U.S bonds have very low yields, so even if they don't become taxable, I highly doubt it'll increase the percentage of a company's portfolio is allocated to them. And I don't know what you mean buy "selling to foreign governments". We don't have control over who buys bonds - they're traded on the open market. And the vast majority of holders of U.S debt are U.S investors. Foreign governments make up a fraction. Besides, why does it matter who's buying the bonds?
Low yields are better then little to no yields. Take the money out of the shadows.
Remember, I am implementing a rule change here. They can stow this money like a short term version of a 401k. In this case they are investing in the US, and the return is a guarenteed %, completely safe.
My long term goal would prohibit non US citizens or companies from buying bonds at all. Now that I think of it, every US citizen should be able to buy bonds pre tax. It would be a nice alternative to 401k, which depends solely on the stock market.
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