Loading ...I disagree with Dalio. It doesn’t make practical or mechanical sense to save this Rube Goldberg glopida glopida machine of a global economy. It would be counter productive. Its always been too vulnerable. Its a no cushion no leeway economy. Its NOT engineeringly correct. It totally fundamentally flawed without a gold standard, plus other things.
And the bonds? If its a 10 year? If you hold to maturity, you still get your money back. However if you sell out before maturity, and rates fell, you make a profit on the principal. If they sell before maturity? And rates went HIGHER, you lose principal right?
So, if there is a bond market crash, that means rates are flying up and your principal is under water. So then forced to hold for the next ten years, or cash out and take the loss.
The falling interest rates since 1980 is getting very old and not right. It makes sense for a reversal higher rates. To encourage savings. Instead of making people and gov’ts constantly borrow and spend and have no cushion. Borrow and spend NOW for a house is good to avoid high price later.
But that old trend is tired too. If you borrow at 4%, and the house drops by 4%, you just paid 8%. It used to be you borrow at 6% and the house went up by 15%, you saved 9%. One weeks pay is supposed to cover one months rent.