The Bond Vigilantes: They're Baaaack!

The Bond Vigilantes are back. They were last active during the 1980s and early 1990s. They've been mostly lying low since then. That's partly because inflation remained remarkably subdued from the mid-1990s through 2020. Furthermore, in response to the Great Financial Crisis and then the Great Virus Crisis, central banks  kept the Bond Vigilantes in check with ZIRP, NIRP, and QE. [1]

No more: They're back in the saddle again and riding high. Excessively stimulative fiscal and monetary policies in response to the pandemic were promoted by Modern Monetary Theorists and implemented by governments around the world. Inflation came roaring back in 2021 and 2022 forcing central banks to tighten their monetary policies, while fiscal policies continued to run amok.