| Are Bonds Safe?

Are Bonds Safe?

pitachips3 asked:


I have always heard that U.S. Treasury bonds are the safest investments one can make. However, it seems to me that the U.S. national debt is spiraling and creditor countries like China and India are approaching the point where it is no longer necessary for them to buy U.S. debt. At this point, won’t the whole U.S. government economy collapse, and won’t bonds be defaulted? Please explain to me how people can have 100% confidence that their 30 year bonds will be repaid.
Yes, I am American. Sorry for not clarifying; I was unaware than different nationalities brought different implications

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Comments

4 Responses to “Are Bonds Safe?”

  1. igi on April 4th, 2009 5:50 pm

    if you lock them in your box at the bank

  2. bob shark on April 6th, 2009 10:49 pm

    First of all, are you american??
    If you are american, buying 30 Year bonds is safe and they will be redeemed.

    But if you are a foreigner you have a problem, yes the bonds will be redeemed in full for the amount of money printed on them, BUT, the U.S. Dollar at the time of redemption could have dropped in value compared to your currency. So the pruchasing power to the money could be very low compared to it’s value now. There won’t be a default, as selling bonds just puts more money into the system, and that is the reason the dollar will depreciate.

  3. muncie birder on April 9th, 2009 10:55 am

    You have an excellent point. There is no 100% guarantee that 30 years from now the U S government will not default on their bonds. But what is much more likely is that the government will stoke inflation so that the amount they have to repay is neglegible compared to the amount they borrowed.

  4. Frank Castle on April 10th, 2009 1:57 pm

    It is possible and extremely likely China and other countries won’t buy more US debt in the future.

    Even the Former President of the United States of America Bill Clinton suggested to Mexico they should stop buying US debt (Mexico buys billions each year)

    However, the United States of America won’t collapse.

    They will just sell New Mexico and Arizona back to Mexico and Alaska back to Russia and maybe all their islands to Japan.

    Also they can change the name of Michigan to Microsoft and Florida to Ford and Montana to Marlboro and charge them a sizable fee.

    They can also raise the Sales Taxes to 15% in every State.
    They could charge $10,000 to each parent for every baby.

    They could execute every prisioner (There are over 3,000,000) unless their families pay them $10,000

    The United States of America could sell every museum to foreign corporations.

    Too many solutions to one simple problem