04/18/2016 - Kyle Bass: The Looming “Run On Cash”
“I think this is where the academics are clashing with the practitioners. On paper, negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on will end poorly at some point in time, I just don’t know when that time is .. I think that one of the fears that they have is a run on cash. If they told you and me that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.”
