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Financial Repression (For Dummies) : What Has Really Been Going On Since The Crisis of 2008

It is in the interests of those in power to promote the “recovery” meme and to have people buy into the status quo. Politicians and those pulling their strings, Wall Street and the financial networks of the mainstream media have been trumpeting economic recovery and full steam ahead for what, six years now.

For the most part people seem to be buying into it.

Surely, if you are not one of the 92.6 million who are now out of the workforce there certainly is something that should make you take pause notice that reality does not quite match up with the tale being presented to you. It could be your grocery bill, the absense of any compounding interest on savings you may have or older family members trying to live off of their nest egg. You must at least suspect something smells fishy!

I realize everyone is busy and distracted, but it does seem that many would rather just keep their head in the sand rather than be willing to face reality.

The following video is a 37 minute investment that will be well worth your time. Gordon T. Long of Macro Analytics interviews Grant Williams, chief investment strategist for Mauldin Economics’ premium publication, Bull’s Eye Investor, as well as the author of the popular free investment letter, Things That Make You Go Hmmm…

With accompanying slides, Williams lays out in terms that anyone can understand exactly what has been happening since 2008 (and long before for that matter).

Financial Repression is the government’s attempt to steer behavior away from true investments and into those that assist the government to pay down its debts.

“The result is essentially outright theft by borrowers from savers. The pool of savings on earth is the last really untapped pool of capital that government has to go after”.

According to Williams the explosion in credit through removal from the Gold Standard, financial engineering and keeping interest rates low has left a differential between Credit Growth and GDP that has forced governments with no choice but to adopt Financial Repression policies. By debasing their currency and through inflation government creates the most insidious type of wealth transfer that most people just don’t understand.

In the video:

  • 3:40 • What we’re getting here is outright theft from savers to borrowers
  • 4:20 • chart of credit vs GDP going back to 1929
  • 5:30 • the farce of de-leveraging since 2008
  • Central Banks are trapped
  • it punishes those who have been diligent and saved
  • it’s a most insidious transfer that most people do not understand
  • 8:45 • Chart of real savings rates for the safest instrument
  • 9:30 • Chart shows the interest earnings that are being robbed from you. (‘should make you sick)-you’re being forced to put your capital into riskier instruments
  • retirees were told to plan on 6% return on their money to live on-They are burning through their capital which is also getting eaten by inflation. Which is why many of the jobs the administration claims to have created have gone those aged 55-69. see: Hiring Grandparents Only
  • 15:00 • At some point the forces of the business cycle are going to reassert themselves
  • 18:00 • It’s a stealth tax on people and unfortunately the average person is not engaged enough in economics to really understand what’s going on.
  • when you’re told by the government that inflation is 1.2% people have a sense that may not be quite right but don’t actually challenge it
  • What you can do moving forward

Everything will seem just fine until suddenly it isn’t. If you’ve been buying the BS so far you’ll believe whatever your told then. It’s ISIS’ fault, It was Russia who hacked us, China did it, Syria……….

 

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comment and start a conversation.

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One comment on “Financial Repression (For Dummies) : What Has Really Been Going On Since The Crisis of 2008

  1. […] Financial Repression For Dummies: What Has Really Been Going On Since The Crisis of 2008 […]

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