Reply To: Bond vigilantees and political power


The McKinsey Report only goes back to 1990, but it gives an indication of the magnitude of increase in financial markets, 7.2 percent per year, which is much larger than increases in real GDP.

But it’s not their size that indicates their “power” vis-a-vis governments. As the report shows, the category of capital markets with the biggest increase is sovereign debt. Since breaking the fetters of gold, governments have used debt and monetary inflation more aggressively. Accordingly, they have made their own finances more dependent on capital markets.