The Great Depression Online

Great Depression Online Archive Issue:

Wealth Protection of Proxy Bearer Bonds

Great Depression Online
Long Beach, CA
May 25, 2010

Inside This Issue You Will Discover…

*** What’s a Bearer Bond?
*** The Ultimate Store of Value
*** Wealth Protection of Proxy Bearer Bonds
*** And More

What’s a Bearer Bond?

A bearer bond is debt security issued by a government or a corporation that is unregistered – no records are kept of the owner, or the transactions involving ownership.  It’s real simple, whoever physically holds the bond, owns it.  Of course there are certain advantages and disadvantages with this…bearer bonds are private, but provide no protection for loss or theft.

Bearer bonds were largely used to fund Reconstruction in the post Civil War United States.  Later on, following ratification of the Sixteenth Amendment, bearer bonds became popular for those wanting to avoid taxation. 

Because of their use by tax evaders and money launderers, the United States banned new issuances in 1982.  As of May 2009, approximately $100 million bearer bonds issued by the U.S. Treasury are still outstanding.

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As an aside, just last year Italian financial police seized $134.5 billion in bogus U.S. bearer bonds.  For whatever reason, the two men carrying them, who were obviously unaware they were well over the $100 million outstanding, were released after the bonds were seized.

The Ultimate Store of Value

Mistakes can sometimes be quite valuable.  Take the Inverted Jenny, for example.  If you didn’t know, the Inverted Jenny’s a 1918 United States postage stamp where the Curtiss JN-4 airplane was mistakenly printed upside-down.

Only one pane of 100 Inverted Jenny’s was ever discovered making it one of the most prized possessions for American stamp collectors.  In fact, one guy wanted one so bad he paid $977,500 at a Robert A. Siegel auction in November 2007.

Still, that’s nothing…

“The Swedish ‘Treskilling Yellow’ retained its title as the world’s most expensive stamp when it changed hands at a private sale shrouded in secrecy,” reported AP on Sunday.

“The one-of-a-kind 1855 misprint was sold to a group of buyers who asked that their identities and the winning bid be kept confidential.”

Auctioneer, David Feldman, “…declined to reveal whether the sale matched the 2.875 million Swiss francs (then about $2.3 million) price it set a record for in 1996.”

However, he did note, “It is still worth more than any other single stamp.”

We don’t blame the buyers for wanting their confidentially…would you want others to know you’d blown on the order of $2 million, or more, on a tiny little stamp? 

Yet perhaps it has an important, alternative benefit.  As Feldman, who’s quite the salesman, put it: “For those who consider postage stamps to be the last “bearer bonds,” able to transcend national boundaries and to be ignored by airport scanners (unlike platinum or gold, rubies or diamonds), this stamp could be considered the ultimate store of value.”

Wealth Protection of Proxy Bearer Bonds

Long gone are the days when all you had to do to get out of dodge was cross over the county line.  New, integrated, state, federal, and international data bases make evading the long arm of the law nearly impossible.

In fact, a friend of ours was recently tagged for some near harmless mischief he was involved in a quarter century ago in Chicago.  A retroactive Illinois law is now prohibiting California from renewing his driver’s license.  If you can believe it, he may have to file for residency in Colorado just so he can legally drive a motor vehicle.  It’s either that or get a presidential pardon.

Here at the GDO we don’t condone breaking the law.  We bring this up, however, to make the point that it’s an Orwellian world out there…you really can’t escape it.

Whether collectable stamps are the ultimate store of value or not is open to debate.  But in a world with an increasing loss of privacy and greater capital controls we appreciate Feldman’s sentiments.

One’s money is, after taxes, their private property.  And when a government robs the individual of their private property through currency debasement, and then imposes capital controls, it behooves the individual to protect them self in creative ways.

Collectable stamps, or other proxy bearer bonds, could serve as a prudent wealth protection strategy in the years ahead.


M.N. Gordon
Great Depression Online

P.S.  As the economy stalls out and investors finally come to their senses, one thing is apparent.  We’re in for a long, and violent, journey.  But while many will be wiped out, others will prosper.  Discover the many unique opportunities to protect your wealth and profit right here.

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