ZIRP (Zero Interest Rate Policy) is Stalking You. Here’s Your Best Protection …

Monday, November 04, 2019

I don’t know about you. But when they were younger, my kids used to have a lot of fun with Zombies, especially on Halloween. They know the Zombies weren’t real. Nor were they very scary.

Unfortunately, I can’t say the same about the real zombies that are stalking you, me and the entire economy right now.

Zombie banks that were rescued from the dead in the 2008 crisis.

And a Zombie monetary policy that we thought the U.S. Federal Reserve had buried when unemployment reached record lows:

The ZIRP Zombie (Zero Interest Rate Policy)

This is what the Fed practiced for 84 long months after the Great Financial Crisis when it pegged its benchmark interest rate to near zero.

It’s unprecedented. It’s extreme. And it’s a close cousin of the deadlier NIRP (Negative Interest Rate Policy) practiced by the Bank of Japan, European Central Bank and others.

The theory of ivory-tower economists is that this should ignite an economic boom and help “improve” inflation by bringing it UP to “more desirable” levels.”

But a decade or more of real-world results shows that isn’t the case. The only thing the ZIRP Zombie accomplished was to suck the life, profitability and proper functioning out of banks, pension funds, insurance companies and other financial firms.

Result:

  • Many leading European and Japanese bank stocks are trading at, near or even below the worst levels they’d hit in the financial crisis.
  • Pension funds and insurers are begging for relief even as their obligations to retirees and policyholders grow by the day.

So, what did the Fed do last week? It decided to “emulate” the “fine example” of central banks overseas … plunging deeper into the same trap they’re in.

The Fed took yet another step toward zero interest rates! It lowered the benchmark rate by another quarter-point, its third such move this year. That puts the lower bound of the Federal Funds target rate just one-and-half percentage points above zero.

In other words, the Fed is actively feeding the beast. For you, this means that …

The ZIRP Zombie is a Big Threat
to Your Wealth That Refuses to Go Away

The ZIRP Zombie will drain the yield from your savings and money-market accounts.

It will gnaw on the yield that relatively safe investments will pay.

It will make you sock away more and more money — just to earn the same monthly stream of income you need.

But fortunately, you do have a way to fight back. You don’t need a barbed-wire-bound baseball bat. You just need to buy gold, silver and precious metals miners!

Indeed, it’s no coincidence precious metals and miners started rallying precisely when global central banks began embracing ZIRP and NIRP.

As yields on corporate bonds dropped to zero and even BELOW, investors asked …

What’s more attractive: zero yield on flimsy paper money, or zero yield on solid, pure gold?

Or better yet, what about the ACTUAL yield I can make on dividend-paying gold miners, particularly the kind that regularly share their royalties with shareholders?

No wonder miners — quietly, yet persistently — are beating the pants off just about every other sector in the stock market! And if Fed Chairman Jerome Powell is forced to keep cutting rates in 2020 ... as I expect he will, given the likelihood of a recession ... they’re going to keep on doing so.

And never forget: Just because Halloween is over, it doesn’t mean the ZIRP Zombie has gone back underground.

Make sure you take steps to protect your portfolio — and grow your wealth — as long as he’s out there stalking all of us.

How exactly can you do this? Stand by for my email coming tomorrow about our upcoming High-Profit Gold Stock Forum.

Until next time,

Mike Larson

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