Bill Fleckenstein delivers a sobering but clear-eyed take on the growing risks in today’s markets—especially the bond market. He argues that the Federal Reserve’s long history of enabling debt expansion through money printing is now coming home to roost. The bond market, he says, may soon take control from the Fed, with rising rates signaling a structural shift in market power. Investors lulled by the past 30 years of falling rates and passive inflows may not be prepared for what comes next.

Fleckenstein explores how the passive investing boom has distorted equity prices, creating what he calls a “voting machine” market—driven by automatic flows, not fundamentals. He warns that this dynamic will persist until something breaks, possibly triggered by economic weakness or inflation pushing bond yields higher. He’s deeply skeptical of official inflation data, sees signs of stagflation, and points to deteriorating anecdotal evidence in tech hiring as an early signal of economic fragility.

Rather than try to time the next shift, Fleckenstein’s is sitting on the highest cash levels of his career, with select holdings in precious metals and companies that can weather economic weakness, which reflects his personal investment outlook. He doubts the Fed will be able to pull off another QE (Quantitative Easing) rescue, especially if the bond market balks. This is not an interview of doom and gloom—it’s one of caution, realism, and discipline in a market that’s becoming more fragile beneath the surface.