Financial Repression
Hi Terry,
I have been hearing the term “Financial Repression” a lot lately with the New Fed chair coming in this month. Is this a real thing? Do you think The Fed will go along with him and reduce rates? and what can we do to so we do not go underwater?
Terry Says
I hadn’t heard that term, and frankly had to Google it. For others who might be interested, this seems to be an appropriate definition in a global sense:
https://www.weforum.org/stories/2025/03/financial-repression-debt-management/
Governments might try, but in these days of global financial markets, the “bond vigilantes” will set things right. That’s to say that if interest rates offered by governments are too low, then our huge loan of over $30 trillion of outstanding debt will be sold by holders, thus elevating interest rates to market levels. And if we set rates too low, no one will buy the additional debt we are accumulating at a rate of $2 trillion per year!
Global markets are so sophisticated these days — and they are impossible to fool!
