Why in the world would you own bonds?

> Unfortunately, there's a catch. People can say things they don't believe, especially if there is a large amount of money to be made. If I'm holding a large amount of X, and can convince enough other people to buy X that the price rises (hopefully by a lot), I can sell my shares of X for a (large) profit. Pump and dump schemes have been common forever, popularized in the the 2000 movie Boiler Room as well as Wolf of Wall St.

Or most recently Gamestop investors.

> At the end of the day, the point is they're trying to sell their book, which is not the same as trying to sell investment X (although they may be very closely related).

My point it is almost never going to be possible to distinguish between good investment advice and self-serving investment advice. Sure, there is some fungibility there for people with different investment needs, like pension funds vs young income earners. But! we should think about what we would think if the reverse was true. If investors were advocating for investments that they weren't personally invested in, then I would be far more skeptical than if they did.

>Capital controls are populist. They shift power away from the wealthy to those at the political levers.

No? Capital controls in western history is hardly populist. When I think of populist economic movements, the Bretton Woods System doesn't come to mind. And it's clear China's capital control serve to keep power in the hands of the autocracy; not the other way around.

If the value of the dollar was spiraling to zero it's the Fed, and their clients, that would have the most to lose.

Well you get compensated for increased default risk so certainly.

Holding cash costs money too since interest is negative. If you're talking about actually physical cash, you will have to pay for a vault and security to store and move the cash.

Maybe he does, but his post does not show it. Best reading is that he does it because he is interested in return-on-investment money. In which case his title should be "bonds are not useful for high return-on-investment". But no, he chose "Why in the world would you own bonds?". And then he doesn't even really answer that question, he just goes on about his investment strategies. His result: Don't own bonds. This pretty much explains his "…The economics of investing in bonds (and most financial assets) has become stupid" paragraph.

I already answered why bonds are still valid to be owned by institutions with lots of money and also why big banks still buy them (happily, I should add).

> The world is a) substantially overweighted in bonds (and other financial assets, especially US bonds) at the same time that b) governments (especially the US) are producing enormous amounts more debt and bonds and other debt assets

Yes and no. Why are there so many bonds? Well, lots of countries have policies to not issue money directly to the finance ministry which then gives the money to whatever the government wants to fund, but instead for every spending of the government issue bonds that are sold to banks and put that money on the finance ministries balance sheet. It's an entirely political concept, but it's reality. As such, bonds and state debt are just the money handed out by the state. If they would not hold debt and/or issue bonds, there would be no money for anybody. Period.

>…If bond prices fall significantly that will produce significant losses for holders of them, which could encourage more selling

This leaves out the political dimensions in its entirety. Bond prices will not fall significantly UNLESS the state's resources (technology, work-force, ...) also drop significantly. If that is not the case, the state can just uphold the bond's values.

> …Imagine what would happen if, for any or all of these reasons, the holders of these debt assets wanted to sell them. There is now over $75 trillion of US debt assets of varying maturities.

This is just wrong. I already explained why, in brief, above. I won't shed anymore words on this, except that it is fear-mongering.

> …History and logic show that central banks, when faced with the supply/demand imbalance situation that would lead interest rates to rise to more than is desirable in light of economic circumstances, will print the money to buy bonds and create “yield curve controls” to put a cap on bond yields and will devalue cash. That makes cash terrible to own and great to borrow.

There are more sides to that coin. This is often used to create fear for inflation. Because history has also shown that unless there is hyper-inflation people always love to own cash, regardless of the economic circumstances. And better borrowing conditions should enable economic growth, and over-borrowing should be kept in check anyways (re: financial crisis 2008) so there is no real issue here. And as explained above, unless the resources of a state drop significantly, there is no trigger for hyper-inflation.

All in all, he is just arguing from an invester's perspective, but even then not a very holistic approach.