<BreadWithSpam[at]fractious.net> wrote in message
news:yob4qpykk2n.fsf_-_[at]panix3.panix.com...
- quote -

Actually it's not necessarily "your" bank account. If someone gets ahold of
your password they can easily add "additional bank accounts." When a
Treasury Direct account connected bank account is changed, the account hold
IS NOT NOTIFIED!!!! If you don't believe this ridiculousness, open an
account and try it. The lack of communication and back up that you are used
to receiving at your local bank is non-existent. This is a real concern of
mine and of other people who are using Treasury Direct. Treasury Direct
seriously needs to modernize and increase the safety measures for the
individual accounts or holders may find themselves learning that "safety" is
not only a matter of default or inflation. The phrase is "Safekeeping of
your securities."
- quote -


======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond.

"Jimmy Smith" <nospam[at]pleaseno.more> writes:
- quote -

Please read (and trim) the posts to which you respond:

I'll repeat:

- quote -






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<BreadWithSpam[at]fractious.net> wrote in message
news:yob4qpykk2n.fsf_-_[at]panix3.panix.com...
- quote -

Savings bond do not suffer from interest rate risk. The principal does not
fluctuate at all no matter what interest rates do. In year number one they
cannot be sold. In years two through five you can sell at anytime and you
get full principal plus interest minus a three month interest rate penalty
(not bad). After year five you get full principal put in plus compounded
interest.

Rising or falling interest rates do not affect the principal value which is
always paid in full when the bonds become liquid after one year of
ownership.

Jimmy
- quote -


======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond.

"Jimmy Smith" <nospam[at]pleaseno.more> writes:
[Please edit down the post to which you are responding]
- quote -

"safe" _usually_ means "will not default". The question isn't
"what's safe" but rather "what different kinds of risk are there?"
Treasury bonds suffer from substantial interest rate and
inflation risk. The former hurts if you have to sell before
they come due and the latter hurts if your currency starts
to suck.

[snip example of Germany]

- quote -

In other words, if we reach the stage where the US currency
is so deeply in the crapper and/or the US Government defaults,
chances are that those actions are far from our only, and
very likely far from our worst problems.

Default risk is effectively zero for that reason. Inflation
risk, however, is still quite real. It doesn't have to be
massive hyper inflation to be very damaging to one's portfolio
and lifestyle.

- quote -

And if you had old fashioned paper bearer bonds, you were
actually taking an even greater risk.

Treasury direct won't send a wad of cash to someone's house
and has a variety of safeguards. Transactions between you
and TreasuryDirect are actually between your bank account
and TreasuryDirect. Both your TD account _and_ your bank
account would have to be compromised before someone could
get hold of your cash.

If you're _that_ concerned, there's probably no means of
storing money these days that you can trust. It's all
very likely much safer than, say, the old wad of cash under
the mattress or the chest full of gold buried in the basement.

Back to question at hand - if the US defaults on its
debt, will it default on Savings Bonds (ie. I and EE bonds)?
Nobody knows. If you are concerned about the US Gov't
defaulting on debt, you're already way off the far end
of the set of risks you should be concerned about. It's
really a non-issue.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

Sid,

If you knew exactly where the "crash" was going to come from you could more
easily protect against it, but we don't know. It could be a stock market
crash, a real estate crash, an econmic depression, a government debt
failure, bank insolvency failure (bad mortgages and credit card debt), hyper
inflation, labor revolution, slow competetive strangle hold on economy from
overseas competition, a huge energy crunch, interruption of the food supply,
or water supply............ we could go on and you can see that nobody can
predict which if any will come to pass.................soooooooooooo......

Stay as healthy as possible.
Stay employed as long as possible......... That's right..... never retire...
you become a sitting target.
Diversify widely...... Some old religious texts say 1/3 cash, 1/3 debt (own
it) 1/3 business or real estate.
That's a great beginning, but carry it out to a greater degree with 10%
precious metals hidden in small pieces (1/10 ounce gold, etc.) Imagine
these coins in a great depression...... priceless.
A farm would be no good. It's so obvious and armed hungry people will take
your stuff away in a true disaster.
Get a Winchester and a few hundred rounds.
A few water purifiers.
Educate yourself continuously.
Take a airplane trip from coast to coast and border to border so you can
physically see just how large and diverse this economy really is.
Television makes the world seem like we all live in a very small, very bad
neighborhood.
Do something good for yourself today and realize the bad thing most likely
won't come from a terrorist or economic catastrophy. Chances are it will be
a call from your family doctor after you or a loved one have a routine
physical exam.
Turn off the damned news channels, then live life every day to fullest right
now.
Fall on your knees and thank God nobody lives forever.

Jimmy


"sid" <justsid[at]i-dont.net> wrote in message
news:c951j4$ge2[at]library2.airnews.net...
- quote -

Let's look at this logically.

First you must clearly define what you mean by "safe." Does that mean you
will get something back? Get the agreed upon number of dollars back? Get
"value" at the end of the term?

If Germany had savings bonds through WWII and paid off in German marks at
the end of the war, those bonds were worthless because the underlying
currency lost it's value.

Someone here said US government can continue to print currency so therefore
the bonds can't fail. In that limited sense they are correct, but never
forget the WWII Germany example. Plus, the erosion does not need to happen
to the extent of total erasure of your buying power such that you are paid
back with a wheelbarrel of worthless dollars.

Any government can possibly default. I am not saying that ours will. God
forbid that ever happening. I believe we would take some drastic physical
actions throughout the world before that will happen. I believe liberals
will become conservative and conservatives will become organized long before
total default. But, as the Euro grows in popularity and inflation erodes
the buying power of your dollar you are enduring a far more sinister
"failure" without accounting for it. Why does failure necessary mean total
non-repayment? What if they only paid back half? That would be failure of
course. Well, the negative impact of inflation and then taxes on top of
that have the same effect. You only get half back or less if things don't
improve over time.

Also, if you read the fine print on the document from Treasury Direct you
will find that if someone gets your password and "steals" your bonds, they,
Treasury Direct, are not responsible. When you think about it, a scary
proposition if your total savings are locked up in those babies and evil
uncle John or that ever faithful secretary gets ahold of your password and
drains your account. Have you ever seriously looked at your possible
recourse? Read the fine print. It is defintely there, it is a new system
and opens serious safety concern of a different kind. In the end it doesn't
matter how it got lost or fail. If it's gone, it's gone....... partial or
complete.
"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote in message
news:5in8b0ltu6o2gm6um4gcbh1hmfhrpg6n99[at]4ax.com...
- quote -

Thanks for the replies.

sid <justsid[at]i-dont.net> wrote:

- quote -

Not a major one. The National debt peaked at about 120% of GDP in 1946
and it now approaching 70%. See the graph at
http://zfacts.com/p/318.html

- quote -

There is safety in numbers, live in a suburb or small city with other
upper income people. People in rural areas did worse in the depression.

- quote -

Have some alternative job skills.

The depression was at its worse several years later. Good economic
policies would have cut the depression short.

--
Ron

In article <c951j4$ge2[at]library2.airnews.net> , sid wrote:
- quote -

Let's suppose for a second that God appeared before you and warned
that our society has too much debt (personal and government) that
cannot all be repaid within a stable financial system. Let's make this
a given, an assumption for the purposes of this discussion. Whether
this is, in fact, true or not, is of course debatable, but let's assume
that it is true.

The only logical outcome for a debt that cannot be repaid, is for it
to be repudiated. That could happen in two scenarios, a lot of
personal bankruptcies, or runaway inflation due to government emission
of money that is printed to pay off debt.

The only way of preventing or even benefiting from this is:

1. Do not lend money long term that has a fixed repayment in nominal
money.

2. Do not buy government bonds (kind of follows from #1)

3. Do have some debt on your own that is long term, fixed interest,
and that would become less costly for you in case money loses its
value. That is not to suggest that it is wise to have much more debt
than you could easily handle under all circumstances -- merely that
having some debt on advantageous terms would be valuable.

4. Buy assets that are not others' debt obligations and that are
likely to appreciate as fast as paper money would lose its value.
For example, real estate (personal or commercial or REITs), bullion,
foreign currencies, foreign assets, would be things to consider.

- quote -

Well, if you protect yourself while everyone else does not think that
there is a problem, then you protect yourself on much better terms
than when you do it when everyone else scrambles to do it.

I bought euros early last spring, for example.

- quote -

The only good answer is that "there is a very good chance of that
happening". Maybe a 45% chance or so. Some people could legitimately
estimate those chances to be lower or higher. But, I doubt that it is
rational to dismiss this possibility outright.

- quote -

There are alternatives that are easier than that, not that there is
anything wrong with owning some land and some food.

- quote -

The first thing to recognize is that a normal working person cannot
protect himself against a major economic decline completely.

Jobs will pay less, pensions will decline, some prices get out of
hand, etc etc.

Living well within one's means, having modest debt at long term fixed
rate, owning a variety of assets that are somewhat inflation proof,
all will help, and are sane things that are not going to ruin you if
the worst outcome does not materialize.

- quote -

Most such books are not good, unfortunately, full of dangerous advice
or quackery...

i

"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:260520040942550741%john[at]johnweeks.com...
- quote -

I keep reading and hearing economists and other money-people talk about a
critical situation that looms because of the enormous personal and
government debt Americans are carrying. But no one ever says exactly what
this crisis will be -- the only thing I've ever heard is the gloom-and-doom
Mad Max type of scenario you hinted at above.

And no one ever offers any suggestions about what to do about it, other than
to reduce my own personal debt and perhaps exercise my right to vote for
fiscally responsible political leaders. But what good is that going to do
if no one else seems to think there is a problem?

I guess what I am asking is:

Is there a real debt crisis looming?

If there is a crisis looming, what can I do as an individual to prepare for
it, other than buy a plot of land in the wilderness, stock it with food and
water, and protect myself as best I can?

If we had to relive the Stock Market crash of 1929 again, what are some
steps people might take to ensure they don't have to stand in soup lines?

Can anyone recommend any good books or articles on this subject?

Thanks, sorry to be so gloomy.

In article <260520040942550741%john[at]johnweeks.com> , John A. Weeks III wrote:
- quote -

I have a problem with saying that because the US can print paper
money, the bonds are "safe".

If a bondholder ever gets to the point where the US has to print
significant amounts of money to pay off the bonds, it means that the
payoff would lose its value due to inflation.

For example, if I pay $100 for a bond that pays $110 in five years,
and receive that $110 in five years (a fictional example), BUT, due to
emission of money that $110 is only worth current $50, I have lost.

Contrast this with holding some hypothetical inflation proof asset
that would retain its value, relative to other goods, regardless of
what the government does.

A risk from owning any bond is twofold, it is a risk of default, and
it is a risk of inflation.

i

In article <5in8b0ltu6o2gm6um4gcbh1hmfhrpg6n99[at]4ax.com> , HW \"Skip\"
Weldon <skip5700removethis[at]hotmail.com> wrote:

- quote -

Yes, it is safe to invest in US government securities. The government
has a unlimited ability to print new money, so they could simply
print more to cover your bonds when you cash them in. If a
situation ever came up where the government would even consider
defaulting, you would have far more things to worry about than
a few bonds, like finding food and fighting off roving bands of
gunmen looking for food.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john[at]johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

"HW \"Skip\" Weldon" <skip5700removethis[at]hotmail.com> wrote:

- quote -

You don't have to worry about the US defaulting on its bonds. The
government can print more money or raise taxes.

- quote -

Some of those countries had bonds in dollars instead of their own
currencies.

- quote -

The US will not default on any of its bonds. Other units of government
or agencies might, however.

--
Ron

The following was returned to the poster because it was cross-posted.
With corrected headers, it is copied below:

--- From: rubicinc[at]yahoo.com (mike)

With the growing US debt and weak US dollar, is it safe to invest in
US savings bonds? I am concerned about debt limits that congress has
to increase each year.

What prevent US government from defaulting on its debt? People say it
will crash world economy, but I doubt it. Russia, and many other
countries have defaulted in the past.

If US government defaults on its treasury bonds, does it necessary
include Savings bonds?

Thanks.



end copy -----------




-HW "Skip" Weldon
Columbia, SC