Zero Interest Rate Policy (ZIRP) was instigated by a credit induced collapse of the US financial system and perpetuated in December of 2008 by desperate financial policy makers as a fix to problems they created in the first place.
In reality, it is simply an epic distortion of normal economic signals that cleaned up the mess created by previous policy distortions (like the commercial credit bubble of the Greenspan era) by systematically (5+ years and running) main lining new distortions into the system.
So in addition to this picture, which could one day hang in a monetary museum with the title ‘Grandma and Her Savings Account Bail Out Wealthy Asset Owners’, let’s take a walk down memory lane and marvel at some other pictures created by this policy…
The venerable S&P 500 is in the 6th year of a bull market. At some point over the last year or so the public finally became aware of the bull market in US stocks; 4+ years in.
As the public came in, momentum came into the market for the first time, especially in big tech. Bears hold prospects for the little topping pattern way up there, but so far that is a drop in the bucket compared to the upside this market has seen.
Of course, the object of policy making has been at least two-fold; bail out the big banks (the pigs at the trough), and create a stock bull market to increase household net worth on paper, through ownership of stocks. The BKX, while weak lately, quadrupled over the last 5 years.
Gold at first did what it was supposed to do, acting as liquidity and leading asset markets out of the price destruction of the melted down prior credit bubble. Then a funny thing happened, Europe sprung a leak to compound global credit fears and gold experienced an upside blow off in 2011 as players the world over knee jerked into the honest money value retainer.
That was of course after silver had sucked in every last commodity (and inflation) bull as the commodity echo bubble blew out in early 2011.
