Part 5/15:
He expressed concern over the extraordinary situation where bonds with negative yields are commonplace in Europe and other parts of the world. Such bonds guarantee a loss in real terms and essentially turn a supposed 'safe' asset into a liability. This unpredictability is partly attributable to central bank policies—specifically, the Federal Reserve's interventions like quantitative easing and yield curve control—that manipulate rates and artificially suppress yields.
Larry further elaborated on how the Fed's influence destabilizes the supposed risk-free rate. The ongoing suppression of interest rates has led to a bond market disconnected from economic realities, with many bonds effectively operating as return-free risk, where investors accept guaranteed losses for the illusion of safety.