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.

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.

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.

The Follies of Fannie and Freddie

MAPLETON, UT | July 22, 2008 | Recently, two names have been plastered across headlines so often you’d be forgiven for thinking they were the latest hollywood pair. Their celebrity status has been cemented by constant mentions in the top news programs, length pieces on their life history, and endless gossip and rumors about their sudden fall from grace in the current housing crisis.

They are the 800-pound gorillas of home ownership: Fannie Mae and Freddie Mac, the biggest owners of mortgages in the country.

In order to understand how such trusted institutions could sink to the notoriety of tabloid fodder, shocking the country with revelations of their default-ridden mortgage portfolios, let’s use an imaginary example. While it is helpful to study their historic origins, a hypothetical situation will demonstrate the cause of their tragic fate…

Imagine you started a company that loaned money to people. In order to raise capital, you pitched your business plan to potential investors, who would be interested in knowing how you would manage the risk of borrowers defaulting on their loans. If you were like every other private company, you would provide a effective strategy that would reassure your investors of the relative safety of their investment. Obviously, no plan would be foolproof, thus investors would determine if they valued the potential gains more than the potential risk of defaults that could cause your business to fail and their investment to go up in smoke.

Now imagine that next door, a new business is formed to provide the same service, only this one makes a unique promise to investors: if for any reason they fail to operate profitably, they have access to financial reserves unlike any other –  an enormous pile of cash replenished annually by every taxpayer in America (not to mention a fine collection of special printing presses). Other companies might have large insurance policies, or additional streams of revenue, but what could compare with the ability to extract money from millions of people under threat of force?

Which company do you think will attract the most investors over time? Which company would possess a nearly unlimited ability to increase their loan portfolio? Which company do you think will eventually cease to exist, leaving its competitor to absorb nearly the entire market for lending in America? Which would you choose if you were the investor?

In a free marketplace, where force was only used to punish fraud and enforce contracts (and not reassigned to the job of eliminating risk), the growth and success of any financial services company would be directly tied to their ability to demonstrate fiscal responsibility and profitability over time. They would be limited in their ability to raise capital in that all funds would have to come from voluntary sources – no guarantee other than that of their capability to manage risk and operate profitably would be possible. Such a company would have a vested interest in carefully scrutinizing every transaction, knowing that their very future depended on it. No investor would voluntarily invest in a company that had a reputation for poor stewardship.

But a company with the advantage of an armed, wealthy godfather like the one in our story has no such incentive to personally insure the solvency of its business. Additional funds could always be extracted from taxpayers, who had no say in the matter (and thus had no interest in evaluating the safety of their “investment”). There would occasionally be complaints and concerns, voiced in committee hearings, but other than enduring some boring meetings, no real threat would be posed to the existence of the company. Even the bureaucrats, prodded by their angry constituencies would be unable to stop feeding the unprofitable beast  – especially now that the company is “too big to fail”.

And thus another naturally corrective process would be suspended by force: the process of failure, in which losses are experienced, lessons are learned, and ideas are re-evaluated. In an attempt to avoid the pain, the benevolent godfather would step in and make the consequences of the original bad idea seemingly disappear (through another violation of principle).

Some are crying that Fannie Mae and Freddie Mac were originally “good” institutions, created for the purpose of helping the poor and underprivileged acquire home financing they would not otherwise have qualified for. Ironically, the very violation of principle that made those companies so attractive in the housing market (reducing risk by promising security with funds taken by force, thus removing the possibility of failure) made them appealing to everyone in the housing market – and reduced the incentive for Fannie and Freddie to be more careful about the risk they purchased so rampantly. Even if Fannie and Freddie never purchased a single sub-prime loan, their very existence as an unlimited source of funds had an enormous effect on the availability of easy money for home financing, which in turn influenced the rise in real estate values that was the enabler for much of the speculative and sub-prime transactions in recent years.

By creating a company that was perceived to be protected from the risks that would challenge any private mortgage buyer or insurer, a distortion was created in the marketplace. Such a company has an artificial advantage, having the sanction and protection of the only entity in America with the legal power to use force to provide funding for its endeavors – the U.S. government.

In a recent article in the New York Times, the following explanation was given:

The case against Fannie and Freddie begins with their peculiar status: although they’re private companies with stockholders and profits, they’re “government-sponsored enterprises” established by federal law, which means that they receive special privileges. The most important of these privileges is implicit: it’s the belief of investors that if Fannie and Freddie are threatened with failure, the federal government will come to their rescue.This implicit guarantee means that profits are privatized but losses are socialized. If Fannie and Freddie do well, their stockholders reap the benefits, but if things go badly, Washington picks up the tab. Heads they win, tails we lose.

Such one-way bets can encourage the taking of bad risks, because the downside is someone else’s problem. The classic example of how this can happen is the savings-and-loan crisis of the 1980s: S.& L. owners offered high interest rates to attract lots of federally insured deposits, then essentially gambled with the money. When many of their bets went bad, the feds ended up holding the bag. The eventual cleanup cost taxpayers more than $100 billion.

This particular author, who clearly describes the contradiction inherent in the business model of Fannie and Freddie, is nevertheless adamant that they should not be allowed to fail. Despite his articulation of the system of “privatized profits and socialized losses”, he acknowledges no violation of principle, and advocates continued support of the flawed enterprises, while blaming greedy speculators for dragging down the whole housing market, and causing defaults in the “good mortgages” that Fannie and Freddie hold. In other words, no one would have noticed that the emperor has no clothes if it wasn’t for everyone else losing their shirts.

The only thing the current crisis has done to Fannie and Freddie is reveal the fatal flaw in their very foundations. It has simply sped up a process that cannot be stopped, only delayed. Violating principle, even for a “good cause” has consequences that cannot be avoided, but are often hidden from view for years in an attempt to defy reality. The very birth of Fannie Mae and Freddie Mac, as institutions wishfully set apart from the rules that would govern every other private endeavor, held the seeds of their own destruction.

Many critics today cry foul at lenders who provided the “easy money” to those who they claim should never have been given money due to their “sub-prime” status – in other words, the likelihood that they would default. What they forget is that those lenders and the investors that supported their efforts are now paying the price for their decisions. Loss is the natural consequence of their bad ideas. In an attempt to ease the pain of loss, little tyrants everywhere are calling for regulations to keep people from making such “risky” investments. But government has no place telling people how to invest their money. Such efforts to revise government regulations would be better spent removing the poison in the well that perverted the minds of irrational investors – those institutions that stood as the bastions of the illusion of security in the housing market, Fannie Mae and Freddie Mac.

Action Steps

1. Learn more about how Fannie Mac and Freddie Mac were formed and what their role is in the housing market. Learn about how the mortgage market works, how liquidity affects it, and what 
2. Write your Congressmen and Senators to express your opinion of a taxpayer bailout of Fannie and Freddie – include your view of the violations of principle involved in the current situation and the very existence of the institutions.
3. Share what you have learned with your friends and family. Teaching principles helps us to live by them, as we strive to advocate principles effectively.

MRFC Principles:  (5,6,7,8,12)

Sources

Julie Creswell, Protected by Washington, Companies Ballooned, New York Times, July 13, 2008.

Making Sense of Problems at Fannie and Freddie (informative graphic showing how Fannie and Freddit supply liquidity to the mortgage market), New York Times, July 11, 2008.

Paul Krugman, Fannie, Freddie and the Threat of Economic Meltdown, New York Times, Reprinted on alternet.org, July 15, 2008.

Paulson: Support for mortgage giants needed, MSNBC, July 22, 2008.

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

NOTICE! Human Life Value Takes a Dive!

HIGHLAND, UT | 14 July 2008 | The EPA, of all agencies, regularly publishes a calculation on human life value. They reported recently that over the past five years this value has dropped. What is the EPA doing calculating human life value? Turns out that many government agencies calculate this value, all for their own purposes and all having a different value to serve those purposes. The EPA uses theirs to help determine what regulations the government should impose upon environmental issues. The higher the value the more restrictions they feel justified in demanding.

Critics say the lowering of the value was politically motivated so the Bush administration can get away with not creating more environmental regulations, but others, including Rush Limbaugh callers-in believe there is more behind the numbers: the government can then regulate the amount of entitlements it doles out to different groups of people. Say, senior citizens needing operations that will end up costing more than their human life values at that time of their life.  

So, what does this mean for the common American? Well, since Human Life Value is the source and creator of all property value, and since everyone’s HLV has dropped, this means that each person’s ability to determine property value is suddenly much lower. Perhaps it also means that the government has more authority in helping each one of us in making those determinations.

But seriously:

Key Points

• Human Life Value, as defined by the FreeCapitalist Project:

…the capitalized monetary worth of the earning capacity resulting from the economic forces that are incorporated within our being: namely, our character and health, our education, training, and experience, our personality and industry, our creative power, and our driving force to realize the economic images of the mind (Huebner, 5).

• Definiteness of Purpose and having a Definite Chief Aim are two of the best ways to recognize a person’s HLV because it is the best indicator of whether person will have the character and develop other aspects necessary to become successful in a given field of life. Napoleon Hill explains:

One of the most startling facts brought to light by those 16,000 analyses was the discovery that the ninety-five per-cent who were classed as failures were in that class because they had no definite chief aim in life, while the five per cent constituting the successful ones not only had purposes that were definite, but they had, also, definite plans for attainment of their purposes (Hill, 32).

• A person able to aptly define a definite purpose easily recognizes the value of things in his life and can quickly decide upon his willingness to exchange for them.
• In contrast, Seth Borenstein of the AP reports that the EPA determines HLV as follows:

The EPA figure is not based on people’s earning capacity, or their potential contributions to society, or how much they are loved and needed by their friends and family—some of the factors used in insurance claims and wrongful-death lawsuits.

Instead, economists calculate the value based on what people are willing to pay to avoid certain risks, and on how much extra employers pay their workers to take on additional risks. Most of the data is drawn from payroll statistics; some comes from opinion surveys [very scientific]. According the EPA people shouldn’t think of the number as a price tag on a life.

• Thus, the EPA’s calculation appears to be more of what the average HLV in America determines as the property value of these risks rather than an assessment of the HLV itself.

Conclusion

Have no fear. In spite of what various government agencies might think HLV is not declining, that is, as long as an individual seeks to improve his life based upon the 9 or 10 aspects defining that value.

Action Steps

Seek to increase your HLV. Below are some possible ways of accomplishing this.

1. Enroll in a class you’ve been thinking about studying.
2. Take on a new skill.
3. Develop the habit of reading at least 30 minutes every day. “Leaders are readers and readers are leaders.”
4. “Discover your strengths,” your unique abilities, and develop definite purposes around those strengths. Seek to create value for others in these respects.
5. Don’t worry how the government defines HLV, they don’t know anyway.  

MRFC Principles: 6 (4, 6) 

Sources

Seth Borenstein (AP Science Writer), An American life worth less today,SFGate.com (San Francisco Chronicle), July 10, 2008.

S.S. Huebner, The Economics of Life Insurance, 3rd Edition, New York, Appleton-Century-Crofts, Inc. 1959.

Napoleon Hill, The Law of Success in Sixteen Lessons,Lesson 2, Wilshire Books, Facsimile Edition, 2000.

Entitlement Addiction Hard for Doctors to Let Go Of

HIGHLAND, UT | 7 July 2008| Health care continues to be a big item in this year’s election campaigns and politics as the push toward a nationalized health care systems receives more and more pressure. Today, New York Times reporter, Robert Pear, tells the story of how the recent cuts in medicare allowances have prompted many doctors throughout the nation to shut their doors to older patients; so the American Medical Association (AMA) has reportedly created a campaign aimed at U.S. Senators to sway them to undo the cuts that went into effect last week.

Most people view entitlement benefits from the patient’s perspective. Very few, perhaps, view the angle of the doctors. With those benefits coming down, the doctors receive less profits which makes treating older Americans less attractive. Several Prosperity Principles come into play as one considers this situation throughout the country.

Key Points

• With the current cuts, doctors no longer see the profit center they once saw, but this is fallacy. What they thought of as profit was actually government subsidies that gave doctors a false sense of validation. The unintended result was two-fold. First, doctors became addicted to a fiat source of revenue. Whether they knew it or not this source would ultimately dry up. Second, this drove prices higher as the medical field recognized the government would pay any amount to guarantee health care to the older generations of our country (a right that does not exist). These two unintended consequences tend to feed off each other until the revenue source becomes overburdened and ceases to supply the profits. This results in lazy doctors who have no idea how to work for true profits.
• This is the economic side. The moral side, the side carrying the most important equations reveal that even if the government just continues to print more currency it results in stealing property from Americans and cankers the souls of all those involved. This behavior gives false prosperity to doctors who don’t use their minds to create value for their customers. It creates a sense of entitlement in their customers who falsely believe it is a God-given right to live healthy lives. Those in government usurp more and more power over the citizens. And the common citizen’s resentment grows as his prosperity mysteriously slips through his fingers in ways he cannot account for.

Conclusion

Medicare alone will not cause the moral and economic demise of this nation, but it is a piece of the puzzle that robs each individual of that moral and economic prosperity. As Jay Perry so aptly expressed:

A careful analysis of U.S. history reveals that virtually every serious problem now confronting American society can be traced to a departure from the sound principles taught by these great statesmen.

The unstated solution is only a return to those ideas will solve those problems. Though difficult and painful, scaling back and eventually completely discontinuing such entitlement programs as medicare is the only solution to bringing this country back to a principled lifestyle of prosperity.

Action Items

1. Study the Founders—what did they believe about government dole?
2. Seek to regulate your own actions according to the Founders’ ideas, whether you are a consumer of products (i.e. a patient) or a producer (such as a doctor).
3. Take responsibility for your own life by living according to self-reliant principles.

MRFC Principles: (3, 4, 6, 9)

Sources

Robert Pear, Doctors Press Senate to Undo Medicare Cuts, New York Times, July 7, 2008.

Jay Perry, The Real George Washington, NCCS, p. xv.

How Do You Celebrate Independence?

HIGHLAND, UT | 4 July 2008 | Ah! The Fourth of July! That great mid-summer holiday. Full of parades and beauty pageants, fireworks, barbecues, 10k races, pancake breakfasts in the park, and flag raising ceremonies. This is what this holiday is all about, right? Oh, and thinking about the signing of the Declaration of Independence (whatever that is). I sure am glad those guys did that in summertime so we could have such an awesome party.

Independence Day is also a day to reflect. Do we recognize the price our Founders paid to win their independence? Do we know of the struggle leading up to that great event? What do we know about those men? Do we buy in to the image so prevalent today that they were philandering old men or have we done our homework and recognize their virtue? Do we just spend our day lounging around, getting drunk, and exercising the inner urge to blow things up?

The Founders started a revolution, but they did not complete it. They recognized it would take many generations to complete what they started. Yes, they were able to validate their declaration of political sovereignty; but their revolution was so much more. They subsequently created a government to transcend the ages, one which had never been tried before. One which honored the individual and allowed the individual to govern himself.

The Founders revolution included three areas. The first, most well-known is the political revolution, discussed above. The basic premise is that man is able to govern himself and doesn’t need a king or elected officials to tell him what to think and how to act. How are you doing? Do you govern yourself or do you allow others (political leaders, bosses, Kommissars*, etc.) to control your life? Second, this revolution was one of religious freedom, or freedom of conscience. Finally, to be a citizen of a nation an individual did not have to be the member of a certain church. He could choose for himself, according to the personal belief system within his own mind. The third portion of the revolution is economic. Through capitalism people can freely exchange with one another, individuals can do more than just live paycheck to paycheck. They are free to discover their life’s missions and to pursue those with that same freedom of conscience and to strive to leave the world better than when they entered it.

This revolution—all three portions of it—are not intended only as a collective revolution; it is a personal revolution. So how are you doing? Do you understand the purpose of the revolution? Do you live the revolution, or are you just living paycheck to paycheck, getting up when others say you should, going places others say you should, thinking the ideas others say you should? Or do you practice your own autonomy? Are you actively engaged in a personal revolution? Do you celebrate independence all year long, or is it a 0.27% of the year?

MRFC Principle:

*German spelling used intentionally for effect.

Supreme Court Ruling for Guns already under Attack

HIGHLAND, UT | 1 July 2008 | It took the opponents of firearms ownership less than a week to come up with their next attempt to ban handguns. Last week the Supreme Court struck down the 32-year old D.C. handgun ban in a 5-4 decision. Yesterday, AP “medical writer”, Mike Stobbe revealed a “surprising fact,” that more than half of all gun deaths are suicides. Stobbe points out that “Justice Stephen Breyer used the word [suicide] 14 times in voicing concern about the impact of striking down the handgun ban.” Justice Breyer maintains: “If a resident has a handgun in the home that he can use for self-defense, then he has a handgun in the home that he can use to commit suicide or engage in acts of domestic violence.”

The American Association of Suicidology report some sobering statistics. they report over 32,000 suicides in 2005, the last year for which they have statistics. Over half of these were firearm related suicides. Justice Breyer’s numbers were similar, where he cited government studies revealing 36,000 firearm related deaths, 51% of which were suicides. While these numbers are cause for alarm, assigning blame to the presence of a firearm is illogical and not founded upon principle. Merely banning guns or hazardous materials will not solve the problem causing all the suicides, or other violent murders for that matter. As always in these types of topics, the issue lies much deeper than simply having a material weapon available. Human Life Value and an individuals perspective of that value is the real issue.

Key Points

• Suicide is a reflection of a person’s self-loathing. Refer to the American Association of Suicidology:

A person in acute risk for suicidal behavior most often will show: Warning Signs of Acute Risk:
• Threatening to hurt or kill him or herself, or talking of wanting to hurt or kill him/herself; and/or,
• Looking for ways to kill him/herself by seeking access to firearms, available pills, or other means; and/or,
• Talking or writing about death, dying or suicide, when these actions are out of the ordinary.

• These are all signs of a person whose self-loathing has reached dark depths. If they have reached this point, professional help should be sought after. However, it is suggested that for real success to occur, therapy based upon true principles should be employed and not just the scientific mysticism often employed by the psychology industry of the day.
• Lasting change comes when the individual learns to love his life and recognizes the truth regarding his self-interest. This is not always an easy task. The individual must unlearn all the training, teaching, and educating that sticks him in the consumer, scarcity paradigm and robs him of his self-love and feelings of being a producer.
• Productivity is the standard in this process. Productive members of society generally feel better about themselves and about their fellowman. The more productive success one has, the better he feels.
• Even some who claim to be productive may begin to loath themselves. This is because their productivity is not creating real value for others in the world. Productivity requires an exchange between two consenting individuals. Many otherwise successful individuals become overstressed and lose perspective in the value they create for others when they do not exchange with them.

Conclusion

In seeking for root causes of nearly any activity, it is always good practice to look beyond inanimate objects to the Human Life Value that acts upon that object. Nearly forty thousand individuals kill themselves in America every year. This is indication of a much deeper problem than whether a gun is close within their grasp. Proper education, helping them learn to create value for others, is the best thing to help people learn to create a life they love.

Action Items

1. Create a life that you love.
2. Seek to create value for others and exchange with them. Begin small, if necessary, but make sure it is meaningful.
3. Make a new friend.
4. Find a cause larger than yourself that you are passionate about.
5. Seek professional help if you are too deeply in despair.

MRFC Principles: (2, 3, 4, 6, 10, 13)

Sources

Mike Stobbe (AP), Surprising Fact: Half of Gun Deaths Are Suicides, Yahoo! News, June 30, 2008.

Supreme Court Opinions, District of Columbia v. Heller, June 26, 2008.

American Association of Suicidology, U.S.A. Suicide: 2005 Ofiicial Final Data

American Association of Suicidology, How Do You Remember the Warning Signs of Suicide?

Who Is to Blame for $4 per Gallon Gasoline?

HIGHLAND, UT |18 June 2008 | While surfing the Internet for interesting news stories I came across an advertisement: “Who is to blame for $4 per gallon gasoline?” It then offered three photographs the reader could choose from for the blame. One was a picture of an Arab, representing the OPEC producers of oil. Another was George W. Bush, representing, surely, himself but probably the American government in general as well. And the third was a photo of BP, representing the fuel refinery companies. I clicked the link to find out what the attitude was; unfortunately, it was a broken link and I did not discover its source. But the question still looms in my head. Who is to blame for these outrageous fuel prices?

Ultimately, to argue about “fault” is a useless endeavor. It does nothing to solve the problem and serves to raise animosity between different camps. Much more productive is to recognize the powers at work in the issue and to see how principles govern the process.

Key Points

• Perspective determines action. The ever important principle: one must be on the lookout for deception, and self-deception is the most dangerous kind. A Free Capitalist will recognize that he is always free to act, and will reject situations in which he is acted upon.
  Regarding gasoline: As the twentieth century wore on and we have moved into the twenty-first, mankind’s seeming dependence upon petroleum based products is increasingly evident. Perhaps, similar to a drug dealer, the producers of petroleum have kept the prices artificially low until we have become addicted to their convenience in our lives. Now that we think we “gotta have it” these producers are letting us “have it” by raising the prices above levels reasonable to most. A proper perspective on the matter allows an individual to recognize the freedom to act in many different ways.
• Human Life Value is the source and creator of all Property Value.The price of oil or gas is never a necessary or natural phenomenon. The price is set by producers and consumers who voluntarily engage in free exchange with one another. The parties involved are always free to ask prices, negotiate better circumstances, or to walk away.
• Exchange creates wealth. This principle ensures that both parties ultimately want the exchange to take place. Both sides wish to prosper.
• Faith (the driving force within individuals) begins with self-interest. The Free Capitalist individual will assess and recognize his self-interest while deciding to pay any price at the pump, and will determine whether to pay, negotiate, or to refuse the exchange. The fact that the individual acts is an indication of his faith.
• Force destroys freedom. The proper role of government in any economy is not to participate but rather to referee. President Bush’s and others’ imploring of OPEC to lower prices or to produce more oil is misguided and inappropriate. The only role is to ensure that both parties enter the exchange voluntarily and that no deception is involved.
  The Organization of Petroleum Exporting Countries (OPEC) is one of force, in that it is a cartel monopoly supported by practically every political government in the world. It reduces the competitive nature of the industry, which in turn could invite lopsided exchanges to occur. Government, in this respect, has failed its citizens by failing to referee situations in which free exchange can take place.
  Still, this is not to say that all exchanges are forced. Individuals are still responsible for their own actions and may choose to either exchange as they see fit, or to refuse to exchange.

Conclusion

Upon checking the link to the question again, I find that it links to an offer for Money and Markets newsletter. The poll, has many other choices than just the three people like to blame the most, though still none of blame answers is appropriate. The matter, ultimately, and most morally, is simply one of market conditions. Producers are free to ask as much as they believe people will pay. Consumers (or buyers) are free to counter that asking price or to find some other solution, thereby lowering the producers’ asking price to a level more acceptable to those consumers. Individuals must remember they are free to enter or refuse the exchange based upon their self-interests.

Action Items

(The following list is not hierarchical; perhaps simply multiple choice)

• Refuse to pay by not engaging in the transaction.
• Ride a bike to work.
• Walk to work.
• Work at home.
• Buy a vehicle that runs on alternative fuel sources.
• Explore ways to increase your own income (i.e. create more value for people) so you can afford the rising cost of fuel.
• If you are one of the very smart ones, create your own alternative fuel source and challenge the premise that the world must only run on petroleum.

MRFC Principles:  (2, 4, 6, 8, 10, 11)

Sources

“Who’s to Blame for $4 Gas” Choose your answer and see what most respondents believe. You may be surprised.

For comments about government being the referee, see Milton Friedman’s Capitalism and Freedom, fortieth anniversary edition, University of Chicago Press, 2002.

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