Friday, March 13, 2015

Four Strange Tales of European Debt

by Mark Gilbert


March 13, 2015

Strange things happen in quantum physics, science's attempt to analyze and explain what happens at the micro-level of the universe. Schrodinger's cat can be both alive and dead; entangled particles can manifest what Albert Einstein called "spooky action at a distance."

As Europe is currently proving, the bond market can be just as paradoxical once interest rates drop below zero. Here are some examples.

How to Lose Half Your Money -- Guaranteed. Suppose I ask you to lend me $200, and I promise to repay you $100 after half a century has passed. In return, I'll toss a few dollars your way each year. Sounds like a proposal you can easily refuse, right?


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