by Egon von Greyerz
We know that central banks and governments have lost the plot. When the crisis started in 2006, U.S. short rates were 5%. In 2008 they were down to zero and have virtually stayed there ever since.
A crisis package of $25 trillion was thrown at the financial system. This is what the likes of JP Morgan and Goldman told the Fed they had to do to save the bank(-ers). Ten years later the world financial system is in a mess that is exponentially greater. World debt has exploded, most governments are running deficits and the financial system is balancing dangerously on the edge of a precipice.
$8 trillion of government debt is now negative and $16 trillion is below 1%. Negative yields are supposed to stimulate a deflationary global economy and also save bankrupt nations which can’t afford to pay a market interest rate on their exploding debts. But as usual, the central bankers have got it wrong again.