Central bank balance sheets, bloated by a decade of monetary manipulation, now yield less than overnight interest rates. That gap is producing staggering losses for the very same central bankers responsible for creating it.
One such example:
The German Bundesbank is thus expected to generate a 193 billion euro loss over the coming decade. It’s the kind of number that will require a government bailout – indirectly with the passage of time and inflation. And if we’ve learned one thing from our long litany of financial crises, it’s that institutions requiring government assistance lose their independence.