Fiat Currency and German Bonds

"Germany sells Five-year debt at Negative Yield for First Time on Record," screams the article from Wall Street Journal. The subtitle also states, "Move reflects plummeting borrowing costs across Europe." Germany was able to sell $3.72 billion of five-year bonds at a negative interest rate of .08%.   In essence those who lent Germany this money were willing to pay the German government for the privilege of the government holding the investor’s funds for 5 years.  The move reflects, in reality, that investors are more concerned about the return of principle than the return on principle. The German negative interest rate comes on top of similar negative interest rates in Denmark, Switzerland, Finland, and Japan. The disastrous consequences of the current economic policies allow negative interest rates to occur. Negative interest rates are a clear sign of an impending deflationary spiral. The extraordinarily cheap monetary policy of...(Read Full Article)