500 years of bond market sense ends

Extraordinary charts here of the “great distortion” as global central banks go money-printing mad from Deutsche via Zero Hedge:

…only when you eyeball these charts can you start to comprehend the distortions that have occurred and the uniqueness of the current situation. Many people now think European yields can go even lower but many of these same people thought they’d go higher 6 or 12 months ago so one would caution against placing high convictions on anyone’s forecasts for yields at the moment (including ours).

So, where does this end? If the cost of capital is gone then capitalism itself ceases to make any kind of sense. Given everyone is doing it, this is a zero sum game in which each nation simply pushes real economy deflation back and forth while the benchmark against which to measure returns collapse and:

• investment loses meaning;
• yield is all that matters and price is obsolete, and
• the rich get richer as asset prices rise and the poor get poorer as jobs evaporate.

It is worth recalling that Karl Marx saw capitalism ultimately collapsing not in shortage but in an exhausted abundance of oversupply.