War Effect on Bonds and Stocks
Bonds, Government taking loans from you.
The idea of a bond is essential the government taking loans from you, they take an amount of your money and then in a decided amount of time they repay you the loaned value along with a specified interest. These bonds can vary along in their value. Bonds are often used as a way to fund the goveremnt durring war times and tiems of depression.
During both of the World wars, as american began engaging in the actual war its self, the put out a lot of propaganda to convince people to buy bonds as well as enlist and volunteer. These campaigns are often quite successful especially during the World Wars when people are very aggravated and generally Pro-war. The campaign during WWI sold $185 billion worth of bonds, giving alot of funding to the govemrent, and very much helpign the war effort.
But the actual effect of these bonds on the economy is debatibal, while 185 billion may seem like a lot of money, for the use government getting that much extra over the course of many years seems a very small amount of money. But paying it back has unquestionably effected the economy, the government had to pay back everything they got with extra. And getting the money is a lot easier than paying it back, the US government already has a lot of debt to other countries and having more debt to their own citizens does not help anything.
There are more ways that war bonds can effect economics, bonds are essentially just stocks, they are more definite but otherwise they are simply stocks. A lot of people chose to buy bonds in favor of stocks because bonds have a 100+% repay rate, you cant not get repaid for a bond where stocks have high chance of not getting repaid. So people might invest their money into bonds, getting money back at a higher rate and fueling the economy, stocks fuel the economy too but in a much riskier way.
The main effect of this though is that people spend money that could have been spending in other ways on investing, they would spend a lot of their money on war bonds instead of directly funding the market. This does make it kind of hard for the market to function as well, if all your customers are using big parts of their paycheck every paycheck on something that is not goods or services, they have less to spend on you, due to the nature of the free market, you have to compete harder because your demand goes down. Especially if you have something that is not totally necessary, you will lose a lot of your business and have to compete harder to get every single dollar.
