The negative yielding bonds are, in truth, an “instrument of forced inflation” aimed at the “destruction of purchasing power,” Karl Denninger of Market-Ticker.org told Max Keiser in the episode.
“Negative yielding bond is forced inflationary instrument: you buy it, you’re guaranteed inflation in the amount of a negative yield,” he says, blasting the tool as plain “theft” by any government that issues these bonds, which is done in an effort to nominally expand a country’s GDP.
“If the government is issuing more in sovereign debt their GDP is expanding in nominal terms. If you have negative interest rates on those government bonds you’re creating excess space for the government to run the fiscal deficit […] in excess of GDP expansion. Nobody in any civilized nation should allow this to happen because it is theft, on the scale of that differential, from everybody in the economy,” Denninger explains.