I was always under the impression that government bonds were the place to invest when times were tough, but the newest I Bond composite rate is at 0.00% (the calculated composite is actually -5.46%). Does this mean that anyone who currently purchases an I bond won't earn any interest for the life of the bond?!? I've looked at TreasuryDirect.gov and can't find anything to verify one way or the other. If this is the case, I hope no one out there is doing automatic monthly purchases.

That is how it was explained to me. It does make sense though. With the government dumping hordes of cash into the bond market right now is what has driven rates down to ridiculously low levels that none of us will ever see again in our lifetimes.

I just received some information from Treasury Direct that clarifies the I Bond calculation. The composite rate is based on a fixed rate (fixed for the life of the bond) and an inflation rate (changes every May and November). New fixed rates are also announced each May and November but these only affect newly purchased bonds.

While it is true that all I bonds purchased between May and November 2009 won't earn any interest during that period, there is a chance that the rates will increase in the future. If the rates increase enough, those same bonds will start to earn interest. Sorry if my original post confused anyone that happened to read it.