Paying someone to borrow your money sounds like a questionable idea on paper, and seems not to be working out so well in practice.
Yet that's exactly what people who buy negative-yielding bonds do: Instead of collecting payments in the form of yields, investors have to pay someone to take their cash. Investors ostensibly hope they can sell the debt elsewhere and make a profit, as prices go up when yields fall.
The goal that sovereign debt issuers and central banks hope to achieve is a world where money is pushed toward risk and all that no-yielding debt causes inflation that leads to growth.
However, as the arrangement spreads around the world to the point where more than $11 trillion of global debt holds negative yields, questions are growing quickly about its efficacy.
"It's the definition of insanity: Keep doing the same thing over and again and expect a different result. That's my assessment of central banks in a nutshell," said Kim Rupert, managing director of global fixed income analysis at Action Economics. "I never thought I'd say that. I had a lot of respect for central bankers. But they're getting way overindulgent with very little success as far as I can tell."
Central bankers are pivotal players in the negative-yield machine, as they are buying up much of that debt.