Commonality in all volatility – human nature

The underlying commonality to all the Bond market scenarios being played out around the world is all due to liquidity, lack thereof.

Liquidity preference, as decision-making under conditions of uncertainty.

Severe levels of economic inequality is actually a toxic symptom of liquidity preference under extreme conditions.

These extreme conditions are now with Europe, all bonds throughout Europe (now add Sweden to this mix) are in a flux, no buyers hence forcing those bonds and bunds; which were tendered originally at low or negative rates; into far higher yields for those prepared to part with capital.

Basically, the decision-makers in such a situation would have highly pessimistic expectations, and choose to hoard cash instead of taking the time to invest (and create new wealth).

This is the problem, human nature.


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