simply a means to create currency and set interest rates.
NYBoglehead wrote:I think your professor is an idiot. Of course bonds are used as debt instruments to finance current spending. Where does the professor think the money comes from to cover the budget deficit? If we take in a trillion dollars less annually then we receive in tax revenue, where does this money come from if not from the issuance of bonds?
y5a5gdqwty wrote:I'm interest to know where the money comes to make up for the budget deficit if it doesn't come from the selling of bonds.
That's easy. Money is simply entered on the computer. Money is just a number.
Billym wrote:I recently took a course on World Economy and Trade. At one point in the lecture, the teacher maintained that US Government Notes, Bonds, Securities, etc., are not used to help fund the federal government but simply a means to create currency and set interest rates. If this is the case - these notes are not debt instruments like corporate bonds, for instance, - what happens to the money an investor makes in these issues? And what entity is making the timely interest payments or paying off the face value of the issue at the end of the term?
I hope it isn't never ending. Many thanks for help.
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