What is financial repression?

Financial repression is any government policy that prevents investment opportunities for its citizens and at the same time improves the overall wealth of the government itself. Proponents of this theory feel that this occurs whenever governments fall into a significant debt and need funding to remove themselves. The theory states that governments use tactics such as interest rates, government bonds and banking system to effectively act as a system of indirect taxation of citizens of these countries. Those people who feel that financial repression theory is at best cynical and, in the worst case, treacherous, claims it is simply a will against the necessary government interaction with economic machines. Most of these managing authorities claimed that such an intervention is necessary to improve society in general, and the alpate for corruption in such cases is obvious. In the modern world, it would be difficult to perform such direct government corruption. Nevertheless, some experts believe that a finer form of government behavior exists in the form of a financial rePrese.

Although it is difficult to define, financial repression in principle appears at any time when the government puts its own financial concerns before the concern of its citizen. This can be done in ways that are difficult to detect. In some cases, methods for achieving such an effect may even be perfectly legal, although the spirit of the government may be perceived as deceptive.

In one particular way of financial repression is the handling of interest rates. If interest rates are kept at low level, while inflation rises, it means that the actual interest rate value is negative. It can reduce the possibilities of savings limited to banks offering these interest rates can limit citizens' prospects. In addition, the government may persuade banks to overcome their money for government securities, reducing the government's debt in this process.

It is difficult to draw a boundaryBetween a place where simple economic stimulation ends and financial repression begins. Many people who believe in this theory point to a period when it was practiced by governments in developed countries coming out of expensive wars that strongly indebted them into the debt. On the other hand, these governments were often forced to take drastic steps to build the economies of their relevant countries.