Thread

1. mono442 · 1790969976 · focus · HN ↗

   Technically bond markets with fiat currencies are unnecessary but for some reason they still exist.

   1. nostrademons · 1790970190 · 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 · 1790974157 · 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. nostrademons · 1790975588 · focus · HN ↗

            If that were true we wouldn't have corporate bond markets, and municipal bond markets, and mortgage bond markets. All of these are capital markets where the capital goes to either a private party or a non-monetary-authority government.

            Seignoriage (the practice of the government directly issuing currency to fund its government expenditures) has been around for about 2500 years and predates the invention of the bond market described in this article by roughly 1500 years.

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