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Principles of Finance: Unit 5, Why Do Muni Bonds Exist Anyway? 4 Views


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Description:

Why do muni bonds exist? Why do any of us exist? Sorry. We got real Camus on you there. (Real answer: to build and maintain the infrastructure of cities.)

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Transcript

00:00

Principles of finance a la shmoop why do muni bonds exist anyway well

00:07

their purpose in life is to build and maintain the infrastructure of cities [Construction workers building]

00:13

parking lots, sewage systems, dams they all have to be maintained or people die

00:18

yeah dam is right so by giving cheap money in the form of the federal

00:22

government "waiving taxes" that would otherwise be do the national [Uncle Sam holding football outside government building]

00:27

government is giving over management control to the local government remember

00:31

the bureaucrats in Washington have no idea whether the parking structure

00:35

should be four storeys or three but the local merchants do in making muni bonds

00:40

an attractive investment the government gets investors who are local who have a [Investors discussing matters]

00:45

stake in the game and who have a vested interest in the investment working over

00:50

long periods of time so if there are exogenous crazy events like an [House with part of the wall missing]

00:55

earthquake or a stampede or an outbreak of plague or free-love then the local

01:01

power players quickly figure out how to fix it if everything had to be routed [People in a meeting discuss how to fix issues]

01:05

through Washington... Well, scant few things would ever get done quickly so treat

01:10

your bonds like your USDA organic 100% biodynamic avocado toast and free-range

01:16

eggs and you know keep them local

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