Kwasi Kwarteng tells Library of Mistakes bond markets don’t act rationally

Library of Mistakes | Dec 1, 2023

The Library of Mistakes

Press release

For immediate release

Former Chancellor of the exchequer Kwasi Kwarteng claimed that bond markets don’t act rationally, speaking in a wide-ranging interview with the Library of Mistakes, the Edinburgh library dedicated to exploring the errors in financial history.

The politician, whose budget was widely criticised for cutting taxes while not doing enough to stem a budget deficit, said he was a victim of the bond markets last autumn, which precipitated his short stint as Chancellor and led to the collapse of the Liz Truss administration. Those who “step out of line” can be punished by markets, he claimed. He also suggested that his budget last year could have been more “balanced”. Kwarteng, who has a PhD in economic history, also spoke at length about financial history, his new book War and Gold; a 500-year history of empires, adventures and debt, and his views on the European Union.

” I was, in a way a victim of the bond markets last autumn. And I totally understand their power. And I did before but it’s just that I think that the bond market is not a rational player. Some things it can absorb, like all the extra COVID spending it absorbed without much of a murmur. But then if you step out of line in a small way, it can react very, very strongly against you. And I’ve been personal witness of that.”

“I’ve never been someone who thinks that deficit spending essentially can pay for itself. And one of the issues that I had in government was, I think what went wrong last last October, the more I think about it, was you’ve got to have a balanced approach to fiscal policy. You can’t just spend money that you don’t have, but at the same time if you’re going to have tax cuts, you’ve got to have spending restraint”

“But, in peacetime, there’s always been an attempt for hundreds of years to try and match revenues with spending. And it doesn’t have to be exact. But you’ve got to give that sort of impression, you’ve got to give that assurance that you’re trying to, you’re trying to balance, the spending and savings.”

Kwarteng was speaking in an interview with Keeper of the Library of Mistakes Prof. Russell Napier. The podcast is produced by Fraser Allen and is available from 12PM GMT on Apple, Spotify and Spreaker.

About the Library of Mistakes

The Library of Mistakes is a free-to-use public library dedicated to the study of financial history, with an outreach and education programme that includes courses, events and podcasts. Amid today’s geopolitical and economic ructions, our drive is to extend the understanding of this topic so that both professionals and the investing public can avoid the mistakes of the past.

Through our renowned online and in-person courses we hope to help financial professionals perform a better service for their clients, while also providing courses that can educate and stimulate the enthusiastic amateur.

As part of the Didasko education charity we help support financial education from the earliest interest through to some of the world’s most cutting edge research. Our partner Future Asset helps encourage young women to work in financial markets, while we support Leavers’ Money Skills, which teaches young people to manage their finances. We also support the work of the Market Mind Hypothesis, a multidisciplinary project to improve markets and ultimately benefit society.

For more information:
David Clarke
[email protected]
07887 600 234


The Library of Mistakes: Photo credit Lom MacNeill/ Library of Mistakes

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