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Tags: Govt bond auctions: they get money then what do they do with it?
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Govt bond auctions: they get money then what do they do with it?

  • Post #1
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  • First Post: Jan 18, 2011 3:22pm Jan 18, 2011 3:22pm
  •  funnyboy
  • | Joined Jan 2007 | Status: Member | 132 Posts
People buy gov. bond then gov. gets money. How do they manage these money? Dose it help reduce country's debt? They will take these money to invest in some ways with higher returns than the bond yield before its expires then give money back to people?

How gov. bond relates to central bank in each country?

Thanks.
  • Post #2
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  • Jan 20, 2011 9:13pm Jan 20, 2011 9:13pm
  •  narafa
  • Joined Jan 2005 | Status: Keep Learning | 1,180 Posts
Issuing gov bonds actually increases the debt of the gov..And no, they don't invest the money somewhere to get a higher return...

Gov bonds are actually issued to help the gov. finance short and long term projects...It also helps the gov. to meet it's short and long term financial obligations...

The system is different from country to country though...In some countries, the auction is handled by the treasury, in other countries, the auction is handled by the central bank, so it depends on the country...

Gov bonds are usually a very good way to roll over their debt also


Regards,

Nader
 
 
  • Post #3
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  • Last Post: Nov 20, 2017 11:35pm Nov 20, 2017 11:35pm
  •  newbietofx
  • | Joined May 2013 | Status: Conscious Incompetence | 127 Posts
Quoting narafa
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Issuing gov bonds actually increases the debt of the gov..And no, they don't invest the money somewhere to get a higher return... Gov bonds are actually issued to help the gov. finance short and long term projects...It also helps the gov. to meet it's short and long term financial obligations... The system is different from country to country though...In some countries, the auction is handled by the treasury, in other countries, the auction is handled by the central bank, so it depends on the country... Gov bonds are usually a very good way to roll...
Ignored
Sometimes gov buy back bonds. Like what the Feds did as alternative to printing cash.

This gave the banks some confidence on the US dollars and in turn are optimistic about the prospect of the US economy. Which bolster the sluggish GDP numbers.
You're going to pay a price for every bloody thing you do and don't do
 
 
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