Bond vigilantes don’t exist - just people who don’t like the price

It appears that the Chancellor’s sums are not adding up - how unlike a real economist that is, eh? - and so there’s a temptation for the government to simply borrow more to make them do so. Or possibly print more if they’re feeling particularly vicious.

It is possible that this will change bond prices and therefore yields upon them. At which point do doubt we’re going to get the usual shrieks about bond strikes, bond vigilantes. That is, the bond markets - or the dastardly capitalists that control them for the more febrile minded - are refusing to allow the democratically elected government to perform its duty to the demos that elected it (cont pg94).

This is a regular cycle in British politics so we feel reasonably confident in predicting it. Also, in suggesting that we’ll have the same calls to action - the bond markets must be brought to heel, government really must insist and financial repression R Us.

At which point we need to point out that there’s no such thing as a bond strike and bond vigilantes do not exist. There’s just a marginal change in the number of people who say “Nah, Mate, ta but no”.

There are, after all, 8 billion people on the planet and near all of them decline to buy British government bonds each and every day. True, true, effective demand is a little lower than that but the point still stands. There are no bond vigilantes, there is no such thing as a bond strike. Just a small change in the already very large number of people who do not desire to buy British government bonds at the price on offer. Thanks and all that, but no. That really is all there is.

Tim Worstall