"There is danger from all men. The only maxim of a free government ought to be to trust no man living with
power to endanger the public liberty." - - - - John Adams

Thursday, May 24, 2012

FREE MONEY - A European Meltdown

Buy guns and gold.  But kill two birds with one stone and buy a golden gun

Buy Guns and Gold  -  Germany is issuing zero interest bonds
  • Frightened investors are snapping up bonds that pay NOTHING.
  • Once inflation is factored in, investors are essentially paying to park their money with the German government

There is no other way to put it.  Investors are frightened to death.  That fact is hidden from the public, but it is never the less true.  Total fear is the only reason an investor would put their money into a product that at best pays nothing, zero, nada for a return.  A fear of what?  A total economic meltdown? or Violence?
For the first time in history, Germany issued long term bonds with a zero percent coupon rate on Wednesday. The demand reveals the deep concerns investors have about the euro zone and their desire for a safe place to park their capital -- even if it costs them money to do so.
For now at least Germany and Greece share the same currency. But don't tell that to investors.  The German Finance Ministry pulled off a remarkable feat for a country in a threatened currency union: It issued €4.6 billion of two year bonds with a rate of zero percent. In other words, once inflation is factored in, investors are essentially paying to park their money with the German government reports der Spiegel.

Are we looking at a new hyperinflation?
Every German became a Billionaire with hyperinflation
in 1920s Germany.

According to German officials demand for the zero percent bonds was robust and added that Germany does not intend to offer up bonds with a negative interest rate. "As such, a coupon of zero percent is the lower limit," Reuters quoted a finance official as saying.

Still, it seems likely that, with investors looking for safe havens for their money, even negative interest rate bonds might sell. "Many investors are putting their money only in places where they are guaranteed to get it back," Commerzbank analyst Alexander Aldinger told the Berliner Morgenpost. "For a large degree of security, investors are willing to give up returns."

Even while borrowing costs have spiked in other euro-zone countries, rates on shorter term German bonds have already hit zero and even ventured into negative territory, meaning investors have been paying the German government to hang on to their cash. Rates on longer-term bonds have been trading consistently below the rate of inflation.

The zero percent bond issue is just the latest sign that concern about the crisis facing Europe's common currency is rampant. As are worries that the situation could become much worse before it gets any better.    (Spiegel.com)

A wheelbarrow of worthless Garman paper money might buy one ounce of gold . . . maybe. 

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