Global Yields to 1%?

Global yields will be moving lower contrary to nearly every single pundit who has called for them to go higher since the 2008 Great Recession. What's truly amazing about today's yields, is that historically, say over the last 200 years, they are at or near historic lows. What's more, is that this seems to be the new normal. Just this past week, Ben Bernanke has indicated in comments to a group of investors that rates will be staying low for a considerable amount of time longer as economic conditions don't warrant tightening. The ECB has also hinted the same. With Japan's 10yr Bond now below 1.0% and pushing within 20 basis points of its 144 year history low, I would have to imagine we are heading very much in the same direction. 

What is driving yields lower is up for debate as there really is no clear consensus on why. Coming out of the recession of 2008, my knee jerk reaction was that rates had to rise as things gradually returned to a historic norm. What I mean by historical norm is 6.2%. That being said, the US 10yr Bond in its nearly 250 year existence has an average yield of 6.24% over that time span -- hence my knee jerk reaction that things can and should move back close to its historical average after dropping to historic lows. Today, I really believe we are establishing a new normal. Not to sound so cliché, but things truly are very much different, and I am almost certain that we will follow in Japan's path to yields closer to 1%.

DYI Comments:  Not until the early 2020's will inflation be back with us as government liabilities pile up due to the costs of Social Security and Medicare.  The remaining years of this decade it is a high probable event that deflation will be imported from Europe dropping U.S. interest rates.  It will be very possible that 10 year Treasuries will yield under 1%.  That will mark the end of "the bond bull market of a lifetime" as DYI's model portfolio at that time will move from 20% to 10% the lowest level by model.  Bonds will not be toxic at that time however the capital gains portion will end.

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 05/25/14

Active Allocation Bands 10% to 60%

45% - Cash -Short Term Bond Index - VGPMX

25% -Gold- Precious Metals & Mining - VBIRX

20% -Lt. Bonds- Long Term Bond Index - VBLTX

10% -Stocks- Equity Income Fund - VEIPX

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60 ways to wipe out your student debt

(MoneyWatch) Indebted college graduates may be able to make their student loans disappear, without paying them and without ruining their credit, according to American Student Assistance, a non-profit that aims to educate young people about money and publisher of an eBook called 60 Ways to Get Rid of Your Student Loans (Without Paying Them).  

Consider, for example, if you aspired to become a district attorney after accumulating a ton of debt in law school. If you become a DA or a public defender, you could apply for the John R. Justice student loan repayment program. This program pays off up to $4,000 a year of an eligible applicant's debt to a maximum of $60,000 per graduate. 

For health professionals, the National Health Service Corps offers an even more generous program that repays up to $60,000 in debt in just two years for those working in medicine, dentistry or mental health in underserved communities. The National Institutes of Health also has a loan forgiveness program that could eliminate up to $35,000 in debt per year for those willing to work part-time on medical research.

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DYI