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Explore the implications of increasing financial repression, with a focus on offshore financial centers and incentives for public debt reduction. Financial repression indicators such as interest rate ceilings, exchange controls, and overseas investment taxes are discussed, along with the potential impact on ownership and prudential regulation. Predictions suggest a rise in demand for equities and redistribution of capital and wealth to lightly regulated jurisdictions amid low interest rates.
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Are we entering another era of financial repression? The growing demand for Offshore Financial Centres
Rationale • The incentives to reduce public debt are more compelling today than at any time in the last 100 years
What does financial repression look like? • Ceilings on interest rates
What does financial repression look like? • Ceilings on interest rates • Exchange controls
What does financial repression look like? • Ceilings on interest rates • Exchange controls • Overseas investment tax
What does financial repression look like? • Ceilings on interest rates • Exchange controls • Overseas investment tax • Restricted ownership
What does financial repression look like? • Ceilings on interest rates • Exchange controls • Overseas investment tax • Restricted ownership • Prudential regulation
Predictions • Low interest rates → ↓Government interest expenses • Low interest rates → ↑Demand for equities • Low interest rates → ↑Redistribution
Predictions • Financial repression → capital & wealth looking for lightly regulated jurisdictions