this post was submitted on 02 Feb 2026
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Explain Like I'm Five
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Usually, countries and companies will buy govt bonds because those are safe, long term investments. Selling the bonds means they don't trust the investment is safe, that is, they don't think the govt will pay them back (default), or that interest rates will remain higher than inflation.
Suppose a country goes through large price inflation, like 15% a year, while interest is only 5% a year. The bonds will have lost 10% total value. Right now, USA inflation and interest are at ~2.7% and ~3.7-4.2% respectively, so bonds are still profitable.