The world has truly gone mad.
We’ve become accustomed somewhat in the last several years to historical anomalies such as zero percent interest rates, Quantitative Easing, competitive currency devaluation, etc. by governments and central banks the world over.
It’s almost become the new norm.
But then there’s always something that happens that shocks us all over again.
And just like with any other addiction, the infusion of ridiculous and unsustainable policies has to be that much more potent to have any effect.
Two such developments have just taken place in the financial world.
First, Switzerland became the first to issue 10-year government bonds with a negative yield.
Let that sink in for a moment.
Especially in the last year we’ve seen governments issue short-term debt with negative interest rates. But now the Swiss government is the first that will actually profit from its long-term 10-year debt.
Just like in a bad infomercial—“But wait, there’s more!”
The government of Mexico just sold 100-year bonds denominated in EUROS. Also the first ever of its kind.
A few years ago, Mexico sold its first 100-year bond—that one was denominated in US dollars. Later, they sold another century-bond in British pounds.
You can just imagine the figures at the Mexican central bank’s meeting going: “Well, that went great. I wouldn’t have believed we could ever get away with that… Hey, what if we tried to do it in euros next time, haha?”
So they did. They took advantage of the European Central Bank’s unprecedented stimulus and issued a 100-year bond in a currency that most likely won’t even be around in the next decade.
Who’s dumb enough to buy this stuff—10-year debt at negative yields and 100-year debt in a doomed currency?
Institutional investors, of course—large pension funds and the like. You might look at news like that and think, well, that’s crazy, I’d never do that. But the fact is, it’s being done with YOUR MONEY.