by Jeff Cox
Paying someone to borrow your money sounds like a questionable idea on paper, and seems not to be working out so well in practice.
Yet that’s exactly what people who buy negative-yielding bonds do: Instead of collecting payments in the form of yields, investors have to pay someone to take their cash. Investors ostensibly hope they can sell the debt elsewhere and make a profit, as prices go up when yields fall.
It’s a strange arrangement that nonetheless has become policy in Japan and parts of Europe.
The goal that sovereign debt issuers and central banks hope to achieve is a world where money is pushed toward risk and all that no-yielding debt causes inflation that leads to growth.