“a pejorative term akin to political repression”: Ronald McKinnon
“a technical term”: Carmen Reinhart
A spectre is haunting economists and creditors across the world – the spectre of “financial repression”. The fear that governments may throw regulatory grit into the otherwise frictionless working of the financial services machine, and so limit the “freedom” of the machine’s owners to manufacture financial gains however they will, wherever they will, whenever they will.
The financial sector, let us recall, caused the 2008/9 crash through greed and speculation, was bailed out by governments and taxpayers in gigantic sums, which led to rises in public sector debt as measures were taken to rescue economies and look after victims of the crash.
But now the financial sector and its intellectual lobbyists are deeply concerned. Concerned, that is, to protect their assets and interests.
On 8th January 2014 on the BBC Today Radio 4 programme, emerging market investor Jerome Booth told listeners:
"We’re certainly going to have to have a decade or so of reducing the debt through maybe inflation eventually. At the moment it is through financial repression."
Asked what this meant, he defined financial repression as “any policy which captures domestic savings in order to fund the government and to do so at lower cost.”
He added that after the Second World War, “financial repression basically stole the money of savers over many, many years.”
“Captures”, “stole”, “repression” – this is emotive language. In Metaphors We Live By (first published in 1980) George Lakoff and Mark Johnson argued that our use of language – indeed language itself - is pervaded by coherent systems of metaphors which we may no longer be conscious of. They explain:
“Political and economic ideologies are framed in metaphorical terms. Like all other metaphors, political and economic metaphors can hide aspects of reality. But in the area of politics and economics, metaphors matter more, because they constrain our lives. A metaphor in a political or economic system, by virtue of what it hides, can lead to human degradation.”
“Financial repression” is self-evidently a metaphor. Someone or something is being kept down by the repressor, evoking mental images such as tanks crushing peaceful demonstrations, or robber barons “capturing” or “stealing” your money.