Last week, former Federal Reserve chairman Alan Greenspan issued an emphatic warning during an interview on CNBC’s Squawk Box: Beware, the bond bubble is about to burst. And when it does, it will take stock prices down with it.
The current level of interest rates is abnormally low, and there is only one direction in which they can go, and when they start, it will be rather rapid.’
Greenspan headed the Fed from 1987-2006, so he has some experience in blowing up asset bubbles. His tenure at the central bank featured an extended period of low rates, but nothing compared to what we have today. In fact, Greenspan pointed out that going back to the time of Alexander Hamilton, long-term interest rates have never been as low as they are today.
The former Fed chair stopped short of predicting when the crash will happen, but he emphasized the prolonged period of low interest rates will come to an end, and the bull market in fixed income that has lasted more than three decades will end along with it.
This post was published at Schiffgold on AUGUST 8, 2017.