[nonbel]

I just want to know what is "supposed" to happen if we assume bond yields are supposed to be equal to inflation like the parent.

Obviously no one is buying negative yielding bonds for the yields except pension funds, etc who are required to by law or not paying attention.

[topspin]

Isn't inflation simply another cost? As long as the value of these bonds (their low risk, as opposed to their maturity value) is greater than whatever cost you care to consider (inflation, negative interest, opportunity cost, etc.) they will be valued instruments. There is no "what should happen" or what is "supposed" to happen; those are fictions in the minds of spectators and until you're prepared to anger some powerful people and institutions they will remain fictions.

[nonbel]

Here is what I was responding to:

> My gut response is that, yes, if you’re buying risk-free treasuries, why should you get a return above inflation at all? Rewards and risks should be commensurate.

The parent has some sort of ad hoc economic theory ("gut response"), and I am asking them to expand on what the theory entails. "Supposed to happen" means it would be predicted by this theory of theirs.