The Indicator from Planet Money Bond vigilantes. Who they are, what they want, and how you'll know they're coming
Nov 21, 2024
Discover the intriguing world of bond vigilantes and their impact on financial markets. Learn about their origins and motivations as they influence economic policies and interest rates. Understand how these powerful investors react to government spending and national debt, especially in the context of a potential second Trump administration. Get insights into how to recognize their actions and the implications for borrowing dynamics. Tune in to grasp the nuances of fiscal responsibility and economic stabilization.
AI Snips
Chapters
Transcript
Episode notes
Bond Vigilantes' Power
- Bond vigilantes are large investors like pension funds and investment firms.
- They exert influence by refusing to buy bonds or selling them, affecting interest rates and government spending.
Origin of Bond Vigilantes
- Ed Yardeni coined the term "bond vigilantes" in the 1980s.
- These investors were concerned about inflation due to government policies.
Bond Vigilantes' Tactics
- Bond vigilantes influence the market through two actions: refusing to buy bonds and selling existing bonds.
- Both actions force the Treasury to increase interest rates, making borrowing more expensive for the government.