My TakeThe postmodern US revolution in empire-building
- Unlike previously successful empires including the British imperial state, debt and deficit – rather than economic and productive might – drive the present-day US empire instead of its decline
There is always more than one meaning to any quotable quote. And one of the most quoted in the annals of American politics is from James Carville, Bill Clinton’s top election adviser, about the bond market: “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
He was, of course, talking about the private bond markets, or more specifically, what we nowadays call the “bond vigilantes”.
Imagine if there is an equivalent of a Marvel superhero in the financial world, he or she would be a bond vigilante.
Such superheroes are the fixed-income traders and investors who sell bonds, or threaten to do so, to push back against economic policies of a government or business plans of a private enterprise.
The justification is that these debt investors or traders – and their cheerleading pundits in the financial press – work to impose discipline on governments by selling off bonds of those that are being profligate or irresponsible, such as loose monetary policy or fiscal spending that is considered inflationary.
However, I have recently started to wonder why no one I have read ever thought Carville’s saying would also make perfect sense when applied to the US government bond market, namely US treasuries.