Friday, March 13, 2015

German Bonds Have A Negative Interest Rate

The luxury of paying your government to hold your money, once thought as absurd, hilarious and downright preposterous is now a reality. For the first time ever, Germany sold five year debt at a negative interest rate. You heard that correct, German citizens and investing institutions that wish to buy government debt in Germany, will be paying the government to hold THEIR money!

http://www.zerohedge.com/news/2015-03-12/bizzaro-world-becomes-normality-germany-issues-five-year-negative-bond

I guess this is similar to an interest-rate swap. You know the value of your money is going to decrease, and now the government will guarantee how much that decrease will be.

Of course, that doesn't include the fact that the bond itself may decrease in value or that inflation will also suck out some of what remains.

The bottom line is ... governments need new sources of revenue, so they're coming after you. But if you are a corporation, not to worry. Just put "your" money somewhere outside governments' reach and everything will be fine.

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