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It's a phenomenon that simply shouldn't exist – one that manifests itself in weird, almost comical ways…
Borrowers are being paid to take out loans and mortgages… Imagine your account balance dropping in value as the bank "taxes" you each month for the "privilege" of keeping your money there.
And yet it's real. Very real: Negative interest rates are already in effect in at least eleven countries. As of the end of August 2019, an unfathomable $17 trillion in global debt was under a negative yield regime.
This isn't confined to fourth-tier economies, either. Several of those are among the world's largest, most advanced economies – like Germany, Japan, and France – where 10-year bonds trade with negative yields.
Incredibly, the total value of negative-yielding bonds is expected to keep rising as central banks keep pushing rates lower.
It's an experiment that will end badly.
Large banks are struggling, unable or unwilling to pass on those negative rates to their clients.
Meanwhile, odds are growing rapidly that America will be the next major economy to institute a negative interest rate policy (NIRP)… and all the negative effects and capital destruction that come with them.
Ultimately, hundreds of millions of investors will be victimized by this dubious practice.
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.