Noland doesn't trust the bond markets

Noland:

"Candidly, I don’t trust contemporary bond markets. In an age of unlimited (“Wall Street”) finance, market yields are no longer determined by the interaction of a relatively defined supply of available funds (“savings”) and shifting demand for borrowings (Credit). For some time now there have been no restraints on US Financial Sphere expansion, and one can argue restraints have been lifted for most global Credit systems over the past few years. It is too easy to expand financial system liabilities, in the process creating new Credit/liquidity, with asset prices – both real and financial – inflated by an overabundance of global liquidity."

In this scenario, a lot of excess liquidity works its way into the bond market and so that the resultant low yields cannot be understood as an accurate indication that inflation is not a problem.