Read it at The Financial Times |
Bond yields and disaster risk premia
by Gavyn Davies
(h/t apj in the comments)
Yep, and why safe currencies and gold are doing well too.
And when a lot of people are adopting a defensive portfolio strategy, and a lot of other people are saving and deleveraging, and this is happening across many countries, the likelihood of debt-deflation runs high owing to the paradox of thrift. When this is a situation affecting many key economies, the external cannot offset the domestic private retrenchment, and it is left up to governments. Should governments not step up sufficiently, then the situation will worsen and the result may become spiraling deflation. With a polarized political environment, the likelihood that governments will take appropriate action decline in proportion with the level of rigidity.