Monetary Repression creates a “Monte Carlo Premium”: sky-high and vulnerable. By Dr. Brendan Brown

EXECUTIVE SUMMARY:
”Stimulus policies” of the central banks this year mean even greater repression of interest rates on government bonds, especially in Europe and Japan.
The consequence has been an increase in demand for assets whose returns are not directly subject to such repression – especially equities.
In a fundamental sense though, there is no escape possible in general from monetary repression.
A high premium price on the alternative assets (to government bonds) eventually goes along with a lowered rate of return.
The same principles apply here as for the usual illusionary escape from taxation offered by tax havens.
A speculative run in haven assets, though, can create an illusion of escape for a lengthy period of time.

Dr. Brendan Brown

For the paper: Monetary Scenarios, Dr. Brendand Brown