Tim Worstall To push the market interest rate on government bonds upwards, investors have to push the price of those bonds down. And there is only one way they can do that: they have to sell government bonds. Full stop.
But to have a significant effect, they have to sell enough of them. And, crucially, having sold them, they cannot then buy them back without reversing the very pressure they are supposedly trying to create.
They can, in fact, just stop buying them. Issuance of new to cover this year’s deficit is what, £100 billion? Another £200 billion matures each year and must be rolled over? About that?
£300 billion has to be sold each year, perhaps 10% of total ossuance. If people just stopped buying these new – a buyers’ strike – then that would push the price of gilts down. Pretty substantially too I’d say – but am not going to try to prove. So, Spud is, again, wrong….
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