Negativity There, Suffocation Here

Never in history has there been an economic phenomenon this confusing. In Europe and Japan, negative interest rates are in effect. The world has turned upside down, with creditors 'paying' interest to borrowers. This absurd phenomenon breaks down all theory and makes mathematical formulas powerless.

Its size is nothing to scoff at. There is a total of US$13 trillion in government bonds with negative interest. This is the result of the quantitative easing policies pursued by many central banks, effectively mass-printing money to buy government bonds. The hope was to stimulate the economy with the government spending the money from the proceeds.

August 30, 2016