Debt is BETTER than Cash? …Who’s running this asylum anyway?

Thursday, April 23, 2015
By Paul Martin

By: Bill Holter
Thursday, 23 April 2015

Two days ago Reuters reported the 3 month “Euribor” went into negative interest rate territory. In this missive I will try to make sense of this as to “why or how” this could happen. I do not believe there is an answer other than the madness and insanity of being locked in a “short squeeze” room with the exits being blocked.

Over the last three years we have seen gold trade many times in backwardation, James Turk has reported this again is occurring in London. The only explanations for this is that market participants either need gold now for whatever reason and will pay a premium to get it …or, they fear not receiving gold contracted for in the future. The bottom line is this, for backwardation to occur, the “current” gold must be in short supply for some reason. I believe this is what we are seeing in Europe, “collateral” is in shortage and a short squeeze has pushed pricing into a Twilight Zone without logic.

After gold backwardation came the next head scratcher which began last year where various bonds, bank accounts and even mortgages being written with negative interest rates. How do any of these make sense? You “pay” the sovereign or even corporate borrower to lend money to them? Or a bank pays you to borrow money on a house or property? Think about the incentives here. Wouldn’t it be better to just take your money out of a bank or broker to avoid the negative interest and just bury it in a hole somewhere? How about banks lending at negative interest rates for a home, wouldn’t the bank be better off NOT making the loan and instead just sitting on the reserves? Here is David Stockman’s current take.

The Rest…HERE

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