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EE Savings Bonds Safe?

I was wondering if EE Savings Bonds are still a safe place for cash. The older ones (1980's) pay about 4%. The new ones only 1.4% However there seems to be something called an (I bond) which says it's at 4.84%

Banks/CD's may not be the best choice for cash at the present time and there have been numerous posts regarding trouble. Picking up some gold and silver is a good idea of course and might possibly offset some of the rapid dollar devaluation/inflation theft. However, I was looking for some secure cash-like alternatives. I hold a few of the older EE Bonds. There are certainly banks that won't survive this but the Gov't and it's debt will.




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any paper investment isn't

any paper investment isn't really as good as gold or an actual commodity ... as long as there is a fed, fed notes will be bad i dea

All paper money eventually returns to its real intrinsic value, zero. - Voltaire

Your reasoning is sound

But those interest rates are terrible. Inflation is going to eat your savings if you buy these bonds.

Why don't you call Euro Pacific Capital (Peter Schiff's company) at europac.net? They'll have better instruments than these government backed bonds. Just say away from stocks, even if they're overseas (look at the graphs for Asian stocks if you want to get scared).

Gold and silver are a good hedge against inflation, but I'm not a fan of holding gold bullion due to the buy/sell spread.

Peter's Company is great

shoots for 8% and dividend, very helpful folks. I was debating about other alternatives and what to do with these older bonds though and I would guess I'm not the only one holding some of these. At 4% they beat the going CD rates and CD/Money Market in a climate where some of these banks are gonna go the way of history isn't a great idea. (FDIC or No FDIC)

FDIC-Has cash to handle about ONE large bank failure
www.bankrate.com/brm/news/sav/19991116.asp

I see

Other than shorting financials (if you're into that stuff), I don't know what you could do.

I knew the FDIC didn't have a lot of reserves, but if that $12 billion figure is correct then things are worse than I thought. IndyMac (IMB) is next in line for failure, and FDIC supposedly insures $16 billion of their deposits.

If the Fed gets additional powers from Congress, then the dollar should get devalued to prevent the larger banks from failing. Unfortunately this hurts your bonds.

On FDIC-I found this

The language in Section 14 of the FDIC Act is clear and
unambiguous:
(a) BORROWING FROM TREASURY.-- The Corporation is authorized to borrow from the Treasury, and the Secretary of the Treasury is authorized and directed to loan to the Corporation on such terms as may be fixed by the Corporation and the Secretary, such funds as in the judgment of the Board of Directors of the Corporation are from time to time required for insurance purposes, not exceeding in the aggregate $30,000,000,000 outstanding at any one time, subject to the approval of the Secretary of the Treasury: Provided, That the rate of interest to be charged in connection with any loan made pursuant to this subsection shall not be less than an amount determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding marketable obligations of the United States of comparable maturities.

So, Any additional money from the federal government is not a guarantee, but rather a loan, which will only be made subject to the approval of the Secretary of the Treasury. Further, that the loan is to be made at “current market yields." What do you suppose would happen to US Treasury yields during a true emergency? They might skyrocket, and this would
serve to compound the difficulty of keeping the FDIC fund solvent.

More on FDIC

Section 11 of the act and find this:
(f) PAYMENT OF INSURED DEPOSITS.-- (1) IN GENERAL.--In case of the liquidation of, or other closing or winding up of the affairs of, any insured depository institution, payment of the insured deposits in such institution shall be made by the Corporation AS SOON AS POSSIBLE, subject to the provisions of subsection (g), either by cash or by making available to each depositor a transferred deposit in a new insured depository institution in the same community or in another insured depository institution in an amount equal to the insured deposit of such depositor. That only says “as soon as possible” and sets absolutely no time limit or maximum. Taken to the extreme, it might be impossible for the FDIC to ever make depositors whole again, and this is one of dozens of such “outs” that exist in the document. Remember, this act was written in 1933 when money was gold, times were uncertain, and government lawyers were exceedingly careful to avoid locking the government into any possible financial black holes. And the FDIC Act is very clear to spell out that the only insurance funds available to depositors are those that exist within the fund itself: (f)(1)(A) all payments made pursuant to this section on account of a closed Bank Insurance Fund member shall be made only from the Bank Insurance Fund So, if the fund runs dry, there isn’t another possible source of funds that can be legally tapped without changing this wording. And that would take – wait for it – an act of Congress.

Thanks

Loved the "wait for it" bit.

So, we are watching as Bank of America etal gobble up the

failing institutions instead and the bank writing the sub-prime bailout so it can cover no doubt as FDIC won't do the trick.

Call the spread insurance.

What happens if funds you are talking about are frozen and you cannot repatriate your investment?
___________

Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforliberty.com/

Ron Paul "Sign Wave Across the USA" -- November 5th!

Why should they be frozen?

I didn't even mention specific financial instruments. Why would they be frozen? (To me, a frozen fund is one which becomes insolvent and prevents people from withdrawing their investment)

Any investment has risk associated with it. Stocks can fall, a company may default on its bonds, a government may print money and make their bonds worthless or someone may break into your house and steal your gold coins.

If you're planning for a Mad Max scenario under which all contracts become questionable, then I don't have any advice other than move into the country, join a militia and buy guns and ammo.

I would much rather choose a safe investment overseas than in the United States. The US government has seized gold in the past, most dollar denominated assets have negative returns due to inflation and American investment banks are full of mortgage backed time bombs.

"To me, a frozen fund is one which becomes insolvent and

prevents people from withdrawing their investment."

Yes, that is exactly right.

Define "safe investment". Also, even if a fund isn't frozen, under the Patriot Act the US government can halt international money transfers.

Also, gold and silver are no longer used as currency in the US (or contained in the coins) as it was during the 30s. It isn't necessary to confiscate gold in order to stimulate the economy and provide liquidity since it is no longer in circulation.

Nobody is stopping you from investing in anything. I just gave my opinion. I also believe in being prudent when we are entering what some are already calling "The Very Great Depression". If that is a Mad Max scenario, then, so be it. No use putting your head in the sand and hope it goes away.

___________

Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforliberty.com/

Ron Paul "Sign Wave Across the USA" -- November 5th!

The Very Great Depression

Define "safe investment".

Safe is a relative term. For instance, I like Euro Pacific's option for investing in gold, as it doesn't require me to store gold at home: http://www.europac.net/investment_perth.asp

There are a few foreign currencies which are safe relative to the USD, in the sense that they're partially backed by metals and they are issued by governments with responsible financial policies.

We're working under a different sets of assumptions. I think Americans will experience a strong decline in quality of life over the next generations, but not as severe as you describe. If the government starts confiscating international transfers then we will really have the Very Great Depression.

Only hard assets hold their value in this scenario.

I'd guess we may reach a point when the expatriation of funds

is blocked by the Gov't as a means of forcing the holding of US stocks, bonds, fiat by Nationals as foreign investment drys up due to dollar devaluation but yes, were they to begin confiscating those investment accounts.....stick a fork in ALL of us cuz were done.

You wouldn't want to repatriate those funds until the US

was back on track ergo only expatriate funds that you will not need during the "collapse". Great point! That's why I was looking for alternatives that can be easily redeemed should the need arise that are safe (or safer).

I don't know how much you have to invest or what

other investments you have (other bonds did you say?). However, it might be useful to begin looking at what your immediate needs might be during the coming depression. In addition to a holding of gold and silver, you might think about food, medical supplies, land, etc.

That might sound a bit strange to go from bonds to items such as these but times are going to get real tough for many people and you are better off owning bags of rice and beans than bonds losing value at 4%. We've now got two years worth of food. If you'd asked me a year ago to store food, I would have thought you were crazy. Maybe I am.

If you have quite a bit of money to invest, I'd look at buying real estate that could be converted into boarding houses. That is what my friend does. Converts large homes into one-room boarding houses. She is quite well-off now and has a waiting list of tenants.

Anyway, good luck with your decision and I hope whatever you decide works well.

___________

Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforliberty.com/

Ron Paul "Sign Wave Across the USA" -- November 5th!

TY We certainly are a group of the Nation's

savers collected here on DP!

I sometimes wonder if we should have joined the "live beyond your means by financing crowd" seems they will get protected by the bailouts.

People looking for a bailout are Socialists even though

many might not have ever heard the term.

___________

Lisa C.

“Elections are short term efforts; revolutions are long term projects.”

--Ron Paul

Join the rEVOLution here: http://www.campaignforliberty.com/

Ron Paul "Sign Wave Across the USA" -- November 5th!

not just bailouts-free everything

I was appalled watching the MTV debate in which the young questioners were seeking free birth controls pills and college educations.

Apparently they never got "there's no such thing as a free lunch" concept!

Inflation

The problem with bonds is inflation.

Real inflation is running at something like 10% and rising. That means with even a 5% bond, your losing value at 5% a year.

If you think inflation will continue and even speed up (as I do) you really don't want to be in ANY dollar-denominated investment.