Posted on 06/10/2016 9:29:38 AM PDT by Lorianne
The central bank experiment with negative interest rates—where governments charge you to buy their debt—is reaching a tipping point. Fierce political backlash is emerging against a policy that hurts savers and small businesses, all of which could have ramifications for U.S. markets.
The bulk of negative-yielding debt is concentrated in Japan and Europe. Globally, the total is now $10.4 trillion, according to Fitch Ratings. In Japan, where politicians are preparing for the next election cycle, negative rates have become a hotbed issue.
The chief policy architect of Japan’s new Democratic Party, Shiori Yamao, just came out publicly against the Bank of Japan. The ruling Liberal Democratic Party had made fiscal and monetary policy front and center in the last election, arguing that the government and central bank had to work together to stimulate the economy.
However, the ruling party’s new platform makes zero mention of monetary policy. While it’s unlikely that the ruling party would reverse course, a change in leadership after the 2018 election would disrupt domestic and global markets.
Ticking time bomb
Europe and Japan have gone about negative rates for different reasons. Individual European countries that do not use the euro are largely trying to weaken their respective currencies, as investors flock to safety.
The European Central Bank, which oversees the euro, introduced negative rates to stimulate growth in the eurozone. Separately, the ECB began buying corporate bonds Wednesday—a move that was announced at a prior policy meeting.
(Excerpt) Read more at finance.yahoo.com ...
Wow, nobody with half a brain saw that coming. /s
Government fulfilling it’s purpose of rent seeking.
We all need to start a real barter economy sans government fiat money. But I’m sure the government will make sure that trading any labor or services without government fiat money or approved credit card is illegal.
Just another tax... Just more theft...
Of course, those who buy early are buying insurance, so they think.
Their only hope is that these Sovereigns survive over the long term.
Many of them will not.
What all of these Bond holders are looking for is a place to park CASH in anticipation of a Debt Deflation. Not hard to do on a small individual scale (currency under your mattress), but very difficult at a macro level.
"This so-called deflationary spiral is the bane of central bankers. It is a consequence of having a highly leveraged financial system pyramided upon government debt. For worse or for better, this is the system that exists."
The entire world financial system depends upon taxpayers and voters in a few countries continued willingness to pay the public debt, when they are the producers and everyone else parasitic.
Sovereign Currency collapse, banking collapse and debt deflation are certain. Only the timing is in question.
And the date range continues to narrow.
We all need to start a real barter economy sans government fiat money. But I’m sure the government will make sure that trading any labor or services without government fiat money or approved credit card is illegal.
&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&
I’ve saved big bucks over the years by getting estimates for roofing, tile laying, plumbing work, siding installer, concrete for new drive way etc. by getting the estimate and then asking of the estimator, one simple question, how much if I pay in cash?
I have yet to meet a contractor who wouldn’t “make a deal”. Not one.
I know that’s not barter but it is a money saver for both me and the contractor, the only loser is Uncle Sam. (Yes, I know it’s illegal),
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.