“Valuations Will Fall Back”: Bank of England Gov. Carney Pooh-Poohs NIRP Miracle…“Derail an expansion and deepen a subsequent recession.”

Monday, February 29, 2016
By Paul Martin

by Wolf Richter
WolfStreet.com
February 28, 2016

When the yield of 10-year Japanese government bonds fell below zero, it marked a new milestone in the negative yield absurdity: it pushed the amount of global government debt sporting a negative return for investors to over $7 trillion.

Which means investors buying this government debt are willing to pay the government for the privilege even if that government is fiscally in worse shape than Greece! But “investors” is a funny word these days of central-bank craziness: the entity that buys every Japanese government bond that isn’t nailed down is the Bank of Japan.

The ECB too is still gobbling up government debt, as Bank of England Governor Mark Carney noted dryly in his speech on Friday at the G20 conference in Shanghai:

The largest four central banks bought assets worth $1.2 trillion in 2015, similar to the amounts purchased post-Lehman and during the 2013 euro-area crisis. Adjusting for lower government debt issuance, that leaves an unprecedented flow of net QE, with only $400 billion of additional government debt sold to the private sector, compared to $3 trillion in 2010.

And these QE-crazed central banks buy most of it negative yields.

The Rest…HERE

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