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Monetary Repression Steals Trillions Per Yr From Savers & Retirees To Save TBTF Governments



Wolf Richter of Wolfstreet.com actually ran the numbers of how much governments steal per year through financial repression from savers and retirees in the US alone.

So now we have this situation where short-term Treasury yields are low, and long-dated Treasury yields are even lower.

How much money are we talking about here? Let’s see. There are $22 trillion in Treasury securities. They’re held by individuals and institutions, including insurance companies, pension funds, and the Social Security Trust Fund.

Then there is high-grade corporate debt. The category of triple-A to single-A-rated debt is about $3.3 trillion. These yields have been pushed down too.

Then there are $3.8 trillion in municipal bonds outstanding. Many of them trade below US Treasury yields. For example, the GO bonds of California, which is not exactly a paragon of fiscal rectitude. During trading last Thursday, the California 10-year yield was 1.76%. This was about one-third of a percentage point below the US Treasury 10-year yield of 2.08% on the same day.

Then there are $9.4 trillion in savings products, mostly savings accounts and CDs at banks. There are also about $3 trillion in checking accounts, payroll accounts, etc., but they’re not included here. These are just savings products.

So let’s add these categories up: They amount to $39 trillion.

A 1% reduction in interest spread across the board of just these four categories amounts to nearly $400 billion a year, that the holders of these products are being deprived of.

A 2% difference in yields across the board takes nearly $800 billion a year in income from savers, current and future retirees, and fixed income investors, and hands this money to borrowers.

The Giant Sucking Sound Of Financial Repression https://www.zerohedge.com/news/2019-08-01/giant-sucking-sound-financial-repression

Articles Mentioned In This Show:
1) European bank chiefs tell ECB: low interest rates won’t fix Europe https://www.cnbc.com/2019/08/02/european-bank-chiefs-tell-ecb-low-interest-rates-wont-fix-europe.html
2) UBS To Start Charging Rich Clients With Negative 0.75% Interest Rate https://www.zerohedge.com/news/2019-07-31/ubs-start-charging-rich-clients-negative-075-interest-rate
3) How negative interest rates helped turn Deutsche Bank into a disaster https://edition.cnn.com/2019/07/29/business/deutsche-bank-ecb-negative-rates
4) Negative Yields Could Be the Death of Bond Markets https://www.bloomberg.com/opinion/articles/2019-07-29/negative-yields-could-be-the-death-of-bond-markets
5) The Limbo Rock! How Low Will UBS Go With Negative Interest Rates On Bank Deposits? https://confoundedinterest.net/2019/07/31/the-limbo-rock-how-low-will-ubs-go-with-negative-interest-rates-on-bank-deposits/

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41 Comments

  1. Are they doing this on purpose to deflate 'paper assets an cause an inflation in real world assets? Is the plan to 'save banking' by draining the excess money out of banking? It seems like a mechanism to reverse the world status quo that all money is in the system.

  2. We in Europe have all 0% on bank accounts. Government bonds all negative rate (besides Greece etc with 1%). Corporate bonds almost all negative rate, at least if you avoid junk bonds. Just wait. IMF and ECB will soon give us really negative rates, with bank accounts with -5%. Then ad inflation to all this. All money will go to stocks or consumtion. Funny if/when stock markets crash 70%. BUY GOLD!

  3. Man please keep calling it exasturbating the problems.. it is more accurate than exacerbating.. think about it.. the politicians just get to feel good but it doesn't produce anything meaningfully good LOL

  4. Jason, I have a simple historical question: if we have a rapid rise in both the CPI and the CIR wouldn't that force the fed to raise interest rates? Can or have we had both inflation and low interest rates? Thank you for you response in advance.

  5. they dont want the following generations to pass on their wealth. if youre wealthy and independent. then your population is mouthy and stands up to governement unfairness and opression. gov preffer needy people. and the dirty work gets done in stealth.

  6. as far as capital flight why would they not just buy their own real estate and stocks vs buying it here in the USSA. if they buy it here in cash or through a loan they still face paying interest and taxes. and if they get a real estate loan in their country that has negative interest rates, wont they get paid for taking out a loan.

  7. well its obvious they want everyone in the digital "currencies". interest rates are just the
    excuse/cause, and the solution, they created is called cryptos. bitcoin etc… this is all on purpose. it explains all the irrationality. there is a fundamental rationality to this chaos

  8. 'And other experts'. Modest. Some people don't believe in experts. Page 65 of the Deutsche Economic Collapse book at the top of my home page explains to people the reasons to be hyper cautious about this perverse word. No offence to this channel. The use of the word 'experts' for me automatically raises a blood red flag.

  9. For years I have
    been hearing why would you have physical gold and silver it pays no interest but it don’t charge interest physical gold and silver in your hand has no counter party risk I’m loading up on physical silver is the most under valued

  10. This is a great video. The governments are stealing the pensions and savings. The crazy thing is that they are stealing the government employee's pensions and they are to dumb to realize they are getting robbed.

  11. So we have tariffs & Inflation, first deflationary which is where we are @, then inflationary leading to hyper inflation… hm
    silver & gold mostly, same as the central sovereigns, American and Canadian gold & silver miners, dividends from Securities Act of 1940 funds, (no federal taxation for the inc. dividend paying fund like a REIT, except with other underlying indexes in different sectors) try Gabelli funds, no load fund, property, land & business development. I invest in Solt:SE with ten solar patents in 8 countries in Stockholm Sweden. GGN for dividends from gold

  12. ZIRP benefits those seeking mortgages too. As you’ve stated many times before, this is necessary to fund government as well, as property taxes would have to fall if housing prices fall. It will end when government figures out how to have its cake and eat it too. I am thinking digital currency. That way they have total control.

    Bitcoin as an idea is grand, buy in reality is a farce. It’s slow, expensive, and trackable. Governments tax you on the exchange, so they maintain complete control of the shadow tax. While it can be used to stealthily cross borders, it is no panacea.

    Great presentation Jason. Keep up the good work!

  13. Noone should treat superannuation as an "investment" method. It's what it's ORIGINALLY designed to be: "mandatory saving" for the retirement. I have changed my entire portfolio to 100% "cash only" (zero interest return) YEARS ago to prevent the super fund and government losing the entirety of my "mandatory savings" on the premise of bad investment , which has happened before to me during student days when I was not shrewd enough to manage the portfolio.

  14. About time somebody addressed this issue using the most applicable term…"Stolen". After MANY years of careful budgeting and regular saving to prepare for retirement, the plan for financial independence has been sabotaged by the crazy low interest rates of the last ten years (plus). So…those who were making an effort to do the "right" thing have been required to bail out the risk taking bankers / gamblers. LOTS of anger out here….

  15. So if you add up the financial repression (theft) by the US government, the EU, Japan, China, the UK, Canada, Australia and emerging markets, trillions of dollars per year in interest income is being stolen from savers and retirees! And that's not counting the real inflation rate and taxes at different levels of government increasing! Welcome to Dystopia!

  16. Credit Suisse CEO Tidjane Thiam, speaking to CNBC following the bank’s second-quarter earnings report, said: “I am not a great fan of low interest rates, as a great believer in the importance of savings in the economy. Subsidies to debtors and penalties for savers, I think in the long term harms the economy.”

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