One of the attractions of privately-produced currencies is as a hedge against inflation; this development may be a competitor to this idea. On the other hand, this setup does have an unavailability in _time_ of the money (more so than other, equal-security bonds of the same duration), which may offset its greater spendability. -Allen
BARRON'S Online - Market Surveillance for the Financial Elite _________________________________________________________________ Barron's _________________________________________________________________ CLINTON UNVEILING NEW GOVERNMENT BOND WITH INFLATION PROTECTION __________________________________________________________________________ Copyright © 1996 Nando.net Copyright © 1996 The Associated Press
WASHINGTON (Sep 25, 1996 11:12 a.m. EDT) -- President Clinton, in his latest election-year appeal to the middle class, is unveiling details of a new type of government bond that will offer investors protection against inflation.
[...]
As the program was explained, the securities will protect the principal against inflation, as measured by the consumer price index. As an example, the official said, if inflation increases 3 percent in a given year, a $1,000 bond would be adjusted upward to $1,030 at the end of that year.
By offering this protection, interest rates on the bonds will be lower than on regular 10-year notes that do not provide inflation protection.
[...]
The notion of tying government securities to inflation has not been tried in the United States, but other countries have been offering such investments for some time.
Such bonds have been available in Britain since 1981 and are also offered in Canada, New Zealand, Australia, Israel and Sweden.
Copyright © 1996 Nando.net