Interest rates have been in a long general decline since the 1980s. The culmination of this trend has been negative interest rates, which were designed (around 10 years ago) as a temporary fix for "moribund" entities: to keep alive zombie banks, businesses, etc.

As of August 2019, a whopping $17 trillion in worldwide debt had a negative yield. Since that time, the value of this glut has been reduced by some $5 trillion -- causing intense financial pain to the buyers of some of these bonds. And the longer the bond's term, the greater the hurt.

Given the inverse relationship between bond prices and yields, investors were ecstatic as long as rates were going down, often using leverage to magnify their capital gains. As a recent example, a 1% drop in the interest rate of the 100-year bond yielded a 70% increase in its value, because longer bond durations have more volatility to changes in interest rates. Throw on 5:1 leverage (using 80% borrowed money) and a bond which had registered a 100% increase, becomes a 500% bonanza.

Unfortunately for bond speculators, it cuts both ways; it's a double-edged sword.

As rates on this 100-year bond recently went up .1%, its value declined by 7%, causing large capital losses for those with leveraged positions; gravy-train bonds became punishment bonds.

But it's not just the hyenas of the speculating community getting burned here.

If you have any life insurance, bond fund investments or vested pension benefits, it's probably safe to say you'll feel some pain too. Many of these institutions have been searching for a higher yield on their portfolios, and have participated in the action.

Very low or negative interest rates are problematic; besides the inevitable capital losses (central bank monopolies notwithstanding), they create massive asset bubbles and greatly distort the real price of money, making the assessment of true risk impossible.

But if interest yields continue upward, there will be much more financial torment to come.