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bendy

Intergenerational Bonds

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is there any reason that governments couldn't issue say a 50/80/100/1000 year bond, other than the perhaps the negative incentive to an investor?

as we're well into the fiat bubble now, why can't it just be blown perpetually forever. the rentiers will at least know it's staying in the family?

edit: thread title should probably be in the stupid questions thread :lol:

Edited by bendybogle

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There are loads of reasons (edit - not to buy them - they can be issued, though), but there are a similar number of reasons why buying PIIGs' debt at 7% is also a stupid idea, but people still appear to be doing it (even if most of them are apparently PIIGy banks).

Edited by WageslaveX14

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There are loads of reasons, but there are a similar number of reasons why buying PIIGs' debt at 7% is also a stupid idea, but people still appear to be doing it (even if most of them are apparently PIIGy banks).

i'm just trying to find a flamepoint, or solid reason why they can't bailout forever, because right now it appears that they can.

are they wrong, or are we wrong? :blink:

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There is no reason why such bonds couldnt be offered. Indeed, didnt the UK issue 'War Bonds' in the second world war with no expiry date at all?

The only reason they dont do it is what is the purpose of them? 30 Years is a long enough time frame for nearly everyone, so there wouldnt be much more demand for a 50 year over and above that of a 30 year bond.

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To sell something you need a buyer. There are a lot of organisations trying to sell debt at the moment, and relatively few buyers due to the low saving rate in most of the developed world. Ordinarily this would result in a big increase in interest rates, but for now central banks are stepping in and buying up the debt with freshly printed cash in an attempt to keep interest rates low. However, this is likely to create inflation at some point, and the expectation of that inflation is what will eventually drive interest rates back up.

So I suppose the answer to why there wouldn't be much point in issuing 50/100 year bonds is that while there might be some opportunity for short term arbitrage between interest rates and inflation (which our government, like the PIIGS, is taking advantage of now while the bond markets remain asleep), in the long term inflation and interest rates are much the same thing, especially for governments with their own printing presses who can always meet their obligations nominally. If the government was hoping to tempt some real buyers into longer maturity bonds, the interest rate on shorter maturity bonds would probably rise as the pool of potential buyers is very much limited thanks to low saving rates. If the government was just planning to sell the bonds to its own central bank, there is no need to go to such lengths. The central bank can just as easily buy 10 years.

Edited by Dorkins

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is there any reason that governments couldn't issue say a 50/80/100/1000 year bond, other than the perhaps the negative incentive to an investor?

as we're well into the fiat bubble now, why can't it just be blown perpetually forever. the rentiers will at least know it's staying in the family?

edit: thread title should probably be in the stupid questions thread :lol:

There are perpetuities such as 3.5% war loan that are never repaid, so there is no reason why not except that rates would be higher. War loan is 4.88%, where as 30 year bonds are 4.39%.

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is there any reason that governments couldn't issue say a 50/80/100/1000 year bond, other than the perhaps the negative incentive to an investor?

as we're well into the fiat bubble now, why can't it just be blown perpetually forever. the rentiers will at least know it's staying in the family?

edit: thread title should probably be in the stupid questions thread :lol:

Nothing wrong with stupid questions.

In fact, how about introducing a bond that is repayable when the next human has evolved. Homo skinticus.

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By the way, my comment above was really that there are loads of reasons why buying integenerational bonds would be a bad idea, and not that there are loads of reasons why governments couldn't issue them - sovereign governments can do what they like, but most buyers have a degree of discretion too.

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is there any reason that governments couldn't issue say a 50/80/100/1000 year bond, other than the perhaps the negative incentive to an investor?

as we're well into the fiat bubble now, why can't it just be blown perpetually forever. the rentiers will at least know it's staying in the family?

edit: thread title should probably be in the stupid questions thread :lol:

I believe the Government still have a few 'perpetuities' on their books from ye olden days.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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