Governments issue bonds to raise money. The bond holder/investor is paid interest on the bonds, and at a specified point in time in the future is repaid the value of the bond.
Government bonds are supposedly a secure investment, there being no risk that you will not be repaid. That is now out the door, as the state of California is grossly bankrupt.
The Federal government issues bonds also. Many of them are issued to the Federal Reserve when the Fed prints money (as now via Quantitative Easing). So, they raise money to give to the banks, which the banks are supposed to loan out to the general population, to inject money into the economy and encourage spending.
This is all a big scam. Firstly, the future debt created by the bonds and the interest on the bonds is a future debt of the American people. The Fed is privately owned, so the owners are making money for doing practically nothing. Secondly, the banks are keeping the money to shore up their capital against all the defaulted mortgages that they have not yet put on their books. In effect, the big banks are all bankrupt, but the law doesn't require them to properly account for their debts.
The entire process is simply increasing the debt to be paid by people via taxes in the future, and because of the increase in money in the system, devaluing the dollar so that it worth less and less.
Bonds are sold to pay for projects. Instead of hiring construction companies, etc. for a big project and then each year paying them 1/20th of what they're owed for 20 years, the state sells bonds, gets all the money to pay for the project at once, pays off the contractors,etc. that did the work and ends up paying off the bonds over the 20 year period.
You should be able to google for the approximate value of the bonds CA has sold.
Comments
Governments issue bonds to raise money. The bond holder/investor is paid interest on the bonds, and at a specified point in time in the future is repaid the value of the bond.
Government bonds are supposedly a secure investment, there being no risk that you will not be repaid. That is now out the door, as the state of California is grossly bankrupt.
The Federal government issues bonds also. Many of them are issued to the Federal Reserve when the Fed prints money (as now via Quantitative Easing). So, they raise money to give to the banks, which the banks are supposed to loan out to the general population, to inject money into the economy and encourage spending.
This is all a big scam. Firstly, the future debt created by the bonds and the interest on the bonds is a future debt of the American people. The Fed is privately owned, so the owners are making money for doing practically nothing. Secondly, the banks are keeping the money to shore up their capital against all the defaulted mortgages that they have not yet put on their books. In effect, the big banks are all bankrupt, but the law doesn't require them to properly account for their debts.
The entire process is simply increasing the debt to be paid by people via taxes in the future, and because of the increase in money in the system, devaluing the dollar so that it worth less and less.
Bonds are sold to pay for projects. Instead of hiring construction companies, etc. for a big project and then each year paying them 1/20th of what they're owed for 20 years, the state sells bonds, gets all the money to pay for the project at once, pays off the contractors,etc. that did the work and ends up paying off the bonds over the 20 year period.
You should be able to google for the approximate value of the bonds CA has sold.
Every state has bonds. We send out more.