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Thread: Former Fed Chairman Greenspan Warns The Biggest Bond Bubble In History Is About To Burst

  1. #1

    Default Former Fed Chairman Greenspan Warns The Biggest Bond Bubble In History Is About To Burst

    Former Fed Chairman Alan Greenspan Ominously Warns That The Biggest Bond Bubble In History Is About To Burst (Title Truncated due to length)
    http://theeconomiccollapseblog.com/a...about-to-burst

    Are we right on the verge of one of the greatest financial collapses in American history? I have been repeatedly warning that our ridiculously over-inflated stock market bubble could burst at any time, but former Federal Reserve Chairman Alan Greenspan believes that the bond bubble actually presents an even greater danger. When you look at the long-term charts, you will see that an epic bond bubble has been growing since the early 1980s, and when it finally collapses the financial carnage is going to be unlike anything we have ever seen before.

    Since the last financial crisis, global central banks have purchased trillions of dollars worth of bonds, and this has pushed interest rates to absurdly low levels. But of course this state of affairs cannot go on indefinitely, and Greenspan is extremely concerned about what will happen when interest rates start going in the other direction…

    Former Federal Reserve Chairman Alan Greenspan issued a bold warning Friday that the bond market is on the cusp of a collapse that also will threaten stock prices.

    In a CNBC interview, the longtime central bank chief said the prolonged period of low interest rates is about to end and, with it, a bull market in fixed income that has lasted more than three decades.

    “The current level of interest rates is abnormally low and there’s only one direction in which they can go, and when they start they will be rather rapid,” Greenspan said on “Squawk Box.”


    ...
    Full article and better formatting on link.



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  3. #2

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    The reason is that bond prices move inversely with interest rates. As interest rates start to rise, the value of bonds will fall. Rates have been in general falling since about 1980. Now they seem to be bottoming out. If you buy and hold your bonds, you should be fine. If you trade bonds (like many bond funds) seeking higher returns, you may experience losses.

    https://www.bloomberg.com/news/artic...greenspan-says

    Greenspan Sees No Stock Excess, Warns of Bond Market Bubble

    Inflation won’t stay at historically low levels, dooming bonds

    Fed Model justifies elevated stock valuations for now


    Equity bears hunting for excess in the stock market might be better off worrying about bond prices, Alan Greenspan says. That’s where the actual bubble is, and when it pops, it’ll be bad for everyone.

    “By any measure, real long-term interest rates are much too low and therefore unsustainable,” the former Federal Reserve chairman, 91, said in an interview. “When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

    While the consensus of Wall Street forecasters is still for low rates to persist, Greenspan isn’t alone in warning they will break higher quickly as the era of global central-bank monetary accommodation ends. Deutsche Bank AG’s Binky Chadha says real Treasury yields sit far below where actual growth levels suggest they should be. Tom Porcelli, chief U.S. economist at RBC Capital Markets, says it’s only a matter of time before inflationary pressures hit the bond market.

    “The real problem is that when the bond-market bubble collapses, long-term interest rates will rise,” Greenspan said. “We are moving into a different phase of the economy -- to a stagflation not seen since the 1970s. That is not good for asset prices.”
    More at link.
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  4. #3

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    Sorta the problem there is that without the bonds to guarantee the money into existence, there is no such thing as dollar-denominated stock valuations. If the bond bubble bursts, it takes the dollar and stocks and everything else with it.
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  5. #4

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    Quote Originally Posted by Zippyjuan View Post
    If you buy and hold your bonds, you should be fine.
    Cuz inflation and depreciating value of dollars does not exist.
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  6. #5

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    10 year going below 2% again shortly, just like last July when the Fed declared (internally, not publicly) negative rates. Odds are the Fed already dropped the target rate privately but will announce it in a couple months.
    Last edited by devil21; 09-10-2017 at 03:30 AM.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks Fishing Boat Rentals

  7. #6

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    Quote Originally Posted by devil21 View Post
    10 year going below 2% again shortly, just like last July when the Fed declared (internally, not publicly) negative rates. Odds are the Fed already dropped the target rate privately but will announce it in a couple months.
    Link to Fed declaring negative interest rates? (if the bond market is going to collapse it needs soaring interest rates which would mean falling prices on bonds) The Fed does not have "internal" rates.
    Last edited by Zippyjuan; 09-11-2017 at 11:40 AM.
    "The only thing we have to fear is.... fear itself!" Franklin Delano Roosevelt.
    "Be afwaid. Be berry afwaid" Donald Trump.

    The optimists built this country and made it great- not the fearful. Fear can only destroy.

    I am Zippy and I approve of this post. But you don't have to.

  8. #7

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    ^^^^^^
    You'll have to talk to the last Zippy account handler about that. I have a thread about it in this subforum though. Happy hunting.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks Fishing Boat Rentals

  9. #8

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    Quote Originally Posted by devil21 View Post
    ^^^^^^
    You'll have to talk to the last Zippy account handler about that. I have a thread about it in this subforum though. Happy hunting.
    Yellen said the Fed could not rule out using negative interest rates at some imaginary point in the future during a hypothetical economic crisis. They have not used (either "secretly" or publicly) negative interest rates.
    "The only thing we have to fear is.... fear itself!" Franklin Delano Roosevelt.
    "Be afwaid. Be berry afwaid" Donald Trump.

    The optimists built this country and made it great- not the fearful. Fear can only destroy.

    I am Zippy and I approve of this post. But you don't have to.






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