05/16/2017 - Michael Pento: Central Banks Are Trapped – Central Bank Crisis Ahead (July 2016)
“As arduous as the path to interest rate normalization will be to the Fed, it will be far more chaotic for the BOJ and ECB to even hint at rate hikes .. By waiting until inflation is well entrenched in the mindset of investors and after pushing sovereign bond yields well into negative territory; the ECB and BOJ have unwittingly backed their sovereign debt markets into death traps. Therefore, even suggesting that it is time to gradually pull back from bond purchases will cause a colossal stampede out of Japanese Government Bonds and European Sovereign Debt .. Traders that have habitually been front-running the central banks’ bids will try to dump their holdings of negative yielding debt as bond prices plunge in response to a 2%–and rising—inflation rate. Throw in debt to GDP ratios that have absolutely soared since the Great Recession of 2008 and the result will be complete chaos in bond markets.”
