“This morning’s Wall Street Journal expressed it about as plaintively as it comes. In a word, the monetary politburo is waiting for zero interest rates, massive debt monetization and its wealth effects promises and “puts” to goose the macros: ‘The central bank has kept rates near zero since the recession to spur hiring, investment and spending.’ .. Does it really take purportedly intelligent people six years to see that the macros are not responding? Better still, isn’t it time for the Fed to explain the exact channel by which its interest rate pegging and forward guidance is supposed to be transmitted to the main street economy? After all, if these channels are blocked or ineffective then its flood of liquidity never leaves the canyons of Wall Street. In that event, the central bank actually functions as a financial doomsday machine, inflating the next financial bubble until it bursts. Then, apparently, its job is to rinse and repeat .. How in the world, it might be asked, is it possible that the chief beneficiary of the financial repression policies of the Fed is the very most affluent segment of society? That is a salient question—-but don’t bother to ask the liberal Keynesians who run the Fed. They do no even have a clue that it’s happening.”
– David Stockman

LINK HERE for Full 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.

“ZIRP (zero interest rate policy) and QE (quantitative easing) as practiced by the Fed and ECB are not boosting, but instead depressing, private sector economic activity. By using bank reserves to acquire government and agency securities, the FOMC has actually been retarding private economic growth, even while pushing up the prices of financial assets around the world. ZIRP has reduced the cost of funds for the U.S. banking system from roughly half a trillion dollars annually to less than $50 billion in 2014.This decrease in the interest expense for banks comes directly out of the pockets of savers & financial institutions. While the Fed pays banks 25bp for their reserve deposits, the remaining spread earned on the Fed’smassive securities portfolio is transferred to the U.S. Treasury – a policy that does nothing to support credit creation or growth. The income taken from bond investors due to ZIRP and QE is far larger. No matter how low interest rates go and how much debt central banks buy, the fact of financial repression where savers are penalized to advantage debtors has an overall deflationary impact on the global economy. Without a commensurate increase in national income, the elevated asset prices resulting from ZIRP and QE cannot be validated and sustained. Thus with the end of QE in the U.S. and the possibility of higher interest rates, global investors face the decline of valuations for both debt and equity securities.”

– Chris Whalen

LINK HERE for Full Article

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

The True Purpose of Negative-Interest-Rate Policy

For some reason, those who argue that the originary interest rate has become negative seem to overlook that the originary interest rate is a phenomena which is not confined to credit markets. It pervades all markets in which present goods are exchanged for future goods.

For instance, the originary interest rate prevails at each stage of the economy’s time-consuming roundabout production. The originary interest rate also exists in the stock market, where investors exchange present money against a claim on future money (that is a firm’s dividend payment).

If they wanted to be consistent, the believers in a negative originary interest rate would have to call for a policy that does not only make interest rates negative in real terms in the credit market, but also in the markets for, say, stocks and housing.

However, a policy that advocates destroying firms’ values and peoples’ housing wealth wouldn’t be taken too kindly by the public at large; and those economists recommending it couldn’t expect being cheered.

The consequence of a policy of a negative real market interest rate should have become obvious by now:

It is an actually perfidious policy for debasing the real value of outstanding debt; and it is a recipe for wreaking havoc on the economy.

Market interest rates may become negative in real terms. In a “hampered market,” for instance, the central bank can push the real market interest rate into negative territory. However, this does not, and cannot, represent an equilibrium, as time preference and thus the originary interest rate cannot become negative.

Should a central bank really succeed in making all market interest rates negative in real terms, savings and investment would come to a shrieking halt: as time preference and the originary interest rate are always positive, “capitalistic saving” — the accumulation of goods designed for improving the production process — would come to an end. Capital consumption would ensue, throwing mankind back into poverty. It would be the end of the market economy.

It might be interesting to note in this context that, for instance, the German national socialists had called for the abolition, the prohibition of the interest rate. Now you know why: Without a positive (originary) interest rate, the market economy will cease to function.

LINK HERE for Full 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.

AMERICANS ARE BEGINNING TO LEARN WHAT OTHERS HAVE ALREADY BEEN FORCED TO LEARN ABOUT CONTROLLING GOVERNMENTS.

SAFETY

Going Offshore is not about Tax Evasion it is about SAFETY against predatory and self serving Private Litigation & Exploding Government Laws, Regulations, Fines, Licenses and Fees.

RENOUNCING CITIZENSHIP LEVELS IS A GROWING SIGN OF ALARM

Land of the Free is Not So Free!

There is a difference between TAX EVASION and TAX AVOIDANCE.

One is illegal, the other is a family responsibility!

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.

“These days, interest rates tell us little about a nation’s creditworthiness .. The culprit behind this mess is a familiar one: central banks. Targeted rate reductions, quantitative easing, and other easy-money shenanigans have pushed rates to the floor .. and through it in some cases. Germany, Switzerland, Japan, France, Holland, and even troubled Italy are among the growing number of countries with negative-yielding government bonds. Negative-interest-rate policies (NIRP) have even spilled over into the corporate world. This upside-down environment makes it difficult for investors to grasp underlying economic conditions, especially since there’s no historic precedent. Credit has never been so abundant. The world has also never had so many currencies deadlocked in a race to the bottom. We are truly in uncharted territory .. Artificially suppressed rates have punished savers, encouraged reckless consumerism, and spurred share buyback crazes in the United States and Japan—a trend that’s likely to pick up in Europe now that the European Central Bank has begun its own bond-buying program .. Monetary policy is the only game in town.”
– Casey Research

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.

Market Watch article reports on new rules by the SEC on certain bond funds to prevent an investor exodus of a short period of time, similar to what happened at the beginning of the financial crisis .. these rules are influencing investor behavior .. [This is another example of financial repression – governments & regulators ‘ring-fencing’ to control the movement of capital.

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.

Create Research’s Amin Rajan sees the changing priorities of investors & in particular retirement money going into a new breed of diversified funds that target the evolving priorities – see above chart .. financial repression in a debt-fueled world are causing investors to rethink & to reallocate their funds .. permission for the below article provided by Amin Rajan, Create Research www.create-research.co.uk

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.

“All of the massive liquidity—-which took the Fed’s balance sheet from $900 billion to $2.5 trillion in less than a year—–worked it magic in the canyons of Wall Street, not in the household and business sectors of the main street economy .. The 5X gain in the Fed’s balance sheet .. has not been harmless——even though it has not stimulated the main street economy. What is has done, obviously, is reflate a massive financial bubble. The latter will splatter eventually, sending the main street economy into a new tailspin of short-term labor and inventory liquidation and another financial crisis for no reason whatsoever .. Do not these clueless Keynesian apparatchiks recognize that the money market rate and the yield curve are the most important prices in all of capitalism, and that their policy of massive and continuous financial repression generates blatantly false prices in the financial markets and therefore rampant speculation and asset price inflation? .. Needless to say, another quarter of no ‘escape velocity’ on main street and a further round of Kool Aid drinker speculation on Wall Street takes us just that much closer to the brink. Yet the Fed remains oblivious and continues to manufacture excuses and equivocations as to why ZIRP should extend into its 80th month and beyond .. This is mis-governance on a colossal scale. So when the next thundering crash occurs—-it is devoutly to be hoped that ‘audit the Fed’ turns out to be the least of the threats descending on the Eccles Building.”

– David Stockman

LINK HERE to the ARTICLE

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

The 4 pillars of Financial Repression:

1. Inflation

2. Negative Real Interest Rates

3. Ring Fencing

4. Obfuscation & Mis-Information

THE FOURTH PILLAR – OBFUSCATION & MIS-INFORMATION

UNEMPLOYMENT

Graham Summers of Phoenix Capital writes:

For six years, we’ve been told that the US economy is in recovery.

This is a totally bogus narrative that was dreamt up by the Central Planners running the Fed. Remember the “green shoots” craze of 2009. It was BS. The US economy is a disaster and has been since 2009.

The bean counters in Washington fabricate a load of nonsense to “prove” otherwise, but telling someone who is 5’6” tall that they are actually 6” tall doesn’t change their height.

Similarly, telling Americans experiencing a REAL unemployment rate of 10+% and an underemployment rate in the high teens that the economy is “recovering” doesn’t change their real-world experience.

Gordon T Long supported this view in the March edition of the GMTP where he wrote:

The U.S. is delivering at a staggeringly low rate of 44%, which is the number of full-time jobs as a percent of the adult population, 18 years and older. We need that to be 50% and a bare minimum of 10 million new, good jobs to replenish America’s middle class.

THE DISTORTIONAL TRICK

1. GIVEN UP – If you, a family member or anyone is unemployed and has subsequently given up on finding a job — if you are so hopelessly out of work that you’ve stopped looking over the past four weeks — the Department of Labor doesn’t count you as unemployed. That’s right. While you are as unemployed as one can possibly be, and tragically may never find work again, you are not counted in the figure we see relentlessly in the news — currently 5.6%. Right now, as many as 30 million Americans are either out of work or severely underemployed.

3. UNDER-EMPLOYED – Those working part time but wanting full-time work. If you have a degree in chemistry or math and are working 10 hours part time because it is all you can find — in other words, you are severely underemployed — the government doesn’t count you in the 5.6%.
4. BIRTH DEATH MODEL – a Plug number that shows dramatic job growth yet the net new enterprises added in America is Negative 70,000 over the last 6 years. Big corporations are still cutting (HP -58,000, America Express -4000) so the number is obviously a statistical “fix”

When the media, talking heads, the White House and Wall Street start reporting the truth — the percent of Americans in good jobs; jobs that are full time and real — then we will quit wondering why Americans aren’t “feeling” something that doesn’t remotely reflect the reality in their lives.And we will also quit wondering what hollowed out the middle class.

Only 15% of those entering working age population are finding jobs

Graham Summes of Phoenix Capital also writes :

GROWTH & GDP

As far as real economic growth goes, if you want a clear picture, you need to look at nominal GDP growth. The reason for this is that because the Fed greatly understates inflation, the official GDP numbers are horribly inaccurate.

By using nominal GDP measures, you remove the Feds’ phony deflator metric and the other accounting gimmicks created by the bean counters to overstate growth. With that in mind, consider the year over year change in nominal GDP that has occurred.

Historically, the level of economic growth post 2010 has been associated with recessions. Small wonder that this “recovery” actually feels like an economy that is not growing: when you take out the accounting gimmicks, GDP is flat lining.

ACCOUNTING GIMMICKS

Speaking of accounting gimmicks consider the massive divergence between corporate revenue growth and EPS growth (hat tip Lance Roberts). You cannot fake revenues: they represent real growth. EPS on the other hand, can be massaged a million different ways.

Notice that the un-massaged growth post-2009 is just 30%. The massaged “growth” is 250%. Bear in mind, executive stock options are linked to EPS… so guess who got rich in the process.

Again, this whole economic “recovery” and stock market boom is based on accounting gimmicks and outright fraud. It’s a giant house of cards that is primed to come crashing down… just as it did in 2000, 2007… and will today.

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.

Forbes article emphasizes the worst “scandal” of LIBOR, not what happened a couple years ago when the LIBOR rate was found to be controlled by a few banks – but about the effects of a low LIBOR rate (low interest rates) on the global economy .. what is LIBOR? – it stands for “London Interbank Offered Rate,” which is a benchmark interest rate that is derived from the rates that major banks charge each other for loans in the London interbank market – LIBOR is used as a reference rate for hundreds of trillion dollars worth of commercial & consumer loans, derivatives, & other financial products across the globe .. “The vastly worse LIBOR ‘scandal’ that I am referring to is the fact that the LIBOR has stayed at record low levels for the past half-decade [from financial repression], which is helping to fuel a massive economic bubble around the entire world that will end in a devastating financial crisis that will be even worse than the Global Financial Crisis. Instead of causing a few tens of billions of dollars worth of losses like the LIBOR rate-fixing scandal, the ‘LIBOR Bubble’ will gut the global economy by trillions of dollars.”

Extended low LIBOR rates have been “helping to inflate the emerging markets bubble that I am warning about” .. sees 3 scenarios of the end-game .. concludes: 
“The popping of the ‘LIBOR Bubble’ may not even require Libor rates to rise because the bubbles may endogenously collapse under their own weight after growing even larger in the next few years. Though the popping of the global bubble is likely several years away, the time to worry about this situation is now because the damage (the debt buildup and asset price inflation) is occurring at this very moment.”

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.

Article highlights an Alberta bank is now the first in Canada to shun U.S. clients on bank accounts .. Canadian Direct Financial, a subsidiary of Edmonton-based Canadian Western Bank, is refusing to open new accounts for U.S. citizens, even to those living in Canada – “The information and documentation required to open and monitor an account within Canadian Direct Financial for a U.S citizen or resident outside of Canada is prohibitive to providing the level of service our clients expect and deserve.”

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.

Heta Bank in Austria has perhaps reached the end of the road. The bank, which was bailed out by the Austrian Government a few years ago & is now in need of another bailout but none will be forthcoming .. Rather, bondholders & creditors will be paying for the bailout & this will have the effect of triggering the CDSs (Credit Default Swaps). Will this lead to a series of cascading collapses among banks across the world? That’s the fear among many alternative economists across the globe, only time will tell .. 24 minutes

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

Janus Capital’s Bill Gross* on the outlook for Federal Reserve policy, the U.S. economy & his objectives at Janus Capital .. “The interest rate can’t be raised substantially even over the next two to three years .. Low interest rates keeps zombie corporations alive because they can borrow at 3 and 4%, as opposed to the 8 or 9%. It destroys business models. It’s destroying the pension industry and in the insurance industry .. Ultimately, low interest rates destroy the capitalistic model at the margin. Instead of investing in the real economy, corporations can now simply borrow at close to 0% and buy their own stocks, which yield 2 or 3% on a dividend basis and provide a return of 6 or 7% on an earnings to price ratio basis.” .. 12 minutes

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

BMG Bullion Group’s Nick Barisheff writes a great essay on how the mainstream media omits facts & distorts the truth to suit their agenda – this is particularly true in the negative media barrage against gold .. “Anyone who cares to look outside of the mainstream media propaganda will conclude that the drop in gold prices was clearly an orchestrated event, first in 2011 with a one day drop of 7.2%, and then in April 2013 for an 8.5% drop. In the early morning hours of January 6th, 2014, 12,000 gold contracts representing $1.5 billion of naked short selling was forced onto the paper gold COMEX market. Without speculating about who did it or why, it should be obvious that no trader would sell that much gold into the market at one time, effectively minimizing their sales proceeds.” .. also highlights the connection between paper COMEX markets & the exchange-traded fund GLD, & how this ETF negatively affects gold prices in times of naked short selling (selling gold without physically having it) –LINK HERE to understand more about the GLD ETF & these problems .. Barisheff dismisses the obfuscation by maintaining “when the manipulation of gold prices can no longer be sustained, gold will skyrocket as the public loses confidence in all fiat currencies.” – see the recommended 20 minutes video below on this .. presents the following factual-based chart showing the positive effect of having gold in your portfolio – see left or link below.

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.

James Turk sees the Federal Reserve as constantly warning that interest rates will rise eventually – but it never seems to happen .. “The obvious strategy the Fed has employed is to delay raising rates as long as possible, but to keep the markets on a knife-edge by saying that rates will rise eventually. They always tie it to something, like the level of unemployment or when the economy improves or inflationary pressures become greater or whatever is the latest benchmark. Former FedChairman Ben Bernanke repeatedly said that the Fed would raise interest rates when unemployment fell to 6.5%. We are below that level — at least by the number reported to the public. But the Fed has done nothing about raising rates except to continue jawboning that it will happen.” .. will it happen & when will it happen? .. Turk emphasizes the Federal Reservenever wants to admit the real reason why interest rates are low – it’s financial repression to keep interest rates low & erode the purchasing power of the currency to lessen the burden of debt .. “Interest rates are low because the U.S. government is over-leveraged and cannot afford to pay a fair interest rate.” .. Turk reasons: therefore if the Federal Reserveraises interest rates, then interest payments on the national debt will escalate money printing even faster to the point of hyperinflation.

LINK HERE to the ARTICLE

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

“QE was never meant to create jobs or generate economic growth… it was a desperate ploy by Central Banks to put a floor under the bond market so rates wouldn’t rise.

… It’s also why Central Banks have kept interest rates at zero or even negative. They cannot afford to have rates rise.

In the US, every 1% increase in interest rates means between $150-$175 billion more in interest payments on our debt per year.

LINK HERE to the ARTICLE

As Dylan Grice from Societe General notes:

when you include unfunded liabolities, this problem is endemic throughout the Western world and has been for years.

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.

Speaking at AARP headqusrters in Washington, President Obama will announce ORDERS to the Labor Department to write new rules for financial managers who handle retirement accounts for working Americans.

THE COVER

As USA Today reports, The White House says the goal is to end “hidden fees that hurt consumers and back-door payments that help Wall Street brokers,” deals that costs retirees billions of dollars in savings.

THE AGENDA

White House officials said they want new fiduciary standards that would require financial advisers to put clients’ interests ahead of their own… and “buy our bonds.”

We wonder how long before there will be an official asset allocation by dictat…??

ABOVE EXTRACTED FROM > ARTICLE

https://youtu.be/oMDTtYMGAAY

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 anti-austerity sentiment appears to be gaining momentum even in the core nations of Europe ..  Even the president of the European Commission recently questioned the usefulness of austerity, noting its results so far have only been shrinking growth and social suffering .. Austerity in Europe is on life support, but the insatiable desire to spend is not limited to just Europe .. Seduced by low interest rates, governments all over the globe are yearning to return to their former big spending ways. Using the cover derived from lower deficit to GDP ratios—caused by record-low rates–politicians are emboldened to return to their first love .. deficit spending. For example, the interest payment on the national debt in the U.S. is lower today than it was prior to the financial crisis, despite the fact that the national debt is $9 trillion higher .. When interest rates rise above these currently manipulated low levels, not only will payments for debt service soar, but the asset bubbles created by central banks over the past seven years will burst.”

– Michael Pento

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.

“In this environment, policy makers are finding their authority, credibility and firepower being tested. In turn, they are finding it tempting to pursue ‘financial repression’—suppressing market prices that they don’t like. But this is bad policy, not least because it signals diminished faith in the market economy itself. In environments of financial repression, businesses are keener to retrench than recommit their time, energy and capital to new projects. Trillions of dollars of private capital remains on the sidelines. And the private-sector engine that drives prosperity sputters .. Financial repression is sometimes the effect of policy even if it is not the intent. It manifests itself, for example, when policy makers react more forcefully to declines in asset prices than to increases. Price increases tend to be treated with benign indifference. But declines often lead policy makers to respond with force, deploying fiscal stimulus and monetary accommodation. Market participants then conclude that governments have their backs .. The Federal Reserve’s continued purchase of long-term Treasury securities risks camouflaging the country’s true cost of capital .. With financial repression at play, we risk missing early warning signs from markets that our debt burden is intolerable .. Financial repression embeds the wrong incentives—obfuscation begets delay, and a robust recovery becomes unattainable .. Financial repression is a tactic that may help get us through the week or month or year. But it will come at a substantial cost to our long-term prosperity.”

– Kevin Warsh, Former Federal Reserve Governor,  a distinguished visiting fellow at Stanford University’s Hoover Institution, on the Steering Committee of the Bilderberg Group

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.

Axel Merk emphasizes the advantages of investing in gold to address the investment challenges in the era of financial repression .. points out how the days of low or 0% interest rates is moving into negative interst rates in several countries – this is a form of financial repression where savers earn less than the inflation rate to discourage saving & the purchasing power of your assets loses value over time .. on gold, highlights how the purchasing power of gold has not changed all that much & therefore it presents itself as an investment asset for financial repression .. Merk explains how the interests of government on their massivie debt are driving policies to mechanisms of financial repression to “debase the value of debt” – negative interest rates, inflation loss of purchasing power, & currency debasement .. “Differently said: interests of the government and savers are not aligned. More broadly speaking, investors – be that in the U.S., Japan, Europe, can’t rely on their government to preserve the purchasing power of their savings.”

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.