Citing Graham Summers in ZeroHedge: [G]lobal leverage has exploded to record highs, with the sovereign bond bubble now a staggering $100 trillion in size. To top it off, over $10 trillion of this is sporting negative yields in nominal terms. . . .Globally, over $500 trillion in derivatives trade [is] based on bond yields.
A $500 trillion derivatives time bomb poised atop a $100 trillion mountain of debt is not a stable situation. It’s time to push the reset button, but how? Bailouts and bail-ins have been tried and proved wanting. But a debt “jubilee” — simply canceling the debt — would devastate creditors and collapse the massive derivatives bubble. All else having failed, it may be time to do what should have been done all along: convert “sovereign debt” into “sovereign money.” The “event of default” triggering a derivatives meltdown can be avoided by simply paying the debts with money issued by the government.