Zeev,
"You should know that bonds earlier this century used to yield 3% or so, and if we have no inflation (and a recession), they could get there again."
Actually, I think it was even a little lower than 3%, and mortgage rates were around 3.75-4%. I don't see why we need a recession to get that low. We just need monetary stability. If people actually get confidence that inflation will remain at 1% or lower, then the long bond should go to 3%. Then the question becomes, if it does get that low, does a recession become inevitable? I don't think so. Depends in part on factors well beyond any one individual's control, though, like government policies and growth throughout the rest of the world. Given recent events, that seems like a pretty big risk, however. |
