Stocks surged to an all-time high Thursday when Fed Chair Ben Bernanke said the nation's central bank will continue to throw a life preserver to the economy. The government is now buying $85 billion a month in bonds to keep interest rates low and to encourage spending and hiring - at least that's the intent.
It seems whenever Bernanke says the Fed is thinking of cutting back its bond buying that the market takes a dive.
Does anyone think this government policy - and Wall Street's dependence on it - seems a little askew from reality?
Back in the day, it was considered patriotic to buy US Savings Bonds. (Does anyone remember those?) If you go back a little further, during World War II, they sold War Bonds to help support the war effort. (By the way, the vast majority of Iowans who bought War Bonds never cashed them.)
Has anyone tried to buy a Savings Bond at the bank lately?
Well, you can't. To buy them, you need to go directly through the treasury department by going online to: www.treasurydirect.gov.
Electronic bonds, as compared to the old paper bonds, earn a fixed rate of interest for up to 30 years. The current rate is .2 percent, certainly not great but comparable to the interest rate on bank savings. While they're not deductible from federal income taxes, they are exempt from state and local income taxes.
The minimum purchase for EE bonds is $25, and they're intended to be long-term investments. You need to hold on to them for at least five years to avoid a three-month interest penalty.
The nation's debt began to seriously accrue when the War on Terror began. Wars aren't cheap, and we've been at war for 12 years now - both in Afghanistan and Iraq. Shortly before that, the nation had no debt. To say that the nation's debt was caused largely by these wars would not at all be an exaggeration.
Instead of buying bonds, the federal government should urge American citizens to buy them. Our leaders should appeal to our sense of patriotism and encourage us to buy bonds to help pay down the nation's debt.
Does that make sense to anyone?