One Reason Why Financial Repression Won’t Work

Three Reasons Why “Financial Repression” Is Doomed To Failure | ZeroHedge.

Hyperinflation in Weimar Germany started with QE.

Germany needed money to pay war reparations pursuant to the Treaty of Versailles. These war payments were simply too expensive, and I daresay vindictive. Germany never had a chance to repay those debts, and the financial markets knew this.

Germany could not borrow money at decent interest rates, so it decided to print money. People had lost trust in the German financial system and currency during the war. When the Reichbank began printing money, it did so in an atmosphere of no trust. This is why the currency rapidly lost its value. People had been primed to distrust the system because of heavy inflation during the war.

The Federal Reserve still has a lot of credibility with the public, so it has been able to get away with money printing so far. However, you’re only one scandal away from losing credibility. Once you lose credibility in the financial system, it is gone forever. Just ask the former employees of Bear and Lehman.


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