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The Economist acknowledges 'financial repression' -- at a safe distance from London
4:21p ICT Monday, March 28, 2016
Dear Friend of GATA and Gold:
In an article headlined "A Tarnished Appeal," The Economist magazine, the voice of the supposedly learned establishment, acknowledges this week that India's government continues to wage a decades-old war on gold that arises mainly from the government's own irresponsibility with its currency.
The Economist writes: "Decades of inflation and a much-debased rupee have pushed savers towards what is, in effect, a convenient way to insulate their nest-egg from the poor decisions of India's policymakers (and, just as often, from its tax inspectors). In rupee terms, in other words, gold has been a stellar investment. ...
... Dispatch continues below ...
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"Policymakers have other ways of making gold less appealing. A modest excise tax in the recently unveiled budget has kept jewellers across the country on strike for a month. Gold sellers were already furious at import duties and rules forcing them to identify customers buying more than 200,000 rupees' ($3,000) worth. In addition, the central bank is discouraging lending to buy gold. ...
"If the government really wanted to accelerate this shift, it could change its own ways. Various laws steer a big share of bank deposits into low-yielding government debt and agricultural loans. That, in turn, means that Indians earn little interest on their savings, enhancing gold's relative appeal. Such financial repression helps the government fund itself cheaply. But it means that Indians are sitting on gold equivalent in value to four months of economic output. That could be financing productive investments instead."
Wow -- so "financial repression" by governments has been acknowledged by The Economist, if at the great distance of London from Mumbai. Now how about a longer excursion into the subject by the magazine? It could start not even 3 miles away at the Bank of England on Threadneedle Street, a nerve center of gold market intervention. Some ideas for such an excursion can be found here:
http://www.gata.org/node/14839
The Economist's article is posted here:
http://www.economist.com/news/finance-and-economics/21695558-indias-gove...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org
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