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Tags: paul mladjenovic | bonds | bubble | stocks

'Dummies' Author Paul Mladjenovic: Beware of Declining Bond Bubble

'Dummies' Author Paul Mladjenovic: Beware of Declining Bond Bubble
(Dreamstime)

Monday, 05 February 2018 02:39 PM EST

Financial planner Paul Mladjenovic, author of “High-Level Investing for Dummies” and “Stock Investing for Dummies,” told Newsmax TV that the tax-cut plan approved in December by President Donald Trump will help to encourage investment and growth.

“When you’re keeping more of the capital in the economy, because what are we talking about when we talk about taxes, those are basically, what, coercive payments that take money out of the private economy and put it into the public economy, or the government infrastructure, basically,” he said on Newsmax TV. “So, if you want the economy to grow, the more capital you keep in there, the better.”

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Tax cuts create incentives for people to work harder, knowing that they can keep a greater portion of their income instead of turning it over to the government to squander.

“A lot of people sometimes debate taxes from a mathematical point of view: ‘Oh, there’s too little, too much, etc.’ But they forget that taxes, especially tax cuts, create a powerful incentive for production and really the cornerstone of success for an economy is production,” Mladjenovic said on “The Income Generation Show.” “The more you can grow, the more you can incentivize that, the better.”

When it comes to investing this year, Mladjenovic sounds a note of caution because of the likelihood of rising interest rates.

“I see a lot of things that are worrisome to me because I feel like the stock market could have shrapnel effect from some other markets,” he said. “The bond market is going to be a huge problem in rising interest rates and that’s going to start tempering in my estimation….there are dangers that are lurking out there that could prevent it from going to where some people – when everyone starts talking about being 30,000 and beyond, we have to be careful because there’s a lot of things come into play.”

His biggest concern is about a bubble in the bond market that has formed during a long period of low interest rates and massive purchases by the Federal Reserve. The U.S. central bank eased monetary policy to cope with the 2008 financial crisis that led to the deepest recession in 80 years.

“There’s a tremendous amount of debt and the point is, I don’t know how it’s going to be paid back. And if interest rates start to rise, that’s going to cause some real problems in those venues,” Mladjenovic said. “And when that starts to occur, then in many cases, that could have a shrapnel effect on the stock market.”

"The Income Generation" airs on Newsmax TV every Sunday at 10 am ET.

© 2024 Newsmax Finance. All rights reserved.


StreetTalk
Financial planner Paul Mladjenovic, author of "High-Level Investing for Dummies" and "Stock Investing for Dummies," told Newsmax TV that the tax-cut plan approved in December by President Donal Trump will help to encourage investment and growth."When you're keeping more of...
paul mladjenovic, bonds, bubble, stocks
496
2018-39-05
Monday, 05 February 2018 02:39 PM
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