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Yglesias

Bond Vigilantes Are Telling Us We Need More Demand

Paul Krugman lampoons the invisible bond vigilantes theory which holds that the US must reduce the deficit in order to reassure markets, even though the markets themselves don’t seem to hold this view. Brad DeLong offers a chart:

St 1

This is a chart of a market that’s expecting weak growth and little demand, not a market worried about the deficit.

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