Blowups and an Epic Mega-Catastrophe are Coming | Economic Prism

On Thursday, the Labor Department reported that consumer prices, as measured by the consumer price index (CPI), are increasing at an annual rate of 7.5 percent.  In truth, by methodologies used in the 1980s, consumer prices are rising at an annual rate over 15 percent.

So if the 10-Year Treasury note is yielding 2.03 percent.  That means, holders of the 10-Year Treasury note are currently losing on the order of 5.47 to 12.97 percent, per year.  In essence, the U.S. Treasury is defaulting on its bond payments.

To account for expectations of rising inflation, yields rise.  But this presents another problem for long term Treasury investors.  When Treasury yields go up, Treasury prices go down.  So if Treasury investors want to exit their holdings early, they’ll do so at a loss.

No matter what way you look at it, Treasury investors stand to face massive losses.  Did your broker mention this to you?

Blowups and an Epic Mega-Catastrophe are Coming | Economic Prism