We Are Now In Year 6 Of ZIRP As Fixed Investments Yield No Income

T  —>  $1.6 T —> $5.9 T (cumulative “foreign” held US Treasury debt)

25% —>     40% —>    55%  (% of notes / bonds held by “foreigners”)

1%  —>      1%  —>     25%  (% Fed held notes / bonds…Fed primarily held Bills until ’08)

74% —>     59% —>    20%  (% domestically held notes / bonds)

6.6% —>    5%    —>   2.4% (net interest rate on debt)

$300B ->  $270B —> $223B (net interest paid on national debt)

$9.2 T –> $13.7 T –> $16.1 T (GDP = 75% increase);

$5.7 T –>  $9 T     –> $17.5 T (National debt = 305% increase )

We are now in year 6 of ZIRP and as the fixed income crowd laddering of investments of 2, 3, 5, and nearly all 7yr debt with actual yields must have rolled off replaced by ZIRP or much “riskier” assets to acheive yield.  This onboarding of ZIRP to Pensions, States, Insurers, intra-gov SS, etc. will leave the already underfunded completely unable to pay out w/out more bail-outs.  And Japan is really in the same scenario as fixed investments yield no income.

So we now come to a point that CB’s effectively are the market debt markets..and the roll off of yielding debt to ZIRP is a corrosive that is destroying all institutional holders of this debt…the laddered tipping point or bankruptcy of 7% planned growth rates of fixed income must be soon.

Ham-bone