The Gold Bull is Back

by Egon von Greyerz
Daily Reckoning

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.

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