Rising bond yields and the death of fiat

US Treasury yields have declined for the last two years. It’s a trap ahead of far higher yields as the credit bubble pops with consequences for gold, silver, and also all other commodities.

A consolidation of the type delineated between the pecked lines usually precedes a breakout continuing the prior trend, suggesting a minimum target of about 10%. This flies in the face of market expectations. While admitting that inflation is somewhat sticky, investors believe that there will be further rate cuts by the year-end.

Standing back from post-covid economic and financial developments, we see that the rise in yields to late-2023 broke a strong, long-term downtrend, which tends to confirm the hypothesis that there are more bond yield rises to come:

The long-term decline was from 15% in October 1981. Breaking such an important downtrend has consequences, not least given that Federal government debt at $37.6 trillion is at about 125% of GDP —that’s a leverage of 6.8 times tax revenue. Imagine taking out a mortgage on that relationship to your income, only to be clobbered by a doubling of the interest rate.

We shall return to the economic and financial consequences later in this article.

A template for currency collapse

Every fiat currency in history commits harakiri through debt spiralling out of control, and the current cohort of currencies is not different.