I got a lot of email in response to my national debt article and the vast majority of those emails shows me that people are still grossly misinformed about the debt. We owe nothing. We own. Period. End of story. That's why, even though the so-called debt has gone up 25-fold since 1980, interest rates have not gone up, but down. Dramatically so. From 20% to zero, as a matter of fact.
And it's why the dollar has been stable. And it's why there's practically no inflation. In fact, the Fed and central banks all around the world have been trying their damnedest to get inflation going with little to show for it.
The government of the U.S. is not a household. It doesn't need to "save" its money. Doing so keeps money out of the economy and out of the hands of its citizens and firms. It's simply ludicrous to think that a sovereign nation that is the monopoly issuer of its own currency needs to "save" that currency. There is absolutely no need for it to run "surpluses" in dollars. I mean, what is that, anyway? How would it even do that? Stack dollars up in a warehouse somewhere? It's absurd.
I have said it in the past, and after reading the emails I am sure, I am absolutely certain, that one day, maybe very soon, we will see a balanced budget amendment passed here in America and that will lead us very quickly on the road to being the next Greece. It will lead us to ruin, for no reason at all. It will probably also hurt -- no, decimate -- many of the people who believe it's a good thing to have a balanced budget amendment.
I am not a pessimist or a negative person. If you read my columns, you know this. However, I do think that bad beliefs can be harmful. They're like infections in a body. If the infections are not eradicated, they can kill the body. The beliefs about the debt are as bad as it gets, and they will surely end up killing the economy if they are not eradicated. People really need to wake up on this or as a nation we are doomed for sure. We owe nothing. We own.
On to the markets. I see investors creating false fears in their minds. There is nothing that I see right now that would indicate that stocks are ready for a tumble. Nothing. There is nothing in the fiscal data or the trends in bank credit. Both are either equal to or better than what we saw all this past fiscal year. It's the status quo or a slightly improved version of the status quo.
I saw one market strategist make a negative call based on the election or, more precisely, if Trump somehow pulls off a surprise victory.
I love how people make these forecasts when we don't even know what the final version of Trump's economic policies will be. Everything that the candidates are saying now, whether it's Hillary or Trump, is campaign mode stuff. They have to get elected, then they have to propose policy, then that policy has to be passed by Congress, most likely with changes, and then it has to be implemented.
Once all that happens first, only then will we know what the actual policy will be and that's when we can gauge the impact on the market and the economy. Yet there are some, actually many, who just matter-of-factly state that this or that as if they already know, when they absolutely do not know. It's a guess. I don't guess. I endeavor to know.
The whole thing cracks me up. It shows why investing is easy, just because so many approach it so wrongly and so unscientifically. For them it's a guessing game disguised as serious analysis and that's why taking their money becomes child's play.
If Trump is elected, then perhaps we'll get a reflex market selloff. Big deal. It'll probably be based on some totally unfounded belief or fear that has been ginned up in people's minds. Go sell. I dare you. I will be buying.
On the other hand, if Hillary gets elected then I guess those same people will buy, because she is somehow perceived as good, even though we don't know what her final, approved, policies will be. In that case, I will most likely be selling into that rally.
Guessing is not what I do. I sit back and wait for stuff to happen. Impatience and over thinking kill most people in this game. I don't allow myself to get into that. I don't invent conditions in my mind that don't exist. I only act on stuff that's real.
Same with the supposed debt. I don't fear what is not real. I only fear what the masses are capable of doing with their ignorance. That's real, and that's scary as hell.