5 ms·
Mortgages are paid back in monthly installments, ensuring that money is recuperated in the meantime or the property becomes repossessed. Bonds are repaid when m
by alpha_squared 7y ago
Mortgages are paid back in monthly installments, ensuring that money is recuperated in the meantime or the property becomes repossessed. Bonds are repaid when mature, no?
Seems like an unfair comparison when talking about an inheritance of debt. Am I misunderstanding something?
- JumpCrisscross 7y agoYes, mortgages are amortised while Treasuries are not. That said, the dominating factor is refinancing. If $1 is financed with a 30y mortgage, it could be paid off in 2 years or the mortgage could be refinanced after 20 years for another 30y. Same with the federal debt. Bottom line is we have no evidence Congress or voters take into account term structure when setting taxes and spending. Those are the drivers of deficits and debt. Not the duration of the bonds issued to finance it.