joegalt, Author at Zenconomics

Cultivate Your Garden

submitted by jwithrow.

This essay is written for those who feel that our society has lost its way.

We see a world in which the collectivist rat race has suppressed minds and spirits. Selfishness and corruption have replaced kindness and honesty. Humility and grit have been replaced by a culture of irresponsibility and instant gratification.

Turn on your preferred news channel and they will be quick to point their collective finger at some group or another and tell you all about how everything is their fault. Now turn off your television and ask your inner self who is really at fault.

Guess what, dear friend? It’s your fault.

Before we can ever expect to see an honest and just society, we must first foster honour and justice within ourselves. We must stop pointing our fingers at others and begin to cultivate our own garden.

Most people are terrified of being different so they attempt to “fit in” at all times. Most people go along to get along so they conform to the status-quo in society. But if you set a shining example of humility, kindness, honesty, and responsibility then others will be encouraged by your example. There is universal truth in the old adage that says “actions speak louder than words”.

I will leave you with the following quote, written by an unknown monk around 1100 A.D.:

“When I was a young man, I wanted to change the world.
I found it was difficult to change the world, so I tried to change my nation.
When I found I couldn’t change the nation, I began to focus on my town. I couldn’t change the town and as an older man, I tried to change my family.
Now, as an old man, I realize the only thing I can change is myself, and suddenly I realize that if long ago I had changed myself, I could have made an impact on my family.
My family and I could have made an impact on our town.
Their impact could have changed the nation and I could indeed have changed the world.”

The Parable of the Monkeys in the Cage

submitted by jwithrow.

Five monkeys awaken to find themselves inside of a large cage. A banana hangs from a string at the very top of the cage and there is a staircase in the middle of the cage that leads directly up to the banana.

One of the monkeys, before long, decides that he would like to have the banana so he goes to the stairs. As soon as the monkey touches the stairs, however, every monkey inside of the cage is sprayed with high pressure cold water from an external hose which knocks each monkey to the ground and makes for a miserable evening.

A few uneventful days pass before a second monkey decides that he would like to have the banana so he goes to the stairs. Once again, as soon as this monkey touches the stairs, every monkey inside of the cage is sprayed with high pressure cold water.

A few months go by and one of the original monkeys passes away and is replaced with a new monkey. The new monkey is amazed that the other monkeys have not gotten the banana and he immediately makes his way for the stairs.

As soon as the new monkey touches the stairs, the four remaining original monkeys immediately yank him to the ground and proceed to assault him.

After a few days to recover, the new monkey once again decides to try to get the banana. And once again, the other monkeys immediately prevent him from climbing the stairs and they beat the new monkey for his efforts.

A few months go by and the second of the original monkeys passes away and is replaced with a new monkey. Naturally, the new monkey is shocked to find that the other monkeys have not gotten the banana and he immediately makes his way for the stairs.

As soon as this newest monkey touches the stairs, the three remaining original monkeys immediately yank him to the ground and proceed to assault him. The first new monkey also rushes to beat the newest monkey with enthusiasm as the first new monkey is now part of the “team”.

The third and the fourth original monkeys both pass away as the years go by and they are replaced each time with a new monkey. Each time the new monkey attempts to get the banana only to be shocked by the beating that he receives from the older monkeys.

Finally, the last original monkey passes away and is replaced by the fifth new monkey. The fifth new monkey finds it strange that the other monkeys have not gotten the banana so he immediately makes for the stairs. As soon as he touches the stairs, the four other monkeys rush to assault the newest monkey.

Now, the four monkeys that are beating up the newest monkey have no idea as to why they were originally beaten for their own attempt at climbing the stairs and neither do they know why they are perpetuating the tradition of beating each new monkey that tries to climb the stairs. As none of the monkeys now in the cage are the original monkeys, none of them have ever been sprayed by water. Nevertheless, the “experienced” monkeys do not try to climb the stairs to get the banana and they immediately suppress any attempt from newer monkeys to go for the banana.

Why is this? Wouldn’t the monkeys love to have the banana?

Well, in their minds, it’s just the way it has always been. The monkeys have been fully cultured to accept the fact that it is unacceptable to climb the stairs in pursuit of the banana.

Silly monkeys, huh?

Avoiding the Identity Trap

submitted by jwithrow.

The identity trap is the belief that you need to conform to what others think that you should be. It is when you feel the need to speak or act a certain way because other people think that you should speak or act that way. It is when you participate in an event or join an organization because others expect you to do so.

While these other people who expect you to conform to certain expectations are typically well-intentioned, you are doing yourself a disservice if you allow yourself to be pressured into the identity trap. Your life will not be harmonious if you are not true to your own inner self.

People, often subconsciously, do not see others as individuals but rather they see others as members of a particular group. They then assume that the other person holds all of the associated group’s beliefs and traits and thus they expect the other person to speak and act accordingly. But everyone is a unique individual and groups are comprised of individuals.

Individuals have a responsibility to themselves to do what they think is right at all times. Individuals have a responsibility to stay true to their beliefs and principles. Individuals do not have a responsibility to put on a façade because other people expect them to be something other than themselves. Falling into and remaining stuck in the identity trap is an impediment to your personal freedom. You can never be free if you must pretend to be something that you are not.

Harry Browne, in How I Found Freedom In An Unfree World, laid out four specific principles to recognize in order to avoid the identity trap. They are as follows:

1. You are a unique individual — different from all other human beings. No one else has the exact same nature that you have; no one else reacts to things in exactly the way you do. No one else sees the world exactly as you do. No one can dictate what your identity should be; you are the best qualified person to discover what it is.

2. Each individual is acting from his own knowledge in ways he believes will bring him happiness. He acts to produce the consequences he thinks will make him feel better.

3. You have to treat things and people in accordance with their own identities in order to get what you want from them. You don’t expect a stone to be a fish. And it’s just as unrealistic to expect one person to act as someone else does. You don’t control the identities of people, but you can control how you deal with them.

4. You view the world subjectively — colored by your own experience, interpretation, and limits of perception. It isn’t essential that you know the final truth about everything in the world; and you don’t have the resources to discover it.

Avoid the identity trap and realize your true individual potential.

The Wizards of Ozymandias

submitted by jwithrow.

“The Wizards of Ozymandias” by Butler Shaffer is a must-read for anyone who appreciates Percy Bysshe Shelley’s “Ozymandias”. The book is also a must read for anyone with an interest in the history of western civilization, social philosophy, free-market economics, or critical thinking in general.

A paperback copy of the book costs $16.85 and the kindle version costs $3.99. We will provide a link to the book at the end of this post.

In a nutshell, Shaffer spends 310 powerful pages exposing the fallacy of central planning and he does so in a common sensical way. There are no ideological theories or assumptions, just critical thinking and common sense – imagine that!

Coincidentally, critical thinking and common sense are two of the most important victims of central planning.

By the way, when we talk about central planning we are talking about the systems of societal control that have been gradually implemented over the past one hundred years or so. We are talking about socialism in general and all manner of destructive socialist policies. We are talking about organizations like the United Nations, the World Bank, the IMF, the Council on Foreign Relations, the Federal Reserve, the IRS, the military-industrial complex (please, look this one up), the FDA, the EPA, all other alphabet soup governmental organizations, all other organizations whose name starts with “The Department of”, and countless other massive, unaccountable monsters of bureaucracy.

And yes dear friend, the Federal Reserve and the IRS are instruments of socialism (and fascism and perpetual war – nothing is ever cut and dry). They are the opposite of free market capitalism. In fact, the implementation of a central bank is one of the planks of the Communist Manifesto. We think it is the fifth plank but we are not sure exactly and we haven’t looked it up because we don’t want to send mixed signals to our friends at the NSA.

Anyway, the point is that human beings are not robots. Human interaction does not need to be scripted according to some jerk’s sociopathic ideals.

Governments are not people. Nations are not people. Corporations are not people. People are people. People are best when they are free from coercion to voluntarily interact with others for their own benefit as they see fit. The free market serves people in this fashion as long as they abide by two rules:

Do not infringe upon another person or his property (natural law). Do all that you have agreed to do and nothing that you have agreed not to do (contract law).

Mr. Shaffer is a little better written than we are so we highly recommend his book.

MyRA-QE Taper Connection

submitted by jwithrow.

We have a question for you:

Is it a coincidence that the government has introduced the “myRA” plans just as the Federal Reserve has begun to taper its quantitative easing programs?

Let’s think this thing through for a minute.

We know:

China is now a net-seller of U.S. Treasuries so the Federal Reserve has had to step in and purchase U.S. Treasury Bonds in increasing quantities to support government spending.
The average American saves for retirement in a qualified retirement plan focusing primarily on mutual funds, exchange traded funds, and stocks with bonds comprising a small portion of the allocation.
The proposed myRA plans are designed to focus on U.S. Treasury Bonds.
The Federal Reserve’s quantitative easing programs have pumped massive amounts of liquidity into the system which has resulted in a broad increase of stock prices across the board.
Tapering QE will withdraw liquidity from the system which will almost certainly result in a broad decrease of stock prices across the board and quite possibly a severe stock market crash.
A falling stock market would likely cause many Americans to seek investment options that they deem “safer”.
The government is already hard-selling their myRA plans stating that there is “no risk to lose what you put in”.

Hmm.

Maybe our benevolent bureaucrats really do think that myRA plans will help the common man.

But we hold dearly to a personal mantra:

Maximize Capital,
Minimize Crap,
Never Trust the Government.

With that mantra echoing in our mind, we can’t help but be a little suspicious – something funny seems to be afoot.

What do you think?

Hidden Secrets of Money Primer

submitted by jwithrow.

Qualified Retirement Plans

submitted by jwithrow.

Qualified retirement plans have their roots in the Employee Retirement Income Security Act (ERISA) that was enacted in 1972.

The most common qualified retirement plans are the 401(k) and the IRA (individual retirement account). These plans allow individuals to contribute funds to their account on a pre-tax basis to be invested predominantly in stocks, bonds, mutual funds, and exchange traded funds. Taxes on investment gains are allowed to be deferred until distributions from the account are taken. Individuals may begin to take distributions without an early withdrawal penalty once they reach age 59.5. Any distributions prior to age 59.5 will be subject to a 10% early distribution penalty. Individuals are required to take a minimum distribution annually once they reach age 70.5. Distributions will be taxed at the individual’s ‘ordinary’ tax rate.

Mainstream financial thinking suggests that qualified retirement plans are the absolute best way to save for retirement because these plans enable you to invest funds on a pre-tax basis during your peak earning years and the investment gains can grow tax-deferred until retirement when your income is lower.

This way of thinking makes a number of assumptions.

The first assumption is that the investments held within the qualified retirement plan will consistently grow in value and they will not experience any significant losses to principal at any time which would serve to stunt the plan’s growth.

The second assumption is that the individual is not capable of effectively using capital during his/her peak earning years to develop diversified income streams that would provide significant income during retirement years. Maybe this would better be stated as the assumption that there is actually a “peak earning period” in an individual’s life.

The third assumption is that the rules governing qualified retirement plans will never change. Mainstream personal finance assumes that the early-distribution penalty will always be 10% and the qualified distribution age will always be 59.5. Mainstream personal finance assumes that ‘ordinary’ tax rates will always be what they are currently. (We say that there is nothing ordinary about the income tax at all!)

What’s overlooked here is the fact that qualified retirement plans are a government-created solution to government-created problems: Onerous taxation and a constantly devalued dollar that make it very difficult for the average American to save for retirement.

Pay very close attention to the language that must be used to discuss qualified retirement plans. In talking about these plans one must use words like allow, may, require, and penalty. In other words, these plans consist of permissions and requirements. People are given permission by the government to contribute funds on a pre-tax basis. And they are given permission to defer taxes on their investments. But they are required to leave all funds in the account until they reach a certain age or they will be penalized.

Any time permission is required to do something it follows that the permission could also be withdrawn at some point in the future. Otherwise one would not need permission to do whatever it is.

If you recognize that qualified retirement plans are a government-created solution to a government-created problem then a very important question must be asked: What happens if the government decides that there are bigger problems than Americans saving too little?

For example, what if government’s biggest problem became the need to finance out of control spending?

Cyprus and Poland have provided two possible answers to that question and the trend suggests that the rules governing qualified retirement plans could very suddenly become less favorable for the individuals using them at some unknown point in the future. The “myRA” proposal seems to be the first step in this direction.

So we can’t help but be skeptical of qualified retirement accounts. It just doesn’t add up. IRS approved tax shelters as a government solution to taxation and inflation? It seems to us that cutting spending, cutting taxes, cutting inflation, and returning to sound money would be a much better solution.

So we will continue to stay away from qualified retirement plans in favor of the IBC strategy for maximizing capital. This strategy, if implemented correctly, does not expose our principal to loss, it offers us access to our capital at any time for any reason, and it offers favorable tax treatment as well. All without requiring us to adhere to silly IRS rules about what we can and cannot do with our money depending on how old we are.

It just makes more sense.

The Rule of Law

submitted by jwithrow.

The Rule of Law is rooted in British common law that dates back to the Middle Ages and it is the foundation of Western civilization. It is the underlying legal/ethical code of conduct that enabled western civilization to thrive.

The Rule of Law can be condensed into two fundamental laws:

1) Do all that you have agreed to do and nothing that you have agreed not to do.
2) Do not encroach upon other persons or their property.

The first law forms the basis of all contract law and the second law forms the basis of criminal law. These laws are simple and intuitive and history shows that a society dedicated to these laws is able to achieve prosperity.

Unfortunately, the Rule of Law has been subverted by the rule of legislation in our society today. There are now hundreds of thousands of petty laws on the books accompanied by millions of pages of legal mumbo-jumbo in supporting documents. Much of this legislation actually violates the Rule of Law as it encroaches upon personal liberty and property rights. Further, these petty laws are enforced at the discretion of the political class; politicians and insiders are largely exempt from abiding by their own legislation.

There was a time in America when grade schools taught common law and history lessons focused almost exclusively on common law principles. Sadly, this is no longer the case as the public educational system now teaches children to never question the validity of legal mandates and regulations, no matter how petty.

Fortunately, the Internet Reformation seems to be setting brushfires of liberty in the mind’s of men once again. These are certainly interesting times we are living in.

“The more corrupt the state, the more numerous the laws.” – Tacitus

“Where there are too many policemen, there is no liberty. Where there are too many soldiers, there is no peace. Where there are too many lawyers, there is no justice.” – Lin Yutang

“Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws” – Plato

Minimum Wage Cannot Fool the Free Market

submitted by jwithrow.

An important facet of a dynamic market economy is a flexible pricing system where prices can freely adjust in response to changes in supply and demand.

Wages are no exception to this rule. You see, wages are simply the price of labor and this price fluctuates with supply and demand in the marketplace – just like any other price.

When it comes to the jobs market, employers seek to hire employees at a wage which will allow the employer to profit on an employee’s labor. As such, the employee’s salary must necessarily be priced lower than the total value of his or her production. Otherwise the employer would not have a need for the employee’s services.

If this seems callous to you then please ask yourself a question:

Are you willing to pay someone $100 to do a job that is only worth $50 to you?

Well most employers aren’t either.

So, employers are willing to offer a salary within a specific value range according to the nature of the job function. The employee may be able to negotiate a higher salary but only up to the employer’s ceiling price beyond which the employer would not be able to justify the hire.

Minimum wage laws, however well-intentioned they may be, have no place within a free market system. Minimum wage laws distort the market pricing system and they fail to achieve their stated intent – they serve only to increase unemployment. Employers will trim their workforce to account for forced wage increases and individuals who would otherwise be willing to work for pay beneath the minimum wage will be priced out of employment.

What’s lost in the clamor for an increased minimum wage is the fact that wages are not the common man’s problem in the first place. U.S. median household income in 1970 was $7,651. It was $22,109 in 1985. And $41,262 in 2000. And median household income in 2012 was $50,099.

Wages have skyrocketed!

But wages don’t buy nearly as much as they used to, do they? Sounds to us like inflation is the common man’s biggest problem – let’s pass maximum inflation laws!

Or better yet, let’s End the Fed and get back to Sound Money.

The Beauty of Language

submitted by jwithrow.

Language is the means of communicating thoughts and ideas.

Thoughts and ideas have the power to shape the world.

Therefore, language has the power to shape the world.

Language is both powerful and beautiful; it is the means to meaning and truth. It is language that has changed the world over and over again. Without language, the Bible is meaningless. The Torah is meaningless. The Qur’an is meaningless. The Mahayana Sutras are meaningless. The Upanishads are meaningless. The Magna Carta is meaningless. The Declaration of Independence is meaningless.

Language is constructed of words and words are the expression of thoughts.

Thoughts are powerful entities; they are not abstractions. There is a very specific electrical reaction that takes place when you create a thought within your mind and this electrical reaction creates energy in some capacity. We cannot explain this electrical reaction as we do not know how it works. But we do know that it takes place. So it follows then that thoughts are energy in some capacity. And the laws of physics state that energy cannot be created nor destroyed rather it can only change forms. So it follows further then that the process of thinking is the process of transforming existing energy into your own unique thoughts. Your own unique thoughts become energy in a new form and the thought energy exists until it is transformed once again. And a powerful way to harness that thought energy is to convert it into language – either verbal or written.

We say all of that to say this: our observations suggest that language is used very carelessly in our culture today. If you understand the power of language then you understand the responsibility that you have to use words in a meaningful way. You understand that language should not be used to harm or mislead another. And you understand that language can be used to change your stars.

The most important language comes from that tiny voice in your head. Make sure that little voice in your head is constantly using language that uplifts and inspires you. Your world will also be uplifting and inspiring if it does.

It’s a funny thing; the events in your life mirror your thoughts. Master your thoughts and you will master your world. And in order to master your thoughts you have to master your control of language.