Cyprus' Unprecedented Bailout: More Common Than You Think

The tiny nation of Cyprus was bailed out by its eurozone partners and the IMF this weekend. That much is barely news. The bailout of a country with a broken banking system is now known as a slow Sunday.

But there was something different about Cyprus' bailout that sent shivers through the global banking system. Deposit holders in Cyprus banks are being forced to pay for part of the deal. The original deal, which looks like it's now being revised as I write this, says those with 100,000 euros or more in Cyprus banks will have 9.9% of their deposits levied -- or taxed, or confiscated, or whatever you want to call it. Those with less than 100,000 euros will take a 6.75% haircut.

This is rare, if not unprecedented, in modern bank bailouts. Deposit holders have long been considered sacrosanct. In the U.S., we have the FDIC. A bank's shareholders can lose everything when it screws up. Bondholders can take a hit, too. But deposit holders, particularly small mom-and-pops, are typically untouchable. "The FDIC has a long history of stability and safety," says former chairwoman Sheila Bair. "No one has ever lost a penny of insured deposits." Europe can't say the same. 

But there's another side to this story.

If Cyprus had its own currency, it would be dealing with its economic problems by printing money. That would eventually cause inflation. How much? I don't know, let's say 6.75%. In that case, those with cash deposits in Cypriot banks would lose 6.75% of their money in real terms -- the same amount being directly confiscated on most deposits through the IMF bailout. 

Think of it that way, and Cyprus's bailout fee is only unprecedented in a semantic way. When a government directly takes 6.75% of deposits, people freak out. When the government takes money indirectly through 6.75% inflation, few are concerned.

There are two takeaways from this.

The obvious one is that Cypriots are getting a raw deal only if you consider the bailout fee in isolation. Compared with what would have likely occurred without a bailout, it isn't bad at all. Most estimates I've seen of what would happen if Cyprus were forced to leave the euro and return to its old currency predict a devaluation of 40% to 60%. The country was in a terrible position with no easy solutions. It took the least bad option.

The other takeaway is that when it comes to cash, the difference between inflation and a direct levy is minimal. Most don't think of inflation as a fee because they don't see money being directly removed from their bank accounts. But the effect on wealth is the same in the end. Sheila Bair is right that no one has ever directly lost a penny on FDIC-insured deposits. But an untold amount of deposit wealth has been lost to inflation.

I'm neither a conspiracy theorist nor a goldbug, and this is not an anti-Fed rant. There will always be inflation, and dealing with it is more useful than grumbling about it. There are plenty of options to invest money at rates of return above inflation. Charlie Munger once said: "I remember the $0.05 hamburger and a $0.40-per-hour minimum wage, so I've seen a tremendous amount of inflation in my lifetime. Did it ruin the investment climate? I think not."

The problem is that so many investors have willingly made themselves subject to inflation's mercy, plowing into cash and bonds that yield less than inflation. They are subjecting themselves to their own mini-Cyprus bailout fee year after year.

What's unfortunate is that they may not even know it. Cypriots are well aware of their fee. They see the headlines. They'll see the withdrawals. Money here today will be gone tomorrow. Other people around the world who invest in the comfort of FDIC-insured cash and bonds yielding nothing, I'm afraid, are much less aware.

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  • Report this Comment On March 18, 2013, at 9:20 AM, prginww wrote:

    I'm an American expat living in Cyprus, and I'm bracing for Tuesday, when the banks reopen after a local holiday. It's nice to have the luxury of analyzing this from abroad, about other people's money, but tomorrow we get to see the ugly human side. It won't be pretty.

  • Report this Comment On March 18, 2013, at 10:41 AM, prginww wrote:

    How do you spell "bank run" ?

  • Report this Comment On March 18, 2013, at 10:54 AM, prginww wrote:

    I can't decide whether to laugh at the fact that Morgan is defending this blatant and unapologetic theft of private funds by the Cyprus government...

    or laugh that Morgan is actually acknowledging that the only way to pay off massive debts and bail-out the banks is via money printing which leads to massive inflation and a de-facto tax on everyone.

    Gee, if only there were people around who have been pointing this out for years... decades, even!

  • Report this Comment On March 18, 2013, at 11:06 AM, prginww wrote: are right. Easy for people to write articles & easier still when it is someone other than yourself.

  • Report this Comment On March 18, 2013, at 11:15 AM, prginww wrote:

    Please don't call this a bailout of "the tiny nation of Cyprus". This is a bank bailout just like the countless bailouts we've witnessed in the past five years, both here at home and elsewhere around the world. People should rightfully be enraged by the massive transfer of wealth to the banking sector, whether direct or indirect.

    When will we finally get sick and tired of the unsustainable nature of modern day banking? Every decade or so there's a massive banking crisis that sends the world economy into an apocalyptic panic. We end up blaming our governments or worse, each other, but in the end the origin of the problem is always the banks.

    "There will always be inflation" -- what is your opinion as to why this might be true? I think its an interesting statement particularly the strong way its phrased but some time spent thinking as to why there is always inflation may be time well spent.

  • Report this Comment On March 18, 2013, at 11:19 AM, prginww wrote:

    You can rationalize this all you want but the result is the same. This is terrible and sets an awful precedent. When the government is so irresponsible that it cannot control it's spending what makes you think taking the money of hard working citizens is the answer. Not Foolish at all.

  • Report this Comment On March 18, 2013, at 11:24 AM, prginww wrote:

    And our president and speaker of the house say our debt is not a problem.........yet. Can anyone tell me what amount of national debt is unsustainable, and how do you know you have crossed that threshold. Isn't the Fed stealing from savers now to prop up our economy, and will eventually have to unleash high inflation at some time due to all the money printing.

  • Report this Comment On March 18, 2013, at 11:35 AM, prginww wrote:

    In Lemessos, someone took a tractor and entered the bank with it just to get his money just after the announcement of the "levy". I live in Greece and we already have plenty of mail from various friends around the world telling us that the same bank run will happen in our country. Italy is on the verge of tremendous problems. They have trillions of dollars in debt.

    If they think the problem will start and end with Cyprus, an island of around 800.000, just think of an Italian bank run. I'm sure the genius who wanted to see a "dry" run on how something so dramatic pans out is an absolute "f"ool. Conspiracy theories have Russia on their minds.

    Personally, the only thing I see is an all out "war"of the financial type with no holds barred. Who let the dogs out Angela???

  • Report this Comment On March 18, 2013, at 11:55 AM, prginww wrote:

    Some time ago, NPR's Planet Money reporters (the other good source of financial news) said if there was a big enough failure of US banks, we should expect a fee or to have our deposited money tied up for up to two years.

  • Report this Comment On March 18, 2013, at 12:30 PM, prginww wrote:

    Morgan, there's a third option other than the levy and inflation: Doing nothing. Let the bad debt be liquidated, and fractional reserve banking fail. The house of cards is going to come crashing down at some point, it may as well crash and allow for a recovery, rather than papering (ha!) over the problem and continuing to punish those that save.

    What shocks me about your column is that you seem to believe that this is just the way things are, and you don't seem to realize that we can change this situation by educating people against the dangers of fractional reserve banking and central banks. We've had no central bank for longer than we've had a central bank, and I dare say we were better off for it.

  • Report this Comment On March 18, 2013, at 12:37 PM, prginww wrote:

    SevenMinutes - sincere good luck, man. Looks like you'll have to wait until Thursday, as the bank holiday has been extended again.

  • Report this Comment On March 18, 2013, at 1:02 PM, prginww wrote:

    I think you are missing the fact that this establishes that a Euro in Cyprus is not the same as an Italian Euro, which may be different than a German Euro? Where would you keep your Euros?

  • Report this Comment On March 18, 2013, at 2:34 PM, prginww wrote:

    Morgan's logic falls flat if you're the one with $200k in the bank and are being "taxed" $20k for the privilege of being in the EuroZone. This is pure Socialism.

  • Report this Comment On March 18, 2013, at 4:24 PM, prginww wrote:

    Guess parking your money overseas has it's risks?

  • Report this Comment On March 18, 2013, at 5:12 PM, prginww wrote:

    @TMFGortok - excellent point.

  • Report this Comment On March 18, 2013, at 6:47 PM, prginww wrote:

    Note that funds in Cyprus yielded 30% from 2008 till now versus 10% in Germany or Austria (according to an interview with Mr. Cernko, CEO of Unicredit Bank Austria).

    Higher interest rates usually reflect higher risks, so the fee for funds above 100.000EUR should be considered fair contribution to saving these banks (Source:


    After all the investors took the interest rates without much asking as well ...

    BTW: revenue from foreign-direct-investments of cyprus companies is tax excempt. Typical example: Russian owner of cyprus company invests in Germany -> profits from this investment are absolutely tax free in Cyprus as well as in Germany (due to EU tax regulations there is no tax in Germany either).

    This tax regime is another reason for the inflated banking system in Cyprus, which is now close to collapsing.

  • Report this Comment On March 18, 2013, at 6:48 PM, prginww wrote:

    The analysis assumes that a person who has 100,000 on deposit intended to spend an equivalent amount of money in Cyprus. The fact that inflation has been avoided will hold little solace for foreign depositors, and does not help those who had no intention of spending an amount equivalent to the funds they had no deposit.

  • Report this Comment On March 18, 2013, at 6:56 PM, prginww wrote:

    So, either this confiscation of wealth is "just the way it is" or we should simply let the current worldwide financial system fail, and we can start again?

    Both of these ideas are rubbish. The financial system is - and always has been - based on the confidence of participants that the rules will not be changed on them arbitrarily and ex-post. In the height of the 2008 crisis both the US and the EURO zone raised their government-guaranteed deposit limits like crazy. And guess what - it worked! In spite of the fact that we got within mere hours of a global financial collapse, there were no runs on the banks. This calmness allowed the adults in the financial world (led by Ben Bernanke - even though I know some of you think he was a villain in this piece) to saddle all of our citizens (including those not born yet) with a massive debt load in order to avoid a repeat of the 1930s' depression. Whether you would have preferred this outcome or one where you could have avoided this debt but at a cost of 1 out of 4 of your fellow citizens having their lives ruined (many of whom would then end in suicide, as happened in the 1930s) depends upon your moral code. But you should recognize that the economics were clear.

    And to think that we could solve the problem by going back to 19th century monetary policies - read some books, people. Learn a little history. Guess what - we had the same types of crises under the old system as well.

    The answers? Read Franklin D. Roosevelt's first inaugural speech. He got it right. We have to regulate the financiers so that they serve society's interests. Otherwise, they distort the financial system to the point society is forced to serve their interests. And right now, they are winning.

  • Report this Comment On March 18, 2013, at 7:05 PM, prginww wrote:

    I wonder how many Cypriots will move whatever money they have left to bitcoins?

  • Report this Comment On March 18, 2013, at 7:17 PM, prginww wrote:

    This is terrible plain and simple. The people who should pay for this mess should be the ones who profited from it and will continue to profit from it!

    This is theft all right, but largely it is reverse Robin hood theft. Most small depositors did not profit from the wreckage caused by the financial sector. This is the financial sectors mess. The financial sector should pay!

    How about a tax on all the salaries of people in the Financial sector who's jobs and equity are being salvaged? How about A transaction charge for all equities?

  • Report this Comment On March 18, 2013, at 7:28 PM, prginww wrote:

    This is absolutely appalling that we don't act in outrage over such government behavior, which is outright confiscation of private property. In addition this author is naive. Not only will citizens lose money to confiscation but IN ADDITION they will lose to inflation on top of this confiscation. I find this acceptance of government behavior ridiculous!

    We have become desensitized to govt antics!

  • Report this Comment On March 18, 2013, at 7:32 PM, prginww wrote:

    This is a foolish argument.

    1) If the tax is on deposits only a few will be affected. If it is done through inflation everyone will be affected. There is a contractual agreement that is broken here. In case of inflation there is no such agreement. There is no way you compare the too.

    2) It is other's money. Not the authors'.

  • Report this Comment On March 18, 2013, at 7:41 PM, prginww wrote:

    This is Cyprus. When this happens in America what will be your reaction? If we don't get our house in order, this will be us.

  • Report this Comment On March 18, 2013, at 7:45 PM, prginww wrote:

    Inflation is a never-ending tragedy to simple bank savings. I live in the Netherlands and do not have an account in Cypress although friends have suggested that in the past for nefarious tax reasons. There are other benefits for shady dealers in non EU lands looking to evade home tax. One factor missed in all the uproar is what the situation is on the Turkish side of the still divided island of Cypress. Once again the banking community has ignored risk in favour of engagement, fractional reserve and return. Now the pigeons return! The confusion is between protection of the ordinary poor to moderate Cypriot depositors and the higher incomes and foreign depositors. It again raises the question of the fundamental functions of banks.

  • Report this Comment On March 18, 2013, at 8:04 PM, prginww wrote:

    We already experienced this phenomenon. Any one recall WAMU, Bear Stearns and Lehman?

    The only difference was, in 2008, a WAMU customer, of the under 100,000 tranche, was captured by the media, using his ATM card and getting cash out of a WAMU ATM. No surprises, it gave him cash. No panic here as the system worked...

    No doubt that there's not enough Euros left in the Euro zone to wait it out, unless, the Russians will trade for drilling rights.

  • Report this Comment On March 18, 2013, at 8:12 PM, prginww wrote:

    Morgan –

    you may not excel at financial analysis but your repeated attempts to obfuscate governments' expropriation, in all its forms, of private property as a "normal" function of government is emerging as your signature “gift.”

    Government creation of money with the POTENTIAL of FUTURE inflation is not the equivalent of a government literally stealing money from bank depositors. As we are seeing with the US Fed’s trillion dollar, plus, annual injection of new money into the financial system that has been occurring for years with no signs of abatement, the deleterious effects are not immediate. Stealing money from depositors IS IMMEDIATE.

    Pouring trillions of phony dollars into the economy, which many believe is reckless, allows astute investors time to adjust their portfolios to cushion or, in some cases, to benefit from prolific money creation. Taking money directly from depositors’ accounts, as the Cypriot Government is doing, cannot be tempered by investment adjustments. It is no different from a burglar breaking into one’s home and stealing money from the homeowner’s safe. No, it’s much worse; governments are supposed to protect the financial well being of their citizens, not diminish it by stealing to support government's corrupt, wasteful policies.

    You don’t seem to understand that governments which selectively raise taxes on the successful job creators and investors among us or directly take money from their citizens’ accounts is no different from organized crime extorting money from successful, hard working people.

    Has the thought ever occurred to you that the gangsters in the Cypriot Government could have achieved all, or a substantial portion of the EU’s demand for matching bailout funds by cutting useless government spending, ironically referred to as “investments” by government waste apologists in the US? Of course not; those with a big government agenda do not understand; they justify.

    Oh, as a respectful correction of “overley’s” oversight – the Speaker of the House, Boehner, never said US debt wasn’t a problem – Bozo the Pres, Nancy Pelosi and Harry Reid made that comment; a comment for which, you guessed it, Housel has provided “context” (i.e.- support) in at least one of his articles.

    Fellow wise investors, stay alert!

  • Report this Comment On March 18, 2013, at 8:19 PM, prginww wrote:

    Hey Morgan

    Instead of constantly pimping stocks and this service...WAKE UP! One day you may find the govt decides to seize 40% of your wealth just as your about to retire, because ignorant people like you choose not to speak out against it and instead push your stock service instead.

  • Report this Comment On March 18, 2013, at 8:52 PM, prginww wrote:

    Why, after the Fed bailed out the banks to the tune of 2 trillion or so dollars, either through the Treasury printing money, or the Fed buying its own treasury notes, was there not even an up tick in the US inflation rate?

  • Report this Comment On March 18, 2013, at 9:45 PM, prginww wrote:

    For every dollar bail of a bank someone has taken a dollar in loans and not paid it back

  • Report this Comment On March 18, 2013, at 10:14 PM, prginww wrote:

    I predict that this entire story will blow over rather soon with no haircut on bank deposits. Why would Cyprus want to enrage the Russians who have been preserving large amounts of wealth over there? It just doesn't make sense. The Cyprian government might as well point an AK-47 to its head and pull the trigger.

  • Report this Comment On March 18, 2013, at 10:45 PM, prginww wrote:

    Yes, it's perfectly appropriate to screw the savers. After, all they would have lost either way.

    That seems to be the sentiment of the article.

  • Report this Comment On March 19, 2013, at 12:16 AM, prginww wrote:

    Panic, run on the bank before all the facts are known, get the people riled up so they might do something stupid, Cyprus and the U.S. have common problems that some groups or even some governments will use to cause panics that can be of benefit to them for profit or power.

  • Report this Comment On March 19, 2013, at 1:15 AM, prginww wrote:

    The problem is not with banking system, company, or country. The problem is with the Capitalist System the whole world is following today. The Capitalist System only looks at the return on investment, even if the money is invested in vice businesses like gambling, tobacco, liquor, etc. It is time the Capitalist System correct itself, before more OWS type protests start all over the world.

  • Report this Comment On March 19, 2013, at 1:25 AM, prginww wrote:

    The author of this article obviously knows nothing about Cyprus, Greece, or the European financial crisis. I marvel at the fact that TMF allowed it to be posted. I'm rethinking my membership here.

  • Report this Comment On March 19, 2013, at 2:09 AM, prginww wrote:

    All this argument comes down to the basic fact that you cannot have your cake and eat it too.

    If you chase high returns you must be willing to accept losses. This is very sad for the innocent depositors who were using the bank for safe-keeping.

    But apart from that the whole banking problem comes back to the lack of effective banking regulation. The only answer to bank failures is regulation that actually works.

    Australia has a strong regulatory system that has made bank failures unthinkable backed by an industry acceptance that the house has to be cleaned internally, The result is NO failures since the 1930's

    In the US the government and depositors have to make up the losses through insurance in the name of freedom to trade as you wish, pocket the salary and leave the FDIC to clean up and shareholders to pay.

  • Report this Comment On March 19, 2013, at 3:11 AM, prginww wrote:

    So politicians rob us! What else is new?

  • Report this Comment On March 19, 2013, at 7:04 AM, prginww wrote:

    Tiny nation? It took the least bad option?? Come on! Everybody is pointing out how difficult it would be if Cyprus did not belong to the Eurozone.! I am a Greek citizen living in Greece. Our problems started from the time we entered the Eurozone. The same stands for Cyprus, too! We used to be a proud nation and now we are just a parody! And for what? For the banks! Everybody is pointing out that if we abandon the euro the inflation rate is going to crush the economy...Well, what???? What about exports? wouldn't exports double because of a low exchange rate? Wouldn't that be good for the economy?? Think about the big picture. An irresponsible goverment that could not control its balance literally takes people's money to bail out the banks! They cannot simply increase the debt cieling because we are not in the U.S....They cannot intervene to fix the domestic economic imbalances....Who gets to pay the price? And for what? Please just for once I would really like to read an article that points out the political and social implications of the euro crisis and please I really wish that some one could say the obvious: Germany has to be stopped!!! Is not just Europe that is being destroyed to serve Germany's interests. Things have gotten out of control! Enough is enough!

  • Report this Comment On March 19, 2013, at 7:32 AM, prginww wrote:

    This commentary only points out the confiscation by both methods, inflation or direct theft of savings. It doesn't take into account that people who have done the right thing and saved money are being singled out for this confiscation and the spendthrifts who have spent all their money, only different from the government in name, get a free ride.

    If the government had kept its house in order there would be no crisis. And if the citizens had all saved some money the economy would have been stonger as well.

  • Report this Comment On March 19, 2013, at 9:03 AM, prginww wrote:

    "In the U.S., we have the FDIC."

    OH, REALLY??

    Wasn't it reported that during the Clinton and the early Bush years, the FDIC STOPPED COLLECTING INSURANCE PREMIUMS from banks?? And no one cared?

    IOW, the FDIC is a farce. Banks are given a free ride because the premiums are NOT RISK-ADJUSTED.

  • Report this Comment On March 19, 2013, at 9:03 AM, prginww wrote:



    However you may argue it's just the economic or moral equivalent of inflation, how is this not going to result in a huge outflux of depositor money? Bond deal notwithstanding!

    I'd say this is a totally hairbrained move.

  • Report this Comment On March 19, 2013, at 9:41 AM, prginww wrote:

    As long as the people keep voting against themselves by electing republican sympathizers , we will continue to lose our wealth and our nation. This holds true overseas as well.buying on credit with no plan to pay back is a fools errand.

  • Report this Comment On March 19, 2013, at 10:46 AM, prginww wrote:

    cannot quite agree with the rather superficial comparison between forced and open government taking from cash depositors and forced but more hidden inflation devaluations. Bottom line you might get similiar cuts to your wealth, but Cypriots are getting both bad eggs. After the government cuts from their bank savings they will also have to continue to share inflation just as before.

  • Report this Comment On March 19, 2013, at 11:41 AM, prginww wrote:

    1) Housel, only you would look at what's happening in Cyprus and have the take-away be "Another reason bonds suck as investments!" Props for that.

    2) All of you hyperventilating about "If it can happen in Cyprus, it can happen here! Just wait and see!" Please. There is nothing comparable about the economy or fiscal situation of Cyprus and that of the United States of America. Nothing at all. If your comback is, "We have a lot of debt and they have a lot of debt." that just shows the limits of your understanding of national finances.

  • Report this Comment On March 19, 2013, at 11:58 AM, prginww wrote:

    It strikes me as ironic that some object to confiscation (tax) of savings to fund government wastrels and fraud but not to confiscation of income (tax) for the same purposes... I guess this kind of protest depends more on whose ox gets gored than on the dumping of your resources down some useless sewer to no particularly valuable purpose.

    The more interesting story Morgan, might be who and how many "insiders" front ran the deposit tax. No I don't know anything here, but given it was a govt action denied right up to a few days before I don't have to know a particular fact to predict that there were some...

    I myself consider this quite a valuable laboratory for what to avoid when the chickens, uh Moas come home to roost from living beyond your means in order to fund foofraw... like Solyndra, A123, Solopower, Revolt, GM, and perhaps the California bail out next... watch out if you have bank accounts in CA...oh, I forgot, they dont have their own currency...yet.

  • Report this Comment On March 19, 2013, at 3:49 PM, prginww wrote:

    Thanks to alexanku to provide some relevant numbers. If those funds have been enjoying 30% return for the last 4 years, earning 15% after tax for just one year is already better than what we are getting in North America.

    TMFGortok was right about the 3rd option, so the question is why the Cypriot government want to transfer the bank debts to the government. Why not follow the Icelandic way, and let the banks collapse. Of course the Russian will be more furious as their fund exceeds the local GDP. Would Putin buy the country, and so take it out of the euro zone?

  • Report this Comment On March 19, 2013, at 5:30 PM, prginww wrote:

    Thank you Morgan. i'm sure you, like myself, got a good laugh from the knee-jerk comments inspired by your to-the-point-as-ususal article; keep 'em coming! FCS, Marxist sympathizing even reared its ugly head; talk about not learning from history. ;) But leading horses (in denial) to water does not make them drink; change must come from within. You people badly need to give yourselves mental enemas and back up a few mental steps so that you can see, if not take in, the big picture. There is nothing fair, nothing avoidable, about deleveraging, nor should there be, nor can/could there be. So buck up. This is still just the beginning for Cypriots (you don't think this wil be their last bank balance deduction, do you?), still just the beginning, the beginning for the PIGGS, for France, for Germany, for Europe, and for the US whose payback is being stretched out over future generations by Bernanke's counterfeiting. Here, my fellow commenters, lest i leave you with nothing but well-deserved derision, is some reading material:

    Thanks again, Morgan.

  • Report this Comment On March 19, 2013, at 8:44 PM, prginww wrote:

    Can you tell me how it is that the bills for all these bailouts of Big Banks are sent to depositors and investors ? How come those resposible for the risky deals that tank aren't asked to pay with their handsome compensations and huge salaries ??

  • Report this Comment On March 20, 2013, at 11:19 AM, prginww wrote:


  • Report this Comment On March 23, 2013, at 11:31 AM, prginww wrote:

    @phrush Everything is inverted these days. The tail will continue to wag the dog until we have another collapse. This philosophy seems to hold especially true in government, and business. Control is ultimate prize, money is just a means to an end.

  • Report this Comment On March 25, 2013, at 12:23 AM, prginww wrote:

    The reality is that it is about time that people started to understand that if you invest in a bank either as an investor or depositor you have no right to expect the taxpayer to bail you out if it all goes wrong.

    There should be a limited value, eg $ 100,000, insurance scheme such as the FDIC to protect the genuine small investor and transactional customer but beyond that there is no reason why a bank should be any different to any other investment.

    The only viable alternative to that is EFFECTIVE bank regulation such as has protected the Australian Banking System since the 1930's

  • Report this Comment On March 28, 2013, at 12:36 AM, prginww wrote:

    "It took the least bad option." Uhhh, no, the least bad option would be to impose the penalties on, oh I don't know, maybe the people who made the loans that have now turned sour? Those people are known as "bondholders", and it is criminal how they are constantly being bailed out by average everyday citizens. Not that the citizens have any choice. It's criminal.

    Regarding inflation-protection, it's funny that you specifically call out bonds, which is an implicit "go buy stocks" cheer. Stocks don't fare well in high inflation environments, and there are such things as inflation-protected bonds. Anyhow we don't live in a bonds-vs.-stocks world, although you wouldn't know it by reading most media outlets. There are other investments that are a lot better at protecting against inflation than stocks or bonds, e.g. real estate.

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