If you told economists twenty years ago about Bitcoin (BTC) and negative-yielding debt, they would be shocked. In the 1990s or even the 2000s, decentralized digital money and a bond that made your money disappear with time would have seemed abstract — quite abstract. Now, however, these two financial trends, which came to fruition mostly over the last decade, have become widely recognized.
Related Reading: Bitcoin (BTC) Loses Multiple Parabolic Trend Lines as Bears Roar
Odd Macroeconomic Trends
What’s weird, Bitcoin and negative-yielding bonds, which are assets that inherently are vastly different, seemingly have the same origins: the 2008 Great Recession. After this horrible financial dilemma, which cost mom & pop investors billions upon billions, the world’s central banks and governments were forced to take drastic action.
The United States’ Federal Reserve started injecting money into the economy through a monetary strategy called “quantitative easing”, better known as QE or open market operations (OMOs).
The European Central Bank (ECB) and Bank of Japan (BOJ) followed suit, also embarking on QE operations to bolster their balance sheet, resulting in a monumental surge in the stock market, and risk-on assets like Bitcoin too.
Related Reading: Cryptocurrency is Part of the Global Currency War, Says Federal Reserve Branch Head
As a result of this and other political and economic factors, there began the era of negative-yielding debt. Now, according to Bloomberg, there exists over $13.4 trillion worth of debt that is negative-yielding — an all-time high for a type of asset that, per normal economic theories, makes no damn sense. What’s weird is that much of this debt is issued by governments or top-graded firms.
Global Negative Yielding Debt rises to record high $13.41 Trillion pic.twitter.com/0Wo5B8ZE0y
— Eric Pomboy (@epomboy) July 24, 2019
That’s not the only odd trend in global finance. As Ikigai’s Travis Kling notes, a Federal Funds rate that…