AOM 2


The whole second episode was about bonds, and it's pretty much a loan you give to the government that they are supposed to pay back with interest. It basically increases the credit supply for governments and businesses. Northern Italy developed the first bonds to fund its wars. Many have made a fortune on bonds, specifically Nathan Rothschild. America used bonds to fund the Civil War and also during the Great Depression. Bonds are still used today to fund infrastructure projects but interest rates are low. Bonds are more common in wealthier, more developed countries because they will typically have the resources to give you back the money you put in, but underdeveloped and poorer countries have less of this because you probably will not get the money back, seeing as they do not have the resources or wealth to pay you back with interest. But the higher the risk, the higher the interest rate. Nowadays, a bond would be used to build something like a bridge. Bonds are the same now as they've been, but interest rates are so low that most investors can make more in the stock market or other places.

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