Author Topic: The Mechanics of Bonds  (Read 292 times)

MacroTOMI

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The Mechanics of Bonds
« on: August 03, 2020, 02:07:00 PM »
Bonds are really very sophisticated IOUs. They are tradeable. All IOUs are. Originally all bonds were bearer, payable to whoever held them, like the notes in your wallet. Bearer bonds are not coming back. They were much better than $100 bills for concentrating money for criminal activity. There were coupons attached and once a year you would ’clip the coupon’ and take it to the bank to get paid.

Unlike a stock at some point unless there is a default the capital is paid back to the bond holder. This is not true for stocks.

The Federal Reserve bond buying and other activities have an impact but prevailing rates are the most important.

Read More about the fascinating history of these instruments: http://macrotomi.com/article/the-mechanics-of-bonds?ref=SAM