source: Federal Reserve Bank of St. Louis (http://research.stlouisfed.org/fred2/graph/?graph_id=163564&category_id=0)
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.
XIRP!
ReplyDeleteI searched for "xirpses" in Google with an intent do a pun based on Egyptian Gods. The results from Google were even better though.
Did you mean: corpses
Interment advice indeed! Hahaha! Sigh.
Stagflationary Mark,
ReplyDeleteIt fits with your death of real yields meme. I am looking forward to Yellen trying to crank rates up even a little to see the corpse twitch.