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Nelson Nash, Founder [email protected]

David Stearns, Editor [email protected]

Monthly Newsletter - March 2017

Own Your DebtbyRobertP.Murphy

[ThearticlewasoriginallypublishedintheJuly2014EditionoftheLara-Murphy Report]

TherearevariouswaysofmotivatingthephilosophyofNelsonNashthathelaysoutinhisclassicbook,Becoming Your Own Banker(BYOB).InthisarticleIwanttofocusonthebenefitsof“owningyourdebt,”aphrasethatIfirstheardfromDavidStearns.IwanttobeclearthatwhatIdiscussinthisarticleisnotthesole rationale for implementing Nash’s Infinite BankingConcept (IBC), but I hopemydiscussion resonateswith a large segment ofAmerican householdswhoarecrippledbyoutsidedebt.

An introduction to ibc

The central message of Nelson Nash in BYOB isthateverybodyneeds to rely (at least implicitly)onfinancingforlife’smajorpurchases.Evenifyoubuyacarwithcash,youareforfeitingtheopportunityofinvestingthatcashandearningareturnonit.Soevenpeople who always “pay cash” still experience thesameimplicittradeoffsbetweenspendingnowversuslater. Therefore, Nash argues, the real question iswhetheryouaregoingtoobtainyourfinancingfromabankcontrolledbyoutsiders,versusabankthatyou control.

Nowonceyou’vedecided that itmakes sense—fora variety of reasons—to rely on financing comingfrom yourself, Nash then explains that in today’senvironment,themostconvenientandadvantageouswaytoestablishyourownprivate“bank”istotakeoutlarge,dividend-payingwholelifepolicies.Thereareways to calibrate such policies so that they are

excellent tools forcashflowmanagement.Theyarethebest place, all things considered, to “warehouseyourwealth”(whichisthetitleofasubsequentNashbook).

As time passes and you plow your savings intoproperlydesignedwholelifeinsurancepolicies,theircash values grow.Then,when you need tomake amajorpurchase,youcantakeouta“policyloan”fromtheinsurancecompany,withyourcashvalueservingascollateral.Thetermsonthisloanarequitegenerous:Thereisanattractiveinterestrate,nocreditcheck,noquestionsabouttheuseofthefunds,andnopaybackschedule.Theexplanationfortheseattractivefeaturesis that the collateral on the loan, from the lender’sperspective, is absolutelyairtight: the life insurancecompany itself guarantees the asset. In this respect,apolicyloanisasaferinvestmentfromtheinsurer’sviewpointthanevenaU.S.Treasurybond.

To be clear, Nelson Nash is not advising everyoneto“invest in life insurance.”Again,herecommendsusingthesepoliciesaswarehousesforone’swealth—aheadquarters,ifyouwill.Ifapersonseesanattractiverealestatedeal,heiscertainlyfreetotakeoutapolicyloanandusethefundstoinvestintheland.Indeed,that’spartoftherationaleforimplementingIBC:Youalways have ready access to your wealth, allowingyou to pounce on investment opportunities as theyarise.

Advice from the financial “Experts”

Naturally,Nash’sadviceisfartoostraightforwardforthegurustoendorse.Theconventionalwisdomfromfinancial planners is thatwhile itmaybe importanttohavelifeinsuranceintheformofacheapertermpolicy (not amore expensivewhole lifepolicy) forits death benefit protection—especially for a young

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breadwinner with kids to support—nonetheless lifeinsurance makes a terrible saving or investmentvehicle.Rather, theconventionalfinancialadvice inAmericatodaysaysthatanindividualshouldturntotax-qualifiedmutualfundstobuildupanesteggforretirement.Putting the twoideas togetheryields thefamiliarslogan:“Buytermandinvestthedifference.”

According to the gurus, “buy term and invest thedifference” is amuchmore sensible strategy. For agivendeathbenefit,thepremiumonatermpolicyislowerthanforawholelifepolicy,sothatthepurelifeinsurancecoverageischeaper.Thenwiththesavings(because the premium is lower), the household caninvest in, say, a 401(k) mutual fund with pre-taxdollars.Theseholdingsthengrowathistoricallyhigherratesthanthecashvalueinawholelifepolicy.Thusitseemsthat“buyterm,investthedifference”isano-brainer:yougetthedesireddeathbenefitcoverageforyourfamilyat the lowestpossibleprice,whileyourretirement investments earn a better rate of return.WhatkindofanidiotwouldfollowtheNelsonNashstrategyinlightofthisseeminglysuperiorapproach?

In other issues of the LMR I have tackled thismindset;1 Iwon’t repeatmy arguments here in thisarticle.Instead,IwanttodescribethetrapintowhichmanyAmericanhouseholdsfall,becausetheyfollowthis typicaladvice that Ihave justdescribed. In thenext section, I’mdoingnothingmore than restatingwhatNelsonNashdescribesasthetypicalAmerican’sproblemearlyoninBYOB,butI’lltalkaboutitfromaslightlydifferentangle.

Putting Your Money in Prison

Nowinfairness,IshouldbeclearthatDaveRamseytellshisfollowerstostayoutofdebtaltogether.Sointhatrespect,someonewholiterallyobeystheRamseyapproachisgoingtobeaheadoftheaverageJoe.Butmoregenerally,that’snotwhatAmericanhouseholdsdo when they listen to the conventional financialwisdom.

Formillionsof American households, this iswhathappensinpractice:Aftertheysiphonsomeoftheirpaycheck into stocks and bonds which they can’t touch until retirement, they then discover that they

can’t afford their desired lifestyle.Sowhatdo theydo,whentheywanttobuyacarorahouse,sendtheirkid to college, or pay for a wedding? Because thegovernmentwon’tletthemaccesstheir“savings”—which makes it an odd form of “savings”—thesehouseholdshavetogohat-in-handtooutsidecreditors.

Depending on howmuch outside debt a householdtakes on, the situation can border on the absurd.CurrentlytheaveragecreditcarddebtperU.S.adultis just shy of $5,000, while the average balanceon a card that usually carries a balancewas above$8,000.Lookingathouseholds(notindividuals),thenationalaverageofcreditcarddebtis$7,000,whilefocusingonjusthouseholds with credit card debttheaveragefigurejumpstoawhopping$15,000.Nearly30percentofAmericansreporthavinghighercreditcard balances than they could pay off with their“emergency savings.” Finally, the averageAPR onacreditcardwithabalanceonitwas13.14%asofFebruary2014.2

These statistics are staggering.3 The conventionalwisdomofputtingmoneyintoa401(k)isclearlynotworkingforanyhouseholdcarryingcreditcarddebt.TheFederalReservemayhavea“zero interest ratepolicy”butthecreditcardcompaniescertainlydon’t.If a debt-strappedhousehold can somehowmanagetopayoffits$15,000ofcreditcarddebtrollingoverat13%,whythat’stheequivalentofaguaranteedrateofreturnof13%ona$15,000investment.Thestockmarketdoesn’tofferthatkindofsurething.

Letmespellouttheabsurditytomakeitcrystalclear:Therearehouseholdswhohavethousandsofdollarsofcreditcarddebtrollingoveratmorethan10%APR,while they simultaneously hold more than enoughto pay off these balances tied up in tax-qualifiedmutualfundsthatfeatureamixofequitiesandbonds.Whenquestioned,thepeoplemakingthesefinancialdecisionsmightjustifythearrangementbysayingthattheyneedto“saveforthefuture,”andthatitwouldbe“irresponsibletotapintomyretirement.”Yettheblend of growth and safety offered by the mutualfund(s)doesnotmatchtheguaranteedreturn—inthesenseoftotalwealth—thatcomesfrompayingdowncreditcarddebt.



This is particularly true in our environment where“safe”bondshaveverylowyields,whilecreditcardAPRsarestillquitehighformanyhouseholds.Andasanaddedkicker,keepinmindthatmanyhouseholdshavevariable-ratedebt,oncreditcardsandothertypesofloans(someevenwithadjustableratemortgages).Ifinterestratesshouldriserapidly—whichisentirelypossibleinourcurrenteconomicenvironment—suchhouseholdswillsufferacrushingblow.

Own Your Debt

Thus we see that there are millions of householdswaitingtobehelpedwithIBC.Note,I’mnotsayingthatIBConlymakessenseforsuchpeople—afterall,theIRSchangedthetaxrulesinthe1980sbecausesomanyrichpeoplewerepilingintowholelifepolicies.Instead,I’mjustfocusingonthisparticularaspectofthecaseforIBC.

Torepeat,thetechniqueIamabouttodescribeisnotthe onlyway that people use IBC, but formillionsofmiddle-classhouseholdswithsizableassetsintax-qualifiedplans,andwhoarecarryinglargeamountsofcreditcarddebt,thetechniquemakesperfectsense,andisaspecificapplicationofIBC.

The technique is to sell off enough of the outsideassets—even if that means paying a tax penaltybecausetheyarein401(k)orsimilarenvironments—inordertofundadividend-payingwholelifepolicylargeenoughtothenallowfortherapidpayoffofthecreditcarddebt.

The benefits of thismove are obvious. On the onehand, itrepresentsasimpleswappingoffassetsandliabilities:On the asset side, the household reducesitsholdingsofstocksandbondsinthetax-qualifiedenvironment,whileraisingitscashsurrendervalueinthe formof awhole life policy (and also the deathbenefitcoveragewhichhasaneconomicvalueitself).Ontheliabilityside,thehouseholdpaysoffitscreditcarddebtwhileincurringacomparableloanowedtothelifeinsurancecompany.

Yetthis“mere”swappingofassetsandliabilitiesputsthehouseholdonmuchfirmerground.Theassetsnowgrowatamoredependablerate:thereareguaranteed

returns, and the dividends thrown off by the policyare alsomore stable than the volatile stockmarket.Furthermore, thedebt (in the formof a policy loanbalance)canbepaidoffonanyschedulethehouseholddesires; there are no minimum monthly paymentsdue,which ifmissedwill triggerpenaltyAPRsandblackmarksonacreditreport.

Finally,whenyouconsidertheAPRthatthehouseholdwas originally paying on the credit card balances,thisnewplanwillmean that the totalwealthof thehousehold appreciates at a higher rate, all thingsconsidered.

Notes of caution

The actual mechanics of this operation depend onthe specific numbers of the individual household.There are also IRS rules concerning how rapidlywealth can bemoved into awhole life policy; youdon’t want to “MEC” the policy. Furthermore, ifthere are large movements of wealth out of a tax-qualified plan, staggering that outflow might makesensetostayinalowerincometaxbracket.Becauseofsuchsubtletiesinexecution,it’scriticaltodiscussthesetypesoffinancialplanswithagraduateoftheIBCPractitioner’sProgram—seeour listingofsuchindividualsatwww.InfiniteBanking.org/Finder.

Let me also put in a warning for any financialprofessionals reading this article: If you are talkingwithaclient,youcannotadvisehimorhertoselloffequityholdingsifyoudonothavetheproperlicenses.FINRAisverypickyonsuchmatters.Forexample,ifyouareonlylicensedasalifeinsuranceagent,thenyourjob(shouldtheclientdesireit)istosethimorher up with a properly designed, dividend-payingwholelifepolicywiththeproperPUAandtermriders,whichwillhavethecorrectpremiumsandcashvaluetargetsforthecashflow(inandout)thattheclienthasinmind.Theclienthastoalreadyhavedecidedwherethemoney to fund the policy is coming from; youcan’tsteertheclientintosellingoffstocksinordertobuyalifeinsurancepolicyfromyou.

conclusion

Theconventionalfinancialwisdomhasplacedmillions



of American households in an untenable position.After takingout incometaxandpayrolldeductions,healthinsurancepremiums,andcontributionstotax-qualifiedretirementaccounts, theaverageemployeehas little left. Thus to buy a car or just keep upwith daily living entices him to turn to credit cardcompaniesandotheroutsidelenders.

OnewayofunderstandingIBCisthatitallowsyouto“ownyourdebt.”Specifically,youbuildupenoughcashvalueinoneormorewholelifepoliciessothatyoucantakeoutpolicyloanslargeenoughtoknockoutwhatyouowetooutside lenders. In thisarticle,wefocusedoncreditcarddebtbecauseitisthemostobvious,buttheprincipleappliesmoregenerally.

Besides looking at the specific numbers (APRs oncreditcardbalances,thevolatilityofthestockmarket,etc.)thequalitativebenefitof“owningyourdebt”isthe peace of mind it yields.Bycollapsingyouroutsidedebts—whichareoftencollateralizedonyourassetssuchasacarorhouse—andbringingthemwithinoneormorewholelifepolicies,yousuddenlybuyyourselfawholelifetimetoplanyourfinancialstrategy.Younolongerhavesomeonesendingyouthreateningletters,makingnaggingphonecalls,orrepossessingyourcar,ifyougetlaidofforhaveotherfinancialhardships.

Especiallyinthisawfuleconomy,thepsychologicalbenefitofowningyourdebtshouldnotbeunderrated.

References1.Specifically,mySeptember2012articlewason“WhyDaveRamseyIsWrongonWholeLife.”AlsorelatedismyJune2013article,“DoesIBCMixTwoGoalsInefficiently?”inwhichIshowedthatitmadesensetouseasinglefinancialinstrument—namelyawholelifepolicy—asbothasavingsvehicleandtoprovidedeathbenefitcoverage.

2.Creditcardstatisticstakenfromhttp://www.creditcards.com/credit-card-news/credit-card-industry-facts-personal-debt-statistics-1276.php,http://www.nerdwallet.com/blog/credit-card-data/average-credit-card-debt-household/,andhttp://www.cbsnews.com/news/51-percent-have-enough-cash-to-pay-off-credit-card-debt-study/.

3.Bytheway,IshouldclarifythatIpersonallyamnotwaggingmyfingerathouseholdscarryingcreditcarddebt—Itoobehavedfoolishlyinmyyoungerdaysandhavenotfullyextricatedmyselffrommypoordecisions.

The Goal of Socialists Is Socialism —Not ProsperitybyWilliamL.Anderson

About 40 years ago, economist BruceYandlewentto Washington to work for the Council on Wageand Price Stability, ready to apply his knowledgeofeconomicsandeducatehis fellowworkers.Afterall, he reminisces, one eye-rolling, head-scratchingdecisionafteranotherwascomingfromgovernmentregulators that surely someoneversed ineconomicscould expose as stupid, wasteful, and downrightridiculous.

Government Serves the Interests of Government

At some point, Yandle realized that the lay of theregulatorylandlookedquitedifferentinWashingtonthanitdidinClemson,SouthCarolina,wherehewason the faculty at Clemson University. Regulators— and the representatives of the enterprises theyregulated—werenotlookingtocreateanatmosphereinwhichthegovernmenttriedtofindthe“optimal”setofregulatorypoliciesthatbothminimizedregulatorycosts and allowed for the maximum removal ofwhatever“externalities”werecreated.

No,asYandlewrites:

… instead of assuming that regulators reallyintendedtominimizecostsbutsomehowproceededtomakecrazymistakes,Ibegantoassumethattheywerenottryingtominimizecostsatall—atleastnotthecostsIhadbeenconcernedwith.Theyweretryingtominimizetheircosts,justasmostsensiblepeopledo.

The more he examined the situation, the more herealized that all of the various actors in the systemwere acting in their own perceived self-interests—regulators, politicians, and those being regulated—andthecombinationoftheirinterestscreatedperverseoutcomes.The “bigpicture”view that thoseon theoutside of the situation might have is irrelevant towhatactuallyhappens,andunderstandablyso.

Far from the stated goals of the regulators andthoseinvolvedintheprocess—thatregulationwas



pursuedinordertopromotealofty“publicinterest”—therealpurposeoftheregulatoryapparatusisthepromotion of the regulatory apparatus. The systemexiststopreserveandprotectitself.

SocialistsAreInterestedinControl,notEconomicProsperity

As I observe (and participate in) a few discussionsonFacebookandelsewhereabout socialism, Ihavecome to a few conclusions about the nature of thearguments and the reasons why socialists remainsocialistsevenasweseetheutterfailureofsocialisteconomiesthroughouthistory.Maybethememethatappearsonceinawhile—“Ifsocialistsunderstoodeconomics, they wouldn’t be socialists” — mightbe true, but I doubt it.As I see it, the purpose ofestablishingsocialismistofurtherpromotesocialism,notimprovethelotofasocietyandcertainlynottopromoteprosperity.

First,andmostimportant,themindsofsocialistsworkdifferentlythandothemindsofeconomiststhatseeaneconomyasamixoffactorsofproduction,prices,final goods, markets, and entrepreneurs that drivethe whole route. Those of us who are economistsarefascinatedbythisprocessbecauseweseehumaningenuity,thecoordinationofthegoalsofnumerouspeople,and,whenthesystemworks,ahigherstandardoflivingformostpeople.

Socialists,however,don’tseewhatwesee. Instead,theyseechaosandunequaloutcomes.Noteveryonebenefits,right?Insomesituations,someonemaylosea job or a way of doing things becomes obsolete.In the end, some people won’t be helped at all, atleast not directly, and in themind of someone thathas anorganicviewof society, the fact that certainentrepreneurial actions taken by some individualshavecreatedgoods thatmeet theneedsofothers isirrelevant.Society should be providing those goods for free! People should not have to pay for what they need!

Are you a surgeon who had done well financiallybecause you have performed medical miracles forpeople who desperately needed your services? You have exploited sick people! Are you like Martha

Stewart, who became wealthy in part by showingpeople how to make holiday celebrations better?What about the poor? They don’t have nice houses!

WhenIfirst startedwritingabouteconomicsnearly40yearsago,IwaslikeBruceYandle,believingthatallthatwasneededtoconvincesocialiststostopbeingsocialists was a well-reasoned economic argument.You know, explain that entrepreneurs don’t earnprofitsbyexploitingworkers,butratherentrepreneursmakeworkersbetteroffbydirectingresourcestotheirhighest-valueduses.Youknow,explainhowapricesystem really does result in morally-just outcomesbecause, in the end, it directs resources towardfulfillingtheneedsofconsumers.Andsoon.

Istillbelievethearguments,andovertheyearshavecometounderstandthemevenbetterthanIdidwhenIwrotemyfirstarticleforThe Freemanin1981.(It’sfunny how Economics in One Lesson continues tobecome increasingly relevant to my thinking eachtimeIreadit.)However,Ibelievethattheendofallofthisactivityis—orshouldbe—theimprovementof lifeforpeopleinawaythat isnotpredatoryandbringsaboutvoluntarycooperationamongeconomicactors.Inotherwords,economicactivityisameanstoanend,andtheendisfreepeoplegaininginwealthandstandardsofliving.

Asocialistdoesnotandwillnotseethingsthisway.Theendofsocialismisnotahigher livingstandardorevenmakinglifebetterforthepoor,asmuchasasocialistwilltalkaboutthewell-beingofpoorpeople.No,theendofsocialismissocialism,ortobetterputit,theidealofsocialism.Oncesocialismisestablished,asitwasinVenezuelaorintheformerUSSRorCuba,thesocialidealhadbeenmetnomatterwhattheactualoutcomemightbe.

But what about the problems that inevitably occurinasocialisteconomy?Arenotsocialistsshakenbythe economic meltdown inVenezuela? The answeris a clear NO. For example, The Nation, whichhas supported various communist movements forgenerations,takesthepositionthatVenezuelasuffersfromnot enough socialism:

If socialism is understood as a system in which



workersandcommunities(ratherthanbureaucrats,politicians, and well-connected entrepreneurs)exerciseeffectivedemocraticcontrolovereconomicandpoliticaldecision-making,itwouldappearthatVenezuelaissufferingnotfromtoomuchsocialism,but from too little.Who can deny thatVenezuelawouldbemuchbetteroffifthehundredsofbillionsof dollars reportedly diverted through corruptionwereinsteadinthehandsoforganizedcommunities?

The author assumes, of course, that socialism canbe separated from the state, which shows eitherdishonestyornaivety,orperhapsboth.Afterall,theauthorcontinuesbyclaimingthatthevastsystemofprice controls the government has laid down overVenezuela’s economyhashad little economiceffectandcertainlyhasnotbeenharmful,justastheauthorassumes that becausemost businesses inVenezuelaofficially are privately-owned, the government haslittleeconomiccontrolovertheiroperations.(Asweknow, the government there has seized businesses,arrestedstoreownersforraisingpricesinthefaceofblizzardsofpapermoney,andmaderidiculousclaimsaboutconspiraciestooverthrowthegovernment.)

The one thing the author does not suggest is thegovernmentbackingoff itspolicies and its socialistideology. To do so, obviously, would mean thatsocialismhadfailedandnosocialistisgoingtoeverembracetheideathatsocialismcouldfail.

PerhapsthebestexampleofthisisRobertHeilbroner’sfamous 1989New Yorker article, “The Triumph ofCapitalism,” written even before the Berlin Wallwentdown,alongwith thecommunistgovernmentsofEasternEurope and theUSSR.He followed thisa year later with “After Communism,” also in theNew Yorker.Inhisfirstarticle,theMarxistHeilbronerwrote:

TheSovietUnion,China&EasternEurope havegivenustheclearestpossibleproofthatcapitalismorganizes the material affairs of humankindmore satisfactorily than socialism: that howeverinequitably or irresponsibly the marketplace maydistributegoods,itdoessobetterthanthequeuesofaplannedeconomy...thegreatquestionnowseems

howrapidwillbe the transformationof socialisminto capitalism, & not the other way around, asthingslookedonlyhalfacenturyago.

Yet, it is clear, especially after the second article,thatHeilbronerwasnotadvocatingtheestablishmentof free markets, but rather saw the collapse of thecommunist system as little more than a strategicpause of the Long March to Socialism. To reachthat Utopia, wrote Heilbroner, socialists needed toturntoenvironmentalismtodeliverthegoods.(Thatmost of the socialist countries alsowere ecologicaldisasters did not penetrate Heilbroner’s mind, andthat should not surprise anyone.ToHeilbroner, theendofsocialismwasnotabetterwaytoproduceandequallydistributegoods;no,theendofsocialismwassocialism.)

Inotherwords,evenafterseeingthesocialistsystemthateconomistslikehe,JohnKennethGalbraith,andPaulSamuelsonpraisedforagenerationmeltdownright in front of him, Heilbroner could not bringhimselftoadmitthatmaybesocialistsneededtoturnin their membership cards and promote capitalism.No,Heilbronerdecidedthatsocialistssimplyneedednewstrategies tofindways tohavestate (read that,social)controlofresourcesandeconomicoutcomes.Interestingly, he wrote these words even afteracknowledging that Ludwig von Mises and F.A.Hayekwerecorrectintheirassessmentofsocialism’s“economic calculation problem,” but even thatadmissiondidnotbringHeilbronertothelogicalendofhisanalysis:totalrejectionofthesocialistsystem.

LiketheFonziecharacterfromHappy Daysthatnevercould admit being “wrong”on an issue,Heilbroner— and others like him— could not concede thatsocialism in any form still would run aground, beit in providing medical care, establishing strictenvironmentalpolicies,ortheestablishmentofavastwelfare state.The central problem facing socialism—economic calculation—does not disappear justbecauseagovernmentdoesnotdirectlyownfactorsofproductionandengageinfive-yeareconomicplans.

This hardly means that economists like me shouldstop writing about the failures of socialism or



stop explaining how a private property order and afreeprice systemwork.First, onenever canbe tooeducatedineconomicanalysisandneithercananyoneinpubliclife.Socialistsmaynotbeabletoabandontheir faith, but otherswhomight like to hearwell-reasonedargumentsmightnotbewillingtojointheChurchofSocialisminthefirstplace.

Second,thereisnothingwronginspeakingthetruthand just because socialists and their followers areaversetotruthdoesnotmeanwegiveupsayingwhatweknowtobetrue.Justbecausesocialistsrefusetobelievethatsocialismfails—evenwhentheevidencepoints otherwise — does not mean they have themoralandintellectualhighground.

BillAndersonisprofessorofeconomicsatFrostburgStateUniversityinFrostburg,Maryland.

Thisarticleappearedinwww.mises.org

Comment by R. Nelson Nash — Bill is another favorite writer of mine. I’ve also had the privilege of a number of conversation with him in past years.

The Broken WindowbyFredericBastiat

Have you ever witnessed the anger of the goodshopkeeper,JamesB.,whenhiscarelesssonhappenedtobreakasquareofglass?Ifyouhavebeenpresentatsuchascene,youwillmostassuredlybearwitnesstothefact,thateveryoneofthespectators,werethereeventhirtyofthem,bycommonconsentapparently,offered the unfortunate owner this invariableconsolation—“It is an ill wind that blows nobodygood.Everybodymustlive,andwhatwouldbecomeoftheglaziersifpanesofglasswereneverbroken?”

Now, this form of condolence contains an entiretheory,whichitwillbewelltoshowupinthissimplecase,seeingthatitispreciselythesameasthatwhich,unhappily,regulatesthegreaterpartofoureconomicalinstitutions.

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another.

Supposeitcostsixfrancstorepair thedamage,and

you say that the accident brings six francs to theglazier’s trade—that it encourages that trade to theamountofsixfrancs—Igrantit;Ihavenotawordtosayagainst it;youreasonjustly.Theglaziercomes,performs his task, receives his six francs, rubs hishands,and,inhisheart,blessesthecarelesschild.Allthisisthatwhichisseen.

Butif,ontheotherhand,youcometotheconclusion,asistoooftenthecase,thatitisagoodthingtobreakwindows,thatitcausesmoneytocirculate,andthattheencouragementofindustryingeneralwillbetheresultofit,youwillobligemetocallout,“Stopthere!yourtheoryisconfinedtothatwhichisseen;ittakesnoaccountofthatwhichisnotseen.”

It is not seen that as our shopkeeper has spent sixfrancs upon one thing, he cannot spend them uponanother.Itisnotseenthatifhehadnothadawindowtoreplace,hewould,perhaps,havereplacedhisoldshoes,oraddedanotherbooktohislibrary.Inshort,hewouldhaveemployedhissixfrancsinsomeway,whichthisaccidenthasprevented.

Letustakeaviewofindustryingeneral,asaffectedby this circumstance. The window being broken,the glazier’s trade is encouraged to the amount ofsix francs; this is thatwhich is seen. If thewindowhadnotbeenbroken,theshoemaker’strade(orsomeother)wouldhavebeenencouragedtotheamountofsixfrancs;thisisthatwhichisnotseen.

Andifthatwhichisnotseenistakenintoconsideration,becauseitisanegativefact,aswellasthatwhichisseen,becauseitisapositivefact,itwillbeunderstoodthatneitherindustryingeneral,northesumtotalofnational labour, is affected, whether windows arebrokenornot.

NowletusconsiderJamesB.himself.Intheformersupposition, that of the window being broken, hespendssixfrancs,andhasneithermorenorlessthanhehadbefore,theenjoymentofawindow.

Inthesecond,wherewesupposethewindownottohave been broken, he would have spent six francsonshoes,andwouldhavehadat the same time theenjoymentofapairofshoesandofawindow.



Now, as JamesB. forms apart of society,wemustcometotheconclusion,that,takingitaltogether,andmakinganestimateofitsenjoymentsanditslabours,ithaslostthevalueofthebrokenwindow.

When we arrive at this unexpected conclusion:“Societylosesthevalueofthingswhichareuselesslydestroyed;” andwemust assent to amaximwhichwillmakethehairofprotectionistsstandonend—Tobreak,tospoil,towaste,isnottoencouragenationallabour;or,morebriefly,“destructionisnotprofit.”

Remember that there are not two persons only, butthree concerned in the little scene which I havesubmitted.

Whatwill you say,Monsieur Industriel—whatwillyousay,disciplesofgoodM.F.Chamans,whohascalculatedwith somuch precision howmuch tradewouldgainbytheburningofParis,fromthenumberofhousesitwouldbenecessarytorebuild?

I am sorry to disturb these ingenious calculations,as far as their spirit has been introduced into ourlegislation; but I beg him to begin them again, bytaking into the account thatwhich is not seen, andplacingitalongsideofthatwhichisseen.Thereadermust take care to remember that there are not twopersonsonly,but threeconcerned in the little scenewhich I have submitted to his attention. One ofthem, James B., represents the consumer, reduced,by an act of destruction, to one enjoyment insteadoftwo.Anotherunderthetitleoftheglazier,showsus the producer, whose trade is encouraged by theaccident.The third is theshoemaker(orsomeothertradesman), whose labour suffers proportionally bythesamecause.Itisthisthirdpersonwhoisalwayskept in the shade, andwho, personating thatwhichis not seen, is a necessary element of the problem.It ishewho showsushowabsurd it is to thinkweseeaprofitinanactofdestruction.Itishewhowillsoonteachusthatitisnotlessabsurdtoseeaprofitinarestriction,whichis,afterall,nothingelsethanapartialdestruction.Therefore, ifyouwillonlygototherootofalltheargumentswhichareadducedinitsfavour,allyouwillfindwillbetheparaphraseofthisvulgarsaying—Whatwouldbecomeoftheglaziers,

ifnobodyeverbrokewindows?

Frederic Bastiat (1801-1850) was the great Frenchliberal economist, philosopher, polemicists, andjournalist.

Comment by R. Nelson Nash — This piece by Bastiat is a classic. I well remember reading it many years ago. It made a vivid impression on how I thought.

Break Up the USALlewellynH.Rockwell,Jr.

Some of our assumptions are so deeply embeddedthatwecannotperceivethemourselves.

Case in point: everyone takes for granted that it’snormalforacountryof320milliontobedictatedtobyasinglecentralauthority.Theonlydebatewe’repermittedtohaveiswhoshouldbeselectedtocarryoutthisgrotesqueandinhumanefunction.

Here’sthedebateweshouldbehavinginstead:whatifwesimplyabandonedthisquixoticmission,andwentourseparateways?It’sanideathat’sgainingtraction–muchtoolate,tobesure,butbetterlatethannever.

Foralongtimeitseemedasiftheideaofsecessionwas unlikely to take hold in modern America.Schoolchildren,afterall,aretoldtoassociatesecessionwith slavery and treason.American journalists treatthe idea as if it were self-evidently ridiculous andcontemptible(anattitudetheycuriouslydonotadoptwhenfacedwithUSwarpropaganda,Imightadd).

AndyetallittookwastheelectionofDonaldTrumpfortheallegedtoxicityofsecessiontovanishentirely.The left’s principled opposition to secession anddevotion to the holy Union went promptly out thewindowonNovember8,2016.Today,aboutone inthree Californians polled favors the Golden State’ssecessionfromtheUnion.

Inotherwords,somepeopleseemtobecomingtotheconclusionthatthewholesystemisrottenandshouldbeabandoned.

It’s true thatmost leftists have not come around tothiswayofthinking.Manyhaveadoptedthecreepyslogan “notmy president” – in otherwords, Imay



not want this particular person having the powerto intervene inallaspectsof lifeandholding inhishandstheabilitytodestroytheentireearth,butImostcertainlydowantsomeone elsetohavethosepowers.

Not exactly a head-on challenge to the system, inotherwords.(That’swhatwelibertariansarefor.)Theproblemintheirviewisonlythat thewrongpeopleareincharge.

Indeed,leftistswhooncesaid“smallisbeautiful”and“questionauthority”hadlittletroubleembracinglargefederalbureaucraciesinchargeofeducation,health,housing,andprettymucheveryimportantthing.Andthese authorities,ofcourse,youarenot toquestion(unlesstheyareheadedbyaTrumpnominee,inwhichcasetheymaybetemporarilyignored).

Meanwhile, the rightwing has been calling for theabolitionoftheDepartmentofEducationpracticallysinceitscreationin1979.Thathasn’thappened,asyoumayhavenoticed.HavingtheagencyinRepublicanhandsbecamethemoreurgenttask.

Eachsidepourstremendousresourcesintotryingtotakecontrolofthefederalapparatusandlorditoverthewholecountry.

Howaboutwecallitquits?

No more federal fiefdoms, no more forcing 320millionpeopleintoasinglemold,nomoredictatingtoeveryonefromthecentralstate.

Radical, yes, and surely not a perspectivewewereexposedtoasschoolchildren.Butisitsounreasonable?Is it not in fact theveryheight of reason andgoodsense?And somepeople,wemay reasonablyhope,maybepreparedtoconsiderthesesimpleandhumanequestionsfortheveryfirsttime.

Now can we imagine the left actually growing sounhappyastofavorsecessionasagenuinesolution?

Here’swhatIknow.Ontheonehand,theleftmadeitslongmarchthroughtheinstitutions:universities,themedia,popularculture.TheirintentionwastoremakeAmerican society. The task involved an enormousamountoftimeandwealth.Secessionwouldamounttoabandoningthisstringofsuccesses,andit’shardto

imaginethemgivingupinthiswayaftersinkingallthoseresourcesintothelongmarch.

Atthesametime,it’spossiblethattheculturalelitehave come to despise theAmerican bourgeoisie somuchthatthey’rewillingtotreatallofthatasasunkcost,andsimplygetout.

Whateverthecasemaybe,whatwecanandshoulddois encourageall decentralizationand secession talk,suchthattheseheretoforeforbiddenoptionsbecomeliveonceagain.

I can already hear the objections from Beltwaylibertarians, who are not known for supportingpoliticaldecentralization.To thecontrary, they longfor the daywhen libertarian judges and lawmakerswill impose liberty on the entire country. And ona more basic level, they find talk of states’ rights,nullification,andsecession–aboutwhichtheyholdthemostexquisitelyconventionalandp.c.views–tobesourcesofembarrassment.

How are they going to rub elbows with the Fedchairmanifthey’reassociatedwithideaslikethese?

Of course we would like to see liberty flourisheverywhere. But it’s foolish not to accept morelimitedvictoriesandfinitegoalswhen theseare theonlyrealisticoptions.

Thegreatlibertarians–fromFelixMorleyandFrankChodorov toMurrayRothbard andHansHoppe—have always favored political decentralization; F.A.Hayekoncesaid that in thefuture libertywasmorelikely to flourish in small states. This is surely thewayforwardforustoday,ifwewanttoseetangiblechangesinourlifetimes.

Thomas Sowell referred to two competing visionsthatlayattheheartofsomuchpoliticaldebate:theconstrainedandtheunconstrained.Intheconstrainedvision, man’s nature is not really malleable, hisexistencecontainsanelementoftragedy,andthereislittlethatpoliticscandobywayofgrandioseschemesto perfect society. In the unconstrained vision, theonlylimitationtohowmuchsocietycanberemadeintheimageofitspoliticalrulersishowmuchtherubesarewillingtostomachatagivenmoment.



These competing visions are reaching an endgamevis-a-visoneanother.AsAngeloCodevillaobserves,the left has overplayed its hand. The regular folkshave reached the limits of their toleration of leftistintimidationandthoughtcontrol,andarehittingback.

Wecanfightitout,orwecangoourseparateways.

WhenIsaygoourseparateways,Idon’tmean“theleft” goes one way and “the right” goes another. Imeantheleftgoesonewayandeveryoneelse–rathera diverse group indeed– goes another. Peoplewholiveformoralposturing,tobroadcasttheirsuperiorityovereveryoneelse,andtosteamrolldifferencesinthenameof“diversity,”shouldgooneway,andeveryonewhorollshiseyesatallthisshouldgoanother.

“Nopeopleandnopartofapeople,”saidLudwigvonMisesnearlyonehundredyears ago, “shallbeheldagainst itswill inapoliticalassociation that itdoesnotwant.”Somuchwisdominthatsimplesentiment.Andsomuchconflictandanguishcouldbeavoidedifonlywe’dheedit.

LlewellynH.Rockwell,Jr.ischairmanandCEOoftheMisesInstituteinAuburn,Alabama,andeditorofLewRockwell.com.

Comment by R. Nelson Nash — A number of years ago Dr. Walter E. Williams said that secession is the only viable solution to our problem. In the meantime you can secede from personal financial slavery by learning how to BECOME YOUR OWN BANKER. Get started by going to our website www.Infinite banking.org. This is done without political action.

Our Huge Hidden Tax: Government RegulationsbyScottPowell

On day one, President Trump surprised businessleaders gathered at theWhite House, declaring USregulations“outofcontrol”and“inneedof75%ormore reduction.”Aweek later, he boldly signed anexecutiveorderrequiringrepealoftwooldrulesforeverynewonethatgovernmentagenciesimplement.

The fact is that cutting regulations is as critical as

tax relief in turning the US economy around. Thetwoaretheholygrailtorepatriatealargepartofthe$2.5 trillion in offshore corporate capital, stimulatedomestic investment, and create jobs— all centralto“makingAmericagreatagain.”Andit’seconomicgrowthandbroadeningthetaxbasethatcan—inthelongerrun—financerebuildingUSinfrastructureandthemilitarywithout adding to deficits and nationaldebt.

TheFederalRegisterrecordsregulationsareimposedonbusiness.Itsannualpagesgenerallygrowwitheveryadministration,with a 19% year over year increasein Obama’s last year — setting a record-breaking95,000-pluspages.ProfessorAlanDershowitznotesthat, “today the averageprofessional commits threefelonies a day without realizing it, thanks to thecomplexlayersofregulationandlegalrequirementsthathavebeenbuiltupovertime.”TheSmallBusinessAdministration estimates the compliance costs ofregulationsmay be upward of $2 trillion a year—anenormoushiddentaxnearlysixtimesgreaterthanthe aggregate $350 billion in corporate tax revenuecollectedannuallybytheIRSinrecentyears.

We Need More Than Executive Orders

Executiveordersprovidetemporaryrelief,butlong-term structural change is needed for theUS to freeitselffromtheregulatoryleviathanandpermanentlylimit federal bureaucracies and their army ofunaccountable regulators. Start with two statutorysafeguards:(1)Congressionallegislationthatrequiresthe delivery of $2 of regulatory cost reduction forevery one dollar of new regulatory cost increase;and (2) Periodic Congressional reauthorization ofregulationsaffecting industriesand theeconomy—withsunsetprovisionsforthosenotreauthorized.

Butperhapsmost importantly in the longrun is theneedforarenaissanceinunderstandingtheappropriatescope and principles for regulation in today’s freemarketinformationeconomy.

Toward this end it’s worth evaluating and learningfromthethreeregulatorylawsthathavehadthemostimpactontheeconomyoverthelast15years:(1)TheSarbanes-OxleyPublicCompanyAccountingReform



and Investor Protection Act, which was signedinto law by George Bush in 2002; (2) The PatientProtectionandAffordableCareAct,akaObamacareorACA;and(3)TheDodd-FrankWallStreetReformandConsumerProtectionAct—thelattertwosignedintolawbyBarackObamain2010.

The Sarbanes-Oxley Disaster

Sarbanes-Oxleywashastilypassedby aunanimousSenatevoteinJuly2002topreventthenextWorldComandEnron—bothcollapsingintobankruptcyinpartbecause of accounting legerdemain. Its ostensiblepurpose was to improve corporate governance andpreventaccountingfraud.ButSarbanes-Oxley’sone-size-fits-allapproachtostructuringcorporateboards,determining their duties and those of officers, andrequiring granular internal controls and audits wasoverkillandviolatedtheprimacyofpubliccompaniestochooseandimplementbestmanagementpractices.

Sarbanes-Oxley dramatically raised regulatorycosts for US public companies, and made themless competitive in world markets.And it divertedmanagement away from innovation, while richlyrewardinglawyers,accountants,andauditors.Smallpubliccompaniesandventurecapitalstart-ups,whichhavetypicallygeneratedmorethan70%ofnewjobsintheUSwerepenalizedmorethanlargecompaniesas compliance costs, starting at around $2 millionannually, were spread over fewer heads and lessrevenue.Inreaction,USIPOsdramaticallydeclinedafter the passage of Sarbanes-Oxley, resulting inreducedcapitalformationandjobcreation,withmanystart-upschoosingtostayprivate.

TheaftermathofSarbanes-Oxleyalsowitnessedtheadventofmega-billion-capIPOs,suchasGoogleandFacebook,whoselatestagepublicofferingsenrichedthe1%insiderswhileprovidinglessopportunityforthe investing public. Uber’s recent announcementthatitwilllikelystayprivatemayalsobeinpartdueto the unintended consequence of Sarbanes-Oxley,as company insiders enrich themselveswithprivatestocksales,whileavoidingpubliccompanyredtape.

Sarbanes-Oxley was intended to improve corporategovernance and safeguard the little guy. In practice

ithasdampenedinnovation,hurtjobcreation,helpedlarge companies relative to smaller enterprises, andfacilitatedtherichgettingricher.

Obamacare: Keeping Businesses From Expanding

Obamacare provided a new health care entitlementfortheuninsured,butitfailedtoimprovethequality,choice,andcostofhealthcarefor thevastmajorityof Americans because it undermined free marketmechanisms. In hindsight it was ludicrous to passhealth care reform that required billions in newspending that also limited options for participantsandweakenedcompetitiveforcesthatcutpricesandimprovedquality,whilealsoforcingsomeprovidersto render services that violated their ConstitutionalFirstAmendmentrights.Italsocreatedanewhydra-headed government bureaucracy— allwhile doingnothingtoaddressthefailuresandinsolvencyoftheparallelhealthprogramsofMedicareandMedicaid.

Additionally, ACA was the first bill that was socomplex and lengthy at 906 pages that very fewCongressionalmembers read it before voting on it.In the words of then Speaker of the House NancyPelosi,“wehavetopassthebillsothatyoucanfindoutwhat’sinit.”

What was in the ACA bill was a Congressionalsurrenderofthefunctionoflegislationtounaccountablegovernmentagenciesandcommissions,arelinquishingofbudgetary control through the allocationof largeappropriations for vague expenditures, and theauthorizationofabureaucraticexplosionthatcreatedsome159newgovernmentagenciesandboardsthathavechurnedoutsome30,000pagesofnewrulesandregulations—allstemmingfroma906-pagebillthatfewinCongresseverread.

Obamacare also hurt economic growth with itsmandateonemployerstoprovidehealthcarecoveragewhenpayrollsexceeded49full-timeemployees.Manycompaniesapproaching that threshold respondedbyeither replacing full-timewith part-timeworkers orsimplychoosingtolimitthecompany’sgrowth.

The Dodd-Frank Bureaucracy

If Sarbanes-Oxley and Obamacare created new



bureaucraticdysfunctionandunaccountability,whileemasculating beneficial incentives and constraintsuniquetoprivateenterprise,Dodd-Frankwentfurther.Passedintheaftermathofthe2008financialcrisis,iterodedtheruleoflawbycreatingyetmorenewfederalagencies to arbitrarily regulatewhole sectors of thecapital markets as well as large corporations. Onecreature ofDodd-Frank— theConsumer FinancialProtectionBureau(CFPB)—wasunleashedwithnoCongressionaloversightorbudgetarycontrol.

At2,300pages, theDodd-Frankbillwasmore thantwicethelengthoftheObamacarebill.Itextendsthesame creeping regulatory socialism in the financialserviceindustryaswasimposedonhealthcare.Now,more than six years since the law passed, 30% ofthenearly400rulesrequiredbyDodd-Frankremainunfinished, while some 25,000 pages of new ruleshavebeencreated.

Butevenafterfinalization,manyoftheDodd-Frankguidelines — such as the Volker Rule — proveexceedinglydifficulttointerpret,requiringdiversionof manpower and resources from profit-enhancingactivitytoprofit-drainingregulatorycompliance.Aswith Sarbanes-Oxley, complex and costly financialregulationsimposedbyDodd-Frank,havepenalizedthe small and favored the large — resulting inaccelerated consolidation and closure of small andcommunity banks and the credit they traditionallyextendtosmallbusiness.Ironically,theDodd-Franklaw that was supposed to eliminate the need forgovernmentbailoutshasinfactenlargedthenumberand size of institutions nowofficially designated as“toobigtofail.”

The key lessons from the problems and collateraldamage from the three most significant regulatorylaws passed in the last 15 years are self-evident.Congressshouldmoveforwardonlegislativeactionto repeal and replaceObamacare and take statutoryactionstocorrect theeconomicallyharmfulpartsofSarbanesOxley andDodd-Frank.Looking forward,the Trump administration should enlist free marketspokespeople and use the bully pulpit to develop abroad-based understanding about the appropriatescope and principles for regulation that can bring

aboutlimitationsandlastingreduction.

What is under-appreciated is that the free marketsystem based on law is largely self-regulating, andrelatively efficient inweeding out deficient, unsafe,andexcessivelypricedgoodsandservices,aswellasfraudandcorruption.

Government regulations should not be driven bycrisesnorbeoverlycomplex.Thescopeofregulationof a market economy properly understood shouldprotect transparency, competition, private andpublic property, and safety; promote individual andcorporateaccountability;assure levelplayingfields,andprovideforequaltreatmentofsmallenterprises;and most importantly, protect Constitutional rightsandequalopportunityandpenaltyunderthelaw.

Insummary,thecorelessonsofthemodernregulatoryleviathanare:(1)thatitcan’tkeepupwithcomplexity;(2)thatsolutionsarenotonlytenuous,butinvariablycomewithunintendedconsequences;and(3)thatit’sunlikely towork because it is driven by politicianswho are driven to raisemoney and solicit votes—promising to “fix” problems by taking actions that“help”someconstituentsattheexpenseofothersandthatgenerallyinterferewiththeself-correctingnatureofafreemarketsystem.

It may be counterintuitive, but as the economycontinues togrow incomplexity, trust in regulatorysolutions should be tempered by more reliance oncompetitionwithin the framework of existing laws.Applying new knowledge and best practices —rapidly transmitted in an information-based marketeconomy—islikelytodeliverbetteroutcomesthannew, ever-expanding and centralized governmentregulations.

Comment by R. Nelson Nash — It is unbelievable how this phenomenon, authored by bureaucrats, has taken over out lives. I had personal confrontation with this monstrous idea in June 1961.



Seven Reasons to Make Time to ReadbyChadGrills

“Booksarethetrainingweightsofthemind”–Seneca

ThemostusefuldefinitionoftechnologyI’veheardissimply,“theabilitytodomorewithless.”

Ithinkofbooksandreadingastechnologies.

Weonlyliveonelife,butthroughbooks,wecangainthewisdomfromthousands.Whenanauthorwrites,re-writes,andedits,theyareturningtheirwordsintoamoreperfectversionofthemselves.Whenyouread,yougettospendtimeinameditativestatewithawiseperson’smoreperfectself.

Books are the most under-valued and under-appreciatedtechnologyintheworld.

How do we know they’re so valuable? We needonly toexaminehow thebest and theworstpeoplethroughouthistoryhaveviewedbooks.

Theworstseektodownplay,ban,orburnthem.Thefactthatbookshavehaterswhoarewillingtodestroythemconfirmstheirpower.

Thebestadorebooks…andaren’tafraidtocelebratethem.

Likeeveryothertechnology,ifweusebookswithoutintentionsorguides,theydon’tleadanywhere.

But when we learn how to appropriately value,select, and acquire themwith stakes and incentives(buythem,readthem,thendiscusswithfriendsorabookclub)…booksbecomepriceless.Herearesevenunusualhabitsthatbookshelpyoubuild.

1. Books and reading are the ultimate nootropic.

Iapologize to all the modafinil lovers out there,but books have most nootropics beat. Eventually,nootropicswearoff.Meanwhile,readingpermanentlyupgradesyourmind, leavingyouwith a lifetimeofbenefits.Thesideeffectsofbookshavebeen testedbytime,whereasthelatestnootropics?Notsomuch.When you get into the habit of taking a nootropicsuchasbooks(information,wisdom,etc…)througha

methodlikereading,thebenefitscompound.

“Read 500 pages like this every day. That’s howknowledge works. It builds up, like compoundinterest.Allofyoucandoit,butIguaranteenotmanyofyouwilldoit.” — WarrenBuffett

2. Books and reading upgrade your mental operating system.

The best books arewrittenwhen the author is in aflowstate.Theauthortransmitstheirwisdom,muse,orinsightswithminimalego.Whenareaderseekingwisdommovesthroughthesewordsandenterstheirownflowstate…magichappens.

I don’t know how it works, but after enoughtime of reading, my mind always feels upgraded.Programmingourmindsbymovingconsciouslyintothe flow state of another wise person is powerful.When we upgrade our mental OS, our main apps(speaking,writing,andcommunicating)allbegintorunfasterandmoresmoothly.

3. Books and reading help you practice the art of sitting quietly in a room alone.

EricHofferwas onto somethingwhen he said that,“Amanbyhimself is inbadcompany.”Thismightbetrueinitially,butwecangrowourselvesoutofthisplace. It takeshardwork tobecomegoodcompanytoourselves.Butifweread,pauseforreflection,andcontinually improve ourselves… we can becomegoodcompanytoourselves.Byreading,wetrainandprogramourmindsforwhatisarguablythegreatesthumanchallengeofourtime:

“Allofhumanity’sproblemsstemfromman’sinabilitytositquietlyinaroomalone” — BlaisePascal

4. Books and reading inspire you to gain direct experience.

Therearetradeoffsforeverythinginlife,butreadingalot(ofthebestbooks)isn’tdangerous.Thehungerforwisdomseemstobetheonlydesirethatwecansatiate. There isn’t a risk of overindulgence.Afterenoughreading,webecomechargedwithgoodideasandcouragetogooutandexploretheworld.Oncewegetfueleduponenoughwisdom,webecomeinspired



toembarkonournextheroandheroine’sjourney.

BingewatchinganentireseriesonNetflixsometimesleads toahangover,whereasattempting to,“binge”onbooksleadstoanurgeofwantingtoventurebackout into theworld.Mixing thewisdom frombookswith the direct experience of an adventurous life isalwaysrewarding.

5. Books and reading force a meditative practice where you’re forced to listen to the thoughts of a wise person.

Themorewe read and spend timewith books, themore we practice mindfulness and meditation.Readinghelpsteachuspatience,calmness,andbuildsour ability to focus deeply on a single thing for anextendedperiodoftime.

6. Books and reading allow you to strategically isolate yourself from a sometimes sick culture.

“Sanity in thisculture, requiresacertainamountofalienation.”–TerenceMcKenna

Books and reading are one of the last societallyacceptablereasonsforbeingalone.Ifyouneedrespitefromsociety,thereisnobetterstrategicisolationthanbooks.Bookshelpkeepussafefromcrowds.

7. Books and reading are an antifragile vehicle for truth delivery.

“Iamofcourseconfident that Iwill fulfilmy tasksas a writer in all circumstances — from my graveevenmoresuccessfullyandmoreirrefutablythaninmylifetime.Noonecanbartheroadtotruth,andtoadvanceitscauseIampreparedtoacceptevendeath.Butmayitbethatrepeatedlessonswillfinallyteachusnottostopthewriter’spenduringhislifetime?Atno time has this ennobled our history.” –AleksandrSolzhenitsyn

Throughouthistory,bookshavegivenartists,masters,andphilosophersanantifragilevehicletoplacetruth.SowhatdoImeanby this?Therearemanypeoplewhohate to think.When theyhearsomethingwise,they’llreactviscerally,orevenattackthepersonthatbroughtthemtruth.Manyinsocietyhatetheideaofpursuingtruth(becominglesswrong)ordeveloping

heuristics and insights about how theworldworks.AsStraussproposed,thebestsecretsareoftenhiddeninsidestories.

Most creativesknow this to be true, andknow thattheonlywaytodelivertruthinapalatablewaythatcansurviveattack isabook.Themoreentertainingthenarrativeorparable,themorereaderswilltoleratenew ideas. Because the book is able to be sold, ithelpstheseideassurviveattack,andgivestheauthora chance to capture a small amount of value fromhis/herideas.Thisisabigleapforwardforhumans.Throughoutourhistory,thosewhomakeothersthinkareusuallythefirsttobescapegoated,ostracized,ordemonized. Books give the would-be scapegoat avehicle toplace their ideas so that theycansurviveattack, and sometimes even spread because of theattack.

Thedevelopedworldhasevolvedinhowwepersecutethosewhobring forth truth.Wewent fromhorriblepast methods of scapegoating (stoning, crucifixion)into small time scapegoating (attempting to cut offan individual’s livelihood by suing, slander, onlinecomments,etc).

Booksmightbeoneofthemoreperfecttechnologies,buttheystillhavelimitations.Theydon’tworkuntilwe do the work of reading them. They’re largelyuselessuntilwetaketheplunge,purchaseone(acquiretheincentivesandstakestoreadit)orfindthebooksgoodenoughtore-read.

Technologycan’tchangeourlives,onlywecan.Whenwe take a perfect technology like books andwieldthemforgood,we’llbuildhabitsthatcanchangeourlives,liftupthosearoundus,orevengainthesecretsnecessarytocreatenewtypesofperfecttechnology.Need some book recommendations? Check outmylatestarticleonthebestbooksIreadthispastyear.

Republished from Medium.

Veteran turned founder of LL: https://medium.com/life-learning

Comment by R. Nelson Nash — What more can one say that would improve upon the message of this article?



Abolish the One-Man PresidencybyRyanMcMaken

Last month, when President Trump issued hisexecutive order banning refugees and visa holdersfrom seven countries, the acting Attorney GeneralSallyYatesrefusedtoenforcetheorders.

Inresponse,conservativesatNational Reviewissuedanunsignededitorialremindingthereaderthat

It is a very simple proposition. Our Constitutionvestsallexecutivepower—notsomeofit,allofit—inthepresidentoftheUnitedStates.Executive-branchofficialsdonothavetheirownpower.

Thisistrueindeed.Butitshouldn'tbe.

The US constitution places immense power in thehandsofasingleperson.Thiswasdone,asAlexanderHamilton put it in Federalist No 70 to maximize"decision, activity, secrecy, and dispatch" in theexecutive branch. Confronted with opposition fromtheAnti-Federalistswho feared toomuch power inthehandsofasimgleambitiouspoliticians,Hamiltonattemptedtoillustratethattheyhadnothingtofear.

The "Founding Fathers" Were Wrong

Unfortunately, themajority of the politicians at theConvention agreed with Hamilton, exhibiting yetagain that the much vaunted so-called "foundingfathers" were not nearly as insightful as is oftenpretended. Justas JamesMadisonwaswrongabouta large republic preventing abuses of governmentpower,Hamiltonwaswrongthatatheexecutivewilltoward political weakness. Indeed, the "framers"ingeneral exhibited a remarkable lackof insight intheirparanoiaabouthowthelegislativebranchwoulddominateallotherinstitutionsinthegovernmentandrunroughshodovertherightsofthecitizenry.Inreallife,thelegislaturehasinmanyrespectsproventobethe weakest branch of the federal government, andis certainlyweaker than the presidency in terms ofprestige,publictrust,mediaaccess,andinCongress'slackofabilitytorulebydecreeasthepresidentdoes.

Thus, knowing what we now know about the USpresidencytoday,anythingthatincreases"activity"and

"secrecy," asHamiltonwanted, should immediatelysendupaseriesofredflags.

InhisowncommentsattheConstitutionalConvention,GeorgeMasonsaidasmuchwhenheobserved:

The chief advantages which have been urged infavour of unity in the executive are the secrecy,the dispatch, the vigour and energy which thegovernment will derive from it, especially intimes of war...Yet perhaps a little reflection mayinclude us to doubtwhether these advantages arenotgreaterintheorythaninpractice...Ifstrongandextensivepowersarevestedin the executive, andthat executive consists only of one person, thegovernmentwillofcoursedegenerate(forIwillcallifdegeneracy)intoamonarchy—agovernmenttocontrarytothegeniusof thepeoplethat theywillrejecteventheappearanceofit.

On the first point of the executive power's"degeneracy," Mason has been proven right. Afterallwhocandeny that thepresidentsof todayenjoypowersthatthemonarchsofoldcouldonlydreamof?Modernpresidentscandestroytheplanetinanuclearholocaustwiththetouchofabottom.Theycanlaunchthe world's more technologically-advanced militaryatwill.Theycommandavastbureaucraticandlaw-enforcement apparatus that can destroy the lives ofAmerican citizenswhether through theDEA, EPA,or countless other federal agencies that wield vastpower.Moreover,theyenjoyallthesameceremonialtrappingsofthemonarchsofold.

Just last month, the taxpayers were forced to paymore than100milliondollars to throwan immenseparty for thenewpresident sohecouldbehonoredwithfanfareandsolemnceremoniesthatwouldhavemadetheCaesarsenvious.

Astheheadofthishugeunitaryexecutive,Presidentscancommandahugenationalaudienceandfacenoopposition fromanypeer.Theyhandourawards totheirfriends,enjoysumptuousfoodatstatedinners,travelinluxuryonAirForceOne—atgreatcosttothe taxpayer—andshutdownentirehighwaysandcityblockswherevertheychoosetogo.



Thesupportersofthesepoliticianstheninventexaltedtitlesforthem,suchasreferencestothepresidentas"our"commander-in-chiefasifhewerethesupremecommanderof theUnitedStates andnot—aswascorrectly understood in the early United States —merely the "commanderof the armed forceson thebattlefield." Except for those actively engaged inmilitaryservice,thePresidentisnotthe"commander"ofanything.

On his final point about public resistance to thepresidency, however,GeorgeMason has beenmostunfortunatelywrong. Ithasnotat allbeen true thatthe "the people" rejected the rise of an extremelypowerfulandmonarchicpresidency. Indeed,weseesomethingverynearitsopposite.

Today, the US president has become for many anobjectofveneration.Heisapersonwhoissupposedtosolvethenationsproblemsincludingeverythingfromgeopoliticalmattersrightondowntomanagingwhatsortoffishing tacklepeoplecanuse.He is afigureto which countless Americans have an emotionalattachment, to "feel theirpain"and toassuage theirfears.

But, justas federal judgesmustbeseenand treatedas what they really are — nothing more thangovernmentlawyerswithfriendsinhighplaces—sothepresidentsoughttobereducedtothepositionofblandadministrator.

RELATED: "Abolish the Supreme Court”

Theidealsolutiontothissituation,ofcourse,wouldbetodrasticallyreducethepresidencytothepointofbeingaweakand temporaryposition—perhapsasa temporarycommander in timesofwar—subjectto the approval the member states of a voluntaryconfederation.

A Modest Proposal

However, in the spirit of compromise — on thewayto totalabolition,ofcourse—wecantaketheprofoundlymoderatepositionofsimplybreakinguptheexecutivebranchamongseveraladministrators.

Afterall, this iscommonplace instategovernmentsin the United States where executive powers are

shared by several elected executive officers. Allstates have governors who wield legislative vetopower and command the state's military forces.Butotherexecutivepowersareheldinthehandsoftreasurers,secretariesofstate,andattorneysgeneralwho themselveswhohave theirownlegislativeandregulatoryprerogatives.

In 2016, for example, 12 states held elections forgovernors,butalsoon theballotwere tenattorneysgeneral,ninetreasurers,andeightsecretariesofstate.Numerousstatesalsodirectlyelectavarietyoflesserexecutiveofficesincludingstateauditors,agriculturecommissioners,andinsurancecommissioners.

Historically, state governments, being moredemocraticandclosertothevotershavetendedtobesuspiciousofexecutivepowerandhavelimitedthatpower both by decentralizing the executive branchandbyholdingelectionsmorefrequently.

Today, for instance, only two states still have atwo-year term for governor (New Hampshire andVermont).Over thepastcentury,however,29statesmovedfroma2-year termtoa4-year term.As lateasthe1950sand1960s,nofewerthan19statesstillforced governors to run for re-election every twoyears.

And yet, these states manage to not descend intochaos,asHamiltonandhisFederalistswouldhavehadusbelieve is the inevitable resultofadecentralizedexecutive.

Thebenefitsof,asHamiltonputit"vestingthepowerin two or more magistrates of equal dignity andauthority"wouldbe immediatelyapparent. Itwoulddamagethemysticalsuperstitionsthatencouragebeliefinthepresidentasthe"embodiment"oftheelectorateorasrepresenting"thewillofthepeople."Fewthingscanunderminethemystiqueofthepresidencybetterthan creating multiple rivals competing incessantlyfornationalattentionandnationalvotes.

Were this issue to gain any traction, of course, wewouldhearincessantlyfromthemodernHamiltonians,themselveslamentingthegravedangerto"unity"and"strength" that adilutedpresidencywouldbring. In



theeighteenthcentury, thosewhoheld thispositionbemoaned that an insufficiently "energetic"nationalgovernment would allow too many freedoms toordinary people and that "licentiousness" woulddestroythenation.

On this, Patrick Henry was doubtful, and in 1788,whiledebatingtheratificationofthenewconstitution,heconcluded,

Butwearetoldthatweneednotfear;becausethoseinpower,beingourRepresentatives,willnotabusethepowerweputintheirhands:Iamnotwellversedin history, but I will submit to your recollection,whether libertyhasbeendestroyedmostoftenbythelicentiousnessofthepeople,orbythetyrannyofrulers?Iimagine,sir,youwillfindthebalanceonthesideof tyranny…

Thisarticlefirstappearedonwww.LewRockwell.com.

Comment by R. Nelson Nash — Maybe this would be a good time to read, again, The Curse of Hamilton by Tom DiLorenzo to remind us of what that man did to sow the seeds of centralized planning — an idea that can’t possibly work.

VISIONByLeonardE.Read

Note - Frequent readers of BANKNOTES are aware of my relationship with Leonard E. Read and my admiration for his works during his lifetime. In the following issues I will be sharing his book, VISION, one chapter per month. It was written in 1978. What a privilege it was for me to know this great man! –R.NelsonNash

Chapter21

REFLECTIONSONPRAISEANDCRITICISM

In Heav'n's disposing pow'r events unite,Nor aught can happen wrong to him who acts aright.

-HENRYBROOKE

The appropriatemethod for advancing the freedom

way of life is, unquestionably, to live and explainthe rightway—emphasize the positive—rather thanto denounce the countless ways of being wrong.However,thereisanimportantsubordinateaspecttoexplanationanddenunciation.Ithastodowithpraiseandcriticism,amatterworthyofsomereflection.

Thosewhopraiseeverything,whetherthematterbegoodorbad,aswellasthosewhocriticizeeverybodyand everything, act without discrimination. TheywouldnotqualifyforBrooke'sblessing:“Noraughtcanhappenwrongtohimwhoactsaright.”

Praiseandcriticismmaybeconstructiveordestructive,not only to theperpetratorbut also to those towardwhomthewordsaredirected.Harmmaybedonetooneorbothparties,or—ontheotherhand—genuinegood.The following is an attempt to sort the chafffromthewheat,theignoblefromthenoble.

Individuals addicted to praising indiscriminatelymay realize an ignoble ambition. They may gainsome favors frompoliticans andothers theypraise.At thevery least theymaybepraised inreturn—anintoxicant that inflates their egos—flattery! Thefumesof it invade thebrainandmake themselfish,proudandvain!

And what about those who are the objects ofundeserved praise? Unless fortified with a rarediscrimination, theywill believe the folderol. Theywill overrate themselves.What a great man am I!Or,ashasbeensaid,“Ittakesagreatdealofgracetobeable tobearpraise.”Thegraciousway toacceptpraiseistowelcomeitasarefreshingbreezepassingby-gonewiththewind!Admittedlydifficult,butitistoactaright!

Does thismean thatweshouldavoidallpraise?Ofcourse not! Praise has an important role to play. Itshouldpertain,nottopersons,butrathertoeconomic,intellectual, moral and spiritual achievements.Examples:

• Praisethefreedomwayoflifeandallcontributionstoitsbetterunderstanding.

• Praiseallgoodthoughts,spokenorwritten.

• Praiseisadebtweowetovirtue.



• Paytributetoourgreatmentorsofthepastbypraisingtheirnobleworks.

“Nor aught can happen wrong to him who actsaright,”relates no less to criticism than to praise—perhapsmore so.Criticism, for themost part, is ofthe “thou fool” variety. It is vicious and inflicts itsdepravityontheperpetratorsasmuchasonthoseatwhomitisaimed.

From the Sermon on the Mount, we read, “...whosoever shall say, thou fool, shall be in dangerof hell fire,” which I take to mean destruction ofthe self as contrastedwith intellectual and spiritualunfoldmentorgrowthinconsciousness.

ItisabsurdtoregardothersasfoolswhodonotthinkasIdo,believewhatIbelieve,actinmyway.Forifsuchwere the case—all likeme—allwould perish.Whoisharmedmostbythismannerism,others—the“fools”—orI—thefooled?TheignobleI!

Ihaveintimateacquaintances—quiteafewofthem—whoreceivemoreinvitationstolectureonthefreedomphilosophythantheycanpossiblyaccommodate.Eversomany in this and other lands seek their counsel.Andtheyknowthatonlythosewhoareseekingcanlearn.Yet,manyofthesefreedommentorsdesertthecorrectmethod.Why?Theybecomesoexasperatedwithwhat's going on that they forsake their reasonandyieldtotheiremotions.Theycalltheiropponentsfools or demagogues or some other derogatoryname—criticismatitsworst.

Criticismofthe“thoufool”varietydoesfarmorethanoffendthoseatwhomitisdirected.Itcausesthemto dislike or hate not only the name-callers but thefreedomphilosophyaswell.Ithardensthemintheirsocialistic ways and toughens rather than weakenstheirstand—overcomingmadefarmoredifficult.

Nowreflectonthename-callersandwhatthiskindofcriticismdoestothem.Notonlymustwenotcallthem“fools”but,equallyasimportant,weshouldnoteventhinkofthemassuch.Thiscomesclosetobeinganunattainabledisciplinebutitisoneforwhichweshouldstrive.Whathappenstouswhenwethinkofothersinthismanner?Itresultsinanoverassessment

ofself:Wehavealltheanswers,theyhavenone.

While I believe that collectivist answers are utterlyfalseandthatoursareinthedirectionoftruth,Iamunawareofanyonewhohasmorethanscratchedthesurfacewhenitcomestounderstandingandmakingthecase inclarity for thefreedomwayof life.Thisbeing the case, a profound humility should featureourlives—anacknowledgmentthatweknownexttonothing!

It is ever somuch easier to preach than to practicewhatisright.Overtheyears,Ihavecometoseetheerrorofname-calling,butIstillfindmyselfthinkingunpleasantly of those whose politico-economicviewpointistheoppositeofmine.Itisahabitdifficulttoovercome.

Isthistosuggestthatwedevoteesoffreedomshouldcease all criticizing?Of coursenot!Criticism,usedaright,shouldneverbedirectedatpersons;criticizethe fallacies of socialismby showing thevirtues offreedom. Strict adherence to this tactic has an all-too-seldomdiscovered blessing not only to self buttothefreedomphilosophy,freedomofspeechbeinganintegralpartthereof.Impersonalbutproper!Thislessonwastaughttome45yearsago.

BackintheearlydaysoftheNewDeal—theNIRA-the Blue Eagle, so-called—was invoked, a set ofstranglingcontrolsendorsedbytheU.S.ChamberofCommerce,theNAMandmostbusinessleaders.Onthe staffof theChamberat that time, I learned thatonedistinguishedbusinessleader—unknowntomepersonally—was severely criticizing this socialisticmonstrosityweweresponsoring.“Thinking”thatwewereright,Icalledtosethimstraight.Followingmynonsense,heemployedatacticwhichherarelyused.Averyseverecriticofallsocialisticprogramsthenontherampage,heemphasizedthepositive,explainingthe freedomphilosophy in terms as clear as I haveeverheard.Thathour'sexplanationwas thebirthofmyturnabout.

Whatiscriticism'smostusefulpurpose?AccordingtoSamuelJohnson,“Criticism,asitwasfirstinstitutedby Aristotle, was meant as a standard of judgingwell.”



Nelson’s Newly Added Book Recommendations

https://infinitebanking.org/books/

Bonhoeffer: Pastor, Martyr, Prophet, SpybyEricMetaxas

The Rothbard Reader byMurrayNRothbard editedbyJosephT.SalernoandMatthewMcCaffrey

Nelson’s Favorite Quotes

“It takes the average NorthAmerican nine uniqueexposures to your ideas and name to understandwhatyouaretalkingaboutandwhatyoudoaboutit”—Melchinger(AMarketer)

Welcome the newest IBC Practitionershttps://www.infinitebanking.org/finder/

ThefollowingfinancialprofessionalsjoinedorrenewedtheirmembershiptoourAuthorized Infinite Banking Concepts Practitioners teamthismonth:

You can view the entire practitioner listing on our website using the Practitioner Finder.IBC Practitioner’shavecompletedtheIBC Practitioner’s Program and have passed the program exam to ensurethat they possess a solid foundation in the theory andimplementation of IBC, as well as an understandingofAustrian economics and its unique insights into ourmonetaryandbankinginstitutions.TheIBC Practitionerhasabroadbaseofknowledgetoensureaminimallevelofcompetencyinalloftheareasafinancialprofessionalneeds,inordertoadequatelydiscussIBCwithhisorherclients.

• JorgeHerrera-Katy,Texas• PaulHorsley-Ellsworth,Wisconsin• LarryMcLean-StAugustine,Florida• KevinDottenwhy-Wausau,Wisconsin• DougMarshall-Seattle,Washington

WerewetofollowAristotle'scounsel,wewould,firstand foremost, look critically at our own thoughts,ideas, impulses. Is our understanding of the privateownership, free market, limited government wayof life grounded in basic principles or is it merelysuperficialorimitative?

Intheadvancementofunderstanding,areourmethodsattractive or distractive? Have both praise andcriticismbeenrelegatedtotheirappropriateroles?

And, finally, has that all-too-common practice of“reachingothers”beenreplacedbytheattempttogetsoproficient thatotherswill reach for the freedom-orientedself?

Iftheanswerstothesequestionsarenotaffirmative,thenthereishomeworktobedone.Whetherothersdoitornotisnoneofmybusiness.Whatismybusiness?Myhomework!Interestingly,themoreIdothemoreIfindthereistodo!Andwhatmighthavebegunasdrudgerybecomesincreasinglyjoyous.

http://infinitebanking.org/finder/

http://infinitebanking.org/finder/

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