Posted on 03/14/2015 4:09:33 AM PDT by OwenKellogg
~snip~
Germany was able to sell $3.72 billion of five-year bonds at a negative interest rate of .08%. In essence those who lent Germany this money were willing to pay the German government for the privilege of the government holding the investor’s funds for 5 years. The move reflects, in reality, that investors are more concerned about the return of principle than the return on principle.
~snip~
The disastrous consequences of the current economic policies allow negative interest rates to occur. Negative interest rates are a clear sign of an impending deflationary spiral.
~snip~
Just as the housing market and the dotcom stocks became overinflated, the stock market is displaying similar overvaluations due to the "free money" Federal Reserve policies since 2008.
Naysayers to a market correction are quick to point out that the price-to-earnings multiples of the current market pricing are reasonable. I would agree as long as those earnings remain steady they are accurate.
However, all of that changes in a negative interest rate climate due to deflationary concerns. Market triggers to a major market correction include the Federal Reserve’s inability to raise interest rates, minimal gains in real wages, declining commodity prices, and increasing national debt. Once one or more of those triggers are rupture, corporate earnings will decline with a concurrent decline in the stock market and economic activity.
Read more: http://www.americanthinker.com/articles/2015/03/fiat_currency_and_german_bonds.html#ixzz3UMCYEkP4 Follow us: @AmericanThinker on Twitter | AmericanThinker on Facebook
(Excerpt) Read more at americanthinker.com ...
There is the potential for a market correction -- or worse.
The author opined on deflation in an article posted here a couple of weeks ago...
http://www.freerepublic.com/focus/f-news/3260274/posts
The author:
Col. Frank Ryan, CPA, USMCR (Ret) and served in Iraq and briefly in Afghanistan and specializes in corporate restructuring and lectures on ethics for the state CPA societies. He has served on numerous boards of publicly traded and non-profit organizations.
Artificially low interest rates allow the US government to spend freely and continue running up large deficits. If rates were 5 or 6 percent, payments on the debt would force the government to reduce spending dramatically, raise taxes, or default.
If I understand this correctly you loan the government your money and get 0.08% less per year they keep it.
What kind of fool would take up a deal like this is beyond me.
If I understand this correctly you loan the government your money and get 0.08% less per year they keep it.
What kind of fool would take up a deal like this is beyond me.
It takes a special kind of fool.
It takes a special kind of (collective) fool to allow governments to interfere in the free markets to create such a scenario.
More semi-literacy by another so-called professional writer. Did he miss 4th Grade?
I caught that too.
Lulled to inattention by the almighty spellchecker.
Very interesting. Thanks for posting.
Derivatives to paper over the devaluation of the paper derivatives accumulated by those who were able to outrun the paper chase when they were young and strong. Fascinating fiat fascism. Manipulative marxists.
Socialism Is Legal Plunder - Bastiat
What about those with 401Ks or other retirement savings? As one gets closer to retirement, the portion of that money absolutely needed should be zero risk or close to that. With those accounts, the interest paid is just over 1%, but even that isn't always available.
The push seems to be toward annuities to secure retirement income. The feds would love to get their hands on all that money in retirement accounts, rather than it going to descendants. I could imagine a day when those funds are put in government annuity for our own good, to assure our money is there when we need it (etc blah, blah, blah).
It's all a rigged over-controlled game. Chaos theory is that when the natural ebb and flow of things is altered, the outcome will be far worse down the road when the controls no longer work.
It’s a storage fee.
This from a CPA. You would think he would know the difference between principal and principle.
When I saw that I lost all confidence that the article would contain any useful info.
It was further reinforced when he made the claim that a negative am loan is the same as negative interest.
A bean counter is not an economist.
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