Saturday, March 22, 2014

XIRP forecast

Using the premise that the US is copying, Xerox style, the interest rate history of Japan after their bubble busts, we can make some forecasts on when and how effective Fed efforts to raise short term interest rates might be.

After Japan's rates fell below 1% in April, 1995, they stayed near zero until May, 2006, despite a little noise in 1999. That was 11 years of ZIRP, suggesting a serious Fed effort to raise rates in November, 2019.

Japan did make an effort to raise short term rates to 0.5% in 2006, and rates got as high as 0.639% in September, 2008. After about 2.5 years of half-percent interest rates, they crashed back to zero during the global recession caused by the US bubble bust and today sit at 0.05%. Based on that timeline, when the Fed finally does make a serious effort to raise rates, they may hit a wall at 0.5% and be unable to maintain it for more than a couple of years.

This is all conjecture based on the US following the Japanese lead, unable to stop "it" from happening here.

Monday, March 3, 2014


source: Federal Reserve Bank of St. Louis (

This chart shows the US is following a Xerox Interest Rate Policy: an almost flawless copy of the interest rate policies of Japan, delayed by about 16 years. The blue line is the Japan T-bill rate and the red line is the US T-bill rate. Japan had a last gasp interest rate hike in the early 1990s, while the last gasp in the US came in 2007. Since the mid-1990s, Japan has been at zero, with the corpse twitching a couple of times before coming back to rest at zero. The US has been at zero since 2008 without even a twitch, but we might expect a small one if we are maintain XIRP. Based on the theory that Japan has led all western nations into the financial abyss, we can expect at least another 15 years with the US T-bill rate at zero.

This is not investment advice, but it might be interment advice.

Sunday, March 2, 2014

Crimea River

S&P 500 stock futures are down about 1% right now. The Nikkei is down about 2.5%. Maybe central banks have absolute control over world events and have eliminated all risk forever. Or maybe they haven't.