The yield on the benchmark 10-year Treasury bond fell as low as 1.976% last Thursday — the lowest yield in recent history.

This is not a surprise. In fact, I predicted this would happen in a column that appeared in Money Morning nearly a year ago.

I’m not bringing this up to brag, but rather as a warning to stay tuned. Because now that we’ve broken the 2% barrier, it’s not difficult to imagine yields as low as 1.5%.

Remember your history.

During the Great Depression, U.S. bonds actually traded at a negative yield as investors paid the government to keep their money. The idea was that they could get their money back from the government, but by leaving it in a bank or corporate bond they risked losing everything.

And that speaks to the core of what’s rattled the markets recently.

U.S. Federal Reserve Chairman Ben Bernanke and our leaders continue to believe this crisis is all about liquidity, which is how they are trying to fight it. The markets, on the other hand, have figured out what I said when it started — that this really is about solvency.

There’s a big difference and investors are beginning to worry about the return of their money rather than the return on their money. That’s why they’re running straight to U.S. Treasuries despite our nation’s debt, persistent budget deficits, slowing economic growth and near total lack of adult supervision in Washington.

So do you buy bonds at this stage?

I think not. The trade is overdone, and if you are not in it already, you’ve probably missed the boat. But, you have arrived on the dock at a most opportune time.

Eventually, there will be higher rates. It doesn’t matter how, or even why. Just that there will be.

So buy into the panic — literally — with ProFunds Rising Rates Opportunity Investment Fund (MUTF:RRPIX).

It’s a specialized inverse fund that will appreciate significantly when the bond markets eventually reverse course, rates rise and confidence returns.