For the better part of the last 100 years, US government bonds have been considered by many the safest investment in the entire world. The US economy is absolutely massive, and the country is home to many of the largest companies on the planet. This dynamic provided protection in the eyes of investors. The thought being that if you lent money to the US government, you didn’t have to worry about whether or not you were going to get paid back. As the taxing authority of the world’s largest economy, if the US government ever ran into trouble, it could simply raise taxes and use that money to pay back borrowers.See also United Nations along with hundreds of NGOs giving out debit cards and cash to illegals entering America! Because of this, US government bonds have been viewed by investors and the finance community as the only truly quote unquote “risk free” investment that exists. This commonly accepted belief has led to US government bonds being extremely popular investments for everyone from individual investors, to pension funds, to banks, and even other countries. The supply of investor money wanting to purchase government bonds has consistently exceeded how much money the government has needed to borrow. As a result, borrowing money has always been relatively cheap for the US government. However, that dynamic may finally be starting to change. The ripple effects of which would be felt throughout the world.
Prior to the 70’s ( 1972?) financial institutions could NOT accept US Treasuries as collateral-or in other words assets to acquire a loan…they were considered DEBT! Since then, they dropped the law-and then people could make money on DEBT….for the thinkers- things have gone all wrong since then.