Proposal/question for experts on gov't bonds

[feargach]

Is the following idea legal? Is there any genuinely insuperable reason it could not be done, such as firm ECB/EU opposition?

Pretty simply idea really. The state intends to borrow €10bn or more for 2010. If we don't do it, the economic crash that would result would destroy far more than it saves. We would avoid having to ay back 10 bn plus interest, but the country would lose jobs and companies and trade with a much larger value. So the borrowing is definitely needed. We have more to lose by not borrowing than vice versa.

The idea is basic. If we loan to foreigners, they will demand a higher interest rate. If we loan to ourselves (people living in the 26 counties) we have a vested interest in the state having a lower borrowing cost, therefore it makes sense for us to ask for less interest, as we will be rewarded by a lower tax burden as well as the beneficial effects of the increase in aggregate demand.

So, the state offers a bond paying us a flat 3%, far more than we'd get from any bank. The increment is €100. It works on the pledge system. On Monday you pledge however much money you have by moving it into a special post office account. On Wednesday the state announces whether it achieved enough pledges to attain an acceptable amount of money. If not enough pledges are raised, the money is returned. If the pledges are sufficient, the bonds are issued.

I am guessing that someone has thought of this already, and I'm wondering if there's some legal reason it can't be done.

[feargach]

anything?

[atlantic]

It might work ,but people haven't alot of mula .Would the socialists all over Ireland not go nuts that rich people where making mula off the taxpayer?Next year will be fun and games governments around the world will need 12-13 trillion to cover themselves.

[cyberianpan]

I'm puzzled... I thought you didn't like deflation & attendant cash hoarding that happens during a recession ... yet you are now encouraging a MASSIVE government savings scheme ?

Secondly according to modern investment theory and Irish person shouldn't use their savings buy Irish government bonds ... as that means they are doubly f**ed if the economy goes down

Thirdly the ECB is printing money to buy our bonds.... and I way prefer that... and even still, whilst they've likely printed over €10b for us... that hasn't radically lowered yields

cYp

[Quinn Quinn]

I'm puzzled... I thought you didn't like deflation & attendant cash hoarding that happens during a recession ... yet you are now encouraging a MASSIVE government savings scheme ?
Secondly according to modern investment theory and Irish person shouldn't use their savings buy Irish government bonds ... as that means they are doubly f**ed if the economy goes down
Thirdly the ECB is printing money to buy our bonds.... and I way prefer that... and even still, whilst they've likely printed over 10b for us... that hasn't radically lowered yields
cYp

That is utter drivel. . . Like most of your rantings

[Dreaded_Estate]

Is the following idea legal? Is there any genuinely insuperable reason it could not be done, such as firm ECB/EU opposition?

Pretty simply idea really. The state intends to borrow €10bn or more for 2010. If we don't do it, the economic crash that would result would destroy far more than it saves. We would avoid having to ay back 10 bn plus interest, but the country would lose jobs and companies and trade with a much larger value. So the borrowing is definitely needed. We have more to lose by not borrowing than vice versa.

The idea is basic. If we loan to foreigners, they will demand a higher interest rate. If we loan to ourselves (people living in the 26 counties) we have a vested interest in the state having a lower borrowing cost, therefore it makes sense for us to ask for less interest, as we will be rewarded by a lower tax burden as well as the beneficial effects of the increase in aggregate demand.

So, the state offers a bond paying us a flat 3%, far more than we'd get from any bank. The increment is €100. It works on the pledge system. On Monday you pledge however much money you have by moving it into a special post office account. On Wednesday the state announces whether it achieved enough pledges to attain an acceptable amount of money. If not enough pledges are raised, the money is returned. If the pledges are sufficient, the bonds are issued.

I am guessing that someone has thought of this already, and I'm wondering if there's some legal reason it can't be done.

Isn't this exactly what Prize bonds are.

We'll have borrowed €10bn by May 2010. It will be at least €25bn for the year if the cuts/taxes are imposed.

[feargach]

Isn't this exactly what Prize bonds are.

We'll have borrowed €10bn by May 2010. It will be at least €25bn for the year if the cuts/taxes are imposed.

I thought you were "in the business"? I understood that prize bonds pay no interest (thus unlike what I proposed) have no redemption date (thus unlike what I proposed) and have as a sole upside the chance of winning prizes, which might well turn out to never happen in 1000 years (thus unlike what I proposed).

So I hope you don't mean "exactly" in a literal sense.

[cyberianpan]

I thought you were "in the business"? I understood that prize bonds pay no interest (thus unlike what I proposed) have no redemption date (thus unlike what I proposed) and have as a sole upside the chance of winning prizes, which might well turn out to never happen in 1000 years (thus unlike what I proposed).

So I hope you don't mean "exactly" in a literal sense.

DE likely meant Savings Certs which are also NTMA issued and An Post administered


cYp

[nonpartyboy]

So, on top of all the tax they are already taking you want to give the government more money with no strings attached..............ARE YOU INSANE ?

At least the eu are getting some commitments out if them before giving them money.

[feargach]

DE likely meant Savings Certs which are also NTMA issued and An Post administered


cYp

Well, this rule is one reason it's not for me: (1) No person shall at any time hold or have any interest in Savings Certificates with an aggregate purchase price of more than €120,000 (the “maximum
personal holding”).

If Bono wishes to buy €1m of them, I don't want to stand in his way.

Besides, I think it's important to do this in the pledge manner: the idea is to solve a lot of the problems in one fell swoop, but nobody wants to be the first to jump.

People HATE the idea that they might buy the bonds, but their neighbours would choose not to do, but benefit from the economic upturn.

It's a fact of human psychology that most of us would seriously consider starving rather than survive, but with free-riders benefiting from our efforts.

The pledge idea means that, if insufficient numbers take part, that means that the minority who do take part will have the option to pull out.