Economics Finance Investing Investment Inflation Bonds Currency Devaluation Cash central banks Financial Repression IMF NBER Transitory
Lyn Alden
Lyn Alden

@LynAldenContact

3 Tweets 18 reads Mar 30, 2022
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This is known as financial repression.
When debt is very high, then even when inflation runs hot, central banks are extremely slow to raise rates.
The real value of the debt gets eroded away; currency devaluation.
The BOJ, ECB, Fed, and some others are running the playbook that the IMF published back in 2015 and NBER published in 2011, and which was done through much of the 1940s-1970s.
imf.org
nber.org
The BOJ, ECB, Fed, and some others are running the playbook that the IMF published back in 2015 and...
imf.org/en/Publication…
nber.org/papers/w16893
This works because not everyone gets it at once. They think it's transitory, and have all sorts of justifications/theories to overweight bonds and cash. And sometimes they do get a good counter-rally.
But years and years later, they look back and were significantly devalued.

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Economics Finance Investing Investment Inflation Bonds Currency Devaluation Cash central banks Financial Repression IMF NBER Transitory

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