Sunday, March 28, 2010

Jim Rogers: "The U.S. Government long bond is a bubble."

Jim Rogers, as far as I can tell, is the smartest man in the world.  It's in the way he speaks.

Rogers says Treasury bonds are a bubble.
If he's right, Treasury bond prices will drop.
If prices drop, rates will go up.
If rates go up, interest payments on the national debt go up.
If payments go up, the rate of new borrowing goes up--unless and until spending is cut or taxes are raised.

For you, this may mean higher taxes, fewer government services, greater national debt, and bad performance from your retirement savings.



Opt Out of:  Borrow-and-spend politics; personal exposure to US bonds.

Friday, March 19, 2010

Ben Bernanke: "Central Banking is an Art" (that is, not a science)

Bernanke: "You need some system to set the money supply... Every major country in the world uses a central bank, which must make some decision about the money supply."
Ron Paul: "But then there's no good information for the investor, unfortunately."

Wednesday, March 10, 2010

Health care reform proposals are a tax on being healthy

For as long as health care reform has been in the news in its current incarnation, I've been silently opposed to it on principle, certain that somewhere in the thousands of pages of legislation would be at least one provision that I regarded as incompatible with common sense and basic morality, and a non-starter.

Actually, I was aware of one such provision from the beginning: the individual mandate.  This says that every person must purchase health insurance or pay a fine.  Obama claimed to oppose the individual mandate during his campaign; after all, you can't solve the problem of homelessness by requiring everyone to buy a house.  It's too bad he changed his mind.

But the individual mandate is a gimme.  It is obviously nonsense despite the fact that it almost certainly will be a provision of anything that is signed into law.  I knew I must dig deeper and find something more substantive, more offensive, more asinine to serve as my reason for opposing health care reform.  It took me about 15 minutes of reading.

As background, be aware that the House of Representatives and the Senate have each passed a health care reform bill.  The differences between the bills must be resolved by a joint House-Senate committee, and the full House and Senate must then vote on the committee resolution.  This is the sticking point because the Senate Democrats may not have enough votes for passage now that Ted Kennedy has been replaced by Scott Brown.

The offensive and asinine thing that I found in both the House bill and the Senate bill, which I have never seen mentioned in anything I have read or heard about this debate, is this: health insurance companies will be prohibited from considering your medical history when determining your premium rate.  This means that the guy who exercises and eats vegetables, and is healthy because of it, will pay not one cent less than the guy who watches television and eats potato chips, and is sick because of it (all other factors being equal).

This is how Congress proposes to make health care "affordable": by outlawing the common-sense idea that those who exhibit a tendency to get sick should pay more for health insurance.  Of course, it will make health insurance more affordable--for sick people.  It will also make it less affordable for healthy people.  So health insurance for sick people will not be subsidized by the government or taxpayer at large, or the insurance companies, or future taxpayers paying down the national debt.  It will be subsidized by healthy people.  This is a tax on being healthy and a subsidy on being sick.

In the Senate bill, I also found this gem: variance in insurance premiums on the basis of age and tobacco use will still be allowed, but limited to ratios of 3 to 1 and 1.5 to 1, respectively.  This means that a 100-year-old cannot pay more than 3 times as much as an 18-year-old, and a smoker cannot pay more than 1.5 times as much as a nonsmoker.  Instead of teams of statisticians with advanced degrees determining how much premiums should vary for such people, a handful of Congressmen have predetermined those numbers.  These are taxes on being young and tobacco-free and subsidies on being old and smoking.

We don't make people who build houses on hills pay the same thing for flood insurance as those who build houses on the beach.  We don't make 30-year-olds pay the same thing for life insurance as 80-year-olds.  Such policies would defy common sense, as do the proposals I've described, which may yet become law.