ZIRP on the horizon

If you're not familiar with Japan's Lost Decade, you can read about it here. Or you can just wait to experience it in the good ole USA. It's also known as the Japanese Asset Price Bubble.

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

The Japanese asset price bubble ("bubble economy") was a time of skyrocketing land and stock prices in the Japanese economy, that peaked from 1986 to 1990 and hit bottom in its valuation of the Nikkei index in 2003. It is one of the more famous economic bubbles in economic history.

One of the hallmarks of the Lost Decade in Japan was the ZIRP (zero interest rate policy). Basically the central bank ran into a wall lowering rates to stimulate growth.

You can forget all of the silly talk of rate hikes in the future from the Fed. That has been and is a running joke at best. Anybody familiar with true monetary policy knows that the Fed would never raise rates heading into the storm we are facing. That would be akin to pushing down the throttle on the Titanic full steam ahead. That leaves us with a rate cut in the future and quite possibly an emergency rate cut similar to earlier this year. The only problem is we're getting awfully close to ZIRP which is a giant brick wall that the Fed has been avoiding hitting.

This crisis is clearly a unique one to the US, but it will have eerily similar undertones to Japan's lost decade and almost 15-20 years of declining house prices if we continue to zombify the financial system.