TREASURY RENEGES ON 30 YEAR BOND HOLDERS

The U.S. Treasury will default on contracts with investors, mostly individuals, who loaned the government money in 1979 on the agreement that they would receive 9.125 percent interest every year until their bonds mature in the year 2009.

No longer will politicians and appointed bureaucrats be able to brag that the United States has never failed to live up to its obligation as the safest investment in the world. Investment is no longer guaranteed.

The Bureau of Public Debt announcement claims that this recall applies to about $4.6 billion in 30 year bonds issued on May 15, 1979 and calls for their redemption by May 15, 2004. Of course, investors holding these bonds are not forced to cash them in and can hold them until 2009 if they want, but they will no longer receive the interest promised, the main reason for investing their money in the first place.

That means that if you loaned the government $10,000 in 1979 you will lose $912.50 a year, $4,562.50 in the next 5 years, in interest you would have been due from the government�before the government decided to back out of their end of the contract.

Continued....
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This will do little to boost faith in America, or help promote Bond sales in an era of record deficits.

The value dollar is based on faith in America's abilty to repay it's debts. If faith in the dollar goes down so can the value of the dollar.

Very interesting! Investing in bonds is good for the government/military, but I've always known that somewhere along the line you'd loose some money.

This ties in nicely with the article about the Saudis wanting "GOLD" for payments re"oil purchased! Our
economic system is currently imploding and they are
just delaying the inevitable...system collapse.

I am going to call my bank tomorrow and tell them that I am going to renig on my mortgage,...

Surely they will understand.."to reduce the cost of debt financing" ...


Seriously though, these 30 year bonds were purchaced by individuals, primarily Americans.

To call them in early, removes the value of that dollar to the individual investor, and sends it where?....who funds the treasury?....OTHER COUNTRIES !!!

The interest paid and due in term, should be owed the investor, as that was the purpose in the first place.


This is a sign,...that the US Federal Government would rather be financed by foreign countries then it's own citizens, in order to save some money.

No wonder the US people can feel like their voice is not heard, ...

A hooker only works for the john.

Wake Up America !

[Edited on 19-1-2004 by smirkley]

this is really distrubing......boy, am I glad I found ATS. Otherwise I would never read about this stuff!

Well I am not at all suprised by this. We have been loaning them money every year with taxes. A portion of our taxes are a loan to the government, and our tax returns are more less them paying us back....without interest mind you. Go and try to take a government loan out and look at the interest rates they charge us, should we not get that same interest rate payed to us?This is but yet one more way they screw us. So by them renigging on their agreement to avoid interest fees doesnt surprise me in the least. Theres always a loop hole somewhere when dealing with the government

Ummm...


US citizens PAY tax, not loan money.

Foreign governments loan money to the US, to fund the government (treasury bills).

Tax returns are payment amounts returned that you had with-held in excess.

Taxes paid in, merely pay-back the Federal Reserve (notes), which is a corporation currency operation, not the US government.

Government loans are taxpayer subsidized, to reduce the interest rate you would of had to pay, if the Federal Reserve was solely responsible for setting your interest rate.

The reason for doing this is that these bonds were sold in 70's when interest rates were high. By calling them in early they can replace them with lower interest bearing bonds.

As the author points out these bonds were issued when money supply was tight. The only main reason they were purchased was becasue of the security, and the relatively high interest paid on them. They have every right to expect that the conditions be honored the full term.

The method is not so simple, but this is effectively robbery.