Government bonds are a popular investment among retail investors. : NPR


Andrea Hsu and Stacey Vanek Smith bought a 25-cent postcard with their earnings from investing in a government bond.

Stacey Vanek Smith/NPR


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Stacey Vanek Smith/NPR

Government bonds are a popular investment among retail investors. : NPR

Andrea Hsu and Stacey Vanek Smith bought a 25-cent postcard with their earnings from investing in a government bond.

Stacey Vanek Smith/NPR

Move over crypto. 2022 hot investing is much more sleepy but much more stable. These are US government bonds.

A few weeks ago, so many people rushed to access the asset that they crashed the Treasury website.

“It’s been a wild few months here,” said David Enna, founder of Tipswatch.com, a site that tracks government bonds. “These are things that never normally get attention, but they’ve gotten really hot.”

The 28 cents that could break the budget

Government bonds are loans that you give to the government: you buy a bond for 4 weeks, 6 months, 10 years, etc., and at the end of this period, Uncle Sam pays you back with a little interest.

And when I say “small”, I really mean “small”. “People were earning a few cents in interest a year,” Enna said.

Fellow journalist Andrea Hsu and I decided to see what was going on for ourselves, so we did half-sisters (with our own money) on a $100 government bond that matured after 4 weeks.

In exchange for a $100 loan to the government for four weeks, we earned 28 cents. This, admittedly, sounds puny, but it is not.

If we had bought this same bond at the beginning of the year, we would have gained a small fraction of a penny. Now we receive more than 70 times.

This is good news for us, but bad news for the US government, which has $24 trillion in bonds to repay, some at these higher interest rates.

In fact, these bond payments have become so large in 2022 that people fear they will plunge the United States into crippling debt or impose drastic spending cuts.

And the money the United States makes from bond sales (billions of dollars every week) is a crucial source of funding.

The United States needs the bond money to keep the lights on, and if it suddenly has to pay a ton of money to get that money, that’s really bad news.

How did it happen?

Along came the Fed

At the start of COVID, one of the ways the Federal Reserve came to the aid of the US economy was to buy government bonds. The Fed bought these bonds in order to keep money flowing through the economy (like one part of the government lending money to another part).

But when inflation started to appear as a serious problem, Jerome Powell got the Federal Reserve to largely stop buying bonds. This sent a small shockwave through the US bond market and forced the Treasury to offer much larger payouts.

Spend loot

Andrea and I wanted to do what we could do to help the American economy with our 28 cent loot. We knew spending it would put it back into the economy faster than anything else.

Luckily, NPR’s New York offices are right next to Times Square, where there are endless ways to spend money (as long as you love New York).

Still, finding something for a quarter wasn’t easy: the inflation that helped us get our sweet 28-cent payment also drove up the price of almost everything.

After visiting several stores, we finally found a gift shop that offered postcards for a quarter. With sales tax, it came out to just under 28 cents.

There were several options, but we chose one with the Statue of Liberty on it. After all, patriotic capitalism is what government bonds exist for.

And, if we buy two more bonds, we might have enough money to mail them.


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