Shhhhh, Don’t tell them its Socialism!

New York (International Herald Tribune)|If the U.S. government moves ahead with a plan to take ownership stakes in American banks, as seems likely, it would be an exceptional step – but not an unprecedented one.

The United States has a culture that celebrates laissez-faire capitalism as the economic ideal, but the practice is sometimes different. Over the past century, the U.S. government has nationalized railways, coal mines and steel mills, and it has even taken a controlling interest in banks when that was deemed to be in the national interest.

The corporate wards of the state typically have been returned to private hands after short, sometimes fleeting, stretches under government stewardship.

Finance experts say that having Washington take stakes in U.S. banks now – like government interventions in the past – would be a promising step in addressing an economic emergency. The plan being weighed by the Treasury Department, they say, could supply banks with sorely needed capital and help restore confidence in financial markets. Across Europe, governments rolled out similar initiatives Monday.

In other countries, the government bank-investment programs are routinely called nationalization programs. But that is not likely in America, where nationalization is a word to avoid, given the cultural aversion to anything that hints of socialism.

“Putting this plan on the table makes a lot of sense, but you can’t call it nationalization here,” said Simon Johnson, an economist at the Massachusetts Institute of Technology’s Sloan School of Management. “In France, it is fine, but not in the United  >>>Read the Full Article

Rogue Agency Arrests Utah Mom

Imagine you’re Annie Bradley, a married stay-at-home mother of eight. Two weeks before your 43rd birthday, its 9:00 pm and you’re sitting down with your husband and two house guests discussing a very difficult topic—the sale of your home.  Uncharacteristically, your seventeen year-old daughter interrupts the discussion with a stunned look on her face, informing you that police and federal agents are surrounding your house.  An armed Sheriff’s deputy has followed closely behind her and now stands before you asking, “Are you Anna L. Bradley?”

The scene in the Bradley’s neighborhood Tuesday was much like something you might expect to see on the big screen, or read about in one of those hard to believe mystery novels.  But for Annie, her husband Randy and their eight children, it was a very real nightmare.

“I begged them not to take her,” explains her husband.  He couldn’t understand why law enforcement was at his house in the middle of the night, demanding $10,000 cash for bail, or they were going to be taking his wife.  At 9 o’ clock in the evening, when banks and businesses are closed, it’s close to impossible for an average family to come up with that kind of cash.

So, at approximately 9:41 pm, after local agents from the Utah County Sheriff’s office, accompanied by at least two federal agents, had surreptitiously surrounded the family’s home and afterwards made quite a scene for the neighborhood, law enforcement agents placed Annie Bradley under arrest, handcuffed her, and led her the long way across the front lawn, in front of inquiring neighbors, stunned house guests, her confused and bewildered husband, and perhaps most difficult, in front of her sobbing children.

When asked why they were doing this in the middle of the night, with so little opportunity for the Bradleys to even reach an attorney, one member of the Utah County Sheriff’s department replied, “Well, we don’t usually deal with nice folks like you.”  Annie was booked into jail and held on $10,000 bail.

Annie Bradley's Arrest Photograph

While the image of her arrest might seem dramatic, the facts surrounding her arrest are even more bizarre. Annie Bradley wasn’t arrested, as it turns out, because she’s suspected of committing some violent crime.  The barrage of law enforcement officers didn’t surround her house to execute an arrest warrant because she’s suspected of some kind of drug involvement or some other dangerous crime.  Annie Bradley was arrested because she and her husband have been caught up in a political battle related to the Utah Department of Commerce.

In February of this year that Utah Division of Securities Director Wayne Klein resigned under a cloud of suspicion for corruption and mismanagement.  Randy and Annie Bradley were one of the cases originally overseen by Klein.  Earlier this summer, on July 3rd, an independent audit of the Division was delivered to the State Legislature citing widespread abuses, mismanagement, miscarriages of justice and a government agency rife with internal conflict, lack of leadership and suffering serious internal divisions.

But what does this have to do with Annie Bradley?

Well, let’s start with the basics.  A lifelong resident of Utah County, the last year and a half has been an exceptionally difficult time financially for Annie her family.   In a situation becoming all too common in America today, with the mortgage market in shambles, and the credit industry in upheaval, Annie and her family are in the middle of an unplanned move.  The guests in her home Tuesday night when she was arrested, were negotiating the purchase of several pieces of furniture to be sold along with their house.

The previous success of her husband’s small business Race Holdings, LLC—which had enabled the family to move from Springville just a year and a half ago into their dream home on the west side of Mapleton—has become a thing of the past.  With no business income to speak of for most of the past year, the family has been living on food storage, modest financial reserves, and the hard work of the entire family to bring in whatever they can.  Randy has recently taken a job working over six hours away from his family, in Montana.

The Bradleys however, are no strangers to hard work or sticking together.  Generations of both sides of the family have made a living at hard work in Utah, with no troubles or run ins with the law and no questions about their integrity or reputation.  What they are unable to comprehend however is in the midst of these difficult circumstances, why was Annie Bradley arrested, handcuffed and taken from her family in the middle of the night.

The entire Bradley Family

What would cause the Utah County Sheriff’s office, in conjunction with Federal Agents, to surround the family’s home as if they were conducting some kind of undercover sting operation?  Why would law enforcement arrest a stay-at-home mother in the middle of the night when it’s almost impossible for the family or friends to reach an attorney or to get access to cash for bail?

The charges made against Mrs. Bradley, according to the affidavits and other documents provided by the Utah Division of Securities allege that Annie was involved in committing securities fraud against her neighbor.  The Bradleys dispute the charges. Annie Bradley never worked for her husband’s business and was never an employee or manager of the company.

The neighbor, Mrs. Wendy Hendry, who owns and manages her own real estate related investment company loaned $30,000 to Race Holdings, LLC in June of 2007.  The loan from Mrs. Hendry’s company to Mr. Bradley’s company, was a high interest loan charging 36% annual interest.  According to banking records the entire loan plus interest and fees was repaid in full by Race Holdings in November of 2007.  No subsequent business was transacted between the parties.  Annie Bradley had nothing to do with it.

So what were the grounds upon which to make such a dramatic arrest of Mrs. Bradley? Apparently, Annie was arrested as part of a legal strategy related to another case being investigated by Securities Division Enforcement Director Michael Hines under the direction of his superior Ms. Francine Giani the Executive Director of the Utah Department of Commerce.  Their plan was evidently to increase pressure on Annie’s husband, Annie’s friends and some of her husband’s former business associates related to another case.

Substantiating the chain of events is a reputable and prominent Utah County securities attorney who has represented clients and worked directly with the Utah Division of Securities for more than a decade.  FCD has obtained multiple audio recordings substantiating the shocking reality behind Mrs. Bradley’s arrest, but has been asked not to reveal the identity of this attorney for fear of reprisal and other consequences from the Utah Government.

Apparently Mr. Hines believed that Randy would do “just about anything” to keep his wife out of jail.  In the recordings obtained by FCD it is revealed that Mr. Hines’ intention was a strategic decision to implicate Mrs. Bradley regardless of her actual involvement in any suspected wrongdoing, in order to bring pressure on her husband to “turn State’s evidence.”

Hines reportedly explained,

We have to put maximum pressure on people…and if Mr. Bradley can’t provide me information that would help me then we are going to charge them both   The information that would help is for Randy to say contrary to that whole affidavit basically, to say he received misrepresentations.

Annie and her Husband Randy Bradley

In the same conversation Annie and Randy were told that if Randy wasn’t able to provide the information he was looking for, Hines intended to follow through with his threat to put Annie in jail.  At one point in the conversation Mr. Bradley can be heard asking,

“What if there isn’t any information?… I would have to commit perjury to say that.”

The formal audit released to the public after several complaints about these kinds of abuses, explains that obtaining cooperation or even false confessions under the threat of jail time is a “Division Tactic” where investigators attempt “to coerce cooperation by intimidating and threatening that the person would be arrested.”

At one point in the recordings it is revealed that in an earlier conversation with Hines, prior to her company even being repaid, Mrs. Hendry was uncomfortable with Mr. Hines agenda, insisting;

“We don’t care about the money.  Let’s just rip up the promissory note.”

Even though Annie was not involved, even though her neighbor apparently did not want to complain against the Bradleys, and even though Race Holdings, LLC did in fact repay the full amount of the loan in question as per the written agreement, Michael Hines had another objective and it required that the case proceed against Annie.

According to Hines, he could charge Annie with a crime based solely on one conversation she had with her neighbor in church one Sunday.  Evidently, during a short stretch of time in mid-2007 when her husband’s business had fallen behind on monthly payments Mrs. Hendry approached Annie looking for re-assurance that the debt would be paid. In defense of her husband, Annie reportedly replied, “My husband is an honest man, and he will repay this debt no matter what.”

Annie Bradley, targeted by Michael Hines

That statement, innocently made by a spouse, in a Sunday church meeting, according to Hines, “constitutes an inappropriate statement or omission of material facts, and therefore constitutes fraud.”

The Bradleys are confused as to how Annie’s statement could be considered fraudulent, especially since her husband later did exactly as she had suggested, ensuring that his business repaid the very high interest loan, plus all interest and fees, as agreed.  The Hendrys profited, according to FCD calculations, in excess of $10,000 in six months and received a full recovery of principal prior to the note’s maturity.

Answering the question of how such a situation could be construed as fraud, Utah Securities regulator A. Gary Bowen provided a rather lengthy but insightful explanation.  He explains:

“People do not understand the nuance of securities regulation.  Most attorneys do not…we can go after these people and we have been just overwhelmed by the filings, you get into my office I’ve got them practically stacked up to the ceiling and I’m not making this up and I’ve got them stacked all over the floor so we’re pursuing them…

“I’m going to recommend you look at section 61-1-1 which is entitled ‘Fraud Unlawful’ and you’re going to discover a definition of fraud that your average attorney is going to be totally clueless about…the nuance that the average attorney doesn’t get, whose competent in real estate, competent in corporate or business law, competent in contract law, is the mere omission of a material fact… do you know what the implication of fraud is, criminal prosecution, time in jail!”

Mr. Bowen who according to his own representations has been charged with advising Utah citizens and business owners about how to avoid breaking the law for more than ten years, later admits that its impossible to pin down what might be construed as “fraud” if the government wants to press charges.  He continues,

“If you look at our definitions section, I’ve been working for this for years and read it a number of times but it really sunk into me here this summer when I was reading it and talking to someone like you, you go in and read the definition actually under 61-1-13 of fraud, and its one of those things that you say, well, what does that mean? The answer is, I don’t know.”

With a definition like this, its no wonder that Utah has become known by some as the “fraud capitals” of the West.  Mr. Bowen’s advise boils down to a simple axiom.  If the government thinks it is fraud, its fraud.

Even experienced attorneys, according to Mr. Bowen, can’t understand what the enlightened public servants in the Department of Commerce might allege.  Or, in short, all Utahans should be very careful when discussing their spouse’s integrity in church on Sunday.

As 2008 rolled around, the Bradleys lived with the daily uncertainty and fear of being charged with fraud as a result of Mr. Hines strategy.  It didn’t seem to matter that both parties agreed the loan had been satisfied and that Annie Bradley had nothing to do with it, other than being married to the business owner.

At one point Randy reveals that the stress became unbearable.

“I came close to considering saying whatever Mr. Hines wanted me to say if it meant it would keep my wife out of jail.  I decided against it, but I couldn’t trust Hines anyway if he was willing to build another case based upon a lie.”

Resigned. Former Director Wayne Klein

But this past February things started to look brighter from the Bradley’s perspective, when Utah Securities Director Wayne Klein was forced to resign because of scrutiny being placed on the Securities Division for its alleged abuses.  The Bradleys along with many small business owners in Utah hoped a new Director would be more just in his oversight of the Division and more effective at reigning in employees like Hines.

Lying, by “any person” during a proceeding under Sate Securities Laws is a 3rd degree felony.  While Randy decided against going along with the enticements of Hines, Audit Manager Tim Osterstock’s performance audit of the Division clearly documents that the Division had been engaging in deceptive practices, evidently believing that government employees are exempt from the requirements of the law.

“The division has, at times, violated the terms of its settlement agreements.  In one case, the division agreed to not publicize the action or commence further administrative actions and then violated both terms of the agreement.  The person accused told us he felt compelled to plead guilty to a lesser criminal charge rather than place his business in jeopardy defending a greater charge.  The division agreed to not seek additional charges but nevertheless pursued an administrative action.  The respondent then signed the settlement agreement after the division agreed to not publicize it.  However, the day the settlement was signed, the division publicized the information on its web page and also published the information in its newsletter the following month.”

The audit also revealed that the Division made false allegations against innocent businessmen as part of its coercive tactics, obtained false confessions and false settlements by threatening citizens with arrest and jail time, and that the State of Utah had been violating its own legal settlements with impunity while Department employees escaped criminal investigation for such activity that clearly violates State law.

With this information now public, the Bradleys anxiously waited for the government to take action to reform the Department.  They also continued to correspond regularly through their attorney with the Division of Securities and specifically with Securities Division attorney Scott Davis who works for the Utah Attorney General’s office.

Mr. Davis corresponded multiple times with the Bradleys about resolving the civil concerns raised by the Division, but never informed the Bradleys that they were in eminent danger of being arrested or criminally charged.  Things seemed to be looking better for the Bradleys, and they were hopeful they could soon put this troubling ordeal behind them.

Then, out of the blue, new rumors began circulating of the Bradley’s pending arrest.  The rumors came from the most unusual of places.  For some unexplainable reason in early August of this year, Mr. Hines called Ron Hendry and explained that the Bradleys were being charged criminally and would soon be arrested.

“I didn’t know what to make of it,” said Randy about the phone call from Hines to Hendry.  Mr. Hendry subsequently began sharing the information with other Bradley neighbors including their religious leaders.

Although the Hendrys had profited handsomely from their transaction with Race Holdings, Mr. Hines, in very questionable legal territory, evidently had some reason for giving them a “heads up.” As it turns out, Hines had told the Hendreys that they were witnesses, as victims, in the now criminal case against both Randy and Annie.

Hines, according to Ron Hendry, had been in contact with them seven our eight times throughout the months of June and July.  During this same time, the Bradleys unsuspectingly continued to hope things were getting closer to being resolved.

When Randy received a surprise phone call from his local Bishop asking about his pending arrest, he wasn’t sure if Ron Hendry was just spreading gossip, or if the strange collaboration between he and Hines were actually fact.  So, through their attorney the Bradleys went straight to the government.  They contacted Scott Davis of the Utah Attorney General’s office.  Randy explains,

“I thought we were working things out.  Through our attorney we were in regular communication with the State.  They are the ones who postponed our last meeting.  Through our attorney we contacted the Attorney General’s office and Scott Davis, the man we were told was the attorney for the Division and he acted surprised and claimed he knew nothing about any criminal charges.  He acted completely embarrassed and didn’t seem to know what Michael Hines was up to.”

Huntsman Appointee, Executive Director of the Utah Department of Commerce, Francine Giani

Seeking to defend herself and her Department, once the audit was released, Francine Giani publicly insisted that her Department had taken all necessary corrective action.   However, one of the major indictments in the audit was that Giani’s staff was repeatedly in violation of Utah State law related to how the State’s lawyers from the Attorney General’s office were being ignored as the Division pursued its own agenda.  The audit reads in part,

“[S]taff from the AG’s office are assigned to represent the  division.  Securities law states “The attorney general shall advise and represent the division and its staff in all matters, administrative or judicial, requiring legal counsel or services in the exercise or defense of the division’s power or the performance of its duties” (Utah Code 61-1-21.5).  There have been conflicts with both how the former director utilized the attorneys representing the division and the level of authority the attorneys should have in defining division activities.  In some cases, it appears the former director assumed the role of the attorney.”

Despite the Attorney General’s office claiming that they knew nothing about criminal charges or arrest warrants, to the shock of Annie, Randy, and their attorney, such warrants were indeed issued.  Randy was arrested on August 29, 2008.

After Randy’s arrest he worried that his wife would be next.  Through their Attorney, the Bradleys made an agreement with prosecutors that with Randy voluntarily returning from his job in Montana, surrendering to the Utah County Sheriff’s office, and providing the required $10,000 bail, the warrant for Annie’s arrest would be withdrawn.  A few short days later however, local and federal agents were surrounding the Bradley’s home and in almost no time, Annie was in jail.

“I told them that we had already taken care of things,” says Randy.

“I begged them not to take her.  I explained that the prosecutor had agreed to release the warrant for Annie’s arrest since I cooperated and posted $10,000 bail.  The Deputy told me that he believed me, but since I had nothing to prove it, there was nothing he could do.  I wasn’t angry at the Sheriff’s office, they were professional and doing what they were supposed to do.  But, who is going to stop Michael Hines from ruining people’s lives while he does whatever he wants?  That is what makes me so angry.  He doesn’t care about my wife, my kids, or our family.”

Annie and Her Two Daughters

So, how and why was Annie arrested so dramatically this past Tuesday night, even after the prosecutors had agreed to release the warrent for her arrest? Why didn’t the government follow the usual procedure when dealing with reputable citizens, not charged with violent crime, having no past criminal history, and just deliver a “Summons to Appear?”  Evidently, that wouldn’t work for Mr. Hines strategy.

Annie Bradley was arrested because Randy and Annie had the courage to resist Mr. Hines for almost a year.  That, evidently, is just not acceptable to the State of Utah, Department of Commerce.

It’s not just the Bradleys who have had to make this tough choice.  The pattern of unjust enforcement by the Division of Securities is revealed unmistakingly in the formal audit results, but Ms. Giani and her boss Utah Governor Jon Huntsman Jr., have neglected to address the gravity of the situation.  Certainly, Ms. Giani and the new Securities Director Keith Woodwell have failed to reign in Hines and others engaged in the abusive practices.

The actual truth related to Annie Bradley’s arrest might have never come to light except that a number of individuals, attorneys, businessmen and even Department of Commerce employees have grown weary of this unchecked abuse and have begun using audio recording’s to try and help document this behavior.

The recordings obtained by FCD are a collection from multiple sources, and cover a multitude of cases. These recordings, and hopefully others yet to be provided to FCD by interested citizens, are beginning to serve as a powerful tool to provide critical insight and political leverage to address this rogue government agency reeling from criticisms, rife with internal conflict and desperate to cover-up its own current and past misdeeds.

Nevertheless, some bureaucrats can’t seem to understand how persecuting small businessmen in Utah (and their wives) is the same as persecuting normal families.  Some government officials can’t seem to understand how unjust it is to have a government agency justify their supposed administration of justice with lies, cover-ups, excessive force, coercion and deceit.

Annie Bradley’s arrest is one more revelation in a series of events alerting Utahan’s to the very real consequences of a corrupt government agency, the conduct of malicious bureaucrats and an incompetent government appointee—Francine Giani—who seems more worried about the appearance of “protecting investors” than she is about following Utah’s laws and protecting all Utah citizen’s civil rights.

The Bradleys have now had to come up with $20,000 cash bail so that they could continue remain free to take care of their family while continuing their fight against a corrupt government investigation.  This amount pales in comparison to the mounting legal costs they’re incurring in a legal circus that could last many more months if not years.

But, instead of heaping added difficulty on their heads, the State of Utah should be issuing the Bradleys a sincere apology as part of its first step to clean up the seriously damaged reputation of the Utah Government.  We should all be grateful for families like the Bradley’s that stand up to corruption, that work constantly to provide a good life for their children, that conduct an honest business, and do all they can–even if they’re late on payments—to always pay their personal and business debts as agreed.

“This has probably been the most difficult emotional thing that has ever happened in our lives, but we’re going make it through,” says Randy, soberly.  “Annie has said that if this is what it takes so that someone will finally put a stop to people like Michael Hines, its okay, I’m okay with it.”

In the face of America’s current economic difficulties it seems like the Executive Branch of Utah’s government has somehow forgotten the virtue of families like the Bradleys and the responsibility to protect all Utah citizens equally.  It is, after all, small businessmen and women, along with their families, who regularly take risks and assume responsibilities that creates more jobs, deliver more services, and add more value to our community than any government appointee and her bureaucrats.

Despite Mrs. Giani’s public assurances, there is an obvious problem in the Utah Department of Commerce.  Evidently this problem extends all the way to the head of the Executive Branch into the office of Governor Jon Huntsman.

Despite calls by numerous state legislators for the removal of Ms. Giani and several of her remaining staff; and despite the multitude of problems revealed in the recent performance audit of her Department; and finally despite even the personal appeals made directly to him from Utah’s own Attorney General for her firing, Governor Jon Huntsman (who is the only elective oversight provided by State law over Francine Giani) seems to share the philosophy of Giani and Hines, namely, that innocent people being wrongly accused is simply a price Utahans should get used to paying if they expect the government to do its job.

That’s an interesting theory of government.  No matter how nice, pleasant or polite Governor Jon Huntsman, Jr. comes across — there is no mistaking that he was not elected to simply look good in office.  Hard decisions sometimes have to be made, and in this case, when dealing with the Department of Commerce, the direct action that needs to be taken just isn’t that hard to discern.

Tyranny, at any level, only works for so long.  What is happening in the Utah Department of Commerce is wickedness; there is no way to skirt around the issue.  A full audit of all divisions within her stewardship will reveal even more succinctly that it is time for leadership in the Governor’s office, in the legislature, and in the judiciary in dealing with abuses like the Giani’s absurd, forceful, and dramatic arrest of Annie Bradley.

This problem will come to a head and the unjust, and in some cases criminal, activity of government bureaucrats along with the startling incompetence of executive management in the Department of Commerce will ultimately cost some politicians and employees their jobs.  Someone with courage will ultimately step forward to address and correct the very serious problems.

In the mean time however, the dirty politics and renegade operations of the Utah Department of Commerce will ensure that more Utah families like the Bradleys will be trying to explain to their small children why mommy or daddy was dragged away in handcuffs, in the middle of the night.

It just doesn’t seem like America.

The Bradleys

Pass the Gas!

By Ammon Nelson.

WEST VALLEY CITY, UT | 3 September 2008 | The recent gas price hikes have brought out an interesting phenomenon in some religious communities as attendance in church on Sunday has reportedly dwindled.  Some may use this as yet another reason why the government must do something to “fix” the economy, but there is a trend that illustrates some important principles, if we take the time to analyze the situation. Carrie Moore of the Deseret News reports:

A story published earlier this month in The Baytown Sun described how Maranatha Church leaders made the offer to everyone in the community, including non-church participants: show up before any of the church’s 10:45 a.m. Sunday services through July and August for a free raffle ticket.  Entrants must be at least 16 years old, and the tickets will be submitted in a drawing to win free gas.

If attendance at church is dwindling, there is a reason for it, and higher gas prices merely serve to accentuate the consequences.  It is not the cause of the low attendance.  The cause is the Brain Off Conspiracy – people failing to take responsibility for their own value judgments and playing the victim saying, “It’s not my fault.  I just can’t afford to come to church.  Gas prices are too high.”

Key Points

• While church attendance can and often does help people gain a better relationship with God, it is not necessary and natural that people attend church to do so.  It is a made and imagined idea that in order to “get them to Jesus” as one pastor quoted in the article stated, people must attend church.  There are millions of people around the world who have close relationships with God, without attending church on Sunday.
• God is the author of prosperity and principles govern – While attending church can help people turn to the author of prosperity and learn about true principles, giving away something for nothing in a raffle creates a false incentive, and gives the idea that the gas is the thing of value, rather than the relationship with God, the clergy and other members of the congregation.
• Agency implies stewardship – the people who fail to attend church on Sunday are merely demonstrating how much they value going to church.  Those who attend church on Sunday demonstrate what they value as well.  In order to be truly happy, we must first take responsibility for our own value judgments and choices.
• Human Life Value is the source and creator of all Property Value – If people value coming to church more than the cost it takes to get there they will come.  By holding a raffle for free gas, it teaches that free gasoline has more potential to make people happy than the friendships gained at church and the message being shared at church.  The value of going to church is in the person giving the sermon or teaching the lesson; and the people who are there and share common beliefs.
• Faith—being the principle of action in all intelligent beings—begins with self-interest.  The best way to promote something, like church attendance, is to demonstrate how that cause is in the self-interest of those you want to persuade.

Conclusion

Offering raffle tickets for free gas to get people in the pews replaces the intended incentive of helping people improve their relationship with God and true principles with a desire for “free gas.”  The value in any religious meeting is in the message being shared and in the association with like minded individuals.

Action Steps:

1. Evaluate your motivations for everything you do and see if you do it because you can rationally explain how it is making you a better person, or if there is some other motivation.
2. If attendance in a group that you value, like your local church congregation, is low; brainstorm with your leader of ways you could help improve the actual content and substance of the meetings and effectively get the message out to better appeal to individuals’ self-interest to persuade people to attend.

Principles 1 (1, 2, 4, 6)

Sources:

Carrie A. Moore, Empty tank, empty pews? High gas prices lead churches to get creative, Deseret News, July 26, 2008.

Ammon Nelson was born the second of ten children. Raised in West Valley City, he graduated from Granger High School in 1992 and served an LDS mission to the Northeast region of Brazil. He graduated from Salt Lake Community College in 2000 and from the University of Idaho, in Moscow, ID, in 2003. He enjoys discussing philosophy, performing and learning music, and spending time with his family. He currently lives in West Valley City with his wife, the former Heather Mann, and their six children. He works for the Nucor Building Systems of Brigham City, Utah, and has been a part of the FreeCapitalist Project since September 2006.

In Praise of the Invisible!

HIGHLAND, UT | 21 August 2008 | Pop quiz! What do William F. Buckley, Tom Lantos, Charlton Heston, Tim Russert, Jesse Helms, Tony Snow, and Alexander Solzhenitsyn have in common? If you’re paying any attention of to the news this year, you would recognize at least a couple of these names on the death lists for the year. And you’d be absolutely correct. All of these individuals have passed away this year. Extra Credit: what does a writer, a Democratic Representative of Congress, a former Democrat and believer in gun control turned NRA president, a moderate Democratic journalist, a Republican Senator, a speech writer, and a former Soviet labor prisoner also have in common? They were all stalwarts in the Cause of Liberty in this country and around the world.

In an August 10, 2008, American Thinker piece, Bruce Walker memorialized these seven icons and then lamented, in ways people often do when a list of greats depart this earth, that they were irreplaceable. Walker concludes his essay:

We live in an age filled with convenient platitudes.…We can no longer smell the stench of sin or of dishonor. We have lost our sense of moral purpose in life. We can replace almost anything in our lives—human organs, currency and credit, electronic records and documents—but ultimately these things do not define life.

What matters in life is the yearning of the human spirit for goodness and truth and the courage and grit to make that yearning into deeds and words that matter. Men who personify these values, unlike hearts and dollars, are irreplaceable. It is not they who have died: They are immortal. It is rather us who die each time one of these rare few leave this world. We have forgotten, in our busy rush to nowhere, how to replace the irreplaceable.

Throughout his essay he reflects upon this question: Do the institutions these great men arose from produce more such souls today? His answer is always the same. “If they do, these [newly produced icons] are invisible.” Well, maybe invisible is what we need.

Key Points

• Being invisible means waking up and turning your own brain on.
• Being invisible means recognizing your self-interest in determining a definite major purpose for your life.
• Being invisible means living a life of self-reliance based upon true civic service that begins first with fixing yourself, politically, economically, and most important morally.
• Being invisible means turning outward to effect lasting change in your neighborhood and community by entering into voluntary mutual value-creation based upon individual self-interest.
• Being invisible means building communities of principled individuals by helping others to awaken and to fix themselves.

Conclusion

The Founding generation of this nation was a population of only three million common farmers. They came to or were born in this land to work the land and to build society upon the principles of freedom they understood and subsequently discovered. A small, statistically significant number of these regular people (about 3% of the population) effectively changed the course of history in the matter of only a few years. The political revolution they achieved has directly or indirectly affected every nation in the world. But the moral crisis we face today is challenging those political achievements. The call for a moral revolution is real and it is immenent.

But the great tribal leaders—those memorialized by Mr Walker and many others—stood at their respective helms intending to inspire the masses and still our world is in a downward slope into a “shallow, silly, and scared society” where principles are discarded for the whims of polling data and focus groups. Heads of the tribe, no matter how great they are, will never generate the change our society is looking for. The moral revolution must come again from a small, statistically significant group of people. When they begin to change their lives, amazing things can result. It is time for the invisible to rise up with principled living to effect the kind of life Mr. Walker recognizes as important. Perhaps Walker is right. Perhaps the next wave of greats is invisible.

Action Items

1. Begin your awakening process, by finding a wise, brain-on mentor, or listening to FreeCapitalist Radio.
2. Learn to read—study with a purpose.
3. Begin to associate with like-minded individuals and discuss your ideas.
4. Start a blog where you explore your ideas in the written world.
5. Discover your Definite Major Purpose and begin today to work towards achieving that purpose.
6. Resolve to stand up for truth in all places and in all situations (it will save your soul, and it might just save the nation).

MRFC Principles: 1 (1, 2, 4)

Sources

Bruce Walker, Replacing the Irreplaceable, The American Thinker, August 10, 2008.

Real Estate Appraisal Regulation

HIGHLAND, UT | 19 August 2008| The real estate industry in the United States is in complete disarray. Many articles have been written on FreeCapitalist Daily to illustrate this point. Still, little has been done to really capture the severity of this problem. Throughout the country, many news articles and even books have been written in attempt to expose who these authors believe to the culprits of the fraud that has led to the recent bursting of the real estate bubble that has so many people losing their homes. Yet, it is doubtful whether the finger of blame has landed correctly on the right person or persons.

A similar housing crisis in the late 1980s led to stronger federal regulations in many areas of the real estate industry. One of the strongest holds the government took was upon independent appraisers. Mitch Weiss’ in-depth AP article this week gives a good overview of that history. However, the rest of Weiss’ article was lost on the lament that the regulation is basically a paper tiger, lacking any teeth in bringing “rogue appraisers” to justice. Questions a thinking reader must pose include: What is such an appraiser cheating on? Whom is he cheating? According to what standard is such an appraiser deviating? Who says he is acting fraudulently? The reader’s questions may be endless in this respect.

Correctly understanding the principles of prosperity will enable even the most casual looker on to recognize the trouble and to take appropriate measures to right this sinking ship. Namely, one must begin to understand the relationship between agency and stewardship.

Key Points

• Regulation means discipline and well measured action. Regulation means maintaining honesty in transactions. Regulation is attached to stewardship.
• Stewardship properly lies in the parties involved in a given transaction.
• In the 1980s real estate crisis, the federal government has erroneously yet effectively assumed stewardship of nearly every real estate transaction in the U.S. This happened progressively over the decades, first with the founding of the twin debacles of Freddie Mac and Fannie May; then with the Savings and Loan Bailouts where the government finally got a hold of the real estate agents and the appraisers.
• This erroneous assumption of stewardship simply is not within the government’s proper role.
• This has robbed the buyer, seller, and lender of their agency, in that they have been unable to determine their own values in a given transaction—they must now seek government permission for the transaction.
• Government regulation begets black markets. Because the human soul is autonomous and yearns for that freedom, it will search for it and achieve it in any way possible. This has created a system that is broken and a bureaucracy unable and unwilling to enforce itself.
• Stewardship is very closely tied to self-interest. One who lacks self-interest will not do his due diligence in a given transaction; but one who recognizes much self-interest will seek to establish the truth regarding the transaction he wishes to engage in.
• Mortgage lenders also have a stewardship in real estate transactions because if a borrower defaults on a mortgage, mortgage lenders will want to make sure they are adequately collateralized. They have surrendered their stewardship because government agencies have guaranteed nearly every loan. This has robbed the lender of his self-interest so he feels no need to do due diligence.
• In the end, the entity that is defrauded in a given real estate transaction is ultimately the government because of those loan guarantees.
• No one, however, is willing to take responsibility of the due diligence.

Conclusion

On the John Pendleton show on the Accent Radio Network this morning, the author of Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis explained that to eradicate all regulation would make this problem worse. This introduces the question: Is it good to regulate? The answer is shockingly: Yes. However, what was missed on the radio and is also missed in Weiss’ article is that regulation must accompany stewardship. The regulation is the individual’s personal adherence to correct principles. As this problem illustrates, the government, ultimately, is unable to enforce such regulations unless it is willing to bring out the big guns to force its hand. Fortunately, this country has not seen the veritable bloodbath of its appraisers, real estate agents, and mortgage brokers. However, to continue down this path of ever tightening government regulation would ultimately result in such a bloodbath. Nothing short of a full-scale overhaul of the system will remedy itself of these problems. And when that overhaul takes place, the government must not be invited to the party.

Action Items

1. Evaluate your own life. Are there stewardships that you willing hand over to someone else, hoping that everything goes alright? Resolve to reinsert your own human life value (HLV) into the equation. Take back the stewardship and do your due diligence.
2. Write to your Congressman and express your opinion that the govern should remove itself from all real estate activity and allow the marketplace to overhaul itself.
3. Search for alternative solutions to the real estate crisis, including methods which do not require a mortgage for a lending institution.

MRFC Principles: (2, 3, 6, 11)

Sources

Mitch Weiss, AP IMPACT: Weak rules cripple appraiser oversight, Yahoo! News, August 17, 2008.

John Pendleton, The Tom Pendleton Show, August 19, 2008.

Paul Muolo and Mathew Padilla, The Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis, Hoboken, NJ, John Wiley & Son’s, Inc., 2008.

Only an Enlightened Electorate Should Vote!

HIGHLAND, UT | 5 August 2008 | Caspar Weinberger, Jr., recently wrote an op-ed piece challenging America’s mindset in voting. He asked the question whether every American old enough to vote should be allowed to. His point:

If you are intelligent enough to read the Times or to boycott it on purpose because of its consistent left-biased slant, you are most certainly smart enough to be a voter, whatever your ultimate choice for the election.

His lament:

The truth is that a citizen who takes the time to study the major issues and reach a conclusion based on that study is definitely to be at least off-set by a voting citizen who will vote because he likes Obama’s tie or McCain’s fatherly white hair.

Most textbooks record the progression of suffrage rights as one of ever increasing inclusivity. Surely, the right for blacks and women to vote was necessary for this country to extend equal rights to all. Other steps may not have been as prudent—say, for example, amending the constitution to provide senators to be elected by the popular vote, thus robbing states of their power in the federal legislative process. Universal suffrage has resulted in many people being allowed to vote who, because of their general apathy or ignorance, have no business stepping inside the voter booth.

The Founders certainly had some discriminating issues to work through. They recognized that; and they recognized that it would take many generations to sort all that out. But, I suggest, they had a greater understanding of suffrage than we do. Many of our current woes in this area are a result of our departure from their wisdom.

Agency and Stewardship

Our Founding generation took upon themselves a responsibility very few had taken throughout all of known history. Theirs was a worldview in which man was governed by principles and not the whims of men. They believed God and not government gave rights to man. They understood very well that with high privilege comes great responsibility. Or in other words, agency implies stewardship.

The Founders treated the right to vote with great seriousness. Prior to the constitution the right to vote was attached to the ownership of property, and in many areas only landholders were allowed to vote. The traditions goes back to at least the ancient Greeks that only the truly free possessed the presence of mind to vote wisely. And they attached that wisdom to the material manifestation of land ownership. When someone owns land, he or she generally has a greater understanding of stewardship and responsibility, and has usually worked pretty hard to “deserve” the privilege of such ownership. The Greeks, Romans and others believed that sense of stewardship carried over into self-governance and wise participation in community service.

The British colonists used this method in many of the various American colonies prior to the Revolution. However, the idea universal inalienable rights exposed a side of landholding through the ages based more on aristocracy than on merit. It is evident that the Founders agreed with the landholding idea of stewardship breeding or revealing wisdom, but they feared the rise of an American aristocracy, so eventually this method fell out of use.

It is possible to see the concept of landholding and the attendant sense of stewardship in today’s society. In my personal life I wondered about this idea. Why would the voting privilege be tied to land? And then I bought a house. Suddenly, I became awakened to all the responsibilities of land ownership. I took my stewardship seriously and I found that not only my awareness grew, my ideas changed. I suddenly became much more aware of what political leaders were doing. I took my vote seriously because I recognized a deeper stewardship attached.

I have also been a landlord and I do not see the same stewardship attitude from renters. They have very little regard for property, and my personal experience with them politically is that they care very little for the affairs of the day. Even to the point that I once advised a friend that the best way for her to serve her country in that election cycle was to stay home on election day. When a person lives in someone else’s home, that person does not respect the stewardship and often does more damage than good, residentially or politically.

The Founders held similar views. Jefferson, for example, believed that:

Cultivators of the earth are the most valuable citizens. They are the most vigorous, the most independent, the most virtuous, and they are tied to their country and wedded to its liberty and interests by the most lasting bonds. – Thomas Jefferson, Letter to John Jay (Aug. 23, 1785)

Others held similar views. Simply put, voting rights without the sense of stewardship creates an electorate that eventually become apathetic and cynical to the welfare of their nation. One need not go far these days to see this in our society.

Spain’s Grand Invention

Jefferson also believed that “a nation [that] expects to be ignorant and free, expects what never was and never will be.” In other places he defined this as an enlightened electorate. He understood the stewardship principle as it attached to voting, but landholding held the stigma of a landed aristocracy and he wanted to move away from that stigma. He rejoiced in the attempts of the Spanish shortly after his presidency.

There is one provision [in the new constitution of Spain] which will immortalize its inventors. It is that which, after a certain epoch, disfranchises every citizen who cannot read and write. This is new, and is the fruitful germ of the improvement of everything good and the correction of everything imperfect in the present constitution. This will give you an enlightened people, and an energetic public opinion which will control and enchain the aristocratic spirit of the government. —Bergh 14:130. (1814)

An electorate that is illiterate is unable to appropriately or effectively pick its leaders. As Jefferson so eloquently explained many times, the powers of government should reside in the people. Stored in any other entity, they will soon wither to tyranny. Further, Milton Friedman explains:

A stable democratic society is impossible without a minimum degree of literacy and knowledge on the part of most citizens and without widespread acceptance of some common set of values. Education can contribute to both. In consequence, the gain from the education of a child accrues not only to the child or to his parents but also to other members of the society.

But the electorate requires constant vigilance to remain stable and keep that power. It cannot be kept by mere watching of the nightly news or a quick discussion at the water cooler. Literacy is a starting point for this vigilance.

Unfortunately, the current government-controlled education system is failing this electorate, as 40% of students graduate functionally illiterate. If today’s elective system were set up in this way, how long until the government schools make it nearly impossible to locate a literate American electorate?

Perhaps if more voters in America were truly literate, we would not have had the problems we had in 2000 when so many voters in Florida were rounded up and brought to the polls in buses and told just to pick the one on the left.

Unfortunately, Spain did not let this process play out. The country eventually caved to the pressure of giving suffrage to every citizen regardless of qualification. Sadly, the great experiment failed before we could learn the result. Still, the principle as uttered by Jefferson dominates self-government: the more educated members of a society are on matters of stewardship and community, the better able they will be in holding those powers in check against the rulers in government.

Where Have All the Teachers Gone?

In 1940, Mortimer Adler published How to Read a Book. He provided great insights on literacy that have unfortunately fallen by the wayside as the country’s educational system has followed destructive models which took us away from the classical education of the 3 R’s. In a chapter titled “The Defeat of the Schools,” Adler explains, “If the schools were doing their job, this book would not be necessary.” Adler poses a few questions:

Is it too much to ask that a student be able to read a whole book, not merely a paragraph, and report not only what was said therein but show an increased understanding of the subject matter being discussed? Is it too much to expect from the schools that they train their students not only to interpret but to criticize; that is, to discriminate what is sound from error and falsehood, to suspend judgment if they are not convinced, or to judge with reason if they agree or disagree?

And this a decade or two before the real deliberate dumbing down of our schools began in the 1950s! Adler continues:

Why are these students not getting any help? …It must be because the educators simply do not know what to do about it; in addition, perhaps, because they do not realize how much time and effort must be expended to teach students how to read, write, and speak well. Too many other things, of much less importance, have come to clutter up the curriculum.

Too many other things? Indeed! Today’s system has failed us on many fronts, the most awful is perhaps the literacy question. Government schools, and most private schools I would add, do not do enough to help our children become literate. They have fine programs that teach letter recognition and word decoding; but the education seems to stop there. The schools simply do not have time to teach a student to use reading now to learn new ideas and to think critically about what they have read. Since the schools are not doing this, it is high time that such a practice become available somewhere else.

Free Minds Make Free Men

Adler, on the other hand, has been instrumental in the twentieth century in facilitating many great projects to preserve the great books and great documents of our time, including the Great Books series and the Annals of America, both by Encyclopedia Britannica. Inspired by John Erskine’s Columbia University honors program, Adler concludes his masterful work by explaining the importance of reading and learning in the functioning of a self-governing society and in the lives of “free men.” I quote at length for context.

I remember what John Erskine said when he launched the group of students I belonged to on the reading of the great books. He told us that for some years past he had noticed that college students could not talk to one another intelligently. Under the elective system, they went to different classes, meeting only now and then and reading only this or that textbook in common. Members of the same college year were not intellectual friends. When he had gone to Columbia at the beginning of the century, everyone took the same courses and read the same books, many of them great ones. Good conversation had flourished and, more than that, there had been friendships with respect to ideas as well as on the playing field or in fraternities.

One of his motives in starting the Honors course was to revive college life as an intellectual community. If a group of students read the same books and met weekly for two years to discuss them, they might find a new sort of fellowship. The great books would not only initiate them into the world of ideas but would provide the frame of reference for further communication among them. They would know how to talk intelligently and intelligibly to one another, not only about the books, but through the books about all the problems which engage men’s thought and action.

In such a community, Erskine said, democracy requires intelligent communication about and common participation in the solution of human problems. That was before anyone thought that democracy would ever again be threatened. As I remember, we did not pay much attention to Erskine’s insight at the time. But he was right. I am sure of it now. I am sure that a liberal education is democracy’s strongest bulwark. (Adler 356-357.)

He subsequently developed a study of great books from history that is nearly unparalleled in today’s educative practices. And the best part about it is no teacher is necessary to facilitate the program. Individuals and special interest groups may participate at their leisure in reading and discussing these books in a way that educates one’s mind and turns an individual on to the ideas throughout the centuries. The result is an education that readies the individual for acute discriminative citizenship.

I pull several statements from Adler’s comments that merit discussion.

• Students could not talk to one another intelligently.I challenge that if students of that day could not speak intelligently to one another, that today’s students are in even worse condition. And further that as bad as today’s college student has it, today’s adult population is so much more the worse. Neighbors live, eat, and sleep within feet of one another, yet hold hardly anything in common. Is it any wonder then that hardly anything happens at a caucus meeting or a townhall gathering?
• They would know how to talk intelligently and intelligibly to one another, not only about the books, but through the books about all the problems which engage men’s thought and action. The result of reading great books and learning to talk about them improves the general life overall of such an individual.
• Democracy requires intelligent communication about and common participation in the solution of human problems.The challenges we face today will not be solved by 30-minute sit-com solutions or by expert savior-like elected officials who claim to have all the right answers. They will only be solved when a statistically significant proportion of the population begins to take control of their own lives by becoming literate in and effectively living the ancient principles of prosperity discovered by our Founding generations. We must learn to consider those ideas, to discuss them with our brains turned on, considering the merits of the ideas rather than the typically ad homonym prejudices we blindly attach to ideas. We must patiently work through these ideas and give them time to bear the fruit according to those unchanging principles.
• That was before anyone thought that democracy would ever again be threatened.The twentieth century is known as the bloodiest century by sheer numbers in the history of mankind. More lives were lost in the name of creeping socialism and tyranny than at any other time. And even more souls were lost to its devastating effects on those who physically survived. Is democracy [read: self-government] under threat? Absolutely! And we must do something now in order to stop the overflowing scourge that is filling us to the brim.
• I am sure that a liberal education is democracy’s strongest bulwark. Only an enlightened electorate is able to store the powers of self-government properly. It will take an even more enlightenment to return those powers back to their proper vestiges. Washington, Jefferson, Madison, and their contemporaries were raised up by studying the great books of their times. We are on the brink of a similarly revolutionary time of our own. One of the elements of raising ourselves up to the challenges of our times is to learn and understand the principles those great men implanted into our national psyche. This must be done before it is too late.

And this is only the beginning. Having a literate, enlightened electorate must then act upon the ideas they learn in order to be effective in restoring to them the powers of self-government.

A Test

“I believe that 100% of all citizens of a nation should be allowed to vote.” This is a great statement, one that I believe in. But rather than to stop at the period, one must ask a heavy question. What is a citizen? How can we know when someone has become a citizen? Immigrants who legally enter and live in this country eventually have the opportunity to become naturalized citizens. Among other things, they must take a test to accomplish this. The test is not incredibly difficult, but I wonder how many native-born Americans could answer these questions. Sample questions include:

1. What is the supreme law of the land?
2. The idea of self-government is in the first three words of the Constitution. What are these words?
3. What is freedom of religion?
4. Name one branch of the government.
5. What stops one branch of government from becoming too powerful?
6. The House of Representatives has how many voting members?
7. Who does a U.S. Senator represent?
8. What does the judicial branch do?
9. Who is the Chief Justice of the United States?
10. Under our Constitution, some powers belong to the states. What is one power of the states?

All of these questions are orally answered and none of them are multiple choice. Most of them seem simple enough, but think of Jay Leno’s “Jay Walking” and Sean Hannity’s “Man on the Street Interviews.” Many Americans could not answer these simple questions. These are topics that unless you care deeply about our country you wouldn’t necessarily know. That, therefore, begs the question: what is a citizen?

Isn’t it good enough just to be born in a country to be considered a citizen? I mean, after all, your parents worked darn hard to be in this country and to produce you kids in it. You should just be entitled to all the privileges of this nation, including choosing its leaders. Perhaps… But I suggest that a citizen is much more than just someone born in and living in a particular country. A citizen is one who is educated well enough to be a productive member of the society, one capable of self-government, one who possesses the ability to provide for himself and the wisdom to rule himself.

So, in addition to the naturalization test mentioned above, I propose another test to prove a person’s citizenship and therefore his qualifications to vote: a test of personal self-reliance.

1. Is the individual economically, politically, and intellectually self-reliant?
2. Does the individual have a basic understanding of the founding of this nation, including the Declaration of Independence and the Constitution?
3. Does the individual engage in meaningful personal civic service?
4. Does the individual engage in meaningful community civic service?

Conclusion

Mr. Weinberger knew he would take some heat with his article, and the commentary thereafter is indication enough that the majority of even those who seek to educate themselves on these matters are missing the mark. Images of blind and patriotic sheep conjure in the mind of those who have awakened and turned their brains on. But the fact is, in the marketplace of ideas, if you’re not taking a little heat from such collectivist, though well-intentioned folks, you’re not sharing enough of the truth.

Should everyone in America be allowed to vote? Definitely! If they can qualify as citizens on a much higher scale than we have required in the past. Citizens, true citizens, repeatedly demonstrate that they are able to rule themselves in wisdom by living disciplined, principled lives of self-reliance. This is not possible without literacy. Literacy is not simply the ability to decipher groupings of letters on a page, but rather a complex ability to read closely, discriminate proper principles, think critically about what one has read, to discuss intelligently, and to act upon that reading. In the political processes of our day, too many people vote by whim or by what they have heard say at the water coolers or on television or radio talk shows with pundits who know only a little more than they do. Candidates also reveal their lack of intelligence on a regular interval, showing they are hardly qualified themselves to vote, let alone to stand in their elected positions. Individuals often vote for the best looking or the most promising candidate rather than the candidate who has read and most fully understood the Constitution of the United States. Oliver Van DeMille poses the question: “How can there be Washingtons and Jeffersons today unless we read what they read, feel what they felt, and know what they knew?” To which I pose: And how will there be Washingtons and Jeffersons to elect unless there are Washingtons and Jeffersons literate and self-reliant enough to elect them?

Action Items

1. Read Adler’s How to Read a Book
2. Begin a Classic Reading course today.
3. Join a civic service organization, such as the FreeCapitalist Project, where you can associate with like-minded individuals also striving to realize self-reliance.
4. Become a real citizen of your country and community.

MRFC Principles: (2, 3, 4)

Sources

Caspar Weinberger, Jr., Should All Americans Be Allowed to Vote? HumanEvents.com, July 28, 2008.

Milton Friedman, Capitalism and Freedom, Chicago, IL, University of Chicago Press, Fortieth Anniversary edition, 2002, p. 86.

Mortimer J. Adler, How to Read a Book,New York, NY, Simon and Shuster, 1940. (Note: In order to read the chapter on Free Minds and Free Men, you must obtain a copy of the book published prior to 1972. The older the copy the better.)

New Naturalization Test Questions, about.com

Oliver Van DeMille, A Thomas Jefferson Education: Teaching a Generation of Leaders for the Twenty-first Century,Cedar City, UT, George Wythe University Press, 2000.

What Is the Right Value of a House?

HIGHLAND, UT | 29 July 2008 | The International Monetary Fund (IMF) announced recently that housing prices in the U.S. are “overvalued” by as much as 20%. A common misconception in the world today is that things have inherent value and that when prices fluctuate they become overvalued or undervalued. What the IMF and other economists are really attempting to do is to scientifically measure the amount of Human Life Value (HLV) at work in a given marketplace. They measure items such as whether fear or faith is dominating the actions of humans in the marketplace; whether people are exchanging like they have in the past; and what the perceived self-interest might be for those potentially available to exchange in the market.

Key Points

• HLV determines the value of things. If every human ceased to exchange, the value of items in the market would drop to zero, as became apparent last week in Flint, Michigan, where a house that sold three years ago for $110,000 could not be sold for $6,900. This is a perfect example of how property values are worthless without the human element.
• People are driven either by fear or faith. When on fear, people usually refuse to act or begin to act very irrationally. We see that with the panic stricken lines in front of Indy Mac and other banks as they are forced to close their doors. (Funny how the government and others are playing games lately with these bank closings to reduce these panic lines, but that is a discussion for another time.) When people check their emotions with more rational thinking, faith has a better chance of setting in and people may find better solutions to their challenges.

Conclusion

There is really only one cause of recession and price deflation. That is the human element. When human beings exchange, those involved in the exchange become enriched. When exchange slows down, poverty and scarcity set in. The problem with all of thee fantastic gadgets to predict trends and explain conditions is that they tend to become self-fulfilling prophecies. When indicators show a slow down, people tend to panic. Panic reduces action and productivity, which in turn restricts exchange.

Humans determine value. Those who will profit the most in these economically difficult times, will be those who most successfully get others to exchange with them. This will require a lot of cool-headed thinking, a high degree of persuasion, and ideas that make life easier for those whom one wishes to exchange with. In short, the higher the HLV, the greater the value there will be in exchanging with that person.

Action Items

1. Whatever your chosen field may be, seek to increase your HLV by looking for ways to increase people’s willingness to exchange with you.
2. If third party lending is usually a catalyst to the exchange, like it is in real estate, seek for ways not to need that part of the equation for the exchange.
3. Improve your communication skills in order to persuade prospective people to exchange with you.
4. Specifically related to real estate, consider ways of exchanging while still holding onto that property until more people are willing to exchange, thus increasing perceived value in the market.
5. Seek other areas to create value in to offset your losses in real estate.

MRFC Principles: 6 (2, 4, 5, 6, 8 )

Sources

Lesley Wroughton, U.S. house prices overvalued by up to 20 percent: IMF paper, Yahoo! News, July 25, 2008.

Valdimir Klyuev, What Goes Up Must Come Down? House Price Dynamics in the United States,imf.org, July 25, 2008.

Bob Ivry and Sharon L. Lynch, Fannie mae Unsold $5 Billion Homes Brings Peril to Shareholders, Bloomberg.com, July 23, 2008.

Why the Pickens Plan Won’t Work

HIGHLAND, UT | 23 July 2008| One of the hottest topics in the marketplace of ideas is America’s growing concern with energy. Many say that oil production peaked in 2005 and will soon dry up. Others say that petroleum based internal combustion engines, though not very efficient, are here to stay. Many are looking for alternative sources of oil, such as shale or from algae while others argue that these sources are not feasible for the country’s needs. And there is the ubiquitous clamoring that our current “dependence” upon foreign oil is draining our coffers dry. One of the latest to come on the scene for the current crisis of alternative solutions, is a man named T. Boone Pickens.

With a name like T. Boone Pickens: if you picture a Texas oil tycoon millionaire philanthropist, you would be correct. Though his plan is new, Pickens is not new to the energy industry. The son of an oil producer and a degree in geology, no doubt to aid him in understanding where oil, natural gas and other energy sources may be found in the earth, Pickens was the founder of Mesa Petroleum, which grew to become “one of the largest and most well known independent exploration and production companies in the United States” under his stewardship. Simply put, Pickens’ background and experience definitely qualifies him to be listened to regarding an alternative plan.

His plan is to use one of the world’s greatest wind resources to generate enough electricity to power other energy plants and to provide a portion of America’s electricity needs, thus relieving the need to operate these plants with oil, so the oil demand in the country would drop and more oil could also be used to produce fuel for our vehicles. The Plan also provides for alternative sources of automobile fuel, such as natural gas and ultimately electricity. The plan appears quite legitimate, in and of itself. But it contains a serious flaw that will prove it ultimate failure, and perhaps the failure of our great nation.

Principles govern in the affairs of man. A plan that violates those principles may prove quite successful in the short-term, but will ultimately spell the doom of all those involved. In this regard, Pickens doesn’t really appear to violate principle in the plan itself: wind, natural gas, and other sources of energy are as viable as any other on earth. And left up to a good capitalist, say, another Henry Ford or Steve Jobs, these alternatives could definitely become the next hysteria in transportation. The major flaws of the Pickens Plan is the implementation.

Pickens has been in Washington D.C.all this week, lobbying elected officials and testifying before committees, looking for “permission” to carry forth his plan. This corporatist approach to solving this nation’s challenges violates the Principles of Prosperity and will ultimately end in ruins.

Key Points

• Those who seek the protection of government believe government provides prosperity. Those who understand where true prosperity comes from will then gain the faith necessary to act appropriately. Pickens reveals his faith in government rather than God:

It can all be accomplished with private investment but needs government support by clearing the way for action, which means help on providing the transmission right of way, the appropriate renewals of the renewable energy tax credits, among other things.

• In reality, the plan, any plan, only needs one thing from government: to get itself out of the way and allow informed citizens to voluntarily create the solutions the country seeks.
• Faith is the opposite of fear. again, a thorough understanding of God as the true source of prosperity puts the course in perspective and creates a level of certainty. This builds faith which aids an individual to action. Pickens wants to have the government force its citizens to follow his plan. He lacks the faith that people will see this for themselves. If an intended market does not recognize its self-interest in a given market item, the only way to get that intended market to buy into it is by force. The better solution for Pickens would be to create the project more locally and have it prove its legitimacy and allow it to catch on in the rest of the country. To his credit, he is currently building the largest wind farm in the world which will have the productive capability of four coal-fire plants. Perhaps, however, he feels this is too slow.
• By attaching stewardship (the responsibility of failure) to the collective body, the Pickens Plan creates a fissure in agency. No one will act responsibly enough to ensure success. This allows an escape hatch to exist in case of failure. And when it crashes, too many otherwise responsible parties will echo Atlas Shrugs’, “It’s not my fault.” This gets people off the hook but it does not create a formula for success.

Conclusion

The intended implementation process of the Pickens Plan is the product of a collective attitude within the American society that says business success can only happen with government’s blessing. This is the result of decades of fascist and other socialist influence over not just government’s psyche, but that of the general population as well. Thus, the truth of the FreeCapitalist statement: Everyone is trained, taught, and educated in the scarcity paradigm. That psyche is the flame that has fueled our society from the Great Depression right down to the next big bail out and the next government-enforced great idea. On paper, the Pickens Plan looks really good, but these violations of principle will spell the ultimate doom. The Founders created a country in which rugged individualism and social strength, based upon the universal principles of prosperity, would move this country forward in success. Anything short of that, anything that replaces faith with fear, is at best a counterfeit and will not work.

Action Items

1. Review the Pickens Plan for yourself and decide whether the energy portion of the plan is something you could support.
2. Communicate with your Congressman your position regarding any government involvement in this Plan.
3. If you have an idea you’ve contemplated bringing to market, study Principle 1 (God is the author of prosperity) and Principle 2 (Faith begins with self-interest) until you have built enough faith in yourself and in others to bring your idea to market according to principle.

MRFC Principles:  1  (1, 2, 3, 11, 12, 13)

Sources

The Man with the Plan,PickensPlan.com.

The Plan,PickensPlan.com.

T. Boone Pickens’ energy plan gets play in Washington, Dallas Business Journal, July 23, 2008.

C. Rick Koerber, A Call for Revolution,The FreeCapitalist Project Primer, p. 19.

Are My Government-Prompted Charitable Contributions Tax-Deductible?

When I choose to give money or resources to my church, the Red Cross, or any other charitable organization, I am allowed to deduct the value donated from my taxable income. And, at the end of each year, as I prepare my taxes, I am asked to account for all of my charitable donations. Turns out that I have been shorting myself—there are plenty of charitable causes that I didn’t even know that I was supporting.Every year, the government spends billions on charitable causes. And the billions they spend come right out of our pockets. Now, don’t get me wrong, I am all for charity and helping those who stand in need. But, when the government decides that they will take my money to help every cause under the sun, and do so in a way that wastes significant portions of the pilfered funds, it perplexes me a little. Not only are they robbing me of my chance to get a tax deduction for a voluntary donation to the same cause, they are robbing the people they are supposedly helping by not being as efficient as private institutions with “donated” funds.

While I can’t list every cause that you and I have donated to through government channels, I will try to give some perspective to the two major ones that were announced in the last 24 hours.

It turns out that I am highly concerned about the wildfires in California. When I took too long to pull out my check book to try and help the Golden State, President Bush decided he would exercise Executive Privilege and make that move for me. Once Governor Schwarzenegger declared 12 counties to be in a state of emergency, President Bush decided to get on a plane and head that direction.

When we hear that Bush or other elected representatives go visit a forlorn area, most think “Oh, how nice. Such compassion”. Few of us consider that when the president travels, so does his entire entourage. Now, I don’t know the exact amount they spend on any given trip, but I doubt that they stay at the local motel 6 and dine at McCheapos, if you know what I mean. And that costs the American tax payer. With today’s technology, could the president not view the damage on the news or the internet and recognize just as deeply that things are pretty bad? Would the aid not be given more quickly and effectively if Bush skipped the trip and trusted the word of local professionals who are more familiar with the area and more adept at assessing local needs?

Even if I was fine with the use of legal plunder for public good, I’d still have problems with this one. Living in a state that has plenty of its own wildfire problems, I’d prefer to keep my fire-fighting donations local. Stealing our local resources to deal with someone else’s problems won’t help us curtail the damage when our fires hit. Perhaps we should have started our fires earlier this year to ensure that we got government help before it runs out.

It also turns out that I am highly concerned about AIDS in Africa and other areas of the world. The gravity of the AIDS situation makes it easy for the government to jump to the conclusion that something must be done now. And I agree that help is needed, and quickly. But, if I was dying of AIDS and approached you saying that you would have to choose between sustaining your life and using the same resources to sustain mine, which would you choose? Well, the government doesn’t think that you and I are smart enough to make that choice, so they made it for us.

On Wednesday, the Senate voted 80-16 to triple the size of PEPFAR (President’s Emergency Plan for AIDS Relief), a product of the Bush Administration. The bill has already passed the House and yesterday, the Senate approved the $50 Billion spending plan. And, both the President and Congress are pretty proud of themselves.

Sen. Joseph Biden, D-Del says that PEPFAR, is “the single most significant thing the president has done.” NOTHING that this administration has accomplished on our own soil compares to the free-ride we are giving another nation? Sen. Richard Lugar, R-Ind says the program “has improved attitudes toward the United States in Africa and other regions.” Will the same regions feel as friendly when this and similar spending programs bankrupt the ability of the American people to help out? When the flow of money dries up, does the relationship do so, as well? After touring Africa earlier this year, President Bush said he was glad for the chance to meet “the patients, including many children, who understand and appreciate America’s generosity.” The giving away of something that belonged to someone else counts as generosity?

One only needs to look back to the aftermath of Hurricane Katrina to see that large government aid programs breed corruption on several levels. A large portion of the money simply doesn’t reach the intended recipients. That is not to say that private charitable institutions never face the challenge of corruption. But, the freedom to discriminate between which people and projects one chooses to fund (a freedom that the government doesn’t feel that it has) tends to filter out many of the free loaders.

The Bible says that man should not give “grudgingly, or of necessity: for God loveth a cheerful giver.” (2 Corinthians 9:7) I think that the only thing that would make me a “cheerful giver” would be if the giving wasn’t forced.

Please don’t take this all to mean that I (or other capitalists) don’t care about human suffering and world problems. I care deeply. I care so much that I am willing to see that solutions are created and administered in ways that don’t violate principle and actually work. Violation of principle will never bring sustainable relief to any situation, no matter how grave and urgent the situation appears. And government spending on relief programs, foreign or domestic, is a violation of principle.

Sources:

Juliana Barbassa, “Bush set to survey Northern California wildfires”, Associated Press, Thu Jul 17, 2008 (http://news.yahoo.com/s/ap/20080717/ap_on_re_us/wildfires)

Jim Abrams, “Senate agrees to triple anti-AIDS funding”, Associated Press, Thu Jul 16, 2008 (http://ap.google.com/article/ALeqM5jb7JQ6VIFJu7UQB0ElCfWnkvUAGwD91V8JQ00)

Hope Yen, “Corruption: Katrina Fraud Ballooning Past $1 Billion”, NY Transfer News, Associated Press, Dec 25, 2006 (http://www.blythe-systems.com/pipermail/nytr/Week-of-Mon-20061225/054855.html)

FDIC (Fear Drives Ignorant Consumers)

SALT LAKE CITY, UT | 16 July 2008 | In a move that stirs up images of the Great Depression, people are lining up outside of IndyMac Bank branches to see that they “get theirs” before there is nothing left to get. Because of the number of people waiting to close their accounts and withdraw their funds, the bank has had to limit the number allowed in the bank at any time to five (those seeking to deposit funds are bumped to the head of the line). So, the rest are left to sit outside and stew in each other’s sob stories. And the scarcity abounds.Each of these customers felt that the high interest rates offered by IndyMac, combined with FDIC’s guarantees, were sufficient reason to deposit their money at one point. But, today, as the FDIC makes moves to fulfill their part of the bargain, panic-driven people are proving that they don’t trust the guarantees that made them feel so secure in the first place.

What has changed to cause these people to panic? Certainly, the general economic conditions of the day aren’t favorable, and the bank has shown a lack solvency, neither of which would muster much confidence in the average consumer. Even so, weren’t these distinct possibilities when accounts were opened and monies were deposited? No one likes to lose out and good stewardship demands that we do what we can to protect and increase our resources. But, when things do go differently than we hoped or planned, what should we do as good stewards to rectify the situation?

Key Points

• Faith begins with self interest. Fear is the enemy of faith, and therefore, acting out of fear is never an act of faith and can never produce the needed or desired result. Fear is an emotion that is meant to warn us of potential dangers and help us determine how to handle those dangers. It is meant to help us consider the options before us and navigate our course rationally. But, most people allow fear to lead to panic and irrationality. In the name of protecting their prosperity, people make moves that will almost certainly lock them into a life without prosperity.
• Panic and irrationality lead people to forget where real value lies. If the bank fails, if the dollar fails, if the entire system fails, each of us will still have the talents and knowledge that we have always had. We may have to adapt how we apply our talents and knowledge in our new situation, but we will still have the ability to create value, exchange it with others, and find value in the ensuing relationships.
• People standing in line will likely get their money back, but will either cling to it and not put it to good productive use (the hoarding mentality of so many of the Depression Era), or they will put the money at continued risk, speculating in other areas in hopes of recouping lost profits. Neither option has the power to create prosperity for these people. Both options place value in the physical reality of dollars—an option which leaves these people as slaves. They have no ability to control the market value of those dollars, and are therefore captive to the market swings of those dollars. If the dollar becomes completely devalued, they will be left with worthless papers and the big question of who is to blame for their bitter situation.

Conclusion

Loss hurts. But the amount that it hurts is entirely up to us. We can choose to be victims of bad situations and be tossed about by them. Or, we can take stock of that which we still have and determine how to produce with it. Money, the great distracter, has nothing to do with that decision. Which kind of makes sitting in line at a bank seem a little silly.

Action Items

1. Learn to eliminate fear and apply true faith to your financial decisions. (This DOES NOT MEAN hoping really hard that an investment will work the way you want it to.)
2. As best possible, know the potential positive and negative outcomes of an investment before you choose to make it.
3. Determine if the worst case scenario is something that you could live with and learn from.
4. Determine how you will recognize if the investment is faltering. What leading indicators should warn you that things are heading south?
5. Determine what your exit strategy would be if leading indicators showed the likelihood of the worst case scenario coming to fruition.
6. Recognize from the get-go that whether you recoup all of your money and expected profits or not, the risk of the investment was something that you chose to assume. In similar fashion to John Galt’s refusal to accept unearned guilt or profits, vow to never blame others for your gains or your losses on any investment.

MRFC Principles: (2, 3, 4, 5, 6, 7, 8 )

Source: Hundreds Demand Money From Failed California Bank, Associated Press, as seen on FoxNews.com, July 15, 2008 http://www.foxnews.com/story/0,2933,383341,00.html

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