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Gilt Yields and Ghosts of Budgets Past: Who's Afraid of Bond Vigilantes?

Many Happy Returns

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Bond Market Dynamics and Government Spending

This chapter explores the behavior of bond investors and their rational actions in response to government fiscal policies, comparing it to a lion's defense mechanism. It highlights the impact of recent budgetary decisions on the bond market, particularly in the UK, examining issues such as high inflation and unfunded tax cuts that exacerbate financial instability. The discussion critiques short-term budgeting practices and advocates for more realistic fiscal goals to promote long-term economic growth.

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