Hey, want to sock away some money and earn 3.83% interest over the next 12 months? That’s better than the rate on online savings accounts (about 1%) and 1-year CDs (1.2% at best). It’s even better than the rate on 5-year CDs.

Furthermore, unlike savings accounts and CDs, the financial instrument I’m talking about is guaranteed to keep up with inflation, and you can hold it for up to 30 years. You’ll never pay state or local income tax on it, and don’t have to pay federal tax until you cash it in.

This is real, risk-free, and not a scam; there are almost no catches. You can and should do it today, because that guaranteed 3.83% rate expires at the end of October.

I Bonds Revisited

I’m talking about Series I US Savings Bonds–“I-bonds” for short. (No, they’re not an Apple product.) At a time when complaining about low interest rates is our national pastime, few people know about these bonds. The Treasury has no budget for advertising savings bonds, so you have to hear about them from fans like me. They’re the financial equivalent of an unsigned indie rock band, except that savings bonds have been around forever and will never be featured in Pitchfork.

“It’s a product designed for Main Street, not Wall Street and the banking industry,” writes Chris Farrell in Kiplinger’s. That’s exactly it: only individuals can buy savings bonds. If I-bonds were a club, Goldman Sachs wouldn’t make it past the velvet rope.

Buying savings bonds has a reputation for being complicated, so I’m going to tell you exactly how and why to do it. I’m buying some today; you should, too.

How They Work

I-bonds are like certificates of deposit. You put money in, it grows in value, and at some point you cash it out and spend the money.

You can’t cash out an I-bond until its first birthday, so don’t put in any money you might need in the next year. If you cash it out in less than five years, you pay a small penalty: you give up the most recent three months of interest payments.

Unlike a CD, an I-bond has a variable interest rate tied to the rate of inflation. If you buy an I-bond before October 31, it will pay 4.6% APY for six months and then 3.06% APY for the following six months (3.83% is the average of the two rates). After that, the interest rate will change again: it changes every six months and could go higher or lower, but it will never be less than the inflation rate.

To put it simply: if you buy a $1,000 I-bond (which has a picture of Einstein on it) today, it will be worth $1038.30 in a year. Again, that’s by far the best you can do in a risk-free investment today.

Each person can buy up to $10,000 worth of I-bonds this year. The limit drops to $5000 starting in 2012.

How to Buy

The easiest way to buy I-bonds is to mail-order them, Sears Roebuck style. (Yes, my jokes are as venerable as savings bonds themselves.)

Just fill out this form, print it, and mail it with a check. This will probably be the only time in your life you write a check to the Federal Reserve Bank of Minneapolis. They’ll mail you the bonds in a couple of weeks. As long as your check arrives by October 31, you’ll get the current, delicious interest rates.

If you can only afford to put $5000 or less ($10,000 for a couple) in I-bonds right now, stop reading, submit your order, and relax with a beverage knowing you’ve joined a secret society of expert savers.

Because here’s where it gets complicated. You can buy up to $5000 in paper bonds (that’s what you’ll get via mail order) and another $5000 in electronic bonds. To buy electronic bonds you have to sign up for an account with TreasuryDirect, the government’s direct bond sales web site. It’s similar to signing up for online banking, but the security measures are Iron Curtain-inspired.

Starting next year, you won’t be able to buy paper bonds any more, so if you want to keep buying I-bonds, you’ll have to sign up for TreasuryDirect, in any case.

The Take-Home

I-bonds are the perfect savings tool for short- to medium-term savings goals: down payment, vacation, college tuition (if you use I-bonds to pay for college, you can cash them in tax-free). The fact that you can’t cash them in for a year protects you from impulse buys. They grow tax-deferred. They never lose purchasing power due to inflation.

Nobody regrets buying I-bonds. If you have money sitting around earning 1% or less, pick some up today.

Welcome to the club. Let’s work on a secret handshake.

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.

Every month, the US Bureau of Labor Statistics publishes inflation numbers for the previous month. And every month, bloggers go ballistic and tell us that:

–The consumer price index (CPI), which is used to measure inflation, doesn’t include food and energy prices. If you like to eat, drive, or heat your home, tough luck.

– The CPI assumes you will be just as happy substituting cheaper goods for less expensive ones if prices rise. Everybody uses exactly the same example for this: “If the price of steak goes up, the government assumes you’ll buy more hamburger, so there’s no inflation.”

– The government has a vested interest in depressing the “real” inflation number so it doesn’t have to pay Social Security recipients their promised cost of living increases, plus it can save on interest payments on inflation-protected bonds.

Is any of this true? And if it is, should you care? Is anybody checking the government’s work to keep them honest? And what should you be doing if you’re worried about inflation?

I’ve got my trenchcoat and magnifying glass right here.

Myths and facts

The two most common criticisms of the CPI are just plain false. There are actually several CPIs, but the two most important for the average American are the CPI-U, which is used to index inflation-protected bonds (also known as TIPS and I-Bonds), and the CPI-W, which is used for Social Security cost of living adjustments.

Both of these measures include food and energy. The CPI-U and CPI-W are up sharply over the last six months because of food and energy prices. If you receive Social Security, you will receive a cost of living increase this December (unless we hit major deflation between now and October, which is very unlikely). If you hold TIPS or I-bonds, you will get an inflation adjustment soon. This is not one columnist’s wacky opinion. This is verifiable fact.

As for steak and hamburger, as the BLS puts it, “Hamburger and steak are in different CPI item categories, so no substitution between them is built into the CPI-U or CPI-W.” So quit saying that. Please. Have a burger.

Who’s watching the inflation-watchers?

Okay, but maybe federal pencil-pushers monkey with the data in more sophisticated ways than handing you a burger and calling it steak. Wouldn’t it be great if someone without a vested interest was checking their work?

Since 2007, the Billion Prices Project (BPP) at MIT has been collecting price data the same way you and I do it: by going online. This is completely different from the BLS’s method, which is to send people out to stores to pull shirts off the rack and check the pricetag. (Can you even imagine having this job?)

The project monitors over 5 million prices in 70 countries, including the United States. One the project’s early successes was demonstrating that the government of Argentina was consistently understating that country’s inflation rate. “They actually fired people from the statistical office and they forced them to recompute a new inflation rate,” says Roberto Rigobon, an MIT management professor and cofounder of the BPP.

Rigobon doesn’t work for the US government and would become famous (as economists go) if he found them pulling the same kind of stunts. So what’s the verdict? “When you look at our statistics and the statistics of the BLS, we have roughly the same inflation rate,” says Rigobon. “The increase in our index is almost identical to the total increase of the BLS. If you stop the graph before March, you would say, oh, the BLS is lying. You have no idea how many blogs I have to deal with.” Then March’s official numbers came in and confirmed what the BPP had been showing: prices are up.

“The BLS caught up with our number,” says Rigobon, laughing. “That’s putting it in an arrogant way.”

Another view

In 2010, Boston University professor Zvi Bodie teamed up with colleagues at the Federal Reserve to investigate claims of bias in the CPI. (The Federal Reserve, I should point out, has nothing to do with calculating the CPI.) “We found no evidence of manipulation,” says Bodie. “I don’t say that it’s a ridiculous thought. It’s just there’s no evidence of it having happened in the past.”

Here’s another piece of evidence. What if there were a political action committee made up of older Americans, people who receive Social Security, who turn out to vote in every election, and have lots of spare time to call and write their elected representatives? If, hypothetically, there were such a group, how loud do you think they would be screaming about CPI bias?

Well, this is what the AARP has to say about the CPI in a recent policy paper: “The CPI-U and CPI-W are thought to overstate inflation[.]” Overstate!

But let’s say for the sake of argument that Bodie and the AARP and the BPP are wrong, and the BLS has been systematically underreporting inflation for years. Who cares?

If you’re receiving Social Security or have a job with pay indexed to the CPI, you care a lot. But nobody else should care at all. You care about the actual inflation rate, not what someone says it is. If it’s rainy and I tell you it’s sunny, I’m a jerk, but it doesn’t affect whether you get wet.

So regardless of whether the government publishes real or funny numbers about inflation, you’ll want to carry an umbrella. What does an inflation-fighting umbrella look like?

Inflation fighters

The two most common and most effective ways to weather inflation are:

Have a job. No, your salary doesn’t adjust to the prevailing inflation rate from day to day. Over time, however, it does. (Or, if it doesn’t, you’ll look for a new job.)

Have a fixed-rate home mortgage. If you owe money, inflation is your friend, because if dollars are going to be worth less tomorrow, so is the principal on your mortgage and so is your monthly payment.

You can find a million articles about “inflation-proofing” your investment portfolio. But if you’re still in the workforce, your portfolio is already resistant to inflation, because your monthly contributions will (or should) rise with your salary, and because both stocks and bonds tend to outpace inflation over time. (Like all investment rules of thumb, of course, this one comes with no guarantee.)

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.

Super Bowl XLV is less than two weeks away and if you plan watch the game live at Cowboys Stadium, chances are you’ve already purchased your tickets and made your travel arrangements. Not yet? There are still tickets up for the taking, in exchange for — depending on how close you want to be to the action – $2,131 to $22,729 per ticket on Ticketmaster.com. Ouch. Maybe we’ll watch Christina Aguilera open with the national anthem and the Black Eyed Peas at halftime from the comfort of our home. 

What if we told you that there was a time when you could have bought a Super Bowl ticket for just $20? Granted, we’re talking about the 1970s. But even in 2010 dollars, $20 in 1976 would equal $76.65. Talk about inflation. In this slideshow, we look at Super Bowl tickets — and their prices — through the years.

Anyone who has lived through a period of hyperinflation can tell you that it’s a trying time on both your financial and psychological well being. Prices go up every day, in some cases several times a day. If you’re lucky, your pay somewhat attempts to keep up — and you get paid more often than usual. Your country is in a financial crisis, most likely combined with political instability or even war.

On the bright side, you become a millionaire. Granted, a million won’t buy you that much, but to an outsider, looking at your country’s currency is kind of amuzing.

In this slideshow, we’ve compiled a dozen currencies that feature anywhere from six to 14 zeroes (that is, from a couple hudred thousand to a trillion). We don’t, of course, mean to imply that hyperinflation is a laughing matter. For the stories behind nine currencies that failed as a result of hyperinflation, click here.

The Federal Reserve

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It all starts with the Federal Reserve, the “central bank” that literally puts money into circulation at our financial institutions. The banks we use day-to-day (like Bank of America, Wells Fargo, and People’s), may borrow from other banks, but ultimately they borrow from the Federal Reserve – known as simply “the Fed” for short – once it is printed by the US Treasury. As a quasi-public institution, the fed is charged with regulating the nation’s money supply through its setting of monetary policy. Primarily, this consists of setting the interest rates at which banks lend money to other banks, which greatly influences how much money pervades the economy at any given time. When these inter-bank lending rates are too low, many argue, money becomes too easily available and creates economic bubbles.

The Fed reports data on the nation’s money supply weekly and monthly in the form of M1 and M2. M1 is a measure of actual, physical currency, consisting of, “…currency in the hands of the public, travelers checks, demand deposits, and other deposits against which checks can be written” according to the New York Federal Reserve Bank website. This includes currency held by foreigners, as this can, in theory, be spent on US goods. In April 2008, for example, M1 was clocked at $1.4 trillion. M2 consists of everything in M1, “…plus savings accounts, time deposits of under $100,000, and balances in retail money market mutual funds.” M2 was clocked at $7.7 trillion in that same period, the difference consisting largely of savings deposits. The fed typically reports both M1 and M2 data every Thursday at 4:30PM, and you can find the latest stats in Friday business papers like the Wall Street Journal.

The Internal Revenue Service

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Outside of physically distributing money, the other main way the government puts money into the economy is by first taking it out of the economy. Before money can be dispersed to particular groups via subsidies, welfare payments, or payments in kind (such as free or subsidized housing), it must be collected from those originally in possession of that money. This is done primarily via income taxation, which represented 44% of all collected taxes in 2006, but also through a number of other taxes including: corporate income tax, gift taxes, employment taxes, excise taxes, and estate taxes. Capital gains (investment income) are taxed as well. In total, it is estimated that the IRS took in $2,518,680,000,000 in taxes during fiscal 2006 according to the Heritage Foundation.

A breakdown of which taxes contributed most to this figure can be found here.

Once collected from taxpayers, this money is then distributed by government to various groups and agencies through vehicles described below.

Subsidies

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One of the most common ways government puts money into the economy is through the distribution of subsidies. Any business or industry receiving payments from the government is said to have been subsidized. An oft-cited example is agricultural subsidies, which the government pays to various farmers and corporations deemed (at least ostensibly) to be vital to America’s food supply. A Washington Post investigation into farm subsidies reveals that while most subsidy payments go to farmers growing important crops, as much as $1.6 billion has gone to farmers who grow nothing at all but receive checks anyway due to neglect and systemic fraud. For our purposes, however, we need only know that such subsidies are paid to businesses and industries whose survival is politically important.

Another form of subsidy involves payments in kind, such as subsidized housing. In this case, low-income families are provided with housing paid mostly or in full by the government – that is, taxpayers. The construction and maintenance of subsidized housing puts money into the pockets of contractors, developers, and utilities as well.

Government Contracts

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While the government at federal, state, and local levels is responsible for everything from building roads to building schools, government officials do not literally build any of these things. Instead, private firms and individuals are hired to do the work through government bids and contracts. When a town needs a new school or playground, for instance, local contractors and construction companies will typically submit bids of how much they would charge to do the job. The government then selects the winning bid and pays the winner an agreed-upon amount, which then gets spread around to materials distributor, the salaries of those working on the job, and the contractor’s profit.

Government contracts are so potentially lucrative that a website – Business.gov – was established to direct businesses on how to go about submitting bids for them. Between construction, administrative processing and defense, hundreds of billions of dollars are awarded by government contracts every year.

Stimulus Spending

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During economic disasters, the federal government typically attempts to “stimulate” the economy by allocating money to sectors or industries in trouble. Perhaps the most famous example of government stimulus spending is the New Deal, enacted by President Franklin Delano Roosevelt between 1933-1935 to offset the crises caused by the Great Depression. The agricultural subsidies discussed earlier actually originated during this time, as farming was hit exceptionally hard by the Depression. In addition, the New Deal sought to right a sinking ship by instituting public works projects. Roosevelt’s Public Works Administration spent some $3.3 billion in taxpayer money paying private companies to build 34,599 projects ranging from dam construction to bridge building, according to Jason Scott Smith’s Building New Deal Liberalism: The Political Economy of Public Works.

A comparable effort to the New Deal is President Barack Obama’s $787 billion Recovery and Reinvestment Act of 2009. The industry deemed most troubled today (as opposed to farming in the 1930′s) is the automotive industry. In order to drive sales in this beleaguered sector, Obama instituted the Cash For Clunkersprogram, which pays individuals $3,500-$4,500 (depending on how fuel-efficient their current vehicle is) to buy a more fuel-efficient vehicle. The program’s website states that Cash For Clunkers is slated to run from July-November 2009 (although this is probably unlikely), and pay over $2 billion to car buyers and that over 250,000 cars have been sold so far, though Edmunds.com notes that interest is reportedly dying down.

MSNBC notes that the stimulus includes a $50 billion “rescue fund” to prevent homeowners from losing their homes to foreclosure. Presumably, these funds are dispersed to the lenders in position to foreclose so that they will not exercise that option.

The stimulus also pumps $40 billion more into expanding payments to the unemployed, $19 billion to food stamps, $3.95 billion for job training, and $125 million for “subsidized community service jobs for older Americans”, according to Wikipedia.

Additionally, some $27.5 billion has been allocated for road and bridge construction, as well as $6.9 billion for public transportation. All of these programs represent money being placed into the hands of various individuals and groups by the government.

So, as we have seen, the ways in which government puts money into the economy are virtually endless. They grow in number every year, and vary according to which way the political winds happen to be blowing at a given time.

Germany Weimer Republic 1922-1923

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By the end of 1922 Germany found it was no longer able to pay the war reparations set forth by the Treaty of Versailles. French and Belgian armies responded by occupying Germany’s most productive, and industrial regions. German industrialists then ordered workers strikes, which put further pressure on an already frail economy. The German government countered this situation by printing unbacked currency with which it meant to pay both workers benefits, as well as its delinquent international debt. Supply and demand followed: too much money was circulated, and the money was soon considered worthless. In 1922, the largest denomination of the Papiermark was 50,000. A year later it was 100 Trillion. This means that by December 1923, the exchange rate with the US Dollar was 4.2 Trillion to 1. It is estimated that by November 1923, the yearly inflation rate was considered 325,000,000%. This means that the cost of goods were increasing about every two days. As a result, the Rentenmark was introduced at a rate of 1 to 1 Trillion of the Papiermark. Reparation payments eventually continued, and France and Belgium agreed to leave the country.

Hungary 1945-1946

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The Great Depression put an initial strain on the Austrian Pengo, originally introduced with great strength as a replacement to the Austrian-Hungarian Korona in 1926, per the Treaty of Versailles. Next, the associated effects of World War II would run their course. In 1944, the Hungarian Pengo’s highest denomination was the 1,000 note. A year later it was 10,000,000. And by mid-1946, it was 100,000,000,000,000,000,000. Realizing that this type of hyperinflation and denomination increase was not sustainable – and after 20 short years – the Pengo was replaced by the Forint. There are famous pictures of this event, which include street sweepers cleaning the sea of Pengo notes that Hungarians so eagerly discarded. At the time of this replacement, the Pengo to Forint exchange, was Four Hundred Octillion (That’s 29 Zeros) to one. That same Forint would exchange for 11.74 to $1USD. Inflation has since continued at a much more subdued rate, and the current exchange is valued at approximately 195.2 Forint to 1 $USD. It is estimated that at the time of replacement, the value of all Hungarian currency in circulation equaled less than one-thousandth of one US dollar!

Chile 1971-1981

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Shortly after the ascension to the office of president, Socialist President Salvador Allende, decreed that many of Chile’s leading industries would be nationalized. Owing predominately to management problems (with bureaucrats overseeing the market) this government soon began hemorrhaging money, and in order to subsidize the loss, the Chilean Central Bank began printing unbacked currency at an alarming rate. This resulted in an inflation rate of 600% by the end of 1972; inflation eventually skyrocketed to 1200% by the end of 1973. This was the same year General Augusto Pinochet’s US-backed coup d’état seized control and installed his populist military regime. Shortly thereafter, in 1985, the Escudo (1960-1975) was replaced by the New Peso at a rate of 1,000 to 1. Except for a slight depression in 1981, the Chilean economy recovered, largely due to the government’s decision to sell off newly acquired State-owned enterprises. The rest of Pinochet’ s tenure in Chile, however, is entirely another story.

Argentina 1975-1992

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After unprecedented annual growth rates and record trade surpluses, panic and political unrest broke out between Argentine Trotskyists and the Perón loyalists, in the wake of the 1973 oil crisis. Conflict came to a head in 1975, when a sharp recession looked inevitable. The Argentine government then exacerbated the situation by refusing to borrow in order to cover its budget and trade deficits. In 1975, the largest Argentine Peso denomination was 1,000. A year later the 5,000 note was introduced. In March 1976, a violent coup was staged by the country’s military leaders, who promised to bring stability to the region. By ’79, there was a 10,000 Peso banknote and by 1981, the Argentine Central Bank had introduced a 1,000,000 Peso note. The country’s economy declined, further worsening the situation – in between 1981 and 1982, Argentina’s GDP fell 12%, the worst single year decline since The Great Depression. When the currency was reformed in 1983, 1 Peso Argentino was exchanged for 10,000 of the “old” Peso. Then in 1985, the ‘Austral’ was introduced, which replaced the Peso Argentino at a rate of 1-to-1,0000 Then yet again, in 1992, the New Peso replaced the Austral this time at 1-to-10,000. This end result of this experience – in many circles referred to as, “The March of Zeros” – equated to a 1 New Peso equal to 100,000,000,000 Pre-’83 Pesos.

Peru 1988-1991

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During the 1980s, Peru, like many Latin American countries introduced a number of trade liberalization polices. At the same time, government increased public spending, privatized enterprise, and neglected to service the nation’s external debt. As a result, by the end of the 1990s, Peru’s already small economy – which once had been enticing avenue for foreign direct investment – was experiencing not only negative economic growth, but also deficits of all types, as well as hyperinflation. While hyperinflation became apparent, the Peruvian government replaced the Peru “Old” Sol with the Inti, in 1985, at a rate of 1,000 to 1. The largest denomination of this new currency, was a 1,000 note. In two years, monthly inflation would increase by a rate of 132% in September 1988, and later 400% by September 1990. In order to facilitate the new higher prices of goods and services, new notes were introduced such as the 10,000,000 Inti note by 1991. Again, Peruvian government decided again to replace the currency, this time with the Neuvo Sol, at a rate of 1,000,000,000 to 1. The result was a currency that was worth one billion times that of only six years before.

Angola 1991 – 1999

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Angola’s story is an unfortunate one, and while it is today one of the fastest growing economies in the world, the country was plagued by civil war from 1975 to 2002. This conflict placed a large strain on the nation’s economy, as well as its currency, the Kwanza. In 1991, the largest note was the 50,000 kwanza denomination. By ’94, there was the 500,000 banknote. In 1995, the Readjusted Kwanza (Kwanza reajustado) was introduced for 1,000 Kwanzas. The new currency also had a 500,000 denomination. When the country changed currencies in again in 1999, the New Kwanza was introduced, exchanging for 1,000,000 of the reajustados; by this time, the new currency was equal to one billion of the pre-’91 Kwanzas.

Yugoslavia 1992-1995

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Between 1988 and 1989, the Yugoslavian Dinar’s largest denomination switched from 50,000 to 2,000,000 notes. The New Dinar replaced the Dinar in 1992, at a rate of 1 to 10, with the highest denomination being 50,000. By 1993, this was 10,000,000,000. In answer to this sharp increase inflation, the government simply removed six zeros, meaning that the “Newer” Dinar replaced the “Old Dinar” at a rate of 1 to 1,000,000. In the next year the currency was replaced yet again, this time at the rate of 1 to 1,000,000,000! By January 1995, prices had increased a quadrillion percent in two years, and as a result the German Mark became the country’s Fiat currency. It is estimated that during the height of hyperinflation (December 1994), inflation was increasing by a rate of 100% per day. In fact many Yugoslavians during this time sought to forgo paying their bills for as long as possible, because it several weeks the amount owed would seem relatively cheap!

Belarus 1994-2002

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Shortly after the Cold War, many of the newly independent Eastern Bloc states began to experience the pains of a currency fluctuation, and moving towards a market-based economy. At the time of independence, Belarus was had a relatively highly developed economy, and it’s citizens experienced a standard of living among the highest of eastern Europe. In 1993, the largest Belorussian note denomination in circulation was the 5,000 Rubles. By the end of the decade, this had increased to 5,000,000 notes. In an effort to displace this, the government replaced the new Ruble at an exchange rate of 1 to 1,000 “old” Ruble. Presently, the highest denomination is the 100,000 note, which is equal to 100,000,000 1993 Ruble. Many people credit the high rates of inflation to the leadership of Lukashenko who has been in office since 1994. Today 80% of the country’s industries are still nationalized.

Zimbabwe 2000-2009

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When Zimbabwe became an independent African state in 1980, the Zimbabwe dollar was actually valued higher than the US dollar, at a rate of 1 to 1.25. Through a series of questionable race-based land seizures and rampant money-printing, the Zimbabwe dollar began to experience rampant inflation by the early 21st century. By 2004, inflation reached a then-all time high of 624%, before going below triple digits in 2005, and then surged up to to 1,730% in 2006. In August 2006, the currency was replaced with a New Zimbabwe dollar at a rate of 1 to 1,000. By mid-2007, inflation reached a yearly increase of 11,000%. By May 2008, 100 Million and 250 Million New Zimbabwe Dollars (ZWD) denominated notes were released, and less than two weeks later, a 500 Million ZWD note was introduced (valued at about $2.50). Then less than a week later, 5 B, 25 B and 50 B ZWD notes were introduced, and later, in July, a 100 B denomination was introduced. In August 2008, the government removed ten zeros from the currency, and 10 Billion ZWD became equal to 1 New ZWD, with an estimated annual inflation rate of about 500 quintillion (18 zeros) percent, with a monthly rate of 13 billion percent.