Financial repression occurs when Central Bank policy drives interest rates well below the inflation rate.
Financial repression is a term introduced in 1973 by Stanford economists Edward S. Shaw and Ronald I.
FORBES: The Government, The Retiree And Financial Repression
Meanwhile, deficits turn into increasing levels of sovereign debt that can only be funded by financial repression.
Financial repression has been the way out so far, Reinhart and Sbrancia write.
FORBES: S&P Downgrade: Short Term, Meaningless. Long-Term, Spot On.
By suppressing nominal interest rates and pushing real rates into negative territory, the Fed has engaged in financial repression.
FORBES: Ben Bernanke's QE4: Another Step Toward Helicopter Money, And Away From Freedom
"The basic goal of financial repression is directing credit to the government on terms as inexpensive as possible, " Ms. Reinhart says.
WSJ: The Intelligent Investor: Why Bondholders Should Be Worried
Financial repression may compel U.S. institutions to buy bonds at yields that all but ensure negative returns in the long run.
WSJ: The Intelligent Investor: Why Bondholders Should Be Worried
The post-war period of financial repression occurred under the Bretton Woods system of fixed exchange rates, which was marked by tight capital controls.
Now given we live in a globalised financial market, with free-floating exchange rates and no capital controls, how would you "do" financial repression?
Financial repression would chart a middle course through these outcomes, in which the real value of holdings in government bonds was steadily eroded by inflation.
By downsides, I refer especially to the loss of flexibility if circumstances change and the prolonging of an already too long period of financial repression.
Essentially, this is an example of an attractive investment area in an age of financial repression, as they continue to grow dividends and repurchase stock.
This financial repression tax is unlike income, consumption, or sales taxes.
FORBES: S&P Downgrade: Short Term, Meaningless. Long-Term, Spot On.
On a practical level, using gold as money has never been easier (though financial repression of gold through taxes and regulation still presents a formidable barrier).
Financial repression, when coupled with inflation, provides a more optimum environment for a debt-laden government to dig out of its hole (more on that in a moment).
FORBES: The Government, The Retiree And Financial Repression
As a result, financial repression, say economists and fund managers at Schroders in London, is becoming as much a part of the new normal as is slow growth and deleveraging.
"Good-bye financial repression, hello financial crash, " by Carlos Diaz-Alejandro.
Quantitative easing by the Federal Reserve Bank of the U.S. is a form of financial repression, because investors who are long safe Treasury bonds are losing money after inflation is factored in.
Financial repression has penalized savers while rewarding banks.
The most fruitful reform, notes Lardy, would be to end financial repression by liberalizing interest rates, which would increase real rates on deposits, thereby decreasing saving if the income effect is strong, and increasing consumption.
It is hard to escape the conclusion that "financial repression" - as mooted by Reinhart and Sbranica - is, if not under way, then being pieced together ad hoc out of the anti-crisis measures in Europe.
And financial repression has ripple effects.
WSJ: The Intelligent Investor: Why Bondholders Should Be Worried
Republicans, on the other hand, have desecrated the limited-government legacies of Reagan, Goldwater, and our founders by embarking on spending orgies with borrowed money -- a form of deferred taxation and financial repression -- while hiding beyond false pledges of tax purity that have made tax reduction and simplification much more difficult to achieve.
"It is high time the Bush Administration provide credible disincentives and impose serious financial and other sanctions for actions of repression being undertaken by Gorbachev to crush genuinely democratic forces, " said Roger W. Robinson, a Center Board Advisor.
应用推荐