Yep Mario Draghi has officially joined in the central bank money printing game in which the rich win and everyone else ends up losing. We now have negative interest rates in Germany 5 year bunds and record low interest rates in France, Italy and Spain on 10 year notes. The Eurozone bond market is already heavily distorted in anticipation of the ECB purchases. So part one of the game is that investors lose income by taking negative or record low bond yields. The second part of the game is that the owners of these so called "safe" Government bonds end up making huge capital losses when the bond yield suddenly spikes up in one year to five years time (who can time these things)! Meanwhile we are being told how great it is to print €60 billion a month out of thin air to avoid deflation. I like deflation, I like lower oil prices it leaves me more money to spend on other goods than petrol and energy. I don't like inflation and a situation where people end up paying money to lend to governments that is not supposed to happen. We are in global bond market bubble the like of which I have never seen. Japan prints money like crazy and the other day had a 10 year bond yield of 0.2% (0.30% today) despite an inflation target of 2% and the biggest national debt in the world of 250% of GDP and a Central Bank printing money as fast as it can. When this bond market bubble eventually blows up it is not going to be pretty sight.
RSS Feed