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wwwinfinitebankingorg davidinfinitebankingorg

Banknotes

2957 Old Rocky Ridge Road Birmingham Alabama 35243

BankNotes archives

infinitebankingorgbanknotes

Nelson Nash Founder rnnash31gmailcom

David Stearns Editor davidinfinitebankingorg

Monthly Newsletter - January 2017

IBC Is Not A GimmickbyLCarlosLara

[ThearticlewasoriginallypublishedintheApril2015EditionoftheLara-Murphy Report]

InAprilof1987anewspaperadranintheWallStreetJournalwiththefollowingalmostunbelievableboldheadlinesldquoAll Life Insurance Lets You Provide For Your ChildrenmdashOurs Lets You Buy Toys Of Your Ownrdquo 1ThisadwassoostentatiousinitsmessagethatitbecameExhibit-AinaSenateHearingbeforetheSubcommitteeonTaxationandDebtManagementon March 25th 1988 The final outcome of theseproceedingsledtoadramaticchangeintheInternalRevenueCodetreatmentoflifeinsuranceunmatchedbyanyothersincetheindustryrsquosinception2

Now itrsquos true that even our common sense tells usthisadvertisementisdefinitelytalkingaboutspecialbenefits for the livingnot thedeadSo theaddoesbeg the question ldquoIs this really life insurancerdquoFurthermore who can dispute that the ad itself isshamelessespeciallysinceCongresshadjustenactedthe1986TaxReformAct3theyearpriorseeminglyclosing all of the tax ldquoloopholesrdquo of the wealthyBut it seemed that by overlooking this remainingfavorabletaxtreatmentenjoyedbytraditionalwhole-lifeinsuranceCongresshadsomehowldquoinadvertently made a generous gift to a small privileged segment of societyrdquo4 Nevertheless some life insurancecompanies had placed ads such as this in majornewspapersandmagazinescausing thesalesof theldquosingle-premiumrdquo whole life insurance policy tosoarTheendresultwasthattheentirelifeinsuranceindustrymdashand specifically thewhole life productmdashcameunderfederalscrutiny

Onekeywitnessinthepanelofthisformalinquestmdashthewitnesswhoactuallysubmittedthisparticularadas an exhibit to her testimonymdashwas the ExecutiveVicePresidentoftheALWilliamsCorporationaninsurance agency specializing in the exclusive saleofterminsuranceandalsotheagencyfamousforthecatchphraseldquobuy term and invest the differencerdquoSheamong the rest of the23panelists representedwasparticularlyoutspokenandtooktheopportunitytotellthemembersoftheSenatethatldquo[w]hen life insurance becomes a haven for tax dodgers and a means for the wealthy to avoid paying their fair share of taxes then Congress should take actionhellipFailure to act now is tantamount to putting the Congressional stamp of approval on these abusesrdquo5

As assertive as these documented comments werethe truth is that there ismuchmore to thiscomplextaxstoryinvolvinglife insuranceandthisparticularmarketingdebaclethanfirstmeetstheeyeGrantedthenewspaper ad is certainlydisgracefullybad andtactlessbutthisaccusatoryreferencetoldquotax dodgingrdquobytheALWilliamscompany6isalsoabitextremeespecially when the accusation came from theorganization thatwenton tobecomeCitigrouponeofthelargestcommercialbanksinthenationtheverysameorganizationthatwasbailedoutwithbillionsofdollarsoftaxpayermoneyinthe2008financialcrisis

StilltwowrongsdonrsquotmakearightItrsquostheresultingdoubt and confusion the uneducated public mustcontendwiththatcreatesthelong-termdamageThisisreallyhowreputationscanberuinedandinstitutionsdisgraced As usual government intervention onlymakes matters worse More often than not wediscoverthatgovernmentinterventionistheprimaryculpritasitwasinthisparticularcaseTheendresultof this entire ordeal was that the once-invincible

BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017

2wwwinfinitebankingorg davidinfinitebankingorg

wholelifeinsuranceproductwassomalignedthatitbearsastigmathatlingerstothisday

In thisLMR article I intend to highlight several ofthemost significant in the chain of events that ledto thisSenate hearing inwhich the single premiumwholelifeinsuranceproductwasputontrialandwasultimately reclassified as a Modified EndowmentContract(MEC)7ThisdramaticrevisionandhowitcameaboutisanimportantsubjectforallpractitionersoftheInfinite Banking Concept (IBC) simplybecausetheunderlyingframeworkfortheimplementationofthisprivatized bankingprocess isstill thedividend-payingwhole life policy These historical incidentsareimportantbecausetheyhelpexplainwhydespiteits often misunderstood image those that trulyunderstand the unique benefits of dividend-payingwhole life insurance continue to defend its meritsvigorouslyWhatwemustnotforgetisthatthepracticeof IBC using dividend-paying whole life insurancecontinues to afford us financial freedom but withthis benefit comes responsibility especially in howitismarketedtothepublicProvidingguidanceandeducationalinsightinthisparticularareaisoneofthemost important reasons for theestablishmentof theNelsonNashInstitutealongwiththeAuthorizedIBCPractitionerProgramforfinancialprofessionals

Putting The Facts In Chronological Order

This story begins in the 1960s with of all thingsa common misconception about how whole lifeinsuranceisdesignedandhowitactuallyworksAtthat time the life insurance industry was relativelyuncomplicated and had only two life insuranceproducts ldquotermrdquo and ldquowhole liferdquo insurance Theonlyothernon-lifeproductwastheannuityButwhatmanymembers of the general public did not knoworunderstand fromanactuarial standpointwas thatldquotermrdquoandldquowholeliferdquoinsurancewereconceptuallysimilarproductsthatobeyedthesamerulesofdesignandpricing

Ironically the same lack of understanding prevailstoday Properly understood there really is no pricedifferentialbetweenthetermandwholelifeproductssincetheyarebothpricedaccordingtothelengthof

timeoftheircoverageAtermpolicywhosecoverageis so long that the insuredwill almost certainly dieduring its term becomes very similar to a ldquowholeliferdquoinsurancepolicyTermprotectionforalifetimeisnaturallygoing tobemoreexpensive thana10-15-or 20-year term policy Consequently in orderto provide coverage for a period spanning awholelifetimeaspeciallydesignedtermpolicywillneedtobecreatedinsuchawaythatanactuarialrelationshipbetweenthefixedpremiumscashvaluesanddeathbenefitaretobeldquojustsufficientenoughandnomoretocausethepolicytoendowrdquo8(becomefullypaidndashup)Thisisnotaspeculativestrategybutratherasetformuladesigned to reachadesignatedendWithawhole lifepolicy the insurerwillpayout thedeathbenefit claim either upon the actual death of theinsured or (sometimes) when the insured reachesthe designated age (originally 100 but now often121years)andthepolicyendowsUnfortunatelyasinterestratesroseintheUSduetoinflationandmoreoftheAmericanpublicturnedtospeculativeventuresthis basic knowledge about whole lifersquos simpleprotectionandsavingstructurebegantofadeIn1979thiscrucialunderstandingwasdealtadeathblow

OurparticularsordidstoryunfoldswithRalphNader9thewell-knownconsumeradvocateofthe1960swhoagitatedforthefederallawsgoverningseatbeltsinourautomobilesNadertookaself-promotingstancewiththeinsuranceindustrybyincorrectlydiagnosingthatwholelifeinsurancewasaninvestmentproductandassuchwasterriblewhencomparedtootherinvestmentproducts in themarketplace that paid amuchmorefavorable rate of return SincemostAmericans stillowned whole life policies as their primary meansof saving money Nader believed Americans weregettingconnedbytheinsurancecompaniesHebegancalling for aCongressional investigation and thatrsquoswhenthetroublereallystarted

The 1979 Federal Trade Commission Report

By the late 1970s when government eventuallystepped in to examine the life insurance industryand the whole life product itself the confusionsurroundingithadescalatedKeepinmindthatstateinsurance commissionersmdashwho actually regulate

wwwinfinitebankingorg davidinfinitebankingorg3

BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017thelifeinsuranceindustryandhavedonesofortwocenturiesmdashhadnoproblemunderstandingwholelifeinsurance its mechanics and its ultimate purposeBut now we had a federal inquiry made up of anassembled staff of individuals commissioned toexplain to the Federal Trade Commission how lifeinsuranceworksBystartingwiththewrongpremisetheir comparison of whole life to other investmentproductswasanunfairanalysismorelikecomparingapplestoorangesTheyonlyservedtobewildertheinvestigating committee even more Consequentlytheirconclusionswerenotatallsurprisingandwereidentical to Naderrsquos According to them wholelife insurance was a bad investment with meagerrates of return Furthermore they determined thatthe moving parts of the whole-life product wereentirelytooconcealedthusmakingitdifficultfortheinvesting public to make proper buying decisionsTheirrecommendationswerethattheentireindustryshouldbereformedtoprovidemoredisclosureoftheproductsandtheirinternalworkings

UnfortunatelythisStaffReporttotheFederalTradeCommission was published in a booklet in 197910andwithoutanywarningtotheNationalAssociationof Insurance Commissioners (NAIC) was releaseddirectlytothepressPredictablynewspapershadanabsolutenationwidefielddaycastingwholelifeinabadlightwithastonishingheadlinessuchasthese

lsquoWhole Life Insurance a Bad Investmentrsquo Yields Only 13 Return FTC Reportsndash mdash Los Angeles Times July 11 1979

lsquoFTC Staff Says Consumers Losing Money by Keeping Savings in Insurance Policiesrsquo ndash The Wall Street Journal July 11 1979

lsquoAmericans Lose Billions on Insurance FTC Saysrsquo ndash Houston Post July 11 1979

lsquoFTC Finds lsquoWhole Lifersquo Insurance a Bad Investmentrsquondash Dallas Morning News July 11 1979

lsquoFTC Study Assails Whole Life PoliciesrsquomdashPalm Beach Post July 11 1979

Although the NAIC and life insurance actuariesrepresenting many of the largest life insurance

carrierscameback into these investigationhearingsforweeksafterwardstorebutthesefalseaccusationsandsettherecordstraightitwastoolateThedamagehadbeendoneTheFTCreportdevastatedthewholelifeproductItplummetedfromabout85ofthelifeinsurancemarketin1979toabout50by1986

Buy Term and Invest the Difference

BythetimeoftheSenatehearingof1988wholelifewasontheropesandfightingforsurvivalwhiletheentirelifeinsuranceindustrywasundergreatduressinattemptingtofinanciallyrepositionitselfSeveralcarrierssuchasExecutiveLifeIntegrityandotherswereveryobviouslystrugglingItwasactuallythesecompanies in desperate acts to increase premiumrevenuethathadplacedtheadspromisingoutlandishbenefitsfromlifeinsuranceInordertokeepthemfromgoingunderandultimatelytoprotectpolicyholdersfinancially stronger life companies eventuallyacquiredthemThoughthisperiodprovedtobeoneofthemoredifficultanddarkestinthehistoryofthelifecompaniestherecordshowsthattheyadaptedtothecircumstancesandemergedfromitallfinanciallystrongerthaneverWhatreallyexoneratedwholelifeinsuranceintheeyesofthethoughtfulpublicwastheseverestockmarketcrashesthatcamelater

What our readers must understand is that theslanderous remarks made by the A L WilliamsCompanyagainstwholelifeinthisparticularhearinghadactuallystarted20yearsearlierwhentheyoungA LWilliams set out with a handful of agents todestroy it He like consumer advocate Nader hadfailedtoseethatinthebroadestsensewholelifewasinfactldquoterm insurance and investing the differencerdquoall in onefinancial productmdashbutwith the investingbeingdoneinaverysafeandconservativeportfoliocompared to equity-based mutual funds But nowallthatwasamootpointThe1979FTCReporthadalreadymadeALWilliamsabillionaireandhelpedleadtothesurrenderofmillionsofwholelifepoliciesbecause the people believed the government In hisbookandinhisownwordsALWilliamswrote

ldquoWe put the FTC report on top of every clientrsquos kitchen table We passed out flyers by the



the1986TaxReformActItstillcontinuestoprovidethe flexibility to sequester small or large amountsofmoney inside of it formaximum protection andfinancingpurposesinadditiontothepeaceofmindthatcomesfromprotectingonersquosbeneficiariesintheeventofdeath

SinceIBCistheprocessofusingaspeciallydesigneddividend-payingwhole life policy for superior cashmanagement purposes and safety members of thepublic when ready to implement the process areencouraged to visit the Nelson Nash Institute fora complete truthful explanation of its theory andseek out personal guidance from an AuthorizedIBC Practitioner listed on its website (wwwInfiniteBankingorgFinder) It iswise tomake sureoneimplementsthisprocesswiththeproperproducttheproperpolicydesignandthepropereducationonhowitworksfromtheverystart

What youwillmost likely never see again is a lifeinsurancecompanypromotingthesespecialbenefitsostentatiouslyandrecklesslyFinancialprofessionalsshould be careful not to do it eitherWe must notforgetthatgovernmentislikearoaringlionseekingto destroy everything in its path through excessiveregulationwhengiventheopportunityLetrsquosnotgivethemanirresponsiblereasontocomelookingourwayagainwithsensationalandmisleadingadvertisingNomatterhowldquotoogoodtobetruerdquoIBCmayseemitisnotafinancialgimmickandshouldnotbeportrayedassuch

ThereisonelastimportantanecdoteIshouldmentionin closing It was repeated frequently in the 200-page transcript of this Congressional hearing so itmeritsshowcasinghereandisexemplifiedinSenatorBacchusrsquostatement

ldquoIf you are going to change the definition of life insurance I think there is a strong basis for feeling that any changes should be prospective that prior investments ought to be protected because that change is very dramaticrdquo12

Thisstatementspecificallyreferstoldquograndfatheringrdquoinandprotectingallthosethatarealreadyontheinsideandarerightfulownersofawholelifepolicybefore

thousands The report supported everything we claimed Its credibility just couldnrsquot be denied Every man and woman in AL Williams felt a new conviction that our crusade was 100 percent right for consumers Consumers now knew the real story behind ldquotrash valuerdquo life insurance With a choice they came to AL Williams every timerdquo

mdashAL Williams Coach 2006

Conclusion

AftertheTaxReformActof1986salesofthesinglepremiumwholelifeproducthadskyrocketedamongwealthy individuals for good reasons With manyldquotaxloopholesrdquonowremovedpeoplebeganreapingthefinancialprotectionsthathadbeenthereallalongwith traditionalwhole life insuranceAt the timeofthe1988SenatehearingWilliamsrsquoorganizationwasnolongerasmallgroupofsalesmenbutinsteadwasa nationwide network of independent businessmenand women marketing financial services in all 50statesandalloftheprovincesofCanadawith180000licensed representatives The presence of the ALWilliamsrepresentativeatthishearingwasprincipallytomakesurewholelifewouldnotberesurrectedintotheprominenceithadpreviouslyheld

This 1988 committeersquos efforts were successful inreclassifyingthesingle premium whole life11productfrom pure insurance to a ldquotax preferred investment accountrdquoHowever the dividend-payingwhole lifeproduct for all practical purposes remained intactcompletewith all of itsmulti-dimensional benefitsAlthoughaone-timesinglepremiumpaymentintoadividend-payingwhole life policy no longer avoidsincome taxation on the excess cash accumulationdue to thesehearings it is stillpossible toproperlystructureandfundevenalargewholelifepolicythatisnotadverselyaffectedbytherevisedIRSrules

When properly designed and funded the dividend-payingwholelifepolicycontinuestohavethesamefavorabletaxtreatmentaccessibilityofitscashvaluessafety privacy diversification away from volatilemarkets guaranteed growth stability control andnumerousothersfinancialadvantagesthathadmadeitsoappealingbothhistoricallyandinparticularafter


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017anynew lawchangesareenactedThisprincipleofapplyinglarge-scalechangesinregulatorytreatmentonly going forward is often (though not always)respectedwhenwesurveythehistoryofgovernmentinterventionSoIwouldonlyaddthatyoubejudiciousenoughin itsuse tocauseyoutoactsoonThereisa bad financial storm coming Donrsquot be left on theoutsideGetinnowwhilethereisstilltime

References1TaxTreatmentOfSinglePremiumLife InsuranceHearingSubcommitteeOnTaxationandDebtManagementCommitteeOn Finance United States Senate One Hundredth CongressSecond Session March 25 1988 US Government PrintingOfficeWashington DC 20402 Page 98 (Search Google forPDFhrg100-67TaxPapersinglepremiumlifepdf(page1of199)

2TransactionsofSocietyofActuaries1988Vol40PT1TheDefinitionofLifeInsuranceUnderSection7702oftheInternalRevenueCodebyChristianJDesrochers(SearchGoogleforPDFtsa88v40pt19-1pdf(pages1of56)

3 1986 Tax Reform Act Wikipedia the free encyclopediahttpenwikipediaorgwikiTax_Reform_Act_of_1986

4TaxTreatmentOfSinglePremiumLife InsuranceHearingSubcommitteeOnTaxationandDebtManagementCommitteeOn Finance United States Senate One Hundredth CongressSecond Session March 25 1988 US Government PrintingOfficeWashingtonDC20402Page18-20

5TaxTreatmentHearingPages18-20

6TheALWilliamsCompanyWikipediathefreeEncyclopedia(AlsoseehistoryofPrimericaFinancialServicesandCitiGroup)httpenwikipediaorgwikiArthur_L_Williams_Jr

7 Insurance Avoiding The Modified Endowment ContractTrapMark P Cussen Investopedia articleMay 2015 httpwwwinvestopediacomarticlesinsurance10avoid-modified-endowment-contract-trapsasp

8Life Insurance 14thEditionKennethBlack JrHaroldDSkipperKennethBlackIIICopyright2013byLucretianLLCwwwlucretiancomChapter21Page539

9RalphNaderWikipedia the free EncyclopediaMay 2013httpenwikipediaorgwikiRalph_Nader

10LifeInsuranceCostDisclosuresStaffReporttotheFederalTrade Commission httpswwwftcgovsitesdefaultfilesdocumentsreportslife-insurance-cost-disclosure197907lifeinsurancecostpdf

11ALookAtSinglePremiumLife InsuranceByGeorgeDLambert May 3 2015 Investopedia httpwwwinvestopedia

comarticlespf05singlepremlifeasp

12TaxTreatmentOfSinglePremiumLifeInsuranceHearingSubcommitteeOnTaxationandDebtManagementCommitteeOn Finance United States Senate One Hundredth CongressSecond Session March 25 1988 US Government PrintingOfficeWashingtonDC20402Page7

The Petroleum Industry Saved the Whales12042016BillWirtz

AtthebeginningoftheIndustrialAgewhaleswerean important natural resource which humans hadbeenexploitingforcenturiesIndeedtheoilthatwasextractedfromwhalesnotablythatfromthePhyseter macrocephalus the sperm whale whose oil wasextractedthroughthenosehadmultipleusesrangingfromheatingtopetroleumlampstopaint

Whaling ships were of considerable size as theywithstood the rough sea for the precious good thatuntilthenonlywhalescouldprovideThesehuntersused so-called cutting andhead spades used to cutthrough the whalesrsquo skull or decapitate the animalTheweightassuredthatitwaseasytochopthroughtheheavyvertebraeinawhalersquosneck

Astheglobaldemandforwhale-oillampsincreasedthewhalingbusinesswasboomingandsoonsupplycouldnrsquot keep up with demand Consumers werereluctanttopaytheexorbitantpriceof$250agallonfor whale oil1And yet alternative lighting fluidssuchascampheneturnedouttobeoflesserqualityand even potentially dangerous Camphene washighlyflammable a deadly risk in residential areascharacterizedbywoodenconstruction

By1850theconsumerhadthechoicebetween

bull campheneorldquoburningfluidrdquomdash50centsgallon(combinationsofalcoholturpentineandcamphoroilmdashbrightsweetsmelling)

bull whaleoilmdash$130to$250gallon

bull lardoilmdash90cents(lowqualitysmelly)

bull coaloilmdash50cents(sootysmellyandlowqualitytheoriginalldquokerosenerdquo)



By1851whalinghadhadsuchadetrimentaleffectonwhalesthatfishershadtomovefromtheoverfishedAtlanticandIndianOceanswhichmadetheproductevenmorerareandunaffordableToday thisstrikesus an an unlikely problem given that we live in asocietymarkedbytheluxuryofchoosingnumerousproductionmethodsforelectricityandweenjoymassproduction of light bulbs in every shape and formButenergyproductionwasarealcrisis in themid-1800sandpeoplewereliterallyrunningoutoflight

Abraham Gesner Saved Us and the Whales

Abraham Pineo Gesner was a Canadian physicianandgeologistIn1846hismineralresearchresultedin a liquid combined out of coal bitumen and oilshale which he called kerosene In comparisonto the competing products kerosene was neithersmellynordirtyandmostofallonceitsproductionwas commercialized through Gesner in 1850 (theKeroseneGaslightCompany)themassproductionofit(especiallyafterGesnerrsquoscompanywasboughtbyStandardOil)broughtpricesoflightingdown2

NotonlyhadGesnerinventedanewwaytoliterallyilluminate the world he had deprived the whalingindustry of its most important revenue source Themassfishingofspermwhaleshadbecomeobsolete

Gesnerrsquos entrepreneurial activities and theestablishment of his pioneer keroseneworks inNewYorkwasfundamentalforthedevelopmentof the young coal-oil industry The latter grewrapidly in the following years The rise of thenewcoaloilsinevitablytriggeredthefallofthewhaling industry whose golden years finallyhadcometoanabruptend3

Sonexttimeyouwishtothinkofanorganizationorindustry that has prevented animal cruelty and thehorrible death of millions of animals donrsquot thinkaboutGreenpeaceThinkofthepetroleumindustry

BillWirtzisalawstudentatUniversiteacutedeLorraineinNancyFranceandlocalcoordinatorforEuropeanStudentsforLiberty1DanielYerginThe Prize The Epic Quest for Oil Money amp Power(1962NewYorkSimonandSchuster1991)chapterIOilontheBrainTheBeginningsecPriceandInnovationp

22(Online)

2 Gerald Kutney Sulfur History Technology Applications amp Industry (ChemTec Publishing 2007) chapter 4 His OilVenturessec22p84(Online)

3AlexanderSmithSettingHistoryRightTheEarlyEuropeanPetroleumIndustriesandtheRiseofAmericanOilinFrom the Industrial Revolution to World War II in East Central EuropeedsMarjiaWakounigandKarloRuzicic-Kessler(ViennaLITVerlagGmbH2011)p68(Online)

Taxation Isnt Only Theft Its DestructionbyMikeRozeff

Where the state is there is the power to tax forrulers cannot rulewithout taxationAsLudwigvonMiseswrote The funds that a government spendsforwhateverpurposesareleviedbytaxationOrasMurrayRothbardputitAllstateactionsrestonthefundamentalbinaryinterventionoftaxesrdquo

Where the state is there also is the growth of thestateWhydoesastatersquosscopeenlargeOnetheoryis that interest groups seek to use the statersquos taxingpowerfortheirownbenefitIwouldliketosuggesta complementary theoryWhen the power to tax isconferred upon rulers many harmful incentivesnecessarilyareconveyedwithitTheseencouragetherulerstoexpandtheirdestructiveacts

Incentives

Purposeful action involves choice amongalternativesChoicesembedincentives(rewards)anddisincentives(costs)bothofwhichcanbemonetaryornon-monetaryConsiderforexampletheCrownrsquosprovisionofjusticeinmedievalEnglandConvictedfelonsweretypicallyhangedandtheirgoodsforfeitedtotheCrownalthoughtheKingmightpardonafelonwhoagreedtoserveintheRoyalarmyThisincentivestructure motivated the Crown to convict felonsbecauseforeachconviction thepaymentwaseitherthe felonrsquospropertyoruseof the felon as a soldier(the incentives) The Crown faced disincentivestoonotonlyout-of-pocketcostsbutalsodisloyaltydisaffection loss of reputation and resentment if itwronglyconvictedinnocentpeopleoffelonies


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017Under this incentive structure the Crown likelydisplays a marked enthusiasm for arresting andconvicting felons (and perhaps non-felons) TheincentivestructurealsoinducestheCrowntochangethe laws so as todefinemore crimes as felonies Ifthisdynamicsoundssimilartothecaseofpoliceandmunicipalities in the United States benefiting fromtheseizureandforfeitureofgoodsandtheresultingexpansionofcrimessubjecttoseizureandforfeiturethatisbecauseitis

Harmful Incentives of the Power to Tax

Rulers being human havewants that theywish tofulfillitemslikedoinggood(astheyseeit)powerglory money pride ego-satisfaction respectadulation security of office aiding the poor or therich ending capitalism spreading democracy etcHoweverwhatrulerswantisnotwhatsubjectswantIndividualshavewidelyvaryingideasaboutwhatisdesirableasevidencedbythemanywaystheyliveObviously rulers are unable to choose actions thatsatisfyeverysubjectrsquosindividualpreferencesevenifthey know them but also no ruler knowswhat thesubjectswant now or tenminutes from now Sincerulersabsorbtaxpayerresourcesandspendthemonprojectsthatcannotsatisfytheirsubjectsrsquopreferencesit follows that rulersdestroy thehappinessof thosetheytax

WhenconstrainedtoemploytheirpersonalresourcesrulershaveadisincentivetospendThepowertotaxremoves thatdisincentive that is provides themanincentivetofulfilltheiraimsConsequentlytheyareencouraged to such things aswars to end allwarswarstofurtherdemocracygreatleapsforwardwarsonpovertyanddrugsandterrorgenocidesdisruptiveprograms territorial expansions subsidies andguarantees lavish parties entertainments airplanesand limousines volumes of regulations that kill offmarketsetc

WhilesomesubjectsgainfromthesedepredationsandlobbyforthemtherebybecomingrulersmostdonotTheycanonlyvotegripeorwritelettershighlyimperfectmeansofaffectingrulingactionsVotesareonrepresentativesnotprojectsandtheyoccuronly

atinfrequentintervalsduringwhichtherulerscreatenumerous faitsaccomplisNovotercanunilaterallywithdrawsupport fromthewarondrugsor thewaronterrororthesocialsecurityprogramoranyotherstateprogram

GettingtheirwayisbutthefirstofthebadincentivesthataccompanytherulersrsquopowertotaxThesecondis to increase the taxes leviedwhich isundesirablebecause it supports more misguided actions by therulersTaxincreasesarepredictablebecausetherulersgain from them as long as the cost in lost votes isnotexcessiveTheincentivestructureinherentinthepowertotaxisincrediblymalignbecausetherulerscontrol theamountof the incentiveTheycan raisetaxesatwillsubjectonlytothelossofsomevoteswhichtheyhavemanystratagemstoforestall

Thirdtaxationprovidesapowerfulincentivetoraisefunds by borrowing Without taxes to pay interestand principal a state cannot issue large amountsof debtWith that power the state can borrow andexpandtherebymortgagingfuturetaxpayersFuturegenerationsmust pay the debt out of their savingswhichharmsthemFurthermorehavingissueddebtthestatehasan incentive topay itoffwithcheaperdollarsThe power to tax leads the state to replaceprivate money by the statersquos currency and thenceto themany ills attendantupon the inflationof thatcurrency

Fourth thepowertotaxprovidestherulerswithanincentivetoinstituteprogramsthatdistributewealthandcreatedependencyDistributionistschemesgrewenormouslyintheUSonlyafterthestategainedthepowertotaxincomesTheseharmfulprogramsbenefitrulersThey create state support among dependentswhofearlosingtheirhandoutsfromthestateandthatsupportgreatlycomplicatesanyeffort to reduce thestatersquospower

Fifth the power to tax is the power to sell orexchange tax relief for favors or donations aswell as thepower to extortmoney so as topreventtaxes from being imposed Corruption of politicalofficials isencouragedAdditionally theseactivitiescreate differential taxation and costly economic



inefficiencies

Sixth rulers have an incentive to camouflage theirlevies so that the subjects do not even know howmuchtaxtheyarepayingTheydiffusethetaxpainwidelysothatitismorebearableThisiswhyrulersinstitute withholding taxes social security taxesgasolinetaxespayrolltaxessalestaxesvalueaddedtaxes etcAdditionally theymake the tax code soimpossibly complex that even tax collectors do notunderstandit

After a while public attention settles on thecomplexity of the tax code rather than the taxesThosewhodebatetaxcodesimplificationoftenassertthattheirproposalswilllowertaxesTheymayandpigsmaysomedaycolonizeMarsfortherulershaveno incentive to adopt tax simplification unless theyexpect a gainmdashin revenue in power or some otherbenefit

Seventh in order to persuade taxpayers that theyspendtaxescarefullyongoodcausesrulershaveanincentive to lieabout thebenefitsandcostsof theirprojectsandtoreportthemindistortedandconfusingwaysIfawaroccursnoonewillbeabletoascertainitscostwithoutdoingamasterrsquosthesisonthesubjectNASAwillassertthatthebenefitsofthespaceshuttleprogramcanbefoundjustabouteverywhereorthatitcontinuestogivetheAmericanpeopletremendousvaluefortheirtaxdollarwhileavoidinganymentionoftheprogramrsquosestimated$173billioncostTruthisacasualtyofthepowertotax

Eighth thepower to taxencourages rulers toadoptmeasuresthatworkbadlyPutanotherwaytheyhavea diminished incentive to do well with tax moniesraised because they do not personally bear the fullcostoferrorTheycanalwaysraisemoremoneybytaxesHence all programs funded by taxeswill beless efficiently run than comparable private sectorprovisionofthesameservices

FinallytherulershaveaninthincentivetomaintainindefinitelythepowertotaxAtleastthreedestructiveactivities result One is continually to manufacturepropagandatojustifytaxesRulersareforeverraisingahueandcryaboutimminentdangersandproblems

They publicize desperate needs that are essentialto survival poverty programs to forestall disunityriot or crime drug prohibition to prevent threats tothenationrsquoshealthsubsidiestopreventfailureofthefoodsupplyorlossofthefamilyfarmerswhoarethenationrsquos backbone and central banking to preventcatastrophic banking failures Basically rulersappeal to their subjectsrsquo fears insecurities anddeepnationalisticpatriotic religiousandotherdesires inordertojustifytheiractions

Second rulers recruit a corps of propagandists ingovernment and out who tout the party line andin return receive money favors access or otheremoluments that they value including power andfeelingsofimportanceTheperverseconsequenceisacorruptionofsocietyrsquosinformationprocesses

AthirdmeansofkeepingthepowertotaxistodiminisheffectivecriticismoftherulersWererebelliousanti-tax voices to gain influence the rulers would beworseoffHencetheytrytohaltandsuppresssuchcriticismSadlyfreespeechandthepowertotaxareincompatible and the rulerswill curtail free speechwhereverpossibleandunderwhatevercleverguisestheycanmanufacture

Summary and Conclusion

Purposefulchoiceintherealmofvoluntarybehavioramong ordinary people tends to improve lifePurposeful choice among rulers tends to destroylife because rulers act on theirwants not those oftaxpayers

JohnMarshallin1819wrotethatThepowertotaxinvolves the power to destroy Even if we ignorethe moral argument that taxes are theft and ignoretheconsequentialistargumentsthattaxeshamperthepursuitofhappinessand lowereconomicefficiencythepowertotaxhasnumerousharmfulincentivesthatindeedencouragedestructioninmanyways

ThebottomlineisthisPlacenohopeofbettermentin changing the party orman in office for so longasrulerspossessthepowertotaxtheywillusethatmechanismof state to the detriment of its subjectsThepower to taxprovides the serpentof statewith


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017itsvictimsusTaxesfeedthemonsterwhosegrowthspreads venom everywhere Taxes with or withoutrepresentation are evil ever fostering harm anddestructionIfwearewisewewilldefangthebeastbyendingitspowertotax

Originally published in The FreeMarket 26 no 8(August2005)

Comment by R Nelson Nash mdash I really enjoy the writings of Mike Rozeff I encourage you to go to wwwLewrockwellcom At the top of the page you will find the ldquoauthorsrdquotab An alphabetic list will drop down Find his name and enjoy his writings

Bureaucracy Buries the Human Spirit with PaperworkJerryKirkpatrick

Bureaucrats have a fixation on numbers and rulesViktor Frankl a Holocaust survivor describes thisterminationpoint

The emaciated bodies of the sick were thrownontwo-wheeledcartswhich were drawnby prisoners for many miles often throughsnowstormstothenextcampIfoneofthesickmenhaddiedbeforethecartlefthewasthrownon anywaymdashthe list had to be correctThe listwastheonlythingthatmatteredAmancountedonlybecausehehadaprisonnumberOneliterally became a number dead or alivemdashthatwas unimportant the life of a ldquonumberrdquo wascompletelyirrelevant

The following words represent the generallyacknowledged mindset of a bureaucrat ldquoRules arerulesfellaIdonrsquotmakelsquoemIjustenforcelsquoemrdquo

Rules Lists and Paperwork

AsLudwigvonMiseshastaughtusbureaucracyisnot a large hierarchically structured organizationwhetherofbiggovernmentorbigbusinessItisthegovernmentrsquosmethodofmanagingitsaffairswhichmeans it is the ldquopeacefulrdquo method of managingcoercionLawsofthelandabudgetforeachbureau

andregulatoryrulesdictatetocitizenswhattheycanandcannotdoDisobediencebringspunishmentThemethod is top-down the higher authority must beobeyed

Business management is bottom-up deriving itslegitimacyfromcustomersatisfactiontheonlymeansinafreemarketofearningprofitsPoliciesnotrulesare guidelines informing everyone in the companyfrompresidenttostockclerkhowtofunctioninordertoachieveoptimalcustomersatisfactionandthereforeoptimalprofits

If a large hierarchically structured businesstoday seems bureaucratic in the sense of beinginefficientandinsensitivetocustomers lookforthegovernmentrsquos demands for compliance to laws andrulesCompliancemeansobediencetoahigherpowerwhichconsequentlydeflectsattentionfromcustomerneedsandwantsThisiswhatmakesbusinessesinamixedeconomytakeontheldquorulesarerulesrdquomentality

So why the bureaucratic indifference to peoplePaperwork is the only yardstick bureaucracy has tomeasureitsldquosuccessrdquoLawsandrulesarecommandsthatcompelcitizenstoobeyandcitizensusuallydoobey to avoid punishment Paperwork records thecompliancemdashbutitmustbecorrect

The objective yardstick of a business is its bottomlineprofitswhichmeans it issuccessfullymeetingitscustomerrsquosneedsandwants

The Bureaucratic Society

A bureaucratic society is a rule-bound societyFreedom and creativity are not valued (Creativityafterallmeansbreakingrules)Themorebureaucraticthesocietythemorerule-bounditwillbecomeThesocialiststatethereforeisasocietydominatedalmostentirelybylawsandrulesThemorelawsandrulesthemoretotaltheregulationofhumanaffairsthelessvalueitplacesonitscitizensrsquolives

Total bureaucracymdashthe totalitarian socialist statemdashisdictatorshipbyexcessivelawThisdescribesNaziGermanyduringWorldWarIIaswellastheUSSRandmanysimilarregimesinthetwentiethcentury

Thelisthastobecorrectbecauseallpaperworkhasto



becorrectWilliamShirermadethisclearinThe Rise and Fall of the Third ReichwhenhedescribedgangsofGermansecretariesdutifullytypingorderstosendJewishpeopletotheirdeaths

Even a few members of Kerenskyrsquos provisionalRussian government who were discovered byilliterate Bolshevik revolutionaries during the 1917October Revolution were compelled to write theirownarrestpapersThepaperworkhadtobecorrect

Inabureaucraticsocietythoughtisneitherrequirednor appreciated only complianceThus paperworkhastobecorrectforthelower-rankedofficialtoavoidpunishment and for the higher to justify his or heractionsbyreferencetoalaworrule

Concernforthepersonbehindabureaucraticnumberisminimalornon-existentJustaskstudentsatstate-rununiversitieswhat it is like tobe anumberonaroster(Andtherostersdohavetobecorrect)

Simple and Few

Messageforadvocatesofa freesocietyThefewerlawsandrulesthebetterIndeedastrongargumenthas been made that we could easily do withoutlegislature-made statutory law by replacing it withcommonlaw

Central planning requires centralized law-makingthat is deliberative assemblies (legislatures) andregulatory agencies to write and pass thousands ofpagesof lawsand rules allofwhichare subject toossification officious manipulation and arbitraryapplicationThisgivesusthenefariousrulebymenunderapretextofrulebylaw

CommonlawisdecentralizedandrequiresconceptualthinkingbyeachcitizenandjudgetoresolvespecificdisputeswithreferencetoprinciplesJusticeevolvesandimprovesonacase-by-casebasisaswealthandwell-beingdointhedecentralizedfreemarket

Conceptual thinking requires the discovery andunderstanding of universal principles that can beapplied to many concrete instances Common lawthereforeisgeneralandguidedbyrightssuchastherequirement toprove intent incriminalcasesbut itis constrainedbyprecedent andusually confined to

specificpartiesChangeincommonlawoccursslowlyanddeliberately

Legislature-made laws and rules in contrast asidefromtheirflagrantviolationsofindividualrightsareat the same time concrete and sweeping such as abanonsmokinginallpublicplacesandwithintwentyfeetofabuildingAndbecauselegislature-madelawismadenotdiscoveredchangeoccursquicklyandfrequently thus leading to a continual increase oflawsandrulesmdashandpaperwork

Thinking in principles and independent judgmentare prerequisites for building and sustaining a freesocietyWhenourmindsaredriventofocusonlistsand paperwork that must be accurate conceptualthinkingbecomesdifficultthoughnotimpossibleFormanyhoweverinbureaucraticsituationsmoralitymdashhonesty integrity courage dignity and humandecencymdashgooutthewindow

Thelisthastobecorrect

For more on the relationship between bureaucracysocialism and dictatorship see Misesrsquo 1944 bookBureaucracyHereishisone-paragraphsummaryandconclusion(p125)

The champions of socialism call themselvesprogressivesbuttheyrecommendasystemwhichis characterized by rigid observance of routineandbyaresistancetoeverykindofimprovementTheycallthemselvesliberalsbuttheyareintentuponabolishinglibertyTheycallthemselvesdemocratsbuttheyyearnfordictatorshipTheycallthemselvesrevolutionariesbuttheywanttomakethegovernmentomnipotentTheypromisetheblessingsoftheGardenofEdenbuttheyplantotransformthe world into a gigantic postofficeEverymanbutoneasubordinateclerkinabureauwhatanalluringutopiaWhatanoblecausetofightfor

Bureaucracyisnotabenigninstitution

JerryKirkpatrickisProfessorEmeritusofInternationalBusinessandMarketingCaliforniaStatePolytechnicUniversityPomona

ThisarticlewasoriginallypublishedonFEEorg


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017Comment by R Nelson Nash mdash This article is so important that I recommend you read it least once per month in 2017

5 Ways To Think Like a StatebyJeffreyTucker

DoyounoticeapatternwhendealingwithanyaspectofthegovernmentatnearlyanylevelWeallhaveExperience shows that if something is going to goreallywrongpredictablywasteyourtimeannoyyouandattackyourdignityandfinally justprove tobetotallyineffectiveataccomplishingthetasktherersquosagoodchancethatitinvolvesthegovernmentThisisoneofthemostpersistentandyetleastacknowledgedfeaturesofmodernlife

ThereisacertaincastofmindatworkhereIrsquovewrittenthatgovernmentasweknowithasatoxicpersonalityBelowismyattempttoframeitupandidentifythemainpersonality traitsof theldquoadministrativestaterdquothat is the modern public sector that in principleknowsnolimitstotherangeofitspower

SocietyoutsidethestatehascorrectiveforcesalwaysatworkLifersquosnotperfectbutitisgenerallytryingitsbesttoimproveThemarketandthevoluntaryorderhave within them structures that keep human viceandrelentlessfailurefromcompletelytakingoverthesystem

ThatrsquosnottruewiththegovernmentThegovernmentbuilds protective walls around itself that prohibitinputs thatwould otherwise keep faulty thinking atbayThingsseemstuckinapatternoffailureateverylevel At best government does necessary thingspoorlyOftenitdoesunintelligentthingsAtworstitdoesunspeakablyhorriblethings

Some quick examples from everyonersquos favoriteexample of government annoyance the TSA LotsofpeoplearedeeplyoffendedbytheTSArsquosgropinggruffness More striking however is its sheerincompetenceatitsassignedtaskitslackofconcernforanythingbuttheexistingplanandthedisconnectbetweenthegoalofsecurityandtheactualreality

But theTSAishardlyunique in this respect It just

sohappensthatmorepeopleencounteritmoreoftenthan most any other government agency Yes itmakeseveryonecrazyButwewouldexperiencethesameabsurditiesifeverydaywehadtodealwiththeDepartmentofLaborthePentagontheDepartmentofTransportationorHousingandUrbanDevelopmentThosewhodocantellyouamazingstories

Herersquos the deal The statersquos distinguishingcharacteristicisitspresumptionofcontrolanditsuseof force to exercise that controlBut this is not thewholeoftheproblemwithstatismThischaracteristicgives rise to many other features that are part ofwhatwemightcallastatistwayofthinkingItreallyamountstoapatternofbeingthatcomeswithpowerwhichis tosay thatcomeswith theabsenceofanycheckorcorrectiveconsequences

Sowhatarethefeaturesofthisfaultywayofthinkingthat seems pervasive in government institutionsRelyingonmyusualinfluences(NockHazlittReadMisesRothbardHayek)letusexplorehowyoutoocanthinklikeastate

1 Presume that all things worth knowing are already known That includes the goal and themeans to achieve the goal The state thinks thatsociety should work a certain way and assume apredeterminedshapeanditknowsthiswithabsolutecertaintyThereisnoprocessnounfoldingofhistorythatyieldsunexpectedresultsThestateissocertainoftheendpointofthesocialorderthatitneverhastoexplainorjustifyitsperception

It knows the right allocation of income betweenclasses the right size and number of businesses ineachsectortherightallocationbetweensecurityandriskwhatisjustandwhatisunjustwhatisandisnotfairItknowswhentheeconomyisgrowingtoomuchor too little It knowswhat industries shoulddieorlastforeverItknowswhatisandisnotgoodforyou

Because there is no uncertainty in the statistmindthere is no need for discovery improvisation orimagination that reveals itself through time throughtrialanderrorThereisnoneedforlisteninglearningadaptingWhatrsquosmoreastatedoesnrsquotdoubtthatithasthemeanstoachieveitsgoalsTowillitistocause



ithappenItsomnisciencecomeswithomnipotence

ThisiswhythereisnoarroganceintheworldlikethestatersquosarroganceAtthesametimeanypersonoranyinstitution can adopt this regrettable habit ofmindmanagers parents pastors business professionalsOutsidethestateandtheprotectionsitbuildsarounditselfhoweverrealityeventuallystrikesbackRealityis about uncertainty change surprise innovationadaptationMarkets give life to these forces in thesameway that thestateabsolutelyandbynecessitypretendstheydonotexist

2 Presume that the path to victory is paved by enforcementThis isa featureof the statistwayofthinking that is most on display in wartime Is thewarcausingmorepeopletojointherebelranksTheanswerismoreshockandaweIfthatdoesnrsquotworkbringoutthetanksthebiggergunslargerbullhornsandmoretroopsontheground

It goes without saying that there is nothing wrongwith the statersquos plan so the only problem here isthatpeoplearebeinginsufficientlydeferentialtotherightful authority There is only one way forwardshowpeoplewhoisboss

This is not only in wartime Every agency ofgovernment thinks thiswayYousee it in thepenallaws If something is bad like drugs or underagedrinking the answer seems obvious increase thepenaltiesforthosecaughtNopunishmentistooharshTheharsherthepunishmentthemorethedeterrenceor sobelieves the state In the sameway there canneverbetoomanypolicetoomanypeoplechargedwithmakingotherpeoplecomply

ButmightthispathcreateunintendedconsequencesMight the enforcement be causing the problem togetworseandcreateblowbackbacklashandblackmarketsOrmightharshnessrecruitmorepeopleintothe rebel class and discourage law keeping In thestatersquoswayofthinkingthisisnotpossibleThelawsandtheregulationsarethevoicesofgodperiodandgodisneverwrongCertainly thisgodneverunderanycircumstancesadmitserror

3 Presume that all disagreement amounts to

betrayal and treason This point follows directlyfrom the above two If youknowall things and allthingsarepossiblethroughenforcementitstandstoreasonthatshouldsomeonedaretopopuphisorherheadand take issue thisperson is anenemyof thestateorwhateverthestatestandsfor

YouareagainstthewarThenyouarefortheenemyand defying the rightful authorityYou have doubtsabout the endless looting of privatewealth and theregimentationofhumaninteractionYouarepartoftheprobleminsteadofthesolution

In the statersquos way of thinking there are only twopossiblearchetypesofthegoodcitizentheserfandthesycophantIfyoufalloutsidethosetwocategoriesyouarearebeltobewatchedoratraitortobecrushed

Tothestate thereisonlyonepathAll thingsworkinthisworldbecauseonewillrulesallInfactthatrsquosexactlywhateveryonewhothinkslikeastatebelievesUnlessthereisadictatorlifewillsurelycollapseintochaosbrutalityheresyorsomeotherdisaster

The state canrsquot even conceive of the truth aboutsocietythattheoldliberaltraditionrevealsitworkspreciselybecauseitisnotruledbyonewillItisthedecentralized knowledge of individual actors thatcreates order in the world It is the multiplicity ofplansallcoordinatedthroughinstitutions thatcreatetheextendedorderthatgivesrisetocivilizationandcausesittodevelopinunexpectedways

4 Presume that the material world matters more than ideasAgainthisfollowsfromtheabovethreepointsThedistinguishingcharacteristicof the stateisitscontroloverphysicalpropertyItrulesthespacewhereitstanksrollandwithinjurisdictionallinesonthemapIttakeswealthatthepointofagun

Itsloveofthephysicalissointensethatitalwaysandeverywherebuildshuge and imposingbuildings foritsbureaucratsandgiantmonumentstoitselfItwrapsitself in theoriesof theworld that revolveprimarilyaroundphysicalthings

Itdabblesinpropagandaandeducationbutnotinwaysthat are reliably successfulThe state cannotfinallycontrolhumanmindsThoseareandwillalwaysbe


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017oursaloneEvenintheprisoncamptheprisonersarefree to thinkwhat theywantWe all canAnytimeThisiswhythestateisdeeplysuspectofthehumanmindandwhatitproducesThehumanmindandthewholeworldofideasisultimatelybeyonditsreach

More incredibly still is that thewhole of theman-madephysicalworldasweknowitbeganwithideasIn the same way the ideas we hold now are theforeshadowingoftheworldoftomorrowAndthatrsquospreciselywhythestatistwayofthinkingisfearfuloffreethoughtandwhythestate itself isnotforward-thinking

5 Oppose every unapproved change in the plan This follows from the above four TheendpointofthesocialorderisalreadyknownItcanbeachievedby enforcement and suppression of dissent andthe crushing of new ideasThewhole cast ofmindpresumes no surprises Therefore it is best justtomake sure that no change takes place that is notalreadybuiltintothemodel

Thinkinglikeastatethenmeansforeverwallowingin the legacy content of what has been mandatedbefore If somethingwas ever a law itmust stay alaw If something was ever enforced it must beenforcedforeverLookbackwards towhathasbeen(oramythicalversionofit)andnotforwardstowhatmightbeThestatelovesitsownhistoryitsleadersitswarsitslegends

Thisbackwardsbias isdeeplyentrenchedThebulkof the laws and regulations that are daily enforcedon people in society have nothing to do with thecurrentpoliticalmanagers(contrarytowhatelectionspromise)TheydatebackdecadesandevenasmuchasacenturyormoreLawsdonotleavebooksTheyare only added and accumulated like rings on thetrunkofatreeShoringupwhatexistsaddingbandaidsasnecessaryismuchmoreimportanttothestatethanreversingmistakesofthepast

SoentrenchedisthisideathatnewlawsiftheyareevertoexpiremusthaveasunsetprovisionexplicitlybuiltintothemandthisisusuallyaddedonlytobuyvotesButmoreoftenthannotthesunsetdatearrivesandthelawisrenewedagainItisamomentousevent

whenabadpolicydiesthinkoftheepicsignificanceof the end of prohibition or the end of the 55mphspeedlimitTheseareexceptionsthatprovetherule

Thisfinalfeatureofthinkinglikeastateisthemostdestructive to civilization Change is the source ofsocietyrsquoslifeanddevelopmentTherearenewpeoplenewideasnewtastesandpreferencesnewpatternsoflivingnewtechnologies

Mankindhasapenchanttowanttoimproveandthatrequires throwing out the oldThe state uses all itspower to shore up the past andwage a daily battleagainsttheforwardmotionofhistory

IfyouunderstandthesefeaturesyoucanrsquotbesurprisedbyallthedailyfrustrationsandannoyancesimposedbyregulationsbureaucratsandpoliticiansThestatehasapersonalitydisorderonebornofitsmonopolystatus and its coercive tactics This disorder is notunique to the stateYouprobably recognize at leastsomeof thesetraits inpeopleyouknowYoumightevenrecognizetheminyourself

Itrsquos fine to rail against the bureaucrats but there isalsoacaseforempathizingwithTSAworkerscivilservantspoliceandthemillionswhoarepartofthesamekindof institutional structuresThedifferencebetweenusandthestateisthatwhenthesepersonalitydisorders appearwe are capableof changing themandwehaveeveryincentivetodosoThestateasawhole just keeps keeping on long after it becomescompletelyirrelevanttoanythingthattrulymatters

Thestateisneitherangelicdispenserofgracenoranalienbeastofunknownevil It imagines itself tobecorrecting for societyrsquos failings but blinds itself tothepossibility that it is itselfacompositeofhumanfailings ndash cumulated institutionalized uncorrectedandunleashedwiththeforceoflawInourdailyliveswemightallhavethetendencytothinklikethestateuntilwerunintofailureandgraduallylearntothinkinadifferentway

JeffreyTuckerisDirectorofContentfortheFoundationfor Economic Education He is also Chief LibertyOfficer and founder of Libertyme DistinguishedHonoraryMember ofMisesBrazil research fellow



attheActonInstitutepolicyadviseroftheHeartlandInstitutefounderoftheCryptoCurrencyConferencememberoftheeditorialboardoftheMolinariReviewan advisor to the blockchain application builderFactomandauthoroffivebooksHehaswritten150introductionstobooksandmanythousandsofarticlesappearinginthescholarlyandpopularpress


Comment by R Nelson Nash mdash Itrsquos all about how you think mdash and Jeffrey has succinctly demonstrated how Statists think Learn to recognize Statist thinking and avoid these people like a plague because thatrsquos what they are

VISIONByLeonardERead

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 ndashRNelsonNash

Chapter19

WHYSEEKTHELIGHT

Light Natures resplendent robe withoutwhosevestingbeautyallwerewraptingloom

-EDWARDTHOMSON

The followingdoggerelmay serve todramatize thepointhereatissue

TherelivedtwofrogssoIvebeentoldInaquietwaysidepoolAndoneofthesefrogswasablamedbrightfrogButtheotherfrogwasafool

Nowafarmermanwithabigmilk-canWaswonttopassthatwayAndheusedtostopandaddadropOftheaquapuratheysay

Anditchancedonemornintheearlydawn

WhenthefarmerssightwasdimHescoopedthosefrogsinthewaterhedippedWhichwasajokeonhim

ThefoolfrogsankintheswashingtankAsthefarmerbumpedtotownButthesmartfrogflewlikeatugboatscrewAndhesworehewouldnotgodown

So he kicked and splashed and he slammed andthrashedAndhekeptontopthroughallAndhechurnedthatmilkinfirst-classshapeInagreatbigbutterball1

This humorous verse strikingly depicts the humansituationintodaysUSA

1TheresthefarmerwhocheatsHeobtainsthewaterforfreeandsellsitformilkCompetitionQuitetheopposite thesomething-for-nothingsyndromeThisnicely symbolizes getting paid for notworking andthethousandandoneotherdeviationsfromtheprivateownership freemarket limitedgovernmentwayoflife In politico-economic affairs it is an affront totheGoldenRuleWereall todo likewiseallwouldperish

2 Then theres the ldquoblamed bright frogrdquo Whatstrengthof character canweassign tohumanswhoaresimilarlyorientedNeversaydieThatfrogcouldnotguesswhatwouldsavehislifeHeknewlessaboutbutter-makingthanIknowaboutCreationifthatbepossibleEvenaswemortalshewasunawarewhatformhissalvationwouldtakeoreventhathewouldbe saved But he exemplified a spirit that shouldfeatureourlivesthe will to prevail

3Andlastthefoolfrogwhowhenconfrontedwithanobstaclebehavedasdoeversomanyhumanswhenfacedwith cheaters galore they give up the ghostthrowinthespongeabandonlifeshighpurpose

WroteJohnWilmotldquolsquoTisameanerpartofsensetofindafaultthantotasteanexcellencerdquoThisinsightrequiresreflectionifitsmessageistobeheeded

Obviously it is thebetterpartofwisdomandgoodsense to seek excellence and not be constantlydistracted by the countless faults of mankind To


BankNotes -NelsonNashrsquosMonthlyNewsletter-January2017ldquotaste an excellencerdquomdash to seek the right and thegoodmdashisanobjectivethatshouldinmyviewfeatureourmortalmomentsTodootherwiseistomisslifesgoldenopportunitiesItsamatterofwhichwaytheeyebecastmdashtowardthemesswereinortowardthewhat-ought-to-bewecanchoosethedarknessortheLight

ThecountlessfaultsofmankindareincessantlythrownupatusFreedomdevoteesbythetensofthousandsallowthemselvestobesodistractedbythebadthattheyareblindedtothegoodmdashwhichisthousandsoftimesgreaterMerelybearinmindthattheeyecannotbecastinoppositedirectionsatthesametime

Whyisthebadsoblatantlybroadcastcausingmassdistractions while the good ever so much greaterissilentfor themostpartandhastobesoughtoutThisrequiresananswertothequestionldquoWhatmakesnewsrdquoThemassmediagivetheanswer

WhatqualifiesasnewsMostlydisastersmdashthebadmdashonlynowandthenthegood-thesuccessesAjetplanecrash is news Newspapers TV radio publicize ittheworldoverBut try tofindany reportingon thehundreds of millions of miles flown safely everyweek The successful is an unevent no mentionHijackingThats newsWhy Its a disastermdashbadand exceptional but passengers by untold millionshaveneverbeenhijackedIsmymorethan2000000milesofsafeflyingnewsIndeednot

AthiefrobsabankNewsMillionsofcitizensday-in-and-day-out year-in-and-year-out are honest TheypromptlypaytheirbillsandkeeptheirpromisesNo news

ThiscommentaryhastodoonlywiththefewwhoaredevotedtothefreedomphilosophyWhatdestructivetendency has the media on us and what might theremedybeAstrictobservationofthecorrectanswerwould be a boon to everyone including freedomsopponentsThefollowingishowIpresentlyseethemediaseffectanditsremedythoughadmittedlyitisamatterofforeverprobing

As related to politico-economic affairs the mediawithafewnotableexceptionsprofuselypresentthe

fallacies of socialism as if theywere sound If youlistentoradioorTVreportersandcommentatorsorreadthedailynewsorspendtimewithmostweeklyand monthly magazines you listen to and readmessages that spell sheer calamity to anyone whounderstandsandbelievesinhumanliberty

Nowitmaywellbethatyouareoneoftheexceptionalfewwho can allow such amessage of socialism togo inoneear andout theother shrug it off for thenonsenseitisandletitgoatthatInthatcaseluckyyou

ButsupposeyouarentoneoftheseluckyfewWhathappens Wholesale distractions which result indespair discouragement pessimism-all is going topotandruinThebadissooveremphasizedthatthegoodcannotbeseenYousufferandfreedomsuffersbecause there isone feweramonguswhohas faiththatthegoodwillprevailAndwithoutanabundanceofsuchfaithfreedomisalostcause

Edward Thomson quoted at the beginning wasdoubtlessreferringtothelightofdayHoweverhisdramaticallyphrasedthoughtispreciselyasrelevanttotheLightofanenlightenedmindPhraseitthisway

Light Mankinds resplendent robe without itsflowinginspirationmaniswraptingloom

SeektheLightBenotdistractedfromsodoingletnothing stand in thewaynotevenall the faultsofsocialistsHenryWardBeecherofferedgoodcounselEvery man should keep a fair-sized cemetery inwhichtoburythefaultsofhisfriendsAndIwouldadd the faults of his opponents If their nonsensecausesourgloomtheyvewon-andwithoutknowingwhy

WhatismyformulaforescapingthegloomItrynottohearorreadanyofthenonsensemdashjustignoreitSohowdoIknowwhatshappeningAstothebaditsintheatmosphereandcanbefeltinonesbonesasthesayinggoesNocarefulattentionisnecessary

Actually if Icanavoidbeingdistractedby thebadI can know far more of whats going on than canthosewhospendtheirtimewanderinginthismurky



swamp I can spend all ofmy time on seeking thegoodmdashwhichisenormousThisallowsmetodrawcomparisonsbetweenthebadandthegoodwhereasthosewhoseeonlythebadcanmakenocomparisonstheyareinablindalleyTheyareunhappywhileIamenjoyingeverymoment

Why seek the light This is precisely the same asaskingldquoWhydowhatsrightrdquoItisonlyastherightisfoundandpracticedthaterrorsarediscoveredanddismissed In ourworkadayworld it is only as themiraculouswisdomofthefreeandunfetteredmarketisapprehendedthatsocialismwillfallbythewayside

WroteHenryClayldquoIwould ratherbe right thanbePresidentrdquoSoletusstandwithhimfortherightmdashforhumanlibertypeaceonearthgoodwill towardmen

IExtractedfromldquoStoryofaKickerrdquobyHolmanFDay

Welcome the newest IBC Practitionershttpswwwinfinitebankingorgfinder

ThefollowingfinancialprofessionalsjoinedorrenewedtheirmembershiptoourAuthorized Infinite Banking Concepts Practitioners teamthismonth

You can view the entire practitioner listing on our website using the Practitioner FinderIBC PractitionerrsquoshavecompletedtheIBC Practitionerrsquos 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 ourmonetaryandbankinginstitutionsTheIBC PractitionerhasabroadbaseofknowledgetoensureaminimallevelofcompetencyinalloftheareasafinancialprofessionalneedsinordertoadequatelydiscussIBCwithhisorherclients

Nelsonrsquos Newly Added Book Recommendations

httpsinfinitebankingorgbooks

The Overspent American Why We Want What We Donrsquot NeedbyJulietBSchor

Death by Food PyramidbyDeniseMinger

Wealth Poverty and PoliticsbyThomasSowell

Nelsonrsquos Favorite Quotes

ldquoUniversalism and collectivism are by necessitysystems of theocratic government The commoncharacteristicofalltheirvarietiesisthattheypostulatethe existence of a superhuman entity which theindividualsareboundtoobeyrdquomdashLudwigvonMises

bull CharlieNowlin-BirminghamAlabamabull RichardCanfield-EdmontonAlbertabull WilliamMora-HoustonTexasbull TimothyBogert-SouthfieldMichiganbull WilsonSkinnerIII-WilliamsburgVirginiabull MicheleBoyer-ParkerColoradobull JohnBlalock-BirminghamAlabamabull RandyLittlejohn-StLouisMissouribull SteveParisi-AllentownPennsylvaniabull BrianTu-StamfordConnecticutbull LarsDove-AustinTexasbull MarcSolomon-DenverColorado



NNI Live Seminars amp Eventshttpinfinitebankingorgevents

The IBC Seminar with Nelson Nash Dr Robert P Murphy and L Carlos Lara

Feburary 11 2017SheratonBirminghamBirminghamAL35203

Would you like to attend for half-off the registration price Contact an Authorized IBC Practitioner and get a 50 off discount code

Follow this link for registration informationorcontactDavidStearnsforregistrationinformation

205-276-2977davidinfinitebankingorg

The Whole Truth About Money Examining the Pros amp Cons of Common Financial Vehicles

AOneDaySeminarpresented

byToddLangfordwithKimButler

Feburary 8 2017SheratonBirmingham

BirminghamAL35203

Follow this link for registration information

IBC Practitionersrsquo Think Tank Symposium InvitationonlyeventforIBCPractitionersandguests

Feburary 9-10 2017

SheratonBirminghamBirminghamAL35203

ContactDavidStearnsforregistrationrequirements205-276-2977davidinfinitebankingorg



wholelifeinsuranceproductwassomalignedthatitbearsastigmathatlingerstothisday

In thisLMR article I intend to highlight several ofthemost significant in the chain of events that ledto thisSenate hearing inwhich the single premiumwholelifeinsuranceproductwasputontrialandwasultimately reclassified as a Modified EndowmentContract(MEC)7ThisdramaticrevisionandhowitcameaboutisanimportantsubjectforallpractitionersoftheInfinite Banking Concept (IBC) simplybecausetheunderlyingframeworkfortheimplementationofthisprivatized bankingprocess isstill thedividend-payingwhole life policy These historical incidentsareimportantbecausetheyhelpexplainwhydespiteits often misunderstood image those that trulyunderstand the unique benefits of dividend-payingwhole life insurance continue to defend its meritsvigorouslyWhatwemustnotforgetisthatthepracticeof IBC using dividend-paying whole life insurancecontinues to afford us financial freedom but withthis benefit comes responsibility especially in howitismarketedtothepublicProvidingguidanceandeducationalinsightinthisparticularareaisoneofthemost important reasons for theestablishmentof theNelsonNashInstitutealongwiththeAuthorizedIBCPractitionerProgramforfinancialprofessionals

Putting The Facts In Chronological Order

This story begins in the 1960s with of all thingsa common misconception about how whole lifeinsuranceisdesignedandhowitactuallyworksAtthat time the life insurance industry was relativelyuncomplicated and had only two life insuranceproducts ldquotermrdquo and ldquowhole liferdquo insurance Theonlyothernon-lifeproductwastheannuityButwhatmanymembers of the general public did not knoworunderstand fromanactuarial standpointwas thatldquotermrdquoandldquowholeliferdquoinsurancewereconceptuallysimilarproductsthatobeyedthesamerulesofdesignandpricing

Ironically the same lack of understanding prevailstoday Properly understood there really is no pricedifferentialbetweenthetermandwholelifeproductssincetheyarebothpricedaccordingtothelengthof

timeoftheircoverageAtermpolicywhosecoverageis so long that the insuredwill almost certainly dieduring its term becomes very similar to a ldquowholeliferdquoinsurancepolicyTermprotectionforalifetimeisnaturallygoing tobemoreexpensive thana10-15-or 20-year term policy Consequently in orderto provide coverage for a period spanning awholelifetimeaspeciallydesignedtermpolicywillneedtobecreatedinsuchawaythatanactuarialrelationshipbetweenthefixedpremiumscashvaluesanddeathbenefitaretobeldquojustsufficientenoughandnomoretocausethepolicytoendowrdquo8(becomefullypaidndashup)Thisisnotaspeculativestrategybutratherasetformuladesigned to reachadesignatedendWithawhole lifepolicy the insurerwillpayout thedeathbenefit claim either upon the actual death of theinsured or (sometimes) when the insured reachesthe designated age (originally 100 but now often121years)andthepolicyendowsUnfortunatelyasinterestratesroseintheUSduetoinflationandmoreoftheAmericanpublicturnedtospeculativeventuresthis basic knowledge about whole lifersquos simpleprotectionandsavingstructurebegantofadeIn1979thiscrucialunderstandingwasdealtadeathblow

OurparticularsordidstoryunfoldswithRalphNader9thewell-knownconsumeradvocateofthe1960swhoagitatedforthefederallawsgoverningseatbeltsinourautomobilesNadertookaself-promotingstancewiththeinsuranceindustrybyincorrectlydiagnosingthatwholelifeinsurancewasaninvestmentproductandassuchwasterriblewhencomparedtootherinvestmentproducts in themarketplace that paid amuchmorefavorable rate of return SincemostAmericans stillowned whole life policies as their primary meansof saving money Nader believed Americans weregettingconnedbytheinsurancecompaniesHebegancalling for aCongressional investigation and thatrsquoswhenthetroublereallystarted

The 1979 Federal Trade Commission Report

By the late 1970s when government eventuallystepped in to examine the life insurance industryand the whole life product itself the confusionsurroundingithadescalatedKeepinmindthatstateinsurance commissionersmdashwho actually regulate

























Conclusion





































22(Online)






Incentives















inefficiencies






































Simple and Few



































































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017



























Conclusion





































22(Online)






Incentives















inefficiencies






































Simple and Few



































































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017




































22(Online)






Incentives















inefficiencies






































Simple and Few



































































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017
















inefficiencies






































Simple and Few



































































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017




























Simple and Few



































































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017
























































Chapter19

WHYSEEKTHELIGHT


-EDWARDTHOMSON



























































BirminghamAL35203



Feburary 9-10 2017
















































BirminghamAL35203



Feburary 9-10 2017



2957 old rocky ridge road birmingham, alabama 35243...

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