Reply To: Bond vigilantees and political power

#17944
jmherbener
Participant

Wherever financial markets exist, they constrain government finance. International gold redemption, however, placed a tighter constraint on government monetary inflation and debt financing. The 20th century saw a relaxation of that constraint. After Bretton-Woods was destroyed in 1971, the federal government exercised monetary inflation and debt financing more vigorously and the financial markets reacted more severely.