Further feel-good reading from 'The Great Taking':

"Perhaps you have heard of the “Everything Bubble.” What is it?

I will explain the horror of it simply. Let’s take the example of a single bond with no fixed maturity date, i.e., a perpetuity. This bond pays a fixed annual dividend of $5. If the market rate of interest is 5%, this bond has a value of $100. If the Fed lowers interest rates such that the market rate of interest for this bond is now 1%, what happens to the value of the perpetuity? The fixed dividend of $5 remains unchanged. As 5 is 1% of 500, the value of the perpetuity goes up five-fold to $500. Now if the Fed increases market rates back to 5%, the value of the perpetuity paying a fixed dividend of $5 returns to $100, and hence, there is an 80% decline in value. It’s basic math.

The entire global financial complex is, essentially, a big perpetuity, i.e. a financial instrument with no fixed maturity date. The prices of all fixed income instruments are determined by interest rates, and all equity market and commercial real estate values are similarly driven.

The Fed created the “Everything Bubble” with the justification of fighting the Global Financial Crisis, which of course the Fed had also created, by lowering the Fed Funds Rate from 5% to near zero, and then keeping it near zero for most of the past 15 years. The Fed has now increased the Fed Funds Rate from near zero in April of 2022 to more than 5.00% in just one year.

That the decline in global financial and real estate markets will be massive, has been made certain. This cake is baked. The financial gains of the past 15 years have been an illusion."