Why Is The Term “Financial Repression” Being Sold?

Matt Stoller is a fellow at the Roosevelt Institute.  You can follow him on twitter at http://www.twitter.com/matthewstoller.

Over the past few months, the concept of “Financial Repression” has come into the lexicon and is increasingly used to describe a possible set of government strategies that constrains the financial sector.  Economists Carmen M. Reinhart and M. Belen Sbrancia reintroduced it with this paper, explaining that the public debts accrued during the financial crisis might be reduced through such strategies.

Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of “financial repression.” Financial repression includes directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, regulation of cross-border capital movements, and (generally) a tighter connection between government and banks. In the heavily regulated financial markets of the Bretton Woods system, several restrictions facilitated a sharp and rapid reduction in public debt/GDP ratios from the late 1940s to the 1970s. Low nominal interest rates help reduce debt servicing costs while a high incidence of negative real interest rates liquidates or erodes the real value of government debt. Thus, financial repression is most successful in liquidating debts when accompanied by a steady dose of inflation. Inflation need not take market participants entirely by surprise and, in effect, it need not be very high (by historic standards).

In other words, financial repression means doing things rentiers hate, like preventing them from moving their capital anywhere in the world at a moment’s notice, stopping them from engaging in predatory lending and usury, directing investment to national priorities (like public investment, war, health care and education, a safety net, etc), and regulating banks so they don’t become casinos.  Keynes called the process of reducing the return on capital “the euthenasia of the rentier and consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.”

As we’ll see, rentiers don’t like this one bit; they prefer to retain their income streams and their place in the social hierarchy without sacrifice or risk on their part.  It’s why they’ve dubbed reasonable restrictions on what they perceive as their right to a riskless profit as “repression”.

Here’s the FT’s Gillian Tett, taking the financial repression meme seriously.

But what Reinhart and Sbrancia argue is that if you want to understand how the west cut its debts during the last great bout of deleveraging, namely after the second world war, then do not just focus on austerity or growth; instead, the crucial issue is that during that period, the state engineered a situation where the yields on government bonds were kept slightly below the prevailing rate of inflation for many years. This gap was not vast. But since asset managers and banks continued to buy those bonds at unfavourable prices, this implicit, subtle subsidy from investors helped the government to cut its debt pile over several years. Indeed Reinhart and Sbrancia calculate that such “repression” accounted for half of the post-second world war fiscal adjustment in the US and UK, due to the magic of compounding.

Now, these days, it is hard to imagine any western government overtly calling for a second wave of such “repression”. After all, as Kevin Warsh, a former Fed governor, recently pointed out, the drawback of financial repression is that it curbs private sector investment and credit growth.

Let’s start by fact-checking Warsh’s statement.  Here’s a chart of US gross private domestic investment.

The so-called “financial repression” of the pre-1981 financial system did not seem to suppress private investment.  I did a quick calculation with St. Louis Fed data.  Growth in private domestic investment from 1947-1980 was 9% a year.  Growth in private domestic investment from 1981-2010 was 5% a year.  And here’s GDP growth over that time period.

Once again, no obvious suppression of GDP growth.  It was on average 3.7% before 1981, and 2.7% afterwards.

Caps on interest rates, restrictions on cross-border capital flows, tighter regulation of banks, and directed private lending into the public sector are all characteristics of the World War II and New Deal-era financing system (also, the Civil War and WWI were funded with directed bank holdings of government bonds).  While most of these characteristics are not ones that exist in today’s financial system, we do in fact still have directed private lending in the form of housing finance (try lending money to a business if you are a small bank and watch the regulators come down on you for not putting your capital into conforming mortgages) and speculation.  If former Fed Governor Kevin Warsh had had his facts straight, he might have pointed out that not only were growth and private investment higher during the age when banks were constrained, but there were no financial crises during that era.  Of course the titans of finance don’t like such a system, because this is what democracy looks like when applied to the banking sector.  This is what public control over the monetary order implies.  You don’t just get riskless profit from holding sovereign bonds, you have to actually invest and risk your capital to get a return, invest in real things, real production, real wealth.  It’s really just a continuation of the “bondholders take no losses” attitude that so constrained our choices during the bailouts and has inevitably led to massive foreclosure fraud to prevent creditor losses.

So we see that the financial repression meme is at heart an aristocratic concept.  Bankers would prefer that we think of finance as essentially a private activity, but it isn’t.  There really is no such thing as a private bank (though we use that term in everyday parlance, and it’s not likely going away).  Every financial institution is at heart a hybrid public-private partnership, which becomes obvious when a crisis hits and the banks come crying to the government to fulfill a lender of last resort role.  It’s even more obvious when you look at a dollar bill, and you realize it is a liability owed to the taxpayer.  What that means is that either the public controls banks or banks control the public.  Just as aristocrats rely on state-sponsored privileges to maintain their social hierarchy while pretending to a fixed and immutable social construct, so too do bankers imply that their absolute right to gamble with public money is part of some fixed and immutable formula leading to prosperity.

A set of institutions that enforce versions of capital controls, interest rate caps, strong regulation, and some directed lending are necessary to live in a democracy.  And that’s why the financiers want to brand it financial repression.  They want you to enlist in their world view, that constraining finance is bad for society as a whole, when it is really bad for rentiers who do not actually know how to manage real risk and use a taxpayer backstop to make their bonds whole.  The record of the last few years is that more, not fewer, restrictions on financial speculation are needed.  Of course, rather than the term “financial repression”, I prefer a more quaint expression – the rule of law.

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  1. jake chase

    If you want to discuss history you ought to consider the principal facts of history. Gross investment was high during the post WWII era because the war destroyed most of the physical capital of Europe and Japan. The remaining people needed more stuff than America could produce, and this stimulated investment. These days there is more productive capacity than existing customers can support. The private sector answer to these problems is war and looting, both of which are humming along nicely.

    1. Maju

      The extra demand was subsidized by the states, notably the USA via the Marshall Plan. You can’t grow (in capitalist conditions) without demand and public demand need public attention, something as basic that even a fascist like Ford could grasp it.

      1. Moneta

        Maybe they don’t care about the 297 million in the US, thinking the few billion outside th country will take over.

        1. Frank Speaking

          the importance of consumer spending to the economy was not existent in the 18th century—the economy of Say’s day was mercantilism.

          what other aspects of the 18th century would you proscribe for those of us living in the 21st century.

      2. Frank Speaking

        there is little doubt Ford was an anti-semite but that doesn’t automatically make him a fascist.

        he raised the wages of his workers so they would be able to buy Ford cars he didn’t prevail on the government to require higher wages to stimulate demand for his product nor unduly prevail on the government to purchase his products as a fascist would

    2. JamesW

      “..because the war destroyed most of the physical capital of Europe and Japan..”

      This is the classic “effect, then cause” false argument dichotomy — complete red herring.

      Similar to the argument that all, or the majority, of progress comes war. If one were to do an historic balance sheet of all the endless destruction and killing, one finds war to be considerably anti-progress: how many developments and cures were lost with the random killing of humans?

      How much useless destruction occurred, which set back people, groups, social units, countries, etc.?

      War is historically financed by the money people, be the former sovereigns, more recently the bankster class, as it facilitates the wealth transfer, or thievery, to enrich them.

    3. Binky the Bear

      this is a trope that gets thrown around a lot for some reason but seems to be a “just-so” story never supported by data. Germany was exporting cars by 1947, and Japan was exporting mechanically complex toys, electronics and cameras by the early 1950s. They weren’t so broken as some would have us believe, although the Marshall Plan and postwar planning designed not to spear the wounded, spurred by Cold War and anti-communist fervor, were strong motivators.

  2. andrew hartman

    financial repression is a great term. robbing people of their savings would
    be a better term, but i guess that’s too much to ask.

    1. Maju

      What “people”? Corporate “people” maybe? The infamous 1%?

      This is simply known as financial regulation and it worked quite well when implemented. At least for all who were not mere bloodthirsty vampires.

        1. RueTheDay

          How exactly is “everyone with a savings account” being financially repressed?

          Are you referring to the current low rate of interest on bank deposits? If so, why exactly is it that you think you are ENTITLED to a high rate of interest when in fact you are taking zero risk (your account is FDIC insured) and your deposits are available on a moment’s notice?

          Or are you referring to the nonexistent inflation that some on the right have been fretting was just around the corner for the past 3+ years but that never actually materializes?

          1. spooz

            Non existent inflation? On what, the latest electronic gadgets? How about health care, education, food and energy? Inflation has hit my family pretty hard in these essentials. Just because Chinese junk is still cheap doesn’t mean we haven’t been experiencing inflation. But no interest on the nest eggs to keep up with it.

          2. Lidia

            Rue and spooz… there’s only “inflation” in the relatively novel sense that things in the physical world are actually -truly this time!- getting scarcer.

            Things getting scarcer means that investment paradigms can’t keep up with people’s recent habitual spending and consumption. We’re all going to have to deal with things in a new way. Our monetary systems are not geared to deal with negative growth, which is the only type of growth we are going to be seeing in our lifetime.

            Krugman’s recent bleat was appalling—an embarrassment—claiming that our current troubles are due to lack of DEMAND… HOLY MOSES… this is a Nobel Prize Winner?????

            As my grandmother said, “keep your eye on the doughnut and not on the hole.”

            Club of Rome

          3. spooz

            Lidia, what does scarcity have to do with health care and education, where we have seen the worst inflation?

          4. andrew hartman

            there are people, very serious people, to borrow krugman’s lame joke, who
            would like nothing better than a 0% interest rate on savings and 5% inflation.
            to state that as a desired policy says you already intend to dishonor the debt
            you want to issue. it may be useful, but its dishonest. and not everyone who
            is a net creditor is a member of the 1%. some people have to live on
            long acquired savings. does anyone in the comic book marxist crowd have

        2. Anonymous Jones

          Andrew has yet to be introduced to the concept embodied in the word “relative.”

          Go easy on him. It’s difficult for the ignorant to navigate the world and make coherent statements. They deserve pity, not rebuke.

      1. Lew Glendenning

        No, financial regulation has not worked.

        In fact, no kind of regulation has worked, as ‘money buys power’, and all regulatory bodies end up incestuous with the regulatees.

        How, precisely, do you explain how we got here?

        All around the world, the regulatory approach has failed, yet everyone thinks the mechanism is perfect, the obvious failures are merely some flaws inthe political process.

        Think in therms of dynamic systems. Your static models have completely failed.

        1. Jack C

          So we should just throw up our arms and not bother regulating? Color me nonplussed, I was busy being grossed out by Upton Sinclair’s “The Jungle”.

          Of course the regulators can be corrupted. That’s why regulation is a process and not some watchmaker machine that gets set in motion when the ink is dry on the authorizing statute and never needs to be touched after that.

          Your point is valid if the conceit of efficient markets is true, but it isn’t. All regulation has come about because of failures of the unregulated market, and in the USA’s case the unregulated market has to be dragged kicking and screaming to the new regime. It’s not as if we undertake new regulation unless some crisis reveals it to be necessary.

          1. Frank Speaking

            unfortunately regulations tend to be road maps for the regulated that they can loose their pack of accounts and lawyers on to find the obscure but real path around and through the regulation.

            a path that smaller firms without the resources—and not the target of the regulation in the first place—less end up suffering to the point of extinction

            and you have to wonder about the ability of regulation promulgated by those owned by the target of the regulation to be of any use—Dodd-Frank and the ongoing struggles of the U.S. Consumer Financial Protection Bureau come to mind.

          2. Lew Glendenning

            In addition to which, it is a measure of how our Progressive-dominated educational system has triumphed when you can’t think of an alternative mechanism for controlling people and institutions except for gov regulation.

            You ignore the many new opportunities for control by individuals, e.g. taking our money out of the TBTF banks. Opportunities which will soon be shut down by our bank-friendly government, no doubt. SOPA, for example, will be used to kill opportunities for citizens discussing events. Blogs like this one, for instance.

        2. Lew Glendenning

          My argument is that humans are fallible, no net of rules can deal with the complexity of the reality that we live within, and that money is a universal resource that can buy whatever is needed to sway the judgment of other people.

          My argument is that Zimbardo’s “Stanford Prison Experiment” puts very strong constraints on the kind of government that can be stable.

          My argument is that unstable governments cost a generation’s accumulation of wealth in each major war and economic depression.

          My argument is that strong governments are necessary for oligarchies.

          All regulation has come about because some of the regulated group saw that it was in their best interest to cooperate with whatever the Progressive media had decided on, and thereby prevent future competition.

          All of which is supported by the facts that we most dislike the most-regulated industries, which are also the most profitable and the biggest contributors to your Progressive president.

          1. Frank Speaking

            what a sterling example of logic tortured by ideologic dogma designed to obfuscate and misdirect.

            Koch Industries has turned loose their A Team.

          2. Lew Glendenning

            Another tremendous advertisement for your educational institution. Please let me know which one it was, so my children can avoid it.

  3. Moneta

    I think we need to look at where these investment dollars are going.

    Since the credit crisis, the wolrd has fallen in love with Canada and a huge chunk of investment has gone into real estate… a bubble about to burst.

    It’s all about misallocation of capital.

  4. Moneta

    Our economy is about goods and services. These is an infinite supply of services while the offer of goods is more constrained.

    People on the right tend to pooh-pooh liberal arts, believe in hard sicences and focus on goods while those in the soft sciences, usually on the left, on services. It’s easy to see why the right would tend to believe in a limited pie while those on the left think the pie is large enough for everyone. They are both right!

    Money gets injected by banks (private side)usually thanks to collateral and government (public side)thanks to goods AND services.

    There is unlimited growth on the services side but since money creation depends in a large part on physical goods (collateral) it is mostly those with the hard assets who control the economy. And these same people are trying to convince us that government (the one that keeps services going) needs to go austere. One will notice that on the private side, the service jobs with good pay are usually those desired by the owners of hard assets. Government has played a huge role on the services side of the economic equation.

    Predictably, those owners of hard assets and their servicers, often believers in hard sciences, will try to convince us that we need to cut all unecessary spending and become self-reliant… starving the service side and focusing on hard assets, when what we need to do is stimulate the service side and curb our materialistic side.

    We need to find a way to inject capital into our system for services, by-passing the hard asset side. A tough job considering humans are materialists attracted to scarcity.

    1. David Pearson

      Stoller’s premise is wrong. In Latin America, the government practice of financial repression hollowed out the middle class and benefited the rich. How so? The middle class tended to save in fixed-income vehicles so their savings were essentially confiscated. Moreover, wage earners saw their real wages fall over time. The rich, on the other hand, benefited from their offshore bank accounts, as well as a plethora of domestic inflation hedges that they actually made money on (a little known fact: in the 90’s, the average large Brazilian company made more money speculating than selling goods).

        1. JamesW

          Uh oh, you must have read Ravi Batra’s Greenspans’ Fraud? And some other choice books, huh?

          David Rockefeller’s creation of the Council for the Americas, the precursor to the passage of NAFTA, and within the year almost all of Mexico’s banking sector has been privatized, principally by American-based multinational banks. (That drug money laundering is sure one lucrative business.)

          Surely you aren’t referring to the (Hillary Clinton-chaired, and Timothy Geithner-cochaired) Millennium Challange Corporation’s financing of the overthrow of the democratically-elected government in Honduras? (Of course, phoney crat Obama did say he was for change, but it appears the assault on human rights in Honduras, Bahrain, Egypt, Yemen, America and elsewhere, continues unabated.)

          Sorry, got carried away, there.

    2. beowulf

      You reminded me of something I came across the other day by Marriner Eccles.

      money is created by debt—either private or public debt—and to the extent that the banking system creates deposits through the purchase of Government securities or through the lending of money, either way, it is a process of monetization.

      That’s interesting because most people don’t consider that if federal borrowing is monetization, then so is private borrowing.

      1. Moneta

        Yes. And on the private side most of the monetization has occurred through real estate. Try getting a loan without collateral… that’s why the average Joe focused on real estate.

        Americans want to go back to what their country was 50 years ago but until the 60s, the US was self-sufficient and a net exporter. Not anymore. I’m not sure it can be self sufficient any longer. At 300M, I think there are too many people in the US now for a fair distribution of wealth unless there are radical shifts in ideology.

        The US system as it is is too energy and resource centric and that’s why it needs to stick its nose in all energy producing countries’ business. For the survivial of the middle class, America needs to make sure that emerging countries don’t burn the oil it needs to keep the entropy going.

        IMO, the only way the US is going to include its middle class once again is if emerging markets collapse or if it radically reins in its materialism. That means a HUGE shift in paradigm if you ask me.

        1. JamesW

          “..and a net exporter..”

          A crucial point that! As of 1999, America became a net importer of tech services!

          As of 1999, zero net new job creation has occurred. (That is, more jobs have been continuously lost than created.)

    3. JamesW

      “Our economy is about goods and services.”

      Unfortunately, you are talking about ancient history.

      The US economy, for all practical purposes, has been dismantled over the past 35 years or so (start with the Tolchin’s marvelous book, published in the early ’80s, The Dismantling of America), which is why there exist so many billionaires — you really don’t think they “earned it” — do you????

      The majority of what passes for the GDP is made up of the finance sector, which generates so much securitized debt, or essentially junk paper; which is why they continue to offshore jobs, that is, practise full-on labor arbitrage and labor deflation, further means of wealth transfer.

      1. Moneta

        I agree about where we are today.

        However, trade is natural between humans. Money greases trade but infortunately our banks and the top 1% are making it hard for us to trade and exchange services. That’s why barter systems are popping up here and there.

        We don’t really need to deal with a bank to get money to buy services. We’ve been brainwashed into thinking we should and the bankers and elite who control the hard assets will do everything in their power to curb barter and force people to go to the bank to get the cash to pay for a service so as to control the cost of living and the vaue of money. But we need to fight them so a barter system or other parallel money system mught be the key to save the middle class.

    4. Lew Glendenning

      Infinite supply of services?

      Medical services are regulated by the medical cartel to keep the price high.

      Educational services are regulated by the educational cartel to keep the price high.

      Legal services … Plumbers, painters, hair dressers, nail polishers, … all ditto.

      Do we live in the same world?

      1. Frank Speaking

        so you equate the licensure of professionals and service providers with the function of the SEC, EPA, OSHA and the like?

        Koch Industry troll alert.

        1. Lew Glendenning

          Arguing with you guys is an amazing experience.

          One says ‘infinite supply of services’. I say ‘no, and your Progressive institutions and laws are designed to hold down the already limited supply’.

          Whereupon I am accused of being a Koch troll and claims that my point proves there is an unlimited supply of services.

          “QA promotes trust”. Right, all of these institutions and legal restrictions are for your own good, peasant, trust us.

          And, how do IOUs vs dollars bear on this?

          Back to the central point : regulations don’t work, can’t possibly work, because money buys power. This is the point of limited government.

          The regulatory, big-government approach, the only approach that Progressives comprehend (judging from their history), has failed everywhere. In fact, it is much easier to find regulatory bodies that accomplish the opposite of what was claimed to be intended that what was claimed to be intended.

          I have yet to hear any of you deal with these issues, with the fact that this world has been constructed by Progressives, and poor people around the world are being royally screwed by the institutions set up by Progressives claiming to work on behalf of the People.

          Money buys power. So long as some people are richer than other people, so long as people favor their own goals over other people’s goals, they will use all powers given to the government for their own ends. So long as human psychology is such that Zembardo’s results are true, there can be no shortage of bully-boys and torturers willing to help. No system of government, so far as I know, has avoided this problem.

          And you guys have an infinite list of distractions to prevent you from considering anything fundamental.

          You are tremendous advertisements for your educational institutions, IMHO.

          1. Moneta

            Frankly, I’m sick of the “progressives/neocons are the scourge of the earth meme”.

            I am trying to inject different ideas. Sorry if they are simplistic… however, these are often the ones that induce an “éclair de génie”

      2. Moneta

        The fact that they regulate these is proof that there is unlimited supply.

        It is service sector individuals securing ther wealth to get their share of hard assets.

      3. Moneta

        In North America, IOUs were prevalent before we got a central currency.

        An IOU could be written for every single thing someone does for somebody else.

        Think about it, who decides what gets remunerated with dollars and what does not?

        1. H. Alexander Ivey

          One could write IOUs but few would take them. Money is a promise, it involves 3 groups of people, the giver, the reciever, and the enforcer. The enforcer, usually the government, is the critical group or role that makes money, money, and not an IOU. It is also the role that main stream economists and too many others ignore, don’t believe is important, or misunderstand by thinking it is repressive.

          1. Moneta

            IOUs don’t need to be physical and can stay within 2 people.

            Instead of hiring a contractor to help fix my backyard I could join a barter group to find someone to help me and I could exchange a service in return. We both agree on the worth of these 2 services and it might not correspond to what our financial system has determined it should be.

            No need to go to the bank and get myself a line of credit to get it reflected in the GDP. Of course this shrinks recorded GDP and governement hates it because it does not get the taxes on it and it reduces its ability to increase debt…

            We have been brainwashed into only accepting currency coming from bankers and governments manipulated by them. But as long as they hold the purse strings, they get to determine what trade can occur or not.

          2. Moneta

            Every day, I see loads of work that could get done, instead we have loads of people staying home watching tv. Imagine if all those idle people could help eachother out without even having a penny to spare.

            Exchanging services is still better than staying at home doing nothing. We have become such materialsits that we don’t realize how services and simple TLC can increase our quality of life more than stuff.

            Isn’t it ironic that barter comes to mind when money was created to solve its rigidities.

            But in our monetary system, banks and government (controlled by the 1% and banks)get to decide what gets funded and since wealth is now so concentrated, the rich don’t have enough needs and time to spend it all. Therefore, our system is increasingly leaving out a huge chunk of the population.

            Maybe we need a parallel monetary system for the 99%! The current one would price hard assets and the new one services.

            Just a thought…

  5. Jesse

    The fallacy in the ‘goodness’ of this meme is that it assumes that government is naturally good and efficient, the flip side of the efficient market hypothesis that caused the problems in the bubble.

    To the extent that it is ‘undisciplined’ it will misallocate capital, foster fraud, and propagate misery.

    Japan has worked to some extent under this solution but only because of the highly secular cultural bias to the common good, like a mildly benevolent dictator. And the people accept it because they believe it is for the common good as well.

    But in democracies it leads to autocracy and repression, not of the financial sort.

    1. scraping_by

      The “goodness” of the meme notes the fact that private interests have no reason to treat savers and investors fairly, not even honestly, by so called market forces. There’s always some way around the theoretical consequences of bad behavior, at least in the short run.

      That leaves the choice: get screwed every time or set up some regulatory apparatus. Posses of vigilantes might work, the way they do in fiction, but that’s just creating a small scale government. Randists like insurance companies, but those know whose side they’re on.

      Japan, with a near-communal system, along with Europe’s more socialist systems, don’t conflate banks creating their own reality with human freedom. Once you’re talking an institution, you’re talking artificial and you’re talking rules. It’s wise to make the rules favor the better part of us.

  6. FredB

    My neighborhood has a lot of retirees living out their last years on their savings. I am grateful to you for lifting the scales from my eyes so that I can see these old people for the hated rentiers that they are.

    1. scraping_by

      Only the retirees who are playing around with other people’s life savings. Which, I doubt is too many of them.

      And those with connections to government that allow them to play with tax revenue as if it were their private stash. Again, not on your street, I think.

      And those who can get tax dollars to pay for failed casino capitalism. The casino birds among them pay for themselves, I believe.

      The Masters of the Universe are different from the rest of us. Indeed, they’re enemies of the savers. But, will you and your neighbors act on that assumption? Dunno…

    2. EconCCX

      You’re fooling nobody here. A rentier, who collects interest on money newly and temporarily created through a free-ride overdraft, is NEVER to be conflated with either a saver, like your retiree, or a productive entrepreneur.

      Anna J. Schwartz, co-author, with Milton Friedman, of A Monetary History of the United States, 1867–1960), describes the money-creation process here:


      You’ll notice there’s lots of borrowing and lending at interest to accomplish all this, but no savers required. It is, in fact, the free-ride creation of money that makes banks *indifferent* to your deposit, and that delivers unto your retirees the paltry, pathetic rates of interest they now contend with.

      1. F. Beard

        It is, in fact, the free-ride creation of money that makes banks *indifferent* to your deposit, and that delivers unto your retirees the paltry, pathetic rates of interest they now contend with. EconCCX

        Well said.

  7. Jill

    “Repression” is a term of propaganda. I’ve noticed the govt. use terms which mean one thing in reality and apply those terms to situations which mean their exact opposite.

    Everyone says they hate repression. Repression is wrong, it’s evil. Repression is harm done by the powerful to the powerless. Now take a concept as viscerally understood as “repression” and apply it to it’s exact opposite–the attempt to have the powerful follow the rule of law, precisely so they will not be able to repress/steal from the less powerful.

    The corporate govt. uses every tool available to accomplish it’s ends. Orwell was correct to point out the importance of language in changing “reality”. It can and it does. It is vital to point out the misuse of language so that we may see what is actually happening in the world.

    1. scraping_by

      “Financial repression” is a propaganda slogan that will, certainly, be spread all over the media.

      “Financial regulation” is an accurate term for the actions and ideas the slogan is trying to mask.

      A better term would be “financial law enforcement.” But, traders don’t need cops to keep them in line, do they?

    2. Jill


      Financial repression, in this context, does not exist. Actual financial repression is wrong. It harms many people.

      This is the crux of propaganda. The use of the term “financial repression” to describe something that is not really financial repression is a tool to confuse people.

      Everyone is made frightened by reality based financial repression. It means the loss of income, home, medical coverage, food, water, etc.

      Here, what is being described as “financial repression” is in reality the attempt to keep banking criminals from stealing, (including stealing from grandma’s retirement fund). The use of such a psychologically loaded term is meant to obfuscate the reality of what is happening.

      1. R Foreman

        Governments in collusion with banks actually are engaging in financial repression, but the people being repressed are the middle and lower classes (the 99%).

  8. Bagehot by-the-Bay

    Stoller misses the point. “Financial repression” as practiced today is a an important stealth technique for socializing losses and privatizing profits. It takes from the many, and gives to the few. The unfairness is what is objectionable. The recipients of these “trickle in” bail-outs aren’t complaining. Everybody else is.

    1. scraping_by

      The current model for kleptocrats is to gamble, embezzle, and steal and then claim public funds to make up the loss. Often, deliberately screwing up and sucking in public funds.

      This is in addition to the good old, tried and true, methods of fleecing “the crowd” in the stock markets, mortgages, derivatives, credit cards, and other consumer level theft. It’s the MOTU viewpoint that this is just business, nothing personal, and so they get outraged when someone represses them by throwing them in jail.

      The line between financial regulation and underhanded private gain is obscure. Mostly creating behavior they wouldn’t do if they were responsible for their own failures. Or is it something more abstract?

      1. JamesW

        “The line between financial regulation and underhanded private gain is obscure.”

        That’s for darn sure! I had to read that Dodd-Frank Act over quite a few times before I finally comprehended the major scam of it (and it has a bunch of super-sized loopholes, by design, to continue credit derivative destruction and proprietary trading): that the Federal Reserve can do a covert bailout, from this time forward, without consulting the US Congress, with nobody the wiser.

        So obscure few still fully grasp it.

        Just like that incredible passage in the FCIC report demonstrably proving that the bankruptcy bill of 2005 was by design to enrich the derivatives dealers (banksters peddling securitized mortgages, etc.).

        1. scraping_by

          So it’s an obvious difference between financial institutions oppressing the public with the law on their side or not enforced, and the repression of the poor, poor, pitiful financial companies by ravening regulators?

          Bankruptcy law’s a good one to look at. Bankruptcy’s been essentially gutted in the last ten years, changing it from a fresh start to debt peonage. And was this the work of the ACLU, the SEC, the Roosevelt Institute, the OMB, the Labor Department, the ILGWU, ACORN, OSHA, Yves Smith, the UAW, the NAACP, and all those other lefty thugs? Hell, no. It was the banks and credit card companies bribing whoever needed to be bribed.

          Government, when it governs, is for the good. When it’s a sock puppet for the rich and powerful, the 1%, things are ugly. The solution is not no government, it’s good government. Which is work.

          1. Stephen Nightingale

            “Bankruptcy’s been essentially gutted in the last ten years, changing it from a fresh start to debt peonage.”

            Well it’s business as usual for American Airlines, who are so confident of their continued existence that they have actors-paid-to-look-like-employees exhorting the traveling peasantry to keep on coming back. Whatever happened to the notion of bankruptcy where an officially appointed receiver decides how the defaulting company should be split up, hived off and written off to continue the viable parts of the business under separate, new managements?

  9. Mort

    I would suppose that in a Marxist state financial repression as defined above would be embraced. Notwithstanding, the meaning as I hear and read in much of the mainstream financial media is in the context of redistribution of wealth from those who work and save. Ironically financial repression has also been embraced by the banking class who have an continue to be its main beneficiary. The author’s contention that “financial repression means “doing things rentiers hate” may apply to those who live on a fixed income but for banker bonuses in 2008, 2009, 2010 and this year I would suggest financial repression is the gift that keeps on giving.

        1. Frank Speaking

          more precisely —gamblers playing with other people’s money that becomes the gamblers money when they win and remains “other people’s money” when they lose.

        2. JamesW

          And even more precisely, not so much gambling as insider trading and a rigged environment, designed and controlled by those who designed that global financial virus: credit derivatives and naked credit default swaps…..

          1. Frank Speaking

            and the winner is…precisely as you say

            you have to admire the mastery of the crime none the less…they even learned from the mistakes of earlier attempts at the prefect crime in that they figured out the get away this time.

  10. Jane Doe

    “Why Is The Term “Financial Repression” Being Sold?”

    They assume that Liberals and the left (whatever the later means) will spin their wheels trying to say that they are not trying to oppress.

    The argument style is called flipping the switch. “Flipping the switch” is where you describe you get your opponent defensive about an argument so that no one ever notices how you are acting.

    1. scraping_by

      That’s true, but remember, it’s also The Big Lie. Which depends on unchallenged repetition to work its way into people’s minds until it’s common sense, or obvious, or just the way things are.

      Setting the truth beside the lie again and again seems rather blue collar, a lot more like factory work or walking a bean field than explicating the truth for once and all. Still, it’s good work and needful in the end.

      1. Jane Doe

        True, that’s the other element. As I tell people these days, for example, one may question what else works in terms of economic policies, but what is clear is that conservative economic policies aren’t working. The only reason why people still believe they can is the exact dynamic you describe. They hear it so much, that despite the facts on economic data, it must nevertheless be true

    2. beowulf

      Don’t you mean “flipping the script”? That expression originated with that profession of job creators (and sharp dressers) once labeled “panderers”.

      1. Jane Doe

        Well, I am from the South and am African-American. We say flipping the switch, and I can’t say as to where that originates.

  11. gibniveek

    The “Rentiers” your hated bourgeoisie established this great capitalistic nation. Posters or “imposters” on this site seem to be those Academicians, who believe they are so much brighter than everyone else. Perhaps, they should relocate to a socialist or communist nation and see for themselves how perfectly wonderful they are. They can even speak with people who have moved here and lived under such regimes. The “BS” on this site is overwhelming, and you even have the freedom here to espouse whatever “ism” you prefer. It is too bad that you influence people, who know no better to follow your assertions and try to ruin this greatest country that the mind of man ever conceived. Some of us began with nothing and pulled ourselves up by our bootstraps to become whatever we could imagine. A man from the UK just told me last week, that people in Europe are lazy compared to the United States. Perhaps, it is because the “spoils” of the social systems have taken away their motivation. People come to this country for the freedom to be whatever each person can conceive. The fortunes in this country were mainly made by immigrants, who saw dreams and opportunity. You all would take away those dreams and opportunity. Go preach your evil gospel somewhere else!

    1. Hugh

      The people who built this nation were American workers and industrial, not financial, entrepeneurs. Its capitalists have mostly given us cycles of boom and bust that have not served the interests of most Americans at all.

      I think you have not just drunk the koolaid on capitalist claptrap but are mainlining it. Capitalism, the capitalism capitalists wanted, would have destroyed the economy back in September-October 2008 if it had not been for non-capitalist government interventions. These interventions were massive and were not made with the American people in mind but solely to protect the interests of capitalists, and were made by the politicians and regulators they owned.

      Also please sell your racist garbage elsewhere. Europeans are not lazy. I hate to break it to you but countries with social safety nets, and ones where the quality of life of workers has not been completely forgotten are not the devil –although in the eyes of capitalist kleptocrats I am sure that is the way they look. It is certainly how you portray them.

      1. JamesW

        In falsified American business history books one frequently finds the following: Railroad companies discovered that Chinese workers would work almost 24 hours a day, on next to nothing to eat, and comfortably sleep out doors, and thus were utilized to build some of the nation’s railroads.

        What they never say: almost to a man (aocording to validated historians) the Chinese workers were worked to death by the money trusts, which brought them in by the boatloads, as foreign scab workers to replace American workers who occasionally went on strike when they weren’t paid, etc. (Also, one frequently hears the reframing of that period, stating that it was solely because of “racism” that the Chinese scab workers were attacked by white American workers (chiefly Eastern Euro and Western Euro immigrants), and Black-American workers and immigrant Japanese workers (although no doubt racism may have been a factor, the entire labor history is left out).

        1. scraping_by

          They also leave out that the Union Army had created a railroad building infrastructure that could have been used to lay down the line under orders and to be owned by the government. There were calls to do so during the Civil War, which is why Lincoln rammed through the Pacific Railroad Act before the end of hostilities.

          Then, the war ended and the soldiers demobbed, were shipped west, and built a private railroad. With the biggest government subsidy until the 2008 Wall Street bailout.

        2. Ransome

          Charles Nordhoff (Mutiny on the Bounty) wrote about this. Because of the gold rush and because of high prices (prices were high because every nail, by way of the East Coast manufactures, had to be shipped around Cape Horn). Labor was both very expensive and not available, hoping to strike it rich. Immigrants were sent from the East. The Chinese had their own economic and social problems because of the drugging of China by the British. The money earned in America was needed back home in China. Shiploads of Chinese built the railroads and established their Chinatowns for protection. When the gold seekers came back, they wanted jobs so we developed the Chinese Exclusion Laws, preventing new immigration. It is always about money and jobs.

    2. F. Beard

      Some of us began with nothing and pulled ourselves up by our bootstraps to become whatever we could imagine. gibniveek

      All without borrowing from the government backed/enforced counterfeiting cartel?

      1. Nanny_Booboo

        If you believe money creation is done through a counterfeiting cartel, then you are in fact a criminal for passing off counterfeit money every time you spend. Please turn yourself in immediately to your local authorities.

        And you are an insufferable ass every time you spend or don’t spend.

        1. R Foreman

          That seems to be the government agenda, implicate everyone in their crimes. Justice would then involve locking up everyone, and you don’t want to go to prison do you? Thus the crimes go unpunished and criminal activities continue at feverish pace.

      2. JamesW

        Ha ha ha. That reminds me of all those phony stories I’ve read over the years (e.g., Fred Smith began Federal Express with ONLY $100,000 of his trust fund — ignoring that other $9 million of family money he used; Carnegie worked like a dog and saved his money to begin at the top — ignoring that the very young and handsome money was handed a humongous sum (as a gift) by his employer, which he then used to purchase a steel company; George W. Bush, past president, who washed out halfway through enlisted basic training in the USAF, only to return to Houston to have officer’s bars pinned on him by his daddy, etc., etc., ad nauseum).

    3. Frohike

      You are right, but you are also wrong. There was a form of capitalism in America that provided the methods and means for economic expansion. It provided constant investment in the country while creating jobs and, with a few sensible rules imposed, created a large and prosperous middle class. That capitalism was wonderful. Too bad it’s been gone for over 30 years and shows little prospect of returning.

      Your gospel of “pulling yourself up by your bootstraps” is admirable. I doubt more than a literal few would ever question the necessity and rightness of individual effort. I doubt more than a literal few would endorse attempting to make that effort with 2000 ton weight on one’s back, either. The current economy is dangerously imbalanced due to a lack of constraints on the financiers, who have decided to loot America for all it’s worth while investing their proceeds elsewhere. I don’t think you quite understand Mr. Stoller’s point, but I will make it plain as day in the hope you might understand. Capital should serve the country, the country should not serve capital.

      1. JamesW

        “There was a form of capitalism …”

        Not intending to offend but I believe you are confusing a brief time in American history, circa late 1800s, when industrial expansion was outpacing employment, and the patent laws hadn’t fully been written, which was more free enterprise, than capitalism, which historically exists to enrich the few while exploiting the many.


      2. gibniveek

        There’s a new dirty word in the American vocabulary. Again, it is placed in vogue by Academicians, who have never owned a business, believe they are intellectuals, and who believe the government has the answer to all the problems by running up trillions of dollars in debt and selling our soul to the Chinese. The word is PROFIT.

        Anyone, who believes differently is labeled either a nincompoop, rapist of the masses, or the new current favorite, “racist”, when it has absolutely nothing to do with race. Many of these large banking institutions are currently either facing hard times or gone belly-up. The petroleum industry pays taxes at the rate of 47% and because refining has become basically non-profitable along with facing the EPA stringencies, we are letting India and China do the refining. They will certainly protect the environment. So, we become not only dependent on foreign oil but also on foreign refining.

        It also doesn’t matter to these elite Academicians, that most of the money slated for retirement is invested in Wall Street, because the Wall Street companies aren’t really the CEO’s or COO’s but actually owned by everybody, who works for a living and has a retirement account, so to hell with Mom and Pop. By Gad, we’ll have socialism and distribution of wealth, come hell or high water, and probably both. They also ignore the fact that banks were forced by government to make mortgage loans to people, who could never repay, and who would default. Of course, that debt fell on the shoulders of the bank and its investors. So, now we just print money, that isn’t worth the paper it is printed on. The entire country can default next, and then everybody will be equal again, but that is what the extreme left wants–bicycles, pushcarts, and Big Brother can care for us all–what a crock!

        1. Hugh

          Earth to gibniveek, you do realize that you are being largely incoherent, don’t you? Stringing together a bunch of propaganda lines is going to cut it with exactly no one around here, especially when you almost comically don’t have your facts straight. Facts like these:

          The top 1% own 50.9% of US stock, bond, and mutual funds. The top 10% own 90.3% of them. The bottom 50% own 0.5% of them.

          Or how about these facts:

          Overall, the top 1% own 33.8% of the country’s wealth. And the top 10% own 71.5%. The bottom 50% own 2.5% of it.


          You talk about wealth redistribution as if it is some terrible thing. Well, as those figures show, it is a terrible thing, and it has already happened.

        2. Damian

          The USA is exporting petroleum products for the first time in almost 30 years profitably with existing EPA regs – there have been multiple news reports about it and check out the refiners profits as well – doing well !

          further the oil companies dont pay an effective tax rate of 47% much less than that – especially if you consider depletion allowance

          the poor banks are upside down on asset values – based upon their credit policies not government – nothing else – and they still issue bonuses to the tune of 50% of operating income before compensation – what other business does that when they lost so much for years?

          you are all propaganda !

    4. Lidia

      Europeans, however perverse in general, have at least been sane in terms of modern working hours.

      When I came back to the US, I found myself “naturally” standing in line at a Boston-area Home Depot at 10:30 at night. I was there because they were there, but what ran through my mind was: WHAT THE FUCK ARE WE ALL DOING HERE!?! Why aren’t we home with our families at night!??!

      It was only the period spent in Europe which led me to understand that the US mode of behavior was even more severely pyschopathic.

      1. scraping_by

        Truth on. Material goods in excess of mere survival is not only measured in money, but can be measured in time. It’s as reasonable to take it in increased leisure as increased consumer goods.

        Perhaps, more reasonable.

    5. Lidia

      “go preach your gospel somewhere else”!!

      Where else would that be? on CNN or FOX? On CNBC? Would Jim Cramer treat the arguments here?

      What about 60 Minutes?

      1. gibniveek

        Hi Lidia,
        This is an open forum, so I should not have ended with that statement. I beg your pardon. Also, a lot of the reason for our huge debt is the fact that the dollar is worth only a fraction of what it once was, and we buy much more foreign products than we sell. We need to change that, but if we don’t have Americans supporting our companies, it will only get worse…
        That is why we need to support as many of the American companies, as we possibly can. We used to have many petroleum companies. Now, there are only a few left, and even though companies like Exxon-Mobil are really big public companies, they are tiny, compared to the size of the petroleum companies owned by foreign countries, (for instance Saudia Aramco)from whom they buy oil and compete in the marketplace.

    6. Stephen Nightingale

      gibniveek: “…this greatest country that the mind of man ever conceived.”

      It became less obviously great if you happened to be Wampanoag, Lenape, Cherokee whose lands and livelihoods were progressively expropriated from the early 1600s onwards.

  12. JonsFriend

    Matt great article, but any chance you could do a reprise of your Jon Corzine piece from 2007?

    I especially liked the conclusion of that article

    “we need more great people like Jon Corzine, people are unafraid to follow their morals, unafraid to get their hands dirty, and unafraid to hold their elite friends to the same standard they hold everyone else.”


    and of course who can forget your pioneering work in the political blogosphere when you worked for Jon back in 2005.


    1. Matt Stoller Post author

      Yes, I was impressed by his work on genocide in the Senate, and I didn’t know that much about Wall Street at the time except what I had been told by people who it turns out knew even less than I did.

      But I also wrote this:

      After all, you don’t become the CEO of Goldman Sachs through altruism, and some part of his fortune came from the clients Goldman served, and Goldman served everyone with lots of money. I realized, through the campaign, that there is no such thing as clean politics, that everyone has some dirt on their hands whether they realize it or not.

  13. rotter

    OH thats rich. When they finally get around to talking about “financial repression” its to complain about weak milqutoast wal st. regulation. Nauseating in the extreme, but completely predictable. Like the MSM stories about those dangerous, wild eyed, would-be banker killing lunatics at Zucati park.

  14. Hugh

    We live in a kleptocracy so none of this is going to happen. I find it surprising though that the vitriol and vehemence of the reaction to it show it certainly hit a nerve.

    But restricting and regulating capital flows is only part of the equation that returns America back to the 99%. The other two pillars of this policy are taxing the rich and fiscal spending directed toward the needs of ordinary Americans.

    1. Matt Stoller Post author

      I find it surprising though that the vitriol and vehemence of the reaction to it show it certainly hit a nerve.

      I noticed that too.

      1. scraping_by

        “Blame the government” is a steady fallback for the people and organizations who run the evangelical/militia/direct marketing subculture. Right now, blaming the government for the housing bubble and its attendant woes is big on the howling circuit. Gingrich has a viral video snivelling a fiction on who this was supposed to have happened.

        A lot of this is panic that “Private good! Public bad!” has been the wrong chant. Never mind whether being in that flock is in your self interest, and the interest of your family and future. Trying to keep the old bogeymen alive.

        It’s true that our federal government does much that is vile and antiproductive. Just ask any citizen of Iraq, that is, the ones still alive. But financial markets need a cop and no one’s come up with a workable alternative.

    2. Jack M.Hoff

      Hugh, I don’t think taxing the rich would solve much. First you’ld have to close their money routes into the Caymans or Switzerland. Rather than taxing, how about we claw back all the ill gotten gains for say the last 30 years? That should put the country in the black. Next, eliminate corporate personhood. Or at least make it a 2 way street for those creatures, let them fail if they choose to. Lastly we really need to establish one simple rule, that being THE LAW APPLIES TO EVERYONE EQUALLY. Sink or swim, no gov’t interference. I doubt thered be too many problems after that.

  15. Lew Glendenning

    Right. Completely ignoring the dynamics of money and power, which is how we got here, the gov is going to do something completely wonderful.

    Completely ignoring that cause-and-effect are extremely hard to discern in complex systems such as rainforests and the economy, the gov knows exactly what that wonderful thing is.

    Completely ignoring that the political process always produces exactly the same kind of FUBARed results, the gov will indeed execute their wonderful plan.

    Money buys power. Always has, always will. The people with money will oppose this, even if it were indeed the right thing to do, which it surely isn’t.

    What, exactly, is the evidence that governments can improve their economies?

    Progressives are very certain that they know how to manage everything. That is how we got here, all of the countries in the world falling into the same depression at the same time.

    Sure you know what to do, and how to do it, and the gov is the perfect vehicle to accomplish it.

    1. Hugh

      What, exactly, is the evidence that the current crop of capitalists can improve our lives?

      And will you cut the lame canard about this all being the progressives’ fault. I mean you are just embarrassing yourself. Wall Street runs Wall Street and just about everything else. So when you cast about for what happened or is going to happen, here’s a clue: Look at Wall Street.

      1. Lew Glendenning

        You don’t find me defending the ‘current crop of capitalists’. Crony capitalism.

        Made possible by the Progressives control of nearly everything for the last 100 years. Those ‘capitalists’ went to the best schools, got the finest educations. Just like all of the other members of the oligarchy, who run all the foundations, staff all of the positions in all of the govs of the world, all of the regulatory agencies, …

        Crony capitalism and oligarchy doesn’t happen overnight, it requires 1000s of laws, something Progressives are always happy to provide. That evolution requires spreading dishonesty : Do you notice that Progressives are more honest than other people? It requires a uniform mind-set that gov is the solution, always. Notice any public institutions saying we need more community, independent of government?

        It requires emasculating the citizenry. Notice any Progressive pushing Jury Nullifcation, something you would think proponents of ‘people power’ would do.

        It requires assigning people to groups, and treating them as part of groups? Notice any countrary trends pushed by Progressives?

        Sorry, Progressives are the environment, their fundamental beliefs are what produced this disastrous situation.

        Poor people around the world are starving tonight because Progressives are all wrong in their basic assumptions.

        1. Frohike

          I could buy this argument if I believed, like you, that history began around 1900. Unfortunately, I’ve heard of the 19th century and the Gilded Age, so I don’t get that option. If you honestly think “progressives” are the cause of crony capitalism, I would love to see your reaction when you learn about Standard Oil and the Pennsylvania legislature in the 19th century.

          1. Lew Glendenning

            Tremendous rebuttal. I have been intellectually devastated.

            You ignored everything I said.

            So let me say it some more : Do I hear Progressives arguing for the abolition of the medical cartel to reduce the enormous costs for poor people? No, they keep giving more power to the FDA, the main institution that empowers that cartel.

            Do I hear Progressives arguing for fewer and simpler laws to allow people to obtain justice rather than be overwhelmed by the oligarchy’s lawyers? No, they always propose more laws, rules, regulations.

            Do I hear Progressives arguing for less money to education, the main mechanism that holds down the poor, handicaps them in the small meritocracy that remains? No, Progressives talk about educational reform, but the dropout rates for the poor remain at 50%.

            Do I hear Progressives arguing for legalizing drugs, the other significant method of removing the poor from the work force? Not lately, the only national figure who does so is Ron Paul.

            Do I hear Progressives re-stating the many studies that show that inflation hurts the poor the most? No, everyone from Krugman on down believes in stimulus, believes the CPI over-states inflation, … and also wonders why we have so many more poor.

            Do I hear Progressives arguing against SOPA, PATRIOT, against the Fed, etc. No, Obama supports all those, has extended them beyond even Shrub’s new highs of government power.

            Where is ‘the right man’ in all this? Not much has changed in the Bush-Obama administration.

            As for ‘the Standard Oil problem’ that Progressives are so enamoured of, I do not defend the dishonesty of either side, industrialists or politicians, but do not that it couldn’t have been a monopoly, because the price of kerosene declined continuously.

            One more time : money buys power. If you give the gov power, you must expect it to be abused against you. There can be no oligarchy without the supporting framework of laws to make it possible.

          2. JamesW

            Glendenning below,

            “..abolition of the medical cartel to reduce the enormous costs ..”

            unfortunately either simplifies things too much, or takes too much at literal or superficial examination.

            The principal two cost drivers for the extremely high medical costs in America today, which correlate directly with rising costs, are:

            (1) hedge fund speculation, and ultra-leveraged speculation, across the entire healthcare sector; and,

            (2) private equity firm leveraged buyouts across the entire healthcare sector (which not only includes hospitals and clinics, but medical technology and research firms, diagnostic firms, various types of medical services firms, etc., etc.).

          3. Lew Glendenning

            JamesW : what institution is it that funds all of this speculation?

            The same speculation that raises food and fuel prices all around the world, and thus is hardest on the poorest?

            The institution that provides the stimulus that fuels the inflation? The one that has the same people and the same policies under both D and R presidents, all from Goldman-Sachs?

          4. Lidia

            I’ll take Lew’s bait.

            I’ve been reading Ivan Illich in recent years, and YES he WAS a progressive who rejected the medical cartels, the education cartels, etc.

            Illich studied the condition of the poor and decried the extravagant employment of energy to the detriment of the average person. Read his “Energy and Equity”.

            Progressives DO ARGUE for legalizing drugs.

            Progressives DO ARGUE against the Patriot Act, etc., but have been effectively marginalized as pro-terrorist for having done so.

            “Not much has changed in the Bush-Obama admin.”
            ABSOlutEly TRUE.

            “Do I hear Progressives arguing for less money to education…?” No. and this is a big problem I have with “the left”. The education behemoth is not on the side of “the people” but works against them and in favor of the State. See Illich. Sapient non-religio-nutcase homeschooling is preferable in all cases. All I could think of, from the time I was eight years old, was how to GET OUT, how to SURVIVE until I could be RELEASED from the torture of public schooling.

            “…they always propose more laws, rules, regulations” because right-wingers are so sociopathic, so contemptuous of social living and sharing that someone needs to erect barriers against their scorched-earth predation.

        2. Hugh

          Crony capitalism and oligarchy are the natural outcomes of capitalism. They’re a feature of it every bit as much as Minskyan bubbles.

          There will always be those who prefer to direct their anger at the messenger rather than the message. Your version of this just seems weirder and more detached from reality than most, like blaming fluoride for sapping your precious bodily fluids or something.

          1. Lew Glendenning

            Perhaps you have heard of the USSR. They didn’t have capitalism, but they did have an oligarchy.

            Perhaps you have read of the US in its early days. Pretty raw capitalism, but no oligarchy.

            Perhaps you should read David Hackett Fisher’s “Historians Fallacies”, which goes into quite a lot of detail about how hard it is to tease cause-and-effect out of complex systems. There is a CIA Analyst’s Manual floating around on the net, that might help also.

          2. JamesW

            But perhaps Glendenning has heard of the totalitarian capitalism of China, Vietnam, and others??

            Citing a CIA analyst is the worst possible form of sourcing: how many came forward about the manufactured intel from Cheney-Bush period? Valerie Plame, although I am not casting aspersions, still, like Baer and other CIA-types, doesn’t understand why they bad guys are at the top in the financial-intelligence complex, dating from WWII, and why she was simply playing the fool for them.

          3. Lew Glendenning

            Mr Watt:

            You cite the totalitarian capitalisms as examples of the flaws of capitalism instead of the flaws of powerful government in rebuttal to the argument that the powerful government makes the oligarchy possible?

            It isn’t a CIA Analyst I am citing, it is the CIA Analyst’s Handbook, which was written to help them tease out reality from a mass of data, very similar to the problems that Historians have, a citation which you ignored

            While you are at it, read David Hackett Fisher’s “The Great Wave”. Very interesting book, the historical parallels between the waves of inflation are throught-provoking, perhaps useful Fisher’s books are quite readable.

        3. JamesW

          Glendenning must be a professional comedian:

          “..Progressives control of nearly everything for the last 100 years..”

          That, is simply to silly to respond to, and,

          “… it requires 1000s of laws…”

          I’ll repeat just 4 from 1913:

          (1) Federal Reserve Act (formerly, the Aldrich Act), establishing that the private banking system, the Federal Reserve System (12 credit monopolies), can issue money to the government, at interest, said interest which will be paid back by establishing,
          (2) the Federal Income Tax (16th Amendment), which was paid directly to the Fed for interest on money “loaned” to the government, and
          (3) the oil depletion allowance, which subsidized the bankers’ oil companies, and finally,
          (4) tax exemptions for foundations, which had been thusly structured to hide wealth and ownership of the bankers/oil moguls.

          Just 4 laws, by my humble count…..

          1. Lew Glendenning

            Wilson was president in 1913, “the people’s man” they called him.

            http://www.whitehouse.gov says “He developed a program of progressive reform and asserted international leadership in building a new world order. In 1917 he proclaimed American entrance into World War I a crusade to make the world “safe for democracy.”

            Those are Progressive laws.

          2. Lew Glendenning

            1994 – 2000. William J Clinton.

            Those are Progressive laws also. Commodity Futures Modernization Act was signed by Bill Clinton.

            Shrub’s policies pretty much the same as Clinton’s, as are Obamas. This is because they are all owned by the same people. The oligarchy, which could not exist without the power of the government to enforce it.

          3. Lew Glendenning

            OK, name a major foundation which is not controlled by Progressives.

            Name a major federal agency which is not controlled by a Progressive. I bet Bernanke would describe himself as a Progressive.

            Name any educational institution (except for those very few affiliated with religions) that is not controlled by a self-described Progressive.

            Name a major publication, even including Murdoch’s papers, which isn’t run by a Progressive.

            Any good examples of major centers of power that are not in the hands of Progressives?

          4. Lidia

            Wow! Lew is off his nut.

            -The Cato Institute? The Heritage Foundation?

            -The Department of Defense (hey, it only accounts for half our nation’s expenditures)

            -This is an easy one: Pepperdine, where my religious nut-job sister got an MBA. They gave Angelo Mozilo an honorary degree and the key to the kingdom there.

            -Err… the Weekly Standard, that my mom subscribes to? The Washington Times, the Moonie paper that she also subscribes to? The National Review, that bastion of wingnut welfare for Jonah Goldberg and other young masturbators?

            Major centers of power not run by progressives = all of them?

            Dick Cheney is still clearly running our energy policy, and Condoleeza our foreign affairs.

            Help me out here, folks, in identifying a “progressive” anywhere in the mix.

          5. Lew Glendenning


            If those are the best you can do, I rest my case.

            Pepperdine. I haven’t even heard the name in years.

            DOD — Most of the military people I have met recently are Democrats. The Air Force Academy turns them out by the hundreds. All of the neocons share Progressive fundamentals : rule by experts, government is the solution. They merely differ in trying to do their engineering in the areas of multilateral diplomacy with war and international power economics rather than social and economic engineering.

            In fact, most of the older neocons were far left to begin with, so sharing the fundamentals isn’t so surprising.

            As for the publications, ‘major’? Compared to what?

            OK, agree with you that Cato and Heritage are influential.

            But you make it clear that Progressives control very nearly everything, and have done so for very many years. There is no escaping the fact that the oligarchy could not exist without all of the Progressive laws. There is no escaping the fact that poor people around the world are made poorer by the effects of the Progressive’s many laws.

          6. Lew Glendenning


            Had you bothered to look, you would have seen that Pepperdine is a Christian University. Your single example of a non-Progressive, non-Christian educational instutition isn’t.

          7. Lew Glendenning


            The SC in 2011 accepts almost all of the laws and institutions that were established by FDR. You will agree that he was Progressive?

            If the SC were NOT Progressive, they would have rolled all of those back a long time ago, beginning with the new interpretation of the Interstate Commerce Clause that caused FDR to threaten to expand (pack) the court with his supporters.

            I will agree, however, that some members are Right Progressives, along with a lot of Democrats, e.g. Dianne Feinstein.

            Thank you and Lidia, btw, for actual arguments, attempts to refute statements. Thought I was in a Monty Python sketch this afternoon.

          8. Lew Glendenning

            Our foreign policy still run by Condolezza?

            I thought Madeleine Albright and Bill Clinton :
            By Rahul Mahajan

            Lesley Stahl on U.S. sanctions against Iraq: We have heard that a half million children have died. I mean, that’s more children than died in Hiroshima. And, you know, is the price worth it?

            Secretary of State Madeleine Albright: I think this is a very hard choice, but the price–we think the price is worth it.

            –60 Minutes (5/12/96)


            Do you think that either Obama or Hilary would say otherwise?

          9. JTFaraday

            Well, if you use this definition of progressive, per historian William Leuchtenburg:

            “The Progressives believed in the Hamiltonian concept of positive government, of a national government directing the destinies of the nation at home and abroad. They had little but contempt for the strict construction of the Constitution by conservative judges, who would restrict the power of the national government to act against social evils and to extend the blessings of democracy to less favored lands. The real enemy was particularism, state rights, limited government.”

            Then I guess you could say that progressive technocrats have consistently been in charge of US fedgov for (almost) 100 years, and consequently, everything that’s wrong today is their fault.

            He knows he’s playing with the currently operative definition of the term and is having great fun doing it. (No doubt Woodrow Wilson is a progressive).

            There may be some madness to this method. The resulting hardened technocracy is kicking contemporary progressive butt, I’d say, (not to mention everyone else’s).

            We want to be pro-government, but we don’t have a good government.

  16. Anonymous Jones

    What happened to this thread? There must be a google alert on ‘financial repression’ and some paid stooges are bringing out laughable misdirection about poor old seniors as “rentiers”. Wow, people can be disgusting in their pursuit of a few pieces of silver.

    1. scraping_by

      Much like the one out on Fukushima. Except it’s volunteers, not the pro flacks the nuclear lobby hires.

  17. Ransome

    Financial repression = capital controls. The effect of capital controls is reflected as economic efficiency which is measured by the deficit. The greater the deficit and the faster the rate of rise indicates capital usage inefficiency. It has been going on for 30 years. Idle capital that has trickled up has been reflected in the rising deficit. The standard of living for most has not risen and is falling.

    The outsourcing of production was heralded as a triumph of comparative advantage. Perhaps for a few, but not nationally. While the Right blames entitlements as a reason for inefficiency (programs that were pre-paid by the recipients), the Right steadfastly refuses to acknowledge that the users of public money and infrastructure have obligations to the well-being of the nation.

  18. lambert strether

    From Alice in Wonderland, “Who Stole the Tarts”–

    Here one of the guinea-pigs cheered, and was immediately suppressed by the officers of the court. (As that is rather a hard word, I will just explain to you how it was done. They had a large canvas bag, which tied up at the mouth with strings; into this they slipped the guinea-pig, head first, and then sat upon it.)

    “I’m glad I’ve seen that done,” thought Alice “I’ve so often read in the newspapers, at the end of trials, ’There was some attempt at applause, which was immediately suppressed by the officers of the court,’ and I never understood what it meant till now.”

    I think that Tett means “financial suppression,” not “repression.”

    Who among us has not wished to see a bankster stuffed into a canvas bag, and then sat upon? Good earthy sport, what?

    1. JamesW

      Probably, just like Tett’s book, Fool’s Gold, was really an advertisement for the noble JPMorgan Chase, who, according to Tett, wisely and sagely backed away from securitizing all those mortgages, even though JPM was a veritable credit derivatives and securitization factory, chugging out more than anyone else and creating the crooked foreclosure model:

      Sell off mortgages, securitize and divide into tranches, sell again, illegally foreclosue on homes with falsified affidavits (robo-signing), recoup majority of loan when FHA, then sell again, earning multiple “profits” multiple times over.

  19. Paul Tioxon

    Financial repression is the new gun control. And remember patriots, guns don’t kill, people do. You’ll have to take my day trading apps from my cold, dead Iphone4S.

  20. Sleeper


    This is a ginned up cliche. It is generated by the same propagandists who brought us “death panel” “job killing regulations” “deadbeats” “mom and apple pie” and so on.

    These cliches are created by focus groups and are designed to to create a visceral reaction and to allow the American people to stop thinking.

  21. Joe Firestone (LetsGetitDone)


    “Every financial institution is at heart a hybrid public-private partnership, which becomes obvious when a crisis hits and the banks come crying to the government to fulfill a lender of last resort role. It’s even more obvious when you look at a dollar bill, and you realize it is a liability owed to the taxpayer. What that means is that either the public controls banks or banks control the public.

    I couldn’t agree more. I also wanted to point out that a dollar bill is a liability from a Modern Monetary Theory (MMT) point of view. The Government owes the holder of a dollar bill the obligation of accepting it in payment of taxes. That is the primary reason why MMTers say that all money is debt.

    Some folks, like the public banking advocates see certain kinds of money as “debt-free.” But thy aren’t thinking about things relative to tax obligations. They’re thinking about the Government exchanging debt paper for already issued money, and want to stop that practice since it primarily provides welfare for the rich and foreign nations. But they’re not about people exchanging money for cancellation of their tax obligations. The bottom line is that all money is debt in the sense that it involves a liability. The only questions are what kind of debt and what kind of liability is involved, and also who benefits and how?

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