And next year we are likely to see the greatest money creation out of thin air in the entire history of the US. The Fed has to create ways to finance the record deficits by the creation of new money.
That of course has inflationary implications. And that will plunge the bond market again, making the bond disaster even worse. We recently explained to our members that the global bond market is $128 TRILLION. That is 128 billion times a billion dollars.
We conservatively estimate that they have unrealized paper losses of at least 60%. Therefore, the loss on the global bond market would be a staggering $77 TRILLION!!!
How will that be handled? The only way is to pretend that the losses don't exist and make sure that accounting rules don't force the losses to be "realized," by marking to market.
Below is the long-term quarterly chart of the ETF for long term US T-bonds, TLT. It has broken well through the March 2020 crash low, as well as through the late 2022 low. It is now approaching the low of this decade in 2002.
So far, the TLT has suffered a 53% decline during its 3.5-year bear market.
After its recent rebound, the shorter-term daily chart of TLT below shows that the latest rally was most probably a bear market bounce that is likely to expire soon.
It is amazing that most professional analysts appearing in the media have been advising the purchase of bonds all the way down.
We now hear from many guests on Financial TV how attractive long-term bonds are because of the higher yields of 5%. This is dangerous advice. Yes, T-bond yields are now around 4.5%. But in 1980 they were over 15%.