Monthly Archives: August 2012

Events, Strategy

Effectively Countering Workplace Violence

With the recent shooting at the Empire State building, the focus is back on workplace violence.  While it is extremely important to maintain vigilence in the workplace, it is equally important to understand that:

1. Despite the high profile media attention that acts of workplace violence generate, these types of incendents are extremely rare and,

2. As with terrorist attacks, they rarely occur without the perpatrator exhibiting suspicious behavior, which is easily observed by the untrained eye, well in advance of the attack.  If this behavior is reported and the intelligence acted upon, most incidents can be difused before an attack takes place.

Stratfor’s Scott Stewart details a number of ways in which employees can through their own vigilence, take ownership of their own safety at their place of work to help ensure that a similar tragedy never occurs at their place of work.

You can read his report (report name) via Stratfor:

Countering Workplace Violence

While the report focuses on the voilence between coworkers, it is interesting to note that the nine bystanders that were wounded in the Empire State Building shooting were injured by NYPD police gunfire as they tried to aprehend the assailent.  Sadly, it is simply another of many examples of how one senseless act of violence leads to another, a fact of life when society subscribes to the “Might makes right” doctrine as its guiding light.

Empire, The Mint

On the nature of Empire, Part I

8/30/2012 Portland, Oregon – Pop in your mints…

Those who have followed The Mint for a reasonable amount of time may have noticed a shift in focus, if indeed there ever were a focus.  At first, we simply commented on the folly of the economy post August 2007, when the wheels began to come off.  We spent our digital ink examining the Federal Reserve and the perversions of what we use as money with a focus on current, even daily events.

Since those days, we have begun to examine the corroded bases of the economy, financial system, and society, as it were.  We poured through “Human Action: A Treatise on Economics” the magnum opus of Ludwig Von Mises and compared its compelling logic to the economic reality that we observe in the world around us.  What we have found has been all at once predictable and surprising, it that is possible.  A world where time and progress have been accelerated by the accumulation of a completely unnatural amount of debt.

On one hand, the accumulation of debt has enabled men to make technological advances which were not even dreamed of a generation before.  On the other, this debt has created severe imbalances in the natural world for which the only cure is the liquidation of said debt and an uncomfortable change in the daily activities for many.

Chart - Decline in US Capital Stock
August 2012 has seen a decline in private capital stock in the US. Coincidence or evidence of Empire? Courtesy of The Money Game at http://businessinsider.com

We’ve found that debt, left to its own devices, has a way of achieving equilibrium.  Credit is created in response to anticipated increases in the capital stock.  However, with the advent of Empire, which we define as a centralized system which employs the philosophy of “Might makes right” to dominate its subjects, debt came to be associated not with increases in the supply of capital, but by decree of the imperial authority.

The nature of an Empire is simple.  It arises out of some sort of ambiguous idea of payment for a common defense.  Through this seemingly logical argument, the Empire extracts a certain amount of voluntary tribute, what today are commonly called taxes, as people make a conscious choice to cede a portion of their earnings for the common defense.

Yet it doesn’t stop there.   With its nascent consolidation of the power to resort to violence, the Empire inevitably expands its activities beyond the maintenance of a common defense.  Most of these extensions of power are more difficult to palate for those subject to the Empire.  They naturally begin to look for ways to lower their tribute.

A view of Empire througout the world - A Map of World Empires 1900-1914 by Geordie Bozanko
A view of Empire throughout the world – A Map of World Empires 1900-1914 by Geordie Bozanko

The lower tribute coincides with increasing monetary outlays by the Empire, which it must fund by issuing debt.  Yet debt issued by an Empire has nothing to do with an anticipated increase in the capital stock, rather, the proceeds are used to fund deficits as the “Might makes right” model goes to work destroying the capital stock of both the Empire and those subject to it.

As the capital stock begins to dwindle, the Empire naturally progresses to using its monopoly on force to take control of the food supply.  Those subject to the Empire are required to render crops as tribute and then to accept a ration of food from the Empire.  Once the Empire has control of the food supply, the supply “mysteriously” begins to dwindle.

Whatever economic pretense that the Empire was founded on is sacrificed in the blind pursuit of a de facto communism.  The end game, which has played out numerous times throughout history, involves starvation, moral deprivation, violence, and revolution.

As the script has played out over the centuries, civil persons everywhere have been known to murmur, “there must be a better way,”

More tomorrow.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 30, 2012

Copper Price per Lb: $3.42
Oil Price per Barrel:  $94.62
Corn Price per Bushel:  $8.11
10 Yr US Treasury Bond:  1.62%
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,655 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,001
M1 Monetary Base:  $2,306,900,000,000
M2 Monetary Base:  $10,032,900,000,000

The Mint

The anarchic, feminine genius of Mary Kay’s sales structure

8/24/2012 Portland, Oregon – Pop in your mints…

We recently attended a Mary Kay event for the first time with our better half and were astounded by the simple genius of this amazing organization.  For starters, the products are terrific and, by most counts sell themselves.  From Satin Hands to the revolutionary TimeWise Repair, there is simply no better way to keep one’s skin soft, smooth, and younger looking.

Yet the true genius of this world class organization lies in what we call its anarchic, open source sales structure.  It is a structure that not only appeals to feminine tastes, but ensures an optimum sales force which manages and promotes itself.

How do they achieve this?

First and foremost, when the founder Mary Kay Ash set out to create her dream company, She consulted Accounting firms, Management consultants, Human resource experts, and MBAs of the day with business plan.  As legend has it, every one of them told her it would not work.  Mary Kay had simply examined what she liked about her direct sales experience with other companies as well as her needs as a woman and mother and created a place where literally anyone has the opportunity to succeed and advance in the sales structure.

It is the sort of thing that is difficult for those with advanced degrees and professional credentials to grasp.

As we now know, Mary Kay Ash didn’t listen to them.  As a result, working for the company can be a woman’s dream.  It emphasizes, relationships, beauty, goal setting, self improvement, and recognition.  It is literally a sisterhood of like minded individuals driving the vehicle (the sales structure) that Mary Kay Ash gave them to achieve their dreams and help encourage others to do so along the way.

Mary Kay offers the chance for all those who are interested to become a retailer of their world class product offering.  For a nominal fee, which amounts to the production cost of the products included in the starter kit, anyone who is interested can become a Mary Kay Consultant.  Establishing this relationship gives the consultant the right to order products at the wholesale price, which is 50% of the suggested retail price of the products.  This is in line with what one would expect a small scale retail markup to be in any line of business.

In order to maintain the right to order products at wholesale pricing, the consultant must maintain a minimum order volume over the course of each three month period.

The next part of the structure which we will explore is the tiered referral commission structure.  This is the part of the structure where those consultants who have actively recruited other consultants can naturally move up the ladder and begin collecting a portion of the sales of those whom they have recruited.

The structure is simple and works in the following way.  The consultant who is responsible for signing on a new Mary Kay consultant has the right to receive a commission of up to 26% on the new consultant’s sales.  This 26% may be shared amongst three tiers of consultants depending upon the receiving consultant’s level.

It is important to note that this commission does not impact the selling consultant’s 50% take on sales, rather, it is paid by the company (technically, the customers via the company).  We can imply, then, that the Mary Kay Corporation, who is the manufacturer, must produce their products and cover their overhead for 24% of the suggested retail price in order to break even.

Selling Mary Kay cosmetics is not a get rich quick scheme.  It is a real company selling real products where, in sharp contrast to jobs in the government or financial industries, six figure incomes must be earned.  According to one statistic, roughly one in 2,000 consultants will attain a six figure income from their annual sales activities.

Mary Kay Pink Anarchist Flag
The Mary Kay Pink Anarchist Flag, and homage to Mary Kay’s anarchic sales structure

And therein lies the anarchic genius of the Mary Kay structure, it gives literally everyone a shot at working to attain said six figure income, which cannot be said of many jobs out there.  The barriers to entry are practically nil and sales training is freely available in most cities from fellow consultants, who naturally stand to benefit from the overall success of their fellow consultants.  The only limitations placed on the consultant are the time, energy, and ingenuity that they are willing to put into the endeavour.

The genius of the Mary Kay structure is furthered in that the commission and the sales leadership structures allow for advancement in almost direct correlation to the of effort and ingenuity of the individual consultant.  For the most part, there are no administrative barriers to income advancement, and at any point the consultant can choose to attempt to increase their income by increasing their efforts towards product sales or towards recruiting a team and supporting their team’s efforts at product sales.

It is the entrepreneur’s dream, and it appears to work as the founder, Mary Kay Ash, intended it.  The sales structure of Mary Kay allows the manufacturer to harness the anarchy in which we all live to maximize the sales potential of their considerable product offering.

The secret to success in any income earning endeavour is self determination (being one’s own boss) and working one’s tail off.  Mary Kay provides the tools and gives the consultant the first part of the equation from the outset.  Results and advancement are then determined by the initiative of the consultants themselves.

Starting one’s own business can be a hard, thankless, and sometimes losing proposition, especially during the first few years when the proprietor is learning the ropes and testing what works and what does not.  In Mary Kay, as with anything in life, there is no guarantee of success if one gives it a run, but there is a guarantee of failure if one does not try.

Even if one has no need for skin care products, it is impossible not to admire the anarchic genius of Mary Kay’s sales structure, for it is a microcosm of organic economic activity as nature intended it.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 24, 2012

Copper Price per Lb: $3.46
Oil Price per Barrel:  $96.07
Corn Price per Bushel:  $8.02
10 Yr US Treasury Bond:  1.68%
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,671 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,173
M1 Monetary Base:  $2,262,700,000,000
M2 Monetary Base:  $10,058,800,000,000

Bible Teaching, Jesus, Rapture, What to expect in the Monetary Realm as the world comes to an end

Rapture!

8/20/2012 Portland, Oregon – Pop in your mints…

We have recently released our latest e book here at The Mint entitled:

Eschatology and Money: A brief look at what is to come

For as long as we leave it up, it can be had for free over at Smashwords.com.

As the title suggests, it is a brief look at what is to come in the monetary realm as the Biblical prophecies regarding the end of the world unfold.  While nobody can predict when or exactly how these events will play out, it is important to be aware of them and, if necessary, take the gift of time afforded us in the here and now to make the proper adjustments to one’s relationship to both their money and The Living God.

The Beauty of Rapture

Students of Eschatology will note our belief in a pre-tribulation rapture.  For those unfamiliar with the term, the concept of rapture is the taking up, out of this world, of we who accept Jesus of Nazareth as the promised Jewish Messiah.

Jesus’ life, death, and resurrection undeniably changed the world.  He is the ultimate expression of God’s mercy towards us.  To us it is logical that we are to be called up to heaven to watch God’s final judgments unfold from the safety of our new home with Him.  Admittedly, anyone who has taken the time to read the book of Revelation would be either masochistic or insane to not want to subscribe to a pre-tribulation rapture.

Even so, there are strong arguments which find support in scripture for a “mid-tribulation” rapture or even a “post-tribulation” rapture.  Further, there are those who believe that the book of Revelation is simply an allegory for events which occur from time to time throughout history.

Given the seemingly sound, yet grim, alternatives, on what basis can we have confidence that this pre-tribulation rapture is true?

As stated above, the basic logic of our worldview leads us to this conclusion.  God loves us jealously and mercifully.  He is bringing the judgments described by John to the earth to prove once and for all the He is the only God.  For those of us who already understand this, the display of sovereignty and wrath is unnecessary and inconsistent with who He is to us.

However, if God is making one last merciful attempt to call His creation to Him, the events in described in Revelation are perhaps the only way to get their attention.  The time of evangelism of the living saints will be over.  Were God to allow those of us who have already chosen to give our lives to Him to suffer further through the tribulations, it would only serve to cause confusion amongst those whom He will call during the time of tribulation.

For those who believe that God will need many witnesses at that time, would not the rapture of the saints, who would disappear without notice, be perhaps the most powerful witness since Jesus himself first appeared?  We argue that many who witness the rapture but do not partake in it will be God’s most fruitful evangelists through the tribulation that is to come.

To apply this logic to the events examined in our e book, for the believer, the test of allegiance that will take the form of the mark of the beast appears to be, has already been passed.

Beyond logic and into Beauty

Yet beyond logic, or perhaps to further affirm it, there is a beautiful symmetry between God’s first universal act of redemption, at the resurrection of Jesus which occurred on the date of a Jewish festival call the Passover, and what will be His final act of redemption before He returns to physically reign, which we believe will be at the time of Rosh Hashanah, the Jewish day of atonement or judgment.  It is also known as the Feast of Trumpets.

Jason Hommel has written extensively regarding the Feast of Trumpets being the appointed time of the coming rapture of the saints.  Through his insights, we gather a greater glimpse of the beauty of Jesus’ plan to rapture His bride, the church.

For the rapture will not be an emergency airlift operation of a people in distress, this is what the day of our salvation from sin was.  No, the rapture will be Christ knocking at our door to take those who are prepared and have our lamps lit to our wedding feast with Him.

Somehow the word beauty seems inadequate.  For God has given us the model of the Jewish wedding, a seven day celebration which begins at an unexpected time.  This is consistent with the scripture, “You will know not the day nor hour, but the season.”  It is also consistent with the celebration of Rosh Hashanah, which generally takes place over a period of two days for the simple reason that no one knows exactly when the new moon, which marks its beginning, will occur.

You will notice that while we may be certain of the time of year which Jesus will come, no one is certain as to which year it will occur, nor the specific date, the only certainty is that the doors of heaven will be swung wide open at that time.

It is just as God intended it, and it is beautiful.

Rosh Hashanah for the year 5773 (or 2012, according to the Gregorian calendar) begins on September 16th.

Is your lamp lit?

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 20, 2012

Copper Price per Lb: $3.37
Oil Price per Barrel:  $95.83
Corn Price per Bushel:  $8.15
10 Yr US Treasury Bond:  1.81%
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,621 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,272
M1 Monetary Base:  $2,308,300,000,000
M2 Monetary Base:  $10,037,100,000,000

The Mint, Uncategorized

The CTP and the Black Locust, a Lesson in Deferred Maintenance

8/15/2012 Portland, Oregon – Pop in your mints…

After a brief hiatus we return to our perch here at The Mint where we see the world very much as we left it with one glaring exception:  Prices are rising.

This phenomenon comes as no surprise to our longsuffering readers.  By our imprecise calculations, we saw that the tidal wave of money that the FED unleashed into the economies of the world would begin to hit main street circa March 2012.  We may have been a bit early, but when preparing for an inflational Tsunami, it never hurts to have a few extra months to prepare.

As prices for everything from gasoline to houses rise, it may be natural to assume that this is a temporary increase which will fade as supply and demand come gently back into balance.  For those of this opinion, most notably the members of the Federal Reserve’s Open Market Committee, we have some disturbing news.  The same imprecise calculations which gave us March 2012 as the genesis of this latest inflationary wave tell us that the Tsunami of cash will relentlessly pound the shores of consumers through AT LEAST November of 2015, and that is if the FED raises the target rate at its next meeting on September 12-13, which is highly unlikely.

Those who think that the general public can tolerate the sustained price inflation which awaits in the trappings of the current system are making a fool’s bet, for the current monetary system will not survive this Tsunami.  Our advice?  Sell financial assets and buy real things.   This is all one really needs to know about the current state of the economy.

The CTP

Our hiatus has not been spent pondering life as we know it, rather, we used the time to prepare for what we thought would be an easy professional examination to attain the CTP, or Certified Treasury Professional, designation.  We thought it would be easy for two reasons.  First and foremost, we work in treasury on a daily basis, which should have given us and edge.

Second, the exam deals with Finance and Banking concepts.  With all due respect to the bankers and financiers of the world, as an accountant by trade, we have always found finance and banking to be rather simple numerical sciences.

We passed the CPA exam back in the days when it was administered in large open convention center spaces with No. 2 pencils.  It was a two day event which was both physically and mentally exhausting.

With this mind numbing experience as our point of reference, we may be excused for thinking that a 3 hour exam and a computer testing center would be a walk in the park.

Nonetheless, we blocked off two solid weeks for which to cram for the CTP exam which, in our accountant’s arrogance, we nearly underestimated.

It turned out that the 3 hours in the testing center were not so much mentally or physically grueling as they were a mind game.  The climax of this game came at the bitter end end of the exam when, instead of flashing our results up on the screen so that we could experience the thrill of victory or agony of defeat in front of twenty others taking various nursing and other such certification exams, the computer instead forced us to take a brief survey regarding our preparation for the exam.

After the survey, the screen directed us to leave the testing center.  What did it mean?  Did we fail so horribly that the computer was too embarrassed for us to deliver the news?

As we left the room in disbelief, we were greeted by the attendant, who during the exam sat behind a glass window and observed us as one observes animals at the zoo.  She handed us a printout.

To our relief and, at this point, surprise, the word “Congratulations” appeared across the top.  We couldn’t help but smile.

And now, here we are.  While we do not feel any different, we are now one of only 23,000 Certified Treasury Professionals in the world.

The Black Locust

With the exam behind us, we prepared for some much needed R&R through the month of August.  We had taken the exam on a Friday and were still catching up on the details of life which we had eschewed during our cramm…er…preparation for the exam.

That very Saturday evening, we drifted into a type of deep sleep that only complete mental exhaustion can produce.  Our slumber was abruptly interrupted by the anxious words of our better half:

“Did you hear that?”

“Hear what?” was our groggy reply, which was a question and an answer all at once, an efficient use language which appeals only to the hopeless utilitarian’s amongst us.

“That loud sound outside…”

Black Locust, Falling Trees
“That loud sound outside…”

As we got up to do a brief inspection of the grounds, we expected to see nothing and prepared in our minds the familiar speculation that the family of raccoons which roams our neighborhood had caused the disturbance.  However, as we opened the front curtains, our jaws dropped.

The large black locust tree which graced our grounds, measuring 25 meters in height and weighing perhaps 10 tons, had split in two and come crashing to the ground in an event that most certainly registered in the Richter scale.  While God had miraculously spared the house from being crushed, the tree was sprawled across the entire front side of the lot.

At midnight, the scene was surreal, what was just minutes earlier a brief 20 second walk to the street was now an obstacle course which could only be duplicated if the producers of “Wipeout” and “Survivor” were to collaborate on a project.

Our limited inspection of the grounds revealed that the tree had split, fallen, and pinned the overhead power line firmly to the ground, snapping the mast and electrical meter from the side of our garage like a toothpick.

As we observed the damage, we took a glance up at the remaining half of the tree, which in the night looked like a giant walking ala the Lord of the Rings trilogy, at any moment prepared to bend down and snatch us up.

Black Locust, fallen tree, power line
The local ecological paradigm shift

It was just to much to process.  We fought the natural urge to fire up the chainsaw and went inside, where we moved our sleeping quarters to the rear of the home, called the power company to disconnect the line, and went to sleep.

The next morning, the neighborhood awoke in shock and awe as they saw the giant that lay slain.  Instead of continuing to recover from the exam, we began, along with our generous neighbors, the grim task of cutting a path to the street.

Two weeks on, we now have had the rest of the tree taken down and what will be, once cut, a great stash of firewood.

Now that a good portion of the grunt work is done, we pause for reflection on the lesson of the tree.

We call the lesson “Deferred maintenance.”

What the tree taught us is that there are two ways to deal with things, be they something as simple as a tree or as grandiose as a nation state’s foreign policy or the world’s financial system.  You can either pay a bit for upkeep along the way at regular intervals, or you can choose not to pay for the upkeep and simply wait to pay an unknowable price when an inevitable breakdown occurs.

In the case of the tree, we had many opportunities to have an arborist prune and treat the tree.  The tree was like a magnet for those in this line of work.  Had we chosen to invest in the upkeep, the tree would have been pruned and inspected.  If we had wanted to keep the tree, it could have been cabled together or a rod could have been placed through it to hold the rotting, diverging hulk together.  As it turned out, we did nothing until the tree collapsed and our hand was forced.

As a result, our views on trees have changed.  Where we once saw peaceful giants all around us, we now see potential house crushers waiting to collapse.

In the case of a nation state’s foreign policy, perceived threats to national interests can be dealt with via diplomacy or, if necessary, small scale skirmishes to keep adversaries either friendly or in check.  If this regular upkeep, if you will, is not performed, the nation state may wait for a Pearl Harbor type of event  to occur before being roused to taking meaningful action.

Finally, in the case of the world’s financial system, the authorities could allow for bankrupt entities to be pruned from the economic ecosystem from time to time, or wait for a blow up of the Central Banking and national currency system.

In all three cases and any number of other examples which could be called upon, it seems clear that taking the route of ongoing upkeep is the most prudent, especially when trying to preserve what is deemed to be the natural order of things.

However, those who either consciously or unconsciously take on the enormous risk associated with ignoring regular maintenance are essentially choosing not to insure themselves against a probable outcome whose only variable is the timing of the event.

If the event occurs at a time when they are not affected by it, they have come out ahead, as they will have should the event occur and turn out to be less catastrophic than had been anticipated.  Indeed, it may even be beneficial if what is really needed is not simple maintenance, but a paradigm shift.

In the case of the tree, we now have sun shining where there once was shade, ideas of what to plant in its place, and great pieces of wood which make us wish we were chainsaw artists.  None of this would have come about had the tree been encouraged to stand.

While there is much to be said for prudent maintenance, sometimes it is necessary to let things go and brace oneself for a paradigm shift, for the inevitable can only be put off so long by the machinations of mere mortals.

Stay tuned and Trust Jesus.

Stay Fresh!

David Mint

Email: davidminteconomics@gmail.com

Key Indicators for August 15, 2012

Copper Price per Lb: $3.36
Oil Price per Barrel:  $94.31
Corn Price per Bushel:  $7.94
10 Yr US Treasury Bond:  1.81%
FED Target Rate:  0.13%  ON AUTOPILOT, THE FED IS DEAD!
Gold Price Per Ounce:  $1,603 PERMANENT UNCERTAINTY
MINT Perceived Target Rate*:  0.25%
Unemployment Rate:  8.3%
Inflation Rate (CPI):  0.0%
Dow Jones Industrial Average:  13,165
M1 Monetary Base:  $2,301,800,000,000
M2 Monetary Base:  $9,941,700,000,000

Strategy

Why European leaders have forced Draghi’s put

Another great piece by George Friedman explaining what is going on in Europe. Will the new economic ties trump not so ancient rivalries? Only time will tell, but European leaders will do everything within their power, including a trashing of the Euro’s value, to ensure they do. Via Stratfor:

Financial Markets, Politics, and the New Reality

Bible Teaching, Jesus, Teaching

A Recent Teaching on Money

Our long suffering readers will note that we have been on a haitus.  It has been a busy time, full of classes, exams, and trees falling.  Don’t worry (or worry if you must), The Mint will return soon.  In the meantime, we wish to provide you with what we hope will be a valuable resource.

They are teaching notes from a class we gave recently to a group of interns at True Life Fellowship.  If you are interested in Money or need to teach on Money and don’t know where to start, feel free to use this as a starting point.  Faithful readers will recognize much of the material.  We pray that it will be a blessing to you.

Enjoy and Stay Fresh!

TEACHING NOTES

PART I:  IS MONEY EVIL?

READ DRAMATICALLY:  “So you think that money is the root of all evil?”…”Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil?

Francisco d’Anconia, character in the novel Atlas Shrugged, Copyright © 1957, by Ayn Rand:

DISCUSSION QUESTION:  Is money evil?

Money is not evil, what, then, is evil?

Radix malorum est cupiditas – Latin for “The root of evil is greed” – Original Greek “Root for all the evil is the love of money.”

“For the love of money is the root of all evil”

–Paul 1:Timothy 6:10

Greed = Covetousness , “Thou shalt not covet…”

THIS DISTINCTION IS CRITICALLY IMPORTANT!

ICE BREAKER ACTIVITY: The baby is crying, the doorbell is rining, and the water in the bathtub is running over the top onto the bathroom floor, ALL AT THE SAME TIME.  You are home alone, what do you do first?, second? last?  PAIR UP and tell your partner what you would do first and why.

Symbolic internal priority

Baby =  Family

Door = Friends

Bathtub = Money

There is no wrong answer, it is important to understand this about yourself.

DISCUSSION QUESTION:  What type of relationship do you have with money?

 

~~~~~~~~~~~~~~

PART II:  WHAT IS MONEY?

What is Money?  What is my relationship to money?  What am I to do with the money I am entrusted myself?  How much time should I spend worrying about money?  To Grapple with these questions is to question many things that we take for granted.  It can be an unsettling experience.

We will begin our session with a brief exploration of what is money is.  This is important, and it may be the only time in your life that you are presented with this information.

We’ll begin with a few quotes:

READ DRAMATICALLY

“Money is the most important subject intellectual persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and its defects remedied very soon.”
–Robert H. Hemphill, former credit manager, Federal Reserve Bank of Atlanta

“All the perplexities, confusion and distresses in America arise not from defects in the Constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.”
–John Adams, letter to Thomas Jefferson

“Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.”
— John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff

DISCUSSION QUESTION:  What are the attributes of money? 

First, it should operate as a medium of exchange.  Will other people accept this item in trade for something else?  Second, it should operate as a unit of account.  Can the item be easily divided without destroying its value?  Third, it should be a reliable store of value.  Will the item purchase the same amount of goods in ten, twenty, or three thousand years from now as it will today?  And fourth, it should be anonymous.  Can the item be freely transferred amongst parties?

Do Federal Reserve Notes fullfill this definition?  Why not?  BECAUSE THEY ARE DEBT, which by definition can NEVER BE MONEY.  On a societel level, it is the equivalent of a person ingesting sugar instead of protiens.  It may taste sweet and keep you running for awhile, but in the end, it will permanently damage your organism.

QUESTION: So what is money?

After reviewing the attributes above and reviewing all of known human history, we can conclude that, in an overwhelming majority of cases, precious metals, namely Gold and Silver, are best suited to serve mankind in the role of money.  As a medium of exchange, they are universally recognized.  As a unit of account, they are divisible with destroying their content.  As a store of value, Gold and Silver are not easily pulled from the ground and coined for use (they cannot be “debauched”).  And as for providing anonymity, they can be freely transferred.

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PART IV:  HOW SHOULD I MANAGE MY MONEY?

Budgeting – Healthy Habits

Questions to ponder:

Why do you need a budget?

Benefits of budgeting:

  • You have a base of data from which to make decisions.
  • You can isolate expenses and work to avoid unwanted increases and even reduce them.
  • It is an important financial guardrail.

How many here have prepared a budget?  How many use that budget?

Most of us know what a budget is and some of us may even know how we are doing relative to our budget.  I would like to share with you some tips that you can use when creating your budget as well as some healthy habits, which will help you stick to it.

Tips for creating your budget:

Think Easy Maintenance – If you are using a computer spreadsheet, use one you are comfortable with.

Include the kitchen sink – Throw into your budget anything you are currently doing as well as those things you think you may want to do which involve shelling out cash.  Finally add the things you hope you won’t have to do but, if you have to, you will have to shell out cash for them, too.

Be a Conservative – It is better to underestimate your income and overestimate your expenses and to be pleasantly surprised than to assume everything is going to go well and to get shocked when an emergency drains your accounts.

Don’t forget taxes – Whether they be of the sales, income, property, or use variety, taxes are unfortunately a large part of the average American’s budget.  While somewhat difficult at first, you will have a clearer picture of your finances if you record your gross paycheck as income and then record the deductions before net pay as expenses or transfers.  It is a bit painful, but it will greatly help you make some key decisions making in the future.

Or depreciation – Perhaps the most overlooked expense line in a family budget is that of depreciation, or what may be more easily understood as “the wear and tear expense.”  Depreciation is simply recognition that anything, a car, house, etc. deteriorates over time and will likely need repair.  Contemplating depreciation allows you to unconsciously develop a rainy day fund to deal with unexpected repairs or regular maintenance.

Large ticket purchasing tip:  The difference between a good investment and a bad one is often determined at the time of purchase.  Learn to buy large ticket items, cars, houses, etc. out of season (that would be the winter in most places) and be sure to negotiate a price reduction for any major repairs.  This will make your depreciation expense (which is a function of the purchase price of an asset) more tolerable and help you sleep at night.

Note:  Depreciation and asset valuation are part of what I call “balance Sheet budgeting, which we will get into more today.

A note on Health insurance – This is perhaps the fastest rising cost for most families.  Consider focusing on a healthy lifestyle and reducing your health coverage to major medical or other type of high deductible plan.  However, do not give up so much coverage that you risk forgoing necessary treatments in the case of an emergency, you do not want to be faced with a tough life or death decision and have it boil down to finances.

Assume inflation (CAN JUMP BACK TO “WHAT IS MONEY” IF THERE IS TIME AND INTEREST)– Ever since the Federal Reserve took over control of the nation’s money supply in 1913, the US Dollar has lost over 95% of its purchasing power.  In 1971, then President Nixon officially took the US Dollar (and world’s monetary system) off of the gold standard, the decline accelerated.  The value of the dollar continues to decline at a rate somewhere between 2% officially and 10% unofficially each year.  It is important to recognize rising costs as a fact of life and consciously plan to increase your income accordingly.

Which brings us to income.  How exactly does one increase their income at a 2-10% pace each year?

Economize and value your time!

Moonlighting or Self Employment – What can you do to help others when you are not at work?  Would they pay you for it?

Acquire new skills at your present job and constantly seek advancement, which in most cases will increase your chances of getting a raise or promotion.

Passive income – For most, passive income is not an option until we collect social security or can draw on a 401K or other retirement plan.  This is why you save, but it will not fill your income gaps while you are younger and working.  However, the concept of passive income becomes very important when considering…

Investments – If you have some input as to how your retirement money is invested, it is best to choose investments that provide a growing stream of passive income.  That is, investment in companies which make real things which people want and are willing to pay for.  If there are no good alternatives, the next best thing to do is to purchase gold or silver coins and to take possession of them.  Store them in a hidden safe on your property.  Gold and silver will hold value against a depreciating currency and have the added advantage of incurring no maintenance costs or taxes while you hold them.

Jesus’ words on money –

Full text from NIV:

Paying the Imperial Tax to Caesar

 15 Then the Pharisees went out and laid plans to trap him in his words. 16 They sent their disciples to him along with the Herodians. “Teacher,” they said, “we know that you are a man of integrity and that you teach the way of God in accordance with the truth. You aren’t swayed by others, because you pay no attention to who they are. 17 Tell us then, what is your opinion? Is it right to pay the imperial tax[a] to Caesar or not?”

 18 But Jesus, knowing their evil intent, said, “You hypocrites, why are you trying to trap me? 19 Show me the coin used for paying the tax.” They brought him a denarius, 20 and he asked them, “Whose image is this? And whose inscription?”

 21 “Caesar’s,” they replied.

   Then he said to them, “So give back to Caesar what is Caesar’s, and to God what is God’s.”

 22 When they heard this, they were amazed. So they left him and went away.

http://www.biblegateway.com/passage/?search=Matthew+22%3A15-22&version=NIV

“Give to Caesar what is Caesar’s and to the Lord what is the Lord’s”

With this statement, Jesus recognizes that everything is God’s, and at the same time, that God recognizes private property in dealings between men.  This is often a point of confusion. 

He also creates an eternal separation between a person’s soul and their money.

Additional Healthy Habits:

Debt elimination – Check your budget to ensure that you have a surplus with which to pay back the debts (via depreciation line or an operating surplus), if not, make adjustments (belt tightening, if you will) until you do have a cash surplus.

Start paying back the smallest debts first.  Paying a debt off will help you build momentum and create habits in order to pay off bigger and bigger debts as you go along.

A great resource for this is Gary North’s “Deliverance for Debt” Debt reduction course.  It is free and you can subscribe via email.

http://deliverancefromdebt.com/

Stealth Saving – Pay an extra $5 to $10 on utility bills each month.  After a few months, you will have a free month of utilities.

Open a separate savings account which you do not see online, etc.  Fund this account first every month.  Make it difficult to access, open it at a seperate bank from the one that you normally bank at.  This will force you to think twice before using it.

Pay cash for items – There is something about cold hard cash that makes you think twice about spending and helps solidify the limit on how much you can spend.  Cash disappears, plastic doesn’t!

Keep the change – Pay cash for items and accumulate the change throughout the day.  At the end of the day, dump it in a 5 gallon water bottle.  When it is full, take the money to the bank and go on vacation.

80 – 10 – 10 plan – This is mentioned by many and the general idea is that you live on 80% of your income, save 10% and tithe (give to your local church) 10% of your income.  This seems logical but…

Why tithe?  Apart from the numerous Biblical references, tithing is not one of the Ten Commandments.  So why do it, especially when you are in debt?

Tithing, apart from helping keep the lights on at your local church, has the incredible habit forming benefit of forcing one to focus on their income.  God knows that you can spend all day in a defensive position, cutting costs and desperately clinging to maintaining what you have.  This is an expense focus.  It has many benefits in the material world, but it is worthless in God’s Kingdom.

God wants you to have an income focus.  “What can I do to serve others that is most highly valued by them?” should be the question on your mind.  Remember, “The greatest amongst you shall be servant of all.” 

Tithing forces you to focus on your income first, which will naturally get you focused on serving others rather than maintaining and increasing your own possessions.  It may seem strange, but serving the greatest number of people has the unique benefit of increasing one’s blessing.

God has made his creation perfect, and the economic laws are eternal and He can be trusted.  Seek first the Kingdom of God and His righteousness, and all of these things shall be added unto you.” (Look for versre)

Additional resources:

The Bible:  Daily study of God’s word will give wisdom in guidence in every area of your life, finances included.

Mint.com:  A free expense tracking software which accesses your online bank account information once you give it permission

Turbotax.com:  An online income tax calculation tool.  There is a charge to file your taxes with the software.  Tip:  To avoid the charge and get the benefits of a free tax advisor, use turbotax to calculate your taxes, then copy the information to a paper form and mail it in.  This is a great way to be aware of changes in the tax code without having to do hours of research.

Dailyreckoning.com:  A great resource for alternative investments.

APMEX.com:  An online precious metals dealer which sell gold and silver coins at reasonable prices.

deliverancefromdebt.com:  Gary North’s debt elimination course mentioned above, free of charge.

Questions?

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PERSONAL STORY ON MONEY

I was first unsettled by this same question in a class on Monetary Policy at the Universitat de Barcelona in the Spring of 2004.  The professor held up a small jar full of shredded green paper and asked us if we knew what it was?  The answer, it turns out, is that the jar was full of $50,000 worth of US Dollars that had been removed from circulation and destroyed.  Simple enough, right?  Dollar bills wear out, you have to replace them.  However, her (the professor’s) point was that what we use as money does not exist in a real, tangible sense.  It is an invention created to meet the policy demands of the fiscal and monetary authorities.  It is an invention that can be created and destroyed at whim.

I was taken aback, trying to catch my breath!  She went on to  explain that Corporations, businesses, etc. are simply “money machines” which strive to minimize money inputs and maximize money outputs.  The difference between the inputs and outputs is what we call profit.  This is obvious enough and it was logical that she would share this insight with our MBA class which was being trained to manage said Corporations.

Something in my mind short circuited in trying to reconcile the logic of a Corporations’ reason for existence being to create money and then seeing that same money end up shredded and destroyed in rather large quantities.  The motor of my mind was so seized up that I managed to miss nearly every question that day on a pop quiz that tested our knowledge on “What is the proper reaction, in terms of monetary policy, to various economic data points?  Should you move to increase or decrease the money supply?”  The questions I did answer correctly were likely due to my misunderstanding the question (I was still learning Spanish and Catalan) rather than any grasp of accepted policy remedies.

In retrospect this day was the day that completely changed the way in which I viewed US Dollars, Euros, and all other paper currencies of the world.  You see, I was answering all of the questions about monetary policy using the assumption that the monetary authorities wanted to maintain the value of the currency that they were managing.  I was dead wrong.  So if they are not trying to maintain the value of these currencies, what are they trying to do?

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PART V:  WHAT DID JESUS SAY ABOUT MONEY?

THE WORD

“Be not deceived.”
— Jesus and Paul in the New Testament

Jesus, during his ministry, talked about money more than any other subject EXCEPT for the Kingdom of God.

QUESTION:  What does Jesus teach about money?

Give to Caesar what is Caesar’s

Jesus Christ speaks with authority.  As such, his words often astounded and confused those, whom in the days when he physically walked the earth nearly 2000 years ago, had aligned both their activities and mindsets with the authority of this world.  An authority which works to suppress the knowledge of the Living God.

The first passage that we will investigate is related in Matthew 22:15-22, Mark 12:14-17, and Luke 20:21-25.  It is focused on what appears to have been a brief verbal exchange between Jesus and a group of spies sent to ask a question of him by the religious authorities.  It appears to take place in courtyard of the Second Temple in Jerusalem around the time of the Jewish Passover, which today is celebrated at the time of year that is known as Easter in the Christian tradition.

Interestingly enough, it seems that people 2000 years ago were as eager to avoid paying taxes as they are today.  In an attempt to catch Jesus advocating for tax avoidance, the religious leaders, who wanted to get rid of Jesus, send spies to trap him in his words.

In response, Jesus not only foils their attempt at trapping him, He provides the world with a simple monetary concept with wide ranging consequences.  He challenges the spies not on whether or not it is right to pay taxes, but rather on what they are using as money.

When asked whether or not it was right to pay the Roman Imperial tax, Jesus stated the obvious, “give to Caesar what is Caesar’s.”  Given that the coin used to pay the tax belonged to Caesar (the Roman Emperor) to begin with, it should be no problem to simply give it back to him when he asks for it.

The obvious yet staggering implication is that money and coinage given by an Emperor may at some point be demanded back by that Emperor, therefore it is foolish to accumulate money and coinage issued by an Emperor as a store of one’s wealth.

Jesus’ response cut to the heart of monetary theory by questioning not what they were doing with their money, but what they were using as money.  The people’s choice to use the Emperor’s money had enslaved them to the Emperor in a way that no army or jail master could, and they were eager for a way out.

In those days, Emperors had made a habit of declaring themselves gods and demanding allegiance.  The Jews were peculiar in that they refused to recognize these imposters and instead steadfastly worshiped the Living God.  However, the Jews also had become accustomed to conceding certain aspects of their allegiance to the Emperor in an effort to survive as a people.

Jesus, with a simple statement, challenged them to get off the fence, for the fence would one day be burned down and they would have to make a clear choice between ultimate allegiance to the Emperors of this world or to the One True Living God, who alone is worthy of glory and honor and praise forever and ever.

Today, circa 2012, it is customary for most people exchange their labor for paper or digital currency issued by the Emperor.  For most, it appears to be a matter of survival.  Yet some 2000 years ago, Jesus sternly warned us against this.

Why would Jesus have opinions on what we use as money?  Jesus knew that a person’s heart would be where their treasure was.  One day, God’s people would be presented with yet another ultimatum which would require them to assent forever throwing their lot in with either the world’s system or The Living God.

When and how would this ultimatum present itself?  What form would it take and what would be the price for holding steadfastly to The Living God?  The answer to these questions had already been partially revealed to Daniel some 600 years before, and was going to be completely revealed to John on the Isle of Patmos some 70 years later.

BIBLE PLAY:  PARABLE OF THE Parable of the Unforgiving servant Matthew 18-21-35

But love your enemies, do good to them, and lend to them without expecting to get anything back. Then your reward will be great, and you will be sons of the Most High, because he is kind to the ungrateful and wicked.
— Luke 6:35

READ BIBLE TEXT – CHOOSE CHARACTERS, ACT, REFLECT

When JESUS came to declare the year of the Lord’s favor, the Jubilee, He not only declared FORGIVENESS OF SINS, but also the FORGIVENESS OF DEBTS.

FORGIVENESS:  AMISH STORY?

Thank you for your time.

Strategy

Good Mideast Dictators by Robert D. Kaplan

Stratfor’s Robert Kaplan analyzes the Arab Spring and the complexities it presents to both the US and the remaining autocratic regimes in the region. Mr. Kaplan’s report can be seen here via Stratfor:

Good Mideast Dictators

Strategy

How Anarchy shapes the US Presidency and Foreign Policy

George Friedman delivers another excellent analysis in his Geopolitical Weekly report on the limits, both explicit and implicit, of the power of the US Presidency.

He further analyzes how the choice to intervene or not in foreign conflicts is seen as simply a choice between maintaining the balance of power in the world via a series of minor conflicts or via a large scale conflict ala WWI and WWII.

Like the large black locust tree in our yard which fell over the weekend, you choose to either trim it along the way or wait for it to come crashing down.

In the end, the US President is subject to forces well beyond their control, just like the rest of us.  While ascribing omnipotence to the office may help those who cannot accept the reality of anarchy to sleep at night, it does little to change the relative impotence of the one that holds it.

Mr Friedman’s complete report can be seen here via Stratfor:

The Election, the Presidency and Foreign Policy