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How the Fed Rigs the Bond Market


High inflation should no longer be surprising, nor should it be labeled “transitory.” Its existence should prompt serious reflection on policy decisions and spur action to avoid a financial crisis.

The big issue is financial stability. Inflation hasn’t been this high relative to Treasury bond yields since the 1970s. Then as now, real bond yields—the gap between the 10-year Treasury and inflation—signaled distress for policy makers and market participants.

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