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FINANCIAL REPRESSIONWhy Financial Repression Is a Ruinous Rip Off By Delwyn Lounsbury - THE DEFLATION GURU Don't look now but you are living in the financial repression era. Financial Repression is when governments print money, borrow, flood other countries with their money and even buy foreign bonds to keep the boom going. The result is your get artificially low interest rates at the expense of all of you who thought they were going to earn a fair rate on money you lend and count on for retirement income. Government feeds and grows on the loss of value of your money and the subsequent low interest rates like a huge parasitic cancer. All this may be ending - badly. Treasury, corporate and investor "carry trades" (borrow short-term to lend long; and short higher quality to finance holdings of lower quality/higher yielding instruments) will eventually catch many leaning the wrong way. Especially when everyone expects more inflation and we have the Greater Depression deflation in all assets and prices instead. Read on! The U.S. dollar of 1913 (when the Federal Reserve Bank a fraudulent monopoly cartel was formed) is now worth two cents. As debt dynamics deteriorate they may yet try currency sterilization or selling the dollar and buying foreign currencies. What the FED has not tried - yet - is borrowing foreign currencies and selling them with the plan to repay at lower prices - another form of financial repression. They probably will try it before this is all over. Thus, flooding the world with dollars and shrinking the amount of euros, pounds and yen. Robert Prechter say the dollar will be strong and in a bull market for the intermediate term. So, this ploy may backfire and make America's problems worse. The Federal Reserve Bank, a fraudulent monopoly and cartel has used quantitative easing (money printing without even putting ink on paper) which is buying US bonds and Treasuries and crediting the federal government's account (monetization). Since, 2008 the FED has been able to increase the money supply by 300 percent. Deflation will send all the trillions created to "Money Heaven." Poof! Money is gone in crashing asset prices of every asset class plus real estate, stocks, (soon) bonds, commodities, antiques and collectables. Here at the start of 2012 real estate values are down 26 percent which is equal to the drop back in the 1030’s depression. Robert Prechter says the washout low may reach a 90 percent loss. What the FED has not tried - yet - is borrowing foreign currencies and selling them with the plan to repay at lower prices - another form of financial repression. They probably will try it before this is all over. Governments ruin the value of money planning to pay it back with depreciated paper. They never pay it back though. It should be criminal and is actually a hidden form of TAX. All taxes are a price fix and a loss of personal freedom. Financial Repression does help business trade with other countries in the short term as U.S. products become more competitive. However, the cyclic swings can confuse corporations completely causing contracting recessions in the short run and eventually depressions to correct all the excesses arising from government meddling with the economy. Stupendous spikes in government debt occurred in the 1930's depression and in the 1980's debt crisis. Today, financial repression is dogging China due to their holding of trillions of dollars of U.S. debt. Currently, inflation is keeping their engine running. For how long is the question? Financial repression rears its ugly head when governments borrow from investors, pensions, hedge funds, banks and other countries. In addition, governments use interest rate manipulation caps, the regulation of movement of capital across boarders and increased transparency. More transparency equals increased regulation if you want a short definition. New tough lending standards along with simultaneous low interest rates at the same time mean money is tight and on sale. It means there are few qualified borrowers lenders are fearful and hesitant to lend. People and businesses are choking on debt and can't really carry any more burdensome borrowing. The savings rate has gone from 0 to between five and ten percent. People and businesses are trying to pay off debt. The world banking meltdown of 2007 and 2008 caused banks to restrict lending (also known as transparency). They are running scared and not lending. Just like in the 1930's. Anyway, the gist of financial repression is that government waters down it's currency to pay for borrowing. Just like a drug dealer who cuts his dope in order to sell more. It is actually government bankruptcy! Fiat money! Fiat money is money with no gold backing. Fiat means "let it be made" in French. History has shown that fiat currencies always go bust. Austrian economics maintains that fiat money created out of thin air along with fractional reserve banking leads to runaway credit inflation which always ends in a credit deflation crash. Now days, they just create money with a computer entry. The FED sells government bonds and T-bills and credits the government's account. No need to waste any paper. Ha! Ha! The result is that assets boom and bust. First real estate crashes. Gold and stocks follow a couple of years later. You can plan on a 90% drop in most asset prices by 2016. Robert Prechter author of "Conquer the Crash" 2002, says interest rates will spike up as people borrow to stay afloat - even in the Greater Depression we are experiencing. Our federal government ramped up financial repression in the 1930's great depression, the 1980's debt crisis, the 1990's savings and loan debacle, LTCM (Long Term Capital Management) crisis in 1998 and the recent 2007 - 2008 sub prime mortgage financial crisis. Ben Bernanke, head of the FED, like other Keynesian socialists of the past is trying to pump money into the economy with QE1 and QE2. But, cries for debt reduction and for an end to the insane borrowing grow. The U.S. national debt has ballooned to a new high of $14.5 trillion dollars under the Obama Presidency. Government financial repression is a rip off ruin of savers; the elderly on fixed incomes and the whole bottom half of the population that can't invest to ward inflation off. GAME OVER! The Greater Depression started in 2000 with the dot com mania stock peak. We've been in the Greater Depression for 11 years now. The CPI says so. In fact, the chart of the CPI shows it reversing down recently after hitting the 62% (golden number) retracement level. The Anglo financial power elite banksters have had it with their money losing value. Most of their assets are in the U.S. where it's safer. The dollar will be strong. They have already sold most of their real estate. Now, the elite will be dumping stocks, commodities and junk bonds. The same thing happened in the roaring 20's leading up to the depression. Bankers back then saw high inflation rates threatening to make their loans worth next to nothing when they were finally paid off. 10% inflation times 10 years equals zilch purchasing value. Zero! Nada! Franklin Roosevelt and his socialistic "New Deal" started us on this path of growing government to the moon. President Barack Hussien Obama, Ben Bernanke, Alan Greenspan and all the Keynesian do-gooders since joined in the charade. It's better to lower taxes and let business do the hiring. The jobs in the New Deal were gone when the project ended. Free enterprise creates real lasting jobs. Not more socialism and bigger more wasteful government! What a myth the New Deal was - along with the myth about WWII getting us out of the depression. Ha! It was coming out anyway. When does wasting tons of resources and killing hundreds of thousands of your workers (I mean soldiers) really help? Government will probably balloon the debt even more trying to stop the pendulum of deflation from swinging in a mistaken Keynesian ploy. It can't be stopped this time. It's too big! QE1 & QE2 money will just disappear like one third of real estate values have. Already, banks are getting "transparency" treatments in the form of huge amounts of government oversight and are setting tighter internal lending standards themselves. Banks aren't lending. In fact, banks are in trouble. Pre-tax profits at six major lenders fell 40.2% in the first quarter of 2011. Deflation and Greater Depression dead ahead! Only private gold backed money will stop government repression reflation from rearing its ugly head again. Lobby for it or else we get a hyperinflation deja' vu all over again. Forget about inflation. First, we get the Greater Depression three times larger than the one in the 1930's due to Elliott wave & Fibonacci number scale. Can you say Grand Super Cycle scale?. That's an Elliot wave principle term that you should know about. Have you read "Conquer the Crash" by Robert Prechter? You had better, or else financial repression will head-fake you! Get an 8 chapter download free at my website. President Obama is ruining the economy with borrowing, socialism like ObamaCare and increased government spending. Now, he wants to raise taxes to pay for his investments? His "investments" are covert communist code comrade for bigger government. When has government made a profit or done anything more efficiently than the free market? Obama is a one-world-government/new-world-order "Big Brother." Obama is trampling on the Constitution, ruining job growth, growing the size of government and killing "goose that laid the golden egg" of free enterprise - all at the same time. Do not re-elect this Marxist tyrant turning fascist on us. Your liberty and freedom are at stake. He wants a one-world-government and will do everything he can to weaken the U.S. This is Treason! The only cure for inflation is deflation. Sorry. It's true. The Greater Depression will catch all those thinking they can pay the huge debt with financial repression and a cheaper dollar. Government will get caught with their pants down. Hardly anyone will be making money. Tax revenues will collapse even more than they already have. Warning! With deflation and 50% unemployment coming, they will try financial repression again. Don't let them do any more financial repression and stupid stimulus deficit spending! Only private money backed by gold can stop the financial repression and save the world. Only gold is honest and not someone else's debt. Get some when prices drop. PS Beware the financial power elite push for a one world government. It is a collectivist conspiracy meant to make you their slave in a feudal NEW DARK AGES. Copyright 2011 by Delwyn Lounsbury - THE DEFLATION GURU
Use of this article allowed with attribution back to:
http://www.deflationeconomy.com
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