What Happens When China Stops Buying Our Debt?

For years, people have wondered what happens when China stops buying U.S. Treasury bonds. Once China refuses to finance our massive deficits, the thought goes, interest rates will surge, and the Treasury might have a hard time selling bonds (ask Greece what it's like). And if China actually began selling its Treasury bonds... that could bring about something far worse.

But we don't have to wait any longer. China has been a net-seller of Treasuries for the past few months. And not only does the world still exist, but interest rates are near an all-time low. Like so many other stories about the economy, the idea that the U.S. is reliant on China to buy its debt and that hell will break loose when it stops is greatly exaggerated.

China has indeed been a prolific buyer of U.S. debt over the past decade. In 2000, mainland China owned less than $60 billion of Treasury debt. By 2010, it owned more than $1 trillion, surpassing Japan as America's largest foreign creditor.

But those numbers have topped out, and actually dropped, in the last few months:

Source: Treasury Department.

At this rate, Japan will likely reclaim its status as the largest foreign owner of Treasuries sometime this year. As of December, China owned $1.1 trillion of Treasuries, next to Japan's $1.04 trillion.

What's behind China's pullback? The nation is deeply secretive about its financial dealings, so no one knows. But it's likely that after scrapping its currency peg to the dollar in 2010, China no longer has the incentive to hold a "price be damned" approach to buying Treasuries. It also has a vested interest in not seeing Europe's financial system implode, and has been vocal about its interest and commitment to buying European assets. That might take up funds that otherwise would have gone toward Treasuries.

There's also that pesky credibility thing. China's leaders have ridiculed the U.S. for spending with abandon for years. When Treasury Secretary Tim Geithner told a group of Chinese students that Treasuries are safe in 2009, "the comment provoked loud laughter from the audience of students," according to Telegraph UK. That same year, Chinese Premier Wen Jiabao warned:

We've lent a huge amount of capital to the United States, and of course we're concerned about the security of our assets. And to speak truthfully, I am a little bit worried. I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.

Disturbed by last year's debt-ceiling circus, China may be acting on its fears.

It's also possible that the recent numbers are deceiving. China has been known to funnel some of its Treasury purchases through money managers in the U.K. When it does, the Treasury counts the U.K., not China, as the owner until the data is reconciled once a year. Last March, for example, the Treasury increased China's estimated holdings of Treasuries by 30%, and the U.K.'s down by an equal dollar amount, to reflect who truly owned the assets. But it doesn't look like that's happening this time. Since July, both China and the U.K.'s Treasury holdings have declined. In fact, total foreign ownership of Treasuries fell in December by almost $20 billion -- one of the only net monthly declines in the last five years.

And keep in mind what interest rates have done through all of this. One year ago, 10-year Treasury bonds yielded 3.4%. Today, they yield less than 2%. As a percentage of gross domestic product, interest on the national debt is near a 40-year low.

So if China isn't buying our debt, who is? That's hard to know, but I dug into some Treasury archives to find out how the ownership structure of Treasuries has shifted over the last decade:

Source: Treasury Department.

The U.S. government itself is by far the largest owner of government debt, taking claim to more than 40% of the total pile through the Federal Reserve and various entitlement trust funds. Substantially all the interest paid to the Federal Reserve is remitted back to the Treasury, and interest paid to entitlement trust funds is used to cover entitlement benefits, so this debt is -- in a sense -- interest-free. Since the concept of owing yourself money is somewhat weird, most analysts instead focus on debt owned by the public.

Of the $5 trillion rise in debt owned by the public in the past decade, $3.3 trillion was financed by foreign investors, half a trillion by U.S. individuals, half a trillion by pension funds, and the rest by banks, mutual funds, and state and local governments. Since 2000, China has increased its Treasury holdings by about $900 billion, and Japan by roughly $700 billion.

America's debt load cannot be ignored or belittled. And the ownership structure of the national debt -- particularly the portion owned by the Fed -- creates all kinds of dangerous imbalances.

But American households now own just about as much Treasury debt as China does. How often have you heard someone worry that the U.S. government is too reliant on U.S. households to finance its debt? I never have. But how often have you heard some version of the "China is our banker" line? Too often, I'd say.

For more like this, check out my new e-book, 50 Years in the Making: The Great Recession and Its Aftermath, on Amazon for your Kindle or iPad. It's short, packed with data, and only costs a few bucks.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On February 17, 2012, at 2:25 PM, chopchop0 wrote:

    Lucky for us that Europe is mired in an existential crisis.

  • Report this Comment On February 17, 2012, at 6:15 PM, bvanveen wrote:

    So, as we don't understand the Fed owning Treasuries, we just ignore its impact on the economy? Didn't we do this once before with derivatives?

  • Report this Comment On February 17, 2012, at 6:37 PM, JustMee01 wrote:

    I'd guess that when China stops buying our debt, we'll stop buying their garbage. I swear that you can't buy anything small that isn't made in China and isn't garbage. Yes, I am currently bitter about yet another simple little thing that I recently bought that literally fell apart in my hands...

    We may be sending them IOUs, but the goods they ship in return aren't worth much more than an IOU. I wish I could find something made in Taiwan or Vietnam. Perhaps it would last more than six minutes.

  • Report this Comment On February 17, 2012, at 6:46 PM, marc5477 wrote:

    They have to support us or they lose their export business. Its better to spend money on treasuries and collect a yield than let the US fall and cut off all their exports. Their loss of business would basically push them to instant depression.

  • Report this Comment On February 17, 2012, at 6:56 PM, TicoHombre wrote:

    @JustMee01

    You sure nailed that one. It's hard to find durable, long lasting anything anymore. I've had to return so much stuff that didn't work out of the box. It's absolutely incredible!

    That has nothing to do with any prejudice, just plain objective truth-telling.

  • Report this Comment On February 17, 2012, at 7:17 PM, dennyinusa wrote:

    I really appreciate these articles that aim to educate people on the situation instead of yelling the sky is falling. I know some people want you to strictly stay on investment news, but I ask that you keep us informed on this type of news.

    As an example I polled 10 friends and family members on amount of debt held by China the lowest number given was 50 percent. I showed them a copy of your article 3 Misconceptions That Need to Die. Their reactions were of disbelief. All they ever read or hear on the debt is that China owns us.

    It is a shame when the 24 hour news network cannot take the time to actually keep their viewers informed on real news instead of covering garbage like the royal wedding, the balloon boy or some lunatics that still do not believe President was born in USA.

    Keep up the good work.

  • Report this Comment On February 17, 2012, at 7:34 PM, CrankyTexan wrote:

    Why worry about the national debt when we can print money, right, Morgan?

    Heck, maybe Obama should borrow $100 trillion from China, and buy every American a new house. Then his reelection will be a sure thing.

  • Report this Comment On February 17, 2012, at 9:18 PM, Wade32ru wrote:

    Good article as usual Morgan. My question is this - how can the US govt pay for things with money that was borrowed from the fed? We're borrowing money from ourselves to meet our obligations, and this means that someone has to feel the pain. Couldn't we compare this to a public company that raises capital through a secondary stock offering? There, the company achieves its goal of raising capital, but it hurts existing shareholders because their shares get diluted. Am I thinking about this correctly?

  • Report this Comment On February 17, 2012, at 9:29 PM, steltek wrote:

    The U.S. government is too reliant on U.S. households to finance its debts. There it's been said. And, it's quite true, too. As it stands about 30% of every dollar collected from taxes goes toward debt payment. That makes the U.S. government easily the least efficient organization in the U.S. The only way it could be less efficient is if it were also rife with corruption and graft. Oh wait...

  • Report this Comment On February 17, 2012, at 9:34 PM, CrankyTexan wrote:

    >>> Couldn't we compare this to a public company that raises capital through a secondary stock offering? <<<

    No, because stocks are not loans. Bonds are loans. So it more like selling bonds to China. Which makes the USA a "company" that is is horrible shape because he has to sell bonds just to pay their bills.

  • Report this Comment On February 17, 2012, at 9:56 PM, ybnvsfool wrote:

    Thanks Morgan, another Obama love in. If our government can just spend enough then we can loan ourselves enough money via the Fed to drive the US into a bananna republic. Wonderful.

    I guess its time to cancel my subscription again. I can't believe the crap I see on MF.

  • Report this Comment On February 17, 2012, at 10:20 PM, steltek wrote:

    Bonds were originally to raise money during a crisis, specifically wars, more specifically Dutch independence. That they have become standard operating procedure during peace is a violation of the ethics of democracy. It is an obfuscated way of raising taxes without notifying the public. It'd be like your neighborhood association president taking out a loan that binds the whole neighborhood to paying back a loan without consulting the neighbors. Then at the next association meeting, he says "oh btw we're raising dues to compensate for interest on our loan..." At that point, you can't say no, because it's already a done deal. And, you can't refuse to pay, because you implicitly agree to let them assign responsibility on your behalf, because you voted for them. Welcome to the land of the free, where other people decide what you pay and why.

  • Report this Comment On February 18, 2012, at 1:43 AM, CrankyTexan wrote:

    1. Federal debt has increased by 44% from $10.6 trillion to $15.23 trillion.

    2. Americans living in poverty have increased by 16% from 39.8 million to 46.2 million.

    3. Total unemployment (U6) has increased by 21% from 19 million to 23 million.

    4. Price of gasoline has increased by 80% from $1.86/gal to $3.35/gal

    5. Grocery prices have increased by 17%. [CPI Food price index of 119.6 to 164.3]

    6. Americans on food stamps have increased 42% from 31.8 million to 45.2 million

    7. Healthcare premiums per family have increased by 19% from $12,680 to $15,073.

    8. US Bank failures per year have increased by 268% from 25/yr in 2008 to 96/yr in 2011.

    9. Home foreclosures per year have increased by 34% from 850,000 to 1,140,000

    10. Total bankruptcy filings per year have increased by 31% from 1,117,641 to 1,467.221.

    11. US credit rating was downgraded by S&P for first time

    12. Median Household income has declined by 4% from $50,939 to $48,950.

    13. Median value of existing homes has declined by 17% from $197,233 to $162,500.

    14. US dollar compared to foreign currencies has declined by 7.7%. [US dollar index on Jan 20, 2009 versus Dec 30, 2011]

    15. US dollar compared to gold has declined 89%. [$855/ounce to $1617/ounce]

  • Report this Comment On February 18, 2012, at 3:02 AM, PeakOilBill wrote:

    European GDP = $16 trillion

    USA GDP = $14 trillion

    China GDP = $ 6 trillion

    We'll survive for a while.

  • Report this Comment On February 18, 2012, at 3:31 AM, portefeuille wrote:

    European GDP = $16 trillion

    -------------

    That is about right as an estimate for the 2011 GDP (PPP) of the EU.

    GDP (PPP) 2011 estimate

    - Total $15,788 trillion

    - Per capita $31,548

    GDP (nominal) 2011 estimate

    - Total $17,960 trillion

    - Per capita $35,887

    from -> http://en.wikipedia.org/wiki/European_Union

  • Report this Comment On February 18, 2012, at 3:33 AM, CaptainWidget wrote:

    <<Substantially, all the interest paid to the Federal Reserve is remitted back to the Treasury, and interest paid to entitlement trust funds is used to cover entitlement benefits, so this debt is -- in a sense -- interest-free.>>

    I don't think you're dumb enough to believe this.

    Nothing in life is free......nothing.....

  • Report this Comment On February 18, 2012, at 3:34 AM, portefeuille wrote:

    For the U.S. it is

    GDP (PPP (=nominal, obviously)) 2011 estimate

    - Total $15.065 trillion

    - Per capita $48,147

    by the way.

    http://en.wikipedia.org/wiki/United_States

  • Report this Comment On February 18, 2012, at 3:36 AM, portefeuille wrote:

    Lucky for us that Europe is mired in an existential crisis.

    -------------

    Give us a few years. Per capita GDP will be higher in Europe than in the U.S. soon.

    Maybe, hehe ...

  • Report this Comment On February 18, 2012, at 3:53 AM, Kauaicat wrote:

    There is a saying in the banking business: "If you owe the bank $100,000, the bank owns you. But if you owe the bank $100,000,000, you own the bank". In the case of U.S. debt, China is the bank, and we actually own them. China can only slowly reduce their holdings of Treasuries without affecting interest rates, and the U.S. economy.

    But the Federal Reserve is now buying (printing) 91% of long-term bonds. The shorter term bonds are being snapped up by investors fleeing the Euro and the stock markets and going to cash. The Fed's creation of fiat money out of nothing is the real problem, not China.

  • Report this Comment On February 18, 2012, at 7:48 AM, ETFsRule wrote:

    Let's see... our 10-year bonds currently yield 1.99%, while Brazil's pay 12.55%. I know which one I would buy.

    As soon as our yields start to rise, China will start buying again.

    This has nothing to do with our "debt load", our "fiat money", etc.

  • Report this Comment On February 18, 2012, at 12:22 PM, Samskiman wrote:

    Mr. Housel never answered the question.

    What happens happens when China stops buying our debt??

    China has not stopped buying our debt.

  • Report this Comment On February 18, 2012, at 1:57 PM, moneytrail wrote:

    Crankytexan nailed it Morgan, America is in a downward economic spiral never before seen in our nation’s history. According to you and Obama everything is moving along just fine. Now, you claim that our total debt structure isn’t as bad as many think. Perhaps we should keep piling up $1 trillion, plus, per year in debt, since the effect is minimal according to you and Obama, whose budget projects one-trillion, plus, debt for the next 10 years. (Oh, by the way, as pointed out by crankytexan, our debt has increased by more than 50% since ’09 (not in the past 10 years, as you erroneously claim, and shows no sign of subsiding under Obama’s regime.)

    You have the knack of misleading the less wary and less informed of your readers with selected facts that present “analyses” indicating an overall improving US financial and economic picture. Your articles are more propaganda than analysis, as clearly and unequivocally indicated by Crankytexan’s presentation. The information he presents is known to all but the most ill-informed investors. (I suspect you know these facts but choose to not address them becasue they do not fit your political agenda.)

    It is irresponsible to present sanguine economic propaganda to those who subscribe to your misleading, faux-analysis. You are treating your ill-informed sycophants as “fools” rather than “Fools.”

  • Report this Comment On February 18, 2012, at 2:15 PM, MittyMo wrote:

    The author's right. There's absolutely nothing to worry about. If China stops buying our debt, our government can (and likely will) step-up and buy more.

  • Report this Comment On February 18, 2012, at 3:06 PM, Risky88 wrote:

    I do not know one person who doesn't own some form of debt. In fact 99% of people will be in debt almost their entire life.

    It's all about how you manage it.

  • Report this Comment On February 18, 2012, at 4:36 PM, CaptainWidget wrote:

    <<The author's right. There's absolutely nothing to worry about. If China stops buying our debt, our government can (and likely will) step-up and buy more.>>

    Yes...our government, who is in debt and needs money, will buy it's OWN debt and pay it's self back....sheesh.........why didn't I think of that? Next time I need a loan to pay my rent I'm just going to borrow from myself interest free. It's so simple.

  • Report this Comment On February 18, 2012, at 4:46 PM, CrankyTexan wrote:

    >>> I do not know one person who doesn't own some form of debt. In fact 99% of people will be in debt almost their entire life. <<<

    Is your personal debt one million dollars? It would have to be that much to compete with the national debt.

    By the way, I have zero personal debt.

  • Report this Comment On February 18, 2012, at 5:25 PM, dennyinusa wrote:

    This is for Crankytexan, moneytrail and the rest who just want to blame Obama.

    Cranky starts his numbers from the day Obama took office. So he wants us to just forget the direct the country was heading thanks to Bush/Cheney team. This is the equivalent to handing over the driver seat to somebody after you drive off a bridge and telling the cops. Hey the car was fine while I driving, he was at the wheel when it landed on top of the boat.

    I remember when Reagan took over from Carter, Reagan blamed Carter for all that was wrong with USA, you may not have liked Carter but he did not raise the debt over his 4 years. Reagan is the president who started us on this great deficit ride. I hope you bitched about him also.

    Obama is far from perfect, but he isn’t as terrifying as some of you want to believe.

  • Report this Comment On February 18, 2012, at 5:32 PM, CrankyTexan wrote:

    I don't who caused the mess. All that matters is that it IS A MESS. A HUGE MESS. And the president is the only one who can fix it. And HE ISN'T. He does give a rat's ass about the debt.

  • Report this Comment On February 18, 2012, at 5:32 PM, CrankyTexan wrote:

    NOT that is

  • Report this Comment On February 18, 2012, at 5:34 PM, CrankyTexan wrote:

    dennyinusa, stop trusting corrupt politicians, and WAKE UP. Republicans and Democrats are both corrupt.

    Wake up and realize that the USA economy is screwed.

  • Report this Comment On February 18, 2012, at 5:39 PM, CrankyTexan wrote:

    Obama has been president for 3 YEARS. That's plenty of time to fix the economy. He has made things much worse instead of improving things.

    Anyone who likes Obama has very low standards. He is corrupt and incompetent. My cat can run the country better than he can.

  • Report this Comment On February 18, 2012, at 5:42 PM, CaptainWidget wrote:

    He may be cranky, but he's right. It's not a partisan issue, it's a "my money is going to be worth less 10 years from now because of big government's poor policies".

    Despite what certain misinformed Fool writers would have you believe, stimulus doesn't stimulate, money isn't free, regulations hurt industries, and we're going downhill, not up. The bigger our government gets, the smaller we get.

  • Report this Comment On February 18, 2012, at 6:15 PM, dennyinusa wrote:

    CrankyTexan. Believe me I do trust GOP or Democrats but the only GOP candidate worth a vote would be Ron Paul.

    The others all want to bomb Iran and keep big defense budgets. We need to get out of the war business.

    All would shut down EPA, this agency was created under Nixon a GOP, when I was kid LA had smog alerts, also had a river catch fire in I believe Ohio because of chemicals dumped. We just need to look at bad rules and change them you do not blow something up. As far as regulations I also do trust business to not pollute or damage environment. Remember with mountaintop removal for coal it is the people who live in this area that will have to deal with the problems this will cause.

    Where I live crushed granite is mined in open pit. Farmer found line fence hanging in air. At 50’ down they dug 20 feet into farmers land. He basically had to sell them land even though he never wanted to. When companies hit bedrock or cannot keep up pumping water they leave 100 foot deep by 20 acres holes in the ground. There is about 500 acres of dead land area. We live in a Township we are not allowed to tax companies for basically hauling away our town. Then they stop paying the property taxes because what good is a big hole. Guess who has to pay higher property taxes for schools, roads, fire and police service. Oh yeah that would be me the schmuck stilling living here. I was on Town Board 6 years, learned that corporation should serve people’s needs or they are useless to society. I had many people like cry about the right to do whatever they want on their property, but as soon as their neighbor wanted the same privilege then they wanted some rules in place. 40 years ago the owner of a large pit wanted to be able make a pit into a landfill/dump. Again he was not from area. He was stopped he then convinced town to our west what a great deal having a dump in their town would be. Took in medical waste, paper mill sludge, etc., he would have took nuclear waste. Needless to say 20 years later it was on superfund cleanup list. He of course just declared bankruptcy and left. His neighbors’ water wells were bad, kids getting sick and now their land is worth nothing

  • Report this Comment On February 18, 2012, at 6:32 PM, HarryCarysGhost wrote:

    Holy Cow!

    How did this turn into a political disscussion?

    That being said-

    Go Ron Paul.

  • Report this Comment On February 18, 2012, at 9:01 PM, slpmn wrote:

    Since half the people that read these columns seem to like to compare the Federal Government to a business (or worse, a family), I give you the following scenario: You've been pulled off the street to run a company in the midst of a massive crisis. It's products aren't selling and it's factories are old and in disrepair. Lack of revenue and high overhead have resulted in annual losses. Barbarians are at the gate.

    You've got two choices: A) Close factories, cut your product line, and fire people to bring revenues and expenses in line, or B) Borrow from every Tom, George, and Xiuan Yu on the planet at 2% for 10 years to make payroll, upgrade your factories, and pay for some R&D, knowing full well that in the near term, your going to be running losses, but you're laying the groundwork for a long term recovery.

    I know what I'd do. The critical thing to keep in mind is how cheap our nation can borrow. If you can borrow for 10 years at 2% to prop things up while the economy recovers, you do it! That's not Republican or Democrat, that's just good business sense. Let's all say it together = We. Are. Not. Greece. No need to pretend we are.

  • Report this Comment On February 18, 2012, at 9:19 PM, CrankyTexan wrote:

    slpmn, the correct answer is....

    C) Cut spending across the board, stop wasting money on liberal pork and bribing congressmen, and then pay off the debt.'

    Didn't you learn anything from the Motley Fool? GET RID OF YOUR DEBT FIRST!

  • Report this Comment On February 18, 2012, at 9:20 PM, CrankyTexan wrote:

    If slpmn were broke, he would get 10 more credit cards and max them out.

  • Report this Comment On February 18, 2012, at 9:21 PM, CrankyTexan wrote:

    The best businesses in America are debt free.

  • Report this Comment On February 18, 2012, at 9:49 PM, CaptainWidget wrote:

    <<You've been pulled off the street to run a company in the midst of a massive crisis. It's products aren't selling and it's factories are old and in disrepair. Lack of revenue and high overhead have resulted in annual losses. Barbarians are at the gate.

    You've got two choices: A) Close factories, cut your product line, and fire people to bring revenues and expenses in line, or B) Borrow from every Tom, George, and Xiuan Yu on the planet at 2% for 10 years to make payroll, upgrade your factories, and pay for some R&D, knowing full well that in the near term, your going to be running losses, but you're laying the groundwork for a long term recovery.>>

    If my products aren't selling, why would I leverage my credit to build more of them?

    I pick A and become Macintosh (leaning out product lines while closing local factories and shifting to more efficient overseas production).

    You pick B and become Eastman Kodak, borrowing on 100 years of goodfaith to keep producing junk that no one wants, only to eventually go bankrupt anyways.

    Which is ironic. When you have an infinite line of good faith credit (like the US government) you generally will always pick B. And when you pick B, you generally keep producing junk that no one wants at a price no one is willing to pay (like the US government). Without price signals and an infinite stream of credit, it's damned near impossible to produce something valuable to the world.

    Either your analogy was poorly conceived, or perfectly conceived, but it illustrated the fallacy of borrowing to fund largess flawlessly.

  • Report this Comment On February 18, 2012, at 10:53 PM, dennyinusa wrote:

    Why a CEO may not be a great public servant.

    The government is not a business.

    Government’s role is to do things most companies will not do because there is no chance for profit. If providing health insurance to the old, disabled and children in poverty was profitable I’m sure some smart CEO would be doing. If providing help after a disaster was profitable I’m sure we would not need FEMA. No CEO looking for profit would want to vote or defend something that 50 to 60 percent of the people may disagree with. Such as Ending Slavery, The Right to Vote regardless of Race, Women’s Right to Vote, Social Security, Civil Rights, Healthcare or the right to build a Mosque.

    Government should lead the people to do what is needed, even though it may be difficult. Be willing to do things that will help the next generation. Tell people the truth.

  • Report this Comment On February 18, 2012, at 11:51 PM, CaptainWidget wrote:

    The government's role is to protect individual liberty, not shape society to the whims of the elite.

  • Report this Comment On February 19, 2012, at 1:43 AM, CrankyTexan wrote:

    dennyinusa, you want free healthcare? how about free food? free clothing? free house?

    The government's job is NOT to take care of you. It is YOUR job to take care of you.

    If you expect the government to force other taxpayers to give you handouts, then you are a parasite.

  • Report this Comment On February 19, 2012, at 3:10 AM, JET99999 wrote:

    As Joseph Goebells once said "If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

    This article although claiming concernsi fits under the common theme "don't worry we can just print" normallyheard from the left, e.g. Fox commentator Dr. Caroline Heldman, Professor of Govt from Occidental college, who poses as and is treated as an economist on many Fox News and Fox Business network shows. (summer 2011) (paraphrasing) "we can print money to pay for Obamacare, it doesn't matter" or Bob Beckel (Feb 2012) left wing political operative "deficits don't matter" or on the right "Rudolph Gulliani" (Fox News Jan 2011) "in a worst case, we can always buy our own debt" Now we have both parties falling all over each other only a day ago congradualating their accomplishment of passing a 94 billion payroll tax cut with zero offsetting cuts, meaning the govt will be required to print that much more additional dollars to cover Social Securities already yearly net deficit positon, now on track to exceed a half trillion (per CBO) over the next decade..

    Monetizating the debt was predicted by many of us as far back as 25 years ago, as the final step before the USA moves into de facto soverign bankruptcy, and so far everything is on schedule.

  • Report this Comment On February 19, 2012, at 4:29 AM, SathyaS wrote:

    Well, If my understanding is right, now that the interest rates are low, China is encashing as the value of the bonds are high. They are both encashing capital gains and reduce reliance on one country. Down the line, when the interest rates rise, they can use this money to buy again at lower cost.

  • Report this Comment On February 19, 2012, at 5:58 AM, junn13 wrote:

    Nice article, thanks for the insight.

  • Report this Comment On February 19, 2012, at 10:50 AM, gebiete wrote:

    Whew this article is such a relief. Foreign countries are no longer subsidizing our overspending, the Fed (i.e. the American taxpayer who is legally responsible for any debt incurred by the Fed) is now the responsible party.

    That means that when (not if) we default on this obligation the injured party is no longer the Chinese......it's ... the ... American ... taxpayer. Hmmmm, wait a minute.

    Well at least I'm an old fart so the burden of this will fall on my kids/grandkids. Suckers!

  • Report this Comment On February 19, 2012, at 11:18 AM, JGDTexas wrote:

    Glad to see you mention the FED ownership of US debt. That monetization is much more troubling than anything about China. I have never heard in history where monetization occurs to this extent and it ends well. It seems this should be the majority of the focus second only to the ludicrous spending that causes it and the lies Wash tells as they continue it.

  • Report this Comment On February 19, 2012, at 11:29 AM, LordSquidworth wrote:

    "I don't who caused the mess. All that matters is that it IS A MESS. A HUGE MESS. And the president is the only one who can fix it. And HE ISN'T. He does give a rat's ass about the debt."

    There is no budget without congress saying so.

  • Report this Comment On February 19, 2012, at 1:04 PM, slpmn wrote:

    @CrankyTexan - I actually have no credit card debt, a small 15-year mortgage, and one car loan. The latter two I only have because it just doesn't make sense not to borrow when the interest rate is 3.875% (mortgage) and 1.9% (car) and I can keep my funds invested in higher yielding assets.

    The whole point is - debt isn't always bad as long as it's serving a purpose. Right now the federal deficit is serving a purpose. Some people get that, some don't. A debt free national government is a fool's pipedream. National debt levels ebb and flow with tax policy and the economy. Right now, ours is high - because of tax policy and the economy.

    If there is one picture consistently painted by the data Housel puts out there (and that's all it is is data) it's that the current debt level is nothing to panic about. So quit panicking. It's irritating to the rest of us and causes unnecessary volatility in the markets.

  • Report this Comment On February 19, 2012, at 1:45 PM, dennyinusa wrote:

    crankytexan

    I have been called a lot names but parasite is new.

    Do not want free healthcare. Always hear how larger companies get better rates because of large pool of employees. So why not do group rate for population of USA?

    I grew up on a farm where we had to go milk cows at 5:00 a.m. before school, get home go to barn for chores and evening milking. I graduated from high school went to work in construction industry. In 1988 while shingling a barn a ladder broke and I fell 25 feet was paralyzed from chest down still have use of my arms. Rehabbed for about 9 months and went back to work for a home builder doing maintenance, purchasing and quality control. Was laid off in 2008 and am now self employed. I know what it is to work. Never took disability pay or Medicaid. Both parents went into assisted living facilities. They have paid for it with life’s saving and cashing out life insurance policies; they took no government money other than SS payments. They did not try to hide money so we kids could get. There will be no money left, which is fine with my siblings and me. Because of my health I will probably never collect Social Security which is ok, leave it for someone who needs it. We are so lucky to have been born in USA; also I have had the support of great family, which I know not everybody is as lucky. None of us make it on our own.

    Some of the rich are like Koch Brothers and Mitten they were born on third base and think they hit a triple, while the rest of us start at home plate having to swing the bat to get on base. I have no problem with rich people that actually earned it, but those that inherit wealth are frauds. Best schools, connections and a business given to them. This actually hurts our society because we are not having people promoted to jobs or positions based on skills, but by connections and money. Let’s have a high estate tax so money goes back into the pie. Let the best of best rise on merit, and then we will see who really have skills and talent.

  • Report this Comment On February 19, 2012, at 2:34 PM, racchole wrote:

    Government debt is NOT the same as personal debt. Understand that fact before you try to rationalize the decisions of a nation with your own personal budget.

  • Report this Comment On February 19, 2012, at 4:09 PM, Sunny7039 wrote:

    So, China has been a net seller of T-bonds for a few months now, and so far, nothing has happened? Lovely, thanks for the update.

    I didn't take the time to look up the numbers and calculate the percentages, but as we all know, the economics game is played based on the margins. I don't count on Japan to pick up all of the slack at these rates, not after their earthquake. When interests rates do go up, will everyone be shocked, shocked? Please.

  • Report this Comment On February 19, 2012, at 4:14 PM, CrankyTexan wrote:

    >>>> it just doesn't make sense not to borrow when the interest rate is 3.875% (mortgage) and 1.9% (car) <<<<

    You should never buy a car using credit. A car is a horrible depreciating asset. You are flushing money down the drain.

    >>>> The whole point is - debt isn't always bad as long as it's serving a purpose. Right now the federal deficit is serving a purpose. <<<<

    Bull crap. Borrowing money so we can pay the interest on our loans is not a good thing. It is a failure of money management.

    >>> A debt free national government is a fool's pipedream.<<<

    You're right. It's a pipe dream because of citizens addicted to handouts, and politicians addicted to corruption.

    >>> Right now, ours is high - because of tax policy and the economy. <<<<

    Bull crap. It is a SPENDING problem. You could steal every penny from rich people and it would not make a dent in the national debt.

    >>>> If there is one picture consistently painted by the data Housel puts out there (and that's all it is is data) it's that the current debt level is nothing to panic about. So quit panicking. <<<<

    This why Housel's articles are so reckless. When we have to borrow money in order to make our loans payments, it is time to panic. That time is now, and you are living in a liberal dreamworld in which debt does not matter. You probably think the economy of Greece is fine too.

    >>>Do not want free healthcare. Always hear how larger companies get better rates because of large pool of employees. So why not do group rate for population of USA? <<<

    Because Democrats are not interested in letting insurance companies sell health insurance across state lines.

    >>> Some of the rich are like Koch Brothers and Mitten they were born on third base and think they hit a triple, while the rest of us start at home plate having to swing the bat to get on base.<<<

    Where do you get your news? Huffington Post? Daily Kos? Media Matters? You have been brainwashed to hate rich people. the ironic thing is that the liberals who taught you this are rich themselves. Obama is part of the 1%. Gore is part of the 1%. Michael Moore is part of the 1%. Bill Maher is part of the 1%. Matt Damon is part of the 1%. Alec Baldwin is part of the 1%. Sean Penn is part of the 1%. I'll bet you don't hate any of these rich people, do you?

    >>>> I have no problem with rich people that actually earned it, but those that inherit wealth are frauds. <<<<

    So the kids of Obama are frauds? The kids of Al Gore are frauds? There is nothing wrong with inheriting money. You have been brainwashed to hate rich people.

    >>>Best schools, connections and a business given to them.<<<

    Life is unfair. Get used to it. If you want everyone to have the same income, then you are a communist. I suppose you want all students to get the same grades too. How about sports? Should score keeping be banned?

  • Report this Comment On February 19, 2012, at 4:28 PM, CaptainWidget wrote:

    <<@CrankyTexan - I actually have no credit card debt, a small 15-year mortgage, and one car loan. The latter two I only have because it just doesn't make sense not to borrow when the interest rate is 3.875% (mortgage) and 1.9% (car) and I can keep my funds invested in higher yielding assets.

    The whole point is - debt isn't always bad as long as it's serving a purpose. Right now the federal deficit is serving a purpose. economy.>>

    What purpose would that be? What great achievement is our $3.7 trillion dollar budget going to fulfill that a a $1 trillion budget a decade again wasn't fulfilling?

    Far be it from me to tell someone how to spend their money (because truly I don't care) but you're paying 1.9% a year to own a car that lost 25% of it's value IMMEDIATELY after driving it off the lot (if you bought new) and loses probably 5-10% more a year after that regardless. Then you're paying 3.9% to live in a house that will appreciate at 1% per year.

    You're talking about the value cost of money, and how you can get higher yields by borrowing. You could get even higher yields with no downpayment on either asset, renting and letting someone else swallow the depreciation or buying a used car outright that you can afford.

    Another great lesson for fiscal policy in America. Even money borrowed at near 0% interest rates that gets thrown into the garbage is still a bad deal. Borrowing to buy a car means you will chuck money in the trash. Borrowing to fund a $3.8 trillion dollar budget full of crony payouts and ridiculous subsidies is still borrowing for naught.

    Borrowing can sometimes be useful if you can quantatively rationalize that the yield will be greater than the interest rate. And that's impossible with the government. They see no price signals, how can they make an analysis if their yield for a loan will be greater than the price? They will just get it, spend it on something useless, and then borrow some more. At some point they have to nip the borrowing.

    And trust, they will only nip the borrowing if there's political will behind it. Unfortunately the majority of America is so ignorant of economics they'll let the Federal Govt borrow themselves into oblivion under the misguided idea that their borrowing is sowing seeds for the future....

  • Report this Comment On February 19, 2012, at 7:09 PM, dennyinusa wrote:

    Crankytexan

    My point on Healthcare.

    I believe it would be more efficient and fair to have same rate for everybody. I don’t care if it is run by single government agency or insurance companies. I grew up in what is considered a high risk job on a farm. I then went to work in another high risk industry construction. What I mean by high risk is these industries pay a higher rate for workers compensation insurance and health. Examples of other high risk jobs would be miners, oil rig workers, steelworkers, any job with heavy equipment or large animals. People with office jobs have a lower rate. This in my opinion is stupid, society needs people to do this type of work but then penalizes the people doing it because their wages are kept lower to make up for higher insurance costs.

    I was paralyzed in 1988, had a great employer who let me learn different jobs that I could still do, and then had the misfortune of being laid off in 2008. I used to think like you, but I found out nobody will hire me because they do not want me on their insurance. I feel like a leper, society needs these jobs done but if you get injured you are on your own.

    If we remove insurance from workplace it would mean people could leave jobs they hate, which would be better for employer and employees. I had to work with people who hated job, not much fun they kill morale.

    I do not hate rich people who inherited money I just have no respect for them.

    Do you think Conrad Hilton busted his butt, so his great-granddaughter Paris could go bar hopping?

    Let’s look at some of the rich that support higher tax rates and some that oppose higher rates. We have people like Buffet, Gates, Mark Cuban, Comedian---Chris Rock, Napster founder Sean Parker, Producer--- Norman Lear, Singer---Jay-Z, Actors---Ethan Hawk, Alec Baldwin, Ron Howard, Matt Damon who actually made money with an idea, skill or talent that they know they can rely on to keep generating income throughout their lifetime. Whereas Mitt Romney, George Bush, Donald Trump, Koch Bros, these people relied on inherited wealth, a birthright to the best/right schools to make connections or had a business given to them to accumulate their wealth. That is why they lobby and support politicians who will keep their capital gains rate low and the estate tax low. They understand it is very difficult to maintain generational wealth without rigging the system to their advantage. This actually hurts our society because we are not having people promoted to jobs or positions based on skills, but by birth, connections and money.

    Let’s tax capital gains at the same rate as labor and have a high estate tax so money goes back into the pie. Let the best of best rise on merit, and then we will see who really has the ideas, skills and talent to be successful. People just want a level playing field. It is easy to be against safety net when you start with Golden Parachute.

    I said nothing about life being fair, or everyone should get same income.

    I am single with no kids, I could bitch that my taxes are higher because people get tax breaks for being married or have kids, public educations, fire service, etc. I have gained nothing from these items. I don’t bitch because I know it improves our society and because maybe some kid that busted his/her butt and had lower tuition because of my tax money may figure out how to fix my spiral cord.

    I just think society is better served by people getting promoted or getting into college on talent.

  • Report this Comment On February 19, 2012, at 7:18 PM, CaptainWidget wrote:

    @dennyinusa

    <<I believe it would be more efficient and fair to have same rate for everybody. I don’t care if it is run by single government agency or insurance companies.>>

    You're wrong. What you consider "fair", someone else considers theft. What's fair is the people who incur a cost should pay for it. I sympathize with your situation, but how is it fair for you to ask a minimum wage single mom of 3 to pay for your healthcare? She has enough troubles without worrying about paying her "fair share" of your medical bills.

    <<If we remove insurance from workplace it would mean people could leave jobs they hate, which would be better for employer and employees.>>

    Agreed, but this is another example of government largess. When the Federal govt froze wages during WWII, they allowed employeers to entice employees by giving a tax exemption on health care. If the government would have kept those noses out of wage rates and/or kept the tax code flat (or...never went to war...), we never would have healthcare tied to our employeers.

  • Report this Comment On February 19, 2012, at 8:19 PM, MichaelDSimms wrote:

    I have thinking of buying my own debt and issuing new credit cards for myself at a .0001% interest rate.

  • Report this Comment On February 19, 2012, at 8:59 PM, dennyinusa wrote:

    CaptainWidget

    If you believe this theft, why is it fair to me to make me pay for, tax breaks for people with kids, public educations, fire service, etc, these items have been socialized.

    Let’s expand the tax base by ending tax exemptions for certain organizations.

    We now have religious organizations, labor unions, private schools, NAACP, NRA, Chamber of Commerce, think tanks and political pacts that are trying to influence policies and elections. The problem is these entities are able to claim they are non-profits, so they pay no taxes. Anyone who pays to lobby congress, get government contracts or campaigns for politicians should be paying taxes.

    At the very least allow states to access property taxes.

    Tax-Free Land:

    This creates a problem, because the tax exemption amounts to a gift of money to the organizations at the expense of tax payers. For every dollar which the government cannot collect on organizations property, it must make up for by collecting it from citizens; thus all citizens are forced to indirectly support these organizations, even those that they do not belong to and may even oppose.

    Some groups benefit much more than others, resulting in problematic religious favoritism. Some institutions, like the Catholic and Mormon churches, have billions of dollars in property whereas others, like the Jehovah’s Witnesses, own much less.

    These organizations now have more influence on policies and elections than at any time in USA history.

    This needs to change. I believe the place to start is with their tax status.

    Church in my town owns 40 acres of land. It has 1 house for priest to live in, 2 other building and large church.

    Church pays $0.00 property taxes.

    I own 1 acre of land and 24’ x 42’ house with 3 car garage. ---

    I pay $2,000.00 property tax.

    Why is this fair?

  • Report this Comment On February 19, 2012, at 10:26 PM, CrankyTexan wrote:

    >>> I believe it would be more efficient and fair to have same rate for everybody. <<<

    You don't seem to understand the concept of insurance. Insurance is not charity. Insurance is something you pay for in case something goes wrong in the future. If you force insurance companies to cover pre-existing conditions, then it is no longer insurance. Insurance companies cannot survive this way. Which is exactly what liberals like yourself want. You want insurance companies to be put out of business so that crooked politicians can take over healthcare.

    >>>I do not hate rich people who inherited money I just have no respect for them. <<<<

    And I have no respect for people who want crooked politicians to force rich people to give their personal property to other people.

    >>> Do you think Conrad Hilton busted his butt, so his great-granddaughter Paris could go bar hopping? <<<

    You are disingenuous for comparing all rich people to Paris Hilton. Not all people who inherited money are narcissistic.

    >>> Let’s look at some of the rich that support higher tax rates and some that oppose higher rates. We have people like Buffet, Gates, Mark Cuban, Comedian---Chris Rock, Napster founder Sean Parker, Producer--- Norman Lear, Singer---Jay-Z, Actors---Ethan Hawk, Alec Baldwin, Ron Howard, Matt Damon <<<

    All those people are full of crap. All of them are welcome to donate extra money to the IRS, but none of them do. They are all talk and no action.

    >>> Let’s tax capital gains at the same rate as labor and have a high estate tax so money goes back into the pie. <<<

    No. I already pay tax on the money that I invest. So you want to tax me again? There is a good chance my stocks will decrease in value, so I should not be taxed. The 15% capital gains applies to EVERYONE including poor people. It is not my fault that poor people blow their money instead of investing it wisely.

    >>>. People just want a level playing field.<<<

    Like I said, life is not fair. You are a communist.

    >>> It is easy to be against safety net when you start with Golden Parachute. <<<

    Quit whining and make your own money. You are American. You have the freedom to become as rich as you want. Stop feeling sorry for yourself and get rich instead of hating rich people.

    >>> I don’t bitch because I know it improves our society and because maybe some kid that busted his/her butt and had lower tuition because of my tax money may figure out how to fix my spiral cord. <<<

    You have had bad luck in life, so now you hate people who have good luck. That's a horrible attitude.

    >>> I just think society is better served by people getting promoted or getting into college on talent. <<<

    Then I am glad that you are against affirmative action.

  • Report this Comment On February 19, 2012, at 10:35 PM, CaptainWidget wrote:

    <<CaptainWidget

    If you believe this theft, why is it fair to me to make me pay for, tax breaks for people with kids, public educations, fire service, etc, these items have been socialized.>>

    It's not, the government shouldn't be involved in subsidizing any individual, industry, or commodity. And any taxation that it does to facilitate it's necessary functions should be either completely voluntary or completely flat.

    You went off on a tangent about tax free groups, I don't disagree. I think either everyone should pay the same rent or none at all. But what does that have to do with your suggestion that someone else should pay your medical bills?

  • Report this Comment On February 19, 2012, at 10:36 PM, CrankyTexan wrote:

    dennyinusa, if you spend the rest of your life feeling sorry for yourself, you are guaranteed to be miserable for the rest of your life.

    Stop feeling sorry for yourself, and devise a plan to become happy without taking the personal property of others.

  • Report this Comment On February 19, 2012, at 10:45 PM, CrankyTexan wrote:

    By the way, I happen to hate Paris Hilton. But I don't hate her because she is rich. I hate her because she is an attention whore. Do I think the government should take away her personal property? No. I hate her, but she has the right to keep every penny of her inheritance. She has the right to keep her personal property.

  • Report this Comment On February 19, 2012, at 10:46 PM, CrankyTexan wrote:

    "Communism doesn't work because people like to own stuff."

    - Frank Zappa

  • Report this Comment On February 19, 2012, at 11:51 PM, Harbinger0 wrote:

    "Substantially, all the interest paid to the Federal Reserve is remitted back to the Treasury, and interest paid to entitlement trust funds is used to cover entitlement benefits, so this debt is -- in a sense -- interest-free."

    .....TANSTAAFL...

  • Report this Comment On February 20, 2012, at 1:21 AM, deborahyetts wrote:

    i think with all this nonsense and guess work which is really what it is all about because even wall street should have enlightened some,so put the cat on the ballot-same as our present debaters or better yet lets all get our info via the new colony on the moon-or maybe texas will form its own union that will fix it

  • Report this Comment On February 20, 2012, at 1:26 AM, deborahyetts wrote:

    i sure hope the texan guy gets his crap out thanks to the fools

  • Report this Comment On February 20, 2012, at 1:31 AM, CrankyTexan wrote:

    >>> i think with all this nonsense and guess work which is really what it is all about because even wall street should have enlightened some,so put the cat on the ballot-same as our present debaters or better yet lets all get our info via the new colony on the moon-or maybe texas will form its own union that will fix it <<<

    Was that English? It makes zero sense.

  • Report this Comment On February 20, 2012, at 4:42 PM, moneytrail wrote:

    This ongoing political altercation only seems to occur with Housel’s articles. This is allegedly an investment analysis service and for all other analysts the dialogue is about investment insights. Housel has chosen to put forth political propaganda under the guise of investment analysis. He should write for the NY Times or another left wing, Obama campaign source that excels, as he does, by selecting “all the news that fits,” his agenda which is then gobbled up by Obama Zombies. Housel’s response to claims that his analysis is political and not financial is: “the reader is biased, hence is reading his articles as politically biased.” Odd, he seems to be the only MF “analyst” who has this problem.

    Any objective, successful investor knows what Housel puts forth is selective, pro-Obama faux analysis. Only a “fool” (small “f”) would buy into his thesis that our economic picture is brightening with real unemployment at 15% (CBO) and as high as 20% by many private economists. These numbers take into account the millions of fewer jobs and workers in the economy, since he took office (2-6 million fewer jobs); as well as the 11 million Americans who have been transformed from unemployed to Social Security “disability” recipients. He has piled $5 trillion, plus, in debt upon us, with no end in sight, so he could provide raises for public employee unions and his “green energy” pals at Solyndra and other fatally flawed “green” businesses established by his political contributors and union pals, previously known as “crony capitalism.” Gasoline prices have almost doubled in 3 years under Obama, food stamps recipients have shot up more than 40% and poverty has increased by double digits. How can any semi-educated, semi-intelligent person accept Housel’s and Obama’s propaganda that our economy is improving?

    Ironically, successful investors aren’t likely to be duped by Housel’s politically charged articles; as a group, we’re too well informed about the economy and capital flows to consume his tripe. It’s his dizzy acolytes who will be seriously damaged if they follow his politically motivated “investment analysis.”

    As far as “angrytexan” is concerned, I understand why he is angry. It’s because tens-of-millions of Takers are sucking growth-capital from our economic growth engine and accusing successful Makers and Creators of new wealth as “greedy,” despite the fact that the top 10% of Makers pay more than 70% of all income taxes to feed, clothe and provide shelter and healthcare to Takers, who pay zero income taxes. Hopefully, next November there will be millions of hard working, successful Americans who share angrytexan’s shock at what the Takers are trying to take from their fellow Americans, while destroying our formerly, dynamic economy. If not, America will slide further into decline and the Takers will want more health care, food, shelter and endless subsidies funded by a shrinking number of Makers. Then, the smarter, successful investors in America will take their money elsewhere, by the trillions and, as in Greece, the Takers will then have to pony up for their reckless binge. I hope we can avert that outcome next November but, if not, it might be fun to watch the beggars scramble among themselves for non-existent freebees, as is occuring in Greece and will soon occur in the other, appropriately named, PIIGS countries.

  • Report this Comment On February 20, 2012, at 5:08 PM, TMFKopp wrote:

    @moneytrail

    Interesting that the word "Obama" doesn't show up until the comments section. If Morgan is a shill for Obama, he's really bad at it -- he could at least spend some more time attributing bright economic developments to the President.

    Of course you tip your own hand by using phrases like "Obama Zombies" and "pro-Obama faux analysis." It's hard to believe that you'd be able to read anything objectively.

    Personally I think that Morgan has done an excellent job at stepping back from the usually-politically-charged news coverage of the economy and taking a far more sober look at the numbers than most sources I've seen. Anybody that can legitimately describe themselves as objective would likely recognize his writing as highly additive to the Fool's coverage.

    Maybe I'm just biased. But if Housel's got me fooled then he's done a good job on the Society of American Business Editors and Writers as well... twice they've tagged Morgan's writing as "Best in Business."

    Matt

  • Report this Comment On February 20, 2012, at 5:38 PM, ETFsRule wrote:

    They must be part of the conspiracy too.

  • Report this Comment On February 20, 2012, at 5:38 PM, CrankyTexan wrote:

    >>> Interesting that the word "Obama" doesn't show up until the comments section.<<<

    As if praising a horrible economy during an election year has nothing to do with Obama.

  • Report this Comment On February 20, 2012, at 6:38 PM, CrankyTexan wrote:

    >>> Interesting that the word "Obama" doesn't show up until the comments section. <<<

    As if praising our horrible economy during an election year has nothing to do with Obama.

  • Report this Comment On February 20, 2012, at 8:08 PM, CaptainWidget wrote:

    I don't think Housel is an Obama shill, I just think he's a bad economics shill.

    Bad understanding of economics is far more detrimental to the country at large than supporting the "wrong" candidate. Bad candidates can be voted out, bad economics pervades both parties and transcends elections.

    Housel is a great example of the axiom "a little bit of knowledge is a dangerous thing". He uses his little bit of knowledge to make some nice charts, draw up erroneous conclusions, and then convince other impressionable people of the fallacy. That's why his articles have 100 responses. Other, more knowledgable members are trying to stem the tide of misinformation.

  • Report this Comment On February 20, 2012, at 8:15 PM, dennyinusa wrote:

    Crankytexan, CaptainWidget

    On Healthcare I do not expect anyone to pay my medical bills. I do not want anyone’s pity and I do not feel sorry for myself, It sucks not having the use of my lower body, but I still know I am lucky because I have a roof over my head and food to eat, my parents instilled a work ethic that has served me well and I have friends and family to help me, but I know not everyone has that and these are the people I believe can benefit if we change some of our tax and insurance policies. Most people actually think I’m an optimist. I am just trying to give you a view from the other side. I merely used my experience to show what can happen to people. I find it ironic that for over 48 years of my lifetime either my parents, myself or the company I worked for paid into healthcare plans and I was covered, but once I was laid off. Bang it was all gone. I understand you think it is wrong to force an insurance company to take someone with pre-existing condition but does not paying into the systems all those years count for something. I just believe it would be better to have a system that has a single rate for everyone. When you are born parents pay into system for you, then you take over payments. It would not be free.

    I will admit using Paris was disingenuous but I think you are being disingenuous to think the rich person that believes in higher taxes must prove it by donating more to IRS.

    On capital gains you are not being taxed on the money you invested, you are being taxed on what that money gains. So I do not buy the twice taxes theory. Money is made from labor and investment why do you place more importance on the investors’ side without both products cannot be made. I have worked blue and white collar jobs, have learned we need both.

    I believe wanting a level playing field does not make me a communist. Why do you assume I am a socialist or communist, I believe in a free well regulated market and the need for taxes?

    I’m not whining, nor feel I have had bad luck so I hate the rich or feel sorry for myself. I’m an American and I understand how fortunate that makes me. What I am trying to point out are the fools who think they made it on their own without help from others or don’t understand how lucky to have been born in USA or granted citizenship. We have advantages many things people take for granted.

    I will join with you against affirmative action as soon as you join with me in stopping an admitted “C” student like George Bush from getting into Yale over someone more qualified.

    CaptainWidget

    I went off on my tangent because I wanted to point out there many groups setting at the government trough that should be taxed so the rest of us would not have to pick-up the tab. Not looking for anyone to pay my medical bills, merely using as example. Not looking for handouts.

  • Report this Comment On February 20, 2012, at 8:16 PM, dennyinusa wrote:

    Crankytexan, CaptainWidget

    On Healthcare I do not expect anyone to pay my medical bills. I do not want anyone’s pity and I do not feel sorry for myself, It sucks not having the use of my lower body, but I still know I am lucky because I have a roof over my head and food to eat, my parents instilled a work ethic that has served me well and I have friends and family to help me, but I know not everyone has that and these are the people I believe can benefit if we change some of our tax and insurance policies. Most people actually think I’m an optimist. I am just trying to give you a view from the other side. I merely used my experience to show what can happen to people. I find it ironic that for over 48 years of my lifetime either my parents, myself or the company I worked for paid into healthcare plans and I was covered, but once I was laid off. Bang it was all gone. I understand you think it is wrong to force an insurance company to take someone with pre-existing condition but does not paying into the systems all those years count for something. I just believe it would be better to have a system that has a single rate for everyone. When you are born parents pay into system for you, then you take over payments. It would not be free.

    I will admit using Paris was disingenuous but I think you are being disingenuous to think the rich person that believes in higher taxes must prove it by donating more to IRS.

    On capital gains you are not being taxed on the money you invested, you are being taxed on what that money gains. So I do not buy the twice taxes theory. Money is made from labor and investment why do you place more importance on the investors’ side without both products cannot be made. I have worked blue and white collar jobs, have learned we need both.

    I believe wanting a level playing field does not make me a communist. Why do you assume I am a socialist or communist, I believe in a free well regulated market and the need for taxes?

    I’m not whining, nor feel I have had bad luck so I hate the rich or feel sorry for myself. I’m an American and I understand how fortunate that makes me. What I am trying to point out are the fools who think they made it on their own without help from others or don’t understand how lucky to have been born in USA or granted citizenship. We have advantages many things people take for granted.

    I will join with you against affirmative action as soon as you join with me in stopping an admitted “C” student like George Bush from getting into Yale over someone more qualified.

    CaptainWidget

    I went off on my tangent because I wanted to point out there many groups setting at the government trough that should be taxed so the rest of us would not have to pick-up the tab. Not looking for anyone to pay my medical bills, merely using as example. Not looking for handouts.

  • Report this Comment On February 20, 2012, at 8:35 PM, CrankyTexan wrote:

    >>> I find it ironic that for over 48 years of my lifetime either my parents, myself or the company I worked for paid into healthcare plans and I was covered, but once I was laid off, bang it was all gone <<<

    I pay for health insurance that is not connected to my job.

    >>> but does not paying into the systems all those years count for something.<<<

    It doesn't matter how long you had insurance. All that matters is whether or not you had insurance when a new illness came up.

    >>> I just believe it would be better to have a system that has a single rate for everyone.<<<

    Why? Car insurance rates are based on risk. Health insurance should be the same way. If you smoke and overeat, you should pay more for health insurance.

    >>>I will admit using Paris was disingenuous but I think you are being disingenuous to think the rich person that believes in higher taxes must prove it by donating more to IRS. <<<

    All those scumbags whine that they want to pay more taxes. THEN SHOULD GO AHEAD AND MORE TAXES! No one is stopping them from donating more money to the IRS. They are hypocrites. They are the only rich people that you do not hate.

    >>> Money is made from labor and investment why do you place more importance on the investors’ side without both products cannot be made.<<<<

    Work income is guaranteed. Investment income is NOT guaranteed. If I buy $100,000 of stock, the stock could become worthless, and could lose all of the money. Guess how much of my $100,000 loss is tax deductable? Only $3,000. Why are you so pro-tax anyway? Do you really want your money to be managed by crooked politicians? How could you be so gullible?

    >>> I believe wanting a level playing field does not make me a communist. <<<

    Level playing field IS the definition of communism.

    >>> What I am trying to point out are the fools who think they made it on their own without help from others or don’t understand how lucky to have been born in USA or granted citizenship. <<<

    So what? People have the freedom to do whatever they want with their personal property.

    >>>I will join with you against affirmative action as soon as you join with me in stopping an admitted “C” student like George Bush from getting into Yale over someone more qualified. <<<

    So, now you are FOR affirmative action? Yesterday, you said college admission should be based on talent. Now, you want it based on skin color. You are a liar.

  • Report this Comment On February 20, 2012, at 11:19 PM, TMFMorgan wrote:

    Just for the record, this article did not:

    Say there's nothing to worry about.

    Say that borrowing from the Fed is risk-free.

    Say the economy is strong.

    Mention Obama.

    Make a single partisan reference.

    Say anything about gas prices, food stamps, or housing prices.

    <<That's why his articles have 100 responses. Other, more knowledgable members are trying to stem the tide of misinformation.>>

    The vast majority of comments have nothing to do with the article.

    Thanks.

  • Report this Comment On February 20, 2012, at 11:42 PM, TMFMorgan wrote:

    Wisdom from writer Dan Gardner:

    "Your writing is balanced" = "You wrote what I believe." "You are so biased" = "You wrote what I do not believe."

  • Report this Comment On February 21, 2012, at 10:07 AM, FutureMonkey wrote:

    China ran up huge amounts of US Treasury holdings because they had nothing else better to do with their money, not because of some sinister plot. Not entirely sure why China iholding US Treasuries is some how sinister, but Japan, UK, European banks, or our collective 401k, IRA, and Pensions is great.

    As Morgan points out, China's treasury buying habits is not the beginning or end of our economy. The impact of China as a net seller of treasuries did not alter our interest rates. Ratings downgrade didn't mean squat. Investors knew better than the rating agencies that US Treasuries are still the safest haven for large quantities of money and the world has been more than willing to continue buy our bonds at very low interest rates.

    Then the conversation devolved into nickering about the President and govenment spending. Simplely put, when it is raining and the levee is rising is not the time to whine about the government spending to much on umbrellas and sandbags.

    The time to pay down debt and reduce spending is when the sun is shining and private economic engine is cranking on all cylinders. But instead the first thing everybody wanted when the sun was shining wasn't debt reduction it is lowering taxes. Clinton and the GOP congress worked together to balance the discretionary budget and we were on the road toward debt reduction. Bush and the GOP congress work together to decide the surplus belongs to the "people," so rather than paying down our governmental debt (which also belongs to the people) he eliminated the surplus and debt continued to rise. The next rain storm comes (which was a big one) and suddenly everybody starts complaining about debt again. Cycle renews.

    Not entirely sure why one political idealogy is focused entirely on spending and the other is focused entirely on revenue, when any rational, objective human can see that they are two sides of the same coin.

    FM

  • Report this Comment On February 21, 2012, at 10:40 AM, DJDynamicNC wrote:

    Well, looks like I missed the usual antics over my time off. Good to see you guys again.

    If any time anybody says anything positive about the economy it counts as "shilling for Obama" then you guys are going to have a fit if and when the economy ever truly turns around and recovers.

    Morgan posted a bunch of data. Apparently these are "Obama facts" and not "real American facts," but facts they remain.

    If you want somebody who is shilling for Obama, I'm right here. I'm happy and proud to stand with the majority of the nation behind the duly elected President of the United States, and I'm impressed with how far we've come since the gigantic disaster of the Bush administration, while conceding that we've got a ways still to go. There you go. That's partisanship. Now you'll know it when you see it.

    Posting tables of figures and contrasting those figures with the conventional wisdom, on the other hand, is not.

  • Report this Comment On February 21, 2012, at 12:29 PM, moneytrail wrote:

    TMFKopp:

    Biased investors seldom are successful investors. We look for sound investment analysis, not selective fact crafting. Why do you think Housel’s articles generate more political response than any other MF investment analyst? That’s not a biased view that is a fact.

    Presenting silliness that points to the dropping U3 unemployment number as evidence of our improving economy, while conveniently omitting the fact that increasing millions have been removed from the unemployment rolls because they simply found a new handout-social security disability, is sloppy analysis at best, and political pandering at worst. Omitting to mention the galloping increase of prices for staples such as food, fuel, medical care, as well as the loss of consumer purchasing power over the past 3 years is far from objective investment analysis.

    Housel does not comprehend the complexity of our current economic turmoil – regardless who caused it, and seems to present selective economic facts that distort the true depth of our economic malaise. Whether it’s intentional misrepresentation or ignorance is unimportant to most investors. What is important is that his analysis tracks the propaganda spewing from the White House and its minions and propaganda based investment analysis leads to disaster.

    Good luck! You’ll need it if you continue to subscribe to Housel’s political commentary, rather than objective investment analysis provided by other MF contributors.

  • Report this Comment On February 21, 2012, at 12:46 PM, TMFMorgan wrote:

    <<Presenting silliness that points to the dropping U3 unemployment number as evidence of our improving economy, while conveniently omitting the fact that increasing millions have been removed from the unemployment rolls because they simply found a new handout-social security disability, is sloppy analysis at best, and political pandering at worst.>>

    And thankfully, I don't do this.

    http://www.fool.com/investing/general/2012/02/09/more-on-the...

    <<Omitting to mention the galloping increase of prices for staples such as food, fuel, medical care, as well as the loss of consumer purchasing power over the past 3 years is far from objective investment analysis.>>

    Where have I discussed inflation and omitted food, fuel, and Medicare? Can you provide a link?

  • Report this Comment On February 21, 2012, at 12:50 PM, TMFMorgan wrote:

    <<Why do you think Housel’s articles generate more political response than any other MF investment analyst?>>

    I'd venture to say two-thirds of political comments on my articles come from you and cranktexan. So there's that.

  • Report this Comment On February 21, 2012, at 1:05 PM, TMFMorgan wrote:

    <<According to you and Obama everything is moving along just fine.>>

    New rule: When announcing, "according to you ..." link to something I've written. Everything is not moving along just fine. Does that clear things up?

  • Report this Comment On February 21, 2012, at 1:34 PM, TMFKopp wrote:

    @moneytrail

    "Biased investors seldom are successful investors."

    In that case, I will simply point back to your phrases like "Obama Zombies" and "pro-Obama faux analysis" and wish you luck eliminating the bias from your own investing.

    If you think for one second that you can say stuff like that and *not* overlook certain data that doesn't back up your "anti-Obama, the economy's in the toilet" thesis, then you are fooling yourself in a big way.

    But, hey, you're absolutely entitled to do that.

    Oh, and as for your pointed attacks on Housel's perceived bias... there was somebody at some point that said something like, "Remove the log from your own eye before trying to remove the speck from your neighbor's eye." I can't recall who said it, but I have a feeling he was pretty wise.

    Fool on!

    Matt

  • Report this Comment On February 21, 2012, at 1:50 PM, mrbillCZ wrote:

    MorganHousel,

    Personally, I'm interested to see the articles, research, and remain amused at most of the comments, albeit the Fools have taken time to defend positions, for better or worse.

    I've used Cranky Texan's stats with friends just to see the reaction. None given, which is scary in itself.

  • Report this Comment On February 21, 2012, at 2:03 PM, kyleleeh wrote:

    <<I'd venture to say two-thirds of political comments on my articles come from you and cranktexan. So there's that. >>

    Agreed

  • Report this Comment On February 21, 2012, at 2:33 PM, moneytrail wrote:

    Morgan:

    How this is for clearing things up: re-read your own articles touting the improving trend of the US economy despite structural unemployment, measured by the amount of time workers are unemployed, being the worst since the Great Depression; despite gasoline and food prices currently soaring and despite our economy facing the most massive tax increase in America’s history in January, 2013, along with a national medical insurance scheme that will increase prices and degrade quality for every medical service.

    Perhaps you are not intentionally presenting the national press’s sanguine view of the economy. Maybe it’s just easier than digging deeper into what the ugly underbelly of the US economy looks like. In any event, your articles present a brighter view of the economy than clearly indicated by the inflation, structural unemployment and pending crushing tax increase numbers indicate. It’s real simple Morgan: pumping up the size of government (25% since ’09) in a mature industrial economy like the US depresses economic initiative and growth causing capital to move to friendlier environs and depressing the fortunes of most Americans. This is fundamental economic reality; more so, it is basic human behavior

    .

    With all due respect Morgan, as Americans and investors we all would like to see the economy driven by investment growth, rather than $5 trillion in new debt since ’09. However, the fact is our economy is in the tank with as many problems as we suffered throughout most of the seventies, compounded by an incomprehensible amount of debt. There will never be economic growth comparable to what was seen during the ‘80’s and 90’s while we have a gang in DC that believes the fruits of hard work and risk taking exist to pump-up a strategy that promotes dependency on the Federal Government as a re-election strategy. This is the fundamental economic principle missing from all your analyses which renders your selective economic “improvement” indicators misleading.

    How can anyone, especially an investment analyst, not comprehend the crushing burden our current government profligacy places upon the well being of the US economy, nothwithstanding your selective economic rhetoric?

  • Report this Comment On February 21, 2012, at 3:23 PM, DJDynamicNC wrote:

    "With all due respect Morgan, as Americans and investors we all would like to see the economy driven by investment growth, rather than $5 trillion in new debt since ’09"

    If a business invests in capital goods, does it still count as growth if that business used loans to procure the good?

    "pumping up the size of government (25% since ’09)"

    Source, please? How are we measuring government? What metric, here? The number of people employed by government continues to decline. Are you using some other metric that has noting to do with the actual size?

    Oh wait! Let me guess, it's the "real" size of government, which is totally independent from the size of government as measured by any of a dozen other metrics that mainstream economists would use.

  • Report this Comment On February 21, 2012, at 3:30 PM, arizonamike303 wrote:

    If we would quit running up debt for China to buy we wouldn't have to worry about it.

  • Report this Comment On February 21, 2012, at 4:47 PM, CrankyTexan wrote:

    >>>If we would quit running up debt for China to buy we wouldn't have to worry about it.<<<

    We can't. We have to keep borrowing money just to make our interest payments. This is not a sign of a health economy. This is a sign of an economy in a death spiral.

  • Report this Comment On February 21, 2012, at 4:50 PM, CrankyTexan wrote:

    >>> If you want somebody who is shilling for Obama, I'm right here. I'm happy and proud to stand with the majority of the nation behind the duly elected President of the United States <<<

    Why do you worship such a corrupt man? Do you worship Bernie Madoff too?

    Either you do not realize that Obama is corrupt, or you do not care that Obama is corrupt. Which is it?

  • Report this Comment On February 21, 2012, at 4:54 PM, TMFMorgan wrote:

    <<Either you do not realize that Obama is corrupt, or you do not care that Obama is corrupt. Which is it?>>

    http://en.wikipedia.org/wiki/False_dilemma

  • Report this Comment On February 21, 2012, at 6:49 PM, CrankyTexan wrote:

    Morgan, are you implying that Obama is NOT corrupt?

  • Report this Comment On February 21, 2012, at 7:19 PM, CrankyTexan wrote:

    Morgan, I don't think my statement is false dilemma. But since you have labeled it as a false dilemma, how would I have to change my statement to prevent it from being a false dilemma?

  • Report this Comment On February 21, 2012, at 7:42 PM, kyleleeh wrote:

    <<Morgan, are you implying that Obama is NOT corrupt?>>

    Argument from Ignorance:

    "a fallacy in informal logic. It asserts that a proposition is true because it has not yet been proven false, it is "generally accepted" (or vice versa). This represents a type of false dichotomy in that it excludes a third option."

  • Report this Comment On February 21, 2012, at 7:43 PM, CrankyTexan wrote:

    kyle, then what is the third option?

  • Report this Comment On February 21, 2012, at 7:50 PM, CrankyTexan wrote:

    1. Either you do not realize that Obama is corrupt

    or

    2. You do not care that Obama is corrupt

    or

    3. You care that he is corrupt but you still love him.

    .....There, are you guys happy now?

  • Report this Comment On February 21, 2012, at 7:52 PM, CrankyTexan wrote:

    Perhaps you guys are implying that Obama is not corrupt, which would be hilarious.

  • Report this Comment On February 21, 2012, at 7:53 PM, kyleleeh wrote:

    IMO the third option is that

    1. The president is not a dictator and does not make all decisions in regard to the budget, in fact most of the budget is mandatory, unless congress changes the laws.

    2. In a divided government you must make compromises with the other side, and to your constituents those compromises may look like corrupt sellouts.

    3. making mistakes is not necessarily corrupt, Many people accuse Bush of people corrupt but I think he had the best intentions, but very poor judgment.

  • Report this Comment On February 21, 2012, at 7:55 PM, kyleleeh wrote:

    *people should be being

  • Report this Comment On February 21, 2012, at 7:56 PM, CrankyTexan wrote:

    kyle, your options are ridiculous and off on a tangent.

    You are implying that Obama is not corrupt, which is hilarious.

  • Report this Comment On February 21, 2012, at 8:02 PM, CrankyTexan wrote:

    I'll give you a little sample of his corruption...

    http://michellemalkin.com/2011/12/28/the-year-in-obama-scand...

  • Report this Comment On February 21, 2012, at 8:12 PM, kyleleeh wrote:

    Those are mostly opinions and a lot aren't even about Obama, just people that work for him. Guilty by association is a logic fallacy as well. That's three fallacies in as many hours.

    Corruption is largely in the eye of the beholder. I don't have a problem that dividends are taxed at a flat rate because they have already been taxed at the cooperate level but to a lot of people it is corrupt to only be paying 10% on millions in dividend income. It's not as black and white as you're trying to make it out to be.

  • Report this Comment On February 21, 2012, at 8:24 PM, kyleleeh wrote:

    Most of those are opinions and many are not even about Obama, just people that work for him. Guilty by association is a logic fallacy as well. That's three fallacies in as many hours.

    Corruption is largely in the eye of the beholder. For example, I don't have a problem with the rate that dividends are taxed at because they have already been taxed at the cooperate level, but to a lot of people only paying 10% on millions in dividend income is corrupt. It's not as black and white as you're trying to make it out to be.

  • Report this Comment On February 21, 2012, at 8:29 PM, kyleleeh wrote:

    ^ ^ ^

    didn't post right away so I rewrote it

  • Report this Comment On February 21, 2012, at 8:37 PM, CrankyTexan wrote:

    kyle, you are in denial. You are pathetic for worshiping corrupt politicians.

  • Report this Comment On February 21, 2012, at 8:38 PM, CrankyTexan wrote:

    >>> Corruption is largely in the eye of the beholder <<<

    Spoken like a true scumbag

  • Report this Comment On February 21, 2012, at 8:41 PM, TMFKopp wrote:

    @CrankyTexan

    That is your "proof" that our President is corrupt? If it really is, it also proves that he's really bad at corruption -- LightSquared is going down the toilet *really* fast:

    http://www.chicagotribune.com/business/breaking/chi-lightsqu...

    Also... "CrankyTexan"... few TMF handles are quite so apt :)

    Fool on!

    Matt

  • Report this Comment On February 21, 2012, at 8:44 PM, CrankyTexan wrote:

    TMFKoop, I take it you do not think Obama is corrupt?

    I've never seen the Motley Fool this left wing before.

  • Report this Comment On February 21, 2012, at 8:46 PM, TMFKopp wrote:

    @CrankyTexan

    It's a strange day indeed when you're "left wing" for not believing the President is corrupt. I didn't ever accuse George W. of being corrupt either, does that just blow your mind?

    Matt

  • Report this Comment On February 21, 2012, at 8:47 PM, kyleleeh wrote:

    <<Spoken like a true scumbag>>

    That was flat out inappropriate and immature. learn how to have debate like a adult.

  • Report this Comment On February 21, 2012, at 8:48 PM, CrankyTexan wrote:

    kyle, anyone who turns his back to corruption is a scumbag.

  • Report this Comment On February 21, 2012, at 8:51 PM, TMFKopp wrote:

    @CrankyTexan

    Perhaps this got lost from sight because it's we're so far down in the comment string now, but:

    "Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe."

    Thanks!

    Matt

  • Report this Comment On February 21, 2012, at 8:53 PM, CrankyTexan wrote:

    Okay, you guys go ahead live in your own world where Obama is ethical, and the economy is recovering.

    I will live in reality, where politicians are scum of the earth, and our economy is doomed.

    Like I said, I've never seen the Motley Fool this left wing before.

  • Report this Comment On February 21, 2012, at 8:54 PM, CrankyTexan wrote:

    >>> Help us keep this a respectfully Foolish area! <<<

    Yet you insulted me by mocking my name.

  • Report this Comment On February 21, 2012, at 8:56 PM, TMFKopp wrote:

    @CrankyTexan

    Honestly didn't mean that as an insult. I figured that somebody that calls himself "CrankyTexan" would have some sense of humor around that.

    Sorry for any damage caused!

    Matt

  • Report this Comment On February 21, 2012, at 8:57 PM, CrankyTexan wrote:

    TMFKoop, feel free to scold kyleleeh for calling me ignorant at 7:42pm

  • Report this Comment On February 21, 2012, at 8:58 PM, CrankyTexan wrote:

    Since you are in a scolding mood that is.

  • Report this Comment On February 21, 2012, at 8:58 PM, kyleleeh wrote:

    Thank you Matt.

    I don't agree with you on things Texas but I'm going to resort to name calling.

    I stand by what I said, corruption is in the eye of the beholder. A lot of Occupy Wall Street people are arguing that it is corrupt for banks to foreclose on homes that people made no down payment on and could never afford in the first place. I don't think that's corrupt at all...do you?

  • Report this Comment On February 21, 2012, at 9:00 PM, kyleleeh wrote:

    >>MFKoop, feel free to scold kyleleeh for calling me ignorant at 7:42pm<<

    I didn't call you Ignorant I posted the definition of the logic fallacy called "Argument from Ignorance" you can look it up yourself if you like

  • Report this Comment On February 21, 2012, at 9:04 PM, CrankyTexan wrote:

    kyleleeh, nobody forced those people to buy a house they cannot afford.

    By your logic, I should buy 3 Ferrari's, and then blame the bank when I stop making payments.

    And your "Occupy" heroes are thugs that rape women, defecate on police cars, destroy private property. Now I understand why you like Obama.

  • Report this Comment On February 21, 2012, at 9:05 PM, kyleleeh wrote:

    *should say not going to resort to name calling. Typing to fast tonight.

  • Report this Comment On February 21, 2012, at 9:09 PM, kyleleeh wrote:

    Good! Then we agree that It is NOT corrupt for the banks to foreclose on them. We BOTH do not agree with OWS that foreclosures are corrupt, and you have just clearly demonstrated that corruption IS in the eye of the beholder.

    THANK YOU!

    now if only we could on that selective hearing of yours.

  • Report this Comment On February 21, 2012, at 9:11 PM, CrankyTexan wrote:

    >>> We BOTH do not agree with OWS that foreclosures are corrupt <<<

    No I don't, you liar.

  • Report this Comment On February 21, 2012, at 9:13 PM, CrankyTexan wrote:

    Oh nevermind. I misunderstood your first comment about OWS.

  • Report this Comment On February 21, 2012, at 9:14 PM, CrankyTexan wrote:

    Nevermind. I misunderstood you.

  • Report this Comment On February 21, 2012, at 9:15 PM, kyleleeh wrote:

    I don't get it, are you saying you DO agree with OWS that foreclosure is corrupt? Please clarify

  • Report this Comment On February 21, 2012, at 9:16 PM, kyleleeh wrote:

    OK I see

  • Report this Comment On February 21, 2012, at 9:20 PM, CrankyTexan wrote:

    I just told you twice that I misunderstood you. I incorrectly assumed that you agree with OWS.

  • Report this Comment On February 21, 2012, at 9:28 PM, TMFAleph1 wrote:

    "And your "Occupy" heroes are thugs that rape women, defecate on police cars, destroy private property."

    You really should share the data proving that there is a higher proportion of rapists among OWS protesters than in the general population.

  • Report this Comment On February 21, 2012, at 9:29 PM, CrankyTexan wrote:

    You are wrong though. You are implying that Obama is not corrupt because banks are not corrupt. You are accusing me of lying about Obama the way that OWS lie about banks.

    When a corporation donates money to the Obama campaign, and then Obama gives millions of tax dollars to that corporation, THAT is corruption.

    When Obama excuses unions from Obamacare, THAT is corruption.

    When Obama sues states for enforcing immigration law in order to get the Latino vote, THAT is corruption.

  • Report this Comment On February 21, 2012, at 9:32 PM, CrankyTexan wrote:

    >>> You really should share the data proving that there is a higher proportion of rapists among OWS protesters than in the general population. <<<

    Wow, 3 left-leaning TMF's on one night. This has got to be a record.

    Name another protest in which protesters were raped by other protesters. I can't believe you are actually defending these rapes.

    Next you will tell me that the Tea Party protests were just as violent as the OWS protests.

  • Report this Comment On February 21, 2012, at 9:42 PM, CrankyTexan wrote:

    These are some photos of the damage by OWS protesters...

    http://michellemalkin.com/2011/12/12/your-guide-to-d12-occup...

  • Report this Comment On February 21, 2012, at 9:48 PM, TMFAleph1 wrote:

    <<Wow, 3 left-leaning TMF's on one night. This has got to be a record.>>

    You mistake rationality for political orientation. You made a statement and I asked you to support it.

    <<I can't believe you are actually defending these rapes.>>

    Your hallucinations are becoming a problem. Where did I defend rapes? I asked you to support your statement -- Can you do so without dragging us down some rabbit hole?

  • Report this Comment On February 21, 2012, at 9:52 PM, CrankyTexan wrote:

    I'll tell you what, TMFAleph1, when you tell me how many people were raped at the Tea Party protests, then we can debate rape further.

  • Report this Comment On February 21, 2012, at 9:53 PM, CrankyTexan wrote:

    The correct answer is that rape is inexcusable at any protest, instead of implying that it is normal for our population.

  • Report this Comment On February 21, 2012, at 9:54 PM, sea127 wrote:

    When are we going to stop the democrats and republicans from squandering our tax dollars for their own little pet projects? How do we stop them from trying to control every aspect of our lives? How do we stop them from showing little regard for the constitution and the Bill of Rights? When will the ones in positions to make these changes, rise up and stop all this nonsense? All our freedoms are being taken from us little by little. We have become slaves of the United States government. Wake up people.

  • Report this Comment On February 21, 2012, at 9:56 PM, CrankyTexan wrote:

    >>> You mistake rationality for political orientation. <<<

    Very well then, are you Democrat or Republican?

  • Report this Comment On February 21, 2012, at 9:58 PM, TMFAleph1 wrote:

    <<I'll tell you what, TMFAleph1, when you tell me how many people were raped at the Tea Party protests, then we can debate rape further.>>

    The burden of proof is on you, my friend, not on me -- you're the one who made the original statement. And stop trying to present anyone who questions your statements as someone who supports rape.

  • Report this Comment On February 21, 2012, at 10:00 PM, TMFAleph1 wrote:

    <<Very well then, are you Democrat or Republican?>>

    I'm sorry if I don't fit into one your neat, narrow boxes.

  • Report this Comment On February 21, 2012, at 10:02 PM, CrankyTexan wrote:

    You do not support rape, but you are trying to trivialize the OWS rapes by implying that they are normal for our population.

  • Report this Comment On February 21, 2012, at 10:02 PM, CrankyTexan wrote:

    <<<I'm sorry if I don't fit into one your neat, narrow boxes. >>>

    Which box does Noam Chomsky fit into?

  • Report this Comment On February 21, 2012, at 10:03 PM, CrankyTexan wrote:

    >>> The burden of proof is on you, my friend, not on me -- you're the one who made the original statement. <<<

    My statement was that OWS protesters raped women. This is a fact.

  • Report this Comment On February 21, 2012, at 10:05 PM, TMFAleph1 wrote:

    <<Which box does Noam Chomsky fit into?>>

    He doesn't -- which is why he's a model for all of us.

  • Report this Comment On February 21, 2012, at 10:08 PM, CrankyTexan wrote:

    I see. TMFAleph1 believes that Noam Chomsky is a model for all of us.

  • Report this Comment On February 21, 2012, at 10:11 PM, CrankyTexan wrote:

    "Everybody's worried about stopping terrorism. Well, there's a really easy way: stop participating in it."

    -Noam Chomsky

    "I have often thought that if a rational Fascist dictatorship were to exist, then it would choose the American system".

    -Noam Chomsky

    "If the Nuremberg laws were applied, then every post-war American president would have been hanged."

    -Noam Chomsky

    "The Bible is one of the most genocidal books in history."

    -Noam Chomsky

  • Report this Comment On February 21, 2012, at 10:13 PM, TMFAleph1 wrote:

    <<My statement was that OWS protesters raped women.>>

    That wasn't your original statment -- don't try to wiggle out of it. You suggested that there was a higher incidence of rapes/ rapists among OWS protesters than among the general population. If you didn't, then there is nothing to be concluded from your original statement. I can cite rape statistics also, but I don't make non-existent leaps of logic on that basis.

  • Report this Comment On February 21, 2012, at 10:14 PM, CrankyTexan wrote:

    "The more you can increase fear of drugs and crime, welfare mothers, immigrants and aliens, the more you control all the people."

    -Noam Chomsky

    "You never need an argument against the use of violence, you need an argument for it."

    -Noam Chomsky

  • Report this Comment On February 21, 2012, at 10:16 PM, CrankyTexan wrote:

    My exact words were, "And your "Occupy" heroes are thugs that rape women, defecate on police cars, destroy private property. "

    You are the one who is dissecting my quote in an attempt to defend OWS.

  • Report this Comment On February 21, 2012, at 10:17 PM, TMFAleph1 wrote:

    I repeat: Noam Chomsky is an intellectual model for all of us in addition to being one of the very few deeply moral intellectuals.

    It must be nice to be able to sum up Chomsky's towering intellect with three well-chosen quotes lifted out of all context.

  • Report this Comment On February 21, 2012, at 10:18 PM, CrankyTexan wrote:

    I can find more quotes if you wish.

  • Report this Comment On February 21, 2012, at 10:19 PM, TMFAleph1 wrote:

    "You never need an argument against the use of violence, you need an argument for it."

    -Noam Chomsky

    I'd be very curious to have you explain how you find this statement objectionable.

  • Report this Comment On February 21, 2012, at 10:25 PM, TMFAleph1 wrote:

    <<My exact words were, "And your "Occupy" heroes are thugs that rape women, defecate on police cars, destroy private property. ">>

    Okay. Here's my statement: Among the general population, there are thugs that rape women, defecate on police cars, destroy private property.

    Your statement is no more useful than mine until you can provide evidence that the incidence of rape, public defecation and destruction of private property is higher within OWS protesters than among the general population. I know that logic and evidence must seem like difficult burdens to bear, but reality is a harsh mistress.

  • Report this Comment On February 21, 2012, at 10:29 PM, CrankyTexan wrote:

    “Education is imposed ignorance.”

    ― Noam Chomsky

    “See, people with power understand exactly one thing: violence.”

    ― Noam Chomsky

    “It's not radical Islam that worries the US -- it's independence”

    ― Noam Chomsky

    “Bolivia is a striking example. The mostly white, Europeanized elite, which is a minority, happens to be sitting on most of the hydrocarbon reserves. For the first time Bolivia is becoming democratic. So it's therefore bitterly hated by the West, which despises democracy, because it's much too dangerous.”

    ― Noam Chomsky

    “This Sarah Palin phenomenon is very curious. I think somebody watching us from Mars—they would think the country has gone insane.”

    ― Noam Chomsky

    “Since Jimmy Carter, religious fundamentalists play a major role in elections. He was the first president who made a point of exhibiting himself as a born again Christian. That sparked a little light in the minds of political campaign managers: Pretend to be a religious fanatic and you can pick up a third of the vote right away. Nobody asked whether Lyndon Johnson went to church every day. Bill Clinton is probably about as religious as I am, meaning zero, but his managers made a point of making sure that every Sunday morning he was in the Baptist church singing hymns.”

    ― Noam Chomsky

    “You can find things in the traditional religions which are very benign and decent and wonderful and so on, but I mean, the Bible is probably the most genocidal book in the literary canon. The God of the Bible - not only did He order His chosen people to carry out literal genocide - I mean, wipe out every Amalekite to the last man, woman, child, and, you know, donkey and so on, because hundreds of years ago they got in your way when you were trying to cross the desert - not only did He do things like that, but, after all, the God of the Bible was ready to destroy every living creature on earth because some humans irritated Him. That's the story of Noah. I mean, that's beyond genocide - you don't know how to describe this creature. Somebody offended Him, and He was going to destroy every living being on earth? And then He was talked into allowing two of each species to stay alive - that's supposed to be gentle and wonderful.”

    ― Noam Chomsky

  • Report this Comment On February 21, 2012, at 10:31 PM, CrankyTexan wrote:

    >>> Here's my statement: Among the general population, there are thugs that rape women, defecate on police cars, destroy private property. <<<

    You theory does not explain why the Tea Party protests had none of those crimes.

  • Report this Comment On February 21, 2012, at 10:32 PM, TMFAleph1 wrote:

    I'm not sure exactly what you think the Chomsky quotes establish, but I'm quite sure they don't.

  • Report this Comment On February 21, 2012, at 10:33 PM, CrankyTexan wrote:

    Even the leftist mayor of Oakland is fed up with the Occupy protesters.

  • Report this Comment On February 21, 2012, at 10:33 PM, TMFAleph1 wrote:

    <<You theory does not explain why the Tea Party protests had none of those crimes.>>

    Evidence?

  • Report this Comment On February 21, 2012, at 10:39 PM, TMFBiggles wrote:

    I like Mencken, myself:

    "The most common of all follies is to believe passionately in the palpably not true. It is the chief occupation of mankind."

  • Report this Comment On February 21, 2012, at 10:42 PM, TMFAleph1 wrote:

    You should realize that Chomsky knows infinitely more about *everything* on which you have quoted him than you (or I) do.

  • Report this Comment On February 21, 2012, at 10:48 PM, TMFAleph1 wrote:

    @TMFBiggles

    Mencken had it right!

  • Report this Comment On February 21, 2012, at 11:08 PM, dennyinusa wrote:

    CrankyTexan

    Either you do not realize that Obama is corrupt, or you do not care that Obama is corrupt. Which is it?

    Do you consider the Bush/Cheney duo as corrupt?

    Prisoners captured in Afghanistan war were subjected to water boarding and other enhanced interrogations approved by Bush Whitehouse. USA signed Geneva Convention to not torture prisoners.

    Start war with Iraq over WMD. No WMD every found. War costs, who really knows. Over 3,000 Americans killed, 1000’s injured with life changing injuries. Iraqis killed or injured who really knows.

    By May 24, 2004 over $12 billion dollars were shipped to Iraq for reconstruction projects. C-130 Hercules plane could haul up $2.4 billion dollars in $100.00. After audits military cannot account for $6.6 billion. Story from LA Times June 13, 2011

    Halliburton its subsidiaries Brown & Root Services and KBR are awarded multipliable no-bid contracts in 1990s and 2000s. Guess who was CEO of Halliburton from 1995-2000 that would be Dick Cheney who goes on to become VP to Bush 43.

    I believe it was also Cheney how revealed identity of a CIA agent.

    Do you consider the Bush/Cheney duo as corrupt?

  • Report this Comment On February 21, 2012, at 11:13 PM, TMFDiogenes wrote:

    “Dogs and philosophers do the greatest good and get the fewest rewards”

    “The vine bears three kinds of grapes: the first of pleasure, the second of intoxication, the third of disgust”

    "“Most men are within a finger's breadth of being mad.”

    -Diogenes the Cynic

  • Report this Comment On February 21, 2012, at 11:16 PM, dennyinusa wrote:

    Why is it called lobbying and considered perfectly acceptable when corporations, banks, Wall Street and Koch Bros. pay think tanks, superpacs and politicians to influence their tax rates or create loopholes for their benefit, but if anybody else has an opinion it is called class warfare, told to shut up or called a socialist/communist?

  • Report this Comment On February 21, 2012, at 11:18 PM, CrankyTexan wrote:

    >>>

    Do you consider the Bush/Cheney duo as corrupt? <<<

    Yes.

  • Report this Comment On February 21, 2012, at 11:20 PM, CrankyTexan wrote:

    >>> Why is it called lobbying and considered perfectly acceptable when corporations, banks, Wall Street and Koch Bros. pay think tanks, superpacs and politicians to influence their tax rates or create loopholes for their benefit? <<<

    Who said it was acceptable?

    You assume I think only Democrats are corrupt. both Democrats and Republicans are corrupt, yet you still admire them.

  • Report this Comment On February 21, 2012, at 11:22 PM, CrankyTexan wrote:

    Admiring Obama or Bush is like admiring Bernie Madoff.

    Yet millions of people admire Obama or Bush.

  • Report this Comment On February 22, 2012, at 12:41 AM, dennyinusa wrote:

    CrankyTexan

    It is not that I admire them; it is just that I realize that all presidents are going to have policies I like and dislike. There are situations that are beyond their control. But that does not mean they are corrupt. I have watched presidents since Nixon. They have all had situations where people thought mistakes were made; some pals benefitted because they gave money to their corporations or created a tax loophole. We all wish that there would be no bad regulations or rules, that agencies would be more efficient or that corruption would cease.

    I spent 6 years on local Town Board I learned there are many things people think you can control, when the truth is we may be at the mercy of country, state or federal rules. I think everybody should serve on school, town, village boards, etc.,

    Town employee may make a decision on project, and that decision may be different that what board member told landowner. Now we have problem, sometimes unforeseen things popup when doing big projects. There was no intent to deceive landowner, yet that decision costs town more money. This is a town of 1000 people, now thing of keeping 313,000,000 million happy.

    I believe we need to replace our congress people with citizen legislators. Who will put an end to all the perks legislators get while in office and retirement. Put in term limits. Make rule any elected official wanting to run for another position must resign from current elected position. The ideal public servant should vote for what is best for country and/or people, not what will get them re-elected. Then go back and live with rules and laws they helped create.

  • Report this Comment On February 22, 2012, at 12:41 AM, CrankyTexan wrote:

    Unemployment just rose to 9%. It was "nice" while it lasted.

  • Report this Comment On February 22, 2012, at 12:42 AM, CrankyTexan wrote:

    denny, go ahead in live in your dreamworld in which Obama is not corrupt. I will continue living in reality.

  • Report this Comment On February 22, 2012, at 12:56 AM, CrankyTexan wrote:

    notice that you implied that bush and cheney are corrupt but you refuse to believe that obama is corrupt.

  • Report this Comment On February 22, 2012, at 9:19 AM, Foolhartford wrote:

    Can some body explain ? Is Federal reserve owning treasury debt equal to monetization (Printing) of equivalent money.

    That means essentially Fed and treasury have printed and spent 6220 Billion of money . This is why Price of rare commodities like gold is up because the value of US dollar is decreased by 6220 billion dollars. Fed will never get repaid .

    Treasury will pay everybody other than FED and expand FED reserve book. Thus if china comes knocking asking for their money they will get dollars borrowed from federal reserve and price of Gold will go up because circulating dollars will increase . This is cheating and debasing of poor senior savers.

  • Report this Comment On February 22, 2012, at 2:25 PM, DJDynamicNC wrote:

    CrankyTexan, my friend, I admire your dedication, but at some point every community on the internet has to collectively recognize a troll for a troll, and cease feeding him or her.

    I am not going to convince you of any of my points. If I make a compelling case and back it up with facts, you'll move the goalposts or, if it becomes completely indefensible, simply change topics. At some point you'll probably just embrace praxeology and decide that empirical facts don't even count anymore. At the same time, your own claims are bolstered largely by logical fallacies or repetition, so you are unlikely to convince me. Recognizing that, further exchanges between us are unlikely to be worth either your time or mine.

    I hope that your doom and gloom perspective doesn't blind you to the wonders of life, and I wish you the best of luck in all future endeavours, particularly with your investing. When Obama finally delivers the muslim atheist communist fascist paradise he's promised all of us, I'll take some of my George Soros money and buy you a beer and we can wax nostalgic about all this.

    Fool on!

  • Report this Comment On February 22, 2012, at 6:05 PM, RedScourge wrote:

    @Dennyinusa: "No CEO looking for profit would want to vote or defend something that 50 to 60 percent of the people may disagree with. Such as Ending Slavery, The Right to Vote regardless of Race, Women’s Right to Vote, Social Security, Civil Rights, Healthcare or the right to build a Mosque."

    Actually, slavery was ended by the classical liberals, today referred to as the libertarians, at a time in history when it was more profitable an endeavor than ever before.

    The US fought for its independence from Great Britain over "taxation without representation", or in other words, to secure for its citizens the right to vote.

    Charitable giving in the 19th century, the height of classical liberal (libertarian) influence in government policy saw the largest increases in standard of living and charitable giving in history. Charity could very well provided a better level of care for those who cannot afford coverage than the current healthcare system. Social Security would hardly be necessary in a society in which people are not taught to rely on the government for every last thing, and so it would also easily be handled by charity. We did not get another 100 year period of libertarian influence on society though, so instead we ended up with the government doing them both, and very inefficiently. They've also run our schools for quite a while now as well, and so most of us graduate incapable of taking care of ourselves, since the people in the government have a vested interest in making sure the people cannot live without them.

    Civil rights are the inevitable conclusion of market forces driving companies out of business which refuse talented workers or potential customers due to insignificant things such as race. If a business owner is racist, they are turning away good customers and potential employees that a non-racist business owner will put to work and eventually drive the racist business owner out of business. All that forcing racial integration onto a society that was at the time not ready for it accomplished was greatly inflaming the tension and discontent for far longer than it would have otherwise lasted, had society been given the chance to finish solving the problem itself, as it did in most other countries.

    My point is basically that all of the things that you believe are traits of our society that are impossible without government due to them being good but not profitable things, were largely fought for and achieved primarily due to Libertarian influence on society, not thanks to the Progressive movement.

    Yes, it is shallow to say one political party is better than the other or that any particular President caused or solved all the problems, but what you have to look for when determining what works and what does not is ensuring that you are connecting the proper results with the proper cause. Looking merely at the stated intentions of a government program or policy is foolish, you have to look at the true results. If you do, I think you will find that historically, Libertarians like Ron Paul have been largely responsible for what has made Western civilization great, and none of what has made it not.

  • Report this Comment On February 22, 2012, at 6:15 PM, RedScourge wrote:

    The fact of the matter is that the existence of the state itself is the source of all corruption. It does not matter which politicians are corrupt today or tomorrow, what matters is that given enough time, enough of them will become corrupt quick enough that you can not solve any problem by changing the people or the policies.

    In the long run, you have to dismantle it as much as the technology of the society enables, and bring as many decisions as possible to as local a level as possible. Or else as you said, you get all sorts of improper incentives baked into the system where companies will find it more profitable to dig right beside a farmer's land and under it so that he ends up having to sell them his land, than actually be responsible members of society.

    Consider two companies, Status Quo Inc, and Disruptive New Technology Inc. It becomes obvious to Status Quo Inc that it cannot compete fairly in a free unregulated market against the newcomer, and so it has to make some sort of changes. It discovers that the changes required will cost most of the management their jobs, and billions of dollars in investments. It also discovers that for a few million, it can likely lobby the government to raise awareness in Congress of their plight, and then bribe a few politicians to get favorable legislation put in place which protects them from industry newcomers.

    The incentives are clearly in favor of them lobbying government, so they do so. So long as the government has the power to greatly influence the market, the market will always be interested in influencing the government in its favor.

    So you see, you have to dig down into the philosophical level to see why things are the way they are, and to be able to truly solve the problem. You can't just drop to the scientist level and start conducting experiments on 300 million people to figure out the right combination of people and regulations to solve it, because the game itself is rigged. It is for this reason that we have had 20,000 years to find the right combination of policies and people to form a lasting consistent peace and prosperity and yet have failed to do so, even with all this technology and knowledge. Technology and knowledge and data are tools, but you cannot fix everything with the same set of tools.

  • Report this Comment On February 22, 2012, at 6:21 PM, RedScourge wrote:

    The founding fathers never intended for a democracy. A system in which the will of 51% of the people can boss around the other 49% tends to work better than most other systems we have tried, but it is not the best. It fails when either the 51% are either easily pursuaded away from the proper ideas, unable to come up with the proper ideas, or are downright immoral. If we are to believe that we are not downright immoral, that leaves the easily persuaded and "dumb" options. The "dumb" option is a big concern when there is a government monopoly on primary education as it is a moral hazard, and it is even worse when we already know that our education system is clearly failing.

    What would be ideal is a system where these vulnerabilities do not exist. A system in which the absolute and complete freedom of the individual to do as they wish is not prevented, so long as it does not directly interfere with the same freedoms of other individuals. A system based around the concepts of individual liberty.

  • Report this Comment On February 22, 2012, at 6:22 PM, CrankyTexan wrote:

    >>> CrankyTexan, my friend, I admire your dedication, but at some point every community on the internet has to collectively recognize a troll for a troll, and cease feeding him or her. <<<

    I am not your friend.

    A liberal's definition of a troll is a conservative who keeps replying.

  • Report this Comment On February 22, 2012, at 6:26 PM, CrankyTexan wrote:

    >>> The fact of the matter is that the existence of the state itself is the source of all corruption.<<<

    Exactly. This is why the House and Senate was created by our forefathers....to make it harder for the president to be a dictator. Obama has made it clear many times that he is frustrated that laws have to pass through Congress.

  • Report this Comment On February 23, 2012, at 2:39 AM, dennyinusa wrote:

    RedScourge

    Are you total a libertarian?

    Who believes things like drugs, prostitution and abortion, etc. are an individual’s choice as long as it does not affect another individual negatively.

    That it is nobody’s business whether you use seatbelt or helmet, text, eat, use phone while driving or drive intoxicated as long as it does not affect another individual negatively.

    Consenting adults should be free to choose their own sexual practices and personal relationships?

    I understand the libertarian point of view and if that was the world we lived in I would be fine with that, I agree with many items on the libertarian platform, the problem is other people and I have to deal with the reality of the laws of country as it is run now.

    As it is now for the past 30 plus years other individuals and/or groups have lobbied for lower taxes, loopholes, tax exemptions, programs or laws that were beneficial to themselves or the group they represent or to be classified as non-profits.

    As much as we may wish for the good old days, I don’t think they are coming back anytime soon.

    How would you deal with items I listed below?

    Would insider trading be legal?

    Is someone allowed to build nuclear power plant with no rules, regulation or inspections?

    Do you have police force, fire dept and military? How do pay for these items?

  • Report this Comment On February 23, 2012, at 2:43 AM, stef333 wrote:

    bvanveen wrote:

    So, as we don't understand the Fed owning Treasuries, we just ignore its impact on the economy? Didn't we do this once before with derivatives?

    Yes, but don't worry, let's sell more bonds to ourselves! That way we won't owe money to anybody :)

  • Report this Comment On February 23, 2012, at 3:37 AM, CaptainWidget wrote:

    <<Would insider trading be legal?>>Legalized insider trading would be greatly beneficial to the markets as a whole.

    http://www.youtube.com/watch?v=m0wvlVvZDtk

    It takes insider knowledge public, helping the common share owner profit from the big wig's knowledge. It effectively levels the playing field on trade of information.

    <<Is someone allowed to build nuclear power plant with no rules, regulation or inspections?>>

    The free market has declared nuclear power plants completely unsafe and uneconomical. Of course the government stepped in with legislation to cap the liability of nuclear power plants, distorting the price signals.

    In a completely free market, there would be no nuclear power plants. The insurance premiums alone would cost more than the power they produce. The Fukoshima disaster would have been completely prevented by the free market, simply because the plant would have never been built. This is a case of the free market self regulating UNTIL the government interferes to make it more dangerous on the behalf of everyone else.

    <<Do you have police force, fire dept and military? How do pay for these items?>>

    The original fire departments were all private. You simply bought a placard and built it into the front barrier of your property. If your house caught fire, the fire department would come by, ensure that you bought your fire protection placard, and put out the fire. I'm sure it would be even more simple these days. A credit card, a computer data base, and rapid wireless deployment from your alarm system.

    Police could easily work the same way. A town of people could pay for a private police force with their HOA fees, the same way a local mall pays for private security with their CAM's.

    Military is another ball of wax (one most libertarians don't broach, because approval of some military force pretty much meets a reasonable concensus) but it could be funded on a state level directly to the federal level.

  • Report this Comment On February 23, 2012, at 8:40 PM, dennyinusa wrote:

    CaptainWidget

    I watched video but I was not persuaded by Murray Rothbard assertion that person getting information before others makes the system more efficient or is based on the ideas of a free market.

    To what lengths can one go to acquire this inside information is spying, phone tapping or paying someone on board of directors for information all considered fair game. To get information over drinks with board member or CEO is not free market because the employees of company know they are not supposed to discuss information until it is published. I believe even the free market expects people to gain an advantage because of an idea, work harder, possession a talent or skill that others do not or even luck.

    Any idiot can make money if they know drug company’s drug to cure cancer is approved before it is published.

    I believe it does matter how information was obtained.

    So if the bar is full when drunken CEO is spilling the beans and you cannot hear information because you are outside is that’s still ok with you.

    What sense does it make for the rest of us to participate in a rigged game?

    I believe it is best if big wigs do not sell or tell information to friends, let’s publish it and then early birds can catch worms if they get up early and they can live anywhere in the world.

    Word of mouth made sense before newspaper or radio. Now with the internet information can be published at set time, and anybody in the world could get information basically at same time.

    Again I agree with many of liberation’s ideas.

    But with the system we now have the only recourse we have to stop nuclear power plants, corporations or organizations whose products or beliefs we do not share is to try to take away any tax, tax status or regulation advantages that they now have.

  • Report this Comment On February 23, 2012, at 9:00 PM, CaptainWidget wrote:

    It's not about "who" spills the beans and gets the benefits, it's "when". The earlier that information leaks into the market, the quicker it will be reflected in the share price of the security. Ultimately this is what the market at large wants. Prices of the securities they own (or wish to own) to be commensurate of the actual value of the company.

    Hiding information until the company's Q3 report does nothing to help accurately price the security. It only gives a monopoly of information to those on the inside, and shields those on the outside from having that information.

    Ultimately the FAIREST system is for people to be allowed to trade on their insider knowledge, make a profit for doing so, and pass down that price signal to those progressively further away from the security. Yes, those people progressively further away will make less profit from the knowledge, but at least it will keep them from getting caught in jakckpot, buying a bad security when they someone else somewhere has the information that would convince them to sell instead.

    I don't defend espionage or breaking contracts to procure knowledge for trading. But that is a COMPLETELY separate issue for insider trading. That's a contract between private parties IE: I tell you a secret and get you to sign a contract to keep that secret. I can sue you for not keeping that secret, but I shouldn't be able to sue the world once you share it. They never signed a contract with me.

    Insider trading is the same. If some buffon from some company tells something that he agreed not to, he should be culpable legally. His employeer should be able to take him to court and sue for damages and breach of contract. But why should the guy listening to the buffon be culpable? He never signed a contract. He never agreed not to share that information.

    Again this is all in the interest of accurate price signals. If you can get a piece of knowledge that will reflect a more accurate price signal to the market, you're doing yourself a service by acting on that info, AND doing the market a service by giving them a new data point to analyze and act upon. By keeping it a secret, you do yourself no service nor the market. As long as the information was gained in a legal manner, there's no ethical consideration. And if the information was not gained in a legal manner (IE: you a broke a law to procure it, breaking into an office type of thing) then there's STILL no reason to make insider trading illegal......you just prosecute for the crime (B&E) not the result (trading on secret information)

  • Report this Comment On February 23, 2012, at 10:59 PM, dennyinusa wrote:

    I respect your arguments even if I do not agree with all of them.

    I thank you for taking the time to answer my questions because I do want to learn/understand how you come to your positions on a subject.

    Nobody learns anything if we only talk to those we agree with.

  • Report this Comment On February 24, 2012, at 10:56 AM, DJDynamicNC wrote:

    "Legalized insider trading would be greatly beneficial to the markets as a whole. "

    I actually agree with this.

    If the point of the market is to accurately price information about a company and to facilitate the flow of capital for best use, then the sooner that information gets priced into the market, the better, because that information is TRUE regardless of whether or not investors know about it.

    Obviously there are issues involved in implementing this in any kind of fair manner (and here is where we probably depart on our methods), but yes, I agree basically word for word with the Captain's post.

  • Report this Comment On February 24, 2012, at 2:34 PM, mikepriz wrote:

    What is worse, China buying the U.S. debt, or the U.S. buying the the U.S. debt? I love the idea of the U.S. buying its own debt. I can just see the U.S. negotiating with itself. "i will pay you 3%. No, no! Please, I think it would be better if you only paid me 2%." In fact, it is such a great idea, I have decided to do the same thing. I am going to buy my own debt. But I am only going to pay myself 1%. What a minute, what do you mean I can't print my own money?

  • Report this Comment On February 24, 2012, at 4:40 PM, Toklat2 wrote:

    I just researched to see if Motley Fool saw the housing bubble before it happened and didn't see any sign that it did. That being the case why should I believe you when you say there's no problem with China not buying our debt. I don't think I spent my money wisely by buying a Motley Fool membership, if your people didn't see the biggest bubble ever to come down the pike.

  • Report this Comment On February 24, 2012, at 4:42 PM, TMFMorgan wrote:

    Toklat2,

    http://www.fool.com/investing/general/2007/04/12/house-price...

    "Fools, what bubbles up must eventually come down."

  • Report this Comment On February 24, 2012, at 7:08 PM, dennyinusa wrote:

    mikepriz

    Would this not be comparable to borrowing from one’s 401K? I know people I worked with used this option to purchase a house, kid’s college or medical expense.

    I believe they also had to pay a set interest rate.

    I understand some people believe this should not be done, but it is an option.

  • Report this Comment On February 25, 2012, at 12:02 AM, DevilzAdvoqate10 wrote:

    Housing Bubble prediktion:- TOUCHÉ!

    Federal National Mortgaje Assn, Federal Home Loan Mortgaje Korpn & Govt National Mortgaje Assn all took masses of mortgajes off banks' hands (allowing them to lend even further) & traded them as diverse derivatives like Kollateral Obligations, Options, Interest-Only & Kapital-Only Loans. After all, these were.... SAFE AS HOUSES!

    GIMME SHELTER! Normally, we kan't get a kredit-kard, personal nor businesss loan without getting vetted. But by 1979, the Politikly Korrekt brigade in government was bullying banks into ignoring risk-assessment for high-risk debtors like slum tenants, Hispaniks, paupers, negroes, women & single mothers!

    MADNESS OF KING JEORJE. GH Bush, who must've had less brain matter even than the soshalists, chanjed Nanny Fanny's brief so she'd tax-subsidize shelter for poor families.

    LIKE FATHER, LIKE SON. GW Bush even tax-subsidized housing (plus big fat lawyer's fee if wanted!!) for people who never saved a penny, let alone paid a penny tax!!

    PORKIES. With so much pig-enforsed tax guaranteeing so much debt, small wonder the housing market puffed up like a big fat pig having a skoff @ the trough. Then the defaults, re-posessions.... Hardly rokk-it ssiense, more like bleedin' obvious!!

    EMPEROR'S NEW SUIT. Is it really worth a Sheer-Lukk Homes medal (that's a terrible pun, Watson!) to know the bureaukratikly tailored $12Trillion loan would unravel upon the thorny truth & the same little thorn would POP the house bubble too??

    AMERIKAN DREAM was meant for heroes like James J Hill, railroad enjineer, who won wealth for millions; & I think Soros' father, a refujee who saved all his pennies for George's edukation. Not tax-subsidized idlers who won't pull up their own boot-straps in the Nanny States.

    PORTUM IN ULTIMO IUDICIO DA NOBIS (= Gimme Shelter (on Jujment Day)). Next time you berate greedy bankers for today's ills (sure they piss me off too playing my deposits on the market for 30% returns but paying me 0% interest out of that), save @ least 2/3rds your venom for the REAL DEVILS, the institutionalized, govern-mental gangster bureau-krassy, many of whom never did a real job in the real world throughout their Nazionalized, Soshalist, Tax-Protekted, Pampered-Pension lives.

  • Report this Comment On February 25, 2012, at 1:13 AM, DJDynamicNC wrote:

    ^^ This post is amazing.

  • Report this Comment On February 25, 2012, at 3:12 AM, CrankyTexan wrote:

    Yeah, amazing if you are a socialist.

  • Report this Comment On February 25, 2012, at 3:38 AM, DJDynamicNC wrote:

    "Yeah, amazing if you are a socialist."

    Cranky, my dear sir, EVERYTHING is amazing if you're a socialist. You should try it some time! Nothing but rainbows, ponies, and micro-brew beer.

    Every once in a while we throw a party, and we all get together and inflate balloons (as much inflation as we want!) and then take turns throwing other people's money in the air and lighting it on fire.

    It's not all fun and games though. Sometimes I over-indulge on alcohol (no reason not to, since we just make other people pay for it) and then my stomach experiences a little quantitative easing.

    Now if you'll excuse me, I'm late for a game of Pin The Tail On The Capitalist Right Next To Where Your Comrades Pinned The Blame For The Oppression Of The Proletariat (sometimes known by its acronym, PTTOTCRNTWYCPTBFTOOTP, which is pronounced "that f***ing game we play sometimes").

  • Report this Comment On February 25, 2012, at 1:20 PM, ChrisBern wrote:

    Quantitative easing will continue to increase our government's share of its own debt, and therefore decrease everyone else's (e.g. China's) share of it. The Fed is printing money out of thin air and buying treasury debt with it.

    This will go well until it doesn't. There will come a day when the Fed's balance sheet and its inability to unwind it gracefully will become a major issue. That day might be a LONG time from now, and the reason is that we're likely to be in a Japan-style malaise for several years to come. But that day will come.

    The other major problem will be when interest rates eventually go up a few percent, back to historically normal levels or even higher. At that time, the banks which are all loaded up on 3.75%-paying assets will suffer tremendous profitability issues. There will be massive closures and you can be sure our beneficent government will step in and save the day. Moral hazard is alive and well.

  • Report this Comment On February 25, 2012, at 1:48 PM, DJDynamicNC wrote:

    My oh my, if only we could somehow get those banks small enough to where they could be held accountable in a free market.

    If only there were some way to do that....

  • Report this Comment On February 25, 2012, at 2:01 PM, CrankyTexan wrote:

    >>> My oh my, if only we could somehow get those banks small enough to where they could be held accountable in a free market. If only there were some way to do that.... <<<

    A socialist wants banks destroyed? What a surprise.

  • Report this Comment On February 26, 2012, at 2:12 AM, DJDynamicNC wrote:

    :lol: I call for banks to be held accountable to the free market, and you think that's socialism.

    Priceless.

    It's astonishing that anybody takes free market zealots seriously anymore.

    On the other hand, maybe they don't.

  • Report this Comment On February 26, 2012, at 12:49 PM, CrankyTexan wrote:

    >>> I call for banks to be held accountable to the free market, and you think that's socialism. <<<

    1. You said you want to make banks smaller.

    2. You called yourself a socialist.

  • Report this Comment On February 26, 2012, at 1:12 PM, CrankyTexan wrote:

    >>> :lol: I call for banks to be held accountable to the free market, and you think that's socialism. >>>

    1. You said you want to make banks smaller.

    2. You called yourself a socialist.

    >>> free market zealots <<<

    Is that what socialists call capitalists?

  • Report this Comment On February 27, 2012, at 4:09 AM, ArupMaj wrote:

    What's happening is Fed is printing money to finance US Govt debt. This will go on for some time resulting in inflation and devaluation of the dollar. This is what China is scared of, it's treasury assets are getting devalued by the day and hence their decision to reduce the treasury weightage and putting more of their money in direct investments all over the world (buying companies in US, Europe, Africa, Brazil)

  • Report this Comment On February 27, 2012, at 8:56 AM, DJDynamicNC wrote:

    "You said you want to make banks smaller."

    Do you feel that banks which are "too big to fail" are at an appropriate size? If they are too big to be held accountable by the market, I feel socialists and capitalists can agree that we are facing a distorted market and that one possible solution is breaking up the problematic actors.

    "free market zealots"

    Not all capitalists. Just the zealous ones.

    Most people are just capitalists by default.

  • Report this Comment On February 27, 2012, at 2:47 PM, CrankyTexan wrote:

    >>> Do you feel that banks which are "too big to fail" are at an appropriate size?<<<

    Let banks grow as large as they can. It's called capitalism.

    >>> I feel socialists and capitalists can agree that we are facing a distorted market and that one possible solution is breaking up the problematic actors. <<<

    No, only socialists agree. And how would you go about "breaking up the problematic actors"? Please be specific. Would you have the government seize all their assets?

  • Report this Comment On February 28, 2012, at 1:57 PM, DJDynamicNC wrote:

    "Let banks grow as large as they can. It's called capitalism."

    Ahh, I agree! That is called capitalism.

    Would you say that it's capitalism even if one bank grows beyond all others and then crushes the competition, institutes barriers to entry, and completely dominates the capital markets?

  • Report this Comment On February 28, 2012, at 3:39 PM, CrankyTexan wrote:

    >>> Would you say that it's capitalism even if one bank grows beyond all others and then crushes the competition, institutes barriers to entry, and completely dominates the capital markets? <<<

    Yes. Just like ISRG.

  • Report this Comment On February 28, 2012, at 3:40 PM, CrankyTexan wrote:

    DJDynamicNC, are you against sports because one team ends up defeating everyone else?

  • Report this Comment On February 28, 2012, at 5:45 PM, DJDynamicNC wrote:

    "DJDynamicNC, are you against sports because one team ends up defeating everyone else?"

    I would be if one team started with a full roster of all stars and the other 99% of the league started with just one rookie and a janitor - and draft spots were awarded to the team with the best record.

  • Report this Comment On February 28, 2012, at 7:23 PM, CrankyTexan wrote:

    >>> I would be if one team started with a full roster of all stars and the other 99% of the league started with just one rookie and a janitor - and draft spots were awarded to the team with the best record. <<<

    Sports teams ARE unbalanced. Some are full of stars. Some of full of crappy players. So, are you against sports?

    You seem to be anti-corporation. You might be a full blown communist instead of a socialist.

  • Report this Comment On February 28, 2012, at 7:51 PM, CrankyTexan wrote:

    It is ironic that a socialist spends time on a stock investing website. The purpose of investing in stocks is to profit as much as possible, which is the opposite of socialism.

  • Report this Comment On February 29, 2012, at 10:07 AM, DJDynamicNC wrote:

    "It is ironic that a socialist spends time on a stock investing website."

    No more ironic than an arch-capitalist eating food inspected by the FDA, driving on interstate highways, and relying on 911 emergency services.

    The market is not without value. I just find it less valuable than human beings.

  • Report this Comment On May 06, 2012, at 1:22 AM, drewrbchd wrote:

    First off we don't owe china crap .. and I personally believe we should take china over. that is what happens .. china is doing it they are just being quiet about it. I don't care about China, I don't think we should stand here and let happen any longer. Unfortunately, the chinese may be boasting a big army but if given half the chance the chinese army would surrender. Dropping a bomb on those pan heads might wake them up. They logistically can't fight us and they deserve a good ass beating to boot!

  • Report this Comment On May 06, 2012, at 1:26 AM, drewrbchd wrote:

    Kick there products out of our country,, make the american companies come back inside the country, abolish income tax, build a 15 foot wall between mexico and us and establish a national sales tax .. live like a millionaire get taxed like a millionaire, live like a bump be taxed like a bump. Get rid of the IRS and gut the US Gov't agencies in this country .. Kick the butt out of China, and the Middle East .. and our problems are solved.

  • Report this Comment On May 06, 2012, at 1:27 AM, drewrbchd wrote:

    China has declared economic war on this country .. and that is an act of war. They are economic Terrorists!

  • Report this Comment On September 22, 2012, at 6:50 PM, Jonathanchar wrote:

    I'm sorry, but this author's assertion that the sky isn't falling is completely disingenuous. Why pre tell is the Fed selling put options on its own debt at absurdly low prices? Do you think it's trying to coax people into actually believing the hog wash that 1.7% 30-year bonds are normal!??? I mean seriously, do you really think when interest rates rise it's going to be a smooth thing. Absolutely not, and I guarantee China's no dope. The banks have to buy this crap to pass "stress tests." Meanwhile Chinas decreasing its banks' capital requirements. Come on, be more honest! What's the type of liquidity represents the greatest volume cash or treasuries??? What's going to happen when banks need cash to cover deposits? COME ON.

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