Special Guest: John Butler, Amphora Commodities Alpha

FRA Co-Founder Gordon T. Long discusses the Austrian School of Economics with John Butler and how its methodologies can be applied to the current global economy. John Butler has 18 years’ experience in the global financial industry, having worked for European and US investment banks in London, New York and Germany.

Prior to launching the Amphora Commodities Alpha Fund he was Managing Director and Head of the Index Strategies Group at Deutsche Bank in London, where he was responsible for the development and marketing of proprietary, systematic quantitative strategies for global interest rate markets. Prior to joining DB in 2007, John was Managing Director and Head of European Interest Rate Strategy at Lehman Brothers in London, where he and his team were voted #1 in the Institutional Investor research survey. In addition to other research, he publishes the Amphora Report newsletter which appears on several major financial websites

THE AUSTRIAN SCHOOL OF ECONOMICS

“It is the no free lunch school of economics.”

The Austrian school believes that economics systems are ultimately information systems. Some of those systems use information more efficiently and effectively than others, and in particular systems of which authorities of various kinds meddle with the market. Authorities may do this by extracting capital from the market via tax rates or even by manipulating the money of that market through some sort of artificial interest rate policy.

“From the Austrian schools point of view, anything that impedes the free price information flow of an economic system will result in a sub optimal economic outcome.”

Without the rule of law, without the ability to strongly enforce property rights, without the ability to prosecute fraud, and various other legal frameworks; the Austrian economic model cannot work.

“Our goal is to make sure economic information flows as efficiently as possible within a solid legal structure.”

HOW THE AUSTRIAN SCHOOL CAN BE APPLIED IN INVESTING

Austrianism teaches us that the future is unpredictable. The economy is made up of the billions of people in the world, with each person making transactions almost every day. Each decision is an individual’s choice, and each decision, even the decision not to spend your money has some effect on the economy.

“Austrian school provides you a way to identify distortions, a powerful way that is caused by a fiscal and monetary policy set such as interest rate or fiscal policy manipulation. Austrians are able to look at these policies and be able to see how they are impacting the investment environment. This gives you a sense of where the distortions are. In theory you get an idea of where you should be overweight and underweight from an investor’s point of view.”

CURRENT EVENTS AMPHORA IS FOCUSED ON

“Currently we are seeing a general overvaluation of risky assets that has been caused by truly an unprecedented set of highly expansionary monetary and fiscal policies throughout most of the world.”

Income growth has not kept up; assets are expensive relative to incomes. So the correct strategy is not simply to short assets, which is dangerous; but if indeed they do look for ways to stimulate aggregate demand more directly rather than through the banking system.

The correct strategies to have today are those that will perform if incomes begin to catch up to asset prices, it could be asset prices declining towards incomes or vice versa. It is impossible to know which one is going to happen, but it is highly likely looking forward that a conversion of the two will happen.

POSSIBILITY OF NEGATIVE NOMINAL INTEREST RATES

“Policy makers have become almost pathological; they have a relentless attitude to make their policies work.”

“Problem with this is, once you get to this point, you can no longer question your original set of assumption. Austrian school of economics knows that the original sets of Keynesian assumptions that have gone into forming this unconventional and aggressive policy mix are themselves flawed. We are on this course where if it were left to run itself, policy makers will operation in these counter-productive directions because they will not question whether their assumptions are wrong.”

“Banning cash will prevent people from making even the simplest transaction in their own neighborhoods; it will lead to complete riot and chaos.”

“Putting a ban on cash is a terrible idea. It is terrible for them and for the economy as a whole. Sadly, with the way things are going, policy makers are going to teach everyone a very hard lesson about blindly accept anything the bureaucracy tells you to do.”

CENTRAL BANKS ROLE IF ASSET CORRECTION OCCURRED

“If you do get a major correction in asset markets that causes collateral problems in financial markets, the policy makers are out of options. The only thing they could do is begin capital controls”

Prevent investors being able to freely liquidate or withdraw funds from their existing investments. This of course is very anti-capitalist, very inti-market. It goes directly against everything that a free enterprise economy should stand for; but when you follow these policies you will eventually get to a dead end.

Abstract written by Karan Singh karan1.singh@ryerson.ca

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: Leland Millar – President, China Beige Book International

FRA Co-Founder Gordon T. Long interviews Leland miller, the president of the china beige book international and discusses financial repression in the context of the Chinese economy. He describes himself as a Lifelong china watcher who decided to do something about the complete lack of data in china.

“One of the things that the china beige book plans to do is to give people a real picture of not just the growth dynamics, but also the labor market, the credit dynamics, the macro implications of Chinese growth, indications of future Chinese demand, implications of commodity markets around the world, we try to give the people a much better picture on what’s actually happening instead of just relying on official data and press release”.

FINANCIAL REPRESSION

Leland describes the Chinese reform as a reversal of financial repression and this repression in the context of the Chinese economy is the oppression of consumers and households by state organizations through its economic systems.

“It means reversing this long time economic model, where the state will profit through the economic system at the expense of the consumers and household, and one of the things that the new leadership is intent on doing in order to create consumption is to empower consumers, so they spend more and stop empowering state organizations which are fuelling the overcapacity and the massive debt bubble”.

What should investor know about china?

He explains the biggest misconception concerning the Chinese economy is believing the GDP tells you much about how china is doing.

“It is a broad, blunt indicator that doesn’t measure productive growth or credit dynamics”.

On some of the challenges of getting reliable data in china, Leland explains that he and his team had to ask Chinese firms and consumers on ground what is happening in the country, and  set up a number of polling units across sectors in order to get reliable and accurate information.

Economic trends in china

“For years we have been talking about the Chinese slowdown; it’s inevitable, despite the fact that the economy has been slowing”.

He goes on to explain that although the market sentiment has gone from optimism to “Armageddon” in recent months, the actual data is at odds with these sentiments. As a result of china’s economic slowdown, there is great vulnerability among emerging markets. Now, the reason for this is that for years these markets have relied on china’s demand without factoring the likelihood of a decline or certainty of a decline in china’s demand.

On China’s view of America, Leland has this to say

“The Chinese look at America as a model that they are interested in taking pieces from; they like the dynamism of the economy and the global status.  On one hand, they see us as a model to learn a lot of things from but also as a serious threat that is looking to constrain their inevitable and ultimate rise”.

Abstract written by chukwuma uwaga uwaga3@outlook.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.

Special Guest: Paul Craig Roberts PhD – Chairman of the Institute for Political Economy

FRA’s Gordon T Long talks financial repression and the decline in democracy with Paul Craig Roberts. Paul is the chairman of the institute for political economy, he was also the former assistant secretary of the US treasury for economic policy in the Reagan administration.

“As far as I can tell not only has democracy departed the western world but also compassion empathy for others, morality integrity respect for truth justice fairness self-respect western civilization has become a hollow shell there is nothing left but greed and coercion and the threat of coercion”.

He believes this outcome is based on the behavior and statements of the government and the public’s acceptance of it. Part of the reason the public doesn’t care, is due to a lack of information as about 90% of the American media is owned by 6 large mega corporations that manipulate the news.

“The story that is told by the American media is Washington’s propaganda line and of course whatever the corporation’s propaganda line is and there is no challenge to either”.

On the republican debates, Paul questions the aggressive stands that most of the candidates seemed to have towards foreign policy. He states that this stand will simply create distrust among nuclear wielding powers.

“Every American president since John F Kennedy worked with the soviet leadership to diffuse the nuclear issue”.

He says that this shift in culture across the candidates is a combination of both campaign finance and a shift in culture.

“There’s no such thing as a free market in the United States, it requires many producers none of which can affect price…….look at the banks, the banks are so concentrated that they are too big to fail. How do you have capitalism if a failed enterprise doesn’t close down instead it is bailed out by the people or by the Federal Reserve printing money to buy its worthless portfolio. This not capitalism, there’s no capitalism here, this is an oligarchy!”

“What has the government said that’s true? Think of anything, can you think of anything they’ve said that’s true? We know that the unemployment rate they’re reporting is false, inflation rate is false, and the gross domestic product is false. We know all of this, we know that Saddam Hussein did not have weapons of mass destruction, he did not have Al Qaeda connections, that Assad of Syria did not use chemical weapons. We know Russia did not invade Ukraine but they say this over and over and over. I can’t think of one thing that the government or corporate world has said in 20 years that’s true”.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.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.

Special Guest: Jeff Davis – Managing Director, Financial Institutions Group, Mercer Capital

FRA Co-Founder Gordon T. Long interviews Jeff Davis of Mercer Capital, and discusses financial repression and its effects on the banking sector.

Davis is currently a Managing Director of Financial Institutions Group at Mercer Capital. Davis also provides financial advisory services primarily related to the valuation of privately-held equity and debt issued by financial services companies and advisory related to capital structures and M&A.

FINANCIAL REPRESSION’S EFFECT ON THE US BANKING SECTOR

“Financial repression is a price control that relates to all facets of the economy and has profound impact.”

The 3 major cycles: Business Cycle, Credit Cycle and Rate Cycle.

“The banks straddle all 3 to be a key contributor of capital in the US economy. Financial repression impacts at a very base level for all 3 cycles.”

“Financial repression has artificially pumped up asset value.

“Commercial real estate values really pivoted in 2010. There is additional risk in the system now that asset values are pumped up”(See Chart to Left)

Leverage Ratio

“If you look at the leverage ratio we can see that over the last 20 years the industry has been raising capital. I don’t think that’s a bad thing. We are significantly much better capitalized than Europe which is a good thing, but as it relates to an investor there is a lower return on equity.”(See Chart to Left)

“Regarding financial repression, if you think about interest rates today, it is very painful for an institution to hold cash. There is significant risk taking occurring amongst commercial banks in taking additional credit risk and duration risk. Structurally banks aren’t as spread in terms of their assets relative to their borrowings that fund these assets.”

“Companies don’t go broke because they don’t make money. Companies go broke when they have no liquidity, so what financial repression has done is push liquidity into the system. So now heavily indebted companies are able to borrow money and we will soon see the consequences of that.”

HOW BANKS FUNCTION

“The banks are special for being separated from commerce.”

“The objective for a bank is to earn a spread on assets. Loans being the highest yielding asset, followed by bonds, and finally cash. The banks role is to take the deposits and prudently while still taking risk, lend the money into the economy to help finance the economy.”

SHADOW BANKING

“Over the last several decades the shadow banking system has developed into an alternative lender as well as another place for people to put their money.”

The term “shadow bank” was coined by economist Paul McCulley in a 2007 speech at the annual financial symposium hosted by the Kansas City Federal Reserve Bank in Jackson Hole, Wyoming. In McCulley’s talk, shadow banking referred mainly to nonbank financial institutions that engaged in what economists call maturity transformation.

Commercial banks engage in maturity transformation when they use deposits, which are normally short term, to fund loans that are longer term. Shadow banks do something similar.

“Shadow banking system is separate from commercial banking system, but is a very large piece of the credit allocator. A lot of risk has been pushed out of commercial banks and is now in the shadow banking system, where it is not as opaque as a commercial bank.”

CONCERNS WITH SUSTAINED LOW INTEREST RATES

One day there will be a reckoning. It’s simply a buildup of risk; an attempt by central authorities to guide the economy.

Malinvestment: A mistaken investment in wrong lines of production, which inevitably lead to wasted capital and economic losses, subsequently requiring the reallocation of resources to more productive uses.

“A delay of lost recognition and mass malinvestment which is all a credit risk within the banking systems. However, my biggest concern is a dramatic slowdown in the economy, short rates at zero.”

Abstract written by Karan Singh karan1.singh@ryerson.ca

Commercial Real Estate Values

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: Don Rissmiller – Partner & Chief Economist, Strategas Research Partners

FRA Co-Founder Gordon T. Long talks Financial Repression and current economic developments with Don Rissmiller, a founding partner and chief economist of Strategas Research Partners. Mr. Rissmiller has overseen Strategas macroeconomic research since 2006, as well as thematic research, and high frequency econometric forecasting.

“When we think about financial repression, we think about interest rates being below normal levels or below inflation. You would do that if you’re in an environment with a lot of debt. The solution if you have too much debt is to try to make the burden of that debt to decrease.”

Rissmiller highlights the 3 avenues in which the government receives funds through taxes. Taxing income, taxing transactions, and taxing wealth; however financial repression relates by,

“Keeping interest rates below inflation is a fancy way of taxing liquid wealth, taxing cash.”

THE RESULT OF LOW INTERST RATES

“You’re trying to stimulate the economy by implementing lower interest rates.”

The financial repression process begins at the monetary policy level as a response to some shock In the economy. The goal is to get risk taking up in the economy, and that’s complicated with monetary policy because it is not the best policy when it comes to risk taking,

“It may be the best you can do, it may be an appropriate policy response in a time of stress, but it still has consequences that may not all be desirable.”

When you think about where we are going, what you can do is use whatever works. “You have to force other investors to take more risk. You might bid up asset prices, and of course assets are not equally distributed so that has consequences for income inequality.”

THE SEPTEMBER 17th FOMC MEETING

“It was the biggest fed meeting since 2008 in terms of expectations”

The Fed took the approach that they would like to wait a little more and see some more data. This is not uncommon, if we look back to 2013 to see an example of this, the Fed started talking about the quantitative easing taper in the middle of 2013, and by Sept 2013 the expectation was they were ready to go, but they held back for 3 more months because of the tightening of financial conditions.

“This is a reasonable way to look at what will happen in September of 2015, a tightening of financial conditions plus data that wasn’t equate to have confidence in your forecasts leading the Fed to delay.”

FORECASTING THE US ECONOMY

Considering the global slowdown in world trade and commodity prices, Rissmiller shares some foresight into the potential future of the American economy.

“We are seeing weakness in manufacturing that means another sector will have to pick up the slack. The sectors I will focus on are housing, consumer, and the government.”

“In housing we are seeing some improved signs on household formation. As unemployment is looking more normal we have had more household buying.”

“Consumer spending has been growing, we think this can continue because the decrease in energy prices tends to effect consumer spending with a lag and so we are going to continue to see positives to lower energy prices.”

” The government sector has been a drag, there is still one more budget fight coming in the next few weeks and that’s going to be a challenge, but if we get through that we are into the part of the election cycle where government drag turns into a small boost, we are already seeing some rehiring at the state and local level and that is significant as well.”

Abstract written by Karan Singh karan1.singh@ryerson.ca

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: Stewart Taylor – Vice President, Eaton Vance & Senior Fixed Income Trader

FRA Co-Founder Gordon T. Long breaks down financial repression and the future of emerging markets with Stewart Taylor. Stewart is currently Vice President and Portfolio Manager at Eaton Vance Management based in Boston, managing the Short Duration Real Return Fund since 2005.

THE SEPTEMBER 17th FOMC MEETING

“I am sure the Fed is going to move, the Fed knows they have to get away from zero bound.”

To Taylor, financial repression is keeping interest rates below a considered normal level. When asked about the recent FOMC meeting, he had this to say…

 “They missed a chance in 2013 to raise rates, they had a free shot at it and they didn’t do it. I think they had a free shot at it again this past month, they didn’t take it, and now it becomes harder as we go along. Particularly, given what we are seeing happening in emerging markets.”

A progressive opening up of more countries to foreign investors has been accompanied by major structural transformations in many parts of the world. Strong economic growth combined with the development of financial markets has led to the expansion of investment opportunities in emerging markets and has reshaped the equity sector.

The graph to the left shows a dramatic drop for emerging markets performances of this September. The decline is Indicative to what Taylor had to say regarding the meeting…

“After hearing what the fed said, I don’t think the market feels the Fed has much confidence in the economy right now.”

THE COMMODITY SECTOR

“I am looking for ways to own commodities now.”

When asked about the commodity sector in emerging markets, Taylor states

“Commodities have been going down for the past 3 years while equities have been increasing or staying in the long trading range. I think it is evidence that perhaps equities have become somewhat divorced from the real economy. I certainly think that commodities are more indicative of the economy than equities are. “

THE FUTURE OF BOND MARKETS

Is a shift in the bond market inevitable?

“I do think a shift is coming, but I think the one thing that happens with rates that not many people appreciate is that first of all there is a difference between how rates behave in an inflationary environment, and how they behave in a deflationary environment.”

“I think at some point an abrupt shift will happen, but if you look historically you see that these changes take sometimes decades to complete.”

THE BRICS

“I am a firm believer that too much debt pushes down economic growth, and we are in a world that is constrained by debt and that isn’t going to change anytime soon.”

Taylor compares China’s equity market to America’s; both are very similar, China’s is just multiplied by a greater degree.

“Their equity market isn’t well connected to the underlying economy, so that’s why I dismiss equities as a signal. “

“You look at countries like Brazil that are being hurt by corruption, that’s hugely concerning considering how large of a role Brazil plays in the emerging markets. The BRICS, with the exception of India have all had a really rough time as of late and I don’t see that changing anytime soon.”

Abstract written by Karan Singh karan1.singh@ryerson.ca

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: Martin Barnes – Chief Economist, BCA Research

FRA Co-Founder Gordon T. Long sits with BCA Research Chief Economist, Martin Barnes, a highly decorated and well renowned economist of 40+ years to talk Financial Repression and Barnes most recent work, Low Growth and High Debt: Financial Repression is Here to Stay.

FINANCIAL REPRESSION

Barnes defines Financial Repression as,

“An environment where interest rates are kept below levels which most people would consider being normal.”

In a recent publication, Low Growth and High Debt: Financial Repression is Here to Stay, Barnes focused on the problems of continued high debt levels and argues Financial Repression as a legitimate solution to the global debt crisis.

“If you can’t easily get your debt burdens down, then at a minimum you have to make the debt easier to live with, and the only way you can make your debt easier to live with is through Financial Repression. In other words, financial repression is the inevitable result of a world with low growth and stubbornly high debt.”

CONSEQUENCES OF LOW INTEREST RATES

“If money is free, very clever people at some point are going to do stupid things with it. There is no question that low interest rates will encourage some misbehaviour, and speculation. However it is hard to make the claim that today’s interest rates are low enough to be causing economic problems.”

Despite already low interest rates, economic growth around the world has been relatively low. Barnes states, “Economies should be booming with current interest rates but they’re not, we are living in a world that I would argue needs lower interest rates.”

“The by-product is financial distortion which has powerful implications for certain groups of people such as people trying to live off of fixed incomes. But you can’t push interest rates up to protect the interest of those people if the global economy is screaming for even lower rates. We cannot have a level of interest rates that will have everyone happy.”

THE PENSION FUND DILEMMA

A major mistake with the development of pension funds is that governments did not increase the pension age with the increase life expectancy.

“In a world of low returns, and people living much longer, the promises that were made a long time ago can no longer be kept. Everyone needs to understand that at some point those promises have to change, either by raising retirement age or increasing contribution rates. The logic behind these pensions is unsustainable and therefore it must change.”

SITUATION IN CANADA

In the midst of falling commodity prices, devalued currency and the housing market bubble, Barnes states the Canadian economic situation

“…is not disastrous; just like so many other economies, we are stuck in low growth. Exports are battling against moderate global growth and world trade. The big drop in the Canadian dollar has not lead to a big pick up in exports as we would have hoped. We are very tightly linked with the US economy and they are slowly growing so that is a positive.”

“Housing by every standard is incredibly overdone, especially in Toronto and Vancouver, it’s hard to get away from the fact that house prices are extraordinarily high here and it will likely erode.”

“China is moving away from its commodity oriented growth to a more service oriented model. The world is moving away from its commodity dependence which is not great for Canada, but we’ll adjust to that.”

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Karan Singh

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: David Berson – Senior Vice President & Chief Economist, Nationwide Mutual

David Berson is the senior vice president of Nationwide Mutual. Before now, he has worked as a College professor, at the Fed and for 20 years he was the chief economist at Sallie Mae. He has also worked at Nationwide Mutual insurance for the past three and a half years.

To David depending on where you are in the financial system financial repression will mean different things to you. According to him,

“Financial repression is holding interest rates below the level where they would naturally go.”

He explains that there are two sides to holding down the interest rate, a positive and a negative side. The positive with reducing the interest rate and applying quantitative easing include the addition of liquidity to the economy. According to him, most of the models used by macroeconomists indicate that monetary expansion helps the economy a bit at first but only a period of time. David says the expansion policy helped boost the economy out of recession and is responsible for the modest growth we see now. But the downside to it all is that keeping rates lower than it should naturally be results in savers being hurt due to the extremely low interest rates. At the same time borrowers are at an advantage. It also makes it difficult for investors to have a reasonable return. David agrees that low interest rates push investors to riskier assets but also insists that it is one of the points of having an expansionary monetary policy. He further reiterates that the upside to the artificial reduction in rates is the increased liquidity, which moves the economy a bit upwards.

“They need to concentrate on what’s happening in the domestic economy, they are the US central bank, they are not the central bank of emerging market countries even if those countries are greatly affected by what we do”

According to David, what’s happening in terms of the fall in commodity prices is not directly as a result of what the Fed does. He believes it is as a direct result of the rapid growth in china’s economy as they move to become an industrialized economy. He explains that the primary force driving the fall of commodity prices is the slowing down of the Chinese economy that is occurring now.

On what the Fed will do, David thinks the Fed will tighten this September although he also mentions that with the recent market volatility, the chances of that happening is less than 50%. He believes the Fed should tighten this September as he believes that such an action will help the economy.

On the disappointing recovery of the economy, David explains that there is an excess of government oversight on the economy, which has further contributed to the slowing down of the economy. If you look at what he calls the core GDP, which includes private sales and private purchases minus volatile inventory, trade and government, he is convinced that growth has picked up better than the overall GDP suggests and much closer to historical averages.

“One of the reasons why economic growth has been weaker in this expansion than others is a lack of government spending now I think that in the short-term negative in the long run I think a move in resources from the government sector to the private sector is positive but it takes a while for that to manifest itself in stronger overall GDP growth”.

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.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.

Special Guest: James Bianco – President, Bianco Research LLC

Bianco research started in 1998 and is affiliated with Arbor research and training. It is an independent research company with James Bianco as its president.  Bianco research specializes in macro, fixed income and equity research.

James views financial repression in light of what Ben Bernake said in his November 12 op-ed in the Washington post:

”the purpose of QE2 is the fed buys bonds, force down interest rates, that would make them relatively unattractive for most bond investors, seeking alternatives they would move further out the risk curve and they would not buy .They would push up those assets prices, create a wealth effect expecting a cycle in which the wealth effect creates economic growth to justify those higher prices”.

The forced down interest rate will not bode well for individuals who need certain rates of return to guarantee things like pension and retirement. You end up taking more risk by buying riskier assets which pushes up its price causing you to feel wealthier. He explains that when a government body in this case the CBN steps in and sets price at levels where they would not ordinarily go by themselves, they are repressing the price of interest rate, inflating the price of risk assets. They argue it is a greater good because of the wealth effect that comes from that.

James doesn’t think that the wealth effect occurs as a result of that. According to him, Milton Friedman in 1915 developed the permanent income hypothesis which states that if an asset goes up in price for example a house, you treat it as another form of permanent income. One the other hand, if your stock portfolio goes up, you perceive as temporary due to what you read in the paper.

“That’s why we obsess over the fed because we think all this stuff is temporary and we want to find out how temporary it is, because when the fed raises rates… I guess to mix my metaphors a little bit with the old warren buffets’ old line that we find out that we are swimming naked when the tide goes out”.

That’s why a rate hike is such a big deal in the financial markets.
What will the Feds do?

“There are two things to keep in mind concerning what the feds will do. There’s the economic data and the market pricing of it”.

He says that based on the economic data, the fed has set up some parameters for itself and from a data dependent point of view, they have everything they need, but James believes that what will hold back the feds will be market instability. Currently, there is a great deal of volatility and uncertainty in the Chinese and emerging markets. He believes the instability in these markets will cause the feds will to maintain interest rates because they are hoping that things would calm down enough by Dec. He mentions that part of the reason for the unstable markets is due to the Feds insistence on raising rates.

EU

On his view of the EU, James Bianco has this to say:

“The history of the Europe is for the last thousand years is every generation they try to kill each other and the last one was in World War 2”.

Then they decided to get closer in order to prevent more wars. This led them to create the euro. According to him, the problem with the euro, is that you have 17 different countries in different cycles using the same currencies. He says that Draghi’s plan is to get interest rates to below zero and continue trying to stimulate the economy. He goes further to explain that the current refugee crisis that the EU is facing will have a huge negative impact on their economy. He doesn’t think Draghi’s plan will work because people think it’s temporal and as long as they think that, the permanent income hypothesis will take effect.

Check out his interview with Gordon T Long which covers this and much more.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.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.

Special Guest: Adam Andrzejewski – Chairman, American Transparency and Editor, OpenTheBooks.com

ADAM ANDRZEJEWSKI DISCUSSES HIS PUBLIC INITIATIVES TO BRING MORE TRANSPARENCY OF GOVERNMENT SPENDING AT ALL LEVELS TO THE ELECTORATE.

FRA Co-Founder Gordon T. Long interviewed Adam Andrzejewski, the Chairman of American Transparency and Editor, OpenTheBooks.com. on his personal goals which prompted his launch of these public projects.  Mr Andrzejewski’s American “Heratio Alger” story needs to be told.

In October 1997, Adam Andrzejewski founded an independent publishing business with his brother, Abram Andrzejewski. The publishing company, HomePages Directories, employs nearly 150 people and has an annual revenue of nearly $20 million. Adam Andrzejewski also started a grassroots initiative to enable local counties and school boards to post their check register online.

On March 1, 2009, Adam Andrzejewski announced his intent to run for the office of Governor of Illinois. Andrzejewski was one of four Republicans to file with the Illinois State Board of Elections to be placed on the ballot, submitting over 14,000 signatures. On 25 January 2010 Andrzejewski received an endorsement from Lech Wałęsa, former Polish President and Nobel Peace Prize Laureate. On 1 February 2010, Andrzejewski was endorsed by talk radio host Rush Limbaugh. On 2 February 2010 Andrzejewski was defeated by a significant margin in the Republican primary for Governor of Illinois.

His platform was based on government transparency. His campaign slogan was “Every Dime Online in Real Time.” Today as Chairman of American Transparency and Editor, OpenTheBooks.com. he is following through in a high profile and aggressive manner on his campaign platform and his personal goal to bring visibility of all levels of public government spending to the voting public.

Adam believes it is this visibility which will force accountability and responsibility from elected officials charged with the fiscal decisions of local, city, state and federal government offices.

“Open The Books” has become a national rallying cry for transparency in public spending. U.S. Senator Tom Coburn, sponsor of the 2006 “Google Your Government Act,” recognized Adam’s work,

“Open the Books is doing the work I envisioned when the Coburn-Obama bill became law. Their innovative app and other tools are putting sunlight through a magnifying glass.”

LEARN MORE & SUPPORT OPEN THE BOOKS

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 Casey – Managing Director, WindRock Wealth Management

CHRIS CASEY DISCUSSES TYPES OF FINANCIAL REPRESSION, THE MYTH OF MONETARY VELOCITY, AND WHAT IT MEANS FOR INVESTORS.

FRA Co-Founder Gordon T. Long interviewed Chris Casey of Windrock Wealth Management on the monetary policy aspects of financial repression.  Mr. Casey, an Austrian economist, is a frequent speaker and writer on macroeconomic topics and their related investment implications.

TYPES OF FINANCIAL REPRESSION

“Financial repression can best be described as government intervention in the financial markets which causes distortions not only within financial markets, but throughout the economy.”

According to Mr. Casey, financial repression can take direct and indirect forms.  The most damaging form of indirect financial repression is the expansion of the money supply decreases interest rates.  The artificially lowered interest rate structure causes widespread malinvestment within an economy.

All of this would perhaps be tolerable if monetary policy actually stimulated the economy, but Mr. Casey states that even Federal Reserve economists have recognized the ineffectiveness of the multiple quantitative easing programs.

THE MYTH OF MONETARY VELOCITY

Mainstream economists believe inflation is currently mitigated by today’s historically low monetary velocity (“the number of times one dollar is spent to buy goods and services per unit of time”), so the money supply can be expanded without the damaging effects of inflation.  Chris Casey takes issue with this as well as the very concept of velocity.

“Velocity has no impact whatsoever, in fact it is a meaningless statistic.”

Worse, the theoretical construct from which the concept of velocity derives, the Fisher Equation of Exchange, is equally faulty.  This equation attempts to explain the price level within an economy, but while it includes the supply of money, it ignores the demand for money which renders it useless.   A useless theory in the wrong hands can create disastrous policy:

“The real danger is that by looking at velocity, by being focused on velocity, mainstream economists have been focusing on a false measure which creates false decisions which is going to have a very real impact on investors.”

WHAT SHOULD INVESTORS DO?

Where may the faulty policy decisions lead the U.S. economy?  Chris Casey believes that “the endgame eventually will be a massive inflationary recession.”  Gordon T. Long then asked Mr. Casey:

“What could you suggest to our listeners that they should be doing or thinking about to protect themselves in this environment?”

After recommending investors consider becoming fairly liquid, Chris Casey addressed how to profit from the coming economic environment:

“Build a portfolio of hard assets.  You want to look at anything from precious metals to certain types of real estate such as rental residential real estate to farmland.  You potentially want to look at foreign currencies to diversify from the U.S. dollar despite the dollar’s strength over the last 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.

Special Guest: Ramiro Larroy – Partner & Director, Integras Capital

RAMIRO LARROY DISCUSSES HIS VIEWS ON WHAT LESSONS THE WORLD CAN LEARN FROM RGENTINA ABOUT INVESTING IN AN ERA OF FINANCIAL REPRESSION

FRA Co-Founder Gordon T. Long interviewed Ramiro Larroy, Partner & Director, Integras Capital in Buenos Aires, Argentina.

FINANCIAL REPRESSION

“Financial Repression globally is basically governments keeping interest rates below the rate of inflation as a way of taxing savers”

Ramiro suggests that in Argentina it is much more direct it its enactment by governments. “We had many experiences throughout the years where depositors in banks were ‘bailed-in’ and forced to take on debt as opposed to their deposits”

“IT IS A TAX! It was applied a little differently in Argentina than how it is being achieved by governments in developed countries.”

THE ARGENTINIAN EXPERIENCE

“When Argentina regained democracy in 1983 we had a government that from an economic standpoint did not do that well. They ran fiscal deficits and prices of exports were poor. By the end of this government in 1989 the country was heavily in debt with inflation. At the same time they paid high interest rates on deposits so people kept deposits in the bank. With these deposits the banks were able to buy government debt. In 1990 enacted (like at midnight!) a program where everyone that had deposits received a bond.” Literally, overnight with no recourse.

“Maybe people were able to earn a rate higher than inflation before, but all of a sudden they lost everything!” The government did not have the money to pay the money owed on the bonds it had issued. This was a way to reset and issue a new long term bond.” Argentinians have experience in their bank deposits being taken from them.

CHANGED INVESTMENT SENTIMENT

“These banking actions resulted in a huge change in the mind set of investors! It is now very difficult for a family to have a substantial part of their assets to be held locally or exclusively in the banking sector. Though rates may be ‘ok’ in the banks, people are not comfortable with the risks they are taking! Pretty well everyone has developed OTHER WAYS OF STORING WEALTH, from Real Estate, to buying Gold to buying physical US Dollars.”

“The more wealthy individuals and families have their wealth outside of Argentina as a way of protecting those assets. It is not about higher returns, but rather not wanting to lose the wealth.”

STORE OF VALUE STRATEGIES

“Store of Value Strategies are so prevalent that on this day we are talking, in the morning paper of one of the largest newspapers in Argentina, the major story is “8 Strategies Not to Lose Your Wealth in the Upcoming Depreciation! Need I say more!”

.. there are many lessons to be learned in this broad 35 minute interview discussion. Maybe the most important is that Argentina is 15-20 years ahead in regard to Financial Repression investor strategies. Government actions are very predictable when debt becomes too large for officials to handle.

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: Danielle DiMartino Booth – Former Federal Reserve Advisor, Chief Market Strategist, The Lisco Report

Having done lots of fishing this summer at Camp Kotok in northern Maine, Danielle DiMartino Booth is here interviewed by FRA Co-Founder Gordon T Long. Danielle is a former Dallas Federal Reserve Bank Advisor and now the Chief Market Strategist of The Liscio Report. She takes an Austrian School of Economics viewpoint on economic and financial matters.

Danielle emphasizes how she understands financial repression “in her bones” because she worked in “The Financial Repression Factory”, referring to the Federal Reserve. She understands the level of malinvestment, mispricing and lack of price discovery as the unintended consequences of repressive and obfuscating monetary policies of central banks. She thinks the Federal Reserve “does not have a deep enough appreciation of malinvestment .. as if Ludwig von Mises never walked the planet.”

She is angered by the considerable level of savings which has been foregone thanks to the quantitative easing (QE) policies of the Federal Reserve. Gone are the days of retiring on a Certificate of Deposit paying a decent level of interest income, due to the virtually 0% interest rates.

Danielle says there must be a renewed emphasis on education and innovation in America for it create jobs and jobs that are higher-paying generally than is currently the case.

Check out her recent speech – subscribe to our Mailing and Alert System and we will email you the PDF or view the Scribd below:

July 2015 Speech by Danielle DiMartino Booth

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: Peter Schiff – CEO & Chief Global Strategist, Euro Pacific Capital Inc.

PETER SCHIFF TALKS FINANCIAL REPRESSION, CRYPTOCURRENCIES AND MORE.

Continuing with our series on financial repression, today we have Peter Schiff here with us who is being interviewed by FRA’s Gordon T long. Peter Schiff in his own words has been in the industry his whole life. He is also one of the few people to predict the financial crisis and was vocal about it in 2008.

FINANCIAL REPRESSION.

According to Peter one of the ways in which the government represses its citizens financially is through the banking system. He talks about the lack of privacy that arises from the opening of a bank account.

“In America today, if you have a bank account you have no privacy anymore. Your banker is basically an unpaid spy working for the government trying to monitor your activities for anything suspicious so they can turn you in to the government!”

Other ways include inflation, which erodes the value of one’s assets over time and government taxation in its many forms.

BAIL-INS AND CASHLESS SOCIETY.

“Bail-ins are a function of government deposit schemes which really don’t work!”.

He goes on further to explain that the reason they don’t work is due to the safety nets which these schemes provide. A situation is created where the banks “know that the depositors couldn’t care less how risky the bank is”. He alternatively suggests that market forces be allowed to reign in the banks so that banks compete on the basis of how much risk they can mitigate.

“People are looking for an alternative to the fiat currency created by governments”.

He mentions is one of the basis on which bitcoin was formed, although he doesn’t believe in its longevity going as far as likening it to a Ponzi scheme. The flaw in bitcoin according to peter Schiff is its lack of intrinsic value, unlike gold.

EURO PACIFIC BANK

“How do I spend my gold?”

Peter Schiff asserts this is a problem faced by consumers around the world and his bank Euro Pacific provides a solution to this problem. Customers are provided with gold and silver backed accounts with which they can access their gold 24/7. This works by using a 2-step process in which the customers have to open their account and sell off gold before they can swipe their card. Ultimately, he plans on streamlining this 2-step process into a 1-step process. This will work by converting gold in real time at the market value when customers swipe their debit cards.

Peter Schiff mentions how the real benefit from this system will be the ability of customers to save their gold since it holds on to its value and spend their fiat currencies. He goes on to compare his system and that of bitgold saying that the concept of giving out free gold which bitgold uses is not a viable business plan.

Check out his interview with Gordon T Long which covers much more of this.

Abstract written by Chukwuma Uwaga – chuwaga@gmail.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.

Special Guest: Guillermo Barba – Mexican Economist, Blogger & Forbes Mexico Writer

A Mexican Economist, Guillermo Barba never heard of the Austrian school of economics until after graduating. Mexican University teaching still focuses on Marxist philosophy and Keynesian thinking. His subsequent exposure to the Austrian school of Economics was an eye opener which started him on a road which he hopes to help others in Mexico and Latin American become exposed to. He believes that the socialist thinking which South American universities are still oriented towards is one of the cancers in the world and hurting economic development.

“I became a real economist after I met the Austrian School of Economics!”

“The Austrian School has a framework to explain the current ‘economic mess’ in the world today!”

Barba’s popular Mexican blog is focused on financial intelligence because he felt the truth was not being told and it needed to be.

FINANCIAL REPRESSION

“Mexicans know perfectly what Financial Repression means! Living in Mexico means living in the neighborhood of the United States of America. That is a lot of financial repression!”

“The entire world is suffering from Financial Repression because there are Financial Repressors. That is the problem. Who are those financial repressors? As Hugo Salinas Price told him, the entire world is controlled by a group of about 1000 people and a smaller core group control most of the decisions. Most of them are bankers”

Barba believes that t he global reserve system which is based on the US dollar “is basically a scam”. According to Barba, to keep the whole system working the powers to be must get people into debt. Debt must grow exponentially.

IMPORTANCE OF SAVINGS

“Pushing people to spend and taken on debt versus savings is insane! Savings is the base and the cornerstone of development. Savings are the cornerstone of capital! The world needs capital accumulation, not debt accumulation!

“Debt accumulation is not sustainable. Capital accumulation is sustainable!”

Guillermo Barba believes the powers to be simply don’t know what to do other than just ‘print more money’. He also sees the US dollar getting much, much stronger as people generally won’t know what to do to protect their wealth. This will offer opportunities to use inflated US dollars to buy real estates at attractive prices.

….. there is much more in this interview on the Mexican and South American economies.

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: David Morgan – Silver Expert, Publisher: Morgan Report, Silver-Investor.com

An Aeronautical Engineer by training, David brings these analytic skills to his analysis of financial and commodities markets. He believes the inability of the majority of people to properly understand the significance of mathematical science such as the exponential curve is one such important example. A “hockey stick” of debt growth is simply and fundamentally unsustainable!

FINANCIAL REPRESSION

Keeping interest rates low is central to debt ridden governments surviving. Acording to David Morgan the government must keep rates low as long as possible but believes a reset of some sore is inevitable. David sees the mechanics and policies of keep rates repressed as fundamentally defining Financial Repression.

Financial Repression is like a big coffee press, pressing everything down and has suppressed the ability for us to have a free market and thereby enjoy the fruits of our intellect, labor, creativity and purpose as humans.”

POTENTIAL RISING INTEREST RATES

Many believe that rising interest rates will hurt gold. David fully expects the Fed to increase rates but sees it as being nothing more that “showmanship”. David suggests that:

“his experience shows that it is when REAL RATES get positive that you COULD see gold impacted from an increase in interest rates”

“What you really need to know is what are the real rates versus nominal rates which you see iin the newspapers.”

GOLD-SILVER RATIO

The current gold-silver ratio implies to David Morgan is that silver is presently undervalued relative to gold.

According to Morgan the Gold-Silver Ratio is telling us something else that is important.

“If you have a real economy with sound money you get a deflationary trend. This means your money is worth more over time. It is beneficial to almost everybody. Silver is the best inflation edge and not the best deflation hedge. Gold is the best deflation hedge. Silver anticipated this huge inflationary environment back when QE2 was announced and moved from $26/OZ to $48/OZ. What happened was all that anticipated inflation didn’t get into the market place because all the increased debt only resulted in re-liquifying the banks. They forced the money into the banking system and not out into the public sector.”

David believes silver is currently a better buy than gold. He still believes silver will outperform gold.

“We are not out of the woods. There is a place for precious metals in your portfolio. 20% for “metal bugs” and 10% for the average public.”

There is much, much more in this 32 minute interview with this well respected precious metals and silver expert.

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: Jeff Berwick

Jeff Berwick, based in Acapulco, Mexico, has formerly been interviewed in this series (https://www.youtube.com/watch?v=O20n_oDUx54 ). He founded the StockHouse Media Corporation in 1994 and was its CEO until 2002. He is publisher of the dollar vigilante website (https://www.dollarvigilante.com/ ), which went online in 2010. Back then, he predicted the complete collapse of the US Dollar and the world financial system within the next five to ten years. He thinks that we are a lot closer now. He recently predicted a massive breakdown for September 2015 based on the seven year “Shemitah cycle“ (http://surviveshemitah.com/ ).

Jeff is concerned about the dependence of governments and financial market institutions on extremely low interest rates, even negative interest rates, which he calls “complete Keynesian insanity”. What is happening in Greece right now is just the beginning. It will eventually happen in other eurozone countries like Spain, Portugal, Italy, France and in countries all around the world, including the US.

Government debt in most countries has become so high that minor increases in the interest rate would lead to immediate default. The explicit US debt is above $18.3 trillion, as shown in the figure below. This however does not include implicit debt and liabilities that the US government has accumulated over the years, for example in the form of social security. Total debt and liabilities according to Jeff amount to $95 trillion.

“All it takes is, for example, for the Federal Reserve to raise interest rates by .25 per cent and they can bankrupt the entire financial system. This is where we are now. It’s been complete insanity. They tried to fix the 2008 crisis by printing money and going into more debt, which is why they got into that problem in the first place. And we are starting to see the next wave of major collapses and crises.”

As a response to the ongoing war on cash, Jeff suggests to go out of large cash holdings as soon as possible. He sees one potential solution in BitGold and even more so in Bitcoin, as a completely decentralized money and payment system. The price of bitcoin has been rising during the recent Greek crisis, whereas gold and silver have fallen. However, Jeff points out that the prices for gold and silver are systematically distorted on a “very manipulated market.”

“There is no Bitcoin office, there is no BItcoin servers. So no matter what the government does, unless they turn off the internet entirely, they can’t stop Bitcoin. That’s the beauty of Bitcoin.”

Jeff also recommends the internationalization of assets as a hedge against oppressive interventions by individual countries (suggested links:http://tdvwealthmanagement.com/ and http://tdvoffshore.com/ ).

Although Mexico is often portrayed as a dangerous third world country, Jeff can tell from personal experience that it is in many respects a better place than the US, as there is far less government involvement in private and business affairs. Mexico will nonetheless face serious problems, because of their close economic ties to the US. The collapse of the American economy will inevitably spill over to Mexico.

“But I think people here [in Mexico] are more used to it. So, for example, they had their peso collapse in the 90s and people lived through it. But Americans aren’t ready for what’s coming. They haven’t seen it in their lifetime. And as you know, half the people in the US are on government assistance now, and a lot of those are on welfare and food stamps. When those EBT cards get shut down, I wouldn’t want to be anywhere near any major population center in the US.”

Jeff generally sees potential in other Latin and South American countries like Columbia, Chile and even Nicaragua, as well as some Asian countries, but definitely not in North America, Europe, Japan or Australia, which all share the same problem: the biggest cohorts of their populations looking for  unsustainable entitlement payments in the near future.

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: James Turk – Founder & Managing Director, GoldMoney.com

With a career in International Banking, including managing the Abe Dubai Investment Authority’s Commodities Portfolio, James Turk is an experienced professional whose insights should be thoughtfully considered. He feels strongly that the US needs to return to the sound money principles the framers of the US Constitution outlined and which the US has unfortunately and perilously veered away from.

FINANCIAL REPRESSION

“Financial Repression is government intervention in the market system which distorts the market’s signals. …. Government intervention not only distorts the markets but in fact is counter-productive because many times it is government policies which the market are reacting to!”

Instead of changing the policies, governments try and convince the markets (through intervention) that the policies they are following are the correct ones, when in fact they are not.

James feels strongly that governments need to be outside the markets and be primarily focused on maintaining the ‘rule of law’ and ensuring there is a level playing field for competitive capitalism to operate on. Government intervention results in distorting that playing field to the advantage of themselves and their special interests.

“(Governments & Central Banks) are following policies that basically are not sustainable!”

“The government’s ‘make believe’ is that they are creating wealth through creating currency and distributing it through their various programs. That is not creating wealth, but rather debasing the currency. When you debase the currency this is the worst type of financial repression because you are essentially destroying people’s ability to interact entirely voluntarily within the market place, as we fulfill our needs and wants.”

UNDERSTANDING WEALTH

There is only so much wealth in world. It needs to come from somewhere if it is to be distributed in a meaningful way. James Turk believes wealth fundamentally comes in two forms: Tangible Wealth and Financial Wealth.

Financial Wealth comes with counter-party risk and the exposure to insufficient cash-flows required to support the leverage that inevitably comes with pyramiding and the interconnection of financial wealth.

James Turk believes we are presently destroying wealth. Financial Wealth gets destroyed because of the eventuality of insufficient cash-flows (Free DCF) to support the over financialization of the economy.

…. there is much, much more in this fact filled 24 minute Video.

WAR ON CASH & BAIL-INS

• The Holy Alliance
• Perpetuating the Welfare State
• Why we can’t trust the banking sytem anymore.
• How banks have become Hedge Funds versus lending institutions,
• Why we need to separate the banks function of being a payments system versus being investment fund managers.

CRYPTO CURRENCIES

• What is the real purpose is of money,
• How the current environment is a historical aberration. We have moved away from a sound money system as the constitution framed.
• Why we need to return to the wisdom of the framers of the US constitution,
• Why Gold and Silver’s proven historical track record is important.

GoldMoney & BitGold MERGER

• Why GoldMoney and BitGold Merged,
• What James sees the future to be for the merger.

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: Joseph Salerno – Austrian Economist, Professor of Economics, PACE University, VP Academic MISES Institute

Professor Joseph Salerno is a noted Austrian Economist who spoke with the Financial Repression Authority on Financial Repression and his growing concerns with what is referred to as “the War-On-Cash”, which he sees leading America and other developed countries in the wrong direction. He sees it as presently gaining momentum in senior policy levels around the world as global debt problems become more acute.

FINANCIAL REPRESSION

“A combination of Deliberate Inflation and very low Interest Rates. Interest rates which are kept low by a variety of what are called “Unconventional Monetary Policies“.

“There is talk now of having:

• Negative Nominal Rates,
• Governments taking over Pension Funds,
• Varies ‘privileging’ of government debt as part of bank capital.

..so it (Financial Repression) is a series of interferences in the financial markets by government with the end being to push interest rate lowers so they can inflate away their debt! They do that by having interest rates even lower than the rate of inflation.”

“What Financial Repression does is transfer surreptitiously resources and coming wealth from savers and retirees to the government and its crony banks. I think it exists, it is dangerous and I think many people are being hurt by it!”

WAR-ON-CASH – GETTING TO NEGATIVE NOMINAL BOND RATES

Professor Salerno believes the government wants Negative Nominal Rates but as he points out: “The only way they can do that is to lock peoples deposits into the banking system – that is where the War-on-Cash comes in! They would love to restrict or even abolish the use of cash within the United States if they could. That means they would have to use deposits.”

“This is another way of propping up a very unsound and dangerously flawed banking system!”

Professor Salerno has spoken out extensively on this subject, most recently at the Mises Circle event in Stamford, Connecticut

Governments, at least modern western governments, have always hated cash transactions. Cash is private, and cash is hard to tax. So politicians trump up phony reasons like drug trafficking and money laundering to win support for bad laws like the Bank Secrecy Act of 1970, which makes even small cash transactions potentially reportable to the Feds.

Today cash is under attack like never before. Ultra low interest rates are the norm for commercial bank accounts. In Europe, as the ECB ventures into negative nominal interest rates, certain banks threaten to charge customers for depositing cash. Meanwhile, certain European bonds now pay negative yields, effectively turning them into insurance products rather than financial assets. And some economists now call for the outright abolition of cash, which shows just how far some will go in their crazed belief that economic prosperity can be commanded by forcing us to spend rather than save.

The War on Cash is real, and it will intensify.

PUBLIC FOREIFEITURE

Both bank deposits and withdrawals of cash are now carefully scrutinized by banks and police agencies across America. Safety deposit boxes are seeing increasing restrictions on what can be held in them in the way of cash. People depositing cash often find themselves facing public asset forfeitures and seizures by the police. In some cases when cleared as being innocent then have serious difficulty in getting their seized assets returned. Professor Salerno expounds on this and other troubling new developments in America.

….there is much, much more in this fact filled 29 minute 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.

Special Guests: Mark O’Byrne – Founder & Research Director, Goldcore

(Servitude: Impoverishment & Financial Imprisonment)

Mark O’Byrne feels that holding a Degree in Greek and Roman Civilization with a focus on their economic and monetary history. This gives O’Byrne insights into the cyclical nature of societies that few other writers have. It is these insights that Mark shares in this 35 minute video. Bank Bail-Ins are only a modern day indicator of financially collapsing societies. “Unfortunately, we don’t learn the lessons of history to our own downfall!”

FINANCIAL REPRESSION

“Given the large amount of debt in the world today we are seeing almost ‘anti-free market philosophies’ whereby the governments don’t like price signals and the pricing mechanism, so they are trying to repress this to repress interest rates.”

“By artificially suppressing the pricing mechanism, similar to forcing an inflated beach ball under the water, it will shoot up in another direction and can go in the opposite direction to what is initially intended!”

BANK BAIL-INS

“We are told Bail-Ins are to protect the taxpayer from the government having to bail-out the banks. But the depositors are the tax payers? Bail-Ins are just to protect the Senior Secured Debt holders!”

This is wrongful deception as people belief their money is safe in the bank It is intended to protect the assets of the Senior Secured Creditors within the banks capital structure. Private individuals and depositors are not holders of Senior Secured Credit to the banks which is strictly the realm of select international banks.

CONFISCATING DEPOSITORS FUNDS MEANS DEFLATION

“If you confiscate depositors funds (in a Bail-In) you will cause deflation like you would not believe!”

If you follow Mark O’Byrne’s analysis you quickly realize that Bail-Ins are both economically very dangerous and basically nothing more than regulations to protect elements of the bank financial structure. The question may be: are regulations today to protect tax payers from the banks or to protect the banks from taxpayers (depositors)?

“Maybe today we need to come to the obvious realization that the government is no longer regulating the banks, but rather the banks are regulating the government!” Gordon T Long

INTERNATIONAL DIVERSIFICATION IS THE ANSWER – While the Doors are Still Partially Open

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.