People who sleep better at night because they own bonds and not stocks are susceptible to rude awakenings. A 30-year Treasury bond that pays 8 percent interest is safe only if we have 30 years of low inflation. If inflation returns to double digits, the resale value of an 8 percent bond will fall by 20–30 percent, if not more. In such a case, if you sell the bond, you lose money.
