Bitcoiners don't love the goldbugs/precious metal peeps but bear with me... this article is good (if I say so, myself... but we authors do love all our children).
In "The Re-Emergence and Death Knell of Century Bonds" I get in to the recent history of long-dated bonds and how they completely get fucked up in an inflationary environment.
One underappreciated victim of the fiat era is long-dated bonds. The most successful and impactful financial instrument in the last five hundred years or so was the British Consol—literally perpetual bonds that the British state issued and paid interest on. Everyone who was anyone in the heyday of the British empire held some "government stock"— if you remember your Jane Austen, the Bennets in Pride & Prejudice talks about the return of these bonds as "in the 4 percents..." (bc that's where the Consols had traded, more or less, for decades at the time Austen was writing).
When the money doesn't work, and inflationary regimes may pop up this decade or the next, century bonds (or perpetuals) don't work
When the money isn’t working, as is the case under fiat, there is no such long-term price predictability.
You’re always living in financial terror, waiting for the inflationary sword of Damocles to drop; when it does, it completely undermines your finances and ruins profitability calculus for decades (the “dangers of duration,” Financial Times journalist Robin Wigglesworth calls it).
And so nobody has issued really long-dated bonds for decades... except during the 2010s. Memories are short, investors are greedy, and everyone just lost their shit: Institutions like universities and countries just smashed that sell/issue button, locking in lower and lower rates for longer and longer:
As central banks were tripping over themselves to push interest rates lower and lower—not even zero stopped them—“century bonds” returned to the world of finance. Whether by greed or simply eye-popping, unprecedentedly low rates, people forgot that there was a monetary regime reason why the once-thriving market for long-dated bonds had more or less vanished. So Mexico, Argentina, and Austria issued century bonds, as did many universities and large corporations. In 2017, Oxford placed a three-times oversubscribed century bond at 2.5% interest. (MIT, having been too early to the party, issued $500m at 3.885% already in 2016.)
"Austria issued its first-ever century bond at 2.1%, the price of which rallied during Covid."
Austria even returned to the yield-hungry bond markets and placed another century bond at 0.85%, in a move that was fiscally ingenuous but morally almost criminal.
While the printers were running at full pace, they took money from investors—money they must have known would be worth much, much less when finally repaid in 2120, let alone after the fresh euros had bid up the prices of consumer goods by some 15-20% just a few years thereafter.
OOPS!
By holding cash, bonds, bank deposits, CDs, or a plethora of various financial instruments to carry value forward in time, you’re hoping—against all evidence—that the guardians of the fiat monetary system’s levers won’t unleash more bouts of inflationary madness on you.
Long-dated bonds like perpetuals or century bonds belong to an era of sound money... They popped up in the 2010s and blew up in the 2020s.
don't think we'll do those again anytime soon.