Parents when you are raising your children have you noticed that if you punish a behavior you do so to get less of that behavior, and conversely if you want to encourage the behavior you reward it? Do you think that by reversing the action and punishing the behavior it would lead to an increase? It seems that the Obama Administration does.
One of the onerous taxes in the Obamacare legislation is an increased excise tax of 2.3% on medical devices to help pay for Obamacare. Companies like The Cook Group of Bloomington, IN are quite concerned about the impact it will have on their bottom line and business. The Cook Group President, Ken Hawkins, estimates that the tax will slice $17 million from its yearly revenues starting in 2013. This has already caused Cook to stop cut back its U.S. spending now. Except for one Canton, Illinois, plant that Cook has committed to build in the home town of its founder, Bill Cook, "I've had to put all other small manufacturing plant plans are on hold as a result of this tax." Hawkins said. "It's the wrong kind of tax at the wrong time, on the wrong industry, and I think for the wrong reasons."
The device industry fought and won a reduction of the increased tax from 4.6% to 2.3% on everything from knee implants, heart stints, slings, walkers, hearing aids and more. A new industry sponsored study done by the Hudson Institute sponsored by AdvaMed, concludes that even the reduced rate will damage the industry as if it had a mild stroke. The study projects that the tax will nearly double the corporate tax rate on the medical device industry, causing it to shift 10% of its production to low tax offshore sites and shrink its U.S. employment by 11% or 45,700 workers.
The conclusion of a liberal think tank Families USA president, Kathleen Stoll, believes that most medical device companies should be able to offset the taxed-away revenues by reducing profits, CEO salaries, and shareholder returns. I wonder if she ever studied a single business class.
One of the largest U.S. device manufacturers, Boston Scientific Corp., said it would eliminate up to 1,400 jobs in the next two years and hire 1,000 new workers in China. Ray Elliott, CEO of Boston Scientific said it "discourages job creation, investment, and economic growth by limiting available R&D funds." Cook;s Hawkins said companies, such as his, will drop, or not develop, products with less profit potential. Today Cook stocks 15,000 different products, and many are marginally profitable. If new taxes cut incomes to the innovation-oriented device business he said "Those kind of niche products are going to never be done. And no one would ever know what products we never invent."
Wouldn't it make more sense to cut taxes to U.S.Companies, one of the highest corporate taxed countries in the world today, rather than punishing them? Who pays for these taxes? Each and every one of us. Through increased product cost, through lost jobs, lost revenue from those lost employees, and through lower standards of living without the miracle engine of innovation and discovery stripped by punishing those innovators. If we want to start standing in lines like Old Moscow for whatever the state produced that week, this is a step in that direction.
Tuesday, September 27, 2011
Monday, August 29, 2011
Separation of Church and State.
Where or where is that famous phrase we all know by heart "Separation of Church and State" found in our founding documents? Surely it is in the Constitution, within the Bill of Rights, isn't it? We are told it is in the 1st Amendment, is it really there?
1st Amendment
"Congress shall make no laws respecting an establishment of religion or
prohibit the free exercise there of."
It never says anything about separation of church and state.
Just where did the "separation of church and state" begin? How did it become
part of our national vernacular?
In 1801 the Danbury Baptist Association of Danbury Connecticut heard a
rumor that the Congregational Denomination was about to be made the National
Denomination and it worried them greatly. It was only a rumor, but they
wrote to brand new President, Thomas Jefferson. He wrote them back on
January 1st 1802 and said:
"The First Amendment has erected a wall of separation between Church and
State. They need not fear a National Denomination."
We never hear Jefferson's words in context or intent anymore. Here is that letter, you can see it for yourself in the Jefferson room upstairs in the Library of Congress.
Jefferson's Letter to the Danbury Baptists
The Final Letter, as Sent
To messers. Nehemiah Dodge, Ephraim Robbins, & Stephen S. Nelson, a committee of the Danbury Baptist association in the state of Connecticut.
Gentlemen
The affectionate sentiments of esteem and approbation which you are so good as to express towards me, on behalf of the Danbury Baptist association, give me the highest satisfaction. my duties dictate a faithful and zealous pursuit of the interests of my constituents, & in proportion as they are persuaded of my fidelity to those duties, the discharge of them becomes more and more pleasing.
Believing with you that religion is a matter which lies solely between Man & his God, that he owes account to none other for his faith or his worship, that the legitimate powers of government reach actions only, & not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should "make no law respecting an establishment of religion, or prohibiting the free exercise thereof," thus building a wall of separation between Church & State. Adhering to this expression of the supreme will of the nation in behalf of the rights of conscience, I shall see with sincere satisfaction the progress of those sentiments which tend to restore to man all his natural rights, convinced he has no natural right in opposition to his social duties.
I reciprocate your kind prayers for the protection & blessing of the common father and creator of man, and tender you for yourselves & your religious association, assurances of my high respect & esteem.
Th Jefferson
Jan. 1. 1802.
Then how did we come to believe it is in the Constitution?
In 1958 the Supreme Court discussed their interpretation of the Separation of Church and State.
1958 Baer v Kolmorger
"Continuing to talk about the separation of church and state will make
people think that it was part of the Constitution."
This constant refrain has caused us to add it to our National vernacular.
Consider the warning of Dr. William James;
"There is nothing so absurd but that you repeat it often enough people will
believe it true."
Today, if you ask most Americans if Separation of Church and State is in our Constitution, and I will bet you that 90% will say that it is. It is not now, nor has it ever been. The only place it was ever mentioned was in that private letter to the Danbury Baptists telling them that the State would never force them to follow a national prescribed religious sect.
The facts are there is no Constitutional mandate for a separation of church and state. There is a mandate to protect the church from being imposed on by the State. There is a mandate to protect people of faith from being oppressed in any forum private or public by the State.
1st Amendment
"Congress shall make no laws respecting an establishment of religion or
prohibit the free exercise there of."
It never says anything about separation of church and state.
Just where did the "separation of church and state" begin? How did it become
part of our national vernacular?
In 1801 the Danbury Baptist Association of Danbury Connecticut heard a
rumor that the Congregational Denomination was about to be made the National
Denomination and it worried them greatly. It was only a rumor, but they
wrote to brand new President, Thomas Jefferson. He wrote them back on
January 1st 1802 and said:
"The First Amendment has erected a wall of separation between Church and
State. They need not fear a National Denomination."
We never hear Jefferson's words in context or intent anymore. Here is that letter, you can see it for yourself in the Jefferson room upstairs in the Library of Congress.
Jefferson's Letter to the Danbury Baptists
The Final Letter, as Sent
To messers. Nehemiah Dodge, Ephraim Robbins, & Stephen S. Nelson, a committee of the Danbury Baptist association in the state of Connecticut.
Gentlemen
The affectionate sentiments of esteem and approbation which you are so good as to express towards me, on behalf of the Danbury Baptist association, give me the highest satisfaction. my duties dictate a faithful and zealous pursuit of the interests of my constituents, & in proportion as they are persuaded of my fidelity to those duties, the discharge of them becomes more and more pleasing.
Believing with you that religion is a matter which lies solely between Man & his God, that he owes account to none other for his faith or his worship, that the legitimate powers of government reach actions only, & not opinions, I contemplate with sovereign reverence that act of the whole American people which declared that their legislature should "make no law respecting an establishment of religion, or prohibiting the free exercise thereof," thus building a wall of separation between Church & State. Adhering to this expression of the supreme will of the nation in behalf of the rights of conscience, I shall see with sincere satisfaction the progress of those sentiments which tend to restore to man all his natural rights, convinced he has no natural right in opposition to his social duties.
I reciprocate your kind prayers for the protection & blessing of the common father and creator of man, and tender you for yourselves & your religious association, assurances of my high respect & esteem.
Th Jefferson
Jan. 1. 1802.
Then how did we come to believe it is in the Constitution?
In 1958 the Supreme Court discussed their interpretation of the Separation of Church and State.
1958 Baer v Kolmorger
"Continuing to talk about the separation of church and state will make
people think that it was part of the Constitution."
This constant refrain has caused us to add it to our National vernacular.
Consider the warning of Dr. William James;
"There is nothing so absurd but that you repeat it often enough people will
believe it true."
Today, if you ask most Americans if Separation of Church and State is in our Constitution, and I will bet you that 90% will say that it is. It is not now, nor has it ever been. The only place it was ever mentioned was in that private letter to the Danbury Baptists telling them that the State would never force them to follow a national prescribed religious sect.
The facts are there is no Constitutional mandate for a separation of church and state. There is a mandate to protect the church from being imposed on by the State. There is a mandate to protect people of faith from being oppressed in any forum private or public by the State.
Tuesday, August 9, 2011
The Cost Of Leadership
In our world today we see so many so called leaders in business and politics who are all about themselves, their own benefits, their own rewards, their own egos. It makes it hard for people to understand that what they are showing is the antithesis of leadership. True leadership is built on sacrifice.
Sacrifice is a constant in leadership. It is an ongoing process, not a one-time payment. Many times the cost of moving forward in leadership is often financial, there is usually a temporary step back in income when you take on a new challenge of leadership. If you do your job right the finances will come, never hesitate to make a sacrifice when you know the step is right.
Leaders who want to rise have to do more than take an occasional cut in pay. They have to give up their rights. When you become a leader, you lose the right to think for yourself. Dexter Yager says "If you have a decision to make, you can never go wrong choosing the option that is best for your people over what is best for you personally." For every person, the nature of the sacrifice may be different. For example, Lee Iaccoca's sacrifice came late in his career to save Chrysler. Former South African president F. W. de Klerk, who worked to dismantle apartheid in his country sacrificing his own career. The circumstances change from person to person, but the principle doesn't. Leadership means sacrifice.
Leaders give up to go up. That is true of every leader regardless of profession. Talk to any leader, and you will find that he has made repeated sacrifices. Usually the higher that leader has climbed, the greater the sacrifices he or she has made. Effective leaders sacrifice much that is good to dedicate themselves to what is best. Robert Palmer said in and interview, "In my model of management, there is very little wiggle room. If you want a management job, they you have to accept the responsibility and accountability that goes with it." He is really talking not about management but the cost of leadership.
If leaders have to give up to go up, then they have to give up even more to stay up. Have you ever considered how infrequently teams have back-to-back champion seasons? The reason is simple: If a leader can take a team to the championship game and win it, he often assumes he can duplicate the results the next year without making changes. He becomes reluctant to make additional sacrifices in the off-season. But what gets a team to the top isn't what keeps it there. The only way to stay up is give up even more. Leadership success requires continual change, improvement, and sacrifice. "For everything you have missed, you have gained something else; and for everything you gain, you lose something." Ralph Waldo Emerson.
Sacrifice is the rule of leadership, yet nothing is more rewarding that leadership. Helping others follow a vision, helping them realize more than they ever could have dreamed of without your leadership is priceless. Of course leadership is rewarding financially in the end, it isn't what you get out of it, it is about who you become.
It's too bad so many of our leaders in name or title only have it all backwards.
Sacrifice is a constant in leadership. It is an ongoing process, not a one-time payment. Many times the cost of moving forward in leadership is often financial, there is usually a temporary step back in income when you take on a new challenge of leadership. If you do your job right the finances will come, never hesitate to make a sacrifice when you know the step is right.
Leaders who want to rise have to do more than take an occasional cut in pay. They have to give up their rights. When you become a leader, you lose the right to think for yourself. Dexter Yager says "If you have a decision to make, you can never go wrong choosing the option that is best for your people over what is best for you personally." For every person, the nature of the sacrifice may be different. For example, Lee Iaccoca's sacrifice came late in his career to save Chrysler. Former South African president F. W. de Klerk, who worked to dismantle apartheid in his country sacrificing his own career. The circumstances change from person to person, but the principle doesn't. Leadership means sacrifice.
Leaders give up to go up. That is true of every leader regardless of profession. Talk to any leader, and you will find that he has made repeated sacrifices. Usually the higher that leader has climbed, the greater the sacrifices he or she has made. Effective leaders sacrifice much that is good to dedicate themselves to what is best. Robert Palmer said in and interview, "In my model of management, there is very little wiggle room. If you want a management job, they you have to accept the responsibility and accountability that goes with it." He is really talking not about management but the cost of leadership.
If leaders have to give up to go up, then they have to give up even more to stay up. Have you ever considered how infrequently teams have back-to-back champion seasons? The reason is simple: If a leader can take a team to the championship game and win it, he often assumes he can duplicate the results the next year without making changes. He becomes reluctant to make additional sacrifices in the off-season. But what gets a team to the top isn't what keeps it there. The only way to stay up is give up even more. Leadership success requires continual change, improvement, and sacrifice. "For everything you have missed, you have gained something else; and for everything you gain, you lose something." Ralph Waldo Emerson.
Sacrifice is the rule of leadership, yet nothing is more rewarding that leadership. Helping others follow a vision, helping them realize more than they ever could have dreamed of without your leadership is priceless. Of course leadership is rewarding financially in the end, it isn't what you get out of it, it is about who you become.
It's too bad so many of our leaders in name or title only have it all backwards.
Saturday, July 9, 2011
How to Create a List of 1,000 Names
If you are just getting started in a sales career, or restarting one, one of the first things you need to do is make a list. The purpose of a list is to get as many names written down as possible, this will accomplish many things for you. One it gives you confidence to see all the people who might need your services.
There are many schools of thought on the contact list. Some say the more the merrier, others say to only put enough names that you can really invest the time to cultivate the relationships. Personally I say both, make a huge list, get as many with contact information as possible, then score them into "A", "B", and "C" names depending on the level of activity you choose to give them. You only will be investing money on mail or marketing for them maybe once before you choose which ones you invest in, and which ones you market electronically only.
Let's start showing you how to build a big list. Anyone can create a list of a thousand names with enough effort. Keep in mind that there are many names who are not going to be the meat of your list. In this exercise the most important thing is not to prequalify the names, don't decide for them if they should or shouldn't be on your list, don't leave off those who you would be intimidated to call, if you are too intimidated you won't call them anyway so there is nothing to be afraid of putting them down on your list.
Today it is so much easier to build a big list than it used to be due to the Social Media phenomenon. If they are on your Facebook, Myspace, Linked in, or any other Social media site, put them on your list.
Who went to your wedding? The average wedding has two hundred guests, put them down. Your Christmas card list, you Church Directory, who do you work with, have you worked with at each place you have worked, your bowling league, your high school friends, your civic organizations, your clubs, your extended family, put them down. Go through your address books as well on paper, and in your phone and computers.
Some tricks, don't just try to think of people, think of them in groups. If you sit down and try to think of people you will draw a blank, if you think who was in our softball team all their faces appear in your mind. Think of them in context of places and groups and you will find them popping into your head.
Once you exhaust the lists above now is the fun part. Sit down with someone who will help lead you through this part. This is kind of a free association type of exercise. Have your partner take a Yellow Pages and you sit opposite them at the table with a pad of paper and pen. Have them start with the A's like Accountants and you write down everyone you know who is an accountant, or are reminded of by the word. Then one by one, go through every listing of jobs and businesses types from A to Z. So you should have Ambassadors to Zoo Keepers. Again don't prejudge these names, just write them down. Keep in mind, the names on your list may never be a client for you, but might know someone who would.
Once you have your list start working on putting contact information with them. Those from your social media and from your address books should have it already, put it down as you are filling those out. However, on the free association part, don't stop to get the contact information until you have finished the process of creating the names on the list. You don't want the distraction at that point. Fill in the blanks later.
Now that you have the list, you will start looking at it with a more critical eye as to who you want to start contacting and start adjusting the grading on the names. However, it is wise to get word out to as many as you have contact information on to let them know that you are in business, and how they can get with you. I would request an email in hopes at least some would return your outreach with an email to you. You can then capture theirs as well.
When you have a list, it is time to start contacting them. That will be the topic for another blog. However, one of the most important reasons you need a big list is that if you only have a list in your head, or a list of say a dozen people, you will become frozen if you get a handful of noes in a row when you start calling your list. You will naturally start looking at your list and see it half gone and fear if you call more you will be out of business before you start. If however, you get a handful of noes in a row and see hundreds of names still on it you don't care as much. With that said, if you get a handful of noes in a row, I would call a mentor to see if you are saying something wrong and tweak it.
So, get started on a BIG list.
There are many schools of thought on the contact list. Some say the more the merrier, others say to only put enough names that you can really invest the time to cultivate the relationships. Personally I say both, make a huge list, get as many with contact information as possible, then score them into "A", "B", and "C" names depending on the level of activity you choose to give them. You only will be investing money on mail or marketing for them maybe once before you choose which ones you invest in, and which ones you market electronically only.
Let's start showing you how to build a big list. Anyone can create a list of a thousand names with enough effort. Keep in mind that there are many names who are not going to be the meat of your list. In this exercise the most important thing is not to prequalify the names, don't decide for them if they should or shouldn't be on your list, don't leave off those who you would be intimidated to call, if you are too intimidated you won't call them anyway so there is nothing to be afraid of putting them down on your list.
Today it is so much easier to build a big list than it used to be due to the Social Media phenomenon. If they are on your Facebook, Myspace, Linked in, or any other Social media site, put them on your list.
Who went to your wedding? The average wedding has two hundred guests, put them down. Your Christmas card list, you Church Directory, who do you work with, have you worked with at each place you have worked, your bowling league, your high school friends, your civic organizations, your clubs, your extended family, put them down. Go through your address books as well on paper, and in your phone and computers.
Some tricks, don't just try to think of people, think of them in groups. If you sit down and try to think of people you will draw a blank, if you think who was in our softball team all their faces appear in your mind. Think of them in context of places and groups and you will find them popping into your head.
Once you exhaust the lists above now is the fun part. Sit down with someone who will help lead you through this part. This is kind of a free association type of exercise. Have your partner take a Yellow Pages and you sit opposite them at the table with a pad of paper and pen. Have them start with the A's like Accountants and you write down everyone you know who is an accountant, or are reminded of by the word. Then one by one, go through every listing of jobs and businesses types from A to Z. So you should have Ambassadors to Zoo Keepers. Again don't prejudge these names, just write them down. Keep in mind, the names on your list may never be a client for you, but might know someone who would.
Once you have your list start working on putting contact information with them. Those from your social media and from your address books should have it already, put it down as you are filling those out. However, on the free association part, don't stop to get the contact information until you have finished the process of creating the names on the list. You don't want the distraction at that point. Fill in the blanks later.
Now that you have the list, you will start looking at it with a more critical eye as to who you want to start contacting and start adjusting the grading on the names. However, it is wise to get word out to as many as you have contact information on to let them know that you are in business, and how they can get with you. I would request an email in hopes at least some would return your outreach with an email to you. You can then capture theirs as well.
When you have a list, it is time to start contacting them. That will be the topic for another blog. However, one of the most important reasons you need a big list is that if you only have a list in your head, or a list of say a dozen people, you will become frozen if you get a handful of noes in a row when you start calling your list. You will naturally start looking at your list and see it half gone and fear if you call more you will be out of business before you start. If however, you get a handful of noes in a row and see hundreds of names still on it you don't care as much. With that said, if you get a handful of noes in a row, I would call a mentor to see if you are saying something wrong and tweak it.
So, get started on a BIG list.
Friday, July 1, 2011
The Spirit Of 1776
July Fourth Seventeen Seventy Six was the publish date of the book on free market capitalism in Scotland. This book became the core of the thinking of our own founders who too were busy rewriting the world that same week in America. This book was "The Wealth of Nations" by Adam Smith. Today we find ourselves in dire need of returning to the wisdom of Smith and cast aside the mistakes of John Maynard Keynes.
Rather than trying to do a deep dive into the mind of Smith let's take a look at the core belief that the rest was built around. Adam Smith's "Invisible Hand" that guides business in a free market has been misunderstood, and misrepresented for now more than two centuries from those who are against a free market system.
What is the Invisible Hand? In a word greed. It's a burning desire for gain, and a fear of loss that ultimately guides human nature in a free market. There are many people who will try to tell you that if not for government regulations or unions protecting us from business people we will be treated unfairly and oppressed. However, that simply isn't true.
The examples they will use is the abuses in the factories of the industrial revolution. If there wasn't a crony system with the local governments at the time, they wouldn't have been needed. If someone tried to strong arm, do bodily harm, or even kill anyone who resisted laws would have been broken and if not condoned by local politicians and police it would have ended.
The Invisible Hand is based on personal self-interest and desire for profit. Here is how it would work in a true free market system. If I was a tyrant of an employer and treated my employees horribly, underpaid them, abused them, and was a bad guy, someone would start a company to compete with me and would take away my best employees, leaving me with the most unproductive ones, dooming me to failure.
If I, as a businessman, abused my customers, treated them badly, sold them an over priced, poor quality product and wouldn't stand by it when it failed, someone would compete with me. When they sold a better product at a better price and stood behind it they would cause me to lose my business. I would only have two choices with either story above. One is to keep doing what I was doing and go broke, or to change, improve how I treat my employees and customers to try to compete.
So in my own selfish best interest, I would be forced to be fair, forced to treat customers and employees well for the simple motive that I want to profit. If you read Ayn Rand's book "Atlas Shrugged" that is the core of it's message as well.
When anything interferes with the free market with government regulations or union meddling, or crony capitalism at the local, state, or federal level, it ties the Invisible Hand and takes away it's power to guide the process. When it is tied, the results are always less than it should be, higher prices, lower service. If you want to see how bad it can get look at our health care system in America. It has been so highly regulated for so long there is no way it could be affordable. Rather than a government take over, we would be wise to let the Invisible Hand control it to see what would happen.
Two recent examples of the destroying effect of government intervention are happening right now. One is in Arizona where the state of Arizona is protecting those who pay them dues in the Cosmetology Board to shut down eyebrow threading businesses. They are demanding that these businesses take 600 hours of courses on Cosmetology School for about ten thousand dollars to get a license to practice. However, if you consider that not one minute of those six hundred hours will teach eyebrow threading, it appears that they are simply stopping competition from coming into the market.
In Louisiana right now there is a battle going on with Florists. The State is requiring a four and a half hour test to get a florist license. The judges who test the candidates are competing florists, the results are that the failure rate on the Florist test is twice as high as the bar exam for Louisiana. Once again allowing the competition to use the power of government to keep others from entering the market.
We see crony capitalism from the smallest to largest government entity. Maybe it is time we go back to the Spirit of 76 in both small government Republic and the Invisible Hand.
Rather than trying to do a deep dive into the mind of Smith let's take a look at the core belief that the rest was built around. Adam Smith's "Invisible Hand" that guides business in a free market has been misunderstood, and misrepresented for now more than two centuries from those who are against a free market system.
What is the Invisible Hand? In a word greed. It's a burning desire for gain, and a fear of loss that ultimately guides human nature in a free market. There are many people who will try to tell you that if not for government regulations or unions protecting us from business people we will be treated unfairly and oppressed. However, that simply isn't true.
The examples they will use is the abuses in the factories of the industrial revolution. If there wasn't a crony system with the local governments at the time, they wouldn't have been needed. If someone tried to strong arm, do bodily harm, or even kill anyone who resisted laws would have been broken and if not condoned by local politicians and police it would have ended.
The Invisible Hand is based on personal self-interest and desire for profit. Here is how it would work in a true free market system. If I was a tyrant of an employer and treated my employees horribly, underpaid them, abused them, and was a bad guy, someone would start a company to compete with me and would take away my best employees, leaving me with the most unproductive ones, dooming me to failure.
If I, as a businessman, abused my customers, treated them badly, sold them an over priced, poor quality product and wouldn't stand by it when it failed, someone would compete with me. When they sold a better product at a better price and stood behind it they would cause me to lose my business. I would only have two choices with either story above. One is to keep doing what I was doing and go broke, or to change, improve how I treat my employees and customers to try to compete.
So in my own selfish best interest, I would be forced to be fair, forced to treat customers and employees well for the simple motive that I want to profit. If you read Ayn Rand's book "Atlas Shrugged" that is the core of it's message as well.
When anything interferes with the free market with government regulations or union meddling, or crony capitalism at the local, state, or federal level, it ties the Invisible Hand and takes away it's power to guide the process. When it is tied, the results are always less than it should be, higher prices, lower service. If you want to see how bad it can get look at our health care system in America. It has been so highly regulated for so long there is no way it could be affordable. Rather than a government take over, we would be wise to let the Invisible Hand control it to see what would happen.
Two recent examples of the destroying effect of government intervention are happening right now. One is in Arizona where the state of Arizona is protecting those who pay them dues in the Cosmetology Board to shut down eyebrow threading businesses. They are demanding that these businesses take 600 hours of courses on Cosmetology School for about ten thousand dollars to get a license to practice. However, if you consider that not one minute of those six hundred hours will teach eyebrow threading, it appears that they are simply stopping competition from coming into the market.
In Louisiana right now there is a battle going on with Florists. The State is requiring a four and a half hour test to get a florist license. The judges who test the candidates are competing florists, the results are that the failure rate on the Florist test is twice as high as the bar exam for Louisiana. Once again allowing the competition to use the power of government to keep others from entering the market.
We see crony capitalism from the smallest to largest government entity. Maybe it is time we go back to the Spirit of 76 in both small government Republic and the Invisible Hand.
Monday, June 6, 2011
Courage of Conviction
Conventional wisdom tells us that we should not talk about money, religion, or politics in polite company. That message is even more ramped up when it comes to business. It is foolish to burn bridges with potential customers taking a position on these controversial things and turning someone off who may not do business with us because of it.
During the entirety of my career I followed this thought process with a passion. I took it to the extreme and wouldn't tell anyone I followed Purdue sports to not turn off any Hoosier fans. I wouldn't wear facial hair because there is a certain part of the population this turns off. Vanilla and safe were the goal.
Why today, have I thrown that completely out the window? Because there is a huge difference between having integrity, character, conviction, and courage.
We should always strive to have integrity, we should teach our children to as well. Integrity is not doing something wrong, not cheating, stealing, or misdealing. We should all have integrity. For instance if we saw three big guys beating up someone, we can have integrity just by not taking advantage of this situation. However this isn't enough. We need to step up and show character and stand up and do right. Character will require us to get involved. Character requires courage, courage to take a stand, to take a personal risk. Character could cause pain to come to you because you had the courage to step into the fray. But it requires that you do what is right, not just know what is right.
When you see something happening that you believe is wrong, something that you find yourself under conviction to stand up against it. Then it requires that you have the courage to take the risk of personal harm, be it nothing more than financial harm, to show your true character and step into the fray, to say "this is wrong!" To do something about it.
If you are reading this, like many I know, you cheer from the sidelines, you watch others speaking out, and are glad they do, but fear what might happen to you if you joined in the chorus. Let me ask you to consider moving from integrity to character through courage. Take the risk, step out, follow the example of our founders and become a leader in your sphere of influence. You may lose some "friends", you may have some question you and chastise you, but you will feel good knowing that you are a person of conviction with the courage to speak out, and make a difference.
In my opinion, our freedoms and liberties, and those of our children and grandchildren hang in the balance. Let's roll!!!
During the entirety of my career I followed this thought process with a passion. I took it to the extreme and wouldn't tell anyone I followed Purdue sports to not turn off any Hoosier fans. I wouldn't wear facial hair because there is a certain part of the population this turns off. Vanilla and safe were the goal.
Why today, have I thrown that completely out the window? Because there is a huge difference between having integrity, character, conviction, and courage.
We should always strive to have integrity, we should teach our children to as well. Integrity is not doing something wrong, not cheating, stealing, or misdealing. We should all have integrity. For instance if we saw three big guys beating up someone, we can have integrity just by not taking advantage of this situation. However this isn't enough. We need to step up and show character and stand up and do right. Character will require us to get involved. Character requires courage, courage to take a stand, to take a personal risk. Character could cause pain to come to you because you had the courage to step into the fray. But it requires that you do what is right, not just know what is right.
When you see something happening that you believe is wrong, something that you find yourself under conviction to stand up against it. Then it requires that you have the courage to take the risk of personal harm, be it nothing more than financial harm, to show your true character and step into the fray, to say "this is wrong!" To do something about it.
If you are reading this, like many I know, you cheer from the sidelines, you watch others speaking out, and are glad they do, but fear what might happen to you if you joined in the chorus. Let me ask you to consider moving from integrity to character through courage. Take the risk, step out, follow the example of our founders and become a leader in your sphere of influence. You may lose some "friends", you may have some question you and chastise you, but you will feel good knowing that you are a person of conviction with the courage to speak out, and make a difference.
In my opinion, our freedoms and liberties, and those of our children and grandchildren hang in the balance. Let's roll!!!
Sunday, May 22, 2011
The Conning of The American Economy and Liberty
As a people we discuss politics, we talk about the economy, the Federal Reserve, inflation, money, and more, however, do we know how we got to where we are? Do we know what decisions were made, and by who, and for what? If we do not know, how can we hope to ever make a change?
America, you have been conned. Let's discuss the history of money and see how we have arrived where we are. It isn't so much that we as Americans do not know a lot about our economy, our history, and our government, it is just that like Ronald Reagan once said about liberals, we just know so much that isn't true.
Money was, and has always been, something we have agreed upon to be money. Early on it could have been shells or stones or sheep, later we started using precious metals, like gold, silver, copper and others, mostly gold. This was the basic means of exchange for around six thousand years until 1971 when our money was taken off the gold standard.
When we used gold, there were businessmen known as goldsmiths. These goldsmiths were the bankers of their day, so you wouldn't be in danger of being robbed of your gold, you could deposit it with a goldsmith who would issue you paper receipts or scripts to be able to come back and redeem your gold as you needed it. This evolved to a point where the goldsmith's scripts could be exchanged for purchase and the person you gave it to could redeem it. Soon the goldsmiths realized that only a fraction of the gold they held on deposit ever was redeemed at any given time, so they started printing more scripts against that deposited gold than their was gold held on reserve. This was known as fractional reserve banking, we are still using that same program in our banks today.
Genghis Khan came to the decision that he wanted to use paper money, he had the most powerful and ruthless army on the planet so he enforced that what he said was money was, if you disagreed you died. When Marco Polo explored Asia he came back with stories of this Khan money.
Then in 1715-1720 we saw the impact John Law had on money. A Scot, and son of a banker, John Law was famous for his talents with the ladies. This ended with Law killing a jealous husband in self-defense. He had to leave England and went to France. There at the death of King Louis the 14th, the heir a seven year old Louis the XV inherited the three billion livres of the old king. The currency was devalued by 20% which did no good, those who were accused of hoarding were arrested. John Law showed up with an idea of Fiat money. It was paper money issued by the government secured by land and Royal revenues. He wasn't done yet, he started issuing paper money against land in France's holdings in America, capitalizing on the speculative frenzy the New World held. This created a massive boom the French saw their standard of living escalate as never before known. Many no longer worked, they became full time speculators buying and selling this new paper. Then an angry Prince de Conti arrived and brought wagon loads of this paper and wanted to cash it in for gold. When he did, they gave him his gold, but it caused others to do the same, crashing the bubble.
Law gambling his remaining authority he abolished coin as a medium of exchange, and then in February 1720 declared it illegal to own more than the tiniest of sums in gold in any form. Then he closed the borders, and sent instructions to all coach-houses to refuse fresh horses to anyone travelling to foreign lands until an inspector had examined their baggage. The substantial fines imposed were shared with the public spirited individual who filed the report.
By August of that year it was all over, and John Law was the most hated man in France. Fortunately he was living in Venice. Like all good gamblers he had gone on to the next game, by which means he continued his existence for another 9 years. Much of the money he won at this time would have been that which had earlier escaped him in the capital flight which he had outlawed.
This is truly a story of Booms and Busts, or otherwise known as Inflation and Deflation.
Inflation is not, as most believe, rising prices, demand can cause prices to rise. It is when the money supply is increased too large for demand. It causes prices to go up two ways, one by lowering the value of the money you are using. The other is that those selling goods see an opportunity to raise prices when people have a lot of money in their pockets.
Inflation is actually a secret tax, governments love inflation, and do it intentionally. Inflation is a tax on the people that is hidden, it is actually a reverse graduated tax because it hits the poor and middle class harder as a much higher percentage of their money is used for consumption. It shrinks the buying power of your savings, and as Americans have had repeated attacks on the value of their money for most of their lives it has trained them to not save money.
However, again governments love it, they get to see increased exporting of goods since foreign currencies can buy our goods cheaper than we can. Further it allows them to pay back the massive government debt with cheaper devalued dollars. If wages increase, it will push people into higher tax brackets again raising taxes without the political hit of a tax increase.
Deflation is the opposite, this is the thing governments fear the most. It is caused with the shrinking of money supplies and causes real prices to drop. If you lost your job and then had your one hundred thousand dollar home foreclosed where it resold for fifty thousand, what happened to the other fifty thousand dollars? It is simply gone, it is out of the economy, and the economy was deflated of that purchasing power. Prices going down is good for buying food and energy, but bad if you bought something speculating it would go up in value.
Today the value of the dollar is imaginary and in the hands of the Federal Reserve who manipulates it by pouring money into the market or not. We no longer have a stable money tied to gold or anything else.
How did we get here?
Our founders gave Congress the power to declare what money would be, they only gave the states the power to coin money. The founders had already had an experiment with paper fiat money called the Continental. They printed this paper money to help pay for the war, it wasn't tied to anything of value other than the new government said it was money. It devalued so much that no one would take it, even today we sometimes hear the phrase "It isn't worth a Continental" used.
We then went to a Gold/Silver standard and the nation's money was stable for years. Then another expensive war came about with the Civil War, and we printed money again to pay for it. We also had an Income Tax imposed and a way of collecting in with the IRS in 1862. The income tax was declared Un-Constitutional in 1894, but the IRS remained.
Then the Panic of 1907 came about. Speculation still contends it was done intentionally by a group of big bankers did it on purpose to cause panic and give them and the government the opportunity to "fix it." What we do know is that it started with a failed attempt to corner the copper market. The stock market crashed by 50% in a year, and banks across America failed. It was likely it would have been much worse if not for J.P. Morgan pledging vasts sums of his own money to shore up the banking system. At the time America didn't have a central banking system to shore up the system in crisis. We had two National Banks earlier both highly unpopular with the American people. The last one was the singular purpose of Andrew Jackson to remove. Senator Nelson Aldredge was given the task to find a way to "fix this."
In 1910 there was a meeting on Jekyll Island Club off the coast of Georgia. Aldrich convened a secret conference with a number of the nation's leading financiers to discuss monetary policy and the banking system. Aldrich and A. P. Andrew (Assistant Secretary of the Treasury Department), Paul Warburg (representing Kuhn, Loeb & Co.), Frank A. Vanderlip (James Stillman's successor as president of the National City Bank of New York), Henry P. Davison (senior partner of J. P. Morgan Company), Charles D. Norton (president of the Morgan-dominated First National Bank of New York), and Benjamin Strong (representing J. P. Morgan), produced a design for a "National Reserve Bank".
Forbes magazine founder B. C. Forbes wrote several years later:
Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.
The final report of the National Monetary Commission was published on January 11, 1911. For nearly two years legislators debated the proposal and it was not until December 22, 1913, that Congress passed the Federal Reserve Act. President Woodrow Wilson signed the legislation immediately and the legislation was enacted on the same day, December 22, 1913, creating the Federal Reserve System. At the time it was a secret national bank.
The Federal Reserve is not Federal and it has no reserves.
1913 was maybe the most pivotal year in our economic and Republic's history since it's founding. Also in 1913 the Income tax was brought back, even after it had been found Un-Constitutional twenty years earlier. The government needed to pay the 6% interest to the Federal Reserve. One congressman filibustered on the floor of the House trying to stop the income tax, he said that there could come a time when it would be as high as 20%, the other congressmen laughed him off the floor as a radical an extremist, and an alarmist.
Now the government doesn't take need to take away liberty and freedoms by force, they know that they only have to get the camel's nose into the tent. 1913 was that year. Another gem brought to us in 1913 was the 17th Amendment where unlike the Founder's intent of the Senators being selected by the State representatives of each state to represent the state's interest, they became popularly elected making them part of that buying the constituency vote as well as the House.
1913 was the Birth of an Empire and death of the Republic.
Now, we hear a lot about the Federal Reserve, but do you know how it works?
Basically it is like this. The government sells a bond to the Federal Reserve, the Reserve hands a check to the government written on an account that doesn't exist. The government then deposits that check into an electronic account and the money appears out of thin air, and the Federal Reserve holds the Bond. Every time the Reserve buys bonds from the government money flows out and increases the supply causing inflation and lowering interest rates.
Wars are expensive, they are golden opportunities for government to print more money. W.W.I comes along, Wilson and the Fed pumps money into the supply, inflation and devaluation come right with it. After the war, the soldiers come home, need to find jobs, war machines are no longer being made, and we see a recession. France is demanding gold to pay back our debt to them, so what do we do? Pump more money into the system creating inflation, and the Roaring 20s, everyone had money, life was good, people started speculating in the market that was booming until... Herbert Hoover was hinting about something called the Smoot Hawley Tariff. Just the talk about it caused businessmen to start pulling in their resources, this caused the stock market to crash.
Of course you have heard about the stock market crash, how the market crashed, people committed suicide, and no one had any money for a long time, right? Wrong.
Very few committed suicide, just one year after the crash the market was back where it was before. (Sound familiar) However, this was a perfect crisis for the government to "do something" and they did.
The reason the market crashed is that when businessmen heard, and believed, the government was going to impose tariffs they knew it would be destructive to business and they pulled in their capital.
The government did something:
1932 the Smoot Hawley Tariffs were imposed creating a trade war pushing the recession into the Great Depression.
1934 the Gold Reserve Act made it illegal for any American to own gold, this lasted until the mid 70s.
1935 the Wagner Act gave us unions and collective bargaining. While some of this was needed at the time, we see today how it has become a destructive monster to our Republic and our freedom along with our economy.
1935 the Unemployment Act brings us unemployment insurance.
1937 the Social Security Act, the largest Ponzi scheme in history. This is nothing but a giant pyramid scheme and would be illegal if not run by the government. There was never any money set in reserves in it.
1938 brought us Fannie Mae, the government took started carrying the notes on our mortgages.
If 1913 under Wilson the Camel's nose got under the tent of our freedom and Republic, in the 30s the camel got inside. If our Republic died in 1913 and the Empire was born, the Empire was wearing big boy pants now.
Of course the event that brought us out of the Great Depression was W.W.II. What happens during war? We pump more money into the system devalue the dollar with inflation, and away we went. Then in 1944 there was a conference held called the Brenton Woods Conference. This was the birth of the International Monetary Fund and the World Bank, even though it didn't become fully operational until 1959. This was just the ticket for the Fed and the government, the U.S. Dollar became the reserve currency for world financial markets. This way the U.S. government could dump trillions of dollars into the IMF and the world without causing the massive inflation it would have caused if dumped in the United States economy. This system has worked for years, but have you heard recently that there i growing talk of removing the dollar as the reserve currency? If that happens, and it is actually very possible, the Housing Bubble Pop will look like a blip on the economy compared to the Dollar bubble pop that would surely follow.
Have you heard about government's Guns and Butter Programs?
What were they? They were 1. The Kennedy Space Race, 2. LBJ's Great Society, and 3. Vietnam. All very expensive, all great opportunities for government to pump more money out.
In 1965 we added Medicare and Medicaid along with Freddie Mac in 1970.
With our government's habit of manipulating the money supply to keep driving down the value of our dollar to pay back debt cheaper, the Arab Oil states revolted at selling us oil with dollars that gave them less than they bargained for. Now we have skyrocketing prices as they would no longer sell to us, we would buy it through other countries who bought Arab oil and resold to us taking out middleman pricing.
American voters said "Do Something" Nixon wanted to be reelected he did something. He gave us price controls, this created shortages and producers refuse to produce if they can't make a profit. So to fix this let's add tariffs, they worked as well this time as before.
Now in 1974 we add the ERISA laws, this is where our retirement plans were changed from defined benefit plans to defined contribution plans or IRAs, 401ks, and other deferred tax plans. What we did was take the little guy and put him in the stock market. Of course we didn't teach him what to do when there. Now the big banking system not only got to create our money, they now held our savings as well. The little guy got slaughtered.
In 1979 we got a short reprieve. Paul Volker started pulling money out of the system and brought back some value to our dollar. Then Ronald Reagan dramatically cut taxes, and between those two things it created the greatest economic boom we have seen and sustained longer than any in any of our lifetimes.
However, Alan Greenspan took over the Fed in 86 changing our monetary policy once again. Then in the 90s we had the technology boom, money was flowing, people started day trading, Wall Street was rewarding short term profits not long term manufacturing gains, this drove our manufacturing base out of America. Then it turned to 2000 and Pop goes the Tech Bubble.
When the Tech bubble burst the herd starting looking for the next big thing, the next fix, the next easy short team profit. It found Real Estate. Boom Baby, off they went buying, flipping, refinancing, using their home like a ATM machine to buy cars, jewelry, electronics, vacations, and more Real Estate to flip. The hot market towns in the Sun belt had entire subdivisions purchased by those who had no intention of ever living in the home, but just flipping it. When the bubble burst we heard the sad stories of the people losing their homes, but the media didn't talk much of the novice speculators who took out 125% loans on their homes to buy several others to flip and then lost them all after the bubble burst in 2008.
Okay, now we know how we got here. What do we do about it?
There is a three step process we must do to save things.
1. We need Stable Money, be it back to the Gold standard or something else, it must be stable.
2. We need to lower taxes, we must reward, not punish the producers. Last year 50% of Americans did not pay Federal Income taxes. When that number reaches 51% the game is over.
3. We must deregulate, reduce the amount of laws and rules on businesses.
Government will kick and scream about those three ideas. They now have an entire herd of camels in the tent, they are not going to willingly give up their power. When it comes to inflation and deflation by government and the FED, you must remember that Ben Bernanke has said that he will not allow deflation to occur if it means he would have to throw money out of helicopters. That is a frightening thought that the man in charge of our money value believes this.
There is a storm coming that will make this last few years look like the good old days if we don't regain control over our government's spending habits. I believe we have this next election to either save our nation, or it's over as we know it.
Government's role passed onto us by our founders was to protect us from a big government foreign or domestic. Our founders wrote our Constitution in fear of government, and terrified of democracies. That is why they gave us a Republic. Democracies are mob rule.
James Madison said, "Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions." Federalist No. 10
We have a chance of turning this around, but it will depend upon us to do so. Then if we do, to educate our children, and ourselves what got us here, to make sure we don't do it again.
America, you have been conned. Let's discuss the history of money and see how we have arrived where we are. It isn't so much that we as Americans do not know a lot about our economy, our history, and our government, it is just that like Ronald Reagan once said about liberals, we just know so much that isn't true.
Money was, and has always been, something we have agreed upon to be money. Early on it could have been shells or stones or sheep, later we started using precious metals, like gold, silver, copper and others, mostly gold. This was the basic means of exchange for around six thousand years until 1971 when our money was taken off the gold standard.
When we used gold, there were businessmen known as goldsmiths. These goldsmiths were the bankers of their day, so you wouldn't be in danger of being robbed of your gold, you could deposit it with a goldsmith who would issue you paper receipts or scripts to be able to come back and redeem your gold as you needed it. This evolved to a point where the goldsmith's scripts could be exchanged for purchase and the person you gave it to could redeem it. Soon the goldsmiths realized that only a fraction of the gold they held on deposit ever was redeemed at any given time, so they started printing more scripts against that deposited gold than their was gold held on reserve. This was known as fractional reserve banking, we are still using that same program in our banks today.
Genghis Khan came to the decision that he wanted to use paper money, he had the most powerful and ruthless army on the planet so he enforced that what he said was money was, if you disagreed you died. When Marco Polo explored Asia he came back with stories of this Khan money.
Then in 1715-1720 we saw the impact John Law had on money. A Scot, and son of a banker, John Law was famous for his talents with the ladies. This ended with Law killing a jealous husband in self-defense. He had to leave England and went to France. There at the death of King Louis the 14th, the heir a seven year old Louis the XV inherited the three billion livres of the old king. The currency was devalued by 20% which did no good, those who were accused of hoarding were arrested. John Law showed up with an idea of Fiat money. It was paper money issued by the government secured by land and Royal revenues. He wasn't done yet, he started issuing paper money against land in France's holdings in America, capitalizing on the speculative frenzy the New World held. This created a massive boom the French saw their standard of living escalate as never before known. Many no longer worked, they became full time speculators buying and selling this new paper. Then an angry Prince de Conti arrived and brought wagon loads of this paper and wanted to cash it in for gold. When he did, they gave him his gold, but it caused others to do the same, crashing the bubble.
Law gambling his remaining authority he abolished coin as a medium of exchange, and then in February 1720 declared it illegal to own more than the tiniest of sums in gold in any form. Then he closed the borders, and sent instructions to all coach-houses to refuse fresh horses to anyone travelling to foreign lands until an inspector had examined their baggage. The substantial fines imposed were shared with the public spirited individual who filed the report.
By August of that year it was all over, and John Law was the most hated man in France. Fortunately he was living in Venice. Like all good gamblers he had gone on to the next game, by which means he continued his existence for another 9 years. Much of the money he won at this time would have been that which had earlier escaped him in the capital flight which he had outlawed.
This is truly a story of Booms and Busts, or otherwise known as Inflation and Deflation.
Inflation is not, as most believe, rising prices, demand can cause prices to rise. It is when the money supply is increased too large for demand. It causes prices to go up two ways, one by lowering the value of the money you are using. The other is that those selling goods see an opportunity to raise prices when people have a lot of money in their pockets.
Inflation is actually a secret tax, governments love inflation, and do it intentionally. Inflation is a tax on the people that is hidden, it is actually a reverse graduated tax because it hits the poor and middle class harder as a much higher percentage of their money is used for consumption. It shrinks the buying power of your savings, and as Americans have had repeated attacks on the value of their money for most of their lives it has trained them to not save money.
However, again governments love it, they get to see increased exporting of goods since foreign currencies can buy our goods cheaper than we can. Further it allows them to pay back the massive government debt with cheaper devalued dollars. If wages increase, it will push people into higher tax brackets again raising taxes without the political hit of a tax increase.
Deflation is the opposite, this is the thing governments fear the most. It is caused with the shrinking of money supplies and causes real prices to drop. If you lost your job and then had your one hundred thousand dollar home foreclosed where it resold for fifty thousand, what happened to the other fifty thousand dollars? It is simply gone, it is out of the economy, and the economy was deflated of that purchasing power. Prices going down is good for buying food and energy, but bad if you bought something speculating it would go up in value.
Today the value of the dollar is imaginary and in the hands of the Federal Reserve who manipulates it by pouring money into the market or not. We no longer have a stable money tied to gold or anything else.
How did we get here?
Our founders gave Congress the power to declare what money would be, they only gave the states the power to coin money. The founders had already had an experiment with paper fiat money called the Continental. They printed this paper money to help pay for the war, it wasn't tied to anything of value other than the new government said it was money. It devalued so much that no one would take it, even today we sometimes hear the phrase "It isn't worth a Continental" used.
We then went to a Gold/Silver standard and the nation's money was stable for years. Then another expensive war came about with the Civil War, and we printed money again to pay for it. We also had an Income Tax imposed and a way of collecting in with the IRS in 1862. The income tax was declared Un-Constitutional in 1894, but the IRS remained.
Then the Panic of 1907 came about. Speculation still contends it was done intentionally by a group of big bankers did it on purpose to cause panic and give them and the government the opportunity to "fix it." What we do know is that it started with a failed attempt to corner the copper market. The stock market crashed by 50% in a year, and banks across America failed. It was likely it would have been much worse if not for J.P. Morgan pledging vasts sums of his own money to shore up the banking system. At the time America didn't have a central banking system to shore up the system in crisis. We had two National Banks earlier both highly unpopular with the American people. The last one was the singular purpose of Andrew Jackson to remove. Senator Nelson Aldredge was given the task to find a way to "fix this."
In 1910 there was a meeting on Jekyll Island Club off the coast of Georgia. Aldrich convened a secret conference with a number of the nation's leading financiers to discuss monetary policy and the banking system. Aldrich and A. P. Andrew (Assistant Secretary of the Treasury Department), Paul Warburg (representing Kuhn, Loeb & Co.), Frank A. Vanderlip (James Stillman's successor as president of the National City Bank of New York), Henry P. Davison (senior partner of J. P. Morgan Company), Charles D. Norton (president of the Morgan-dominated First National Bank of New York), and Benjamin Strong (representing J. P. Morgan), produced a design for a "National Reserve Bank".
Forbes magazine founder B. C. Forbes wrote several years later:
Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.
The final report of the National Monetary Commission was published on January 11, 1911. For nearly two years legislators debated the proposal and it was not until December 22, 1913, that Congress passed the Federal Reserve Act. President Woodrow Wilson signed the legislation immediately and the legislation was enacted on the same day, December 22, 1913, creating the Federal Reserve System. At the time it was a secret national bank.
The Federal Reserve is not Federal and it has no reserves.
1913 was maybe the most pivotal year in our economic and Republic's history since it's founding. Also in 1913 the Income tax was brought back, even after it had been found Un-Constitutional twenty years earlier. The government needed to pay the 6% interest to the Federal Reserve. One congressman filibustered on the floor of the House trying to stop the income tax, he said that there could come a time when it would be as high as 20%, the other congressmen laughed him off the floor as a radical an extremist, and an alarmist.
Now the government doesn't take need to take away liberty and freedoms by force, they know that they only have to get the camel's nose into the tent. 1913 was that year. Another gem brought to us in 1913 was the 17th Amendment where unlike the Founder's intent of the Senators being selected by the State representatives of each state to represent the state's interest, they became popularly elected making them part of that buying the constituency vote as well as the House.
1913 was the Birth of an Empire and death of the Republic.
Now, we hear a lot about the Federal Reserve, but do you know how it works?
Basically it is like this. The government sells a bond to the Federal Reserve, the Reserve hands a check to the government written on an account that doesn't exist. The government then deposits that check into an electronic account and the money appears out of thin air, and the Federal Reserve holds the Bond. Every time the Reserve buys bonds from the government money flows out and increases the supply causing inflation and lowering interest rates.
Wars are expensive, they are golden opportunities for government to print more money. W.W.I comes along, Wilson and the Fed pumps money into the supply, inflation and devaluation come right with it. After the war, the soldiers come home, need to find jobs, war machines are no longer being made, and we see a recession. France is demanding gold to pay back our debt to them, so what do we do? Pump more money into the system creating inflation, and the Roaring 20s, everyone had money, life was good, people started speculating in the market that was booming until... Herbert Hoover was hinting about something called the Smoot Hawley Tariff. Just the talk about it caused businessmen to start pulling in their resources, this caused the stock market to crash.
Of course you have heard about the stock market crash, how the market crashed, people committed suicide, and no one had any money for a long time, right? Wrong.
Very few committed suicide, just one year after the crash the market was back where it was before. (Sound familiar) However, this was a perfect crisis for the government to "do something" and they did.
The reason the market crashed is that when businessmen heard, and believed, the government was going to impose tariffs they knew it would be destructive to business and they pulled in their capital.
The government did something:
1932 the Smoot Hawley Tariffs were imposed creating a trade war pushing the recession into the Great Depression.
1934 the Gold Reserve Act made it illegal for any American to own gold, this lasted until the mid 70s.
1935 the Wagner Act gave us unions and collective bargaining. While some of this was needed at the time, we see today how it has become a destructive monster to our Republic and our freedom along with our economy.
1935 the Unemployment Act brings us unemployment insurance.
1937 the Social Security Act, the largest Ponzi scheme in history. This is nothing but a giant pyramid scheme and would be illegal if not run by the government. There was never any money set in reserves in it.
1938 brought us Fannie Mae, the government took started carrying the notes on our mortgages.
If 1913 under Wilson the Camel's nose got under the tent of our freedom and Republic, in the 30s the camel got inside. If our Republic died in 1913 and the Empire was born, the Empire was wearing big boy pants now.
Of course the event that brought us out of the Great Depression was W.W.II. What happens during war? We pump more money into the system devalue the dollar with inflation, and away we went. Then in 1944 there was a conference held called the Brenton Woods Conference. This was the birth of the International Monetary Fund and the World Bank, even though it didn't become fully operational until 1959. This was just the ticket for the Fed and the government, the U.S. Dollar became the reserve currency for world financial markets. This way the U.S. government could dump trillions of dollars into the IMF and the world without causing the massive inflation it would have caused if dumped in the United States economy. This system has worked for years, but have you heard recently that there i growing talk of removing the dollar as the reserve currency? If that happens, and it is actually very possible, the Housing Bubble Pop will look like a blip on the economy compared to the Dollar bubble pop that would surely follow.
Have you heard about government's Guns and Butter Programs?
What were they? They were 1. The Kennedy Space Race, 2. LBJ's Great Society, and 3. Vietnam. All very expensive, all great opportunities for government to pump more money out.
In 1965 we added Medicare and Medicaid along with Freddie Mac in 1970.
With our government's habit of manipulating the money supply to keep driving down the value of our dollar to pay back debt cheaper, the Arab Oil states revolted at selling us oil with dollars that gave them less than they bargained for. Now we have skyrocketing prices as they would no longer sell to us, we would buy it through other countries who bought Arab oil and resold to us taking out middleman pricing.
American voters said "Do Something" Nixon wanted to be reelected he did something. He gave us price controls, this created shortages and producers refuse to produce if they can't make a profit. So to fix this let's add tariffs, they worked as well this time as before.
Now in 1974 we add the ERISA laws, this is where our retirement plans were changed from defined benefit plans to defined contribution plans or IRAs, 401ks, and other deferred tax plans. What we did was take the little guy and put him in the stock market. Of course we didn't teach him what to do when there. Now the big banking system not only got to create our money, they now held our savings as well. The little guy got slaughtered.
In 1979 we got a short reprieve. Paul Volker started pulling money out of the system and brought back some value to our dollar. Then Ronald Reagan dramatically cut taxes, and between those two things it created the greatest economic boom we have seen and sustained longer than any in any of our lifetimes.
However, Alan Greenspan took over the Fed in 86 changing our monetary policy once again. Then in the 90s we had the technology boom, money was flowing, people started day trading, Wall Street was rewarding short term profits not long term manufacturing gains, this drove our manufacturing base out of America. Then it turned to 2000 and Pop goes the Tech Bubble.
When the Tech bubble burst the herd starting looking for the next big thing, the next fix, the next easy short team profit. It found Real Estate. Boom Baby, off they went buying, flipping, refinancing, using their home like a ATM machine to buy cars, jewelry, electronics, vacations, and more Real Estate to flip. The hot market towns in the Sun belt had entire subdivisions purchased by those who had no intention of ever living in the home, but just flipping it. When the bubble burst we heard the sad stories of the people losing their homes, but the media didn't talk much of the novice speculators who took out 125% loans on their homes to buy several others to flip and then lost them all after the bubble burst in 2008.
Okay, now we know how we got here. What do we do about it?
There is a three step process we must do to save things.
1. We need Stable Money, be it back to the Gold standard or something else, it must be stable.
2. We need to lower taxes, we must reward, not punish the producers. Last year 50% of Americans did not pay Federal Income taxes. When that number reaches 51% the game is over.
3. We must deregulate, reduce the amount of laws and rules on businesses.
Government will kick and scream about those three ideas. They now have an entire herd of camels in the tent, they are not going to willingly give up their power. When it comes to inflation and deflation by government and the FED, you must remember that Ben Bernanke has said that he will not allow deflation to occur if it means he would have to throw money out of helicopters. That is a frightening thought that the man in charge of our money value believes this.
There is a storm coming that will make this last few years look like the good old days if we don't regain control over our government's spending habits. I believe we have this next election to either save our nation, or it's over as we know it.
Government's role passed onto us by our founders was to protect us from a big government foreign or domestic. Our founders wrote our Constitution in fear of government, and terrified of democracies. That is why they gave us a Republic. Democracies are mob rule.
James Madison said, "Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions." Federalist No. 10
We have a chance of turning this around, but it will depend upon us to do so. Then if we do, to educate our children, and ourselves what got us here, to make sure we don't do it again.
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