Central Bank Sponsored Madness: Inversions on Negative-Yield Bonds
This Tweet by Holger Zschaepitz, author of 'Schulden ohne Sühne?' a book on states' addictiveness to debt caught my eye.
Zschaepitz's Tweet inspired my lead chart.
The chart shows Germany's negative-yield bond market is inverted in 19 places.
The longer you borrow, the more money you collect because the ECB pays you to borrow.
On the 3-year bond, the ECB pays you 0.667% per year to borrow. If you borrow money for 3 months you collect an annualized 0.514% for borrowing.
Central Bank Sponsored Madness
Getting paid to borrow money, could not possibly happen in a free market.
Yet, it's now so extreme, the longer the borrow, the more you get paid.
This perversion is best viewed as central bank sponsored madness.
Mike "Mish" Shedlock