Wow, 20 years is a long time. If inflation ramps up (e.g., temporary wage price spiral, QE, etc.), and the rate is increased to 8-10%, even temporarily, 20 year bonds will be selling at a loss, which means you could be stuck in them until maturity or until the market shifts. Keep in mind that, with sneaky tricks like QE, etc. the rates could go up in a similar time as the money supply is increasing (tho bonds will not be paying well during the QE).
I've long (mostly) agreed with your thesis on this, but 20 years is such a big gamble. Then again... 4.6% for twenty years, in a Japan-esque deflationary spiral, would be like a golden goose.
Not to mention, in such a scenario interest rates at the banks would be negative, so everybody would be looking for somewhere to park the money where it doesn't get deleted. To be honest, if rates spike up drastically, let's say 8-9%, I would definitely consider putting half of our money into 10 year bonds.
Wow, 20 years is a long time. If inflation ramps up (e.g., temporary wage price spiral, QE, etc.), and the rate is increased to 8-10%, even temporarily, 20 year bonds will be selling at a loss, which means you could be stuck in them until maturity or until the market shifts. Keep in mind that, with sneaky tricks like QE, etc. the rates could go up in a similar time as the money supply is increasing (tho bonds will not be paying well during the QE).
I've long (mostly) agreed with your thesis on this, but 20 years is such a big gamble. Then again... 4.6% for twenty years, in a Japan-esque deflationary spiral, would be like a golden goose.
Not to mention, in such a scenario interest rates at the banks would be negative, so everybody would be looking for somewhere to park the money where it doesn't get deleted. To be honest, if rates spike up drastically, let's say 8-9%, I would definitely consider putting half of our money into 10 year bonds.