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Top U.K. Economist: Governments are Trying to 'Rig' the Financial System


"they're resorting to various tricks"

Stephen King (not the author) is HSBC's group chief economist and the Bank’s global head of economics and asset allocation research. In other words, he knows what he's talking about. And right now he's talking about financial repression. What is it and why should you know about it? He explains:

Financial repression is a situation where the government jumps to the front of the credit queue to make sure it can fund itself very, very easily often at very low interest rates ... and it does so because they're in a situation where the government perhaps has too much debt. And so therefore, trying to effectively rig the financial system to allow it to borrow more easily at the expense of others is a very neat way of trying to deal and live with these very high levels of government debt.

Business Insider sums up his argument:

"In other words, with the governments of big Western nations running up so much debt, they're resorting to various tricks to keep funding themselves -- tricks like QE and so on, which hurt savers, etc."

King especially sees this in the western world, where financial repression is becoming one way of dealing with high debt. According to him, the issue is no longer how you reduce government debt, but "how you live with it."

Watch his interview below:

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