The conspiracy to kill the U.S. savings bond
I'm not exactly sure what the Treasury wants us to read into this. On one hand, I suppose it could be argued that the Treasury is expecting an extended period of high inflation, and decided to cut the fixed rate portion to cover their hinies.
However, I believe that this is yet another step toward the eventual elimination of the savings bond program, where savings bonds have been sold continuously since 1935. To begin, I would like to reference a January 2003 San Francisco Chronicle article by Kathleen Pender, Screws tightened on savings bonds:
"I don't think you should be using taxpayers' money to advertise, promote and market something that is the most expensive way for the Treasury Department to borrow," says Rep. Ernest Istook Jr., chairman of the House Appropriations Subcommittee for Treasury, Postal Service and General Government.
Istook, R-Okla., who authored the bill, won't say whether he wants the savings bond program shut down entirely. "That is not a yes or no question," he says.
A little evasive there, Representative Istook?
From my perspective, here's the sequence of events that have documented the death of the savings bond to date:
- 1/15/2003: Minimum Holding Period For Savings Bonds Extended To 12 Months
- 12/30/2003: Online savings bond purchase via credit card discontinued
- 4/4/2005: Series EE Savings Bonds To Earn Fixed Rates Beginning With May 2005 Issues
- 12/3/2007: Annual Purchase Limit For Savings Bonds Set at $5,000
- 3/21/2008: New $100 Minimums for Treasury Marketable Securities to Debut in April
- 5/1/2008: May 2008 issue Series I Savings Bonds have a 0% fixed rate portion
- 1/1/2012: Treasury to End Over-the-Counter Sales of Paper U.S. Savings Bonds
Sadly, we can only speculate about the next step that the venerable U.S. savings bond will take as the U.S. Treasury gradually lays it to rest. Stay tuned...