Saturday, September 03, 2016

The 5,000 Year Government Debt Bubble

When the international financial house of cards finally comes tumbling down it should be a surprise to no one. Governments have worked very hard to dig this hole, and anyone that cared to look realizes that "voting themselves benefits they can't pay for" is the normal end of "democracy". Even NPR sees this hole.

Mr. Sylla sums it up: “There were no negative bond yields in 5,000 years of recorded history.” 
Put another way, government bonds have never been so expensive.Paul Singer, founder of hedge fund Elliott Management, isn’t expecting a happy ending. He believes that because of massive entitlement promises plus huge debt, “the entire developed world is insolvent.” He says that a negative rate on a government bond is “crazier than zero, and zero was crazy enough.”
Thus we live at a time with slowing or slowed economies, but people largely still living a lifestyle that could only be afforded by rapidly growing economies.

It’s not as if the bond bubble is fun while it lasts. It’s painful for savers and corrosive for society to have governments systematically punishing thrift. It also encourages reckless governments to spend further beyond their means when they are rewarded for borrowing in this way. Perhaps it’s no surprise that the government-engineered bond bubble hasn’t delivered the promised economic growth. Who can confidently invest when the official price of credit appears to be so dishonest?

Corrosive, corrupt, clandestine, coercive,  catatonic,  criminal ... CLINTON!
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