Step right up, and don't be shy
Because you will not believe your eyes
--The Tubes
The situation that we are currently in, where governments worldwide are forcing interest rates to near zero or even negative levels, has become known as 'financial repression.'
This situation is more accurately labeled financial oppression.
By grinding interest rates into the ground, monetizing their own sovereign debt, and buying risk assets such as stocks, governments have laid waste to opportunities in the investment landscape. Investors face no good choices; they are presented only with choices that are less bad. Around the world, this is driving market participants to take more risk than they otherwise would.
Meanwhile, by printing money, government creates claims on the production of others. Wealth is being transferred from producers to non-producers.
Worst of all, policies that encourage consumption and penalize saving are depleting the system of capital vital to improving productivity and future standard of living.
This is the cruelest of oppression. Robbed of current economic resources. Tricked into decisions that will impoverish us in the future.
position in SPX, Treasuries
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2 comments:
Practically all government attempts to redistribute wealth and income tend to smother productive incentives and lead toward general impoverishment. It is the proper sphere of government to create and enforce a framework of law that prohibits force and fraud. But it must refrain from specific economic interventions.
Government's main economic function is to encourage and preserve a free market. When Alexander the Great visited the philosopher Diogenes and asked whether he could do anything for him, Diogenes is said to have replied: "Yes, stand a little less between me and the sun." It is what every citizen is entitled to ask of his government.
~ Henry Hazlitt
There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: "In the long run we are all dead." And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
~Henry Hazlitt
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