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Isn’t there a wealth transfer to new bond holders? The government is paying interest to someone on those new bonds.
by itake 3y ago
Isn’t there a wealth transfer to new bond holders? The government is paying interest to someone on those new bonds.
- spacebanana7 3y agoYeah, new bondholders profiting from the higher rates. However, those bondholders represent a minority of the debt. Roughly speaking, new borrowing is 4-5% of GDP whilst old debt is over 100% [1]. [1] https://www.ons.gov.uk/economy/governmentpublicsectorandtaxes/publicspending/bulletins/ukgovernmentdebtanddeficitforeurostatmaast/september2022 https://www.ons.gov.uk/economy/governmentpublicsectorandtaxe...
- dmoy 3y agoThe government can often repurchase its own bonds. The US Treasury started doing the same thing this month