"In an auction Monday, Germany sold €3.9 billion ($4.96 billion) of six-month bills that had an average yield of negative 0.0122%, the first time on record that yields at a German debt auction moved into negative territory". (WSJ website , “Germany yields south of Zero" , January 10th , 2012)
A nominal negative yield is very rare event, and for a good reason: As an alternative to the investment the purchaser can always store her cash in a current account, or just keeping it in a safe with all the possible advantages: Cash is safer, it offers 100% liquidity and in that case there is no dilemma as , that case, it earns more money than the alternative investment ! ....(1)
So from an economic logic, (whatever weird theory is built on that matter) there is no point to buy such obligations that FOR SURE will yield less money than the original outset.
So from an economic logic, (whatever weird theory is built on that matter) there is no point to buy such obligations that FOR SURE will yield less money than the original outset.
