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To: SeekAndFind
To illustrate, in November, Social Security needed extra cash to pay the bills, and redeemed nearly $100 billion in bonds at par, which earned 4 percent interest. At the same time, it kept bonds that pay less than 1 percent on the books. Given the process, the program lost nearly $2 billion in interest.

You might lose interest depending up purchase price, however when redeemed at par=face value you don't lose principal. A bond with a 1% coupon sold in a higher interest rate environment would lose much more in principal that the 2 billion in lost interest.

21 posted on 01/13/2023 10:12:07 AM PST by 1Old Pro
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To: 1Old Pro

“””To illustrate, in November, Social Security needed extra cash to pay the bills, and redeemed nearly $100 billion in bonds at par, which earned 4 percent interest. At the same time, it kept bonds that pay less than 1 percent on the books. Given the process, the program lost nearly $2 billion in interest.

You might lose interest depending up purchase price, however when redeemed at par=face value you don’t lose principal. A bond with a 1% coupon sold in a higher interest rate environment would lose much more in principal that the 2 billion in lost interest.”””


You are correct. Here are bond prices as of today.

4% 11/15/2042 $103.203

1.125% 08/15/2040 $66.285

The author of this story is an imbecile.

If the Social Security had sold the 1% bonds, they would have received about $65 billion on the $100 billion face value of the bonds.


38 posted on 01/13/2023 10:30:16 AM PST by Presbyterian Reporter
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