Monday, June 13, 2016

Unintended Consequences: 
“How Do I Get Away 
From Negative Yields?”
John Rubino* asks readers to go through some articles & play a game of “what’s wrong with this sentence?”:
1. “Higher amounts of Japanese and Italian sovereign securities with sub-zero yields were the biggest contributors to the monthly changes,” said Fitch analysts. This one’s easy: How can the world be paying Italy to borrow?? Rational investors should never, ever lend money to an entity that irresponsible and incoherent, and the idea of paying for the privilege will occupy entire chapters in future history books. The conclusion will be that today’s central banks are anything but rational.
2. “Cash is expensive.” Cash by definition costs nothing and yields either nothing or next to nothing. Never in living memory has it cost its owners anything (other than the secret tax of inflation). That it’s now “expensive” illustrates how much the world has changed.
LINK HERE to the commentary

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