In history Moon, Capitalism was often mercantilism, favoring certain industries. We have classic mercantilism, finance being most favored, then tech,and big pharma.It isn't communism.

Even 2013 was not exactly a massive increase in bond yields. Tantrums are for those who want to buy the bonds. They are conjured up, so people will sell. At least that is how it has worked out. And bonds have declined in yield in good times and bad over the course of the last 30 years. More demand for structured finance is the reason, IMO.

You said this, John: "I have to say, reading that last part made my blood boil. For the vast majority of people with savings all over the world, zero or negative rates are not just “very difficult to deal with.” They are in many cases the difference between living with a modicum of dignity and living in abject poverty."

Thank you for saying it.

Israel is seeking to limit cash just like the USA. Stanley was there too, a dual citizen. Larry Summers and Stanley Fischer seek to limit cash because they see the inevitability of negative rates. How far they go with limiting cash and how far below they go below zero becomes the concern.

Raising rates would be a good idea, except that the conundrum, the large demand for long bonds still exists. The creation of deficit spending as an answer to the large demand for long bonds may not work because of massive demand, and it mostly helps Wall Street and not main street.

Then, cutting back on benefits for the poor in order that Wall Street has its full quota of bonds for use as collateral is just not nice.

I wonder if the threat to raise rates is simply a cleverly disguised tantrum? Pardon my cynical view of all this.

I did not know that, Keith. That is quite disturbing, since Japan views helicopter money as being dirty and has only asset purchasing QE as an option to fend off deflation. Yes, that is quite disturbing. Perhaps you could go into more detail in any future article about Japan.

Draghi knows that there is a shortage of bonds for collateral. That is partly why he doesn't do anything. He wants fiscal deficit spending in order to create more bonds.

Also, by not doing anything, Germany has a big financial surplus, as investors pay Germany to invest in its bonds. Draghi is clever, very clever.

Bond yields have dropped in good and bad times since the late '80s. Hoarding is commonplace, even more so now.

Bonds are gold, Mish. It is crazy, but it is logical in the system we have.

This theory fails to take into account the massive demand for, and hoarding of bonds, which began in the 1980's with structured finance and has only increased with the advent of derivatives and of clearinghouses. So, depressed bond yields are specific to bond demand.