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Venice’s failed war against Constantinople led to the first bond market

172 points · 59 comments · RickJWagner

  1. mono442 · · focus · HN ↗
    Technically bond markets with fiat currencies are unnecessary but for some reason they still exist.
    1. nostrademons · · focus · HN ↗
      Why? The purpose of the bond market isn't to supply the government with currency, but rather to distribute risk and capital payments to those most willing to bear them.
      1. mono442 · · focus · HN ↗
        The main purpose is definitely to supply the government with currency. Many countries put imo unnecessary restrictions on themselves and do not borrow directly from the central bank which would be simpler and cheaper.
        1. Ekaros · · focus · HN ↗
          Wouldn't that be just more complicated way to print money? With weird question about would it ever be possible lower debt without actually printing...
          1. mono442 · · focus · HN ↗
            Money comes from debt. Debt is essentially the way to print money.
            1. smallmancontrov · · focus · HN ↗
              No. Money is a type of debt, but a very special type, one that has no duration and is available now rather than locked up for some period of time. When the treasury sells bonds, it replaces "unlocked" money with "locked" money in the private sector, decreasing the amount of unlocked money in the private sector to balance the increased amount of unlocked money in the public sector. The amount of unlocked money remains constant.

              If the Federal Reserve prints reserves (unlocked money) to buy bonds (locked money) and keeps doing this as they mature so that WALCL goes up and to the right, that's money printing.

              1. andsoitis · · focus · HN ↗
                >> Money comes from debt.

                > No.

                Money itself is essentially a hierarchy of IOUs.

                In a modern banking system most money is created alongside debt.

                Bank lending creates deposits rather than banks simply lending out pre-existing deposits.

                Not all money originates through private bank debt. Central banks create base money (currency and bank reserves) and can create reserves when acquiring assets.

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