Treasuries in the EU
January 11, 2026 - Central Banks are in a Panic Mode - The trend of interest rates is UP!
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Interest Rates LAG on the Inflation Rate: The more inflation (money) there is, the higher the interest rates! The central banks of Europe and the Fed are coordinating their monetary policies. (April 2024). Hiking Interest Rates during recessions will exacerbate the Hyperinflationary Depression. The Bond markets are showing a BEAR TREND...whatever Authorities do, in the long run, they can not stop rising interest rates! Bond markets can implode in a matter of seconds... Question. Why does global debt keep growing, the world money supply keeps expanding, and why do we have REAL negative interest rates? Answer. Because ECB & FED struggle to SURVIVE. In Europe, the bond market is destroyed. Which institution would buy a European bond with a real negative interest rate? Pension funds require an 8% return to break even. They have bankrupted all the pension funds over there. It is a complete disaster. This is the most significant financial crisis in human history, and people don’t understand what is happening. All excuses are welcome: Covid, Global Warming, WAR,...The EU & ECB plan to spend €300 billion over the coming months. The EUSSR and the ECB are pursuing precisely the same policy as the U.S. and A., creating hyperinflationary amounts of fiat money out of thin air. As expected and as usual, most investors won't realize it until it is too late to act. A random walk through various Social Media shows that the Millennials have NO CLUE about what is happening and what will happen soon. (Dec 21) |
- When, not if, inflation returns and investors finally end their love affair with bonds, bond prices will fall, bond yields will rise, and interest rates will rise too, marking the end of the game.
- By definition, a collapse of Treasuries will result in the collapse of Fiat Money (because money is debt today).
- The European bond markets have become illiquid, trapping the ECB and other European central banks. This will severely impact pension funds; worse is to come over the next few years. Insurance and Reinsurance companies are not much better off. Low & negative interest rates slaughter these entities. As a retaliation, Governments will have to RAISE TAXES dramatically.
- The only way for Pension funds and Insurance companies to survive is to exit treasuries and Bonds. This, HOWEVER, is TOTALLY IMPOSSIBLE and, in many cases, even ILLEGAL.
- Contrary to crashing Stock Markets, crashing Bond markets never bounce back. Even worse, they become worthless. A bond market crash is dramatic because it affects the entire Western world, including pension funds, insurance companies, and financial institutions.
- Higher Interest rates, in turn, make it increasingly impossible to honor the HUGE DEBT. To avoid this, central banks must create more debt to create more money. Higher debt, in turn, affects the overall interest rate. At a certain point, Interest Rates and (Hyper)inflation will rise simultaneously.
British GILTS (Treasuries) show now a BEAR TREND (Sep. 2022) - Bank of England raised the interest rate to 4% (Feb. 2023)
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| Short Term Candle | Comments |
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| Long Term Candle | |
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| A wonderful, ever-rising bond market... a severe bear trend, it is. |
ʘ ʘ ʘ Euro Deutsche Mark bonds: TOP CONFIRMED (Feb 2018) - Germany or the Deutsche Mark is the driving factor behind the EURO.
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| Breakout and bull trend! |
Expect HIGHER interest rates. |
Click to enlarge - 10-year BundesYield - note the critical days: FEB 9-11 and Feb 29, 2016
- Governments and banks create money (credit). Money comes out of thin air, as the Central Bank creates money when it ‘buys’ TREASURIES/DEBT. New Fed money is always exchanged for debt. When the Federal Reserve writes a check, it is creating money."
- The government uses the money to cover its expenditures and taxes its citizens to cover the interest. Treasuries can be redeemed, thereby decreasing the money in circulation, or more Treasuries/bonds can be issued, thereby increasing the money in circulation.
- The government uses the so-called money to pay for its expenditures, which are then deposited in commercial banks. As a result of fractional reserve banking, Commercial Banks can leverage the money created by the central bank to create even more money: bank deposits and Bank Credit. Bank credit is a form of money that is accompanied by an equal and offsetting amount of associated debt, on which interest must also be paid.
| Negative interest rates: Either Banks and governments die, or you die. If Banks and governments die, you may also die... |
This is an exponential system by its very design. All dollars/euros are backed by debt—debt that pays interest. Therefore, each year, sufficient new money must be created to cover the interest payments on all outstanding past debt. All outstanding debt must be compounded at least at the interest rate on that debt each year.
| What happens when a money system that must continually expand runs into physical limits by its very design? |
Defaults are the Achilles' heel of any debt-based money system. Past debts cannot be serviced without continuously expanding the money supply, and defaults may destroy the entire system.
It is essential to recognize that all debt must be redeemed, including accrued interest on the principal and on interest, and that interest is a crucial factor. Interest is a multiplicative factor; the lower the interest rate, the lower the multiplier. Negative Interest rates have a NEGATIVE multiplier factor. The question is whether negative interest rates can STOP the compounded effect. They won't be able to reverse the process, so they'll have to proceed.
| 2015 Governments can not only create money but are now rewarded for it. |
If you, even for a split second, think that Authorities and Bankers have manipulated interest rates towards ZERO and made NEGATIVE for anything other than the battle for their survival, you're incredibly naive. Governments are heavily indebted; the situation is far worse and will only worsen over the coming years. Negative interest rates are highly beneficial in this context, as they make it cheaper to take on additional debt and reduce the burden of repaying existing debt. Negative interest rates are a hidden debt moratorium.
| Negative Interest Rates extend the lives of parasites and bloodsuckers but shorten the lives of savers, Entrepreneurs, and Wealth Generators. It's a lose-lose situation |
In 2012, the ECB began lending capital at a 1% interest rate to European banks, which were used to buy local government bonds (from countries such as Greece, Spain, Italy, etc.) that yielded 4.50% more. Or how to keep interest rates below the detonation level of 4%. 2013. The ECB began lowering the key interest rate to 0.25% (almost zero) because it was desperately trying to revive the economy, but ultimately, to keep governments, the EU, and the ECB afloat.
- The ECB forces Italy to borrow funds at 7% and then lend them to Spain at 3%.
- The magic/dangerous threshold is 4% (adj. April 2015). Once interest rates exceed this level, the debt becomes unsustainable. Over time (and due to increasing debt), this threshold is approaching 1% (the actual level for Japan).
- The European Central Bank put a floor under the eurozone by agreeing to buy unlimited amounts of bonds issued by any troubled member state that accepts the conditions of a bailout program. ECB President Mario Draghi made clear the bank will use all its tools to defeat anyone betting on a break-up of the monetary union.
- The ECB values the Treasuries of its member states at 29%.
What happened in Greece (and Iceland) will happen in other countries the very day the domino for that country falls. Assuming the EU builds a firewall (precisely what it is trying to achieve), I expect the EUROZONE domino countries to fall together. The point of no return has been passed, and it is now impossible to implement corrective action. The ECB is intervening daily to contain the explosive rise of Greek, Portuguese, Spanish, Italian, and French interest rates. Doing this destroys European savings, as well as reinsurance companies, insurance companies, and pension funds. The logic is that, at some point, the economy needs higher interest rates, which prompt more people to save and consume less. But because of fractional reserve banking and the creation of fiat money, there is little logic left...
Negative yields became fashionable in 2015. They destroy savings and serve only indebted governments.
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| Negative interest rates in Germany and Switzerland | Negative yields in Europe |
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Euro Yields, Gilts, and Government Bonds
Warning: Holding on to Government bonds is hazardous to your financial health. Long-term Greek government bonds crashed, and yields rose to +10% in only a week. The yield on Portuguese bonds rose to +5%...only in days...Those holding on to Government bonds will lose 50% to 90% of their savings!!!!
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| German yields are now negative (2015) | 2017 |
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