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El-Erian: “Financial Repression” In the Form of a Negative Real Rate of Return for Savers Is Coming to America

Posted By admin On May 18, 2011 @ 3:21 am In Money Watch | Comments Disabled

Washington’s Blog [1]
May 18, 2011

As CNBC notes [2]:

“Others are flashing orange, like the US, and already require future sacrifices, most likely through a combination of higher inflation, austerity and, importantly, financial repression,” said El-Erian, who classifies financial repression as seeking to impose negative real rates of returns on savers.

This policy will undermine the real return contract offered to savers and, in El-Erian’s view, come instead of any bold moves to address structural problems and imbalances.

“Secular baseline portfolio positioning should minimize exposure to the negative impact of financial repression, hedge against higher inflation and currency depreciation and exploit the heightened differentiation in balance sheets and growth potentials,” El-Erian added.

In other words, Pimco co-chair El-Erian is saying that the major flaws in the financial system will not be addressed, the government will keep on printing money, and that the inflation-adjusted return on investments for most Americans will be negative.

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El Erian: Financial Repression In the Form of a Negative Real Rate of Return for Savers Is Coming to America 260310banner2 [4]


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URLs in this post:

[1] Washington’s Blog: http://www.washingtonsblog.com/2011/05/el-erian-financial-repression-in-form.html

[2] notes: http://www.cnbc.com/id/43056225

[3] Stock up with Fresh Food that lasts with eFoodsDirect (AD): http://www.efoodsdirect.com/

[4] Image: http://purewaterfreedom.com/

[5] Sweden Cuts Deposit Rate to NEGATIVE .25%: http://www.prisonplanet.com/sweden-cuts-deposit-rate-to-negative-25.html

[6] Greece Likely to Default By 2013 as Debts Remain, El-Erian Says: http://www.prisonplanet.com/greece-likely-to-default-by-2013-as-debts-remain-el-erian-says.html

[7] The Fed Has Already Imposed A “Cyprus Tax” On U.S. Savers: http://www.prisonplanet.com/the-fed-has-already-imposed-a-cyprus-tax-on-u-s-savers.html

[8] Savers May Flee U.S. Banks: The Dominoes Are Starting To Fall: http://www.prisonplanet.com/savers-may-flee-u-s-banks-the-dominoes-are-starting-to-fall.html

[9] Real U-3 Unemployment Rate: 11.6%: http://www.prisonplanet.com/real-u-3-unemployment-rate-11-6.html

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