Billionaire Silicon Valley investor Peter Thiel said he’s trying to stay away from a “really crazy government bond bubble” brought on by record-low interest rates in the U.S., Europe and Japan.
In response to a question at the Dublin Web Summit Thursday about whether technology startups’ valuations are overinflated, Thiel said his “candidate for the bubble today would be these super-low interest rates, the negative real interest rates.”
The co-founder of PayPal Inc. and early Facebook Inc. investor has plenty of company in saying that government bonds are headed for a collapse. Public figures including billionaire hedge fund manager Paul Singer, U.S. House speaker John Boehner, and Stanford University economics professor John Taylor have predicted the U.S. Federal Reserve’s low rates would stoke runaway inflation and a selloff of bonds.
Last week, billionaire Julian Robertson, founder of Tiger Management LLC, also said the bond market is in a “dangerous” condition because of low rates.
Despite those warnings, investors worldwide have made about $1 trillion buying and selling U.S. treasuries since the Fed dropped interest rates to almost zero and began three rounds of debt purchases in late 2008. European Central Bank President Mario Draghi said today he’ll be ready to boost stimulus to the economy if needed.
“Probably three quarters of my net worth is tied up in private Silicon Valley companies,” Thiel said today. Those young firms “are about as far away as you can get from the real bubble that’s going on.”
The investor has a net worth of $2.7 billion, according to the Bloomberg Billionaires Index. Thiel is also an investor in or a co-founder of closely held technology companies including Palantir Technologies Inc.
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