New York City has a thriving food culture where millions of people eat out at restaurants every day. Free to choose what and where they eat, the choices of these individuals have a direct impact on the NYC food industry and even determine which restaurants “make it” and which don’t. Therefore, restaurants exist and compete to serve New Yorkers, not the other way around.
The freedom to choose is an essential and universal feature of free markets and should apply to every economic good.
Alas, in the market for money and credit, this freedom has all but disappeared. Consequently, markets have deteriorated to such a degree that a specific term has arisen to describe what’s going on—financial repression.
The Meaning of Financial Repression
The verb repress means “to keep under control, check or suppress.” Financial Repression then is the use of political measures to gain control over the finances of individuals. Such measures include, but are not limited to:
- Manipulation of interest rates (typically lower)
- Direct or indirect government control of banks and financial institutions
- Elimination of the convertibility of bank notes
- Regulation that restricts competition in banking, and raises barriers to entry
Each of the above measures has been employed in increasing degrees by both the U.S. government and the Federal Reserve. America is now more financially repressed than ever before in its history.
Consider how the above measures force everyone who has a money balance to be a lender. They must own something from the following menu:
- Government debt directly in the form of the Treasury bond
- Government debt indirectly in the form of dollar bills
- Government debt indirectly in the form of bank deposits
Unlike with food in New York, this menu is a mockery of choice. You will eat the government debt, with no choice about it. The only paltry choice you’re left with is how it’s served, but even this choice is rendered moot. Normally, the interest rate is supposed to compensate you for the use of your money for a period of time, not to mention the risk of lending. However, in today’s regime of financial repression, whether you choose the Treasury bond, bank deposits, or Federal Reserve notes, your choice is powerless to affect any change in the interest rate.
“How would you like that government debt served sir?
With low interest? Less interest? Or zero interest?”
Videmus cui beneficia – We see who benefits
Commenting on the purpose of Financial Repression, the Financial Times writes that, “The combined effect of all these measures means funds are channeled to the government that would otherwise flow elsewhere.”
In clear contrast to New York restaurants, our monetary system doesn’t exist to serve us. We exist to serve the masters of our monetary system. Financial repression disenfranchises us. In a free market, the participants are ultimately in control. But in money matters, we are controlled.
This is not just bad economically, it’s morally wrong. Human beings should not be ruled this way.
- Owning gold extricates you from being a creditor to the Federal Reserve system
- With gold, you’re in control. You decide if you will invest, and the interest rate you will accept
Financial Repression under the Federal Reserve? Or financial freedom through Monetary Metals’ Gold Yield Marketplace? The choice is yours.