For several months now, I've faithfully invested a part of each paycheck in Series I savings bonds. However, as I was preparing to purchase more bonds this month, I noticed that effective May 1, 2008, the government slashed the fixed interest rate on these bonds to 0.0% (that's right--zero percent).

Unfortunately, without realizing it, I've already purchased $700 of Series I savings bonds at the new rate, which is locked at 0.0% (zero) for the entire 30-year interest-bearing lifespan of these bonds. Furthermore, regulations prohibit me from cashing these bonds until at least one year after the purchase date, which means I'm stuck with them for now.

This whole scenario has me somewhat upset. In fact, this weekend, I wrote a letter to every single United States Senator to express my disappointment. I then went to the post office in Chicago's federal district, and mailed these letters earlier today.

The effective interest rate for a Series I savings bond is composed of a fixed rate plus an inflation rate, so that the bond will always return a fixed rate over inflation. However, if the fixed rate is 0.0% (zero), then the bond will have a real rate of return equal to 0.0% (zero) regardless of the inflation rate. This means that even though the bond continues to earn the annual inflation adjustment component (currently 4.84%), the money in the bond will never actually increase in purchasing power.

So by slashing the fixed rate to 0.0% (zero), the government is essentially telling us that we might as well spend all our money now, because it will never be worth any more than it is today.

I knew going in that government bonds were not the highest paying investment I could put my money into. After all, U.S. savings bonds are not exactly the investment of choice for the rich and famous. However, it was very important for me to start financing my share of the national debt, because I do not believe in having foreign governments own such a large percentage of our bonds.

But in my opinion, there's a big difference between investing in a bond with a low interest rate and investing in a bond with no interest rate. Perhaps I'm wrong to think like this, but it's starting to seem like the government always finds a way to discourage people from trying to help the country, and often penalizes those who put in more than they take out. I believe the American people deserve better.

Read the letter that was sent to all 100 U.S. Senators