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Definition of Moral Hazard - A Bottomless Bag of Cookies.

Imagine a five-year-old comes to you and asks if they can have a cookie.

"Yes." you say, "there's a bag full on the counter in the kitchen. You may go and get one."

Can you guess what will happen?

Now can you guess who's fault it is when they take three cookies?

If you said either the child or the parent, you are wrong. There's always a shared responsibility in any human interaction. While disciplining the child for his decision to disobey, a parent must also discipline themselves to not provide their children with such opportunities in the first place.

This is how I understand Moral Hazard.

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With easy money or credit, the tendency is for people...

to borrow just a little too much. And then, like a child who's sneaked more cookies than he can eat, they hide the extra in stocks they know little about, causing either 'bubbles' or lasting price inflation, and ultimately crashes, such as happened in 1920 and 1929.

When people such as Ron Paul talk about easy money as a Moral Hazard, they are referring to the tendency we all have to take too much, to cut corners, to tell little white lies, to overindulge in food, wine, sleep, tv. Simply, easy money gives us an opportunity to be naughty. Who can resist being naughty once in a while?

Chris Indeedski!

Daily Paul cured my abibliophobia.


...or an all inclusive and all you can eat buffet for adults

I am weak, plz help me :D


Leftovers are...


Chris Indeedski!

Daily Paul cured my abibliophobia.

Still true

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Chris Indeedski!

Daily Paul cured my abibliophobia.