Negative Yielding Debt

[errolanderson]

Negative debt intrest ? does that mean they will pay me to take thier money??

yup . . . .

[macdon02]

Does Greece still exist today?
So does it really matter if the any debt can be serviced or not?
Personal or sovereign or foreign?

I know I am in way over my head in this thread. Fire away.

It's a good point, it's all relative. There's a distinction between govt debt and private. When govt can't borrow, taxes go up. I think it's safe to say if the US govt can't borrow, Canada will be in the same boat. Errol are you bullish or bearish USD? Where do you see the $ going if there's a loss of confidence in bonds? Powell is still letting repurchased debt expire, whereas Draghi isn't, he's rolling it. Fwiw there's talk of a "peg" in rates on govt bonds while letting private bonds float. The CB's are in a corner and Powell will cut here imo. We are closer to the 30s then 1980s here. There's certain relationships that are believed to be true by traders, ie gold(commods) up dollar down, dollar up euro(&rest of the basket)down, gold up yen down, We are on the cusp of this all getting shredded imo). We are in a short period where buying anything is a win. Especially if your home currency is not USD

[bucket]

Thats the modern monetary theory, that we can have our cake and eat it to. Its a free lunch. But debts are always repaid either by the borrower or the lender.

Anyone think ILTA grain will pay their debts????

I am thinking farmers will be paid by other farmers checkoffs to the CGC....and FCC/HSBC will take a haircut...

[AlbertaFarmer5]

Thats modern monetary theory, that we can have our cake and eat it to. Its a free lunch. But debts are always repaid either by the borrower or the lender.

When it is a mathematical impossibility that the borrower can ever pay, The only other possibility is it will be the lender.

To Put it all into perspective, For how many decades have we been hearing about on sustainable deficit and debt levels, We have kept all of the balls in the air all this Time, Life goes on. When it does finally all blow up, It won't matter which side you're on anyways. But living life in fear of the impending economic collapse has been a poor business practice almost forever...

[errolanderson]

Negative yielding debt globally will continue to expand rapidly (IMO). Even U.S. bonds could turn negative as their debt to GDP nudges closer to Greek status. This is the beginning of the shrinking of the money supply bubble and massive write-downs. QE no longer has any impact and in my opinion has just made the economics of money worse. Realize this is not central bank and mainstream thinking.

But the health of the U.S. is being held together by the ongoing flow of global funds into American equities. This is now a parking lot for money. Valuations are now insane. The stock market is the poster child for the U.S. gov’t. If it goes, they go. It is critical, it holds. Tariffs have been quite ineffective, in my opinion.

[jazz]

Errol I will give you a little tip. The fed and CBs will be neutered under Trump and the US will return to a partial gold standard within about 5 yrs. Real assets will rise in accordance. I would personally be out of notes and stocks when that happens. The US will still rise to the top of the new economic system and leave the rest in the dust.

[errolanderson]

Errol I will give you a little tip. The fed and CBs will be neutered under Trump and the US will return to a partial gold standard within about 5 yrs. Real assets will rise in accordance. I would personally be out of notes and stocks when that happens. The US will still rise to the top of the new economic system and leave the rest in the dust.

Jazz . . . Hope you are right, but the path currently taken doesn’t point there.

[tmyrfield]

Negative debt intrest ? does that mean they will pay me to take thier money??

Nope...It means that you have to pay someone to hold your money in a savings account. which unfortunately is at a time when commodities and real goods are deflating so in effect is less damaging.

[ajl]

Errol I will give you a little tip. The fed and CBs will be neutered under Trump and the US will return to a partial gold standard within about 5 yrs. Real assets will rise in accordance. I would personally be out of notes and stocks when that happens. The US will still rise to the top of the new economic system and leave the rest in the dust.

If this does happen and it is highly unlikely, a partial return to monetary soundness will collapse both stocks bonds, and real estate. That would not be good for the president's re election chances. I am kind of surprised there has not been a cut in short term interest rates in the US already given that longer dated treasuries have fallen so much since last October.

[biglentil]

Sven Henrich:
Central banks 2009-2018:
“We will print $20 trillion & cut rates to nothing & that will reach our inflation goals.”

Central banks 2019:
“Ok, none of that worked so let’s print more & cut rates again. Trust us we know what we’re doing.”

[chuckChuck]

Worst debt to GDP countries (believe this current order).

1. Japan
2. Greece
3. Sudan
4. Venezuela
5. Lebanon
6. Portugal
7. Italy
8. U.S.A.

farmaholic . . . does debt matter and need to be serviced? . . . yes. We will all have a reality check and find out why (IMO). It will severely cost the next generation . . . our kids and their kids.

The USA is right in there with Venezuela, Greece, Portugal and Italy? And Trump cuts taxes and increases spending and their debt?

Is this is a new kind of fiscal conservatism? LOL. And he loves protectionism.

And numerous Agriville posters are in love with Trump and America and consider it a model for good governance?

Trump is the greatest and America is indeed great again!

He can do no wrong in the eyes of some.

[macdon02]

I think just about everyone understands that too much debt is a bad thing. But what actually happens when govt defaults on a broad scale basis and the process up to that point? Are taxes gonna increase to stifling levels? Does the purchasing capacity of your currency diminish to the point you wheel barrows of it to buy a loaf of bread? Will promises of being taken of in old age by the state vanish? I don't think it's our children that'll carry the burden, it'll be us as we get beyond our ability to make a living and everything we worked for in our life span is either seized or worthless. There has to be a better way then the current path. The problem is there's zero original thought put into governance and who in their right mind would step into the current mess if they had the capacity to actually fix it? Bernanke got us into this because we couldn't handle a crash and the too big to fail ideology. It's a giant spring compressing and when it lets go whenever and wherever there's gonna be a ton of disappointment likely resulting in revolution and reset. Negative rates were supposed to spawn growth as punishment for sitting on cash and instead it created an increase in equities, not increased day to day spending. Why equities? Because you can cross borders with it when scared, it's mobile. Errol made note it's a parking lot, where is it coming from and why? It isn't domestic USA pumping it, it's the ROW. You can see it in bitcoin as the Chinese want out, it's British and European and even Canadian as the home currency bleeds to the reserve status of USD by default. Trump is merely in the right place at the right time as far as growth in equities goes. Anything priced in USD is increasing in value, breaking out of long term resistance or seeing new highs. The same can't be said for the rest of the world. I think the dollar is going parabolic in the next 5 years or less and it'll rip your face off being on the wrong side. 103 is the line.