Dear Investors,
The ECB (European Central Bank) is the FED of Europe although it is set up a bit different. A bit more politics and a bit less banking capacities to summarize it.
The leader is Mrs Lagarde (see pic) who is a seasoned professional but like her predecessors is mainly conerned about the southern high-government-debt countries like Italy and her own France.
For these countries it is crucial that the interest rates remain low or even better negative hence the ECB sets the interest rate at zero and buys large chunks of market debt to her own balance to keep the (free) money rolling.
Although all targets are reached (economy doing well; inflation around 2% expected) and thy could stop they are only sloing down the purchase of external debt and keep the programm open also in 2022 as "something else could happen"
Reactions were immediately like "yes something can "happen" always but then you never get rid of this porgramm"
Do you know what 'junk bonds' are? These are loans that have a high probability of never being paid back and in turn for that risk must pay a really high interest rate (better : risk premium).
The interest rate of some of these junk bonds rated BBB-- is now also NEGATIVE. So if you buy these you must pay for the risk of loosing your money.
Ofcourse no one buys these bonds except our own ECB with tax payers money or crated money (=inflation). So easy to buy stuff with other persons money.
With politicians and banksters you never know but in my almost 60 years in earth and 40 in fiance it is getting worse each year with the politicians. Or is is that we are better informed of what they do nowadays?
keep your head up and make use of the situation
Goldrooster
