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If the gov't wants to eliminate people from risking their social secrity money in the stock market, why don't they just allow people invest in Ginne Maes, an intermediate bond fund that earns consistent returns of approximately 6 - 7 % per year over the long run.

danpat24,

Bonds, like all financial instruments, are subject to the basic element of Price theory: Supply and demand.

If a bond with a $100 par value is issued with a 7% yield, and demand for that bond is high, the value goes up (you have to pay more than $100 for the bond) and the yield therefore declines.

If huge amounts of retirement capital are poured into bonds, you can expect that the average yields will significantly decline -- which to some extent is what is happening right now in treasury bond market (not the corporate, there, basis points spreads are getting rather troubling).
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