“Zero Has No Meaning” Says Greenspan: We Disagree, So Does Gold, by Mish Shedlock.
Former Fed Chair Alan Greenspan sees No Barriers to Prevent Negative Treasury Yields.
Former Federal Reserve Chairman Alan Greenspan says he wouldn’t be surprised if U.S. bond yields turn negative. And if they do, it’s not that big of a deal.
“There is international arbitrage going on in the bond market that is helping drive long-term Treasury yields lower,” Greenspan, who led the central bank from 1987 to 2006, said in a phone interview. “There is no barrier for U.S. Treasury yields going below zero. Zero has no meaning, beside being a certain level.”
Greenspan is a central banker talking their book:
Time preference can never be negative. Never.
To believe in negative time preference is to believe things such as “It’s better to have 90 cents ten years from now than a dollar today”.
Yields are negative only because central banks manipulated yields negative. They would never be negative on their own accord.
Investors buy negative yielding debt firmly convinced central banks will manipulate yields even more negative.
Alan Greenspan is wrong. Zero is very meaningful with negative being even more meaningful.
It means central banks have hit a brick wall. They cannot cram any more debt into the system. There is no tolerance for paying interest. …
As Gold Blasts Through $1500 the implied message is that central banks are out of control.