Is MMT Real? #4: J.W. Mason
RABBITHOLE
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Bond Market Vigilance Is Not Going to Happen
Bond markets have this weird self-fulfilling quality just like exchange rates and other asset prices do. Bond prices are not set based on inflation they're set by the simple one sentence saying what sets the price of a bond it's investors expectation of what the price of that bond is going to be in the future. The power of the central bank is sort of comparable to God in the Old Testament you know God says let there be light and there was light joggy says let the prices go down and they go down he doesn't need to do anything else.
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