Dawn Bennett and Mark Thornton discussed how roughly 16% of global bonds are now negative and the risk of the U.S. falling into this pitfall. Mark mentioned we are at risk of falling into this if we don't bring interest rates back to normal soon. Hopefully they will do this, because as of right now the 10-year and 30-year bonds are at all-time lows because of interest rates. One of the most important issues that Dawn Bennett and Mark fleshed out early on was the fact that Janet Yellen continues to make counterintuitive statements. She says the economy is improving, but then doesn't raise interest rates. This makes the reality of the economy seem less than stellar. We know that despite the supposedly decreasing unemployment rate that a majority of jobs being created aren't providing wages which you can support a family on, and many people have been unemployed so long that they are giving up. These two statistics when taken into consideration make the economic recovery appear far less optimistic.
Lately almost every major world economy has either found itself in recession or contracting and as a result its currency has been weakening. Despite this the U.S. economy is one of the few which is growing and as a result other countries are buying up U.S. dollars to help protect themselves. It helps that the U.S. dollar is the world's biggest reserve currency, but this running to the U.S. dollar by other countries is giving a false perception of the dollar's real strength.
According to Thornton the best option at this point is for all the countries to raise rates again thereby forcing money markets to exist again. The continuous circulation of quantitative easing going around the world is only causing more inflation and credit. In fact, proof that the markets are out of whack is fact that gold prices and silver prices continued to climb despite currencies around the world, except the dollar, depreciating. This is proof of people taking their doubt in the paper money and transferring it into something tangible.
Another growing problem which we see playing out in Europe right now is Greece and its refusal to enforce more austerity measures. At its current rate it appears as though they will wind up defaulting on some part of their loan, and if this happens then Portugal and Spain will follow. This poses a major problem for the Euro and its stability as we head into the next few years. As Dawn Bennett and Mark Thornton clearly discussed, the various governments with their different fiscal stances makes it difficult to have a unified currency like the Euro. The Greeks will keep giving themselves excellent benefits because they have the power to keep getting money from the rest of Europe.
Lastly, we know that the supposed economic recovery we're in can't be as good as the mainstream media makes it out to be because normal recoveries see 5% growth per year and we are barely seeing 2.5%.