If markets need taming interest rate rises are the wrong way to do it. Use targeted taxes instead.
But that leave’s the question of what is the answer? Is the answer to force many more into more debt, and to create insolvencies by increasing interest rates? Does that make sense? Or is the need to do something much more radical?
Isn’t the real need to increase capital gains tax to reduce the yield on exuberance?
And to have a financial transactions tax to slow markets?
Shouldn’t capital gains be charged on houses on death, at least?
And in places where favourable treatment is given to bond taxation shouldn’t that be withdrawn?
And what about an investment income surcharge to effectively charge national insurance on capital income to force a reduction in prices by reducing yield?
Reducing tax relief on pension contributions would also help by reducing flows into the market for the time being.
All these things and more are possible to reduce the pressure on markets. They would work. They would hit at the real issues. The amount of ‘collateral damage’ each would create would be minimal.
So why aren’t they being proposed? Ask the central bankers. Their failure to suggest them is a measure of their irresponsibility. And that of the governments to which they are accountable.
Candidly, central banks are in charge of monetary policy, not fiscal.
Further, the reason they’re worrying is because, as Spudda still can’t quite grasp, they need to withdraw that extra money supply created by QE.