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There's a multitrillion-dollar black hole growing at the heart of the world's financial markets. Negative-yielding debt -- bonds worth less, not more, if held to maturity -- is spreading to more corners of the bond universe, destroying potential returns for investors and turning the system as we know it on its head. Now that it looks like sub-zero bonds are here to stay, there's even more hand-wringing about the effects for mom-and-pop savers, pensioners, investors, buyout firms and governments.
[...] Negative-yielding debt topped $13 trillion in June, having doubled since December, and now makes up around 25% of global debt. In Germany, 85% of the government bond market is under water. That means investors effectively pay the German government 0.2% for the privilege of buying its benchmark bonds; the government keeps 2 euros for every 1,000 euros borrowed over a period of 10 years. The U.S. is one of the few outliers, with none of its $16 trillion debt pile yielding less than zero, but across the world, strategists are warning that the problem may get worse.
(Score: 3, Insightful) by edinlinux on Sunday July 14 2019, @06:14AM (4 children)
This is why govts and the big corps and banks are pushing so hard to get rid of cash... as soon as cash is gone, then interest rates can be negative as easily as they are positive... (they will just take it out of your account / smart-cash-card, each month..). They can't do that with real cash which can be stashed in safes / mattresses.. which is why cash has to go...
(Score: 4, Insightful) by Farkus888 on Sunday July 14 2019, @07:17AM (2 children)
People are told capitalism rewards hard work in school. The truth is right in the name, it rewards existing capital. That means that the most wealthy, those with the most capital, have the most power. They will never allow negative interest to be a universal thing. Since interest is a percentage it would hurt them far more than the poor. Bonds are for the middle class nearing retirement to stabilize their investments and make them predictable. By making the interest rate on them negative they push more of those people back into the stock market. That drives up the stock prices of the companies the truly rich own increasing their wealth at a higher rate than if they money had stayed parked. Greater disparity between gains of bonds vs stocks will create a feedback loop. Probably already started if they've let the illusion slip by letting bonds go negative.
(Score: 1, Interesting) by Anonymous Coward on Sunday July 14 2019, @03:50PM (1 child)
This is why it so easy to make money in finance. You fundamentally misunderstand how the economy works, probably by design so you are easier to scam. Our economy is not capitalist at all...
Lets look at a snapshot of Reuters market/finance news again (I also did this like a week ago):
https://i.ibb.co/NF2tVdf/finance2.png [i.ibb.co]
What are the topics?
- Us gov budget deal
- China gov drafts plan
- Effect of Tariffs on freight companies
- South Korea trade ministry
- BNP Paribas and US private prison industry
- Trump setting uranium quotas
- Top Puerto Rico gov officials resign
Notice that they are all about government activities? The only one even close to not is the private prison industry, but obviously those prisons are populated by the government.
(Score: 2) by Farkus888 on Tuesday July 16 2019, @08:11PM
You are strawmanning the school definition of capitalism. Again, I'm saying capitalism just isn't that, that thing doesn't exist so it doesn't have a name. It is core to my position that one of the rewards for having capital in capitalism is writing your own rules to make your capital grow faster. How else would they affect interest rates both inside and outside the bond market like I'm alleging they do? I think we believe in the same reality. You think they lie about us having capitalism and it doesn't exist. I think that if you look at the root word capitalism is exactly what we have and they lied about the definition.
(Score: 2, Interesting) by Anonymous Coward on Sunday July 14 2019, @12:41PM
Heh, no. You're applying too much intelligence to the whole thing. Really.
It's just about monitoring, not control. Control comes "outside" of the banks. It's the very reason the US government has a record of every single credit card transaction made, the same reason they have those same records for foreigners buying things through US firms/processing centres.
Control. Who you know. What you buy. When you buy it. What you buy it with. If you are forced into an all virtual cash situation, then they can track EVERYTHING. You owe Bob $10 for lunch last week. They now know you gave Bob $10, you know Bob in some capacity. Does Bob know a terrorist? Maybe you're a terrorist too? Or maybe you're just one of those protestors, like Bob's friends are!
It's why police want more license plate recognition, it's why they want cameras everywhere, it's why China developed gait recognition. It's all about mapping who you interact with, where you go, and by doing so, being able to determine if you're a threat to this year's plans. And if so? Legitimate methods can then be employed to harm/destroy/segregate/isolate/whatever that threat.
On the surface, this actually isn't a bad idea. If you could legitimately determine who is going to blow up a public space, who is going to do "bad things", that'd be great. But the real issue is misuse. At every level of government, the threat of misuse is massive. Individuals going "off the map", and doing whatever they prefer. And it doesn't end there, for foreign powers hack into governmental systems ALL THE TIME, and therefore can use that same data to target/hurt/harm members of your society that are GOOD!
Most primarily, monkeying with the election process is key. If (for example) China or Russia decide that you're the sort of candidate that will put 100% "my country first", and that this includes "hurting them a bit", then maybe you'll be out of the running BEFORE the primaries even happen! There are a multitude of ways for this to occur, all without violence.
But anyhow. Misuse. That's the real problem of all of this, and of a cashless society.
Not some weird "they'll take our cash!" idea.