No bondholder wants less taxes collected. They want more taxes collected as a result of increased output per worker, entrepreneur, or corporation. The more people included in the workforce and the more capital made available to workers, the greater the “crop yield.” Bondholders want increased yield from the taxpayer farms.
They, contrary to what you hear in the business press, don’t care about how inflation may negatively impact the consumer sheep’s ability to pay for his or her cost of living. The bondholder and his fellow tax farmers are willing to finance and deploy social intervention programs that artificially increase the income of the poor and middle class as long as the poor and middle class spend and as long as they believe that in the long term (30 years or a generation), the final coupon and principal payments are made.
They also want to bet against the end of the curve. In other words, if they lend at 7%, they hope the yield curve stays flat at the current rate or dips near maturity, taking away any incentive for debtors to refinance debt. The bondholder also hopes that the central bank cooperates by implementing fiscal policy that maintains yield.
In addition, bondholders want their fellow tax farmers in government to implement tax policy that keeps the burden of government debt repayment on the lower and middle income classes, including allowing enough loopholes for bondholders to take advantage of. The burden will continue to fall on the lower and middle income classes as long as there are enough social intervention programs, these classes will continue to carry the tax burden …