Posted on 06/13/2016 1:33:50 PM PDT by Lorianne
was talking about the bond bubble earlier this week.
Seems I’m not the only one who’s a bit worried. Bill Gross, founder of Pimco (now at Janus Capital), tweeted “Global yields lowest in 500 years of recorded history… This is a supernova that will explode one day.”
Aside from making the pedantic point that a supernova is itself an explosion (according to my limited knowledge of astronomy at least), I find little to disagree with here.
The big question is – when will the bubble burst? We discussed that on Monday.
But in the meantime, it’s worth asking – what damage are negative interest rates doing to our financial system?
The dangers posed by negative interest rates
The bond bubble is real. It’s also incredibly dangerous to the financial system.
According to Goldman Sachs, “an unexpected one percentage point rise in US Treasury yields would trigger $1trn of losses, exceeding the financial crisis losses from mortgage-backed bonds,” reports the Financial Times.
This is the stuff that our pension funds, our banks, our institutions are invested up to their necks in. It’s not very reassuring really.
But let’s put that aside for the moment. The idea that interest rates might rise at some point in the future is quite scary. But it’s not as scary as what low and negative rates are currently doing to our economy.
As Larry Fink of BlackRock put it in a shareholder letter in April: “Not nearly enough attention has been paid to the toll these low rates – and now negative rates – are taking on the ability of investors to save and plan for the future.”
.... snip
Can’t wait till banks charge the customer to keep their money there.
“: “Not nearly enough attention has been paid to the toll these low rates – and now negative rates – are taking on the ability of investors to save and plan for the future.””
No sh#t Sherlock
Obama and Hillary will try to keep a financial crash from happening until after the election.
Its gonna happen. Now its just a question of when we’ll see it.
I must be missing something. Do we have negative interest here? I thought that was mostly a Japanese problem.
Europe is going that way too.
Anyone have any ideas about protecting one’s assets against negative interest rates? Eric Bolling says spend your money now. I’m not making any money on my investments. I could buy things but I have more than enough things.
Then buy things with inherent value and store them. Everything from bullets to Harley’s, gold to silver, strawberry seeds to portable generators. You get the idea.
But buy the Harley’s and generators used, not new.
Good ideas. Thank you.
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