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:
- The ZIRP virus weakens and gradually destroys pension funds. Retirees, beware of this virus!
- The ZIRP virus destroys income for personal savers. People saved for decades and now their savings yield little or nothing in interest.
- The same has occurred with Insurance companies – they earn little on their bonds compared to what they previously earned.
- 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!
- The bond market is further levitated in its 35 year bull market. This benefits the political and financial elite … until it crashes.
