Rather shocking news today: The Treasury Department will halt sales of paper U.S. savings bonds as of January through banks and other financial institutions.

This is from a Bloomberg report:

The end of paper savings bonds, which were introduced in 1935, continues the Treasury’s goal of becoming entirely electronic. Series EE and I savings bonds will remain available through the TreasuryDirect website, which has been in operation since 2002, the Bureau of the Public Debt said in a statement.

“They are a part of American history and culture. We get that,” wrote Joyce Harris, director of public and legislative affairs at the Bureau of the Public Debt, in an e-mail. “But when you look at the numbers – decline in sales over the years and the costs to store bond stock, print and mail bonds – and you consider the push to find savings and efficiencies in government, particularly as of late, this was the right decision.”

Actually, I get their point. I have been a continuous buyer of TIPS since 1999, through the original Legacy Treasury Direct and now through TreasuryDirect.gov. My last purchase of I Bonds was in October 2001. I also have EE Bonds from July 1992. All of them were lovely investments, but as time went on, the new issues lost their attraction.

But here is the weird thing … I have been blogging recently about the advantage I Bonds currently hold over TIPS. It’s a clear-cut advantage over a 5-year TIPS and a solid advantage over a 10-year TIPS.

This is a recent development. I Bonds weren’t so attractive when TIPS paid a 1% or more premium over an I Bond. But now, with TIPS rates in negative ranges for shorter terms, and only about .6% for a 10-year, I Bonds are suddenly way more attractive.

Realize this … I Bonds bought today are paying an annualized rate of 4.6% over the next few months. Can you find a comparable rate elsewhere?

By eliminating the paper I Bonds, the U.S. appears to be limiting your annual purchases to $5,000 per Social Security number, instead of $10,000 with an electronic/paper combo.

(More details on this could be coming later. Would the U.S. allow $10,000 in one account in TreasuryDirect? All would be forgiven …)

But if the U.S. is telling small investors: Stick your money in banks or money market funds paying near zero interest, what is the real message?

Saving is for suckers?

A saver’s revenge: We have until Dec. 31 to load up on I Bonds. I endorse this. If you are married, you can put $20,000 into I Bonds this year … $5,000 per Social Security number at Treasury Direct, and $5,000 each in paper I Bonds.

Send the Treasury a message. Buy I Bonds.