The Says It All…The Crack Addict Is Charging The Public Interest On The Crack He’s Smoking: In First, UK Government Begins Selling Medium-Term Bonds at Negative Yields

This new policy is essentially a broke/bankrupt government selling government bonds, which are usually used to fund government spending while giving interest to those who would buy them helping them make profits, now charging people to buy their junk bonds even though it is the government who needs the investors to invest.

This is clear insanity. This move it tantamount to me charging you to buy my old shoes with holes in them, while you pay me interests because you have them or are wearing them.

Is this not lunacy at its very height?

© CC BY-SA 4.0 / Txllxt TxllxT/Wikimedia CommonsBUSINESS

In financial terms, a negative bond yield means that investors are effectively paying to lend money to the government instead of receiving a return on their investment. When bond yields are negative, it generally means investors are seeking a safe haven for their money instead of looking to earn.

Britain began the sale of government bonds with an average yield of -0.003 percent on Wednesday, the Financial Post has reported, citing market data.

Demand for the bonds, known as gilts, was said to have been lower than usual, although bidding outstripped the available £3.75 billion ($4.59 billion US) by over 100 percent. The medium-term bonds will mature just over three years from now in July 2023.

Short-term UK government bonds first turned negative in March as investors rushed to safety amid the turmoil faced by the stock market over coronavirus-related jitters. The Bank of England cut its main interest rate to 0.1 percent at the time, a record low, and announced £200 billion in bond purchases.

Wednesday’s bond issuance followed the sale of £3.25 billion in five-year government bonds at then record-low yields of less than 0.02 percent earlier this month.

Up to now, the UK government bond market has been unique compared with other developed nations such as Japan, Germany and other European countries, in that the British government has never offered medium- to long-term bond yields of less than zero.

The bonds are expected to help London deal with the continuing global financial and economic consequences of the coronavirus crisis.

Last week, the United Nations said it expected the coronavirus crisis to slash global economic output by $8.5 trillion over the next two years, with the world economy expected to contract by 3.2 percent in 2020, while over 34 million people may be pushed into extreme poverty as nations struggle to reopen their economies after months of ham-fisted lockdowns.

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