What Is a Liberty Bond?

Free government bonds refer to government bonds that are freely subscribed by enterprises or residents when they are issued without any application requirements. It is a common form of issuance of national debt in the modern world.

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The real meaning of free government bonds refers to the government bonds sold by the government on the financial market. Generally speaking, the government does not impose any coercive measures or conditions on such government bonds. In terms of nature, the government's lending status is not exactly the same as that of ordinary enterprises or individuals. There are two main reasons: First, the government has political power that no enterprise, social group, or individual has. In terms of national debt, this supreme political power of the government shows many aspects. For example, the government can give its creditors certain Tax incentives can also give state debt creditors some convenience in non-treasury investment, etc. Second, the government's economic strength, so its bond credit is very high. Generally speaking, the government will not go bankrupt due to debt unless it is politically responsible. The economic strength of the government mainly reflects the taxing power that the government has. Therefore, for investors, government bonds are a very attractive asset. Compared with non-government bonds, it has the characteristics of low risk and good interest rates. Because of this, most countries in the modern world issue free government bonds and rarely issue compulsory government bonds. ^[1]