Financial Repression – The Most Important Thing For You To Understand In 2013


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Here is my year end gift to you. It is the single, most important thing I learned in 2012.

Understanding Financial Repression is vital knowledge. It affects housing prices, your retirement savings, and the future of America. – BC

The government is diminishing the purchasing power of your savings by 3% a year for their benefit. Did you know that?

Besides income tax and social security/medicare, did you know that Americans are paying a third ‘invisible’ tax over $500 billion a year? Most people are blissfully unaware of this.  Imagine the outrage if politicians proposed a tax increase of this magnitude in plain view.

If you really want to understand the meaning of financial repression, it will take some time to wrap your head around; time well spent. What I am telling you about is happening right now. It has completely changed the way I view the our government, interest rates, housing, and investing for my retirement.

Get ready to hear more people talking about Financial Repression.

Reading these 3 articles by Daniel Amerman started my education of financial repression.

Dan is a CFA, and former Wall Street mortgage quant. He has a free email you can sign up to receive, which I totally recommend. 
This article appeared recently, and is one example of financial repression.

(scr*wing old people (savers) to save on US treasury borrowing costs) The Fed Has Removed $425 Billion Worth Of Interest Income From The Economy – Mike Norman – Business Insider  

Thanks to Grant Walmoth for pointing out the next 3 links.

No less than PIMCO has written about financial repression.

1. A New Era of Global Financial Repression – Scott A. Mather- PIMCO – … What Is Financial Repression? Any sovereign policy that interferes with free market activity and the pricing of debt or currency can be thought of as an act of financial repression. … Investors need to be especially alert to increasing financial repression, because it transfers value from savers, investors and creditors to government debtors. We are likely on the cusp of a new era of global financial repression, with important and far-reaching investment ramifications. … (cites Carmen Reinhart and M. Belen Sbrancia) 

2. Socialism ‘No’, But Financial Repression ‘Yes’ – Kenneth Rapoza – … The world is now being restructured to erode savings. There are negative rates in Germany. There are near zero to negative rates in Japan, and even Hong Kong, which is pegged to the dollar. Interest rates there are around 1 percent. … – Forbes

3. The Age of Financial Repression – Sylvester Eijffinger and Edin Mujagic – … Financial repression occurs when governments take measures to channel to themselves funds that, in a deregulated market, would go elsewhere.  …Project Syndicate 
Finally, here is Wikipedia’s definition of financial repression – … Financial repression can be particularly effective at liquidating debt. … 


If you spend time learning about this, or have questions, I would like to hear from you. You can ping me at Linkedin. – Bill 

2 thoughts on “Financial Repression – The Most Important Thing For You To Understand In 2013

  1. Pingback: week5 | Mortgage News Clips

  2. Pingback: Housing Priced in Gold, Non-Agency REITs, Using GSEs as Stimulus, FC Backlog Decline, Fed Stops NPL Data Series, Year In Review, DQs Up FCs Down, Occupy Wall Street Debt Forgiveness, Give Ben Room To Print, Radar Logic On Housing, QE Not Effective?, Rever

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