Interest Rate & Bond Update: iShares 20+ Years T-BondETF (TLT)
September 29, 2017
One could argue that the bond market is the most distorted market on plant terra today. Central banks around the world have been buying government and/or mortgage and/or corporate bonds in their respective markets ever since the financial crisis. The Central Banks around the world are taking this action based on the Keynesian economic theory that if interest rates are lower, people will save less, borrow more, spend more and companies will produce more to satisfy the increase in consumption and investment spending. This will then have additional knock-on effects. To produce more, they will hire more people and those folks will buy goods and services creating a virtuous cycle. This way of thinking is misguided on a whole number of reasons.