The Bond Market Refuses to Accept Economic Reality

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Although many market participants worried these new policies would lead to hyperinflation, that didn’t happen. Instead, the economy struggled, producing one of the most sluggish recoveries of modern times. Over the next decade, the market learned that when the private sector faces a balance sheet recession, unconventional monetary stimulus does little to affect the real economy. Monetary injections are trapped within the financial system and result in limited economic growth.