The fear that today’s negative or low interest rates render central banks helpless in face of the next economic crisis.
We’ll also look at its garbage pile at the bottom. These folks don’t even pretend to be stock pickers. They buy and let it stick till it falls off on its own.
After peak negative-yield-absurdity in August, bond prices fell – the “bond bloodbath” – and the mountain of bonds with negative yields has plunged by $5 Trillion, or by 30%, despite rate cuts.
They undermine banks. To dodge the fallout, banks chase yield, buying stuff like CLOs, instead of lending. When loans go bad, banks may “evergreen” them.
If the US dollar loses its hegemony as a global reserve currency, it would be a sea change globally, and specifically for the US economy. Today, we got the next installment in that saga.
Draghi’s desperate shenanigans thicken.
A rout in the hyper-inflated bond market can blow up everything at this point.
How to make a mess in the era of low demand.
Interest rates don’t have to be negative to make a mess in the era of “Secular Stagnation.”
Now they’re clamoring for this NIRP absurdity in the US. How will this end?