tag:blogger.com,1999:blog-6399730406480392183.post1767375261449416744..comments2024-03-12T16:31:22.046-03:00Comments on Viable Opposition: How the Federal Reserve Walked the Interest Rate Tightrope and Lost ControlA Political Junkiehttp://www.blogger.com/profile/03342345936277964422noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-6399730406480392183.post-19932700801260569742015-01-13T20:37:26.989-04:002015-01-13T20:37:26.989-04:00As mentioned by Anonymous above things continue to...As mentioned by Anonymous above things continue to roll along and to many issues exist to address in only one article. More and more my concern is turning towards what I see as a bond bubble. Anyway you look at it I have a problem lending my hard earned money out for a long period of time based on predictions of future government deficits.<br /><br />These forecast are often formed and made on assumptions based on rosy scenarios or politically skewed to benefit those in power. Like many investors I think the bond market is a bubble ready to pop and won't touch bonds with a ten foot pole. Knowing what we know about the effect that interest rates have on the value of bonds one might deduce that the 30 year bull run on bonds will have to come to an end the moment rates are expected to go up.<br /><br />To give you a sense of what this may mean to U.S. Treasury Bond investors a 10 year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds prior to a 3% rise in interest rates, you would only be able to sell those bonds for $58,000 in the secondary market after the increase. Not only would bond holders be stripped of wealth if rates rise or even worse soar, but rising rates will magnify the nations debt service and rapidly impact our deficit in a negative way. The article below delves into just how big a problem this path could cause.<br /><br />http://brucewilds.blogspot.com/2014/12/bond-market-bubble-has-ugly.htmlBruce Wildshttps://www.blogger.com/profile/10181323607060607040noreply@blogger.comtag:blogger.com,1999:blog-6399730406480392183.post-545901561792857552015-01-13T13:10:10.207-04:002015-01-13T13:10:10.207-04:00" And we all know how that movie ended, don&#..." And we all know how that movie ended, don't we?" I don't think the movie ended. I think looking back at this time period historians will say we printed money to prop up the stock market to allow companies to do buy backs and pretend for while they were still making good profits for the shareholders but in reality we had entered a depression that who knows how long it will last. <br />Anonymousnoreply@blogger.com