downsize its holding of U.S. debt by ending financial repression and allowing a greater play of market forces. A virtuous outcome would be to deny the U.S. government the means to over-leverage and overspend, while invigorating China’s non-state sector by releasing scarce capital for private investment.”

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.