Spiking Bond Yields Pay the Rich and Squeeze Everyone Else

The recent rise in long-term US Treasury yields has revived a familiar story about fiscal irresponsibility. Commentators point to large federal deficits, growing public debt, and the volume of Treasury securities coming onto the market. From this perspective, higher yields are the market’s response to excessive government borrowing, and the Trump administration’s policy amounts to fiscal recklessness. This interpretation rests on an old and misleading conception of financial markets. It treats…