Financial Repression Authority with Dr. Thorsten Polleit
Dr. Thorsten Polleit, 47, is Chief Economist of Degussa Goldhandel GmbH (www.degussa-goldhandel.de). From 1998 to 2012, he worked as an economist for ANB AMRO and Barclays Capital in Amsterdam, London and Frankfurt. Thorsten holds a diploma in economics and was awarded a doctorate in economics from the University of Münster in 1996. In September 2014 he was appointed Honorary Professor for economics at the University of Bayreuth (uni-bayreuth.de). Thorsten Polleit is an Adjunct Scholar of the Ludwig von Mises Institute, Auburn, US Alabama (www.mises.org), President of the Ludwig von Mises Institut Deutschland (www.misesde.org) and a founding member of the research network on The Role of Money in the Economy (ROME). Together with Matthias Riechert he founded the investment firm Polleit & Riechert Investment Management LLP (www.polleit-riechert.com). Thorsten Polleit writes frequently for various newspapers magazines and journals. His publication list can be found here.
When you are as well grounded in the Austrian School of Economics as Prof Dr. Thorsten Polleit, then understanding inflation is only a matter of understanding the countries changing "money stock" and the "quantity of money". As Ludwig von Mises taught - inflation always comes to an end! At some point you cannot inflate any further.
"We live in a world where the quantity of money can be increased at any point in time, in any amount politically desired. It is only a matter of political willingness to increase the stock of money ... the real risk in an unbacked money system is therefore inflation"
Prof Polleit believes there is a "lot of trickery"still to be done to avoid the ultimate catastrophe which he sees ahead because of the lack of politically will to address the present economic problems and the government's fear of deflation. As a result, "it can be anticipated that future government policies will take away a large amount of private wealth".
"Presently there is great support to keep alive a failing unbacked "paper money" system ... Many people have become dependent on the unbacked "paper money" system, for example people holding bonds. They have a great interest that the whole monetary architecture does not collapse. So, if the choice is to bring to a halt the printing press and accept the consequences; or to be in favor of the policies to create new money, the majority of the people would opt for the former. This is why you can (and will) impose all these drastic Financial Repression measures."
"Financial Repression are policies that try to erode outstanding wealth. For instance governments have bonds outstanding. Through Financial Repression they try to reduce the amount of real debt of these instruments. ... They do this by controlling the interest rate and ramping up inflation so the real return on investor assets declines and inflation 'eats away' investor wealth"
Negative Real rates
"Negative Real Interest Rates is an instrument of the government for eroding real wealth of savers to the benefit of the government and other highly indebted interest rate groups - like the banking industry because their outstanding liabilities are getting reduced in real terms. This is the redistribution of income and wealth on the grandest scale imaginable!"
"The losers are the innocent savers with expectations of inflation being lower than it actually is or will become."
"It must be understood that Wealth is being transferred!"