Greenspan warns: Bond bubble about to break because of 'abnormally low' interest rates
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."
So Mr. Greenspan is warning people the Bond bubble is about to burst and rates will rise dramatically. So why is the Fed looking at increasing interest rates a couple more times this year? They could be trying to soften the crash by raising rates controllable instead of just letting the market crash itself and rates go to the moon.
Personally I think the bond bubble is more dangerous than the stock market bubble because so many sectors of the economy depend on cheap interest rates like banking, autos, housing and government. If rates rise to historical averages it will collapse all these sectors and we'll be in a major depression. Interest rates have to raise sometime it's the only way to actually have real growth in the economy but it's going to be very painful for people that are not prepared.
Many people are predicting a market crash in the next 3 months and frankly I've been hearing this for the last few years and every time it looks like it might crash it always rebounds and stabilizes. So I've been taking these warnings with a grain of salt lately. If the club wants to crash the market they will do it whenever they feel like it so no need to panic just because people are starting to talk about it more and more as we approach September/October.
I will say this though, you should be concerned if you have a bunch of money in a 401k or savings account and no money in alternative assets like precious metals and cryptos. If I were you I'd be looking at getting some of those and having some storable food and basic goods stashed away when the club does crash the market because it's going to happen sometime, might not be this year but it's better to be a few years early for this crisis than a one day late.
Watched this today. Real curious the words he choose and his perspective.
@wakeupnd thanks for the information
you're welcome
Nice write up @wakeupnd. I share the same view. I don't think the stockmarket will collapse but I think bonds will implode and there will be other unforeseen events. Time will tell I guess.
Yup, who knows how the average American living paycheck to paycheck will react to a bursting bond bubble it could get ugly very quick.
Rarely we've seen mainstream media speaking about the truth, but to see this old piece of sh'' speaking to the the world that america is in a debt bubble... that's kind of scary. If it pops, we all know what will happen to federal reserve notes, and what will be the consequences...
I don't have much hope that people will just pick up the pieces and get back to rebuilding the economy right after a collapse. I think the general public is going to freak out like the couple just recently in news that jump out of their 9th story New York apartment and left their kids behind because they had to much debt.
That's why we need to wake people up, or if we can't, just bet against all this debt and get the reward when it burst. We'll bring back the west on the right way, or we'll profit from it's fall. But it is an amazing time to be alive on the modern history. The fall of an empire and it's consequences. I always wish the best to everyone, but I prepare for the worst.
Thank you for the information. Yes, the US bond market is currently seeing its 10-year bond yield rise above 3% p.a. usually known as the line in the sand. What is further more disturbing is that the mortgage loan interest rates are rising quite fast at the same time.
I am from Sydney, Australia and I have penned an article today about the problem of the low interest rate environment. Thought your readers may also find it informative!
https://steemit.com/investment/@sydneycontrarian/the-horrible-trap-of-the-low-interest-rate-environment