Mark writes, "With politicians and central bankers seemingly gone mad with their obsession for money printing and ultra low interest rates, it is nice to know that academic economists have a term (i.e., financial repression) for the policies that have created our current economic conditions.

However, it is not a new term. Its use dates back to at least 1973 when two Stanford University economists, Edward Shaw and Ronald McKinnon, used the term in separate publications. The phrase was initially meant to criticize various policies that reduced economic growth in undeveloped countries, rather than as an indictment of the world’s leading modern economies.

Financial repression is a revolving set of policies where the government insidiously takes wealth from the private sector, and more specifically makes it easier for government to finance its debt. In today’s environment this includes:

  1. ZIRP or “zero interest rate policy” where many of the world’s central banks keep their lending rates to banks at or near zero. Naturally, this makes the interest rate on government debt lower than it otherwise would be.
  2. QE or “quantitative easing” is the central bank policy of buying up government debt from banks. This increased demand increases the price of government bonds and reduces the interest rates on those bonds.

These are the two major policies of financial repression currently in use. The combination of the two policies has allowed governments to borrow money, both short- and long-term bonds, at extremely low interest rates. This, in turn, has kept the government’s interest payments on the national debt relatively low." 

It won't end well of that we can be certain. Take a look at the frescoes Mark refers to in his article and see if you recognize a parallel to modern America. The Allegory of Good and Bad Government

Direct download: Mark_Thornton_02.Jun.15.mp3
Category:general -- posted at: 3:03pm EST
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Danielle Park explains why value investors are always as popular as the Maytag Repairman. They look for those situations that the vast majority have passed over. In today's market there are very few such securities in existance. They ignore the hype of the brokers (formerly known as customers' men) and market mania focusing only on true value and real assets. Will value investing make a comeback after the next crash? No one knows the answer to that but we can only hope.  

Direct download: Danielle_Park_02.Jun.15.mp3
Category:general -- posted at: 2:16pm EST
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Jamie Meloni says The Real Estate Business has changed and evolved over the last several years. In this current society you have to be very careful where you give your info and what you spend your money on.

 

The positives aspect of the Real Estate business is it will always be alive and provide a solid source of income. In the current market, there are going to be a lot of new millionaires created from the recent drop in house prices. Now is the time to invest!

Direct download: Jamie_Meloni__02.Jun.15.mp3
Category:general -- posted at: 2:09pm EST
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