Money Zero Maturity Own Rate: Weighted average of the rates received on the interest-bearing assets included in MZM.
This is the interest rate that $12.4 trillion is currently earning (just 0.081%).
The following chart shows the natural log of MZM Own Rate. When using natural logs, constant exponential growth (or in this case decay) is seen as a straight line.
Click to enlarge.
Since the end of the Great Recession, all breaks in the exponential decay rate of the MZM Own Rate have been to the downside.
Rising interest rate environment my @$$.
This is not investment advice.
See Also:
The Growing Deposit Glut
Source Data:
St. Louis Fed: Custom Chart
http://research.stlouisfed.org/fred2/graph/?g=t5V
ReplyDeletethings that make you go hmmm . . .
but when I realized Japan's #1 problem was too strong a currency not too weak, and the former problem is easily solvable in a fiat regime, I became a lot more bullish on Japan.
And sho' nuff, Abe came back and said, 'let's do this!'
Troy,
ReplyDeleteFor what it is worth, I continue to disbelieve that monetary pumping can create real prosperity.
Record Japan trade deficit highlights risk of economic stumble
The ballooning deficit is a reminder that a weak yen alone cannot boost exports as Japanese firms are shifting production abroad, while overseas demand lacks strength needed to offset a blow from the planned sales tax hike.
http://www.ibtimes.co.uk/japans-unemployment-rate-drops-six-year-low-amid-rising-inflation-1434592
ReplyDeleteThe trade deficit is due to still having to replace their off-line nuke plants with natgas and oil imports -- Abenomics makes their energy imports 20% dearer.
Japan is so screwy though that I can't transfer what's happening there to here.
120M+ people in what amounts to one amalgamated urbanization stretching from Kyushu to Hokkaido.
But what gets me is that there are 6.8M 20-29yo men vs 7.8M 60-69yo men.
In 1980 there were 36M age under 20, now 22M.
Japan's macro position doesn't hearten me much, they don't make anything any more that I particularly think is world-beating, unlike the 1970s and 80s with Sony, Yamaha, Honda, Casio, Sharp, Toyota, etc etc.
People say they still make machines that make machines, but that's not a high barrier vs. their E Asian competitors.
Their total population of age 30-39 yo men is 8.8M. China has over 100M in that age group.
But they still own $1.2T worth of treasuries, even if they can't live on the interest any more, that's $1T worth of oil should they monetize them, or 8 years of the January trade deficit.
Question is how much oil $1T will buy in this scenario, but the good thing about Japan is that their resource footprint is going to disappear this century as their population declines to what it was in 1900, ~45M.
Still a crowded country, but no longer over-crowded.
Before, countries selling treasuries amounted to an act of war.
ReplyDeleteBut with the Fed sitting on $2.4T and rising, not so much.
Plus there's nothing stopping the euros and Japanese from printing new money to buy bonds to replace those they sell.
So the budget deficit is actually a virtuous (strike)circle-j(/strike) cycle.
Troy,
ReplyDeleteJapan's macro position doesn't hearten me much, they don't make anything any more that I particularly think is world-beating, unlike the 1970s and 80s with Sony, Yamaha, Honda, Casio, Sharp, Toyota, etc etc
The decline of Sony saddens me. I'm typing this using a Sony PS3 and Sony TV (with Sony Receiver).
The PS3 is the 2nd. It is having difficulty reading several of my disc based games now. The 1st died just out of warranty. Sigh.
The TV has a column of dead pixels that's been getting progressively worse. They appeared not long after the warranty expired.
My last laptop was a Sony. That was many years ago. It died just out of warranty.
Needless to say, I've lost some brand loyalty.
My 96 Camry has been a great car though. That said, the bar was set very pretty low. My previous car was an 88 Hyundai. That car was a repair shop disaster magnet. Even the upholstery failed, but at least it was replaced by the dealer at no charge after negotiating (the grey was fading to brown).
Rates can only rise in the real (interest rate) world. Which they are not doing.
ReplyDeleteLuke The Debtor,
ReplyDeleteHave no fear! Real rates will rise once real growth picks up. Just need to be patient. Sigh.
In all seriousness, real rates could get a boost when we slide into the next recession (and/or simply slide into deflation).
ReplyDeleteThat would not exactly boost real growth though nor would it be reason to celebrate.
http://research.stlouisfed.org/fred2/graph/?g=t6j
ReplyDeleteblue is total systemic debt
red is wages
when you think about it, it's only wages that can pull this train in the end.
well, that and what the old Empire game used to euphemistically call "Uncompensated Workers".
Troy,
ReplyDeletewell, that and what the old Empire game used to euphemistically call "Uncompensated Workers".
Gaming, blogging, it's all good!
A pessimist would say that my wage compensation is stuck at $0.
An optimist would point out that my wage compensation doubles each day though!
2 x $0
4 x $0
...
Now I just need to figure out how to get my girlfriend's compensation to rise too. Unfortunately, we can't both rely on gaming and blogging to make ends meet. I don't have the long-term resources for that. ;)