Erin Burnett yelling at EuroPac’s Michael Pento made for good TV, though the debate itself was not, in part because the “bond bubble” is a well-tread subject by now, but also because EuroPac (lead by Peter Schiff) is a dogmatic shop not interested in debate. (Though to be fair, these one-on-ones are never going to produce much of anything, regardless of who is talking.)Still one point is worth addressing: Pento aggressively presses Burnett and his opponent to justify how the US dollar can possibly remain a safe-haven, and why the world would continue to plow money into such an OBVIOUSLY bad investment.
Sorry, but that’s not how the debate should work.
Look, the question of whether markets are “efficient” or not is a tired one that will never be resolved, but the presumption of efficiency is almost always good place to start. Market players and journalists (especially!) should start by figuring that the market has correctly taken into account all available information, and then work from there to figure out why it hasn’t.
Thus, despite the multi-decade rally in bonds, and the seemingly bargain-basement yields, you might as well start by presuming there’s no bubble.
Then you can start picking that apart, and as with any bubble we’ve seen (housing, internet stocks, etc.) there are some folks who really do get it right in terms of the underlying causes and the timing of the collapse.
So it really is on Pento to make the case that there’s a bubble. Simply reciting gold-buggish platitudes and asking his opponents to justify current prices isn’t going to cut it.
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