A hedge fund friend of sent a link around to a bunch of us about financial repression. We had an interesting conversation, parts of which I want to pass on to you as my daily commentary. The article was by Financial repression fast becoming a reality by Tony Jackson in the FT. Jackson writes:
The concept of financial repression has been on the edge of investors’ minds for a while. It ought to move to the centre, for it is becoming a reality.
In essence, the process involves governments using their muscle to force down the real value of their debt. It can take many forms, but they boil down to two.
First, governments push down real interest rates, with or without the help of rising inflation. Second, they oblige domestic institutions such as banks or pension funds to soak u...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.