Bonds are liquid as cash is. It’s just a higher denomination with a small fee if you convert it to something real. Try to picture a bond as a 00 bill, you can’t take that to a store and buy something with it any more than you can take a 00000 bond to the store. But they are the same as smaller bills of cash and you need a bank to make change for you. Both a Treasury bond and 00 FRN note are guaranteed by the government they are accepted at the bank for smaller bills at any time with issue. Check out the movie “panic room” in that movie there was millions dollars in bearer bonds. All they are is notes with high dollar values on them. They where already discounted when the person purchased them. “Discount” is banker lingo, let me clarify. The government when it creates a bond it puts a price on a certificate, say 0 and it also puts a date lets say one year from now. Well that bond is a promise to pay the bearer 0 one year from now. So a person my bid on that bond and give the government right now. That means they have discounted the bond by and the interest rate is over 11% one year. During that one year interest rates go down to 5% and, lets say it happened the next day (for easy math) you could now sell that same bond for just over that’s a profit of . If interest rates go the other way like to 22% then you can sell the bond for or wait the one year for the full 0. Keep in mind that the bond certificate is good, even years after it’s …
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