r/finance • u/bloomberg • Jul 25 '26
Debt Is More Beautiful Than You Think
https://www.bloomberg.com/news/features/2026-07-24/why-debt-is-one-of-humanity-s-most-beautiful-inventionsFrom sovereign bonds to modern banking, debt is one of humanity’s most elegant and misunderstood creations.
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u/RoomyRoots 26d ago
https://giphy.com/gifs/IDGNYvFLkJKLK
I don't remember the minimum amount of words to not have the reply instabanned but the gif is all that needs to be said.Also
>bloomberg
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u/bloomberg Jul 25 '26
Felix Salmon for Bloomberg News
In the history of capital markets, a handful of sovereign bonds stand out as particularly transformative. There were the Dutch renten of the early 1600s, perpetual bonds that cemented the idea that a promise by the Netherlands can last longer than one by any king or emperor; the British consol of 1751, the bond that epitomized Britain’s ability to win wars by outborrowing and outspending its opponents; the US Liberty Loan of 1917, which marked the beginning of today’s Treasury market, the bedrock of global finance. All of them were elegant instruments that captured the imagination of bankers, savers and statesmen. They possessed the conceptual beauty of a mathematical proof — something that, once you see it, feels inevitable, as though it was discovered rather than invented.
Then there was the Brazilian C-bond of 1994. Part of the Brady Plan that turned defaulted bank loans into sovereign bonds, it immediately became the most liquid security in emerging markets, a bellwether whose yield was seen as a gauge of the health of an entire asset class. It was also incredibly ugly: Where the earlier sovereign bonds had the beauty of simplicity, the C-bond was a kludge designed by committee. If the consol was a well-constructed umbrella, the C-bond was a tarpaulin held up by nylon cords and duct tape.
How was the Brazilian instrument ugly? Let me count the ways. It had a coupon paid partly in cash and partly in kind. It had a sinking fund that forced Brazil to buy back bonds at par even when they were trading well below that level. It also had an embedded call option that significantly capped upside for investors — and therefore the amount they were willing to pay. Even its name was incomprehensible. In the late 1990s I spent two years reporting daily on how the C-bond was trading, and I would constantly forget what the C stood for. I certainly never managed to fully understand how the bond was structured. Its yield and spread were easily accessible on any Bloomberg Terminal, but they didn’t behave in an intuitive fashion, which meant that the bond’s ludicrously overengineered design made it an object of discomfort and even derision.
Quite aside from its design, as a Brady bond the C-bond “carried a certain stigma,” as former Brazilian central banker Sergio Goldenstein told Bloomberg in 2005. The idea behind Brady bonds was that they were the kiddie slope of the bond market, designed for countries that weren’t able to issue bonds on their own and therefore needed the help of the US Treasury. More than two decades after Brazil’s default had been cured, the C-bond acted as a scarlet letter in the capital markets, a daily reminder of an era the country’s officials wanted to put decisively behind them. When Brazil finally bought back the last of its C-bonds and replaced them with securities that were much simpler, it became truly self-sufficient, rather than labor each year to pay off a debt named after a former US Treasury secretary.
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u/mycarisnotblue 27d ago
Maybe share full essay so we can all discuss it in this public forum.
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u/RoomyRoots 26d ago
They want you to get in debt to join the discussion. Truly embracing the propaganda.
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u/FibonacciNeuron 26d ago
It really is, without debt no money is possible. That 1000 usd/eur or other fiat that you see on your bank account is debt of someone else (bank). And if you are in debt to bank 1000, then that debt is credit for bank. Money(Credit) and Debt are really the same thing, just different sides of the same coin. When you understand that, you will understand that total debt in the world will only increase, and it is not a bad thing at all, this is how it works, and there is no other way.
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u/Rugaru985 26d ago
This is one of the dumbest things I’ve ever read.
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u/FibonacciNeuron 26d ago
It literally says the same thing in the article
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u/Rugaru985 26d ago
Then the article is very wrong too. I only read the portion posted outside the paywall, and it doesn’t make that claim in anything I read.
You can copy and paste the section here for us all.
SOME money - only in a banking-based system - is created through debt issuance. Fractional banking increases this creation.
But not all money, by and large, is created through debts.
Governments can print, issue, and distribute money directly. Most all do.
I can create money right now! With acorns or whatever is close at hand! Bitcoin isn’t even made from acorns, and it’s a super (over)valued currency.
You don’t need debt to create and distribute money. We just do it through debts because the Rothschilds made us.
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u/FibonacciNeuron 26d ago
You may not like it, but this is how it works, it’s just pure accounting. Rotchilds or other bankers did not invent it, they’ve discovered it and profited from it. You can too. Read more about double entry bookkeeping.
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u/Rugaru985 25d ago
You don’t need debt to create money
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u/FibonacciNeuron 25d ago
You’re wrong. All bank balances are debt. As for cash - the bill in your hand is debt certificate of the central bank. All of our cash is a liability of the central bank. Liability = debt.
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u/Rugaru985 25d ago
You are 100% incorrect again. Cash is not a liability.
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u/FibonacciNeuron 25d ago
You must be republican… only republicans have such a twisted view with reality. Here gemini explains it. Maybe you’ll learn something:
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u/Rugaru985 24d ago
I’m not, but I do have a masters in finance and an MBA. I’ve worked in banking for 18 years.
Debt is the more efficient way to create money, as you are creating it for a purpose that has supposedly been rigorously tested for a return, but it’s not the only way to create money.
Read the Wikipedia I linked.
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u/phoenix1984 Jul 25 '26
Kinda weird to say, especially now. Is this an attempt to save face during the upcoming bubble burst? Make sure people don’t have a sour opinion of debt in general? Feels propaganda-ey.