The concept of “financial repression” was developed in 1973 by renowned Stanford University economists Ronald McKinnon and Edward Shaw. It describes a collection of economic policies, regulations and capital controls imposed by governments and central banks to facilitate public-sector deleveraging. Today, with countries across the developed world entangled in debt, financial repression offers a roadmap to fiscal stability and a strong incentive for market intervention. But there are costs. Government intervention can produce market distortions—including today’s artificially low interest rates. In an environment of even moderate inflation, these low rates can result in negative real investment returns. That is why we believe it is critical for investors to understand how financial repression works, why governments choose to use it and what tools are best-suited to protect assets and purchasing power.