A Sheep Shearing Instruction Manual
Financial Repression (Yes, it's an Actual Proven Economic Strategy in Use Right NOW)
I was researching historical way governments have “paid off” huge debt burdens short of the default or debt repudiation that many of my gold bug friends seem to expect.
I stumbled on this 12 yrs old video which clarified some key concepts for me. It’s a little noisy but rather humorous and EXACTLY (IMHO) how the US gov will attempt to deal with the unprecedented mountain of debt going forwards.
Forewarned is Forearmed!
From the author’s recent update:
“This was our take on financial repression at from 12 years ago. Not too polished, but the info is even MORE relevant today. What do you do if you're a government that has a huge debt problem like the EU or US and you want to stay in power by avoiding either DEFAULT or HYPERINFLATION?
You pick Financial Repression, the magical third way that 99% of your voters won't understand. You need to deliberately dilute the buying power of money and savings over time and use a combination of carrots and sticks to make sure citizens are forced to come along for the ride.
Our 2011 video attempt "Bernanke explains Financial Repression", inspired by Dan Amermans essay "Financial Repression: A Sheep Shearing Instruction Manual is more true than even this time around. They plan to "print" as much as FOURTY TRILLION DOLLARS to pay for current and upcoming stimulus efforts. En Garde!”
Bonus:
Thanks to savvy sub Jim Davidson https://substack.com/@spaceprivenews (see comments):
When you understand real inflation hidden in the massaged numbers, and realize inflation really represents the DILUTION of your money's buying power, you understand how effective Financial Repression can be.
In the US, tinkering with inflation estimates has created an alternative business for John Williams at Shadowstats.com, who calculates inflation on the 1980 basis before government statisticians began tinkering in earnest to reduce the cost of inflation compensation to hapless citizens. The chart below is from Williams’ website and says it all:
Not only are YOU the Prey (Dr. Breggins style) but your savings and lifestyle are as well, and by deliberate design.
After all, the gubmint can conjure whatever funds it wants out of thin air and get full (current) bang for their buck, with the added bonus of having all their spendthrift debt whittled away by inflation (funny how all the talk is about rising interest rates on the natl debt, a valid concern, but no nods given to the whittling)
It's working rubes like you and I who get stiffed.
Thankfully, savvy investing offers something of a way out, and a chance to “Have Your Cake” (capital appreciation) “and EDITH too” (pay off your personal debts dollars that are literally worth LESS!)
At least that's how I see it from my lil taco stand right now 😀
LOL. This Kid Knows His Rights!
https://youtube.com/shorts/eS4T6EUEa_w?si=GaGlt6u9F5MguTgm
Alasdair McLeod today
https://www.zerohedge.com/markets/managing-crisis
Synchronicity my friend