At the Mercy of Financial Repressionists

Yesterday we vowed to tell you who the real protagonists and antagonists are in this global currency war. It’s a long answer. And of course it’s debatable.  But we’ll begin with just one part of it today: they’re not who you think they are.

This is not really a battle between separate nations all trying to out-compete each other through devaluation. Describing it that way is what sells newspapers and gets people all fired up. But the real battle is between the people who want to control the world’s financial system for their maximum benefit…and the rest of us who have to live with the consequences of their financial repression.

Whether you’re a banker or a central planner, controlling the money is a way of accumulating power. You have the power to change prices and reward or punish the long-term planning decisions of millions of individuals. You also tend to get first-use of money before it’s devalued. Purchasing power problems are for the little people, who must deal with all the negatives of globalisation.

All the positives of globalisation accrue to a small group of what we like to call the ‘trans-national elite’. They belong to no country and have no loyalty but to their own self-interest. That’s what they have in common with each other: they look out for each other’s interests, whether they’re politicians, bankers, journalists, or celebrities and cultural figures.

Yes, it’s a bit of a kooky theory. But in the world we live in with a constant media culture, controlling the narrative — giving people a common perception of what the world is (especially the financial world) — is the key to retaining your position of power and padding it. Just keep that in mind next time someone tells you that government deficits don’t matter and high taxes are fair because they promote social justice.

But enough of the behind-the-scenes-action. And anyway, what’s to worry about? Today’s Age reports that super balances are back to pre-GFC highs. The storm has been weathered, right? The stock market’s function as a retirement machine has been restored, right? It’s time to buy stocks again and stop worrying, right?

Well, maybe. Nobody knows the future. But we do know how the bear works. The bear is cruel and manipulative. He came out of his cave in 2000 and 2008 and knocked the market a mighty blow. But since 2009, he’s been playing possum. He wants you to think it’s finally safe to go back in the woods. Think again!

Dan Denning,
for Markets and Money

From the Archives…

Inflationary Binary Outcome Protocol
18-1-13 – Dan Denning

The Future is on Shaky Ground
17-1-13- Murray Dawes

Retire Overseas: 3 Top ‘Luxury on a Budget’ Boltholes for Aussie Retirees
16-1-13 – Nick Hubble

 The Bond Market Trembles
15-1-13 – Dan Denning

Why Cheap Energy Could be the Key for BlueScope Steel
14-1-13 – Bill Bonner

Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.

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Markets & Money