...now meeting the zero bound on multiple fronts. Recall the clamour in 1q 2014 about the imminent collapse of the Yen and resultant breakdown of the yield structure in JGBs. This was one of the biggest trades in the world at the time. Where are those pundits now? I maintained at the time these pundits were on a marketing campaign to exit their positions. Predictably, academics piled on in order to appear intelligent. They were of course all wrong. It merely reinforces the general principle that once an academic in ecnomics begins to comment on the "inevitability" (a word that should never be spoken on any market related issue ex-ante) of some result, its time to either be neutral or take the oppositve view.
In any case, we have now entered the event horizon of the black hole. Nobody knows what will happen to the international fiat currency system once all these obligations mature or pass through the singularity.
Nothing like this has happens in the history of commerce on this planet, and certainly not on this level of "tacit" cooperation. So we move to terra incognita. What is almost required at this point is a massive failure (both economically and in ruling structure) of one of the major players in this game. They all seem to be holding out as long as possible for a re-shuffling of the deck. This blog has long maintained it would be China that falls first, but with the current imbroblio in Europe...
Suffice to say the race to bottom during the Great Rate Compression appears to have a winner...with several other racers yet to reach the finish line.