Britain is a fiat-currency, Keynesian directed nation. It will be one of many such countries facing an epic financial crisis.From Alasdair Macleod at goldmoney.com:
This article points to the factors driving sterling gilt yields higher. They are likely to lead to a sterling crisis as foreign selling gathers pace of gilts acquired since 2018. Before interest rates began to rise, foreign buyers had enjoyed higher gilt prices which more than offset losses on sterling. That is no longer the case.
Instead, there is growing disaffection with the Bank of England’s performance and perhaps a realisation that a general election in only 18 months’ time introduces political risk.
This article explains the consequences of denying Say’s law, otherwise known as the law of the markets, and by pursuing interest rate policies which have been disproved as a means of controlling inflation. Furthermore, it will be increasing shortages of bank credit which drive interest rates and bond yields higher, not central bank policies.
These are factors which affect all currencies allied to the dollar. The difference between the dollar and sterling is not so much to be found in broad policy dissimilarities, but the lower levels of foreign confidence in sterling as a currency in uncertain times.
