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Capitalism Without the Capital

submitted by jwithrow.

Journal of a Wayward Philosopher
Capitalism Without the Capital

December 25, 2014
Hot Springs, VA

Merry Christmas!

The markets are closed today in honor of this wonderful holiday so we have no updates for you in this entry. Check back in with us tomorrow for market updates. We do have an important entry for you today, however. It’s not nearly as important as spending time with your family on Christmas Day but, since you are here nonetheless, we will carry on.

Earlier this month we watched as the U.S. national debt came up behind $18 trillion, whipped into the passing lane without signaling, and sped off into the distance. Where is the national debt going in such a rush? I’m not sure, but I’d wager it’s someplace not worth going to.

As the national debt raced past we noted that total credit market debt has ballooned up to 330% of GDP with considerable help from the Fed’s efforts to pump in $4.3 trillion worth of hot air.

The television analysts accept it all as normal but we must ask the question: How in the world did we get to this point?

Much of the apparent prosperity we have enjoyed over the last several years has been borrowed from the future. The world’s three major central banks – The Federal Reserve, the European Central Bank, and the Bank of Japan – have each been engaged in an outrageous financial experiment; they have been creating massive amounts of currency out of thin air to purchase government debt by the boat-load.

Remember, debt is nothing more than a promise to pay for present spending with future earnings. These central banks, in collusion with their respective government, are really engaged in a scheme to transfer massive amounts of wealth from the public in the future to themselves in the present. There will be serious consequences to this madness.

It is important to realize that none of this chicanery has anything to do with capitalism… there’s no capital even in sight! The money created by the central banks of the world may act much like real capital, but it is just a clever impersonator.

Capital, according to the Ludwig von Mises Institute, is defined as the goods that were produced by previous stages of production but do not directly satisfy consumer’s needs. In short, capital is real savings and real resources.

Capital formation is actually quite simple – just save more than you consume and you will have capital.

We are currently doing the opposite – we are consuming way more than we produce. That’s how you end up with debt piled to the ceiling. This is true on the macro level (governments, multi-national corporations, etc.) and it is true on the micro level (individuals, local communities). The credit-based money and the massive debt have driven capital into hiding… we suspect for fear of being called a greedy capitalist.

And that, in a nutshell, is the answer to our question: we got to this point by embracing central banking and fiat money thus abandoning capitalism and its sound monetary system.

Sound Money once kept debt and the central planners at bay.

What was the secret?

Sound Money was like your grumpy friend that just won’t ever agree to do anything. You ask him to go to the movies and he says nope. You ask him to go to the ball game and he says he’ll watch it on T.V. You ask him to go to the bar and he says he has beer in the fridge at home already. Eventually you learn there’s nothing you can talk him into doing so you stop trying. That’s why governments and central banks hated Sound Money; it would never agree to any of their best laid plans.

You see, Sound Money could not be infinitely printed by governments or central banks. Originally, before governments got into the money business, money could not be printed at all; it had to be dug out of the ground and then minted into a coin. Later, governments took it upon themselves to stockpile gold in a vault and create paper currencies 100% backed by the gold. Always one to offer something it doesn’t have at a price it cannot sustain, Government reduced the gold backing of its currency over time and then, in 1971, it cut ties to gold altogether. That was the requiem for Sound Money and ever since then there has been absolutely no limits on the amount of currency central banks can create. Which means there has also been absolutely no limit on how much debt governments can rack up.

So here we are.

But just because there have been no limits to all of this economic madness in the short run does not mean there will never again be any limits. History shows that market forces cannot be perpetually suppressed and distorted – eventually the market will win out. The Day of Reckoning will come.

Until the morrow,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and the fiat monetary system please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

Debt as Far as the Eye Can See

submitted by jwithrow.

Journal of a Wayward Philosopher
Debt as Far as the Eye Can See

December 9, 2014
Hot Springs, VA

The S&P opened at $2,056 today. Gold is up around $1,218. Oil is still floating around $64 per barrel. Bitcoin is down to $347 per BTC, and the 10-year Treasury rate is 2.21% today.

In other news, U.S. national debt has now eclipsed $18 trillion. That’s: $18,000,000,000,000.00. Debt to GDP is now around 99%. To put this in perspective, U.S. national debt stood at $398 billion back in 1971 – 34% of GDP – when Tricky Dick put the “Out to Lunch” sign up in front of the international gold window.

Even more startling, total credit market debt now checks in at 330% of GDP. Mr. Market has been trying to wind down the credit market bubble for some time now, but the Federal Reserve has been fighting tooth and nail against him. The Fed’s weapon of choice: funny money! The Fed has purchased more than $4.3 trillion worth of bonds since 2008 in an effort to prop up asset prices and strangle interest rates.

Where did the Fed get this $4.3 trillion? As we pointed out in last week’s journal entry, the Fed got this $4.3 trillion from the same place it always gets money… it conjured every dime of it from thin air!

Still, the economists pretend like this is all normal. Some of them say that the Fed should have bought fewer bonds; $4.3 trillion worth was too much. Other economists say the Fed didn’t buy enough! So they write their articles and conduct their interviews and everyone sleeps sound at night. I can’t help but wonder – do they think this can go on forever? Do they think the Fed can reverse course whenever they darn well please? Do they think at all?

I don’t know if mainstream U.S. finance really is arrogant enough to think there are no consequences to all of this financial chicanery or if they are just playing a big sleight-of-hand game, but the world seems to slowly be waking up to the fiat monetary system that has allowed debt to pile up faster than 5:00 Beltway traffic.

Though the Swiss Gold Referendum didn’t pass last month, it does suggest a change in the financial wind. The initiative would have prevented the Swiss National Bank from selling any of Switzerland’s gold reserves and it would have required a 20% gold backing to the Swiss Franc. The fact that this initiative made it to a vote indicates a growing apprehensiveness towards the international monetary system.

This apprehensiveness is not limited to Switzerland. Germany, France, Belgium, and the Netherlands have each expressed interest in repatriating their gold reserves held in foreign central banks. Additionally, both China and Russia have been buying gold hand over fist. The Russian Central Bank bought nearly 20 tons of gold in October alone. We don’t know exactly how much gold China has been buying – they haven’t reported their full reserve numbers in several years. China and Russia aren’t alone; global gold demand now eats up more supply than miners can produce at current prices.

2013 was a record setting year for precious metals purchases from the U.S. Mint and 2014 sales are on pace to surpass that record. The U.S. Mint sold 3,426,000 ounces of silver in November alone. Perth Mint sold 851,836 ounces of silver in November. India imported 169 million ounces of silver through the first ten months of 2014. The precious metals are clearly being viewed as a life-boat in a sea of rising debt.

In addition to the precious metal rush, several major U.S. financial firms have been using depressed interest rates to gobble up real assets recently as well. The Blackstone Group has been buying domestic real estate like it was last call and Berkshire Hathaway acquired Burlington Northern Santa Fe Corp (BNSF) – a railroad company. Shrewd analysts suggest Berkshire’s purchase of BNSF was a hard asset play to mitigate expected inflation; railroads are nothing but hard assets hauling other hard assets around the country.

Are all of the precious metal purchases and hard asset acquisitions just a coincidence?

Maybe deficits really aren’t that big of a deal. Maybe the Fed really can navigate through the uncharted waters of debt and derivatives. Maybe the fiat monetary system really has supplanted Mr. Market’s choice for good. Maybe financial asset prices really can go to the moon and never come back down.

But I wouldn’t bet on it.

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

Image Source: WilliamBanzai7 – Zero Hedge

The Majesty of Childbirth

submitted by jwithrow.

Journal of a Wayward Philosopher
The Majesty of Childbirth

October 27, 2014
Hot Springs, VA

The S&P is checking in at $1,964, gold is at $1,228, oil has dipped down to $79, bitcoin is trading hands around $355, and the 10-year Treasury rate is at 2.25% today.

October has been the most volatile month of 2014 for U.S. stocks. The Fed is supposed to end QE3 (quantitative easing) this month which has investors nervous. Does the market tank when QE3 ends as it did with the end of QE1 and QE2? Or is the economy all better and ready to resume some semblance of normalcy?

My guess: get ready for QE4.

Mr. Market tried to clean out the gutters back in 2008 by liquidating unsustainable debt but the Fed intervened. With their quantitative easing chicanery, the Feds not only prevented Mr. Market from liquidating bad debt, they also piled even more rotting debt on-top. Without QE, Mr. Market would be free to begin the healing process which requires clearing out bad debt and insolvent entities. But most of the bad debt lives on the balance sheets of the federal government and now the Federal Reserve (transferred from Wall Street) and liquidating this debt would reveal the fundamental insolvency of these entities.

How best to hide insolvency? Print money to pay the debts! Hence: QE4 coming soon – probably early 2016.

Shifting gears: Madison made her entrance last week!

She was born on October 20 at 9:59 pm right here in Hot Springs, VA.

In our dining room.

Oh don’t worry, we put the dining room table out in the garage and replaced it with an Aqua Doula pool and a queen-size mattress.

The result: a healthy 7 lbs 11 oz baby girl born completely naturally with no invasive interventions or pharmaceutical drugs necessary. Just like childbirth has been done for thousands of years!

Wife Rachel said the homebirth experience has far exceeded her expectations in every aspect.

Instead of laboring on her back underneath fluorescent lights hooked up to an I.V., monitors, pain-killers, and labor-enhancing drugs, Rachel paced back and forth from our Great Room to our kitchen while verbally telling Madison she couldn’t wait to meet her. No one was around to bother her save her husband who valiantly tried to be a breathing exercise leader while also laboring himself to fill up the 170 gallon Aqua Doula pool. Needless to say, Madison did not wait around to test her sea legs and she was born very peacefully on dry land… into her father’s waiting hands.

Upon her birth, there was no one waiting to rush her off to be weighed, measured, poked, prodded, or checked so Madison had to settle for laying in her loving mother’s arms instead. While mother and baby bonded in those first few minutes of life, our midwife and doula worked gently to make sure both parties were in good health as the birthing process neared completion. Once confident in the health of mother and baby, our health care team worked diligently to clean and sanitize the area, provide food and water, do laundry, provide advice, tips, and reassurance, and countless other things that a star-struck father couldn’t possibly pick up on in the most defining moment of his life.

Our midwife and doula monitored the situation and provided sound counsel for roughly four hours post-birth as well. “This is what real health care looks like”, I thought. Our midwife came back out to our house for a 36 hour appointment and then again for a five-day appointment. She also answered several phone calls and text messages at weird hours during the stretch in-between appointments as well.

The result of such wonderful health care service is that both mother and baby are in terrific health despite not having left the comfort of their own home. It will be more than two weeks from birth before mother and baby will need to leave their home for another appointment.

The entire experience has confirmed what we knew all along – that natural childbirth at home is a much healthier and happier alternative to hospital birth for both mother and baby.

Of course few others understood this. Some just shrugged at the eccentricity of such an endeavor. Some turned their nose up in disgust. Some thought us to be ignorant, selfish, and cheap.

What they didn’t see were the countless hours dedicated to learning, study, and research over the course of nine months. They didn’t see the pages turning in the books that were read. They didn’t see the computer screen scrolling as medical studies and articles were mentally consumed. They didn’t drive an hour and a half to natural childbirth classes every Thursday evening for six weeks after a full work-day to increase their knowledge and understanding before driving an hour and a half back home to get ready for the following work-day. They didn’t watch the videos and the documentaries or practice the comfort techniques or study the possible complications and their signs. They didn’t sit up at night discussing emergency plans and precautions. They didn’t give up coffee, tea, and soda (caffeine) or dramatically reduce their intake of processed foods for nine full months. They didn’t eliminate glucose from their diet for a full week in the final week of their pregnancy.

But someone did do all of these things.

Someone put the time, effort, and work in to make sure they were making the best decisions possible and to make sure they were fully prepared for what was to come. Someone decided that she would be responsible for educating herself first rather than being wholly dependent upon the status-quo.

Someone decided she would be Super-Mom.

To her I pledge my eternal love, respect, and service.

More to come,

Joe Withrow
Wayward Philosopher

For more of Joe’s thoughts on the “Great Reset” and regaining individual sovereignty please read “The Individual is Rising” which is available at http://www.theindividualisrising.com/. The book is also available on Amazon in both paperback and Kindle editions.

IBC – What’s it all about?

by R. Nelson Nash
Author of Becoming Your Own Banker
Article originally published in the October issue of BankNotes

It should be evident to most people that the last 100 years have been very violent in the financial world. Why? What happened to cause all this turbulence?

During this period we have witnessed the bloodiest century of all time. Two World Wars. Endless smaller wars all over the earth. An influenza epidemic after WWI. Nations formed and then self-destructed. New diseases coming into existence. Endless turmoil in the Mid-East. Empires coming apart. Financial euphoria followed by inevitable busts. Unbelievably powerful weapons and weapon systems. Propaganda perpetrated on an unsuspecting public such as man-made global warming. The list could take several pages to itemize them.

So, what’s going on? All of these actions are preceded by thoughts of the people involved at any time and place. Or, maybe it could be best described as lack of thought! It appears to me that people have forgotten how to live. It could be that they never learned how to live in the first place. Maybe it could be because of the way people feel. We seem to have a generation of “touchy-feely” folks that are in places of leadership and they influence the actions of every-day people.

Wars make absolutely no sense, but it is evident that this behavior is a common denominator throughout this time frame. Nothing good came from them. Yet, wars are glorified in the minds of many people. Things like Tom Brokaw’s book, The Greatest Generation. In reality it was a disaster — because of what it did to the minds of the people. They heard lies and came to believe them. Our country had already adopted Socialist ideas a number of years earlier, but this head-long plunge gained tremendous momentum during this period. I was there to witness it as a teenager and have seen it unfold to become the monster that we have today.

The historian, Dr. Clarence B. Carson wrote a masterful book entitled, The World In The Grip Of An Idea back in the 1970’s. He did a great job of explaining how we got into this abominable situation. The book needs to be re-published and Dr. Paul Cleveland and Dr. L. Dwayne Barney are in the process of re-writing it at this time. The world needs this book very much and so I encourage you to get a copy when it becomes available.

From my own perspective, money is the real common denominator in human action. The great Austrian Economist, Ludwig von Mises points out that the business cycle is caused by central banks. They inflate the money supply dramatically and people can’t tell the difference between “real money” and the “counterfeit money” (fiat money has no real basis). They feel that it is real wealth and so they do things that are totally irrational. This creates booms in the economy. In due course of time, reality rears its ugly head, and the bust follows.

This pattern has a long history, but it seems that every generation during the boom years feels that “Yes, those things happened in the past – but, this time it’s different!” This is nothing but hubris in its purest form. It is the “Arrival Syndrome” that I describe in my book, BECOMING YOUR OWN BANKER. It is the worst thing that can happen to the human mind!

Government debt all over the world is huge. But, consumer debt in these nations is approximately equal in volume. Bankers have created a mind-set in people that “you don’t have to save money– just spend, spend, spend! We are going to take care of your financial needs.” A local Credit Union advertises “Get a Legacy Lifestyle Loan from us.” Translated: “If you don’t like your present lifestyle, then get a loan from us so you can live the way you want to today! Don’t worry about having to repay the loan.”
We are bombarded with such stuff every day. If you listen to financial advertising very long then it becomes “hourly!”

Your local, commercial banks are the primary source of inflation. They lend money that doesn’t exist. If anyone else did that they would be put in jail! But, this chicanery has been going on so long that most everyone considers it normal.

In the video, Banking With Life, Dr. Paul Cleveland points out that people confuse money with wealth. Wealth is your productivity, and things that you own. Money is just the medium of exchange that we use to acquire wealth. Creating a pool of money from which to buy wealth is a necessary function in an economy. This pool of money is known as banking! We could not live the way we do today without the concept of banking! It is sovereign! Some party in your life is going to be the banker whether you recognize it or not!

That party should be you! John Donne (1572-1631) gave us the thought, “No man is an island.” Therefore, this Infinite Banking Concept must involve other people in the form of a contractual relationship. The perfect financial instrument to accomplish this has been in existence for over 200 years. It is known as Dividend-paying Whole Life Insurance (Preferably with a Mutual Company – one that is owned by the policy owners). Your medium of exchange must be warehoused somewhere! There are no exceptions!

This is a place that cannot inflate the money supply. This Infinite Banking Concept has been taught through my book, Becoming Your Own Banker and the follow-up book, Building Your Warehouse of Wealth. Further explanation is provided by How Privatized Banking Really Works by Carlos Lara and Robert P. Murphy, PhD.

Through these books and seminars that are taught all over the USA and Canada, there are now thousands of people who will never have to make loans from an institution that inflates the money supply and creates “booms and busts.” You, too, can become your own banker!

Please see the October issue of BankNotes for the original article and others like it.

Saving

submitted by jwithrow.

We have been hearing all about how most Americans are living paycheck to paycheck and not saving any money as justification for the brilliant (*cough*) myRA government savings plans so we felt that it would be prudent to take a deeper look at what ‘saving’ is.

You see, we don’t think that saving is about money. Money is involved, but it is not the focus. Saving is really about storing our productive efforts.

It goes back to the days of barter…

Back then the fisherman would catch extra fish in the morning and take them to the market in the afternoon to trade his extra fish with the farmer for vegetables. His wife liked to have vegetables with her fish for supper so he had to trade for vegetables instead of the painted rock that he really liked.

The fisherman had learned that fish would start to smell bad the day after being caught so he had no choice but to trade all of his extra fish every afternoon and go fishing for more again every morning.

Until the fisherman discovered gold. Then the fisherman could trade his extra fish for gold and take the next day off. The fisherman didn’t really care about amassing gold; he just figured out that gold would let him store his production so he didn’t have to go fishing every single day to feed his family. And it turned out that three day old gold smelled much better than three day old fish – this was a bonus.

So saving was born!

Somewhere along the line we forgot this and started to think that saving was about amassing money. And on top of that we started to think that money was paper and not gold. We are so forgetful!

So when saving became about money and not about production we opened the door to debt. We started to think that instead of saving we could just borrow whatever money we needed. After all, the credit money still bought stuff just like the saved money except we didn’t have to wait to use it!

But then when we had to start using our entire paycheck to pay back all of the credit money we found out that we had to be even more productive now than before we went into debt. Our plan backfired.

We didn’t learn from our smart fisherman ancestor and now we had to go fishing both in the morning and in the afternoon to have enough fish for our supper and also enough to trade for vegetables so our wife won’t get mad and also enough to give to the banker to pay him back for the credit money that bought us the really neat painted rock.

Darn painted rocks.

Debt Impedes Economic Recovery

submitted by jwithrow.

Debt is nothing more than an obligation to pay for present spending with future earnings.

A little bit of debt used to increase future earnings is a good thing. A little bit of debt used to increase present spending at the expense of future earnings is not a very good thing. A lot of debt used to increase present spending at the expense of future earnings is a good way to make it very difficult for there to be any earnings in the future at all.

At the macroeconomic level, the U.S. has chosen option three. Japan and Europe have done the same.

The great thing about economics is that there is a ‘response’ system built in that maintains a sort of chaotic order in the general market.

When there is significant capital formation within the system, interest rates go down. Decreasing interest rates send a signal that it is a good time to borrow so homes are purchased and businesses expand.

Interest rates then rise as more debt is taken on and thus capital available diminishes. This sends a signal that it is not a good time to borrow so mortgages are paid down and business debt is reduced. This leads to gradual capital formation within the system that will trigger a decrease in interest rates and the cycle perpetuates.

But guess what happens when you have an Ivy League graduate that thinks it is his job to force interest rates lower and keep them suppressed?

That’s right! The market does not receive the proper signal and it looks like it is still a good time to borrow. So even more homes are purchased and businesses keep on expanding.

Then we get the idea that home prices should always go up, stock prices should always go up, businesses should always expand, and GDP should always grow.

And we end up with more debt.

U.S. debt has grown by more than 60% since the financial crisis began in 2008. Global debt has grown by more than 40% in the same time period.

It turns out that a problem of too much debt cannot be solved by taking on more debt.

The events of 2008 sent a signal that it was time to stop borrowing and to liquidate debt but we didn’t listen. The economy will undoubtedly blow up again and the next crisis will be even bigger because the debt is now even bigger.

The only way for the economy to truly recover is for a mass-liquidation of debt to occur. Until then we can expect the Fed to keep fudging the numbers and blaming economic stagnancy on the snow.

We happen to like snow and find it to be much more desirable than the Fed, both economically and ascetically.

The Earth Belongs to the Living, Not the Dead

By: Paul Rosenberg, Freemansperspective.com

What if your grandfather had gone on a wild spending binge, long before you were born, and put himself millions of dollars in debt to people who knew he could never pay? Would it be your obligation to work double-shifts all your life to pay that debt back? And if you died before paying it off, would it become your baby’s obligation?

I think most of us would answer those questions with a resounding “No way!” As well we should. We are not and should not be slaves to the past – slaves to actions we never took and for which we had no possible means of consent.

On September 6th, 1789, in the very first year of the US Constitution, Thomas Jefferson endorsed precisely this conclusion in a letter he wrote to James Madison:

I say, the earth belongs to each of these generations during its course, fully and in its own right. The second generation receives it clear of the debts and encumbrances of the first, the third of the second, and so on.

For if the first could charge it with a debt, then the earth would belong to the dead and not to the living generation.

He wrote the same thing to John Wayles Eppes twenty-four years later, in June of 1813:

The earth belongs to the living, not to the dead.

To lay debt upon the unborn is thoroughly immoral. To try to enforce such a debt is thoroughly criminal.

Your Child or Grandchild

This conversation is critically important, because each child born in the US is born massively indebted. Using $200 trillion to represent the promises already made to people now living (some estimates are higher) and assuming a population of 310 million, that comes to $645,161 of debt, by the time your child reaches his cradle. If you expect your child to become a productive person, his or her share will be roughly twice that amount, or approximately $1.3 million.

(The US government is not unique in this regard, by the way. I use the US example, because it’s easier and because most of my readers seem to be Americans.)

Would you sign papers loading your baby with such a debt?

I am stating these facts in personal terms to cut through the usual BS that passes for public discourse. I am also using the voices of “founding fathers,” partly because it undercuts the fraudulent government story that “we’re following the wisdom of the founders.” Beside, we’re talking about real persons here. Making it personal is not manipulative, but accurate. To make it amorphous would be manipulative.

And while I’m on the subject of founding fathers, here’s something George Washington wrote in a letter to James Madison, also in 1789:

No generation has a right to contract debts greater than can be paid off during the course of its own existence.

I think that’s a very clear and very moral expression. It is not, however, what has been done.

A group formed recently under the phrase, “Not our debt.” I know nothing about the group, but their phrase is entirely correct. The debt of the US government does not belong to us, and we have no moral obligation to repay it.

Most of us do pay something toward that debt (which grows exponentially, just the same), but we should stay very clear as to why we pay. That reason, of course, is naked force, as in coercion and violence. There is no morality to it, except the morality that some people might invent, either to salve their consciences or as sycophants to power. (Though most just do what everyone else does, never considering why.)

My advice is this: Do whatever you want as far as paying under threat, but don’t ever be confused about the morality of this situation. This is a swindle of gargantuan proportions. And that’s precisely what Thomas Jefferson believed. You can see this in a letter he wrote to John Taylor, dated May 28, 1816:

The principle of spending money to be paid by posterity, under the name of funding, is but swindling posterity on a large scale.

Do what you need to do, but don’t ever think you have a moral responsibility to pay that kind of debt.

Paul Rosenberg

[Editor’s Note: Paul Rosenberg is the outside-the-Matrix author of FreemansPerspective.com, a site dedicated to economic freedom, personal independence and privacy. He is also the author of The Great Calendar, a report that breaks down our complex world into an easy-to-understand model. Click here to get your free copy.]

Opportunity

submitted by jwithrow.

Too often we associate the word opportunity with the availability of jobs. We tell our young folks to go where the opportunity is so they march off to the nearest metropolitan city to join the rat race.

How come we never tell our young people that they have the ability to create the opportunity themselves?

We think that the answer to this question is largely because we have been shaped by centralized government education. We refer to it as government education because the Department of Education has gradually imposed itself upon our school systems over time. Whereas we once had school systems that were beholden to parents and local communities, we now have federally mandated curriculum, Department of Education approved textbooks, and compulsory education laws bullying parents into compliance.

Our government subsidized educational system is focused on itself, not those it purports to serve.

The primary educational system (K-12) is focused on molding kids into obedient students that can one day be productive cogs in the wheel. Creativity and critical thinking are subverted by the centralized curriculum and the centralized structure. Students are taught to be dependent on the ‘expert’.

The higher educational system focuses on selling degrees at an enormous price made possible by the abundance of government student loans. The system touts the ability of college graduates to obtain high paying corporate jobs after graduation as justification for the high costs.

The result is that we are conditioned to be obedient worker bees that do not question authority and we base success solely upon income level.

And the rat-race perpetuates.

Even if the college graduate is able to obtain a high paying corporate job, the cost of servicing student loan debt offsets some of this income. And speaking from experience we can say that most of these corporate jobs do not offer a very rewarding experience.

Most of these jobs represent nothing more than a cog in a giant bureaucratic wheel in which employees are required to perform the same menial tasks repetitively day in and day out. Their input is not welcomed and their output is not appreciated. These jobs require employees to sit in a small cubicle under a fluorescent light for at least forty hours every week. And it is not uncommon for commute times to be greater than an hour for many employees also.

The quality of pay is high with these corporate jobs but the quality of life tends to be fairly low.

This doesn’t sound much like opportunity to us.

It’s time to re-examine the way we think about what opportunity is. Technology is rapidly changing the marketplace and the jobs that traditional education prepares us for are diminishing.

But this is a good thing! The diminishing jobs are centralized and boring. The new opportunities are decentralized and exciting! One but has to recognize opportunity knocking.

Steps to Self-Sufficiency

submitted by jwithrow.

This list is certainly not comprehensive but it is our hope that it serves as food for thought.

1. Become money-conscious

Before you can begin to create self-sufficiency and build wealth, you must become money-conscious. Wealth does not come to those who are careless or lazy and it does not come overnight with a stroke of luck. You must begin to recognize that nearly everything that you do has an impact on your self-sufficiency and accumulation of wealth. You must begin to recognize the rules of the universe as it relates to money. And you must begin to take action immediately. Begin to track your expenses tirelessly and eliminate unnecessary spending where possible. This does not require you to become “cheap” but it does require frugality. Once you become money-conscious you will identify ways to reduce your expenses and you will free up additional income to use towards the attainment of self-sufficiency.

2. Consider contributing to a 401(k) if your employer matches your contribution

After assessing your income and expenses and getting your financial house in order, consider contributing to a 401(k) up to the employer match percentage each month. It is important to review the vesting requirements (time of employment required before you can cash out the matching contributions) and determine whether or not you will be at this company for that length of time before deciding to contribute to the plan. The employer match will serve to multiply your deferred savings and your 401(k) contribution will reduce your taxable income. We would not recommend contributing any more than the employer match rate as 401(k) plans are very limited and the rest of your income would better serve you elsewhere. Be aware of the fact that you will have to pay a 10% penalty to the IRS if you cash out the 401(k) prior to retirement but the tax shelter provided will serve to offset some of this penalty. With that said, we would suggest that a 401(k) plan is not a very strong part of a retirement plan and that the funds accumulated would probably better serve you as capital to be deployed once you have developed a more specific investment plan. The 401(k) will allow you to automatically put aside a very small amount of income for use once you are farther along on your road to financial freedom. This vehicle may not be suitable for everyone, but it may be useful if you are still working on creating a sound investment or business plan.

3. Develop a plan to eliminate all consumer debt

You must eliminate all consumer debt before you can effectively begin to build wealth and your first target should be credit card debt. The interest rate on your credit card, in all likelihood, will far outweigh any return on investment that you could consistently generate with your money. So develop a plan to pay all credit card debt off as soon as possible. The most effective way to do this is to determine exactly what dollar amount you can afford to pay towards your credit card debt with each paycheck, and to pay that amount immediately as soon as your paycheck is received. Do not leave yourself short on other bills but make sure that you are paying a sizeable chunk of debt down each month at the same time. If you have multiple credit cards then you should pay the card with the highest interest rate off first. Once all credit card debt is eliminated, move on to the next highest interest rate obligation that you have. The one exception to paying down the highest interest rate debt first is if you have a smaller obligation that could be paid off very quickly in order to free up additional cash flow that could then be directed towards the higher interest debt. While eliminating consumer debt may seem like a long and slow process, be patient and persistent. Imagine a world in which you have no consumer debt to pay and imagine how much extra money you will have at your disposal once you are free of consumer debt.

4. Develop a plan to eliminate or reduce mortgage debt

This step could possibly be interchanged with the next steps depending on your situation but the idea is to either eliminate or reduce your monthly mortgage debt significantly now that you have additional free cash flow from eliminating consumer debt. While the many possibilities cannot be described in this article due to the variety and complexity of mortgage types, we do discuss mortgages in more detail here. Broadly speaking, assess your mortgage and determine if an action can be taken to enhance your financial situation (reducing the LTV, refinancing, etc).

5. Build a six month cash reserve

If you have not already built a cash reserve then now is the time to do so (if you have dependents then you may want to consider making this step two). A cash reserve should be extremely liquid so that you have access to the money in a timely manner in case of emergency. A standard checking account would serve this purpose. Interest bearing savings or money market accounts are acceptable choices although you can rest assured that the interest paid on these accounts will be negligible. Cash under the pillow is another option. Gold or silver bullion could be a wise choice but you will probably want to have direct and immediate access to some cash. While six months is a good benchmark, you could consider building a one year cash reserve as well. Just make sure that you are prepared to sustain yourself and meet obligations in case of an emergency.

6. Set up an IBC whole life insurance policy

If you are unfamiliar with the IBC (Infinite Banking Concept) strategy then this step will require some research before you are comfortable with the idea. Now, do not be put off by seeing this recommendation for ‘life insurance’ – learning about an IBC policy will completely shatter your preconceived notions about what life insurance can do. The reason you have not heard about this type of policy before is because Wall Street would go out of business very quickly if the masses learned and implemented this financial strategy. An IBC policy is about building an ever-growing pool of capital in a way that is advantageous in both the tax and liability realms. The IBC strategy is not about death benefits and it is not about rates of return – these are just bonuses.

When structured properly, IBC policies allow you to funnel income into the policy rather than a bank account. Unlike your bank account, your life insurance cash value is secure from creditors, bail-ins, and bank runs. The cash value also generates a small rate of return without sacrificing liquidity – you can access your cash value tax free at any time for any reason. The implementation of this strategy does require a long-term commitment because it will take on average 8-10 years before an IBC policy ‘breaks even’ internally (cash value equals premium outlay).

Please feel free to email us if you would like more information on this concept.

7. Build diversified income streams in fields that interest you

At this point you have done your due diligence and are in a financial position that will allow you to work on pursuing income in ways that are enjoyable to you. If you are already engaged in work that is satisfying and meaningful to you then this step may not be relevant to you. But if you are like most of us who simply tolerate or maybe despise our job then now is the time to make changes. And even if you are content in your current profession it may be wise to build side businesses as economic conditions are tentative at best at this juncture in time.

Start by deciding what it is that you would like to do with your time and then develop a plan to generate income from your chosen field. While this is an embarrassingly simplistic statement, it is entirely possible to generate income from any good or service for which there is a market. Build a big business. Build several small businesses. Buy rental properties. Become a freelancer in your areas of expertise. Whatever your plan is, the important thing is to engage in work that is enjoyable and meaningful to you – income is useless if it comes with the sacrifice of happiness.

8. Convert income into real assets

Once you have developed a source or sources of stable income then it is time to convert this income into real assets. The most widely accepted choices would be gold and silver bullion, real estate, and/or farm land but you are not limited to these. Real assets could also be things that increase your household’s self sustainability such as alternative energy sources or a family garden. You could also choose more speculative items such as art work or a wine collection but these assets would be much less liquid and thus much more risky (well, the wine would be liquid but in a different kind of way). If you venture into the realm of these speculative investments then make sure that you have a portfolio consisting of the more widely accepted assets as well.

Conclusion:

Note that we wittingly omitted any mention of investing in paper equities (stocks, mutual funds, exchange-traded funds, bonds). The first reason for this is that the financial services industry has sold this type of investment as the only one suitable for retirement which is a lie. There may be a place for this type of investment within your portfolio but it will require much diligence and should serve only as one asset class amongst several within your portfolio. Holding a mixture of stocks across different industries is said by the experts to be the key to diversifying your portfolio. We would suggest that holding a mixture of stocks, real estate, gold and silver bullion, etc. would be the key to a diversified portfolio and that holding only paper equities would be terribly risky. So if you do choose to include equity investments in your portfolio please make sure that you do your research and that you also diversify amongst other, more tangible asset classes as well.

Think of real assets as a ‘backing’ to the cash value of your IBC whole life insurance policy that we discussed in step 6. By building a significant pool of capital (IBC policy) and solidifying it with real assets you are doing exactly what the elite central banks do – except without resorting to fraud. The central banks, Wall Street, and the power elite in general have done a wonderful job of convincing the masses that the key to success is to accumulate exclusively stocks and bonds. And this is true. But what they did not disclose to the masses is that such a strategy is key to the success of the central banks, Wall Street, and the power elite, not the masses themselves.

We hope that this brief article serves as a guide towards maximizing your personal liberty, resiliency, and self-sufficiency.

Always remember that happiness, fulfillment, and calmness of mind and spirit are the most precious of commodities and be mindful not to lose sight of these ideals on the road to building wealth and obtaining self-sufficiency. Also, never be afraid to follow your heart and stand on your principles; this life is but a journey in search of experience and wisdom, and that journey is best undertaken to the beat of one’s own drum.