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Washington has been yapping knowingly about the bond vigilantes since the early 1990s.It would be a good idea, at this late date, to understand what it’s yapping about, given that the bond vigilantes are, one way and another, behind the fiscal collisions roiling the world economy from Washington to Athens.
The bond market is vaguely understood to be a powerful constituent for certain kinds of fiscal policies, but it would be wrong to say the bond market cares about what we care about. The bond market’s concern begins and ends with default fears and inflation (though true default has never been a worry for holders of U.S. bonds).
Read the rest at the Wall Street Journal.
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