Financial Repression 101

The comments below are an edited and abridged synopsis of an article by MN Gordon

Central banking: Has any other single idea extracted more wealth from the lowly wage earner? The Federal Reserve’s backdoor taxation program has snookered honest hard-working Americans for over 100 years.

Financial Repression 101 | BullionBuzz | Nick's Top Six
Image of collecting consumption tax with a magic hand from a trading drawing doll

Bad ideas are well received because they generally promise something for nothing. That one can live off the forced philanthropy of their neighbours. That one can get more out of their retirement fund than they put in.

Promises of fruit without labour are fantastical. They’re also the reliable way for politicians to get reelected. How can it possibly be a good idea to spend more, tax less, and fill the gap with more and more debt?

From a sound fiscal and currency management perspective, this is a terrible idea. Certainly, a policy to spend less and tax less would be sounder. But for a politician looking to win votes, promising something for nothing is the only way to go.

Up for discussion: Popular delusion (the idea of easy riches clouds clear thinking) and financial repression 101 (pegging short-term interest rates below the inflation rate).

Is the stock market rolling over? Or is this merely a correction before stocks uncork to even more dizzying heights?

Anything’s possible when monetary and fiscal policy makers are conspiring to devalue the dollars in your bank account, and that’s the real story.

The books are being reckoned via the printing press. It’s happening at this very moment, and it will continue for many years to come. Better get used to the madness.

Leave a Reply

Your email address will not be published.