How even the safest municipal bonds might become worthless.His mouth is most sweet,
Yes, he is altogether lovely.
—Song of Solomon
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Michael Farr presents a compelling case for capturing superior, tax-free yield from select municipal bonds...
David Goldman recently has bolstered this case in a piece suggesting municipalities will not be allowed to fail en mass. There simply is too much interconnectedness between the municipal bond market and the banking system for federal authorities to allow any severe dislocation. So, the threat of municipal default might be lower than many believe, making municipal bonds and the higher returns they offer appear a safe investment.
Yet what about the real risk of a hyperinflationary blowout — the sort of thing likely to make 30 days "long-term" and a 10-year bond held to maturity absolutely worthless in its purchasing power? This risk is very real with the world's monetary authorities still on their "quantitative easing" kick.
—Tom Chechatka
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