Taxation in FRONA

November 26, 2012

By Russell D. Longcore
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The first thing you must do when considering taxation in The Free Republic of North America (FRONA) is throw out everything you ever thought you knew about taxation. But even before that, you must throw out everything you ever thought you knew about money.

The money of The Free Republic of North America is the Frona. There will be the gold Frona, the silver Frona and the copper Frona. Gold Fronas will likely be used for larger transactions. Silver and copper Fronas will be used as the day-to-day coinage of the nation. Pure gold and silver coinage from other nations would also be acceptable forms of money since they are denominated in fineness and weight. So for example, America Eagles, Austrian Philharmonics, South African Krugerrands, Australian Kookaburras, and Canadian Maple Leafs would all be seen regularly in FRONA transactions.

FRONA money is silver, gold and copper. It is not BACKED by precious metals. That defines a “Currency.” Currency is NOT MONEY. Precious metals ARE money when they are minted as money. But precious metals NOT minted as money can be used as money. If I have a one ounce gold chain of 18K fineness, any merchant could accept that as payment in a commercial transaction because the weight and fineness are known. If I have a one pound gold bar of .999% fineness, it spends just like 16 one ounce coins. Get it?

The next thing that you must do is to stop thinking of gold and silver coins in terms of their value against other currencies, such as the Dollar. Coinage is a function of weight, not price. Yes, there would have to be some exchange rate to convert other currencies to Fronas. But the free market would determine this floating exchange rate, not the FRONA government. US Dollars or Euros might not have a Frona exchange rate at any price after TSHTF. But I’ll bet that the Chinese Renminbi or the Brazilian Real will be just fine. The FRONA national Charter, in its clause about money, would require any minted coin to display its purity and weight, but no value. For those international coins that displayed a value, such as “One Dollar” or Twenty Dollars,” those words would have no meaning in FRONA. And the law would proscribe the penalty of death for anyone minting fraudulent coins or altering coins (clipping or shaving).

In FRONA, goods and services will be priced in WEIGHT, not dollars and cents. A pound of steak might be priced at 0.25 ounce of silver. A gallon of gasoline might be priced at 0.10 ounce of silver. And copper Fronas are there to facilitate the smallest physical transaction, down to the penny. But when using a debit card for transactions, amounts could be priced down to the hundredth or thousandth of an ounce.

There will be no national money and no national currency. This prevents FRONA from debasing the money and stealing from the citizens. The free market will decide what the medium of exchange is. Common sense suggests that gold, silver and copper coins will become money, and likely silver and copper coinage will be the most widely accepted medium of exchange for day-to-day transactions. (Actually, in the technological age in which we live, the digital transaction will likely be the most utilized medium of exchange. Most people will do daily business with debit cards.) The FRONA constitution will prohibit itself from enacting legal tender laws. If the FRONA Treasury wants to issue gold and silver coins it may do so, but enjoys no monopoly or control. It would have to compete in the free market like all other minting operations.

In FRONA, The Treasury Department collects funds in silver, gold and copper, not any other currency from any other nation of the world.

As an aside: The US Federal government has come up with poverty statistics over the years. And in 2012, DC considers you “in poverty” if your family of four earns $23,050 or less per year. Of course, you can own a house, a car, a refrigerator, a washer/dryer set, multiple TVs, multiple cell phones and a nice wardrobe. (Compare that to the per capita income in India of $1,219.00. Is there really poverty in America?) But in FRONA, all of that poverty statistical bullshit is swept away. The US Department of Agriculture determined that a family of three or more persons spent one-third of their after-tax income on food. But in FRONA, there is no Income tax, Social Security or Medicare deductions from a wage earner’s paycheck. So instantly, every FRONA wage earner gets a boost in take-home pay to 100%. And remember…the wage earner is getting paid in weight, not dollars.

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As long as I am fantasizing about The Free Republic of North America, I want FRONA to be the identical boundaries of the State of Texas. After all, Texas is the US state with the most advanced secessionist movement, the Texas Nationalist Movement. And Texas is the state with the best chance of actually seceding and making nationhood work.

I pulled some demographic statistics from various sources for this article.

From the US Census:

-Median household income in TX 2010 – $50,049
-Households: 8.540 million, persons/hshld 2.78
-Per capita income 2010 TX $39,493 (rounding up to $39,500)
-TX population 2011 25,674,681

From the Bureau of Labor Statistics:
-TX Civilian Labor Force 9-12 12,632,000
-Unemployment rate: 6.8%

From Texas state website:
-TX state budget 2012 $80.6 Billion

So based upon those stats, I have made some rudimentary calculations. Remember that these are in Dollars, not ounces of money:

I am going out on a limb here and attributing the FRONA national saving rate at 10%. That means that everybody living in FRONA saves 10% of their income. Easy to do when you get paid 100% of what you earn.

-Per capita income $39,500 x 25.6M people = $101,120,000,000 ($101.12B)
-Per capita income $101.12 Billion x 10% = $10.112 B going into savings

Let’s say that 90% of per capita income was available to be spent. That is $35,550. Let’s say that on average, people do 75% of their transactions with merchants, which could generate a 10% sales tax. That is $26,663 x 10% = $2,666 per year in total taxation. $2,666 x 25.6m people = $68.250B.

This calculation does not include any tax revenue from transactions made by FRONA businesses. That could easily double the amount of sales tax revenue flowing into the national Treasury. These calculations also do not include tax revenue from non-citizens making purchases while in FRONA. More money for the Treasury. I can easily envision sales tax revenues in FRONA of $120-$150 Billion in FRONA’s first year in existence.

And the budget for the State of Texas for 2012 was about $80 Billion.

FRONA has only one source of revenue…a national sales tax of 10%. No property tax, excise tax, duties, tariffs, ad valorem tax, estate tax, corporate tax, income tax…NOTHING but the sales tax. In FRONA, the national sales tax pays for ALL government, even funding the governance needed down to the county and city level. There is NO OTHER SOURCE OF TAX REVENUE…PERIOD.

What happens to any surplus? Under the Charter I have written for FRONA, the government would declare a dividend and pay it back to the citizen/shareholders. Try to wrap your mind around THAT.

Now THAT’S the way a nation should work!

Secession is the only solution for individual liberty and property rights in North America.

Dump DC: Six Letters That Can Change History.

Copyright 2012: Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Two Choices: Own A Business Or Be A Wage Slave

November 15, 2012

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By Russell D. Longcore

I think there are a couple of conclusions we can glean from the national elections just concluded. First is that a billion dollars got spent on campaigns and nothing changed. Mr. Obama is still in the White House. The Democrats still control the Senate. The Republicans still control the House of Representatives.

Second…the business community still controls them all.

Wage-earners have almost no deductions available to them. And in the next four years, the Obama Administration and Congress are coming for many of your deductions in a desperate attempt to steal more revenue from ALL Americans.

For most people, there is no expense in their working lifetimes greater than the amount of various taxes they pay. So, tax planning and tax preparation can have the greatest effect on your income. Just a few hours of effective tax planning can put tens of thousands of dollars back into your bank accounts. Over a lifetime, that could translate into hundreds of thousands…even millions. It could also mean the difference between the constant struggle of monthly income shortages versus living a lifestyle you enjoy.

Government is supposed to protect individual liberty and property rights. Today’s government does little or none of either. Washington DC is a massive spoils system. The best benefits go to those who have the best lobbyists and lawyers.

Taxation was supposed to be a means whereby revenue was collected to pay for the activities of the government. But over time, the tax code became a system of rewards and penalties, and ways for businesses to cock-block their competition.

The IRS code is a hopelessly broken tax system that, over the centuries, was written by business for business. The IRS code favors businesses. There are hundreds of tax breaks, tax credits, tax deductions, tax deferments, tax incentives, etc…designed specifically for business. And I don’t mean just mega-corporations.

Even the smallest part-time, home-based business enjoys tax benefits that the employee wager-earner will never get. Here is a list of only a few benefits a home-based business enjoys:

• Deduct a portion of your property taxes.
• Deduct a portion of your mortgage payment.
• Deduct a portion of your mortgage interest.
• Deduct a portion of your utilities.
• Deduct a portion of business lunches.
• Deduct mileage on your car incurred in business.
• Deduct a portion of your car payment.
• Deduct a portion of your car maintenance expenses.
• Deduct promotional expenses for your business.
• Deduct all or part of your phone bills.
• Deduct insurance premiums for auto, home, health, life, business.
• Deduct travel expenses for business purposes.
• Deduct business gifts.
• Your clothing might be deductible.
• Deduct expenses for equipment like computers, software, supplies etc.
• Deduct expenses for ongoing training.
• Deduct expenses for tax preparation.
• Deduct expenses for legal representation.
• Deduct office furniture.
• Vehicles are deductible in certain instances, and you can depreciate them.
• Deduct depreciation on all the rest of your business equipment.
• Set up a personal retirement plan and put away much more than an IRA allows.
• Hire your kids and shield income from taxation and Social Security payments.
• Deduct rent or lease payments for equipment and/or real property.

That is only a partial list, friends. And the IRS code does not say you have to make a profit. You can even deduct your losses in some cases.

So…what should you do? Should you fall into the resentment fomented by the Mainstream Media of the 97% against the 3%? That keeps you broke and it will not change the system. It certainly won’t change your financial outcomes.

The old saying still goes…“If you can’t beat ‘em, JOIN ‘EM!”

Many people dream of firing their boss and starting a business. But if you have not ever owned a business before, there is a steep learning curve. That is why some folks choose a franchise because training is included. Remember…you had to get trained when you started your job, didn’t you? You must get training to become a business owner. Few of the characteristics that make a good employee translate to being a good business owner. That is why starting a business from the comfort of your home on a part-time basis makes the most sense. This gives you time to learn and grow and make the transition from follower to leader. Still, the business that you choose can make you or BREAK you.

Only one out of five small businesses that make it to their fifth anniversary are still in business. That means that 80% of new businesses FAIL in the first five years. That failure means losing money, investments vanishing, financial pressure, stress and the shame you feel from a failure in business. And if you choose the wrong kind of business, you could lose your business through no fault of your own if your marketplace dries up or the economy slows down.

So the business you choose for your home-based business is a crucial decision for your future and the future of your family. If your new business is successful, you can change your destiny and your family’s destiny for the better. Better schools for the kids, college educations, nicer homes, nicer cars, better vacations, more charitable giving. Choose unwisely and fail in business, and you will still change your destiny. Only it won’t be for the better.

The three most important things for your business are:

1. Choose a highly consumable, life-essential product or service. First let’s talk about the “highly consumable” part. Would you rather sell a product that people use every day, or a product that they seldom have to buy? Think about the difference between a business that sells electricity and a business that sells cars or caskets. Now what about the “life-essential” part? Think about the difference between selling mobile phone service versus selling bowling balls and accessories. You cannot go a day without your phone, but you could go a lifetime without bowling.
2. Have a large, growing, inelastic market demand. A large market demand needs no explanation. But you also need a growing market. Selling pagers 20 years ago was hot. But try even finding pagers today. Don’t put your business on the tail end of a trend. And what about that word “inelastic?” It means you want your business to be steady, and not affected by boom and bust cycles. Ask homebuilders or realtors about what happens to their incomes when a boom ends.
3. Duplicatable. If you have a home-based business that relies upon your efforts, then any vacation you take, or illness you have, costs you money. You can hire people in your business, but having employees brings its own set of problems. Think about what happens to a real estate broker. He hires new people, trains them, helps them be successful. But after a while, his new people want to be brokers, just like he is. When they do become brokers, they become his competition THAT HE TRAINED. The best solution is to have associates that work with you that have the same business opportunity that you have. Then when they are successful, you still make money. This is commonly referred to as “Network Marketing.”

Those three characteristics in a home-based business are really hard to find. But they do exist!

There are two videos directly below that I offer to you. The first video talks about my Energy business. The second video talks about my other product in Social Commerce. Please look at both of them.

Then ask yourself… “Who Wouldn’t Want a Home Based Business Like This?”

Social Commerce Video

Choose one, or choose both. Then come join us!

In closing, remember this:

Your are either working for your own dreams or you are working for someone else’s dream.

Dump DC: Six Letters That Can Change History.

Copyright 2012: Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Flash Editorials May 5, 2012

May 5, 2012

By Russell D. Longcore

The Nation I: This week, Warren Buffet and Berkshire Hathaway are hosting their annual meeting in Omaha. Thousands will attend. You gotta give the old boy his snaps. He has become one of the world’s wealthiest men in the stock market and owning companies. But a big part of his amassed wealth came from doing business with the Federal Government. So is it any wonder that in his doting years, he says stupid things like “the wealthy should pay more income taxes?” His “Buffet Rule” legislation went down in flames last week in Congress. But think about this. No one is preventing any wealthy individual from writing an extra check to the US Treasury. So this is not about the wealthy paying more voluntarily. This is all about being forced to pay more at the threat of death or imprisonment. This is all so extraordinarily disingenuous. The Congress carries the water for business. The tax code for business owners is laden with tax benefits and tax credits that employees don’t get. Employees don’t have their capital at risk, and they don’t deserve business tax breaks. But we all deserve less taxation. So instead of stealing more from the wealthy, let’s see someone slash EVERYBODY’S tax rates. Even better would be a ten percent national sales tax and no income tax.

The Nation II: President Obama made a surprise trip to Afghanistan this week to keep the fictional account of the murder of Osama bin Laden alive, now one year old. This was a campaign speech wrapped in an even bigger lie. Obama didn’t cap Osama. Bin Laden died of kidney failure back in 2002. Too bad presidential lies are not felonies.

International I: In the wake of the nuclear meltdown in Japan, the Japanese government has closed all of its nuclear plants for the first time in 40 years. Now they expect brownouts and rolling blackouts. Out of the frying pan into the fire. Hey Japan!!! Ever heard of the Molten Salt Reactor, using thorium as fuel? Totally safe, no radioactive waste, 60-year-old technology? China has…

Business: At a Sotheby’s auction Wednesday, one of the original four versions of Edvard Munch’s painting The Scream (you know, white face, mouth gaping open, eyes wide…kind of looks like that mask from the horror films) sold for $119,922,500…a new record. The winning bidder had way more money than common sense.

In tonight’s commercial message. Here are the most important questions I could ask you: Are you living the dream? Do you spend as much time with the people you love as you want to? Are you living in the home of your dreams? Are you living in the spot in the world that you dream of? Do you drive the car of your dreams? Do you have a dream of helping others in some charity that remains unfulfilled? And let’s talk about where we spend a huge chunk of our time…at work. Are you working at the job of your dreams? Are you making the kind of money you always dreamed of earning? Were you able to answer “YES” to any of those questions? Most people I know are not living the dream…whatever that phrase means to THEM. I can’t tell you what YOUR dream is. But if you could not answer “YES”, how are you planning to make your dreams come true? There is a racing analogy that works well here: You must have the right vehicle but you must be the right driver. Think about it. If you have a NASCAR or Formula One car, and you’re the driver, you’ll probably get yourself killed in a race. And if you take the best NASCAR or Formula One driver and put him in a Volkswagen Beetle, he has no chance of winning. To win and make your dreams come true, you must be the right driver in the right vehicle. Here is another important question: How important ARE your dreams to you? Do you have a burning desire to make them come true…or do you just enjoy fantasizing about what it would be like to live the dream? Most of the people I spend time with are in the first category. They are working hard to make their dreams come true. Even if you have the right vehicle and you don’t think you’re the right driver, cheer up!! You can Learn to be a great driver…the driver of your dreams! If you’d like to learn more about making your dreams come true, and whether or not my energy business could be the right vehicle for you, send me an email at russlongcore@gmail.com. We can talk about it possibly designing a plan to make your dreams come true!

Economy I: The advance number of actual initial claims under state programs, unadjusted, totaled 330,475 in the week ending April 28, a decrease of 40,158 from the previous week. Yet, the Labor Department reported 365,000 new jobless claims last week. And here is a new piece of information I have never seen before, Today, the St. Louis Federal Reserve released a Bureau of Labor Statistics chart and report about Americans in the category “Not In The Labor Force.” Their report showed 88,419,000 Americans that have functionally dropped out of the labor force altogether. The chart only records up to 88 million people. Now…do you wonder how the government-released unemployment rate can be between 8-9% when 88 million adults are not employed in America? Folks, there are only about 315 million living people in America, and 25% of them are below age 18. Do the math. That means the REAL unemployment rate is about 25%. This statistic makes the Great Depression of the 1930 look pale by comparison.
Here is the chart.

Sports: Former NFL All-pro linebacker Junior Seau died of a self-inflicted gunshot wound this week. Seau is the eighth player from the 1994 Chargers championship team to die. We will all learn more about Seau’s life as the story unfolds, but there is something real bad about the head trauma that is happening in the league all the time. A lot of old players are ending up with dementia and other ailments from old football injuries. But this is the most violent sport in America. There weren’t too many Roman Gladiators that enjoyed a soft retirement either.

Entertainment: The movie The Avengers opens this weekend, and many are predicting that it will have the biggest box office first weekend in history, even bigger than the biggest Harry Potter opening weekend. Go see Nick Fury and his team of The Hulk, Ironman, Captain America, Thor, Black Widow and Hawkeye whip some bad guy butt. Written and directed by Joss Whedon of Buffy the Vampire Slayer and Firefly.At a theatre near you!

Dump DC: Six Letters That Can Change History.

Copyright 2012: Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


China’s Secret Plan Revealed!

March 19, 2012

by Russell D. Longcore

Porter Stansberry of Stansberry Research has produced a video entitled “China’s Secret Plan to Bankrupt Millions of Americans?” This video runs about 1 hour 20 minutes. I almost never offer links like this here at DumpDC. But I have watched this in its entirety and Stansberry is exactly on target.

This is information you will likely NEVER see in the mainstream media. And what China is doing right now will impact YOUR LIFE if you live more than three more years on this earth. Even if you choose not to watch this video, your life will be changed by China’s strategy. So, why would you choose to remain ignorant of what is going on? Why would you not want to prepare yourself and your family for the future?

Watch this video. The information is free. Preparing for the future won’t be.

China’s Secret Plan


Flash Editorials February 10, 2012

February 10, 2012

By Russell D. Longcore

The Nation: Mitt Romney got his ass handed to him in two caucuses and one primary this week. I realize that no delegates were in play, but what does it say about Romney when he gets beat by Rick Santorum, a wannabe conservative lightweight? Even Ron Paul beat Mitt in Minnesota. Tells me that voters would still like to see someone other than Romney as the candidate. But I still think he’ll win eventually.

The Nation II The Obama Administration has given the Catholic Church the Judas kiss. Catholic bishops signed off with their support of Obamacare a couple years back. Now, the Department of Health and Human Services issued regulations that require all non-church religious institutions (schools, hospitals, etc.) to provide employee health insurance that covers contraception, sterilization and drugs like the “morning after” abortifacient pill. Last time I checked, Catholics teach that using contraception is sin. The tyranny is breath-taking, and is a direct assault on the First Amendment. But the old Constitution has no authority to control the Federal government, so why should anyone be surprised that the Feds ignore it blatantly? The Feds know that America will not rise up, but will bitch a little and then comply.

The Nation III Congress passed The FAA Reauthorization Act which orders the Federal Aviation Administration to develop regulations for the testing and licensing of commercial drones by 2015. Barack Obama is expected to sign the bill. That means privacy and surveillance issues galore. That also means that the heavily armed Predator drones could be flying in American airspace soon. The FAA projects as many as 30,000 drones could be watching America overhead by 2020. America is there no level of tyranny to which you will refuse to stoop?

International: The brain-damaged bullies in the Obama Administration don’t seem to be able to leave anyone alone. It’s not enough to breathe out threats to Iran. Oh, no. Washington has to stick its nose into the Syrian civil war. Now the Barry Bunch are trying to slap penalties and sanctions on the Syrian government in an effort to overthrow the Assad regime. Fortunately, when the Obama Oddfellows tried to push this through the Security Council of the United Nations, China and Russia vetoed it. Perhaps Bashar al-Assad should step down, but it’s none of DC’s business.

Business: One of the reasons folks tune into the Super Bowl is for the clever advertisements. I remember an ad from years back that showed cowboys trying to herd cats. I have no idea what they were trying to sell, so I’m guessing that ad wasn’t very effective. This year’s crop of ads were lackluster at best. I didn’t laugh out loud at one of them. But a 30-second spot cost an advertiser $3.5 million this year. Is it worth it? When your ad reaches over 100 million people at once, it might be. Plus, if your ad is great, you’ll get people around the water cooler repeating your ad for days thereafter. But what counts is whether or not sales increase because of the Super Bowl ad. Who knows?

Shameless Plug: If you have a business, a product or a website, you’re always looking for ways to promote and make new sales. One of the best ways to promote your business for free is to write articles about your products or services. Anybody can write a short article, perhaps 350-400 words. Think about it. You are likely an expert on something. Then go to Super Article Directory and we will publish it! Join over 61,000 other authors who post articles at our Directory. And the best thing is that publishing articles at Super Article Directory is FREE!! Publish your articles with us and watch your traffic increase! Check it out at www.SuperArticleDirectory.com.

Sports: Giants, baby! The best story to come out of the Super Bowl is about Tom Brady’s wife Gisele getting caught telling the truth about Tom’s teammates. She was recorded saying (with expletives): “My husband can’t throw the ball and catch the ball at the same time”…or words to that effect. At least we know that this supermodel was watching the game. Tom’s teammates dropped passes that were right in their hands in the last drive of the game. Gisele said the same thing that most every Patriots fan said, whether at the game or watching somewhere else. So, why is she catching a ration of shyt for it?

Entertainment: Super Bowl’s halftime show provided no entertainment whatsoever. Madonna lip-synced her way through her odd dance routines, and then it was thankfully over. One of her supporting cast members, a no-talent called”MIA,” flipped the world the bird while on camera. It was a cynical and brilliant move to gain attention. The NFL leadership should be ashamed that they insulted their audience with this crap. For Christ’s sake, it’s only a 12-minute gig. Can’t they find a decent act to perform 2-3 songs and behave themselves? Between Janet Jackson and Madonna, you guys in the NFL office suck at choosing talent.

DumpDC. Six Letters That Can Change History.

© Copyright 2012, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Dave Ramsey Hates Gold

September 8, 2011

How Dave Ramsey Made $55 Million by Being Good on Personal Debt, Naive on Business Debt, Lousy on Investing, and a Loudmouth Bully.

by Gary North

I have kept my mouth closed on Dave Ramsey for years, but no longer. I have finally had enough.

In a January 23, 2008 phone call, he excoriated Peter Schiff’s book, Crash Proof, after telling the caller that he had never heard of the book or Schiff.

This was unconscionable. The rule is simple: if you attack a book, read it first.

The caller, a young woman, said that her father was worried about a coming stock market crash. He was buying gold and foreign currencies. Ramsey said this advice was “absolutely ludicrous.”

On that day, the Dow was at 12,270. Gold was at $880.25.

Yesterday, the Dow closed at 11,240. Gold closed $1,884.50.

You tell me: Ramsey or Schiff?

But it gets worse. Ramsey’s off-microphone research man told Ramsey that Peter Schiff is Irwin Schiff’s son. Ramsey then went into a tirade over the father’s tax protest advice. He then said this: “This kid’s dad is a nutburger, which probably means the kid is a nutburger.”

No, it means that Dave Ramsey is a disgrace. He verbally tarred and feathered Peter Schiff for a position Schiff personally opposes: the tax revolt.

The “kid” is three years younger than Ramsey. He runs a business. And, just for the record, he has never declared bankruptcy. Ramsey did — and has become a multimillionaire by parleying that act of contract breaking into an anti-debt career. He is like the reformed alcoholic who says no one should take a drink. For the record, I hope he has long since repaid all of his former creditors with interest. “The wicked borroweth and payeth not again.” (Psalm 37:21a).

On Irwin Schiff, I have been clear: Irwin Shiff. I was clear in the mid-1970s, when Schiff began his crusade against paying income taxes. I published R. J. Rushdoony’s 1975 article, “Jesus and the Tax Revolt,” in the Winter 1975/76 issue of The Journal of Christian Reconstruction, which I edited. The article was a refutation of the tax protesters. This was when Schiff had just begun his crusade. I knew who he was, and I joined with Rushdoony to oppose what he and others like him were doing.

In 1975, Dave Ramsey was 15 years old.

He bullied that young woman. He was contemptuous of her father’s advice. He made it appear as though her father was a gullible victim of a charlatan.

Charlatan is as charlatan does.

The phone call came in January 2008. Remember what happened next — an event that Schiff had called perfectly? There was the worst stock market meltdown in modern times. The entire financial structure was changed. The government nationalized Fannie Mae and Freddy Mac. The Federal Reserve gave secret loans of $1.2 trillion to big banks.

Was the advice that the woman’s father received from Schiff accurate? Yes. Was the advice from Ramsey accurate? No. Yet he came on like a know-it-all expert. He showed her!

Then the stock market showed him: the worst crash since 1932. Unemployment remains above 9%.

In Texas, they would say that Dave Ramsey is all hat and no cattle. They would be wrong. He is all hat and diseased cattle.

He tells people to buy no-load stock mutual funds.

The longer your money stays invested, the more it can grow. Over the last 30 years, the S&P 500, a standard measurement of stock market performance, has averaged a 12% growth rate.

Conclusion:

Put your retirement money in growth stock mutual funds with a track record of at least five years of consistent returns (12% average). Divide your portfolio equally among growth, growth and income, international and aggressive growth funds.

He posted this on March 22, 2010. On that day, the S&P 500 closed at 1166. Ten years earlier — March 22, 2000 — the index was at exactly 1500.

Let’s see: that’s a loss of 22%.

But wait! There’s more!

Using the inflation calculator of the U.S. Bureau of Labor Statistics, we learn that the dollar lost over 21% of its purchasing power, 2000 to 2010:

So, combining these figures, the investor who bought a no-load index fund of the S&P 500 and held it for a decade lost almost 40% of this investment.

Ramsey never discusses the retirement-destroying rate of return that American stocks have produced since early 2000. It has been 11 years of false hopes.

Dave Ramsey is a purveyor of false hope. He never changes. He never learns.

For the record, I warned my Remnant Review subscribers in February 2000 and again in March that the price/earnings ratio was too high, and that a market decline was imminent. It began in mid-March. In terms of purchasing power, it has never recovered.

COGNITIVE DISSONANCE

He offers his desperate listeners the dream of riches. But they must do it Dave’s way. We read on his site:

A research study conducted by Dr. Thomas Stanley and Dr. William Danko revealed this fact in their book, The Millionaire Next Door. The findings by the two researchers support what Dave has said for years: your biggest wealth-building tool is your income. It almost sounds too simple, but it’s absolutely true!

Right now you might be saying to yourself, I work hard and have a steady income. Why am I not a millionaire? The answer might be that you spend more than you make. If that’s true, you’re essentially giving your money to someone else so they can become rich while you live paycheck to paycheck. If you want to be a millionaire, you need to change your lifestyle to mimic most millionaires.

Did you take special notice that most millionaires invest their money? It’s not enough to live below your means and save money; you must invest that money. Dave recommends you invest in mutual funds because they offer several advantages over individual stocks. Here’s a quick breakdown of his suggested investments:

* 25% in a growth mutual fund
* 25% in a growth and income mutual fund
* 25% in an aggressive growth mutual fund
* 25% in an international mutual fund

Ramsey on Investing

What’s wrong with this rosy picture? This: the book describes self-made rich men, and almost all of them made it by starting a business. What’s more, most of them declared bankruptcy once. Some did it repeatedly. They lived in terms of debt. They stiffed their investors, their bankers, and their relatives. Starting a business is risky. They passed to others as much of this risk as they could.

In the book, we learn that 85% of them had started businesses. To start a business, you must adopt one or more of these options to fund it: (1) borrow money from friends and relatives; (2) borrow money from a bank; (3) borrow money from customers (e.g., cash up front for a subscription); (4) put up your own money for a cash-only business (exceedingly rare the first time you start one); sell shares in your firm (even more rare). Once the business is profitable, you borrow money more to grow it. This is “the millionaire mind.” the authors’ title for their other book.

These men invested wisely in a diversified portfolio only after they got rich by using debt.

In short, a bunch of them got rich exactly the way Dave Ramsey did. They borrowed money, declared bankruptcy, started over, and got rich. Most of them are not worth $55 million. According to this site, he is. (If he wants to prove me wrong, he can post his CPA’s signed statement of another figure.)

The words “cognitive dissonance” come to mind. Dave Ramsey lives in terms of these two words. He has gotten rich with them.

He keeps telling listeners to do what has produced major losses for anyone who has done it for the last 11 years. Furthermore, they have lost time. They have less time to get back to what they had before they listened to him, after taxes and inflation take their toll.

He promotes this nonsense in the name of a safe and secure retirement.

He will have a safe and secure retirement. They won’t.

He helps people get out of debt. This is admirable. Then he gives them wrong-headed but conventional advice that loses money. He is like a man who sobers up people by getting them to start smoking two packs of cigarettes a day.

RAMSEY’S WAR ON GOLD

He hates gold. No other word better describes his attitude.

This is from his website, written by some staffer, but clearly endorsed by Ramsey.

From 1833 to 2001, the compound annual growth rate of gold was only 1.54%. That’s pretty rotten. Since September 11, the value of gold has definitely increased. It’s looking better right now. But you can’t deny nearly two centuries of consistently poor performance.

Notice what he has done. He uses the era of America’s gold coin standard, 1833-1933, to show that gold made a poor return. That was the point of the gold standard: stable money, with gold at a fixed price. People owned gold coins, not to get rich, but to keep from getting poor. They bought coins rather than deposit them in a local bank. Gold preserved purchasing power.

Then he included the era of the gold-exchange standard, 1933-71, when the U.S. government sold gold at $35 an ounce to governments and central banks. Again, gold’s price was rigged by the U.S. government: fixed. Of course gold’s did not rise. Only after 1968 did the system of gold price rigging begin to break down. Only those people who thought the U.S. government would cheat the central bank holders of dollars and abandon the gold standard bought legal gold coins. I was one of them, and I made a lot of money on this assumption.

In 1970, gold was at $40 per ounce. You could legally buy British gold sovereigns for $10. I did. I still own them. I have made 45 to one, before taxes. But Ramsey dismisses all this.

In 1970, he was ten years old. In 1970, I had written multiple articles on gold. Here is one of them. But Ramsey is the expert on gold. Just ask him. Or his staffer.

He stopped at 2001 — the bottom for gold at $256. That was the year I begged my subscribers to start buying gold.

This man is either intellectually dishonest or just not too bright. He talks a good line — confident enough to fool the walking wounded.

Gold is the new Snuggie. You buy it off late-night cable and end up looking stupid. Everyone is talking about it, and everyone wants to get involved. But think about it. If you were going to invest in gold at all, would you really want to buy it at its 176-year high? Absolutely not!

So what’s gold good for–other than wearing it around your neck or wrist? Well, if you’re in debt–or if you just need a little extra cash–sell it!

Selling jewelry is a great way to build traction on your starter emergency fund, to knock out debt, and to clean up clutter around your house. If you’ve become gazelle intense, but you’re not quite ready to sell the kids, then peek inside the jewelry box. Do you really need everything in there–the trinkets, bracelets, rings and old watches?

Clever! Sell that jewelry!

When did this appear? On October 13, 2009. On that day (using Kitco’s data), gold was at $1,057.50.

It is up by almost 80%.

Now, Dave isn’t endorsing gold as an investment. He never has, and he never will. Companies like GoldStash.com offer an outlet for you to make some money on your unwanted or unneeded jewelry. Dave will only endorse companies that he trusts, and Gold Stash is reputable, honest and absolutely trustworthy.

It could not be clearer. Dave Ramsey will not endorse owning gold for any reason, ever.

Then there is this nagging question: “Why is GoldStash buying gold?” As a favor? As a charity? Or as a way to buy low and . . . oh, no! . . . sell high? Yes, my friends, GoldStash is buying gold in order to sell it. It is buying from people who do what Dave advises and selling to those who don’t.

Dave Ramsey is the company’s go-between. He is a broker. A middleman. He is getting his followers to turn in their gold. What about the people who buy gold from GoldStash? What does Dave think about them?

1. Nail ‘em, the schmucks! (They didn’t take my advice.)
2. Pretty smart. (They didn’t take my advice.)

Dave Ramsey is not an investment expert. He is an economic fool. Anyone who tells a staffer that he will never recommend an investment, other than for a moral reason, such as pornography or gambling, and then has the staffer post it on his site, is an economic fool. He is saying, “Conditions mean nothing to me. I will not buy gold.” This is not investment advice. This is a religion — an anti-gold, pro-fiat money religion. This is what Isaiah preached against (Isaiah 1:22).

We know what Ramsey thinks of Isaiah. “Nutburger.”

If you want to know why Ramsey does not know what he is talking about on the gold issue, read my report: The Gold Wars.

Gold Wars

SELLING ADVICE TO TRAPPED, DESPERATE PEOPLE

The reason I set up my free site on getting out of debt, DeliveranceFromDebt.com, was simple. I did not want to go to my grave knowing that I did nothing to help desperate people get out of debt. But I decided not to sell them advice in their hour of need, the way Ramsey does.

I did not want to refer people to Dave Ramsey, who gives such terrible investment advice, year after year.

My site is free. He sells his information on getting out of debt.

We have different philosophies on what to charge, whom to charge, and when not to charge.

I do not charge desperate people for my advice. He does.

I do not call a man a nutburger in public, merely because his father was given a prison sentence. There is a biblical principle of ethics here:

The fathers shall not be put to death for the children, neither shall the children be put to death for the fathers: every man shall be put to death for his own sin. (Deuteronomy 24:16)

That ethical principle did not restrain Ramsey, who was not about to pass up a chance to vilify an investment adviser who recommends gold. The man is ethically untrustworthy.

He presents himself as a debt-free Christian, and recommends that we all be just like him. That, too, irks me. Why? Because he has only one claim to fame. Dave Ramsey stiffed his creditors legally, got back on his feet, and is now making a financial killing by selling rotten investment advice to poor people who do not know enough about investing to recognize that he has been faking his non-existent financial expertise for a decade.

Dave Ramsey is not to be trusted.

Pass it on.

[Note: If you lose track of this article and wish to find it on the Web, search for "Dave Ramsey," "$55 million," and "nutburger."]

© 2005-2011 GaryNorth.Com, Inc. All Rights Reserved.


Human Freedom Rests on Gold Redeemable Money

May 20, 2011

by Hon. Howard Buffett
U.S. Congressman from Nebraska
The Commercial and Financial Chronicle 5/6/48

(Editor’s Note: Remember that this was written in 1948. Gold and silver coins ARE money. Paper script is currency. There is a big and significant difference. The reason that the US Constitution authorized Congress to “coin money,” not “print money,” is for this very reason. Further, the clause in Article I, Section 8 clearly identifies coinage as an issue of weights and measures, just like fixing the pound to 16 ounces or the yard to 36 inches. The ONLY way a US state can successfully secede is to establish real money of gold and silver coins, or electronic money based upon WEIGHT of precious metals. I even contend that a state could secede without a militia if it got the money issue done right.)

Is there a connection between Human Freedom and A Gold Redeemable Money? At first glance it would seem that money belongs to the world of economics and human freedom to the political sphere.

But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.

Also, when you find that Lenin declared and demonstrated that a sure way to overturn the existing social order and bring about communism was by printing press paper money, then again you are impressed with the possibility of a relationship between a gold-backed money and human freedom.

In that case then certainly you and I as Americans should know the connection. We must find it even if money is a difficult and tricky subject. I suppose that if most people were asked for their views on money the almost universal answer would be that they didn’t have enough of it.

In a free country the monetary unit rests upon a fixed foundation of gold or gold and silver independent of the ruling politicians. Our dollar was that kind of money before 1933. Under that system paper currency is redeemable for a certain weight of gold, at the free option and choice of the holder of paper money.

Redemption Right Insures Stability

That redemption right gives money a large degree of stability. The owner of such gold redeemable currency has economic independence. He can move around either within or without his country because his money holdings have accepted value anywhere.

For example, I hold here what is called a $20 gold piece. Before 1933, if you possessed paper money you could exchange it at your option for gold coin. This gold coin had a recognizable and definite value all over the world. It does so today. In most countries of the world this gold piece, if you have enough of them, will give you much independence. But today the ownership of such gold pieces as money in this country, Russia, and all divers other places is outlawed.

The subject of a Hitler or a Stalin is a serf by the mere fact that his money can be called in and depreciated at the whim of his rulers. That actually happened in Russia a few months ago, when the Russian people, holding cash, had to turn it in – 10 old rubles and receive back one new ruble.

I hold here a small packet of this second kind of money – printing press paper money – technically known as fiat money because its value is arbitrarily fixed by rulers or statute. The amount of this money in numerals is very large. This little packet amounts to CNC $680,000. It cost me $5 at regular exchange rates. I understand I got clipped on the deal. I could have gotten $2½ million if I had purchased in the black market. But you can readily see that this Chinese money, which is a fine grade of paper money, gives the individual who owns it no independence, because it has no redemptive value.

Under such conditions the individual citizen is deprived of freedom of movement. He is prevented from laying away purchasing power for the future. He becomes dependent upon the goodwill of the politicians for his daily bread. Unless he lives on land that will sustain him, freedom for him does not exist.

You have heard a lot of oratory on inflation from politicians in both parties. Actually that oratory and the inflation maneuvering around here are mostly sly efforts designed to lay the blame on the other party’s doorstep. All our politicians regularly announce their intention to stop inflation. I believe I can show that until they move to restore your right to own gold that talk is hogwash.

Paper Systems End in Collapse

But first let me clear away a bit of underbrush. I will not take time to review the history of paper money experiments. So far as I can discover, paper money systems have always wound up with collapse and economic chaos.

Here somebody might like to interrupt and ask if we are not now on the gold standard. That is true, internationally, but not domestically. Even though there is a lot of gold buried down at Fort Knox, that gold is not subject to demand by American citizens. It could all be shipped out of this country without the people having any chance to prevent it. That is not probable in the near future, for a small trickle of gold is still coming in. But it can happen in the future. This gold is temporarily and theoretically partial security for our paper currency. But in reality it is not.

Also, currently, we are enjoying a large surplus in tax revenues, but this happy condition is only a phenomenon of postwar inflation and our global WPA. It cannot be relied upon as an accurate gauge of our financial condition. So we should disregard the current flush treasury in considering this problem.

From 1930-1946 your government went into the red every year and the debt steadily mounted. Various plans have been proposed to reverse this spiral of debt. One is that a fixed amount of tax revenue each year would go for debt reduction. Another is that Congress be prohibited by statute from appropriating more than anticipated revenues in peacetime. Still another is that 10% of the taxes be set aside each year for debt reduction.

All of these proposals look good. But they are unrealistic under our paper money system. They will not stand against postwar spending pressures. The accuracy of this conclusion has already been demonstrated.

The Budget and Paper Money

Under the streamlining Act passed by Congress in 1946, the Senate and the House were required to fix a maximum budget each year. In 1947 the Senate and the House could not reach an agreement on this maximum budget so that the law was ignored.

On March 4 this year the House and Senate agreed on a budget of $37½ billion. Appropriations already passed or on the docket will most certainly take expenditures past the $40 billion mark. The statute providing for a maximum budget has fallen by the wayside even in the first two years it has been operating and in a period of prosperity.

There is only one way that these spending pressures can be halted, and that is to restore the final decision on public spending to the producers of the nation. The producers of wealth – taxpayers – must regain their right to obtain gold in exchange for the fruits of their labor. This restoration would give the people the final say-so on governmental spending, and would enable wealth producers to control the issuance of paper money and bonds.

I do not ask you to accept this contention outright. But if you look at the political facts of life, I think you will agree that this action is the only genuine cure.

There is a parallel between business and politics which quickly illustrates the weakness in political control of money.

Each of you is in business to make profits. If your firm does not make profits, it goes out of business. If I were to bring a product to you and say, this item is splendid for your customers, but you would have to sell it without profit, or even at a loss that would put you out of business. – well, I would get thrown out of your office, perhaps politely, but certainly quickly. Your business must have profits.

In politics votes have a similar vital importance to an elected official. That situation is not ideal, but it exists, probably because generally no one gives up power willingly.

Perhaps you are right now saying to yourself: “That’s just What I have always thought. The politicians are thinking of votes when they ought to think about the future of the country. What we need is a Congress with some ‘guts.’ If we elected a Congress with intestinal fortitude, it would stop the spending all right!”

I went to Washington with exactly that hope and belief. But I have had to discard it as unrealistic. Why?

Because an economy Congressman under our printingpress money system is in the position of a fireman running into a burning building with a hose that is not connected with the water plug. His courage may be commendable, but he is not hooked up right at the other end of the line. So it is now with a Congressman working for economy. There is no sustained hookup with the taxpayers to give him strength.

When the people’s right to restrain public spending by demanding gold coin was taken from them, the automatic flow of strength from the grass-roots to enforce economy in Washington was disconnected. I’ll come back to this later.

In January you heard the President’s message to Congress. or at least you heard about it. It made Harry Hopkins, in memory, look like Old Scrooge himself. Truman’s State of the Union message was “pie-in-thesky” for everybody except business. These promises were to be expected under our paper currency system. Why? Because his continuance in office depends upon pleasing a majority of the pressure groups.

Before you judge him too harshly for that performance, let us speculate on his thinking. Certainly he can persuade himself that the Republicans would do the same thing if they were In power. Already he has characterized our talk of economy as “just conversation.” To date we have been proving him right. Neither the President nor the Republican Congress is under real compulsion to cut Federal spending. And so neither one does so, and the people are largely helpless.

But it was not always this way.

Before 1933 the people themselves had an effective way to demand economy. Before 1933, whenever the people became disturbed over Federal spending, they could go to the banks, redeem their paper currency in gold, and wait for common sense to return to Washington.

Raids on Treasury

That happened on various occasions and conditions sometimes became strained, but nothing occurred like the ultimate consequences of paper money inflation. Today Congress is constantly besieged by minority groups seeking benefits from the public treasury. Often these groups. control enough votes in many Congressional districts to change the outcome of elections. And so Congressmen find it difficult to persuade themselves not to give in to pressure groups. With no bad immediate consequence it becomes expedient to accede to a spending demand. The Treasury is seemingly inexhaustible. Besides the unorganized taxpayers back home may not notice this particular expenditure – and so it goes.

Let’s take a quick look at just the payroll pressure elements. On June 30, 1932, there were 2,196,151 people receiving regular monthly checks from the Federal Treasury. On June 30, 1947, this number had risen to the fantastic total of 14,416,393 persons. This 14½ million figure does not include about 2 million receiving either unemployment benefits of soil conservation checks. However, It includes about 2 million GI’s getting schooling or on-the-job-training. Excluding them, the total is about l2½ million or 500% more than in 1932. If each beneficiary accounted for four votes (and only half exhibited this payroll allegiance response) this group would account for 25 million votes, almost by itself enough votes to win any national election.

Besides these direct payroll voters, there are a large number of State, county and local employees whose compensation in part comes from Federal subsidies and grants-in-aid.

Then there are many other kinds of pressure groups. There are businesses that are being enriched by national defense spending and foreign handouts. These firms, because of the money they can spend on propaganda, may be the most dangerous of all.

If the Marshall Plan meant $100 million worth of profitable business for your firm, wouldn’t you Invest a few thousands or so to successfully propagandize for the Marshall Plan? And if you were a foreign government, getting billions, perhaps you could persuade your prospective suppliers here to lend a hand in putting that deal through Congress.

The Taxpayer the Forgotten Man

Far away from Congress is the real forgotten man, the taxpayer who foots the bill. He is in a different spot from the tax-eater or the business that makes millions from spending schemes. He cannot afford to spend his time trying to oppose Federal expenditures. He has to earn his own living and carry the burden of taxes as well.

But for most beneficiaries a Federal paycheck soon becomes vital in his life. He usually will spend his full energies if necessary to hang onto this income. The taxpayer is completely outmatched in such an unequal contest. Always heretofore he possessed an equalizer. If government finances weren’t run according to his idea of soundness he had an individual right to protect himself by obtaining gold.

With a restoration of the gold standard, Congress would have to again resist handouts. That would work this way. If Congress seemed receptive to reckless spending schemes, depositors’ demands over the country for gold would soon become serious. That alarm in turn would quickly be reflected in the halls of Congress. The legislators would learn from the banks back home and from the Treasury officials that confidence in the Treasury was endangered.

Congress would be forced to confront spending demands with firmness. The gold standard acted as a silent watchdog to prevent unlimited public spending. I have only briefly outlined the inability of Congress to resist spending pressures during periods of prosperity. What Congress would do when a depression comes is a question I leave to your imagination.

I have not time to portray the end of the road of all paper money experiments.

It is worse than just the high prices that you have heard about. Monetary chaos was followed in Germany by a Hitler; in Russia by all-out Bolshevism; and in other nations by more or less tyranny. It can take a nation to communism without external influences. Suppose the frugal savings of the humble people of America continue to deteriorate in the next 10 years as they have in the past 10 years? Some day the people will almost certainly flock to “a man on horseback” who says he will stop inflation by price-fixing, wage-fixing, and rationing. When currency loses its exchange value the processes of production and distribution are demoralized.

For example, we still have rent-fixing and rental housing remains a desperate situation.

For a long time shrewd people have been quietly hoarding tangibles in one way or another. Eventually, this individual movement into tangibles will become a general stampede unless corrective action comes soon.

Is Time Propitious?

Most opponents of free coinage of gold admit that that restoration is essential, but claim the time is not propitious. Some argue that there would be a scramble for gold and our enormous gold reserves would soon be exhausted.

Actually this argument simply points up the case. If there is so little confidence in our currency that restoration of gold coin would cause our gold stocks to disappear, then we must act promptly.

The danger was recently highlighted by Mr. Allan Sproul, President of the Federal Reserve Bank of New York, who said:

“Without our support (the Federal Reserve System), under present conditions, almost any sale of government bonds, undertaken for whatever purpose, laudable or otherwise, would be likely to find an almost bottomless market on the first day support was withdrawn.”

Our finances will never be brought into order until Congress is compelled to do so. Making our money redeemable in gold will create this compulsion. The paper money disease has been a pleasant habit thus far and will not he dropped voluntarily any more than a dope user will without a struggle give up narcotics. But in each case the end of the road is not a desirable prospect.

I can find no evidence to support a hope that our fiat paper money venture will fare better ultimately than such experiments in other lands. Because of our economic strength the paper money disease here may take many years to run its course.

But we can be approaching the critical stage. When that day arrives, our political rulers will probably find that foreign war and ruthless regimentation is the cunning alternative to domestic strife. That was the way out for the paper-money economy of Hitler and others. In these remarks I have only touched the high points of this problem. I hope that I have given you enough information to challenge you to make a serious study of it.

I warn you that politicians of both parties will oppose the restoration of gold, although they may outwardly seemingly favor it. Als o those elements here and abroad who are getting rich from the continued American inflation will oppose a return to sound money. You must be prepared to meet their opposition intelligently and vigorously. They have had 15 years of unbroken victory.

But, unless you are willing to surrender your children and your country to galloping inflation, war and slavery, then this cause demands your support. For if human liberty is to survive in America, we must win the battle to restore honest money.

There is no more important challenge facing us than this issue – the restoration of your freedom to secure gold in exchange for the fruits of your labors.

Howard Buffett was an Old Right libertarian congressman and businessman from Omaha, Nebraska. One of his aides was Murray Rothbard. His son is the oligarch Warren Buffett

Copyright © 1948 The Commercial and Financial Chronicle


Time to Get Rich

May 19, 2011

by Gary North

(Editor’s Note: TIME is the only aspect of humanity in which there will ever be equality. Each of us gets 24-hour days, 365-day years. You can waste time and waste money. If you waste money, you can always get more. But you cannot get more time.)

“If I had just known at age 18 what I know today!” That lament is among the most universal among people aged 50 or older. Is there any society in which itr cannot be heard?

I was reminded of this when I watched a video of half a dozen of coach John Wooden’s most talented basketball players. It was produced in 2010, just after his death at age 99. He had retired 35 years earlier, yet he was still remembered and admired.

The story was basically the same for each of those now middle aged – or older – men. Wooden had been a great teacher, not just a coach. They all said how much sense his principles of living had meant to them two or more decades later. But all of them said that they had not paid much attention at the time. I had heard the same thing before he died from other former players.

Here was a legendary coach who taught some of the finest athletes in America. He was a very smart man, and more to the point, a very wise man. His chart of the pyramid of success has been seen by millions of people. Yet he was unable to get the basics of his outlook across to young men who had come from all over the nation to play for him. (Oddly, the group in the video had all come from southern California.) You can see it here.

What does this tell us? That youth is wasted on the young – a lament of oldsters throughout history and across many borders.

It is not a matter of brains. It is a matter of character. From time to time, we do hear of young men who seem to understand as teenagers how little time men have, and how large the payoff is for hard work, high thrift, and dedication to the mastery of some field. These are the super-performers discussed in books like Malcolm Gladwell’s Outliers. They invest their crucial 10,000 hours before they reach age 21.

But it is not just character. It is something else. It is their understanding of time. They recognize that effort and assets invested early in life have a compounding effect. This makes an enormous difference at age 40 or 50, if a person finds the right niche in which to invest his time.

To do this, a young person needs future-orientation. This is exceedingly rare among the young. As Ben Franklin put it in 1750, “A child thinks that twenty pounds and twenty years can never be spent.” A few musical artists figure it out early, or at least consent to their parents’ demands while they are still forming their habits in life. But few understand it with respect to money.

GET RICH SLOWLY

You have heard the phrase, “Get rich slowly.” That is good advice. It applies to societies as well as individuals.

Why should getting rich take so long? Because it takes a long time to accumulate capital: the tools of production.

Economists have understood this for over a century. But, sadly, most people are into middle age before they figure out that it takes time to accumulate sufficient capital to provide for a comfortable retirement. When we are young, we rarely understand how much we must save, and how long we must save, to accumulate capital.

In Chapter XVIII of his magnum opus, Human Action (1949), Ludwig von Mises presented the case for the importance of time perspective as a source of thrift, capital formation, and wealth. He called this outlook “time-preference.” Some people are present-oriented. They want satisfaction now. They will not lend money at low rates of interest. They borrow at high rates. Others are future-oriented. They save at low rates of interest. They refuse to pay high rates of interest when borrowing.

He made a profound observation on why we are rich compared to earlier generations.

Our activities are designed for a longer period of provision because we are the lucky heirs of a past which has lengthened, step by step, the period of provision and has bequeathed to us the means to expand the waiting period.

Mises recognized that modern man is the heir of generations of capital formation and thrift.

We are in a position to rely upon a continuing influx of consumers’ goods and have at our disposal not only stocks of goods ready for consumption but also stocks of producers’ goods out of which our continuous efforts again and again make new consumers’ goods mature.

Today, we possess far more capital goods than society did in 1949. Around the world, the message is taking root. The free market social order provides incentive for people to innovate. Innovation requires capital. This requires thrift. Thrift is the result of future-orientation.

A generation ago, Harvard University’s political scientist, Edward Banfield, suggested that time perspective, not wealth, is the correct basis of class. Lower class people are present-oriented. Upper-class people are future-oriented. He wrote this in the late 1960s, at the height of the counter culture. Chapter 3 of his book, The Unheavenly City, made this explicit. Radical students complained so much that he left in 1972 for four years, In 1976, he returned to Harvard from the University of Pennsylvania. He told Robert Nisbet that the students at Penn were just as hostile as the students at Harvard. Nisbet passed this tidbit along to me years later.

TIME PREFERENCE AND SUCCESS

Professor Philip Zimbardo has studied the long-term effects of time perspective in children. Beginning with studies begun over two decades ago by a colleague, Zimbardo has tracked the lives of an early group of children. He has concluded that a child’s future-orientation – the psychological ability to defer gratification – is a major indicator of future success in a child’s life. He has produced two videos on this.

The person who is willing to defer present consumption for the sake of future income is in a strong position in society. He has the internal make-up necessary for building capital in the broadest sense.

A person who is ready to consume all of his income now, and even borrow to consume more, is not going to accumulate capital. He will not have the tools, including education and skills, to maximize his contribution to a paying society.

By neglecting the investment required to increase a person’s productivity, the present-oriented person finds that he has gotten what he wanted: high consumption at the expense of future income. In contrast, the future-oriented person gets what he always preferred: lower consumption for the sake of future income.

The great benefit of the free market is that it allows people to buy what they want if they are willing to pay the price. The present-oriented person says” Buy now, pay later.” The future-oriented person thinks, “Save now, buy later.”

In school, we are taught many skills. But what is rarely taught is goal-setting and time management. Perhaps this would be wasted. But if I were to design a curriculum – and I am doing this – I would emphasize goal-setting and time management as soon as a child is capable of adopting a self-taught curriculum. This is probably around age 8. The only one I know like this is Dr. Arthur Robinson’s, which at $200, grades K-12, is a bargain.

By the time a student is a teenager, he or she should understand the basics of lifetime success. Coach Wooden looked for quickness above all other categories. That one is too limiting. Here are the ones I would look for, in this order.

PREDICTABLE PERFORMANCE

“A man’s word is his bond.” That is an ancient principle. It should be basic to any person old enough to make a binding promise.

In a free society, the division of labor is crucial. People must learn to delegate. They cannot do everything by themselves. But decentralization is risky. The person who promises to perform a service may not deliver.

I have said that there are three principles of success.

1. Do what you say you will do.
2. Do it at the price agreed on.
3. Do it on time.

These may sound trivial. They are difficult to achieve for the vast majority of people. Perhaps I should add a fourth.

4. Do it without being reminded or monitored.

At this point, the character set is difficult to find, especially in employees under age 30.

Any teenager who is governed by habit to meet the three requirements of performance has an enormous advantage over his peers. It will be difficult for them to compete with him.

FIRE IN THE BELLY

There are good employees who meet the criteria of predictable performance. But they will remain employees if they do not have fire in the belly.

Some people call this character trait an obsession. It probably is. Others call it ambition. It often is. Still others call it visionary. It always is.

The person with no fire in his belly is unlikely to take the risks that mastery require. Mastery is a high-risk endeavor. It is more than routine maintenance. It is a matter of putting your reputation on the line in something like full public view.

Rockefeller and Carnegie had fire in the belly. They helped to create a new, far richer world. Both of them switched to charitable giving when they got old. Their money bankrolled some of the most insidious projects of the so-called New World Order. They were better at piling up wealth than giving it away. They had no skills at giving it away. They would have done more good for mankind in their lifetimes if they had stuck to their knitting. But super-rich men cannot escape their responsibility for managing great wealth in this way. Their piled-up capital will be inherited. By whom?

Consider Howard Hughes. Leonardo DiCaprio got it right in The Aviator. Hughes was unbalanced from the beginning. He was brilliant. He was creative. He was also rich at a young age, because of his father’s invention of a unique oil-drilling bit. He more than outperformed his father. Yet he was unbalanced to the degree that he became unhinged. He had too much of a good thing. But no one ever called him poor.

Bill Gates had fire in the belly at a young age. He made a lot of money. Then he married an eminently sensible woman. She was able to give him a new vision of service other than designing and marketing digits.

I think a person must have this fire in the belly: his calling. I define calling as the most important thing you can do in which you would be most difficult to replace. This may be a person’s occupation, but only rarely. It was an aspect of John Wooden’s job, but it reached far deeper than his job. After he retired, his calling remained. His influence grew greater over the years as a result of the foundation of his life, which was also the foundation of his occupational success.

After Wooden’s death, Kareem Abdul-Jabbar commented on this aspect of Wooden’s coaching. When Kareem/Alcindor went to UCLA in the fall of 1965, Wooden’s office was a Quonset hut. This was after two NCAA championship seasons.

Fire in the belly keeps a person from getting sidetracked. He may go over a cliff. Surely Hughes did. But it keeps him moving forward.

Ludwig von Mises had this characteristic. Nothing could stop him. He was still teaching and writing at age 85. So was his disciple, F. A. Hayek. Hayek’s book, The Fatal Conceit, is a masterpiece. It can easily serve as the tombstone of the idea of socialism. Hayek finished it at age 86. I visited him in the Austrian Alps in 1985. He handed me a chapter, which I had photocopied by the hotel. He could not be stopped.

ATTENTION TO DETAIL

Hughes had this, obviously. Had he not had it, he would have died in a plane crash. Others have it. They present their work to the public without loose ends. They may revise later on – hooray for eBooks – but they bring a ready-for-prime-time product to the public the first time.

The devil is in the details. So are the failures. This is where a producer pays attention to the customer. He makes sure that the product works as promised, at a price promised, delivered on time. Again, if it is released as a beta-version, fine. The customer knows. But it is best to release it free of charge.

This is a matter of going the extra mile.

CONCLUSION

Success comes at a price. The earlier someone begins paying it, the more success he should expect. The compounding process is a power for personal and economic change.

This outlook requires faith in the future. But it requires more than faith. It has to be accompanied by future orientation. A person needs to discount the future by a low interest rate in order to maintain a high present value of his forfeited income.

The time to get rich is in your teens. The longer you wait to begin the process, the higher the rate of return that you must achieve.

I wish I had more teenage readers. But, then again, Coach Wooden had his share. It took time for what he told them to register.

Gary North is the author of Mises on Money. Visit www.garynorth.com

Copyright © 2011 Gary North


How The US Government Will Seize Your Retirement Account

May 15, 2011

by Simon Black in Santiago, Chile

SovereignMan.com

(Editor’s Note: Of course, if you were in a state that seceded from the Union, and you moved your retirement account to a financial institution in that new nation, your retirement account would be safe. I’m just sayin…)

Following in the footsteps of a rather ignominious list of nations like Argentina and Hungary, the government of lreland is set to take its ‘fair share’ of private retirement funds.

Drowning in debt and faced with unpopular, unrealistic, ridiculously unpopular austerity measures, the government has announced that it will now tax private pension savings in order to raise 470 million euros (roughly $675 million) per year… a lot of money in a country of only 4.4 million people.

Somehow, the government expects to be able to create 100,000 jobs to bring down an unemployment rate at 14.7%. Perhaps they plan on hiring 100,000 new workers to go around the country and collect the tax.

It reminds me of what I saw in Bolivia a couple of weeks ago– there’s a tax or toll or fee for nearly everything you do. Driving on the highway (if you can call it that) outside of Santa Cruz, you pay a toll… obviously not for the maintenance of the road, but to pay the salary of the toll collector.

At the airport, you have to pay an airport tax before departure… obviously not for the upkeep and efficiency of the airport (it took 2-hours to make it to my gate), but to pay the salaries of the guys who collect the airport tax.

This is what politicians consider ‘job creation,’ yet these positions only serve to destroy value. That they would stick up the retirement funds of hard working people is even more immoral.

Here’s the best part, though. If you are a government worker in Ireland, your pension is exempt. They’re only going after people in the private work force. It’s truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees.

Coincidentally, there are a few other loopholes as well, particularly for non-residents and non-resident funds. Apparently those Irish who saw the writing on the wall and got busy moving themselves and their assets offshore will get to keep all of their savings.

Ireland is not the first country to call this play, nor will it be the last. Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash.

Think it can’t happen where you live? Think again. Late last year, the French government went through an elaborate process to change its pension laws, ‘legally’ allowing politicians to steal retirement funds from the public in order to pay off other debts.

In the US, public pensions have been raided for years, Congress routinely ‘borrows’ from Social Security to make up budget shortfalls. This is what talking heads mean when they play down concerns of a $14 trillion debt “because we owe it to ourselves–” $4.6 trillion of the debt is owed to intragovernmental agencies like Social Security.

Chances of this money being repaid to Social Security in full? Slim. The trend is more debt, not paying off existing debt. In fact, I’m convinced that politicians have their eyes firmly fixed on the trillions of dollars in private, individual retirement accounts (IRAs) in the United States to fund new spending.

Here’s how it will go down:

First, there will be some event… some sort of financial cataclysm, similar to the market meltdown we saw in 2008 after Lehman.

Bear in mind that most IRAs are managed by boneheads at big financial institutions; they get compensated not based on the performance of their portfolio, but on the total amount of assets under management. Your interests and their interests do not align.

As such, most IRAs are callously tossed into S&P index funds or some such generic vehicle, citing the safety of broader market diversification, as if that nonsense they teach in MBA finance classes is how the real world actually works.

When a big crash occurs, these unhedged broad market positions get hammered the most. Don’t worry though, your fund manager will still get a big fat bonus check, because his performance is irrelevant.

This is when Congress will step in. Citing its desire to ‘protect’ the American people from future market shocks, the politicians will mandate that a portion of all managed retirement funds be invested in the ‘safety and security’ of US Treasury bonds. And, just to be on the safe side, let’s park them in 30-year bonds that yield 4.35%.

Sound fair? Well who asked you anyways… just be a good citizen and turn over your money already. The important part is that the big financial institutions still get their big fat fees, and the government gets its hands on the mother lode.

This is how US taxpayers will end up being forced to loan their hard earned retirement savings to the government at rates far below any expected inflation.

Right now, there is a window of opportunity to take action; US taxpayers with retirement accounts can set up a special kind of IRA structure that allows you to take control of your retirement savings, and even ship it offshore if you want to, completely legitimately.

After taking control of your IRA, you can do any number of things– buy and store gold and silver coins overseas; hold foreign currencies in an offshore bank account; buy securities on international stock exchanges; purchase agricultural property overseas, or even a beautiful apartment on the beach in some sunny country.

The possibilities are incredible… but the most important thing is that you get this retirement money off the radar of the politicians before they pull an Ireland and announce some new measure, virtually overnight. These things can happen very, very quickly.

I’ve talked about this before a number of times, and every time I read the news of yet another country taking this approach, it serves as a reminder to take action.

If what I’m saying makes sense to you, my recommendation is to check out Terry Coxon’s book on this subject, Unleash your IRA. As one of the world’s foremost experts on this strategy, Terry walks you through the process of protecting your retirement savings quickly and legitimately. You can read more about it here.

Copyright 2011 International Man


Fractional Reserve Banking: The Biggest Bubble Of All Time

April 24, 2011

When this bubble pops, all economies will end

by Russell D.Longcore

Every day we hear talking heads talk about, or we read about, the various “bubbles” occurring in the world.

Here in America, we’ve had the Savings and Loan bubble of the 80s, the Internet “Dot-Com” bubble of the 90s, the real estate/mortgage bubble of the last decade, and now the credit/debt bubble. But there is a worldwide Super Monster Bubble that is the cause of all of the rest of the bubbles that have occurred for the last 100 years.

That bubble is the fiat “money” that is created by Fractional Reserve Banking.

Fractional Reserve Banking (FRB) is the legal system of counterfeiting that all banks worldwide utilize. In a world where 100% reserve banking was practiced, there would be no credit/debt bubble. There would also be no inflation. Here is the definition of FRB from Wikipedia:

Fractional-reserve banking is the banking practice in which only a fraction of a bank’s deposits are kept as reserves (cash and other highly liquid assets) available for withdrawal. The bank lends out some or most of the deposited funds, while still allowing all deposits to be withdrawn upon demand. Fractional reserve banking is practiced by all modern commercial banks.

When cash is deposited with a bank, only a fraction is retained as reserves and the remainder can be loaned out (or spent by the bank to buy securities). The money lent or spent in this way is subsequently deposited with another bank, creating new deposits and enabling new lending. The lending, re-depositing and re-lending of funds expands the money supply (cash and demand deposits) of a country. Due to the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country’s central bank. This multiple (called the money multiplier) is limited by the reserve requirement or other financial ratio requirements imposed by financial regulators.

Central banks usually require commercial banks to keep a minimum fraction of their customers on demand deposits as reserves. These reserve requirements help limit the amount of money creation that occurs in the commercial banking system, and help to ensure that banks are able to provide enough ready cash to meet normal demand for withdrawals. Problems can arise, however, when depositors seek withdrawal of a large proportion of deposits at the same time; this can cause a bank run or, when problems are extreme and widespread, a systemic crisis. To mitigate these problems, central banks (or other government institutions) generally regulate and oversee commercial banks, act as lender of last resort to commercial banks, and also insure the deposits of the commercial banks’ customers.

Do you see the con job? The central bank, in conjunction with the private banks, conspires to create giant amounts of “fiat money”…currency with no assets that back them. They keep depositing currency in each other’s banks over and over, and each time it creates new money from thin air.

Fiat money completely distorts the economic system, no matter what economic system is in place. Instead of the money supply having a concrete value, its value floats from day to day. That is another way to describe inflation. The value of the money becomes whatever any two entities agree on at any given moment in time.

Inflation is the method that governments and their central banks use to steal property from the populace. And I don’t mean they steal land or assets. They steal the value of our money, which is a component of our property rights as free men.

Here is the way an honest bank is formed, and how an honest bank does business when the money is either precious metals coins, or is an electronic currency backed by coins or another hard asset:

The investors/owners form a legal entity called a bank. The investors/owners put their own money into the new bank as their investment in the enterprise. That provides the new bank with capital. The capital allows the bank to fund operations, and a portion of the capital can be loaned to credit-worthy customers. When the bank loans its own capital to customers, it earns interest, and hopefully makes a profit. Those profits can be accumulated, invested in other non-loan assets (securities, land, etc.) or can be loaned out again.

But the bank can also act as a depository. Customers may place their money on deposit in savings or checking. The bank may charge a fee for this service, which would be customary.

The bank would be required to maintain 100% reserves, meaning that any money under management by the bank (checking or non-interest savings) would have to be kept at the bank and always 100% available for withdrawal. Money borrowed from depositors (interest-bearing savings, Certificates of Deposit, etc.) would not be subject to the reserves requirement, since the bank and depositor have a side contract. Money in safe deposit is not considered under management, since the bank is basically renting storage space in a secure vault for a fee.

A savings account passbook is equal to a receipt for money stored at the bank. Money simply stored would not earn interest, but would be much like money stored in a safe deposit box. But the depositor could enter into contract with the bank to make the deposits into an interest-earning account. In this account, the depositor in essence loans the bank his money for a period of time and earns interest. During that period of time, the bank may use that money to loan to others at a higher interest rate, thereby earning income for the bank. The bank could only loan out the depositor’s money for an amount of time less than the period of deposit. For example, if the depositor made a deposit for 90 days, the bank could only loan out the money for a period of time less than that length of deposit. If the term of the loan went beyond 90 days, the bank would have committed fraud, since they have a legal bailee duty to return the deposit to the depositor at the end of the 90 days.

A checking account allows a depositor to write paper IOUs…checks… against his account for any amount up to and including the account balance. The bearer of the the check may present the check at the bank and receive the amount of the check in hard money or electronic money. Banks customarily charge a fee to the depositor to manage a checking account, which is in essence a bookkeeping fee. If the depositor writes checks in excess of his account balance, he has committed fraud against the bearer.

A bank could issue paper currency of its own, kind of like a checking account IOU note, and based upon the bank’s assets. These are called “bank notes.” But at a 100% reserve requirement, it could only issue bank notes equal to the amount of its own hard assets, not including the deposits of its customers. Issuing bank notes in excess of its assets would constitute fraud and debasement of money.

If you look at the top of a piece of Federal Reserve currency, it will say “Federal Reserve Note.” The earliest Federal Reserve notes, like the Silver Certificate, actually could be redeemed for the underlying silver coins. But a Federal Reserve note is no longer a promissory note, since the only thing you would receive if you presented the note at a Federal Reserve bank would be more Federal Reserve notes. Just because today’s currency is called a note doesn’t make it so.

Banks may perform other services for customers for a fee, or a bank could decide to perform certain services for free. That pretty much sums up what a bank may do without committing fraud.

After reading this article sofar, you may have surmised that if the banking systems of the world operated in a legal manner, worldwide levels of credit would be only a very tiny percentage of how much credit and debt exists in today’s world. And you would be correct. The world banks have been throwing gasoline on the world’s economic fire for a century by creating fiat money. The economic activity worldwide has been wildly distorted by easy credit and massive debt. But easy credit and massive debt is what happens when money created from thin air is infused into the world economic system.

So, the governments of the entire world have conspired to defraud the entire population of the planet, and steal the value of their money by issuing fiat currencies. A state of bankruptcy exists when one’s liabilities exceed one’s assets, and one has no way to pay off the liabilities. The governments and banking systems of the entire planet are fundamentally bankrupt, sustained only by the power to create money out of thin air.

The thin air of worldwide monetary policy, its fractional reserve banking and fiat currencies, is what has inflated the Super Monster Bubble to its bursting point. Soon the bubble will burst, and all of the world’s economic systems will melt down simultaneously.

Around the globe, two groups will emerge. The first group contains the worldwide governments and their central banks who will simply invent another fiat system and fractional banking system, and try to convince the world that this new system will work.

The second group will be those that insist on hard money and honest banking. These people will be found in isolated geographic areas, like small nations…perhaps nations fresh from secession from the United States of America. They will have learned their lessons when the economic meltdown occurs and will return to those thrilling days of yesteryear when hard money meant true prosperity and inflation was what you did to a balloon.

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


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