Zero Interest Rate Policy:
A Catastrophic U.S. Monetary Policy
Maintained By The FED
Although the true reasons behind ZIRP are rarely explained, their calamitous effects are nevertheless felt around the nation. There is perhaps no other monetary policy that has been so profoundly destructive to U.S. economy. ZIRP is as ill-conceived as it is doomed to failure.
Quite unfortunately for the depositors and investors of the nation, it is now too late to reverse the pervasive damage this covert scheme has wrought on both macrocosmic and microcosmic levels. ZIRP has been in place for so many years now that generations have been financially ruined just as the middle class has been effectively decimated.
The author is not only the son of a life-long estate planner and financial consultant, but also did a stint as an investment broker and financial planner. Back in the 1980s during the Decade of Greed, it was quite clear where all of this was heading. Anyone working on Wall Street and/or related markets knew that a HUGE game was being played on the unaware and uninformed investor. Those related markets include stocks and bonds, currencies and commodities, real estate and insurance, derivatives and carbon. The very nature of this predatory enterprise is to prey on the elderly, the inexperienced, the trusting and the wealthy. Brokers will always look for those who have a large savings stockpile or untouched money market account. The same stock brokers will engage in an illegal practice called churning whenever they think they can get away with it—selling and buying with the client’s account in order to generate sizable commissions. These money sharks are forever looking to pounce on their unsuspecting prey like a cat on a piece of hot tuna. Yes, it was that bad — then in the ’80s — and it’s a thousand times worse now. The entire GE&FS* is completely bankrupt and broke; that’s why they call themselves brokers, as in “stock brokers”.
*Global Economic & Financial System
What’s really going on here?
Whenever a nation’s monetary policy is designed to prop up banks that are Too Big To Fail (TBTF), the citizenry will be financially destroyed. The Federal Reserve — an international crime syndicate which is neither federal nor has hard assets in reserve — has implemented such a cataclysmic policy since 2008. It is known as Zero Interest Rate Policy (ZIRP).
The FED used the Great Recession of 2008 as an excuse to implement the current Zero Interest Rate Policy. Not only has it not served its stated purpose, it has wiped out trillions in savings and investments.
You see, when the interest rate is effectively maintained at 0% it serves as a great disincentive to keep a savings account. Once upon a time all the conservative folks in America kept their money if safe and sound savings accounts or CDs, as well as in money market accounts.
Now that the prevailing interest rates have been nearly zero for so many years, those same folks have felt compelled to move their money into investment vehicles which DO NOT MATCH their risk profiles. Herein lies the crux of the matter.
Nobody ever wants to see the buying power of their life savings be eroded due to inflation. When those funds sit in a 0% interest rate-bearing account, they lose buying power by the day. Given the relentless price inflation, especially for food and medicine, the pensioners have really suffered. Rents and mortgages, taxes and insurance only seem to go up as well, as do certain energy costs.
The upshot of this ever-worsening predicament is that it has become increasingly easy for the stock broker or investment counselor, financial consultant or estate planner to convince the inexperienced investor to move their life savings into much more speculative investments. This quite purposeful marketplace dynamic has been occurring with greater frequency both prior to and especially since 2008.
Those who are uninitiated into the true ways of the markets have been systematically duped into shifting their funds from safe havens over to quite risky capital appreciation funds and the like. Many of those highly speculative equity funds will undoubtedly crash and burn in the not too distant future leaving millions penniless. Pensioners are particularly vulnerable because of their fixed incomes, which are not rising to keep abreast with inflation and other new costs of living.
Setting a very bad example
The real tragedy here is that the younger generations have not even heard of savings or money market accounts. They are conditioned from a young age to only consider putting their hard-earned money at risk in investments which require a high risk profile and savvy investor mindset. Most people have neither because they do not even understand that the markets are completely rigged. Furthermore, they fail to comprehend that those who really make money in the markets comprehend the methods by which the markets are manipulated so that they can take advantage of knowing how the game is fixed.
Nonetheless, the youth and young adults have only been exposed to a marketplace which unrelentingly encourages types of investment which they should not even consider. Everyone is now acculturated from a tender age to go for the big score so as to break free from what has become a debt prison. College students now graduate facing massive student loan debt … and can’t even find a job to pay it off. Many then live off credit cards which only further exacerbates their financial problems. Eventually they adopt the mindset that capitalizing on promising investment opportunities may be their only way out.
Of course, the older generations have already been around the block and understand that quick money can always have a downside. Nevertheless, many are now reaching a point of desperation in their finances that they will speculate with what few funds they still possess. This ongoing state of affairs has effectuated the biggest transfer of wealth in history from the middle class to the wealthiest among us.
It can now be asserted that the ZIRP was a deliberate scheme set up by the banking industry and investment community in tandem with U.S. Federal Government in order to eviscerate the middle class, once and for all. Truly, ZIRP has been their secret “weapon of financial mass destruction” that has been hiding in plain sight.
There are many other serious repercussions of a long-term ZIRP which are addressed by the following questions which were posed by ex-Treasury official Paul Craig Roberts. The correct answers to these questions are both sobering and alarming.
–> What happens to insurance companies? They’ve got no income on the more-safer form of investment BUT there’s no income; there’s zero interest.
–> What happens to income of retirees? They’ve got no income on their savings.
–> What happens to pension fund managers? They’ve got no way to allocate the investments that they are managing in a way that there’s some sort of balance, some sort of conservative basis in bonds to match the more risky based stocks, so pension fund management is a mess.
–> What’s happened to money market funds? Well if you have zero interest rates you don’t have any most. Many of them closed down.
(Source: Deep Insider Pulls Back The Curtain On Global Financial Scam)
For those who have already been fleeced by the System, the following video offers an excellent overview of what is really going on. It dissects in layman’s language what ought to concern every American.
For those who have avoided being bamboozled by the Global Economic & Financial System the link below will validate your position and provide some excellent perspective of what is coming right around the corner.
State of the Nation
April 7, 2016