Prepare for ZIRP

As many of you know, I have been a Financial Consultant for over 30 years.  So every day I get numerous emails from various financial institutions all telling me what the future looks like.  "We believe that the markets will remain strong."  Or, "We believe we will have a W-shaped recovery.", etc...

Today I received this one telling us that the FED will not stand in the way of recovery.  Translation:  The FED is going to be ready to create money out of thin air AND keep interest rates at ZERO.

ZIRP is an acronym for Zero Interest Rate Policy.

By the end of March, the COVID-19 global pandemic had a deep and profound effect on virtually every economy across the world. The impact on growth is very real, albeit acute, and will pull economic activity down significantly even with the active and widespread government intervention currently underway. While April is shaping up to be one of the “longest” months in recent memory, we are looking forward to May and June when the focus will be how quickly various economic areas can begin to migrate back toward some form of normality.

Overall, we believe the second quarter will be more transitional from the COVID-19 fallout, setting up the third quarter when growth should begin to accelerate aggressively, through to the end of the fourth quarter when we believe we will see a more normal employment and economic growth rates of 2-3%. While this time line may be longer than many expected, it is certainly short enough so as not to impair the ability for a relative short-order rebound. While much uncertainty remains, one aspect of the COVID-19 market shock is clear: The Fed will not stand in the way of the economic recovery. This means the world is headed for a prolonged period of zero interest rate policy also known as “ZIRP”. In this zero interest rate world ahead, less distressed and more rational markets will begin to highly value the yield and income opportunities currently available.

We believe demand will remain focused at the higher end of the credit quality spectrum across corporate and securitized asset classes, albeit selectively among issues and issuers. Accordingly, caution is likely to prevail among the more risky segments, including high yield and certain segments of the securitized market, as investors wait to see how the recovery progresses. We are preparing our portfolios for this zero interest rate world through high-quality investments across consumer finance and non-agency RMBS, while also looking at select areas of CMBS, where market dislocations have created attractive entry points in areas we believe will exhibit resiliency through the economic downturn.

The Fed has no intentions of being a headwind to the recovery and we expect to remain in a Zero Interest Rate Policy (ZIRP) world for quite some time. More importantly, in our opinion, the Fed will not move to a negative rate stance. In maintaining ZIRP for the foreseeable future will anchor the front end of the curve. We expect the 10-year yield to tread in the 0.50% - 1.00% range, with a bias towards the higher end of the range as investors gain more clarity over the economic impact of the virus.

I can't give you a link because the article isn't for public distribution and you couldn't open it anyway.

But I will remind you that this is the first time EVER in human history that that interest rates have been zero or below zero.  And it looks like this is going to be with us for a very long time.

Why?  Because the entire world has become dependent on debt.  We want $50,000 cars but most will never have $50,000 in savings to pay for the car so we finance it.  The same can be said about virtually everything that Americans buy.  Even your sofa, appliances, TV's and boats.  It's all financed.  That's what keeps our consumer society running.

In order to keep people buying stuff on monthly payments, we need to make things as painless as possible.

Also, what might happen to the US Government Debt of $25 trillion if THEY had to start paying 5% annual interest on that?  Do they even collect enough in taxes to pay the interest?

No one knows for sure.

This would be one more factor that points to the understanding that the end of the financial world as we know it is probably much closer than any of us realize.

Remember, this ALL NEEDS TO HAPPEN to make way for the Antichrist financial system that the Bible has told us about all along.