How comfortable are bondholders going be when inflation is above 2 percent when they're barely earning 2 percent on their bonds now?
I mean you're not even getting 3 percent on a 10-year Treasury right now, you're getting around 2.95.
Well, if inflation is above, let's say inflation is two and a half, well you're getting two and a half percent inflation if your yield is only 2.95 you're not even getting 50 basis points. But of course after taxes you're losing money because the Treasury bond yield is not tax-free. The federal government still taxes you on the money you earn on Treasuries, so after taxes if you're getting a two point nine five percent coupon if there's two and a half percent inflation you are losing money.