The Next New Thing in Finance — Bonds Linked Directly to the Economy
When the next big recession comes, we’ll be much better off if governments have established a new kind of bond tied to the ups and downs of the economy.
In fact, just such a financial innovation is almost ready for the marketplace.
The investment vehicle, called a G.D.P.-linked bond because it is tied to fluctuations in a country’s gross domestic product, would be immensely valuable to cash-strapped governments when revenue fell and debt-service costs climbed. In those circumstan...