Today, The Wall Street Journal published my op-ed titled “How the Fed Rigs the Bond Market.” Themes include:
High inflation should no longer be surprising, nor should it be labeled “transitory.” Its existence should prompt serious reflection on policy decisions and spur action to avoid a financial crisis.
The big issue is financial stability.
– The U.S. Treasury bond market has been rigged and manipulated since the Federal Reserve’s second quantitative-easing program began in 2010. The consequence of this blurred line between Fed and Treasury responsibilities—”monetizing the debt”—is inflation.
– Sales by the infamous “bond vigilantes” used to serve as a warning of inflationary policies. The signal has been muted.
The op-ed offers specific actions for Congress, Treasury, and the Fed to defuse imbalances and gradually restore market dynamics to the determination of bond yields.
We look forward to any comments you might have.
To view the full article: