Ro & Ritu Khanna, Municipal Bonds, Impact Investing & The UN Sustainable Development Goals

Welcome to the world of impact investing. Today, we’ll look at how impact investing has become the trend of the day for the richest in the world — all the way down to municipal bond investments. While bond investment isn’t necessarily new in times of financial uncertainty, the complete merger of the private and public sector sprinkled with a dash of surveillance (under the guise of your safety, of course), brings us into an entirely different realm.

Ro Khanna’s wife, Ritu Khanna of LexisNexis, divested from big defense and oil? Wow! Not so fast. Robbie pointed out, later on in a private conversation, that Ritu Khanna, Ro Khanna’s wife, moved money into municipal bonds. After he pointed this out, I couldn’t help but wonder what the incentive would be, from a revenue standpoint, to move out of defense and oil and into municipal bonds around the country — many of which look to be short-term and of a relatively small-dollar amount.

I’ll be candid here: the subject of municipal bonds is quite new to me — so don’t be surprised if you’re feeling confused halfway through this article! The end point will tie it all together. More importantly, for anyone reading this who HAS experience in this area — please reach out with any suggestions or critiques. My articles are always subject to change as new information becomes available. Having said that, let’s look into municipal bonds and how they relate to bond investments (both tax-exempt and taxable) that followed the 2008 Financial Crisis — and why they’ve suddenly surged in popularity with the elite class. I’ll then tie it all together with the notion of the new era of “impact investing” and Conscious Capitalism — thanks to my good friend, Sebs Solomon, for her work on the United Nations Sustainable Development Goals and Agenda 2030. You can follow her work here on Medium.

What are Municipal Bonds?

According to the Brookings Institute, “Municipal bonds — debt issued by state and local governments and some nonprofit institutions — are attractive to investors because the interest is generally exempt from local income taxes. As a result, investors are willing to accept a lower interest rate than they would otherwise demand, and the issuers get lower borrowing costs. As of November of 2020, $129.3 billion in taxable bonds were issued, up from $67.3 billion in 2019 and $25.1 billion in 2018.” Nonprofits with 501(c)3 status can also issue tax-exempt bonds under certain stipulations. Moreover, states can also determine whether they tax muni bond interest. In 2008, the Supreme Court ruled that states and localities could exempt their own municipal bonds’ interest from taxes — yet they could tax interest from other state and localities’ municipal bonds.

“If your primary investing objective is to preserve capital while generating a tax-free income stream, municipal bonds are worth considering. Municipal bonds (munis) are debt obligations issued by government entities. When you buy a municipal bond, you are loaning money to the issuer in exchange for a set number of interest payments over a predetermined period. At the end of that period, the bond reaches its maturity date.”

Municipal bonds are available in both tax-exempt and taxable forms, but tax-exempt bonds are especially lucrative to investors because of their tax-exemption status from federal, state, and most local income taxes. Investing in muni bonds isn’t ALWAYS risk- free, but typically, default risk is “low for municipal bonds.” Facilities providing water sewage treatment, for example, are far more reliable revenue streams for investors compared to something like a park’s rentable shelter space (because it’s dependent on a number of outside factors — unlike a water sewage treatment facility — a critical infrastructure piece). Municipal bonds come in two forms: general obligation bonds and revenue bonds. General bonds are typically backed by property taxes or general funds and are issued by governmental entities — not specific projects. Revenue bonds, secure both interest and principal payments through hotel or sales taxes. When a municipality is an a conduit investor, the backing is usually created through a third-party. Confused yet?

Basically, muni bonds are just another form of protecting money and generating revenue with relatively low-risk for the wealthiest among us. It’s rather simple to understand why the wealthy find refuge in tax-exempt municipal bonds; but the support for taxable bonds that spawned after the 2008 Financial Crisis has resurfaced as of late. Why? Access, of course. Framed as “increased accessibility” for the middle class didn’t work out so well during the Obama years. Yet here we are again in the Biden era.

After the Great Recession, we saw an uptick in issued taxable municipal bonds — thanks to the “Build America Bonds” program. It ended in 2010 without any extension measures. Fast forward to 2019 — from August to November of 2020, “between 15% and 40% of municipal bonds issued reach month were taxable. In October of 2020, borrowers issued $45.2 billion in tax-exempt municipal bonds and $25.1 billion in taxable municipal bonds.” Why the uptick? Basically: taxable municipal bonds — as I see it — are better for people in lower tax brackets — “for whom the tax exemption is less valuable.” If you’re beyond confused now — it’s okay. Stay with me. They’re basically saying that if you’re in a lower-tax bracket, you’d generate more revenue by investing in non-exempt taxable muni bonds because the exemption wouldn’t be worth it. See what they did there? That sentiment is true because the wealthy influence legislation that enables this repeated behavior.

Municipal bonds such as the type we are currently seeing are lucrative because they’re short-term and help build portfolio diversification. While the “Build America Bonds” was supposed to be a remedy for some of the fallout of the Great Recession, Brookings’ outlined the ways that these ended up becoming costly for issuers — who had to pay back what was promised to investors without expected repayment from the government. An important sidenote: the Brookings Institute had no problem calling out the failures of the last time, but they conveniently add in the changes that will somehow make the current version “much more effective.”
Brookings Institute, 2021

Why would we be seeing such a spike in muni bonds investment, then, if it didn’t work the last time? Well — here comes the American Infrastructure Bonds Act.

If you’re REALLY lost now — I promise you, there’s a point to all of this. What we’re seeing is a “broadening” of the taxable bond market — for lower-tax bracket individuals to fund expensive public projects like national rail improvements. Because many of these bonds are only successful revenue generators in the short term — one has to wonder why there’s a push to get more people into municipal bonds unless they really understand what they’re doing? Having said that — you’re probably wondering, “Okay — what’s your point? How are the rich going to get richer through the use of TAX-EXEMPT municipal bonds?”

Hey! Isn’t that Ro Khanna’s signature? We’ll come back to that…but just remember this letter. Ro’s signed these before — maybe he just likes the municipal bond market?

In March of 2021, Hilltop Securities’ Head of Municipal Strategy & Credit noted that, “the American Rescue Plan provides at least $350 billion into state and local governments. In fact, “this capital boost could put U.S. public finance on the brink of a golden age because of the opportunities that currently exist for state and local government leaders, especially if infrastructure stimulus follows later this year. Municipal bond credit will be lifted across almost every sector. We now expect that public finance rating upgrades will outpace downgrades in 2021 and most likely in 2022.”

The 2021 Infrastructure Bill — which we’ll discuss sometime later — is an obvious win for anyone looking to generate revenue off of municipal bonds — specifically those who are looking to generate revenue from the tax-exempt status of these short-term bonds. Let’s take a look at “The Moving Forward Act” fact sheet — proposed back in 2020. It never went anywhere, but the elements of this proposed legislation are baked into the foundation of the 2021 Infrastructure Bill.

Remember the Build America Bonds and the Private Activity Bonds discussed earlier in the article? There’s an obvious legislative incentive for the wealthiest of the wealthy to have these safeguards against inflation — like muni bonds. Moreover, the current muni bond market is booming with all kinds of “green” and sustainable muni bonds — all dedicated to advancing the Biden climate agenda in a variety of ways. “Green bonds,” for example, are the hottest fad in the muni bond market right now. Build America Mutual, the “#1 Muni-only insurer,” that is backed by the National League of Cities (think mayors like Los Angeles, Chicago, New York), S&P Global Ratings, and AAStable, is a “mutual insurance structure” that provides stakeholders with a “unique 15% first-loss reinsurance treaty that covers losses of up to 15%.”


Clearly, the activity here is skyrocketing, and the philanthropy and political leaders of the world are looking to cash in. With the recent Infrastructure Bill passage in the Senate — a piece of legislation that encompasses some of the most expansive, transformational, and economy-changing measures that we’ve ever seen — many of which include measures to reduce climate-change impacts, advance projects in renewable energy, clean water, and low-carbon transportation or infrastructure — among MANY other accelerators of change.

“Many investors already know about the tax benefits of municipal bonds” — especially in times of uncertainty as far as inflation (which is definitely accounted for in the Infrastructure Bill — thank you to my good friend, Shadowbanned Refugee for pointing that out.) With the muni bond market increasing by $474B in 2020, more than $27.6B was issued for sustainable or social bonds (outcomes-based investing), showing us another reason as to why the Biden Administration is getting so many prominent elites to reinvest their money into climate-based muni bonds and divesting from oil and defense. With Biden leading the way, the revenue streams are endless with a green economy. Considering that the Infrastructure Bill includes numbers that factor inflation into everything — this headline stuck out to me:

“Investors often buy muni bonds because of tax benefits. Generally, munis enjoy no federal tax on interest, and investors may also bypass state and local levies on yields, depending on where they live. And high earners may be eager to reduce levies, especially with Joe Biden’s proposal to hike top capital gains rates to 39.6%.”

What Biden forgot to mention, along with everyone else in Washington, is that many of these municipal, “green”, clean bonds — is the part about “social and sustainable bonds that[are] aligned with one of the United Nations’ 17 sustainable development goals. The alignment provides further comfort to investors that they’re buying legitimate green, social, and sustainable bonds. And that’s where we see the market going in the next year,” according to a recent CNBC article on the muni-bond market.

But, wait, those are good things, right? It sounds like the capitalist class has changed their tune? Hardly.

Capturing all of the ways that the United Nations Sustainable Development Goals aka Agenda 2030 aka Agenda 21 (loosely speaking) isn’t easy — but thankfully, my good friend Sebs Solomon has perfectly summed up what the Philanthropy class, the United Nations, and social financiers have in store for us in the coming years. I’ve included a few screenshots for those of you who are completely lost on how this all ties together (it’s okay to be lost, by the way. God knows I was…and am still always learning). You can follow all of Sebs’ work here. I’ve included a few screenshots from her most recent article: Zong Massacre, Sinister Origins of Maritime Insurance, and Human Capital to better understand how this all ties together.

Barack Obama, whether you love him or hate him, was quite fond of these types of impact investments. Again, I urge you to check out Sebs’ article in full that I’ve linked above, but there will be plenty more on the topic. You know what they say about intentions…I’ll leave you with that, along with this video that sums up some of the early beginnings of impact investing in terms of how those types of investments have become quite lucrative to the predator class.

Bloomberg Quicktake Reports Obama Admin is embracing Social Impact Bonds (2012)

To tie everything back together — it’s important to understand that a simple action like divesting from Lockheed Martin or any other war machine industry doesn’t absolve someone from acting in a nefarious — or at the very least, a self-serving and short-sighted manner. Anything that’s set to advance the United Nations’ Sustainable Development Goals must ALWAYS be examined through the same lens that we examine a political figure’s military-industrial complex investments. The corporation and state have merged together in a way that is more intrusive than ever, because it relies on the surveillance state to carry out what cannot be done through other means. What’s even worse is the obfuscation of language — the predator class has effectively taken the words that humanity knows to be generally fundamental to happiness and well-being, and privatized them to fit their insatiable financial thirst. I’m not celebrating that Ro Khanna’s wife divested from anything substantial — she simply transferred it over to something that sounds like utopia. As Jordan of The Yellow Brick Road always says, “there’s no congratulations or awards in this space.” That applies to Congressman Ro Khanna and his wife, Ritu Khanna, and the rest of the people elected.

Look into what your governors, mayors, and congressional representatives have been doing in regards to municipal bonds — you’ll see bipartisanship on a scale not seen in years. My final point? Republicans and Democrats in the highest realms of government are, in my opinion, representative of two slightly similar paths that have different intricacies, but end up at the same place — a place where where party labels mean nothing and assets, wealth, and control mean everything. Don’t let their language trick you into not reading the fine print.

Til next time,





312 • chicago, il

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Aly Alexandra

Aly Alexandra

312 • chicago, il

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