Yields vs. Money (Musical Tribute)

Click to enlarge.

Although we've been in ZIRP for more than 4 years so far, conventional wisdom now believes that we're in a long-term rising interest rate environment (and not just a cyclical short-term one). I am repeatedly told this by nearly every financial "expert" on CNBC. Call me skeptical.

I could be a believer if someone could convince me that disposable personal income will grow faster than the money supply well into the distant future. I'm not going to be easy to convince though. I've embraced the "the death of real yields" story for roughly a decade so far. The following sentence sums up that belief.

It will be increasingly difficult to make money off of money!

As seen in the chart, it appears that monetary policy is "tight" again. As of 8/19/13, interest rates are well above "normal" again. I believe that Ben Bernanke will someday regret the day he uttered the word "taper" in public. That's assuming he doesn't already regret it of course. There's certainly been a "whole lotta" back-pedaling since it was uttered.



And lastly, there are a "whole lotta rosy" outlooks regarding where this economy is headed long-term. I have but one thing to say. Shun the nonbeliever!

Three More Years of Goldilocks? - Larry Kudlow, November 21, 2007

Just opinions! This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart