Monitoring the Monetary System and the Flow of Capital for Forecasting the Business, Financial and Currency Cycle - and Investing in the Emerging Economies from the Euro Global Reserve Currency - on lucabindi.com
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Why Australia's Economy Is A House Of Cards - Zerohedge
As a quick refresher of how we got here,after the Global Financial Crisis, and consequent recession hit in 2007 thanks to delinquencies on subprime mortgages, the U.S. Federal Reserve began cutting theshort-terminterest rate, known as the ‘Federal Funds Rate’ (or the rate at which depository institutions trade balances held at Federal Reserve Banks with each other overnight),from 5.25% to 0%, the lowest rate in history.
When that didn’t work to curb rising unemployment and stop growth stagnating, central banks across the globe started printing money which they used to buy up financial securities in an effort to drive up prices. This process was called “quantitative easing” (“QE”), to confuse the average person in the street into thinking it wasn’t anything more thanconjuring trillions of dollars out of thin airand using that money to buy things in an effort to drive their prices up.
Systematic buying of treasuries and mortgage bonds by central banks caused the face value of on those bonds to increase, and since bond yields fall as their prices rise, this buying had the effect of also drivinglong-terminterest rates down to near zero
Ratings-New York-11 December 2017: The total amount of global
negative-yielding sovereign debt remains at elevated levels despite the
European Central Bank's (ECB) plan to reduce monthly asset purchases
amid improving economic fundamentals in the Eurozone, according to Fitch
Ratings. As of Dec. 4, 2017, there was $9.7 trillion of
negative-yielding sovereign debt outstanding, up from $9.5 trillion on
May 31, 2017 and $9.3 trillion one year ago.
Fonte: Fitch: $9.7T of Neg Yielding Debt Despite Monetary Normalization