When governments print money, where does it all go?
Imagine if you went to Las Vegas to play a game of blackjack, but there was one player at the table who had a very special ability. That one player could print more cards at will. the game would not seem very fair now would it?
If the player got found out they might justify that special ability as having a benefit to the game. It’s really just to stimulate the game and make it more interesting.
Today, half of all European government bonds have a negative yield, with the total amount outstanding at €4.4 trillion. At the end of May, 20% of European investment-grade corporate debt had negative yields.
In the latest case of things that don’t make any sense, more than a dozen companies with bonds having junk status, which usually carry high yields, now trade in Europe with a negative yield.
These same bonds that have a coupon of 6-8% are now trading in the open market at or below zero.