October 5, 2008

Bailing Ourselves Out: A Final Note

One last thought about the bailout:

This grand scheme was engineered by the hardworking people in the U.S. government. While technically they are the employees of the voters and taxpayers, they seem to have a track record of looking out for the people with the most money, or the people who essentially own a piece of them (via campaign contributions, kickbacks, business investments, nepotism, etc.).

You could be one of those people.

No, I'm not suggesting that you go out and offer bribes to your Congressperson. (You'd probably have to stand in line for that and who has time?) I am suggesting that you go out and buy yourself a piece of the Federal Government.

Remember savings bonds? Our moms and dads, or our aunts and uncles, or our grandparents, would buy savings bonds for birthday or Christmas presents. You'd see this funny looking piece of paper that you couldn't play with or even touch. And Mom would lock it away in a drawer somewhere. Then a long time later, she'd take it out, go away with it and come back with money for you. You might get to spend some of it yourself if you were lucky -- more likely Mom would decide what you "needed" and spend it on that.

Well, savings bonds are alive and well and in the company of a host of other products that allow you to invest in the U.S. Government. Check out Treasury Direct, where you can purchase Treasury Bills (aka T-Bills), Bonds, Notes, Treasury Inflation-Protected Securities (aka TIPS) and yes, good old-fashioned savings bonds. Investments range in length from 4 weeks to 30 years, so you can find something to fit with any investment strategy.

Why invest in the U.S. Government if you aren't very fond of its work lately? Well, all this bailout money has to come from somewhere. To cover part of it, the U.S. treasury is planning to issue even more debt in the hope that it will be purchased by foreign countries who want to invest in the U.S.

That's right, foreign countries.

A lot of people get pretty riled up about foreign investment in America. They start talking about outsourcing and downsizing and NAFTA and jobs being taken away from Americans, etc, etc. But remember, the savings rate in this country is something like 0%. So the government is not counting on the citizenry to cover all the costs. I say, why let the Chinese have all the fun? Let's buy up as much Treasury debt as we can lay hands on and then call Henry Paulson in for a little sit-down.

1 comment:

Savings Bond Calculator said...

Like you have mentioned I think saving in savings bonds never go wrong. Unlike any other method of investing I think the best is saving in fed savings bond because as long as the government is around no one can say they are going to default you or just vanish from the face of the earth. Thank you for the wonderful post. Really enjoyed reading it.You have an interesting way of gambling with words.