Have you ever stopped for a moment and thought about where could the money spent by the government for infrastructure projects have come from? Especially with all these talks of budget deficits and economic recession? How could the roads that we trudge on daily have come into existence? How about the hospitals we maddeningly rush to when somebody's sick? How about those schools that mold the nation's future?
Now, it may be too much to ask for when we're engrossed in the despondency of our daily routines. But just in case you did, it may be a question worth pondering on as some of these infrastructures are not financed through the most common method: taxation. In line with this, it may come as a surprise to know that these projects came into being because of a thing you've probably never heard of before, much less even comprehend: It is called the municipal bond market.
The Nature of Municipal Bond Market
This is a market like no other. For one, it has no physical existence. It exists only in theory as its main commodity, municipal bonds, are not something you can cart away after a successful bargaining with the store owner. Also known as state bond or local bond, municipal bonds are long-term debt instruments issued by state and local governments to finance expenses on such projects as schools, roads, hospitals, and other large projects. A significant portion of these bonds are in the hands of commercial banks and insurance companies, although individuals and other high income individuals also own a prominent share of municipal bonds in the U.S. A significant characteristic of these bonds is that they earn income on interests tax-free. This particular characteristic has made the municipal bond market one of the biggest securities exchange in the U.S. Moreover, because of the municipal bond market, the nation continues to enjoy a luxurious array of infrastructures that are often the envy of other nations.
My name is Dean and I have a keen interest in all financial issues. I run the Loans and Finance Website. If you would like more information on financial issues then I recommend the following article: Municipal bond market.
Article Source: http://EzineArticles.com/?expert=Dean_Sturridge
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