vania-janet/multiturn-rag-retrieval-data huggingface dataset:
"Someone has to hand out cash to the seller. Even if no physical money changes hands (and I've bought a house; I can tell you a LOT of money changes hands at closing in at least the form of a personal check), and regardless of exactly how the bank accounts for the actual disbursement of the loan, the net result is that the buyer has cash that they give the seller, and are now in debt to the bank for least that amount (but, they now have a house). Now, the bank probably didn't have that money just sitting in its vault. Money sitting in a vault is money that is not making more money for the bank; therefore most banks keep only fractionally more than the percentage of deposit balances that they are required to keep by the Feds. There are also restrictions on what depositors' money can be spent on, and loans are not one of them; the model of taking in money in savings accounts and then loaning it out is what caused the savings and loan collapse in the 80s. So, to get the money, it turns to investors; the bank sells bonds, putting itself in debt to bond holders, then takes that money and loans it out at a higher rate, covering the interest on the bond and making itself a tidy profit for its own shareholders. Banks lose money on defaults in two ways. First, they lose all future interest payments that would have been made on the loan. Technically, this isn't ""revenue"" until the interest is calculated for each month and ""accrues"" on the loan; therefore, it doesn't show on the balance sheet one way or the other. However, the holders of those bonds will expect a return, and the banks no longer have the mortgage payment to cover the coupon payments that they themselves have to pay bondholders, creating cash flow problems. The second, and far more real and damaging, way that banks lose money on a foreclosure is the loss of collateral value. A bank virtually never offers an unsecured ""signature loan"" for a house (certainly not at the advertised 3-4% interest rates). They want something to back up the loan, so if you disappear off the face of the earth they have a clear claim to something that can help them recover their money.
"The only party that can pay back a government bond is the government that issued it itself. In the case of Argentina, US vulture funds have won cases against it, but it has yet to pay. The best one can do to collect is to sue in a jurisdiction that permits and hope to seize the defaulted government's assets held in such jurisdiction. One could encourage another state to go to war to collect, but this is highly unlikely since a state that doesn't repay is probably a poor state with nothing much to loot; besides, most modern governments do not loot the conquered anymore. Such a specific eventuality hasn't happened in at least a lifetime, anyways. It is highly unlikely that any nation would be foolish enough to challenge the United States considering its present military dominance. It is rare for nations with medium to large economies to spurn their government obligations for long with Argentina as the notable exception. Even Russia became current when they spontaneously disavowed their government debt during the oil collapse of 1998. Countries with very small economies such as Zimbabwe are the only remaining nations that try to use their central banks to fund debt repayments if they even repay at all, but they quickly see that the destruction caused by hyperinflation neither helps with government debt nor excessive government expenditure. Nevertheless, it could be dangerous to assume that no nation would default on its debt for any period of time, and the effects upon countries with defaulted government debt show that it has far reaching negative consequences. If the US were to use its central bank to repay its government obligations, the law governing the Federal Reserve would have to be changed since it is currently mandated to ""maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices and moderate long-term interest rates."" The United States Treasury has no power over the Federal Reserve thus cannot force the Federal Reserve to betray its mandate by purchasing government debt. It should be noted that while Japan has a government debt twice its GDP, it also has a persistent slight deflation which has produced incredibly low interest rates, allowing it to finance government debt more easily, a situation the US does not enjoy. For now, the United States seems to be able to pay expenditures and finance at low interest rates.
Perhaps something else comes with the bond so it is a convertible security. Buffett's Negative-Interest Issues Sell Well from 2002 would be an example from more than a decade ago: Warren E. Buffett's new negative-interest bonds sold rapidly   yesterday, even after the size of the offering was increased to $400   million from $250 million, with a possible offering of another $100   million to cover overallotments. The new Berkshire Hathaway securities, which were underwritten by   Goldman, Sachs at the suggestion of Mr. Buffett, Berkshire's chairman   and chief executive, pay 3 percent annual interest. But they are   coupled with five-year warrants to buy Berkshire stock at $89,585, a   15 percent premium to Berkshire's stock price Tuesday of $77,900. To   maintain the warrant, an investor is required to pay 3.75 percent each   year. That provides a net negative rate of 0.75 percent.
Infrastructure is paid through private investment because it is believed to help stimulate the economy, now whether or not it stimulates the economy more or less then a public company is up for debate between economist.  http://www.politifact.com/truth-o-meter/article/2013/feb/15/government-jobs-vs-private-jobs-which-help-economy/ Btw- OF COURSE private investors are gonna do the bare minimum, every large company crunches pennies! It's the governments jobs to make sure all companies are following rule of law &amp; regulations and keep its citizens safe. maybe laws will change due to the hurricanes effect?
"They also ignored bankruptcy law and gave a large part of the New GM to the unions when it should belong to the bondholders. Or if the bondholders are getting wiped out, it should belong 100% to the US Government. Theoretically you need the legislative or judiciary branches to back such actions, but in practice it doesn't always happen. Or when Obama tanked the Las Vegas tourism industry when he took at shot at the ""fat cats"" and the next day all the executives cancelled their corporate events in Vegas because they wanted to get out of the line of fire."
"Who sets the prices? Effectively the market does, like basically all openly traded things. The Greek government could well have said ""5% is as high as we will go"".  As a result, investors may not have chosen to buy the securities.  The global bond market is highly liquid, and investors who have a choice could well then choose to go elsewhere. The reasons could well be varied, but primary among them would be that investors view Greek investments as more than 5% risky.  If I can get 5% from a country that I deem less risky than from Greece, my choice is clear.  Therefore to be compensated for loaning them my money, I am expecting a return of 7% because there is the possibility that they will default. As for not selling them at all, if they could avoid issuing bonds, most governments would.  They may not have had much of a choice.  If they just print more money, that does other potentially bad things to the economy.  The government needs funds to operate, if they are not collecting enough in taxes, for example, and do not want to print money as I mentioned, then bonds are one other common way to raise cash. Notwithstanding that in your example you are referring to the interest rate, not the price, the principal is the same."
Is there anywhere I can get further information? I ask because I'm thinking about an alternative theory of money where companies can issue bonds as currency, and we can have coexisting monetary policies.  These relate to what i'm saying:  http://www.reddit.com/r/finance/comments/utf5u/where_has_all_the_money_in_the_world_gone/c4yfkhg  http://www.radicalsocialentreps.org/2012/07/open-source-currencies-on-the-rise-in-greece/   http://www.businessinsider.com/why-are-central-banks-independent-2012-5  http://truth-out.org/news/item/11868-spain-and-greece-are-being-forced-to-suffer-to-save-germany-from-high-inflation
The answers provided so far as good and informative, but I just thought I'd add one small point... There are super-national organisations that commonly lend to governments, in particular those in the developing the world. The World Bank and IMF (International Monetary Fund) are the two primary ones. Also quite notably, the Greek economy was bailed out only this year by the EMF (European Monetary Fund) spearheaded by Germany - this is a rare occurrence however and was done mainly because Greece was a relatively developed country and others had an obligation to assist it as an EU member state.
"Elliott was arguing from the position of an original creditor.  They still had the same rights and obligations as if they bought the bond directly from the Argentinian government.  So buying the bonds at a huge discount did not mean that they gave up rights under the law.  Would your opinion differ if it was the original bondholders in the lawsuit, and not these ""vulture funds?""  Think of it this way, Elliott paid less because the original bondholders' rights were judged by the market to be unlikely to result in being paid in full.  But paying less did not extinguish any of the original bondholders' rights.   And anytime a bond holder is forced to accept modified terms that they did not agree to, the borrower is unilaterally changing the terms.  There is an argument that this is necessary for businesses and individuals, but sovereigns that can raise revenue as a matter of policy have no excuse."
Car dealers as well as boat dealers, RV dealers, maybe farm vehicle dealers and other asset types make deals with banks and finance companies to they can make loans to buyers. They may be paying the interest to the finance companies so they can offer a 0% loan to the retail customer for all or part of the loan term.  Neither the finance company nor the dealer wants to make such loans to people who are likely to default. Such customers will not be offered this kind of financing. But remember too that these loans are secured by the asset - the car - which is also insured. But the dealer or the finance company holds that asset as collateral that they can seize to repay the loan. So the finance company gets paid off and the dealer keeps the profit he made selling the car. So these loans are designed to ensure the dealer nor the finance company looses much. These are called asset finance loans because there is always an asset (the car) to use as collateral.
Obviously, we're assuming the company can pay it back, which is why you may only have five to twenty policies via the most renowned five to twenty companies at one time.  *edit: Besides, an immediate boost in purchasing power is pretty advantageous (from my last post)-- *(if someone invests $500 of capital at a 5% interest rate for a one year bond, they immediately get back a note with the purchasing power of $525, which they can spend right away if they wish (if inflation is going to happen anyway, why not beat it to the punch?)).*
In most cases there is no debt attached to those properties, so there is no risk to financial institutions.   So that leaves us with an increase in supply of houses most people can't afford at current prices, expect a short-term boost to construction while many are converted to duplex/apartment type properties and slight downward pressure on prices. Obviously these are wild generalisations and the effect will be massively different in most cities compared to rural or small-town areas.
"You're circling around the answer... The only real difference between a loddar and a privately-issued promissory note is that the loddar is issued by a recognized third party with better credit/credibility (the whole merchant/priest/farmer cartel-thing). Private entities absolutely can and do issue their own promises to pay, and accept them, and in turn rely on those promises to make other promises. It's what you do when you charge something to a credit-card on the basis of your employer's promise to pay. You charge new tires, the tire store promises to pay its employees based on your CC company's promise to pay the tire-store, which is based on your promise to pay the credit-card company, which is based on your employer's promise to pay you, which is based on your employer's contracts with its customers, and so on... In fact, often as not, the whole chain *never actually gets reconciled with printed cash.* The central bank never has to print or even know about these transactions. It's just checks and electronic transfers: promises all the way down, maybe with occasional cash withdrawals for popcorn at the movies or to tip the stripper or something... That doesn't mean it's not ""real money"", it absolutely is: those promises are buying groceries and tires and making mortgage-payments and paying dentist bills and getting people to dig up stuff out of mines that will be fashioned into iPads, and all kinds of stuff. Where this hurts most people in the brain is that they kind of accept dollar bills as axiomatically and intrinsically valuable. So trying to explain in reverse how they are the same as promissory notes or credit-certificates is like trying to convince them that a plane ticket is the same as an airplane (which is obviously not true). That's why I started with this imaginary world without money.
You don't understand government financing at all.  Gov'ts earn revenue, aka, taxes.  They also spend money.  The different between the money they spend and they money they earn is the deficit.  If you run a deficit for a long period of time, you incur a very large national debt.  Now, you can finance (aka, pay for) a deficit by borrowing money.  This means you can sell bonds, and instead of pay off the debt each year, you just pay the interest.  If your spending balloons out of control, your the likely hood of you paying your debt decreases.  If you are very unlikely to payback your debt, people won't buy any more of your bonds, and you no longer have the income (from borrowing) to pay off your interest from other debt you owe, or what ever other obligations you own (think mortgage payments, or teachers salaries, etc).  Here's were Europe and USA differ: European nations can't just print money.  They can issue more debt, but they can't just create more euros.  IF you can print money, you can pay off your debt with money you literally created out of thin air (at the expense of your people, this is called inflation).  But this is a form of cheating, eventually people won't trust you, and won't buy your debt either.  So where do the banks come in?  if the government is SOUND and the banks are NOT, the government can backstop the banks.  This is what the US and UK did.  Greece, Spain, Ireland all had to back stop their banks also.  However, Greece, Spain, and Irelany ( and Italy, and Portugal) also have   1)  A lot of debt  2)  Structurally high deficits  3)  Extremely high borrowing costs (high interest rates...because people don't trust them...because...)  4)  Weak underlying economies  The fourth point gets you in real trouble.  if you have high entitlements, lots of poeple out of work, who the hell is paying taxes and what are they going to?  You have no revenue!  Remember, a govt works just like a household.  It is easy for a good household to support one member, but it is difficult for a member to support an irresponsible household.
"They borrowed it from the people, and typically to finance wars and military spending. For example, Wikipedia suggests that the Bank of England ""was set up to supply money to the King. £1.2m was raised in 12 days; half of this was used to rebuild the Navy."" It's a game that everyone has to play once started; if Napoleon buys an army on credit, you'll have to raise an equal amount or face quite a problem. As for why they've grown so large, it's because governments are quite skilled at owing large sums of money. Only a small portion of the debt comes due in full at a given moment, and they constantly reissue new debt via auction to keep it rolling. So as long as they can make coupon (interest) and the lump sum at maturity, it's not difficult to keep up. Imagine how much credit card debt you could rack up if you only ever had to pay interest. This game will continue for as long as people lend. And there are plenty of lenders. There's pensions, mutual funds and endowments, which find public debt typically safer than stocks. And money market funds, which target 1 dollar NAV and only invest in the ""safest"" AAA-rated bonds to protect it. There's central banks, which can buy and sell public debt to manipulate inflation and exchange rates.  Absent some kind of UN resolution to ban lending, or perhaps a EU mandated balanced budget, these debts will likely continue to grow. You think they ""collectively owe more money than can exist"", but there's a lot of wealth in the world. Most nations owe less than a year's GDP. For example, the US's total wealth is in the neighborhood of 50 trillion."
"Your question is expressed as a run-on sentence, which I'm having trouble parsing. Maybe you could restate.  I'm just pointing out the stupidity of the statist canard that [the debt is not a problem because] ""we owe it to ourselves"". Collectivists like to think we're all in this together, but that's not reality. Some people are taking from others by force of law.  The debt is owed to BANKS, and they want to keep this system going. Wouldn't you like to have a legal monopoly on the supply of currency? Institutions which are funded by loose credit (government, academia, military contractors, crony corporations) likewise benefit from this system.  Those who invest in US dollars, and those who are farthest from the central planning spigot are the losers in this scheme.   But there is more debt than currency, so it can't ever be repaid. So that is a moot point - it can't even hypothetically be considered.   There are however a number of other ways that this system could unwind, when it inevitably does. The banks could be left to fail, and their assets would be bid on by others through the bankruptcy process. Or the Fed could keep issuing currency to keep the banks solvent, eventually inflating the whole system into irrelevance."
No.  The majority of creditors agreed to those terms.  If they hadn't, then Argentinas default would have been an open and shut case some time ago.  Its only now that they're in technical default, because the holdouts went against the majority, and the conditions of the bonds are that all must get equal treatment.
They get higher interest payments.  If they were to sell now they would get a premium over par.  They get principal back if they hold so no gain, only gain if they sell now.  But then they have to put it elsewhere (another bond, this time lower interest?) so it's a wash.  Depends what you use the money for.
If you want to take to task the [$3.7 trillion](https://www.google.com/search?sugexp=chrome,mod=4&amp;sourceid=chrome&amp;ie=UTF-8&amp;q=value+of+muni+bond+market#hl=en&amp;safe=off&amp;sclient=psy-ab&amp;q=%243.7+trillion+bonds&amp;oq=%243.7+trillion+bonds&amp;aq=f&amp;aqi=&amp;aql=&amp;gs_l=serp.3...2959.7140.0.7714.19.19.0.0.0.0.172.2410.1j18.19.0...0.0.TAsEgkE4bAg&amp;pbx=1&amp;bav=on.2,or.r_gc.r_pw.r_cp.r_qf.,cf.osb&amp;fp=fea88144d3bdc45d&amp;biw=1283&amp;bih=739) bond market number enjoy your long list of sources using it. I guess they're all in the business of exaggeration huh?       [Municipal Securities Rulemaking Board](http://www.msrb.org/Municipal-Bond-Market.aspx)   &gt;The approximately $3.7 trillion municipal bond market brings together bond issuers and investors to finance public infrastructure projects.     So now tell me, was he making up a number to exaggerate his story or was he just using the same number the fucking MSRB uses as his source?      Why don't YOU start providing some proof as to why the number is wrong.  That's typically what someone challenging data is supposed to do.        EDIT:     [Fed Agrees With Citi On $3.7 Trillion Estimate](http://www.bloomberg.com/news/2011-12-08/u-s-municipal-bond-market-28-larger-than-estimated-federal-reserve-says.html)
"Governments borrowing money doesn't create new money. When banks ""borrow"" money (i.e. take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people."
The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply.  The question is merely political. In the case of the US, printing money involves convincing politicians to spend it.  While we currently run a deficit, there is a large lobby within the US who are incredibly anti-deficit, and are fighting against this for no good reason.  If the money supply were left in their hands, we would end up with a shrinking money supply and rapid deflation. On the other hand, the Fed can simply bypass the politicians, and control the money supply directly by issuing bonds.  It's easier for them, they don't have to explain it to voters (only to economists), and it gives them more direct control without any messy political considerations like which programs to expand or cut.
If the government defaults on its debt, the holders of the debt get hung out to dry. You'll personally still owe just what you owed before, but the risk profile for the lender just shot up through the roof if the debt they hold is government-backed.
Banks should be risk averse by default. They make loans to people and businesses after measuring their ability to repay.  After they approve a big project loan like an apartment building, they don't give all the money to the builders upfront. They give money as progress is made and they make sure the funds are not being used inappropriately. There's no reason they couldn't do all this while owning the project, but that would also open them to lawsuits later on if anything wasn't built to code. By keeping the project at arm's length, they avoid future liability.
How is the government paid for these things? How is this handled without taxes? Are you suggesting that the people pay for all of this because they supposedly derive all the benefit while the businesses supposedly derive none from infrastructure.  Yes public roads may not be restricted by entities except in safety measures and compliance with DOT regulations. It is illegal for company A to blockade or otherwise make unavailable a public road to keep company B or the general public from using it.   These type of rules also apply to communication lines and power infrastructure and are designed to decrease duplication and ensure that selected infrastructure is appropriate for the area.