Zika, ZIRP, and NIRP Viruses

The Zika virus is the newest threat to humanity, especially pregnant women, so they say.  Big Pharma is working feverishly to create a vaccine.  Chances are the vaccine will be created, highly profitable, and Big Pharma will be “held harmless” for injuries to those who were vaccinated.

Add GM mosquitos, birth defects, Brazilian Olympics, big profits, and the story becomes a huge distraction.  John Rappoport has suggested there is more to the story.

There is money to be made on vaccines and GM mosquitos, and money to be lost if sales of pesticides and other chemicals are reduced.  It is clear in which direction the politics will lean.

The Zika virus should remind us of other strange activities in the financial world.

——– Speculation and Sarcasm Alert ————-

What if we think of ZIRP (Zero Interest Rate Program) as a financial virus, created and distributed by the central banks, that infects pools of savings?  Symptoms are:

  1. The ZIRP virus weakens and gradually destroys pension funds. Retirees, beware of this virus!
  2. The ZIRP virus destroys income for personal savers. People saved for decades and now their savings yield little or nothing in interest.
  3. The same has occurred with Insurance companies – they earn little on their bonds compared to what they previously earned.
  4. Governments must (in theory) increase their contributions to retirement plans to supplement the decreased earnings due to the deleterious effects of the ZIRP virus. Consequently some governments are closer to insolvency and should curtail expenditures.  Retirees, this is another warning!
  5. The bond market is further levitated in its 35 year bull market. This benefits the political and financial elite  …   until it crashes.

D-Tbonds

The ZIRP virus is a nasty virus that affects many people, pension plans, insurance companies, and government budgets.  Central banks have concocted this virus and it has infected many pools of savings.

But there are worse viruses than the ZIRP virus!

The ZIRP virus has mutated into a nastier version – the NIRP virus, otherwise known as the Negative Interest Rate Program virus.  Currently over $7 Trillion in sovereign debt has been infected with this virus and the quantity of infected debt increases daily.

From John Rubino:

“Yesterday Japan’s government borrowed money on terms that require the lenders to pay rather than receive interest for ten years.  And not only was that bond issue snapped up, it was vastly oversubscribed.  This raises a lot of questions, the chief being ‘why would anyone voluntarily commit to something that’s guaranteed to lose money for a decade?’

 The short, obvious answer is that the world’s central banks are creating so much excess cash that there seems to be nowhere else for it to go.”

 The NIRP virus is similar in symptoms and consequences to the ZIRP virus:

  1. Pension funds are destroyed even more rapidly.
  2. Personal savers will, once infected by the NIRP virus, experience the questionable privilege of loaning money to their favorite bank and, if the bank survives, receiving back less than they “deposited.”
  3. Insurance company earnings are hurt by the NIRP virus. Perhaps rates will rise.
  4. Many governments, which are already in financial trouble, will increasingly underfund their pension plans after they have been infected with the NIRP virus.

There are other consequences besides insolvent private pension plans, retirees unable to earn enough from savings, insurance companies earning too little, and government pension plans becoming insolvent quicker.

From Bill Gross (quoted by Rubino):

“Capitalism does not function well, and profit growth is stunted, if short-term and long-term yields near the zero bound are low and the yield curve inappropriately flat.”

From John Rubino:

 “They [life insurance companies] price their policies on the assumption of a mid-single digit positive return on their bond portfolios.  Turn that return negative and all of a sudden the world’s life insurers are either unprofitable or insolvent.  And that’s a big industry.

 “Pension funds, meanwhile, operate the same way, taking in and investing contributions against future obligations.  Many US pension plans are already borderline broke and in a NIRP environment they’ll suffer a mass extinction.”

Repeat:   regarding the effects of the ZIRP and NIRP viruses:

  1. Capitalism does not function well.
  2. Life insurance companies become unprofitable or insolvent.
  3. Pension funds: expect mass extinction.
  4. Retirees and future retirees: This is your warning!  Read an article from John Mauldin.

However, an even more destructive mutation of the NIRP virus has been sighted and may infect larger pools of capital:

It is possible the NIRP virus will mutate into the NIR-BAM virus.  The Negative Interest Rate with Bank Account Mandatory virus would require that all cash be deposited into bank accounts that are “taxed” each year with negative interest rates.  In other words, you can’t win and you must play the game.  The NIR-BAM virus is spreading in Europe and Japan, and a few early signs have been seen in the U.S.  An outbreak or epidemic is possible.

CONCLUSIONS: 

The ZIRP virus, NIRP virus, and a potential outbreak of the NIR-BAM virus are destructive to savers, pension plans, insurance companies, economies, and governments who fund pension plans.  These viruses have mutated from QE and central bank diseases, and all the consequences of these diseases and viruses have not yet been fully realized.

Going forward we might expect additional QE, continued ZIRP and NIRP, deflation in paper financial markets, weakened economic activities, a banking system crash, and a renaissance in gold and silver markets as people seek protection from the effects of the ZIRP and NIRP viruses.

Economies could deteriorate further as more capital, people and markets are infected by financial viruses.  Fortunately, gold and silver have no counter-party risk and both are likely to prosper as other investments experience the deadly consequences of the ZIRP and NIRP virus.  Also, gold and silver will help protect savers from the NIR-BAM virus if it becomes an epidemic.

Gold and silver might diminish worries and help people sleep, and thereby improve their immune systems, which will also help protect people from the Zika virus.

Gold and Silver will thrive – as paper assets are increasingly infected by financial viruses.

 

D-Gold Monthly-3x

D-Silver

Gary Christenson

The Deviant Investor

My books on Amazon

3 thoughts on “Zika, ZIRP, and NIRP Viruses

  1. The “invisible” tax of inflation is somewhat delayed in the financial markets with the cooperation of the Treasury and Central Bank. This isn’t Wiemar Republic, Argy, or Zim small-scale money-destruction where you can save your wealth by getting Swiss Francs or US Dollars. There really is nowhere in the “legitimate investing” (things your Certified Financial Planner is legally allowed to suggest) world to run.
    Retirement is a myth of delayed consumption, spending into the future with wealth not consumed today, presumed to be “invested” (but at-best “speculated”) into the hands of experts. The “experts” are most concerned with commissions, deals, and bonuses for themselves and their co-conspirators visible as Manhattan apartments/$3K suits/Eurolux cars/sailboats/household staff, but much of the fraud is digits being transferred to themselves inside the banking system (to be re-frauded by different criminals) to fund an escape from “the life”. The fraud will not be completed or become visible until 80% of the value expected by the working/paying baby boom generation is “lost”. Soon, then war, which the uSA is not prepared to win. When the 1946 cohort (the wealthiest BB’s, & healthiest, having been born to pre-atomic unfluoridated mothers) settles in to serious retirement spending at 70 with maximum SSI benefits and mandatory IRA/401K distributions, the MegaPonzi will feel pain in performing distributions. This will be digits out of “the system” and in to “Main Street”. It will be called a recovery, some witty new phrase like “Stag-flation”, then “Failure” by the young and unconnected who did “the right things” but are now surviving in overcrowded unaffordable shelter with .gov food benefit cards instead of soup lines. This is why Sanders/Trump.

    Less than 1% of assets are unencumbered pm’s in the hands of owners, and I suspect that fewer than 1% of retirees have more than 30 days spending (current values) in pm’s.

    My family has been sold various annuities (payable in US$ as long as the insurance companies backing them up remain able to pay) by a conventionally-trained CFP. I hope that works out, but they need a real back-up plan for a domino-failure scenario to minimally keep eating, be safe physically, and pay some taxes without depending on SSI, bank-held-currency, corporate payouts, or recovery of funds from brokerage sources.

    I appreciate Dmitry Orlov’s plan to pre-collapse a standard of living early to beat the rush (and become expert at it). Running to the end of employment, end of money, empty refrigerator/pantry, no gas, no power, then shambling into a Cuban-revolutionary-cadre staffed refugee camp/de-lousing center is not a plan.

    Physical fitness will be critical to survival. Can each adult carry 30 pounds in a pack 5 miles in 3 hours? With 2 minutes to put on jacket and be gone? Not worrying about “survival gear”, that’s nothing but a few days and a few dollars, then the Brown truck, or DIY from household stuff. Got Boy Scouts and ARRL contacts? Skills travel easy.

    Of course, I suggest to my family that they prepare for an extended power outage after a strong earthquake. Water might not be good to drink, like Flint Michigan, and fuel for cars/trucks will be disrupted since Oregon has no refineries. Eyes roll. “Come on, that never happens here”. That’s enough. No need for them to lose faith in the Big Criminals who have stolen their life savings ahead of the fact, or to blame me.


  2. the financial virus is not zirp or nirp. the financial virus is the federal reserve debt dollar. zirp and nirp are nothing more than the dollar’s logical outcome as financial parasites near the top of the food chain slowly are forced into the same situation the common citizens have been forced to deal with for generations now. meanwhile the federal reserve debt dollar’s owners watch and smile.


  3. “The Zika virus is the newest threat to humanity, especially pregnant women, so they say. Big Pharma is working feverishly to create a vaccine. Chances are the vaccine will be created, highly profitable, and Big Pharma will be “held harmless” for injuries to those who were vaccinated ….There is money to be made on vaccines and GM mosquitos, and money to be lost if sales of pesticides and other chemicals are reduced.”

    This is truth–and the one stating this is a physician. This is what “American medicine” has become. Believe it. Do not believe what you are told. Do not believe your physician. The majority are just as brainwashed as the majority of citizens. It’s what they have been trained to believe in and to do (dangerous drugs [poisons–look at the data!!] / vaccinations with unknown safety profiles [esp. relative to the relatively minimally proven danger of the virus, and esp. in the mid- to long term] and often with little proven efficacy, also esp. in relation to potential side effects / expensive tests and technology / surgery), as well intentioned as they might be.

    Investigate and learn. Learn alternative ways to take care of yourselves. Learn how to live and eat in a way that is healthy…that is, if you actually care out there in American LaLaLand. Do you? I know from experience that many don’t, meaning, many want to live however they want and depend on the medical system to keep them healthy. It can’t and it won’t…I guarantee that. That is YOUR responsibility.

    No, I’m not talking to the sheeple people that have no desire to think or learn or know the truth. They will follow wherever the boobtube and the mass media propaganda machine lead them. They will hear only what they want to hear…”O’er the Land of the Free and Home of the Brave”…and they believe that singing that out loud, with hand over heart and with gusto, makes them patriots and protects them from all harm. Wrong!! It makes them blind and stupid sheeple. WAKE UP PEOPLE!! It’s all about the money…it is NOT about what is good for you.

    Ditto w/rt ZIRP, NIRP, and NIR-BAM. They have NOTHING to do with what is good for WeThePeople…only with what will make TPTB money and/or rescue them from their fraudulent and larcenous bets and investments (>1.4 $Quadrillion of them…that’s >1400 $Trillion), and AT YOUR EXPENSE.

    And just to be sure you know exactly of whom this writer speaks, he’s talking about the central banksters and their overlords in DC, NYC, City of London, BIS (and a few others), along with the govts they bribed and now control (including your bought and paid for “representatives”–no, they are not!!) through controlling fiat money creation and distribution (distribution first to themselves and the govts they control).


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