Zero and Negative Yield Opportunity

by bitznbitez

As negative interest rates spread, Germany is also now offering negative bonds, an opportunity is created.   The longer rates stay near, at or below, zero the more a sovereign nation can finance its debt at zero interest.    Unlike consumers the sovereigns can than, to the extent debt is financed in their own currency, kick the inflation option full speed ahead after they get enough debt at 0% and make a lot of their current debt vanish through inflation.  To the extent doing that is in the interest of more than one nation, and it would be, that suggest a real possibility of a soon and sudden pivot back to inflation.

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