Joe Doakes from Como Park emails:
Germany is selling 30-year bonds with negative rates. You pay the government to hold your money, betting they’ll be willing to give back some of it, in the future.
This is like Guido saying “That’s a nice nest egg you got there. It’d be a shame if anything happened to it. I’ll just hold onto it for you, you know, to protect it, like insurance.”
How is it possible that in a world of 7 billion people there are absolutely no worthwhile Investments?
I suspect it’s because people only invest when they believe there’s a reasonable prospect of getting a return in the future. And the future right now is chaotic, because all of the fundamentals – security of property, property rights, profit, order, rule of law – are being overturned by the revolutionary socialists who want to spread the wealth, your wealth.
Negative Bond. A losing investment. S***, I’ve got plenty of them. Why send my money to Germany? I can lose money right here at home.
Although now that I think about it . . . in the olden days, investors paid a premium to buy government bonds because they were safe, even though the investor would have to wait years to start making money. With a negative bond, will investors demand a discount to buy the bonds so they can start losing money sooner?
And can I bundle a bunch of negative interest bonds, then sell derivatives to investors so they could take the losses as a set-off to income and thereby reduce their income tax? Hmmm, this could be a whole new business opportunity.
The free market will eventually figure things out – provided government doesn’t throw a wrench in it all over political expediency…