Bonds are just like IOUs. Companies will issue bonds when they want to raise extra money. Prof Steve Keene explains how much of that money sued to come from banks, but now it often comes from investors buying bonds for the guaranteed percentage return they provide over their lifetime. So, do government bonds work the same way. Not quite, but they are tied to government spending and any attempt to reduce that spending and eradicate a government deficit will reduce the bonds available, something that will be particularly felt by banks and the finance sector.

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