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Rekenthaler Report

The Fund Industry's Struggle to Provide Retirement Income

Several decades later, the answer has not yet arrived.

Temporarily Defeated
Note: I had intended this column to continue my string of topical articles. The $2 trillion stimulus package and stock rally encouraged me to revisit last month’s Treasurys article, which found the long bond’s yield to be “unappealingly low” but not irrational. Could I write the latter with the government debt/gross domestic product ratio set to blow past 110% and equities seemingly anticipating healthy long-term growth?

No, I could not. I could only intone “asset inflation”--the thesis that aggressive money creation has pushed the prices of financial assets above their true values. However, I recoil from that answer. Belief in asset inflation suggests that the financial markets are fundamentally irrational, which contradicts both my training and most of my experiences. Also, the proposition looks to be untestable.