The triangle of financial repression

The idea that we are entering a phase of financial repression regularly returns to the fore as real interest rates are negative and nominal interest rates are very low. As the Federal Reserve begins to normalise its policy with tapering and as US Treasury yields are rising, investors might believe this is only a temporary phenomenon. In fact, we believe we entered a regime of financial repression soon after the Global Financial Crisis 15 years ago, the intensity of which could increase in the context of the Covid-19 and climate crises. Indeed, financial repression is not only a function of monetary policy but also includes regulation and government decisions, forming a triangle with a moving barycentre. It appears to be a reasonable policy to ensure a smooth energy transition.