Break the Power of "the Bond Markets" (Intro)

Our government is at the mercy of the Bond Markets because "borrowing" from the Bond Markets (aka selling them government bonds) is the main way that a government can raise money (outside of taxes).

As a consequence, and as we examine in our series of 3 Policy Documents below, Bond Markets are able to force a government to raise taxes and cut spending whether the government wants to or not. In this sense, the government is "in hock to" the Bond Markets.

How do they do this?

To summarise (although we take you through it in depth in the articles below): Bond Markets force such policies by selling the bonds they hold in the secondary bond market (where investors sell to each other). This has the effect of lowering the bond price in the secondary market, which has the effect of increasing the "yield" of the bond (the interest rate on the bond) in this secondary market.

This has the effect of increasing the interest rate on new bonds which the Treasury sells in the primary market.

This is known as "increasing the cost of government borrowing" because it requires the government to find additional money to pay back the bonds at these higher rates of interest. This requires it to put up taxes and cut spending even further.

In this way, the power of the Bond Markets to inhibit a democratically-elected government's economic policy, or even destroy the government, and cause general distress in society, is an incongruous and antiquated power in our modern world, and it must be addressed and restrained.

To give you an idea of the massive amounts of money involved, we are projected this year, 2025-26, to pay the Bond Markets £111.2 billion in interest payments on the National Debt; equivalent to 8.3 per cent of total public spending!

[ See "% Debt interest (central government, net of APF)" at obr.uk/forecasts-in-depth/tax-by-tax-spend-by-spend/debt-interest-central-government-net ]

TAKEAWAY: The Bond Markets are basically the Loan Sharks for the Nation. We have to go to them because we have no other option, with cap-in-hand, and ask for more money, and if they don't like us they can demand extortionate interest rates which will impoverish us as we attempt to pay them back. The answer – for any government – whether of the left or right – is to find a way to render the bond markets no longer central to the national finances.

We conclude that the poorer the country gets then the more centrality the Bond Markets enjoy – because they relate to us like a Loan Shark relates to a poor person. The poorer we get, the more we depend upon them!

Ideally, the country should be generating enough of its own wealth that the Bond Markets should be a minor element of government finance, not a central part upon which we rely and which consequently exercises disproportionate power.

This is also a democratic imperative. After all, it is us, the people, who should have the governing authority – through our elected representatives – not the Bond Markets through their power over our purse.

POLICY: To that end, when elected, we will use our public office to highlight the nature of our economic system; specifically, how the country acquires its money; how the bond markets work; the danger of bond markets; and the alternative ways in which we can finance our national needs, including our "Publicly-Created Money" policy below.

Our MSPs will publicise this vital issue, and seek to start a conversation around changing this central element of our modern national and world economy.

In the 3 Policy Documents below, we explain the Bond Markets, and what we can do about them.

Firstly, we suggest our policy to Break the Power of the Bond Markets here.

For those who are interested, we dive deeply into Part 2 How the Bond Markets Work and also Part 3 How "Bond Vigilantes" Work and how they can bring down Governments.

Having explained this vital element of national and world economies, we then explain the importance of Creating Wealth without having to indebt ourselves to the Bond Markets and we introduce the Policy of Publicly-Created Money - Money For the People, By the People which has the potential to free ourselves from "the bonds of the bond markets".