Savings bonds are safe despite 'fiscal cliff' anxieties

  • Article by: CHRIS FARRELL
  • Updated: November 3, 2012 - 4:36 PM
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jandbaNov. 5, 12 1:41 PM

"We're the wealthiest nation ever" Is this the proper contraction? It should be "we were", because the only way we ARE wealthy now is if you are talking about debt. We do lead the world in debt, and by a lot. I don't consider someone wealthy if they are bankrupt. Right now the U.S. would be in real trouble if interest rates were to rise just to levels of a few years ago and our bankruptcy would be exposed. Meeting interest payments does not make us solvent and we will never be able to repay the principle in any real sense. Our debts will either continue to be repaid through inflation or outright default as the wealth simply does not exist anywhere in this country to pay it, even if we were to sell off assets as they are doing in Greece. Just because many of the other Western economies are also broke does not make us solvent. Right now we are going down a well worn path of past highly indebted countries and it will not end well. Raising the debt ceiling to "solve" the fiscal cliff is absolutely no different than solving your personal debt problem by having Visa increase your credit limit. Sure, you can continue spending but will the debt be repaid without actually earning more and living BELOW your means for some time? As the government currently borrows over 40 cents of every dollar, we are a long way from living below our means. And, face it, almost nothing is trending in the right direction, especially demographically. John Andrews

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JRBNov. 5, 12 9:05 PM

I agree 100% with jandba and couldn't have said it any better myself. As to the original reader who asked the question, I too hold six figures worth of bonds, mostly I-bonds purchased when they were paying 3%+ over the inflation rate. Although I'm concerned long-term for all the reasons jandba outlines (and Mr. Farell chose to ignore in his reply), I do plan to hold them indefinitely because no other "guaranteed to be 100% safe" investment pays as well right now. But I will keep a close eye on economic conditions and would not hesitate to cash out if (or when?) the situation deteriorates beyond repair.

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mauianNov. 9, 12 1:36 PM

Your savings bonds are only as safe as the currency that backs them. So,lets see. Trillion dollar a year deficits, $16 trillion in total debt (not counting Social Security, etc), a 35% higher debt per person ratio than Greece, the US Treasury Secretary telling you the "fiscal cliff" will happen this year (that's within 60 days). Is your money safe there? Absolutely NOT. And losing value daily. Look into physical gold and silver. Gasoline when I was a kid was 21 cents/gallon. Now, 40 years later, 2 pre 1964 silver dimes (worth approx $2.50-3.50 ea)will still buy you a gallon of gas anywhere in the US. And what about your "safe" investment, the dollar? Takes 4 of those now to buy that gallon of gas. Will take more and more of those to buy everything as the government prints more and more dollars. They can't print gold.

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mauianNov. 9, 12 1:43 PM

Jandba,"Right now the U.S. would be in real trouble if interest rates were to rise just to levels of a few years ago and our bankruptcy would be exposed". Exactly right. And who sets the interest rate? The Federal Reserve (private bankers) Bank. Look what the bankers are doing to Greek people. Argentina, Spain, Italy, UK. Amazing they gave the power of literally life and death to a nation to one entity, isn't it? Anyone who thinks we here are immune to the wrath of the greed of bankers will lose everything.

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