The Name is Bond - Part VII

The Fed's raising of the low end interest rate lever can be interpreted as the swinging of the only stick with which the central banks can club the markets and speculators over their proverbial heads.

This is the only defense (outside of legislation) against speculators, hedgers, multinational corporate robber barons and foreign interests who have morphed the financial and asset markets into a morass.

By continuing to raise rates, debt spreads and margins get squeezed; real and nominal long yields eventually rise; risk premiums increase; carry trades and easy money disappear; and speculators and hedgers get chased out of over-leveraged positions.

Hopefully, this clubbing will result in multinationals: being forced to channel our domestic savings into local uses rather than international capital markets.

And force long term capital investments in sustainable domestic economic activity rather than chasing yield in money shuffling schemes; while dissuading foreign interests from engaging in excessive currency manipulation.

Raising rates is the only way the Central Banks can end this drunken party of hyperliquidity by taking away the punch bowl that they spiked with low interest rates and an exploding money supply.

The original question.... (see Part I)What's the generic recommendation for how to weather the next three years?...Is the best bet simply the lesser of these evils? Back to the original question in Part VIII.

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