27 Minutes, 38 Slides

According to John Rubino the EU is being penalized and disadvantaged for attempting a more prudently sound Monetary Policy. Unfortunately the old adage of "Bad Money forcing out Good Money" is occurring and will force the ECB to soon succumb to the pressures of the other, even more monetary spendthrift, developed economies.

A positive current account and falling inflation has kept the Euro strong, which is now undermining further possible EU/ECB recovery efforts. Mario Draghi and the ECB have recently been very vocal that actions will soon need to be taken to weaken the Euro.

This has all the earmarks of escalating Currency Wars as Japan blatantly debases the Yen as a cornerstone of ABE-nomics and The Fed still prints at a rate of $55B/Month (Current TAPER rate).

With the "Baby Boomers" now retiring in Europe (much sooner than the US due to more generous entitlements), the massive unfunded and 'cash accounting' pension and entitlements programs in Europe are hitting fiscal operating budgets. There is little policy alternatives, without unprecedented social unrest, but to rapidly re-expand the money supply in an unsterilized fashion.

Financial Repression

As a consequence, with little media coverage the EU is stepping up its policies of Financial Repression to combat the soon to explode "in budget" government debt levels which have previously been shrouded in government obfuscation and 'creative' accounting.

Race to Debase

We are now in a global "race to debase" as the developed nations debase their currencies to reduce debt burdens, while the emerging economies traditionally have debased their currencies to gain or maintain export led mercantilism economic strategies.

We are left with the developed economies exporting inflation and the rest of the world exporting deflation. The balance is shifting and the question is which way will it tip?

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Thesis Paper: Financial Repression

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