The End Of ZIRP Means The End Of Fixed Income Investing And The Beginning Of Regional Global Governance

Daniel 7:23-24 relates “The fourth beast will be a fourth kingdom on the earth, which will be different from all the other kingdoms, and it will devour the whole earth and tread it down and crush it. As for the ten horns, out of this kingdom ten kings will arise, and another will arise after them, he will be different from the previous ones and will subdue three kings”.

The beginning of the end of the Zero Interest Rate Regime commenced the week ending May 11, 2012. Competitive currency devaluation has been ongoing for over a year and this week, its force was so strong that world government treasury bonds, BWX, emerging market sovereign debt, EMB, and leveraged buyouts, PSP, which are heavily financed through debt, finally traded lower, as bond vigilantes called interest rates higher globally out side of the US, as a safe haven trade in US Government debt, ZROZ, EDV, TLT, flattened the 10 30 US Sovereign debt curve, $TNX:$TYX, as is seen in the Flattner ETF, rising and the Steepner ETF, STPP, trading lower, as the interest rate on the US Ten Year Note, $TNX, fell to 1.841%.

The beginning of the end of ZIRP is also seen in competitive currency devaluation, causing deleveraging out of commodities, DBC, and US Commodities, USCI, beginning in March 2012, with derisking out of commodity stocks, IYM, such as copper mining, COPX, uranium mining, URA, rare earth mining, REMX, aluminum production, ALUM, coal production, KOL,  energy service, IEZ, and energy production, XOP. The risk trade, also known as the growth trade, is history as risk appetite has turned to risk avoidance.

The prophet Daniel, in Daniel 7:23-24, foretells that an end time one world government is coming to rule planet earth. It will be preceded by ten regions of global governance, each with its own king; three of these kings will be vanquished by the Sovereign of Revelation 13:5-10, who will rise to rule Europe as a type of revived Roman empire, where Germany will be preeminent over vassal peripheral states.        

The fiat money system, a production of sovereign nation states, is coming to its close as European nations lose their debt sovereignty and come to cede authority to sovereign leaders in Brussels and Berlin.  The diktat money system, a production of leaders’ regional framework agreements, is rising to provide diktat as both money and credit.

With the failure of the debt trade to stimulate global growth, exports, and profits, and with the collapse of nations states, capitalism will be replaced by regionalization, where regional blocs will provide security, stability and sustainability, as the new paradigm for global economics.   

With the rise of interest rates globally, profitable fixed income investing, is history. Whether it be investing in Leveraged Buyouts, PSP, or in Mortgage REITS, REM, such as Annaly Capital Management, NLY, which invest in Mortgage Backed Bonds, MBB, or in dividend paying telecom stocks such as AT&T, T, or Verizon, VZ, or Utility Stocks, XLU, or Dividend Paying Stocks, DVY, or Retail REITS, such as Simon Property Group, SPG,  or Residential REITS, REZ, or Hotel REITS, such as RLJ, or municipal bonds, MUB, these all are now history of the Age of ZIRP, as the Age of Deleveraging is introducing regional global governance and the destruction of traditional principles of sovereignty.

New sovereignty, coming through regional framework agreements and diktat, is going to cause a swift destruction to both investment principal and interest income, creating a strong need now for a change of investments to physical possession and ownership of precious metals. Soon the only money good will be diktat,  as well as the possession of gold bullion for long term wealth preservation, and silver bullion for bartering

The seigniorage of ZIRP, that is the coinage of the world central banks’ monetary is coming to a close with the rise of sovereign insolvency and banking insolvency. The seigniorage of regional global governance, that is the moneyness of diktat will provide security, stability and sustainability, but no rewards for the fixed income investor.

When zero interest was instituted by the Fed, savers fled to the gold market. Then last year as commodities started to fall, with falling currencies, so did gold; then this year when commodities fell again, as investors became aware of no QE3, gold fell once again; this being seen in this Google Finance Chart of DBC and GLD.

I recommend that beginning immediately, one dollar cost average into having only personal ownership of physical gold coins and silver bullion, as well as ownership of gold bullion stored in trading vaults on the Internet such as Bullion Vault. And that one have this ownership in four locations London, the United States, Panama and Singapore.

Bullion Vault relates Dollar strength “making it difficult” for gold prices to rally

I recommend that one start dollar cost averaging into physical possession of gold even while the price of gold and silver is falling as capital controls are coming globally and regionally which means that one may not be able to transfer fiat investments into hard assets in the very near future; and if one waits to buy gold and silver when it is rising one may be restricted from doing so.

The unimaginable is about to happen, seemingly out of nowhere, a global banking breakdown is ging to occur as the word’s banks assets fall rapidly in value, terminating money and credit as they have been known. 

Life since 1950, with the advent of the Cat In The Hat, as directing economic ethic, has been characterized by fast and hedonistic living, that came with speculative investing.  But just like with the Ice Ages, where mankind went from living carefree, to  overnight seeking warm furry skins to protect from the elements, so it will be when Financial Armageddon, that is a credit bust and global financial breakdown comes, and fiat assets such as stocks and bonds are worthless, and people long for the protection that only gold and silver can provide.

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