Let’s say you buy a government bond. What exactly does that mean? Let’s break it down from the boardroom suite to the street.
When you buy a bond you are lending the government money. The government is too broke to fund its operations without perpetual debt. The government pays you back, plus interest, by taxing its citizens.
The profit you make minus taxes & depreciation means you make zero profit. It means it’s costing you money to lend money to the government.
Let’s use a simpler example. I’m the citizen, you’re the government.
I lend you $100 dollars (a bond). To make monthly payments you steal money from me (taxes). Is there anything in that equation that sounds good? If the answer is no, there’s hope for you.
If you think “investing” in government bonds is a great idea, I’m challenging you to think again. The US government is so broke it has to perpetually borrow money. It pays you back by stealing from you (taxes). The money it pays you back with is so worthless (inflation) that you’re losing money in the “investment.” Zero profit to you.
There’s nothing smart about the entire transaction. The average US citizen doesn’t know what a government issued bond is. So ignorance is the reason this crazy game called The US economy keeps being played. Buying government issued bonds isn’t an investment. It’s keeping the junkie with a needle in his arm. “Investing” in government issued bonds isn’t patriotic, it’s unhealthy for this nation.
If you want to turn this economy around you have to understand how it works and why it’s broken. Get educated. Apply what you learn in your life. Share by teaching others what you learn.
Resources:
What is a Bond?
Give us a call on our voicemail feedback hotline at 615-200-7189 or drop Greg an email at:
greg [at] debtshepherd [dot] com
