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.


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.


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.


“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.


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.


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.


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

Copyright © 2011 Gary North

How The US Government Will Seize Your Retirement Account

May 15, 2011

by Simon Black in Santiago, Chile

(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.

The Truth About Silver And Inflation

April 19, 2011

Courtesy National Inflation Association

Silver futures surged today to a new 31-year high of $42.80 per ounce. Silver is up 146% since NIA declared silver the best investment for the next decade on December 11th, 2009, at $17.40 per ounce. All we need is for silver to rise by another 15.5% and silver will reach its all time high set in 1980 of $49.45 per ounce.

Keep in mind, silver’s high of $49.45 per ounce in 1980 would equal about $140 per ounce in today’s dollars adjusted to the consumer price index and about $400 per ounce in today’s dollars adjusted to the real rate of price inflation. Despite silver’s huge gains in recent months, we have yet to see silver rise by $2 or more in a single day. When we start to see a true “silver mania” with investors around the world rushing out of their U.S. dollars and panic buying silver, we expect to see silver gain by $5 to $10 in a single day on more than one occasion.

Back in February of last year when silver dipped to below $15 per ounce, we sent out an alert saying, “NIA believes this is a once in a lifetime entry point for those wishing to go long silver at a bargain basement price”. NIA suggested silver call options in February of last year that ended up gaining over 1,000%. NIA’s latest silver stock suggestion is currently up 175% from our profile price.

In NIA’s top 10 predictions for 2010, we predicted a major decline in the gold/silver ratio, which was 64 at the time. The gold/silver ratio declined in 2010 down to 46, and in our top 10 predictions for 2011, we predicted another major decline in the gold/silver ratio and projected for it to decline this year to 38. NIA has been the most bullish organization in the world on silver, yet recent gains in the price of silver have surpassed even our short-term expectations. The gold/silver ratio is now down to 35 and we believe it will decline to at least 16 this decade, and possibly as low as 10.

The artificially high gold/silver ratio of the past century will be looked back at as an anomaly caused by the silver price suppression scheme of the Federal Reserve, which was in cahoots with Bear Stearns and now JP Morgan. NIA’s President Gerard Adams exposed this scheme in NIA’s critically acclaimed documentary ‘Meltup’, which has now been viewed by over 1 million people with an overwhelming 96% of its viewers giving it a thumbs up, a world record for an economic documentary. According to Mr. Adams, the Federal Reserve chose to bail out Bear Stearns and not Lehman Brothers, because Bear Stearns was the holder of a massive naked short position in silver that they were on the verge of being forced to cover.

It is not a coincidence that Bear Stearns failed on the very day silver reached its then multi-decade high of $21 per ounce. Bear Stearns was on the verge of being forced to cover their naked short position, which could have sent silver from $21 per ounce to $50 per ounce overnight. By bailing out Bear Stearns and allowing JP Morgan to acquire Bear Stearns’ assets with the promise to cover any losses derived from them, JP Morgan was able to continue managing the silver short position and orchestrate a manipulative take down in 2008 from $21 per ounce down to $8 per ounce.

Only ten times more silver has been produced in world history than gold and from the years 1000 to 1873, a period of 873 years, the gold/silver ratio remained between 10 and 16. In fact, the Coinage Act of 1834 defined a gold/silver ratio of 16. The gold/silver ratio started to rise after silver was demonetized in 1873. Despite silver being demonetized, we saw the gold/silver ratio return to 16 on three occasions during the past century: in 1919, 1968, and 1980.

It was only ten months ago in June of 2010 that the gold/silver ratio was 70. With the gold/silver ratio now at 35, it means that silver investors have seen their purchasing power double over the past ten months, while those with their savings in U.S. dollars have seen their purchasing power decline by 20%. That’s right, forget about NIA’s silver call option that gained over 1,000% and forget about NIA’s most recent silver stock suggestion that is currently up 175%; the simple act of following NIA’s most basic suggestion of getting rid of your U.S. dollars and buying physical silver means that over the past ten months, your purchasing power has doubled while non-NIA members with U.S. dollars lost 1/5 of their real wealth.

The Federal Reserve can claim all they want that there is no inflation, but as we write this article we are eating Ben & Jerry’s ice cream that we just bought at Quick Chek for $5 a pint. Three years ago, the same pint of Ben & Jerry’s ice cream at Quick Chek cost us $3. Three years ago, one ounce of gold would have bought 295 pints of Ben & Jerry’s ice cream and it still buys 295 pints of Ben & Jerry’s ice cream today. Three years ago, one ounce of silver would have bought 5.7 pints of Ben & Jerry’s ice cream and today it buys 8.5 pints of Ben & Jerry’s ice cream.

Americans with their savings in U.S. dollars can today only afford 3/5ths of the ice cream that they could have bought three years ago, but those with their savings in gold have maintained their purchasing power, and those with their savings in silver have greatly increased their purchasing power. NIA is 100% sure that the gold/silver ratio will decline to at least 16 within the next few years, and that will mean those with silver will once again more than double their purchasing power. Considering that the gold/silver ratio overshot to the upside and was as high as 100 in 1991, we fully expect it to overcorrect to the downside and possibly reach a low of 10 this decade. That would mean a more than tripling of ones purchasing power from the current ratio of 35.

When silver rose to $49.45 per ounce in 1980, the government said that the rise was due to the Hunt brothers “cornering” the silver market. The truth is, silver reached $49.45 in 1980 due to the massive inflation that was created by the U.S. government during the 1970s, and the Hunt brothers were used as a scapegoat. The Hunt brothers were accumulating silver in order to protect themselves from a collapsing U.S. dollar, just like NIA has been encouraging its members to do in a countless number of articles and videos over the past two years.

When the Hunt brothers were accused by the U.S. government of “cornering” the silver market and trying to manipulate silver prices higher, they only owned a concentrated long position of approximately 100 million ounces of silver. JP Morgan today has a concentrated naked short position in silver of approximately 122.5 million ounces, but the U.S. government doesn’t seem to have any problem with it.

The problem with the Hunt brothers’ strategy of accumulating such a large concentrated long position in silver is that after silver prices rose, their position was simply too large for them to ever sell without causing silver prices to crash. With silver reaching $49.45 per ounce in early 1980, the world was about to lose confidence in the U.S. dollar, which would have caused an outbreak of hyperinflation. In a desperate attempt to save the U.S. dollar and prevent hyperinflation, the CBOT raised margin requirements and limited traders’ positions to only 3 million ounces of silver futures. The COMEX also limited traders’ positions to 10 million ounces of silver futures. Not only that, but the COMEX and CBOT only had a total of 120 million ounces of silver in inventory, and the COMEX was likely going to default from futures contract holders requesting physical delivery. The COMEX was forced to go into “liquidation only” mode, ending all silver futures contract buying.

Combined with the Federal Reserve rapidly rising interest rates, silver prices began to plunge and the Hunt brothers were hit with massive margin calls. On one single day in March of 1980 when the Hunt brothers were forced to liquidate a large part of their position, silver lost 1/3 of its value, declining by over $5 to $10.80 per ounce. That represented a total decline of 78% from its high two months earlier.

NIA has been receiving a countless number of emails asking if now is the time to sell silver, and if silver could crash by 78% once again like it did in 1980. The fact is, while the Hunt brothers’ 100 million ounce concentrated silver position was on the long side, JP Morgan’s 122.5 million ounce concentrated silver position is on the short side.

While the Hunt brothers’ long position was impossible to sell without causing silver prices to crash, JP Morgan’s naked short position is impossible to cover without causing silver prices to explode to the upside. Being that the CFTC was so quick in 1980 to support the position limits that were then imposed by the CBOT and COMEX, NIA believes it would only be fair for the CFTC to mandate similar position limits today. This is unlikely to occur because the U.S. government believes JP Morgan’s silver manipulation to be a good thing, since it is giving the phony appearance that the U.S. dollar still has purchasing power. The free market will ultimately win in the end and silver prices will soar through the roof to where they belong based on supply and demand fundamentals.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at:

The Run On US Debt Has Begun

March 12, 2011

by Russell D. Longcore

(Editor’s Note: Yesterday an earthquake of 8.9 on the Richter scale rocked Japan, with a 6.5 aftershock and tsunami waves following that scoured the coastlines. Japan is the third largest economy in the world, and their public debt is three times the size of their annual economic output. Japan’s economy has been in a recession for 20 years! Japan’s government holds $877 billion in US Treasuries, second only to China. And consider what effect this catastrophe will have on worldwide insurance companies as earthquake claims are paid. Insurance companies hold US debt too. I guarantee that some insurance companies will go bankrupt because of this earthquake. And companies that default are forced to sell off their assets.

Could this earthquake…the worst to hit Japan in 140 years, collapse the Japanese economy? And, if Japan’s economy falters, will Japan sell off portions or all of its US debt? It certainly could happen. Stay tuned.)

Anybody out there remember reading any of my articles in which I predicted that the worldwide rejection of US Treasury securities could trigger the collapse of the dollar?

Well, this news story from Thursday is a MAJOR step toward seeing that prediction come true. PIMCO is the world’s largest bond fund. They have just divested themselves of ALL United States Treasury debt instruments. Bill Gross, who runs the fund, urged investors to get out of US debt and get into the debt securities of emerging nations.

Pimco Eliminates Government Debt From Total Return Fund

Friends…How are you doing on your survival supplies and your efforts to change US dollars into gold and silver coins? You may need them sooner than you think.

Secession is the Hope For Mankind. Who will be first?

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.

The Perfect Business

February 14, 2011

by Richard Russell
Dow Theory Letters

(Editor’s Note: Mr. Russell doesn’t think that a perfect business exists. I, however, own just such a perfect business. And I am on a national talent search for entrepreneurial associates. You may be looking for a business. Or, you may already own a business, and want to add another profitable stream of income to your existing business. To learn more about it, and determine if you could benefit from owning a business like mine, click on the ”Residual Income” tab above.)

AH PERFECTION: Strange, but the most popular, the most widely-requested, and the most widely quoted piece I’ve ever written was not about the stock market – it was about business, and specifically about what I call the theoretical “ideal business.” I first published this piece in the early-1970s. I repeated it in Letter 881 and then again in Letter 982. I’ve added a few thoughts in each successive edition. But seldom does a month go by when I don’t get requests from subscribers or from some publication or corporation to republish “the ideal business.” So here it is again – with a few added comments.

I once asked a friend, a prominent New York corporate lawyer, “Dave, in all your years of experience, what was the single best business you’ve ever come across?” Without hesitation, Dave answered, “I have a client whose sole business is manufacturing a chemical that is critical in making synthetic rubber. This chemical is used in very small quantities in rubber manufacturing, but it is absolutely essential and can be used in only super-refined form.

“My client is the only one who manufactures this chemical. He therefore owns a virtual monopoly since this chemical is extremely difficult to manufacture and not enough of it is used to warrant another company competing with him. Furthermore, since the rubber companies need only small quantities of this chemical, they don’t particularly care what they pay for it – as long as it meets their very demanding specifications. My client is a millionaire many times over, and his business is the best I’ve ever come across.” I was fascinated by the lawyer’s story, and I never forgot it.

When I was a young man and just out of college my father gave me a few words of advice. Dad had loads of experience; he had been in the paper manufacturing business; he had been assistant to Mr. Sam Bloomingdale (of Bloomingdale’s Department store); he had been in construction (he was a civil engineer); and he was also an expert in real estate management.

Here’s what my dad told me: “Richard, stay out of the retail business. The hours are too long, and you’re dealing with every darn variable under the sun. Stay out of real estate; when hard times arrive, real estate comes to a dead stop and then it collapses. Furthermore, real estate is illiquid. When the collapse comes, you can’t unload. Get into manufacturing; make something people can use. And make something that you can sell to the world. But Richard, my boy, if you’re really serious about making money, get into the money business. It’s clean, you can use your brains, you can get rid of your inventory and your mistakes in 30 seconds, and your product, money, never goes out of fashion.”

So much for my father’s wisdom (which was obviously tainted by the Great Depression). But Dad was a very wise man. For my own part, I’ve been in a number of businesses – from textile designing to advertising to book publishing to owning a night club to the investment advisory business.

It’s said that every business needs (1) a dreamer, (2) a businessman, and (3) a S.O.B. Well, I don’t know about number 3, but most successful businesses do have a number 3 or all too often they seem to have a combined number 2 and number 3.

Bill Gates is known as “America’s richest man.” Bully for Billy. But do you know what Gates’ biggest coup was? When Gates was dealing with IBM, Big Blue needed an operating system for their computer. Gates didn’t have one, but he knew where to find one. A little outfit in Seattle had one. Gates bought the system for a mere $50,000 and presented it to IBM. That was the beginning of Microsoft’s rise to power. Lesson: It’s not enough to have the product, you have to know and understand your market. Gates didn’t have the product, but he knew the market – and he knew where to acquire the product.

Apple had by far the best product in the Mac. But Apple made a monumental mistake. They refused to license ALL PC manufacturers to use the Mac operating system. If they had, Apple today could be Microsoft, and Gates would still be trying to come out with something useful (the fact is Microsoft has been a follower and a great marketer, not an innovator). “Find a need and fill it,” runs the old adage. Maybe today they should change that to, “Dream up a need and fill it.” That’s what has happened in the world of computers. And it will happen again and again.

All right, let’s return to that wonderful world of perfection. I spent a lot of time and thought in working up the criteria for what I’ve termed the IDEAL BUSINESS. Now obviously, the ideal business doesn’t exist and probably never will. But if you’re about to start a business or join someone else’s business or if you want to buy a business, the following list may help you. The more of these criteria that you can apply to your new business or new job, the better off you’ll be.

(1) The ideal business sells the world, rather than a single neighborhood or even a single city or state. In other words, it has an unlimited global market (and today this is more important than ever, since world markets have now opened up to an extent unparalleled in my lifetime). By the way, how many times have you seen a retail store that has been doing well for years – then another bigger and better retail store moves nearby, and it’s kaput for the first store.

(2) The ideal business offers a product which enjoys an “inelastic” demand. Inelastic refers to a product that people need or desire – almost regardless of price.

(3) The ideal business sells a product which cannot be easily substituted or copied. This means that the product is an original or at least it’s something that can be copyrighted or patented.

(4) The ideal business has minimal labor requirements (the fewer personnel, the better). Today’s example of this is the much-talked about “virtual corporation.” The virtual corporation may consist of an office with three executives, where literally all manufacturing and services are farmed out to other companies.

(5) The ideal business enjoys low overhead. It does not need an expensive location; it does not need large amounts of electricity, advertising, legal advice, high-priced employees, large inventory, etc.

(6) The ideal business does not require big cash outlays or major investments in equipment. In other words, it does not tie up your capital (incidentally, one of the major reasons for new-business failure is under-capitalization).

(7) The ideal business enjoys cash billings. In other words, it does not tie up your capital with lengthy or complex credit terms.

(8) The ideal business is relatively free of all kinds of government and industry regulations and strictures (and if you’re now in your own business, you most definitely know what I mean with this one).

(9) The ideal business is portable or easily moveable. This means that you can take your business (and yourself) anywhere you want – Nevada, Florida, Texas, Washington, S. Dakota (none have state income taxes) or hey, maybe even Monte Carlo or Switzerland or the south of France.

(10) Here’s a crucial one that’s often overlooked; the ideal business satisfies your intellectual (and often emotional) needs. There’s nothing like being fascinated with what you’re doing. When that happens, you’re not working, you’re having fun.

(11) The ideal business leaves you with free time. In other words, it doesn’t require your labor and attention 12, 16 or 18 hours a day (my lawyer wife, who leaves the house at 6:30 AM and comes home at 6:30 PM and often later, has been well aware of this one).

(12) Super-important: the ideal business is one in which your income is not limited by your personal output (lawyers and doctors have this problem). No, in the ideal business you can sell 10,000 customers as easily as you sell one (publishing is an example).

That’s it. If you use this list it may help you cut through a lot of nonsense and hypocrisy and wishes and dreams regarding what you are looking for in life and in your work. None of us own or work at the ideal business. But it’s helpful knowing what we’re looking for and dealing with. As a buddy of mine once put it, “I can’t lay an egg and I can’t cook, but I know what a great omelet looks like and tastes like.”

Copyright © 2011 Dow Theory Letters


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