| Show E bond buyers beware The annual drive is on again to persuade people to buy E bonds Stridently pitched radio commercials extol their virtues Government workers find their arms twisted in various subtle and not so subtle ways if they show any resistance to their patriotic duty It may in fact be patriotic to help bail the government out of its self self- inflicted fiscal difficulties But no one should be under the delusion that he is making a wise investment when he buys an E bond The current interest rate on Government E bonds is 6 G percent But inflation has now accelerated to more than 8 percent Moreover the E bond purchaser draws no interest at all if he cashes in his bond within six months On the first year he gets only 4 42 2 percent percent per per- cent and he gets his full 6 percent only if he holds the bond the full five years to maturity And let us not forget that when the purchaser of an E bond eventually cashes it in he must pay an income tax on his profit The sa saver ver verwill will almost certainly have less purchasing purchasing purchasing pur pur- chasing power with the money he draws out of the E bond than he has with the money he originally put into it it This is why financially savvy people do not buy E bonds The rich and sophisticated know how to protect themselves against the ravages of inflation The financially uneducated as a rule do not For example even a very small saver if he is at all wise in money matters knows that he can get a minimum of 6 percent interest today in ina ina ina a Savings and Loan bank and that the interest will accrue immediately with no penalty for an early withdrawal If he is willing to commit himself for a longer period he can get correspondingly correspondingly higher rates Larger investors in today's markets can easily draw 8 percent or more interest in various types of commercial paper Savers including holders of E bonds and life insurance policies are among those who pay the price of the continuous inflation which ravages our our country and indeed the whole world Removal of the gold reserve requirement for Federal Reserve notes our paper money in March 1968 removed the last barriers to continuous inflation of the nations nation's purchasing media As long as a substantial gold reserve was required by law the money-credit money managers were under some restraint Now there is none We have fiat money pure and simple with nothing of any value to support it That Thatis is why the price of gold that most basic of all standards of value continues to soar in price It is a barometer of the ever falling value of paper money E bond buyers beware |
