Is this the biggest bond bubble we have ever seen?
Consider this telling statistic: Approximately $17 trillion worth of bonds, or one-third of the market, are in subzero interest rates. Not only that, more countries are slowly selling ultra-long bonds, which have maturity rates of 50 and 100 years.
That is terrifying.
But former Rep. Ron Paul (R-TX) is sounding the alarm about the bond market. Most importantly, the three-time presidential candidate is warning that the United States will eventually slide into negative territory.
He recently explained to CNBC:
“We will join the rest of them and go to total negative rates in hopes that that will be the solution. We’ve never had as many currencies in negative interest rates. $17 trillion worth of bonds [are] in negative interest rates. It’s never existed before. And, that’s a bubble. So, we’re in the biggest bond bubble in history, and it’s going to burst.”
The Federal Reserve set to finish its two-day policy meeting on Tuesday, Paul is not holding out hope that it will do any good.
“You can’t predict exactly where the creation of credit goes. We have a ton of inflation with all that QE [quantitative easing]. And, every time you lower interest rates below market levels and create new credit, that’s a bubble. You don’t know this precise time. But you know it can happen. How do you sell a bond that pays a negative rate? Who’s going to jump up and down?”
Get ready!
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