Germany for First Time Sells 30-Year Bonds Offering Negative Yields

Re:Germany for First Time Sells 30-Year Bonds Offering Negat... by arcticbull on Wednesday August 21, 2019 @03:48PM (#20760931)

Currency is mildly decoupled from purchasing power.

Here's how you look at it. You give me $20K today, and I promise to give you $19K back in 30 years. The question is two-fold.

(1) What else would you do with that money, that would offer you a better return, factoring all externalities. Holding cash isn't free once you account for risks like getting robbed holding bills your house burns down, you get fake bills, and potentially-negative interest rates at a bank. If you see the market going down you're not going to put it there either.

(2) How much will $20K today dollars buy you as compared to $19K future dollars? If you're betting on deflation, then that $19K future dollars may buy you a house where $20K today dollars may buy you a car.

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Re:Germany for First Time Sells 30-Year Bonds Offering Negat... by rags2riches on Wednesday August 21, 2019 @03:55PM (#20761015)

(3) what will the best offer to hold $20K be tomorrow? If it's even worse, I can sell my $19K promise and make a profit! (Falling yields means raising prices.)

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