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posted by martyb on Sunday July 14 2019, @03:09AM   Printer-friendly
from the You-pay-me-to-hold-your-money? dept.

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.

https://www.bloomberg.com/news/articles/2019-07-13/the-black-hole-engulfing-the-world-s-bond-markets-quicktake?srnd=premium


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  • (Score: 3, Interesting) by anotherblackhat on Sunday July 14 2019, @09:09AM (1 child)

    by anotherblackhat (4722) on Sunday July 14 2019, @09:09AM (#866836)

    It might not matter to the economy in general, but deflation is a huge problem for the currency that is deflating.
    Inflation promotes circulation. Deflation promotes accumulation.
    The standard joke is, the Fed can always print money and drop it from helicopters, but they seriously do have a the ability to effect inflation on a massive scale.

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  • (Score: 0) by Anonymous Coward on Monday July 15 2019, @03:00AM

    by Anonymous Coward on Monday July 15 2019, @03:00AM (#867050)

    Except that money printed by the Fed is owned by the private bankers who own the Fed. That just accumulates more capital in fewer hands.
    Now if the government owned the Fed they could just print money and spend until they had the desired inflation rate.

    Nationalize The Fed!!