Back in July 2010, when Zero Hedge first looked at the history of the US bond yield in all its 3D glory, we showed where it was at that moment [8]...
[9]
... and where we thought, back then, it was going next:
it is now obvious what the Fed wants to achieve, as it gets ever closer to using the last available nuclear option: outright monetization of every single asset class. The graphic representation of what Bernanke would like more than anything to be the economic reality is presented on the chart below.
[10]
Five years later, we are happy to see that the idea of showing the US treasury curve in its chronological 3D glory is alive and well, courtesy of the NYT, [11]which has created the same charts only adding a delightful interactive component.
More importantly, we can observe whether our forecast for the Treasury curve has panned out as expected. Well, 5 years later, QE3, Operation Twist and QE3, not to mention another 5 years of ZIRP, the entire US curve is indeed well on its way to becoming as flat as pancake, and yes: since 2010 every single point on the curve has hit all time lows at least once.
And while we are confident our projection of a flat curve is just a matter of time, we did miss two things: i) we ignored to look at foreign Treasury assets and ii) we did not anticipate NIRP.
We should have.
Here is the German bond yield curve, which is not only that much closer to our 2010 prediction of "flat as a pancake", but thanks to the ECB the entire front part of the curve is now trading below the X-axis!
[12]
As for Japan, well, with the BOJ now monetizing more than 100% of all net issuance, it is only a matter of time before the entire curve is horizontal and sinking into the negative void.
[13]
And then, one fine day, when the world finally loses all faith in the academics who populate the Bank of Japan and the ECB, and the FED and so on, it will all simply disintegrate, as one after another fiat currency becomes Weimar'ed.
Check back in 5 years to see if this prediction has also come true.