From: Rabid Wombat <wombat@mcfeely.bsfs.org>
Date: Sun, 6 Oct 1996 13:42:04 +0800
To: "E. Allen Smith" <EALLENSMITH@ocelot.Rutgers.EDU>
Subject: Re: Inflation-index bonds and private e-currency
In-Reply-To: <01IA3GAFNCWK8Y57AQ@mbcl.rutgers.edu>
Message-ID: <Pine.BSF.3.91.961005212133.905O-100000@mcfeely.bsfs.org>
MIME-Version: 1.0
Content-Type: text/plain




On Mon, 30 Sep 1996, E. Allen Smith wrote:

> 	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
> 

This isn't a new idea - Massachusetts (I think it was Mass., anyway) 
implemented inflation-adjusted pay for soldiers during the revolutionary war.
They didn't have an inflation index, so they rushed one into place based 
on agricultural products.

Just another near-election appeal to the middle-class voter.

-r.w.

> >    BARRON'S Online - Market Surveillance for the Financial Elite
> >     _________________________________________________________________
> >   Barron's
> >     _________________________________________________________________
> >        CLINTON UNVEILING NEW GOVERNMENT BOND WITH INFLATION PROTECTION
> >   __________________________________________________________________________
> >      Copyright &copy 1996 Nando.net
> >      Copyright &copy 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 &copy 1996 Nando.net
>