Negative Interest Rates Confirm Deflationary Forces are Intensifying

The purpose of the unprecedented rounds of quantitative easing initiated by central banks has been to jump-start inflation.

So far, all have failed.

Now, central bankers have turned to negative interest rates, which confirms that deflationary forces are intensifying.

Back on January 29, the Bank of Japan voted for the first time in its history to adopt negative rates on deposits, joining the European Central Bank, Sweden, Denmark and Switzerland in charging depositors to hold their money.

An April 6 Bloomberg article discusses the plunge in global bond yields:

Global bond yields fell to a record, a warning sign for the worldwide economy.

The yield on the Bank of America Corp. Global Broad Market Index plunged to 1.3 percent, the lowest in almost 20 years of data. …

A third of the world's developed-market sovereign debt now has negative yields, based on Bloomberg bond indexes, after Europe and Japan cut interest rates below zero to counter deflation. … Fed Chair Janet Yellen said last week the global economy presented heightened risks. …

The U.S. is struggling with stagnant wages and manufacturing, though the world's biggest economy is adding jobs. Japan's economy contracted in the last quarter of 2015, while the euro zone's barely grew. China this month cut its growth target.

"This is a sign of global disinflation," said … a debt investor at Sumitomo Mitsui Trust Asset Management.

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