As Negative-Yielding Debt Hits Record $17 Trillion, Bitcoin’s Need Only Increases
The negative Yielding Debt continues to increase and analysts say that this is good news for the adoption of Bitcoin.
The escalating U.S.-China trade war, political tensions in Italy, Hong Kong and Argentina and disappointing economic data from China to Germany have fueled demand for haven securities this month. Strategists are increasingly speculating Treasury yields could join the below-zero club, something former Federal Reserve Chairman Alan Greenspan said wouldn’t be that big of a deal.
Government debt around the globe has rallied in sympathy with bets on U.S. rate cuts. German bund yields dropped to a new low in the build-up to the Fed announcement, while Japanese peers rose before the Bank of Japan released its monthly debt-purchase plan.
Popular crypto analyst Rhythm tweeted on the matter:
What if I said I wanted to borrow $100 from you and pay you back $99 five years later?
Would you do it? Of course not.
Yet, this is happening right now with $17,000,000,000,000 of debt with negative yields.
The mother of all financial bubbles.
— Rhythm (@Rhythmtrader) August 31, 2019
Buying into the near $17 trillion heap of global bonds with negative yields might sound like a losing proposition. But for some investors those who predicted correctly that bond prices this year would climb amid worries about sluggish global growth, negative yields actually have been a cash cow.
Whitney George, president of a precious metals hedge fund told:
“We’re now going from trade wars almost into currency wars. Gold is a currency, but it’s nobody’s obligation, so it will stand tallest when everyone else is trying to debase their currency to be competitive globally.”
Raoul Pal, the former head of Goldman Sachs’s hedge funds sales business put cryptos in the same conversation as Gold and says:
“So what the hell does a millennial do to save for your future, when almost all assets have negative imputed returns for the next 20 years, 10 years? And the answer is well, you take the optionality of cryptocurrency and Bitcoin.”