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Presenting The NIRP Club

Tyler Durden's picture


If Krugman is to be believed, the state of global sovereign nation balance sheets must be excellent as there are now 12 major nations with 2Y interest rates below 1.00% with 4 of those nations having joined the Negative-Interest-Rate-Policy (NIRP) club.

Canada, Sweden, USA, UK, Japan, France, Austria, and Finland are all currently below 1.00%

Holland, Germany, Denmark, and Switzerland are all currently negative.

Charts: Bloomberg


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Tue, 07/17/2012 - 08:29 | 2623660 Temporalist
Temporalist's picture

Purple nirple...ouch

Tue, 07/17/2012 - 08:37 | 2623696 Max Fischer
Max Fischer's picture

Interest rates are relative, man. It's always a question of where capital can sit relative to other places.

Truth is, Krugman has been absolutely right.

Tue, 07/17/2012 - 08:41 | 2623709 Everybodys All ...
Everybodys All American's picture

The truth is playing out in Japan's economy daily for the last twenty years.

Tue, 07/17/2012 - 08:52 | 2623750 Thomas
Thomas's picture

"If Krugman is to be believed..." Popped a nut on that one!

Tue, 07/17/2012 - 09:24 | 2623858 Sudden Debt
Sudden Debt's picture

Belgium just went negative also... -0,016%


yesterday our debt crossed the 100% mark and nobody seemed to have noticed that one...

I think it's time to head off to the bunkers because we're going to have the first deflation neutron bomb and in 4 months the inflation hydrogen bomb.

Tue, 07/17/2012 - 08:47 | 2623734 tmosley
tmosley's picture

Other places like Serta warehouses?

Tue, 07/17/2012 - 09:00 | 2623782 Max Fischer
Max Fischer's picture

I think of you often Cliff.

Watching silver plunge by almost 50%, I'm reminded of your endearing, unwavering fanaticism and your repeated claims that you buy X amount of physical silver from EVERY paycheck, price not an issue. I can't even fathom how much wealth you've lost in the past 15 months, but I certainly admire your ability to keep chugging away in the face of HUGE losses.

My warmest regards.....

Tue, 07/17/2012 - 09:14 | 2623830 Beam Me Up Scotty
Beam Me Up Scotty's picture

Paper profits are meaningless until you sell.  So are losses on paper.

Tue, 07/17/2012 - 09:27 | 2623857 Max Fischer
Max Fischer's picture

That mentality didn't work so well for Lehman's MBS book, did it?

Nor is it working for JPM's CDS inventory, per numerous ZH articles.

Nor did it work well for MF equity holders.

Essentially, that mentality is bullshit, but rather comforting compared to facing reality, I suppose.

Pure delusion.

Tue, 07/17/2012 - 09:40 | 2623907 Seize Mars
Seize Mars's picture

Max Fischer, Apparatchik.


Tue, 07/17/2012 - 09:50 | 2623939 Ricky Bobby
Ricky Bobby's picture

Good point Max I am selling all my metals and buying GM, FB and JPM. I can't loose because our brilliant Apparatchiks trained at our best Ivy League schools will lead us out of this soft patch. By the way maybe you would know, when is my check coming?

Tue, 07/17/2012 - 19:59 | 2626397 StychoKiller
StychoKiller's picture

MFGlobal (or was it PFG?) sent it via pony express...

Tue, 07/17/2012 - 09:19 | 2623840 LawsofPhysics
LawsofPhysics's picture

Still don't know the difference between paper and physical. And how has that worked out ove the last 5, 10, 15, or 20+ years moron?  - FAIL.

Tue, 07/17/2012 - 09:34 | 2623878 Max Fischer
Max Fischer's picture

Thank you for writing the word "fail" after your post. Saved me effort.

Tue, 07/17/2012 - 09:59 | 2623971 LawsofPhysics
LawsofPhysics's picture

Answer the question then moron.  Wake me when gold falls below $300 and silver below $8, that is where my dollar cost average.  The fact that you ignore the rise in PM prices over 5, 10, 15, 20+ years tells me all I need to know.  You stink of fear.  

Tue, 07/17/2012 - 09:34 | 2623877 tmosley
tmosley's picture

I still am.  If I could get silver close to spot, I would be within $10 of being able to buy at my cost average.  But I can't.

Wonder why that is?

Funny that you think of me so often.  I never think of you.  I do ocasionally think about how at the start of 2011 silver was right around the current paper level, though.

Tue, 07/17/2012 - 09:43 | 2623917 Max Fischer
Max Fischer's picture

Holy cow.

Still got 95% of you investments in silver?

Amazing. Simply amazing.

You're a poster child for being too emotionally caught up in your investments. You should be looking for return on capital; instead you got married to a depreciating asset. lol

Did you promise, as God is your witness, to keep investing in silver in sickness or in health? For rich, or poor?

Does your wife know about your other marriage?

Tue, 07/17/2012 - 09:58 | 2623942 fuu
fuu's picture

Keep toiling Sisyphus.

Max Fischer's Theme:

Tue, 07/17/2012 - 10:01 | 2623983 Max Fischer
Max Fischer's picture

Bro, That's so fucking dumb I can't believe you'd waste your time making it.

Go sit on your TeeVee and watch the couch - It'll be a better way to spend your day.

Tue, 07/17/2012 - 10:35 | 2624121 fuu
fuu's picture

I don't even own a T.V.

Tue, 07/17/2012 - 10:01 | 2623982 LawsofPhysics
LawsofPhysics's picture

Your post lacks any intellectual content troll, answer the question instead of throwing insults.  How have PMs been over the long term again?

I should know better than to feed the fucking trolls.

Tue, 07/17/2012 - 10:03 | 2623993 Max Fischer
Max Fischer's picture

I posted long term data two days ago.

Equities win.

Tue, 07/17/2012 - 11:22 | 2624370 tmosley
tmosley's picture

Sounds like you are the emotional one here.

Tue, 07/17/2012 - 08:50 | 2623745 BeetleBailey
BeetleBailey's picture

Max...the REAL truth're absolutely wrong

Tue, 07/17/2012 - 09:06 | 2623799 Cortez the Killer
Cortez the Killer's picture

truth is, the Fed manipulates interest rates with the help of its captive banks.

who cares what things cost and if capital is used efficiently as long as I can by a quarter pounder with cheese at Micky D's on my SNAP card

Tue, 07/17/2012 - 09:35 | 2623884 Hedgetard55
Hedgetard55's picture



And depressing rates is the equivalent to cutting the nerves in your arm and expecting it to still work properly.

Tue, 07/17/2012 - 11:22 | 2624371 JeffB
JeffB's picture

So Krugman is in favor of pushing capital towards productive things like being hidden in mattresses, safes and being buried in back yards?

At least until they can stage a fake alien invasion to get the world out of it's current, completely inexplicable and unforeseeable mess, to show the world the amazing power of central bankers with a Keynesian at the helm.


Tue, 07/17/2012 - 08:29 | 2623663 LawsofPhysics
LawsofPhysics's picture

and how many of them are insolvent?  -  "Winning"

Tue, 07/17/2012 - 08:52 | 2623754 cossack55
cossack55's picture

What about the BIRP club?  Bullshit Interest Rate Policy.

Tue, 07/17/2012 - 09:35 | 2623882 Sudden Debt
Sudden Debt's picture

it's their banks which are scrambling for assets and why buy the bonds at whatever price to lower the 47 to 1 hedge on their loans to make them look "solvent".
at whatever the cost...
on paper they look like they are worth a lot more than they actually are because the debt will never actually be repaid.

but on the other hand, they're kicking the can down the road for 4 more years if they can hang to it for another 6 to 12 months.

Tue, 07/17/2012 - 08:29 | 2623666 zero19451945
zero19451945's picture

It's time to start looking for an alternative monetary regime when you lose money in nominal terms when lending to insolvent governments.

Tue, 07/17/2012 - 08:34 | 2623682 Temporalist
Temporalist's picture

"Gold has gone up almost six and a half fold since the beginning of this has gone up a staggering 50 fold vs the dollar since the early 1970s."

Tue, 07/17/2012 - 08:30 | 2623668 DavidJ
DavidJ's picture

Time for a bubble bath!

Tue, 07/17/2012 - 08:49 | 2623739 The Swedish Chef
The Swedish Chef's picture

"Time for bath salts!"


There, fixed it for ya!


On the other hand, as a Swedish tax payer I am somewhat thankful that my taxes aren´t overly burdened by interest payments.

Tue, 07/17/2012 - 08:31 | 2623671 Ivanovich
Ivanovich's picture

It's amazing how many disciples I run into of the High Priest of Keynesian Theory.  and every single one of them gets backed into a corner and stutters their way through their argument.  But none of them, even when faced with facts they cannot dispute, ever rescinds their belief structure.  If ever I wanted to slug someone in the face, it's that guy.

Tue, 07/17/2012 - 09:28 | 2623854 agent default
agent default's picture

You have to remember one thing about the Keynesians.  They are statists, and deep down they all know they are full of shit and what they advocate is wrong.  That's why they always focus on avoiding the real issues, coming up with completely unfounded positions and proposals that basically require that you explain to world to them from day one in order to refute them. Don't bother anyway because you will be back to square one with them after five minutes.  These scamers are pandering to the gullible and know that they are talking unworkable crap.  You cannot treat them as well meaning under any circumstances.  You see they are turning the table on you in a subtle manner.  You are trying to argue based on the merit of arguments.  They on the other hand know that they have no arguments and are refining the art of soundbite.  Unless you and everybody else realizes that, they will keep getting their way, like they have done so far to a large extent.

Tue, 07/17/2012 - 09:23 | 2623855 Offthebeach
Offthebeach's picture

Religious faith against evidence went from the church then to Marx then central planning of rigged markets. Krugman is a moderate advocate of the present commadish elite control economy.
We are the outsiders.

Tue, 07/17/2012 - 08:32 | 2623677 Mister Ponzi
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Austria's 2YR yield was negative for a few minutes this morning but has turned positive again.

Tue, 07/17/2012 - 08:35 | 2623686 Peter Pan
Peter Pan's picture

A pulse rate of 40 means you are super fit but a pulse rate of zero means you are dead.

Tue, 07/17/2012 - 08:36 | 2623692 disabledvet
disabledvet's picture

This is the EASIEST of traps to fall into as a "normal human" and Paul Krugman is no exception. In the world of "buy low sell high" however the DISCIPLINE tells you "i must contain my emotions because they yield the incorrect result everytime"...namely "follow the crowd into the height of the frenzy" and then "follow them into the depression and sell right at the market low." And so it is with "at or near zero interest rates." There is a certain euphoria (going on in Germany i might add) that ignores the terrifying fact that "with money this cheap you are in fact at a HIGH not a low" thus the lack of what is called "risk taking" is in fact precisely wrong. The problem is that risk taking is OFF THE CHARTS in the private's just being hidden by the public sector which is "taking all the losses." Unless and until the media starts pointing out "the bubble bursting in the public sector" on account of all it trading? corruption?...then simply put "policy makers like Paul Krugman are simply on the absolute wrong track." Of course anyone who trades equities for a living would notice this immediately...and "act accordingly."

Tue, 07/17/2012 - 09:08 | 2623809 Tijuana Donkey Show
Tijuana Donkey Show's picture

Buy low, sell while high....

Tue, 07/17/2012 - 08:37 | 2623698 doomandbloom
doomandbloom's picture

negative is positive.... right?

Tue, 07/17/2012 - 08:43 | 2623720 youngman
youngman's picture

Nominal will be a word we will all learn in the future....Nominal vs real

Tue, 07/17/2012 - 08:46 | 2623731 EmileLargo
EmileLargo's picture

What happens to Krugman when the Dollar collapses? Does he at least lose his job?

Tue, 07/17/2012 - 09:12 | 2623822 PulpCutter
PulpCutter's picture

Austrians have been predicting the collapse of the dollar, and hyperinflation, "within 12 months" for years, now. 

Instead, the USD is at 0.83+, and IBM just sold 3yr corporates at 0.75%.  Does the fact that Austrian theory is totally useless BOTHER you at all?

Tue, 07/17/2012 - 09:21 | 2623849 zero19451945
zero19451945's picture

Interest rates are a meaningless indicator when the Fed is openly suppressing interest rates.

Tue, 07/17/2012 - 09:24 | 2623860 LawsofPhysics
LawsofPhysics's picture

All fiats are dying, any suprise that the dollar is the "cleanest dirty shirt?"  Now how is that going to work again when the dollar is no longer used by the majority of other countries in the world?  The BRICs are already doing their own thing.  Better join the military Pulpcutter and defend the dollar, especially since fewer people are willing to do so anymore.

Tue, 07/17/2012 - 09:31 | 2623873 EmileLargo
EmileLargo's picture

Good lad! I suggest you sell all your assets and pile into USDs and stay in USDs (or 30 year treasuries - even better)  since we will be in a low interest rate "deflationary" environment for a long time to come. Makes perfect sense no?

Tue, 07/17/2012 - 14:15 | 2625063 PulpCutter
PulpCutter's picture

Straw man argument.  I didn't say inflation would stay low; I said govt can stimulate without harm until inflation (aka, demand) rears it's ugly head.

Tue, 07/17/2012 - 09:38 | 2623899 Saro
Saro's picture

Austrian theory can tell you the effects of monetary policy, but does not predict timelines.

You're using the individual predictions of some economists to try and smear the entire group, and if you're a Keynesian, is that a road you really want to go down? If so, a 5 minute YouTube clip of Bernanke yapping pre-crisis will have you begging for mercy from the Austrians.

Tue, 07/17/2012 - 12:48 | 2624673 PulpCutter
PulpCutter's picture

Absolutely.  Bring it. Name one situation in which Keynes has failed.  Or one in which Austrian economics has correctly predicted the rate of inflation at even vaguely close to the correct timeline.



Tue, 07/17/2012 - 15:38 | 2625465 Saro
Saro's picture

As the Austrians define it, they would say that the rate of inflation is precisely the rate of the expansion of the monetary supply (they mean the same thing, in other words).  If you instead were talking about predictions related to the price of goods increasing, then clearly you dont understand Austrian economics, because there is nothing in the theory that can predict such a thing to that level (human action being an individual choice).

If you mean that individuals who consider themselves Austrians have made incorrect predictions about the future price of goods in the past, then I agree.  But that's not the same thing as saying Austrian economics is incorrect.  Otherwise, "I heard a Keynesian economist make a prediction about who would win the Superbowl, and he was wrong, therefore Keynesian economics is wrong" could be used as a valid argument.  Obviously, it can't.

Tue, 07/17/2012 - 12:50 | 2624698 MoneyMagician
MoneyMagician's picture

Keynesians are even worse at predicting outcomes. Far worse. And yeah the US dollar is headed for disaster. The writings on the wall. Nobody can predict with exact timing. Don't be foolish. YOu sound like those fools who said the housing bubble would continue forever. In fact an austrian predicted the housing bubble, along with Gerald Celente, and a progressive. It was pretty easy to see. Who predicted the dot com bubble, and bust, I know one austrian did. It's called economics. Try learning it.

Tue, 07/17/2012 - 13:11 | 2624804 PulpCutter
PulpCutter's picture

What's your newest prediction on the dollar's demise (seeing's how all your previous ones have proved wrong)?


Tue, 07/17/2012 - 08:52 | 2623748 youngman
youngman's picture

Now say you were CHINA.....what would you do??????

Tue, 07/17/2012 - 08:57 | 2623770 KidHorn
KidHorn's picture

Buy commodites and PM's and let the Yuan float.

Tue, 07/17/2012 - 09:31 | 2623871 LawsofPhysics
LawsofPhysics's picture

They are already doing that, now if they could just stop printing like everyone else, then they might actually have something.  Instead China is talking about more stimulus.  Morons, they were so close to getting it right.

Tue, 07/17/2012 - 08:57 | 2623772 orangedrinkandchips
orangedrinkandchips's picture

One word....




(sarcasm in case you missed it)

Tue, 07/17/2012 - 09:14 | 2623827 PulpCutter
PulpCutter's picture

America is paying down private debt at the fastest rate since the 1950s.

America's total debt (public + private)/GDP ratio has been dropping since 2010.


Tue, 07/17/2012 - 09:29 | 2623864 LawsofPhysics
LawsofPhysics's picture

No kidding, I would too, especially if I was a private company that just got a bailout from the taxpayer.

Socialization of private losses.  Now what is the public debt again?

Better sign yourself and your children up for the military and be your own police force, because you won't have one once the government is shut down moron.  Fucking bring it.

Tue, 07/17/2012 - 10:46 | 2624178 malek
malek's picture

America is defaulting on private debt at the fastest rate since the 1950s.

There, fixed it for ya.

Tue, 07/17/2012 - 12:28 | 2624619 PulpCutter
PulpCutter's picture

Absolutely, and frankly the more foolish investors that take a bath on risky wagers the better; way too often I (the taxpayer) have to bail them out instead.  I have NO problem with people who are over their head declaring bankruptcy.  'Due diligence' has been replaced by 'let Uncle Sam back it', to all of our disadvantage.

Tue, 07/17/2012 - 11:09 | 2624309 Overfed
Overfed's picture

If I could get some free Bennie bux from the Fed like the big banks do, I would pay off my debt as fast as possible too. 

The national debt is heading for orbit, dude.

Tue, 07/17/2012 - 12:24 | 2624607 PulpCutter
PulpCutter's picture

"The national debt is heading for orbit, dude."

How does your statement correlate with the objective facts; that America's total debt/GDP ratio has been dropping since 2010? 

This is exactly the same path taken by virtually every recession/debt bubble recovery in modern history, including the WWII recovery where public debt/GDP hit 121%.

  • The historic deleveraging episodes reveal six critical markers of progress: the financial sector is stabilized and lending is rising; structural reforms unleash private-sector growth; credible medium-term public deficit reduction plans are in place; exports are growing; private investment has resumed; and the housing market is stabilized and residential construction revives.
  • As of January 2012, the United States is most closely following the Nordic path towards deleveraging. Debt in the financial sector has fallen back to levels last seen in 2000, before the credit bubble, and the ratio of corporate debt relative to GDP has also fallen. US households have made more progress in debt reduction than other countries, and may have roughly two more years before returning to sustainable levels of debt. Deleveraging in the United Kingdom and Spain is proceeding more slowly, and these countries could face many years of gradual debt reduction ahead.
Tue, 07/17/2012 - 20:10 | 2626415 StychoKiller
StychoKiller's picture

Debt/GDP ratio is dropping...hmmm...unfortunately for yer argument, Debt & GDP are BOTH variable -- check yer premises.

Tue, 07/17/2012 - 09:36 | 2623889 BalanceOrBust
BalanceOrBust's picture

So, isn't this the investment opportunity of the millenium?  Borrow US dollars or other Fiat currency at negative rates.  Invest in productive assets linked to third world growth (PM's, agriculture, and possibly energy).  Wait while your investment appreciates and the currency you borrowed in depreciates.  Sell investment at a profit, obtain ridiculous amount of ponzi fiat in return.  And pay off your "debts" which have by this time are meaningless due to the negative borrowing rate and the depreciation of the currency of borrowing.


Tue, 07/17/2012 - 10:00 | 2623978 dvsteenk
dvsteenk's picture

I didn't know Japan was such a good example...

Tue, 07/17/2012 - 10:19 | 2624058 ar01
ar01's picture

I can't wait for "DIRP" and then "HIRP" policies. 

Tue, 07/17/2012 - 10:28 | 2624104 Snakeeyes
Snakeeyes's picture

NIRP is scandlous for senior citizens and other fixed income individuals.

Tue, 07/17/2012 - 12:40 | 2624666 PulpCutter
PulpCutter's picture

No doubt - and let's be honest, NIRP is disadvantageous to all people with assets and savings, which I assume is the vast bulk of ZH logins.  So, we have a natural tendency to see the advantage of policies which preserve or grow the value of those assets.  As in deflation.  I'd love to see it, financially.  And I think it is the most 'just' solution - how can we not reward the responsible, but instead reward the irresponsible?  Where's that lead us?

But, we have to look at another dimension of the situation.  Deflation and lack of jobs carry a heavy penalty for society in general.  We have a whole generation of recent college grads who can't find work - and if they start their own company, can't find enough customers.  These are trained, energetic young people who need to learn how to put their training to productive use.  Youth unemployment in Spain is > 50%.  One can make the case that all that's missing is liquidity - that is we put a little more money into the economy, spending and demand would pick up, and we'd be back at full employment.  And there are numerous cases of exactly that strategy working; the most famous is America after 1938, but basically most world recessions since then have followed the same course.  Public stimulus provides demand while the private debt bubble is worked down, and then the subsequent increased GDP makes paying off the public debt easier.  We've paid that debt down (as measured by debt/GDP dropping) every time; anyone who claims otherwise needs to provide the exception; when did it happen?  As Henry Ford put it 90 years ago, we have plenty of people who want to work, plenty of people who need to buy things...but the bankers in the middle, with their greedy fingers, get in the way.

Tue, 07/17/2012 - 20:15 | 2626428 StychoKiller
StychoKiller's picture

[quote] One can make the case that all that's missing is liquidity - that is we put a little more money into the economy, spending and demand would pick up, and we'd be back at full employment. [/quote]

Pretty-printed paper != MONEY

So, what do we do when BOTH public and private debt is too high?

Study the following topic in logic:

Tue, 07/17/2012 - 12:56 | 2624729 Totentänzerlied
Totentänzerlied's picture

Not if they don't understand what it means. They don't.

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