Friday, January 25, 2013

Fake Things Are Stupid

Have you ever owned a fake Rolex?  It's worse than not owning any sort of Rolex at all, because every time you look at it or feel it on your wrist you are unconsciously reminded that what you have is a fake.  Not the real thing.  Worthless junk.

The unconscious mind for all its vast power and intelligence can be a simpleton at times.  If it tries to process the thought "I own worthless junk" too often it will  make a false association and begin to process "I AM worthless junk" as well.

And if you have ever tried to do anything whatsoever without your unconscious mind on board such as lose weight, get fit, wake up early, stop smoking, practice a musical instrument, get a university degree, pass an algebra class or stare down a creepy disgusting spider, you know that it is virtually impossible to make yourself do something that the unconscious mind refuses to let you do.  You need it to be 100% on your side.

That's why allowing it to believe that you are worthless junk is a disaster in the making. And that's why my advice has always been, that if you must own something, then own as close to the very best that you can obtain.  No junk, no rubbish, no fakes.

Fake ideas and ideologies are also just as damaging to you, both in mind and body.  The following are some particularly destructive fake ideas, things that are not actually real in spite of the many fake examples out there, that I encourage everyone to discard permanently from their minds and lives.

Ass-trology.  The basic premise of "astrology" is that there are twelve signs of the zodiac (the annual path across the stars that our Sun takes, or at least appears to take from the perspective of the surface of the Earth in its yearly orbit) and that these "star signs" fixed your personality and destiny at the moment of your birth, and not a moment before or after. The truth is that there are really 13 zodiac signs and that their positions relative to our calendar have shifted significantly since their identification some 3,000 years ago.  At best, ass-trologers today are all getting the wrong answers.  But in fact your personality was neither fixed by the stars at the moment of your birth, nor has your destiny been pre-determined at all.  Your personality is actually the product of your conditioned neurology, and people can and do change their neurology whenever they want.  It is not fixed from the moment of birth or from any other time.  The random arrangement of stars visible from our solar system exert no influence whatsoever on the earth or its inhabitants except through the beliefs (neurology) of said inhabitants.  It is the conditioned mind that determines your destiny, not which stars were behind the sun when you were born.

Numb-erology.  The premise behind numerology is that certain numbers associated with your birth and life determine your personality and destiny, in particular your name and your date of birth.  Practitioners assign numbers to letters of the alphabet in your name to find out your numbers.  The reality is that the alphabetic order of letters, even the existence of an alphabet, is not a cosmic, universal or fundamental thing but an arbitrary random convention.  Many languages have a different alphabet with varying specific letters and orders, and some languages even lack any kind of alphabet entirely.  Numbers are not mystical things, but simply names of quantities invented for counting.  Those names are not cosmic, universal or fundamental in any way, but are arbitrary words and symbols the meaning of which depends on the numbering system used, e.g. base-10, base-8, binary, sexagesimal, or roman numeral (tally) systems.  The date of your birth is also arbitrary.  Only by random, meaningless convention is January the "first" month instead of, say, the fifth month.  Even the existence of months and their numbered days is also an arbitrary convention containing no meaning or significance whatsoever, nor is the date of the start of the year significant in any way whatsoever, even astronomically.  In fact, the calendar as we know it is a recent invention, and if birth dates were ever meaningful at any time in the past, then they can no longer be so after the introduction of our modern calendar.  Your name was given to you by your parent(s) and not by some universal cosmic force.  The meaning and significance of your name is only relative to your local culture, and is not universal or cosmic.  Just try moving to China and see how meaningful your name is. As with ass-trology, numb-erology is a fake external factor that has nothing to do with your personality or destiny, both of which are actually determined by you internally in your conditioned mind, which you are at liberty to re-calibrate any time you wish.  You do not need to change your name to be a successful person.

Psych-icks.  There's no such thing as a psychic.  There are people who will try to deceive you or deceive themselves, or both, but none of them are really "psychic."  It's all magicians' parlor tricks.  People do not talk to the dead, nor do they read your mind or see or feel your future.  The fakery of psychics has been proven beyond doubt many times.  I refer you to the work of The Amazing James Randi and the excellent recent documentaries made by British non-psychic Derren Brown .

Chiropractic.  The basic idea as postulated by the 19th-century American quack who made it all up it is that all disease is caused by constricted nerves, and that misaligned vertebrae are responsible for these constrictions.  Modern chiropractics still assert that vertebral misalignment causes some if not all disease, and that they can cure everything from asthma to AIDS.  The truth is that the basic premise has not only failed to be proven, but it has been positively proven to be false.  Pure fantasy.  Nothing in it whatsoever!  Disease is not caused or even made worse by compressed nerve fibers.  What is more, misaligned vertebrae DO NOT ever come close to compressing nerves in any way that affects their function. If you have had a beneficial outcome from visiting a chiropractor, then you would have had as much if not more benefit from visiting a qualified remedial massage therapist.   Chiropractic is also not without risks, as people (perhaps as many as 200) have died as a result of completely unnecessary spinal manipulations.  Don't waste your money or risk your life.

Spin Doctors: The Chiropractic Industry Under Examination

Chiropractic the Greatest Hoax of the Century?

At Your Own Risk

Tuesday, January 22, 2013

How Money Works V: The Final Question

The final question about how money works is the obvious and only question on most people's minds:

"How can I get rich?"

Answer:  Easy.  Just do the following.

1.  Understand what money is.  Money is no more or less than a container of value, enabling you to store or exchange the value that you create.  Don't have enough money?  Simple: beginning today, start creating more value and making smarter exchanges.

2.  Throw out those tired old superstitions.  Money, being merely a container, is neither good nor evil.  It is not dirty, nor is it corrupting.  While power can corrupt, money has only the ability to make you more of what you already are.  Being rich is great and being poor sucks.  There is nothing honorable about burying your talent and staying poor.  Rich people are for the most part caring, generous, wonderful and spiritual human beings.  Ignore the occasional rare but loudly publicized "airplane crashes."

3.  Get the Big Secret:  Use money to acquire the sort of assets that make making money easy.  Never spend that sort of money on anything except productive assets.  Your goal should be to use more and more assets and less and less of your personal labor to create a living.

4.  Acquire the following books.  Read, study and re-read them.  Make them an integral part of your thinking.  "Oh, I can't afford all those books!"  Can you afford a free library card?  Rich people are resourceful.  Start being rich (resourceful) right now and stop looking for excuses.

The Richest Man in Babylon

Think and Grow Rich

How Rich People Think

Rich Dad Poor Dad: What The Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

The Magician's Way: What It Really Takes to Find Your Treasure

Now, Discover Your Strengths

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It

Getting Things Done: The Art of Stress-Free Productivity

Secrets of the Millionaire Mind: Mastering the Inner Game of Wealth

5.  Begin managing your money in the following way:

a) Take your weekly take-home pay (welfare check, or whatever), and divide it into 10 parts.
b) Take 10% (one tenth) off the top of your income and give it away.  I prefer to give mine to organizations with a proven track-record of doing the maximum good with it, but it is your choice whom or what to give it to.  Almost every wealth "expert" I've ever studied has this step as their  #1 action for getting rich.  Surprised?
c) Take another 10% of your pay and put it in an interest-bearing account or a CD term deposit.  Never touch this money.  When there is enough of it, start investing it in sure income-producing assets (stocks, bonds, rental property).  If you have a viable, thriving small business, you might invest this money in proven income-producing assets for the business, but not on any speculative ventures.
d) Take another 10% of your income and save it in a special, separate bank account for something you determine ahead of time like a new fridge, a second-hand car, a vacation or a down payment on a house.  Spend this money only when your pre-determined goal is achieved.
e) With the rest of your income (70% or seven tenths): find a way to meet all your regular expenses with this amount. This includes rent, food, gas, electricity, water, and clothing.  Cut out all non-essentials, but include a small celebration, outing or special treat each month.  It is valuable to set aside a few percent of your household budget as a "contingency" fund in case the kitchen blows up or something.  If this isn't enough money to live on, start looking for immediate ways of increasing your income: a better job, overtime, a sideline business, window washing, taking in laundry, dog-walking or grooming, handyman work, etc.  The possibilities of things you can do evenings or weekends are unlimited.

If you do this for the rest of your life, there is no possible way that you can remain a slave to poverty.  This works 100% of the time when it is used consistently.  When your income goes up and you are able, you might decrease your living expenses percentage from 70% down to 60% or even to 50% of your take-home pay.  This allows you to take an additional 10% and invest in yourself through education, books or courses, and to invest even more into income-producing assets.

Of course all this and more you will learn from the books on the recommended reading list, and from others besides that you will doubtless find.    Rich people never stop learning, as you will also discover.  Your brain is always your best investment.

How Money Works IV: The Big Secret

Anything that can hold value and be traded or exchanged is money.  Your time is money.  Your life is money.    Your skills, knowledge, beliefs and actions are money.  Your tools, resources, possessions and property are all money.  But the most important thing about money is that it can be created at any time.  The difference between people who create money and people who don't is not as obvious as you might think.  They can look the same, act the same, and even sometimes have the same bank balance.  What the rich and the poor don't do is think the same.

Consider farming for a moment.  Working on a farm can either make you wealthy or keep you poor, depending on how a person thinks.  If you accept no more than a daily survival wage in return for your labor on someone's farm, then you are poor and will probably stay that way.  If you own the farm, working on it could be making you rich.  Yes, the exact same activity can have two opposite results!  The rich always get richer and the poor always poorer because the poor simply don't know how to a) get the most value out of their time and abilities, and b) use their existing wealth to make more wealth.

"But," you say, "thinking and owning are not the same thing!  You claimed thinking made the difference, but your example showed that ownership is the real cause poverty!"

Wrong.  Ownership is not the primary cause of anything; it is merely a result.  Ownership is both the long-term outward manifestation of rich thinking and the principle that creates all employment opportunities.  Ownership or lack thereof always adjusts itself to match the mental activity of the individual.  If the land-owning farmer didn't understand the secret of money and the worth of his own land, his ownership would be a temporary thing.  If nobody owned farms, then farm laborers wouldn't have jobs at all.  On the other hand, if the landless laborer understood exactly how money works, then sooner or later he would manage to arrange things differently.  He would gradually convert to using money to generate an income rather than his back.

The reason many poor and middle-class folks don't do that is because they are missing this secret about the nature of money.  This is it:

There are two kinds of money:  There is money you never, ever worry about trying to save, and money that you never, ever, ever, never never NEVER EVER spend.


The money that must not be saved is that which meets your everyday needs.  It's like perishable food: you either eat it, share it, or throw it away.  Trying to save a scrap of lettuce here or a crust of bread there consumes more resources than it is worth.  (Pro Tip: if you hate to throw food away, get yourself a chicken.  They eat almost anything left over from your table and convert it into useful eggs.  Way better than dogs, which do nothing more than convert your valuable wealth into useless noise, hair and poop.)  If your budget is to live off of 70% of your weekly income, then spend all of that 70%.  Spend it joyfully and without flinching or scrimping.  It is money that must not be saved, because it is what you and your family live on. You are exchanging it for priceless life, and it's a bargain at whatever the price.

The money that must never be spent under any circumstances is that money which is enabling you to continue to earn your living.  If a farmer gets hungry, does he exchange his plow, cattle, or land to buy food?  Of course not - he uses them to grow his own food.  Who would consider for a minute selling a finger or a toe every day in order to buy food?  Far more sustainable and preferable in other ways is to use your limbs to earn your living.  Eat the eggs, not the chicken that lays them.

A carpenter does not earn his living by selling his expensive and valuable tools.  If there is a market for tools, there must be an even greater market for what those tools can produce in the hands of a skilled and efficient craftsman.   Those tools are money, but the kind one never spends.  They are the kind of money that earns money.

Many people refer to this kind of money as assets or investments.  If you can exchange one asset for an asset of even greater value to you, then do so.  A sewing machine may be valuable, but not so much in the hands of a carpenter.  A planer is likewise of little use to a seamstress.  But an exchange of these creates tremendously greater value for both.  Both are able to earn a living from these assets once they are in the right hands.

The fundamental difference between an asset and any other form of money (exchangeable wealth) is that an asset produces or allows you to produce value on an ongoing basis without itself being consumed.  An asset  enables you to produce far more value than you could without it, even working twice as hard.  Or even ten times as hard, in many cases.  Some assets allow you to do things of value that would be absolutely impossible otherwise.

But the poor often don't value their assets.   The middle-class often do not recognize them for what they are. The difficulty is that today we have an extremely liquid economy in which practically anything can be converted into cash value at any moment.  This makes it difficult for people to spot the difference between money that must be spent every day and money that could be earning them a living.

If a middle-class individual manages to get a job that pays well, they are often unsure about what to do with the money once they have spent as much of it as they can on daily requirements.  They don't know what an asset is, and instead exchange their stored labor for bigger and faster ways of consuming their wealth.  Boats, cars, TVs that rapidly depreciate in value, clothes that are out of fashion before they leave the store, food, drugs or drink that make the body unfit for either work or play, or artificial significance/connection/purpose  in the form of vast piles of "collectible" rubbish sourced on ebay or at yard sales.

Worse still, the poor aspire to be middle-class by copying those behaviors, thus ensuring their continuing poverty.  The only difference between poor and middle class is just one little temporary, fleeting and uncertain thing:  a job.  The vast majority of Americans are no more than two paydays away from being out on the street, homeless and under a mountain of soul-crushing debt.

The thing about being poor is that even if you give a large amount of money to a typical poor person, in five years they will be right back in the same poverty situation if not a worse one.  You see, it was not the lack of money making that person poor.  Rich or poor is determined not at all by a bank balance, but by what is happening inside the person's brain.

Even with no cash, a "rich" person sees opportunities, knows how to value his labor, and understands that using the right assets can make earning a basic living a matter of no more than a few hours per week, with the rest of the time spent building more assets.  Because everyone is free to change what happens inside his or her own brain at any time, anyone can become rich whenever they want.  The change of thinking can happen very quickly, although the bank account can sometimes take longer to adjust itself to the change.

Once the secret of assets is known and its full implications are appreciated, poverty becomes optional.

Tuesday, January 15, 2013

How Money Works Part III: Rich and Poor

~       or       ~

Poverty Is Stupid

In this series, what do we know so far?

  • Money is nothing more or less than a container for Value;
  • Value is placed on anything that people (or any living organism for that matter) needs or wants for itself;
  • Ownership of value is a natural and fundamental property of Life;
  • Every willing exchange of value creates more value and hence increases wealth.

Many struggle with the idea of Money because some people seem to have it and other people don't.  It doesn't seem fair.  We see misery and suffering and assume that it's somehow the money's fault. Numerous solutions to the problems of happiness and poverty have been proposed, but most take the unreasonable and illogical approach of focusing on re-arranging the money.  This is ridiculous because, as Douglas Adams so insightfully puts it, for the most part it is not the money that is particularly unhappy.

Poverty is a serious problem, and as we now know, problems are stupid because most of them have already been solved.  Anyone who clings to his problems and ignores the perfectly well-known solutions out there does so because he is unconsciously in love with his problem while vehemently denying that this is the case.  A problem-haver will fiercely defend and justify his problem to anyone who will listen, particularly if they challenge him on it.

That is why I say poverty is stupid.  It is a problem which has already been solved countless times over.  As soon as someone really understands how money works, decides to stop loving problems and commits to giving up poverty and all its stupid little ways, it is impossible for them to remain poor.  Yet there are two main reasons why people are poor.  But before we discuss them, we have to pause for a moment and define poverty.  To do so we must extend our understanding of how money works to take into account the passage of time.

There are countless ways that people can create value for themselves and for others, and countless more ways of increasing that value by engaging in commerce and trade to deliver the ideal value to the ideal person at the perfect time.  As in the example of the fish and the egg, the person who needs an egg gets an egg, and the person who needs a fish gets a fish.  Value is always increased through a willing exchange.

But what happens when the fish and the egg have been eaten?  Does not the value disappear forever?  Of course not.  For one thing, at the very least the value enters the body of the consumer and is potentially converted into labor or other value-producing activity.  If food is not eaten but becomes spoiled, the possessor still experienced the value and security of at least having had the food available. Stock options eventually expire too, but that does not mean they were not worth having.

And still, the value has not been entirely destroyed,  In fact, it may have even increased.  Here's how.

The value we consume (figuratively or literally) allows us to live and survive.  A day's worth of food, shelter, clothing, security, etc. allows us to live for another day.  Now tell me this:  What is the value of one day of your life?

Whatever you consumed yesterday that enabled you to live till today, you just might consider it, upon sober reflection, to be the absolute bargain of a lifetime.  Talk about increasing value in a willing exchange! You exchanged a few hours of stored labor, a couple of paltry coins' worth of bread, for an entire day of life.  Irreplaceable, priceless life.  It's an incredible increase of value and wealth, and one that makes every living human already rich beyond belief.

If you were lucky enough to stay alive yesterday, then today you have a whole new day's worth of value-creating power, including but not limited to labor and commerce, with which to negotiate another day's worth of life.  If you were able yesterday to store more of your labor than you consumed to stay alive, then you  increased your negotiable wealth by even more than one day's worth.    That additional stored value gives you even greater ability to negotiate and create more value, and if carried on in this manner more or less consistently, it gets easier and easier to create enough value to live on every day.  You become what we will call Wealthy.

Wealthy is fantastic, because it can extend your life in the event of "hard times" in which creating value in the accustomed ways becomes difficult.  You and your family can live off your stored value until things return to "normal" or until normal becomes re-defined.

Wealth also enables you to support others to become self-sufficient and produce not merely enough value to live on themselves, but enough to support others still.

But when people perpetually have to fall back on each day's labor to survive, and often at a not very abundant level, then we say that they are "poor."  They are living poorly.

I define poverty as people who are dying.  Winding down, losing steam, not keeping up with life.  Benjamin Franklin said, "Poverty quickly overtakes the man who rises late or moves slowly." For decades researchers have been puzzling over why poverty is the one of the biggest risk factors for every major disease.  Also, they notice that the lower one's income, the lower a person's average life expectancy.  This comes as absolutely no surprise to anyone who understands what money really is and how it works.

I said at the beginning that there are two main reasons why people might be poor, and now that we have defined poverty, here they are.  But I should also clarify that I am talking about able-bodied people, and not those individuals who must inevitably be supported by family members or by the community due to age or disability.

Reason A.  Mismanagement of a person's daily value, whether labor, stored labor (cash), goods or property.  This falls into two categories: the poor-by-choice and the poor-by-ignorance.  Mismanagement includes undervaluing one's own time and labor, causing one to either voluntarily or ignorantly exchange their time and labor for not enough to live on.  It also includes ill-considered exchanges where the value of items for which one's labor was exchanged are grossly exaggerated.  Therefore anyone who voluntarily gambles, smokes, does drugs, drinks to excess, over-eats or wastes their money in any number of other ways MAY NOT EVER complain to me about being poor.  They are being poor (i.e. dying) by choice, and they love it.  Only the ignorantly poor are allowed to complain, but as soon as they are informed how to manage their wealth, complainy time is over, baby.  At that point, they can either implement the solution or voluntarily remain poor.

Reason 2.  Artificial distortions of the Laws of Money.  Sometime a society gets so f*&#ed up and out of touch with Life that they attempt to re-write the natural laws of life and wealth.  One example is when the concept of Ownership is interfered with, and individuals' wealth is forcibly and institutionally removed from their control.  Excessive taxation, forfeiture of assets, serfdom, slavery, rampant crime and communism are examples of attempts to artificially re-define the meaning of ownership.  This forces people into poverty because they cannot with any certainty store the value that they create.  When that happens, creating value never gets any easier and people can do little more than survive day by day while Death gradually overtakes them.

Another common example is the attempt to meddle with or control willing exchanges.  A willing exchange always creates value, but when an exchange is either forced or the price point is artificially manipulated, value gets lost and people become poorer with each exchange.  A prime example of this was in the 70's when the populist Nixon attempted to order a hold on the spiraling price of gasoline, thinking that this would finally make people like him.  What happened?  People stopped selling gasoline, or sold as little of it as they could get away with, because each sale at the artificial price point was making them poorer.  This resulted in long queues at filling stations and people hated Tricky Dicky even more than before.  Most attempts to artificially fix prices, dictate to the labor market or require certain exchanges by decree result in value being lost to society.  When people are forced to make an exchange which is of no value to them, value is destroyed.

Fortunately, these attempts to work against the laws of wealth tend to blow up after a while and the natural laws eventually re-assert themselves.  In the long run a nation has no more success in attempting to distort the natural economy of life than they would in repealing the law of gravity.  But if you find yourself in a Reason 2 poverty situation, what can you personally do about it?

Many people in that situation do whatever they can to undermine and circumvent the system.  The so-called Black Market for example.  Other people confront the system directly and try to change it through political or military action or in some cases comedy.  Still others learn the system's hidden rules and play along to the best of their ability.  Another option is to attain a higher level of consciousness above the plane of suffering and problems, to live entirely in the moment and thoroughly enjoy every day of life as the wealth beyond measure that it actually is while anticipating the inevitable end of life with complete and perfect serenity.

So there are many options. The old and popular refrain that some people have no choice but to be poor is therefore clearly nonsense.  And one must always question the assumption that the "system" is entirely responsible. It is the oldest and most worn-out excuse used to justify and defend Reason A poverty.  Where there are poor people living (more or less) next door to rich people, is it really the system that is at fault?  Or is it the individual conditioned mind that is causing poverty?  If anyone can be rich, everyone can be rich.

Poverty is not the natural state of life. One way or another it is the result of the improperly-conditioned mind of individuals and of the collective insanity of nations living at too great a remove from life, which is ultimately the Divine.  Poverty really is stupid, and God really does want you to kick the habit and be rich instead.

Monday, January 7, 2013

Problems Are Stupid

I have a brother-in-law who is an extremely sincere unpaid lay minister for his church.  His responsibility as head of his congregation covers the spiritual and physical well-being of about 450 people.  Even with more than a dozen volunteer assistants in various roles, this task occupies him from 6 AM to 4 PM every Sunday, half the day on many a Saturday, and two or three solid evenings during the week.  It's like being CEO of a small corporation.  This is in addition to his actual full-time career and raising a large, extremely active family. How the hell does he do it all?

I don't think I could. I mean, aside from the whole religion thing, I don't think I could be bothered to spend that much time and energy at it.  He can do it because he's interested in people.  He's compassionate and cares about their problems.

I care about people too, sort of.  That is, when I'm not consumed by my own little projects.  I try to help people when I am able and if I happen to have a solution to their problems.  But that's the thing:  I don't really care all that much about most people's problems, because a problem that has already been solved once is no longer at all an interesting problem to me.

Whatever problem you have, it is almost certain that another person in a worse situation than you with fewer resources, less support, poorer health, more kids, fewer limbs and greater disadvantages has already had your problem.  And they have either solved it, or come to realize that it was never really a problem to begin with.

Your problem has already been faced, many times over by many people. So why are you still wasting your time with that problem?  Here's why.

People love their problems.  Their problems gives them a sense of identity, a feeling of significance and a sense of community with those havers and lovers of similar problems.  People love getting together to compare, magnify and complain about their problems.  The bigger, more complicated and intractable the problem, the more significant and attached to that problem community ("problemmunity") they feel.  If you love your problem, you will NEVER be rid of it.  It will always be a focus of your life and creative energies.

People who love their problems will always defend them.  If you offer them a solution, they will counter with all sorts of reasons why the solution will not work.  They will come up with many detailed and closely reasoned arguments for why their problem is quite impossible to solve.  A great deal of imaginative effort goes into making their problem as air-tight as can be.

People who identify themselves through their problem feel angry when anyone shows the slightest doubt about or disrespect for their problem.  Many of them are probably angry at me right now just for writing this.  If you are feeling angry now, then you are probably problem-identified too.

People with chronic problems often don't realize that they love their problems. But their responses always give it away.  Do you justify your problem by taking any opportunity to explain why it is someone else's fault?  Why it is impossible to solve?  Or how the bad ol' government, church, school, parents, ex, neighbors, kids, cops, drugs, booze, food, genes, germs, leprechauns, corporations, aliens, lasers, immigrants or cats did this to you?  Then you love your problem.  I know, because I used to do it, too.  (It was my ex, who I once suspected of being an alien leprechaun cat sent by the government to drug me.  With lasers.)

All human behavior is in response to need.  If any of your behavior, voluntary or otherwise, planned or not, conscious or unconscious, prolongs or intensifies the problem you have, or at least does not actively implement the well-known, proven solution to that wholly unoriginal problem you have, then you are doing it because of something your unconscious mind thinks it needs:

Sympathy.  Significance.  Community.  Identity.  Validation.  Punishment.  Familiarity.  Excitement.  Security.

You unconsciously love any problem that gives you these things, and you will never get rid of it in spite of your loud protests and bellowing indignation at my words.

"You are wrong!  I don't want my problem at all!  But there's nothing I can do about it."

Aha!  You are justifying and defending your problem again.  Will you please say that again, except for the last bit?

" . . . I don't want my problem anymore?"

Good. Thank you.  Now, if you please, . . . Prove it.

Prove it by first understanding that there are no problems, only opportunities.  What opportunity does this so-called "problem" give to you?  What opening is it creating for new things to enter your life?  How might it allow you to grow, expand, increase, and learn?  How is it eventually going to make you a better, more resilient person, more enlightened, joyful, fulfilled and happier?  Oh, yes it will!  If you only stop coddling and nurturing the problem long enough to put it down, see its true nature and get on top of it.

The fear of change alone keeps many people clinging to their "problems."  Don't let such a filthy lie as that keep you weighed down.  Anyway, only your old problem-loving brain stuff is afraid, not you.

Now adjust your conscious and unconscious beliefs about your identity as distinct from your current situation.  Do this in any of the many well-known ways: prayer, meditation, hypnosis, affirmations, brain plasticity, visualizations, NLP, cognitive behavioral therapy, and so on.  This will begin to alter your behavior.  That behavior will implement those well-known solutions to the so-called "problem."  Most people already know what to do; they just don't act because they're too busy defending their problems and remaining dependent on them.

As your mind wakes up out of that problem-centered trance you will begin to doubt the doctrine that other people or things are to blame for your "problem" and start to believe less in their power to create or control your identity.  You may need to forgive certain people who have hurt you, or whom you have hurt.  You may even need to forgive yourself.  As you do, you will discover that you have more and more power to design and control your own life.

You will begin to accept the current situation as just that - a situation, nothing more.  It is no longer an identity or a problem.  You will begin to accept each new situation as it emerges out of your new behavior.  Fast or slow makes no difference, because they are all just situations, never problems. Time is also not a problem.

Finally, look back at that horrible old "problem." It's the one that caused so much pain and suffering and pushed you right to the brink until you were ready to try anything - ANYTHING - no matter how bizarre it sounded or how indignantly your brain stuff reacted at first.  Realize now that the "problem" was actually the greatest blessing of your life because of the place to which it has brought you now:  the end of all problems.

The people who don't do this and who decide to keep their problems have simply not had enough pain and suffering yet.  When they have finally had enough, then you can show them what to do (but you can't do it for them).  Until then, all anyone else can do for them is to help them continue to have the stupid problem.

Some people think I must be devoid of all compassion to say that Problems are Stupid.  Problems are not required for true selfless compassion to exist.  When you no longer have problems, you will still have situations.  They will often be fewer in number, however.  It is nice to have compassionate friends who know how to help you with various situations without turning them into problems or without being motivated by selfish feelings like guilt, obligation or fear.  Helping your friends out of an occasional uncomfortable situation is also a fulfilling thing to do, when you can do so without drama, attachment, suffering, or problems.

I suppose that is how my super-awesome brother-in-law is able to cope with the problems of 450 other people who depend on him.  Though he might not use quite these words, he probably knows that problems are indeed stupid and is able to treat them as nothing more than situations at worst, great blessings and opportunities at best.

Saturday, January 5, 2013

How Money Works II: Perpetual Motion Is Stupid

Cash is only one manifestation of Money.
Last time we discovered that money is merely a storage medium for value, and the concept of value encompasses the needs, wants and survival of all life.  In this post, we wish to elaborate on those natural laws that money (or "wealth" as some prefer) obeys.

But why do I say that Perpetual Motion is Stupid?  And what does that have to do with money?  I say Perpetual Motion is stupid because it is a lie.  It is in direct opposition to Nature's Laws, and therefore it has never worked, does not now work, and never will work in the future.  People who believe in, pursue and promote Perpetual Motion including so-called "free energy" devices and schemes are therefore Stupid.

Likewise, people who pursue and promote financial or economic schemes that attempt to violate the laws of money are also Stupid.  This includes certain well-known philosophers, politicians, ideologues  reformers, do-gooders and, basically most of your garden-variety hippies. But when we learn exactly how money works, we will no longer be stupid, will we.

How can I say that Money obeys natural laws when it is just an arbitrary human invention?  I can say it because money is NOT a human invention at all, nor is it arbitrary.  It is a natural phenomenon.   And as we learned last time, money is not the same as cash.  The ability to store, transport and exchange value arises naturally whenever life takes an opportunity to create more value than it requires in that moment.  Ants gather in the summer ahead of the coming cold and dark.  Bears feast on salmon brains at certain times, ignoring the tasty flesh entirely as the most efficient way to prepare for hibernation.  Humans exchange their time and products to each other and store that value to be exchanged later at the grocery store.  We may flatter ourselves by thinking we invented this system, but it is actually a natural extension of the fundamental biological economy of life.

Recall also from the previous post that the willing exchange of two dissimilar items always creates value.  This additional value is the driving force behind trade, commerce, and specialization.  The exchange itself is of value because in a willing trade, both parties gain.  The sum of value after the trade is more than the sum of value before.

An economy is nothing more than a vast number of single exchanges happening continually.  You exchange an hour's labor for an hour's pay, and an hour's pay for a tank of fuel for your car.  You exchange some of that fuel to locate a mate or gather your offspring, then drive to the store and exchange yet more of your stored labor for some food.

No matter how complex an economic system becomes, it must always reduce to increased value for value in every willing exchange.

To introduce the natural laws of value and money, consider the following somewhat silly tale of woe.

Imagine a refugee camp.  There are ten thousand refugees who for various boring, tedious reasons may never leave the camp.  They have no resources in the camp, and every day they are given a specific amount of food that must be consumed on the spot.  It cannot be stored, traded, or used in any other way.  It has no potential value.

Nothing can enter or leave the camp - no materials, resources, tools, goods of any kind.  The people sit and do nothing all day, because there is nothing to do.  One day a multi-billionaire suddenly gets religion and decides to help these unfortunate souls trapped in the refugee camp. He bestows upon each of them One Million Dollars in cash.

Now, that much cash is a problem in a refugee camp, where it is impossible to secure.  But since they are all thieves to a man, each stealing as fast as he can from all the rest, at any given moment they still each have on average one million dollars more or less.   Still, as no goods may enter the camp, there is nothing to actually buy, so pretty soon they get tired and stop stealing each other's money back and forth.

No matter how much they exchange the money with each other (and none are stupid enough to actually lose money by being swindled or cheated), nobody ever gains anything.  The total amount of money in this "closed system" remains constant, and it remains perfectly evenly distributed.  Nobody has anything to gain, and nobody has anything to lose.  Nobody has anything to buy or to sell.  Even though they are "rich" according to some people's stupid definition, there is no value, no economy, no exchange, and no real life in this camp.

You might propose that prostitution would inevitably spread through the camp like wildfire, and pretty soon only the hoes would have all the money. But if the hoes were to reflect that the so-called "money" does not actually have any value, then solicitations would be refused.

Unlikely, you say? Hoes with that level of insight?  Then we'll exclude that possibility by insisting for the sake of discussion that there remains nothing of value inside the camp to trade for.

What about gambling?  Even to just pass the time?  Fine - but we stipulate that their games are 100% chance, no cheating and no skill involved.  The average refugee will still have one million dollars more or less, and the distribution will be random yet fairly uniform around the camp.

Perpetual Motion is like this ridiculously rich refugee camp.  There is money all around, but none of it is useful for anything.  Perpetual Motion imagines it can create more money, more wealth, more value within this closed system simply by having the money pass from one person to another and back again.  In this closed system, the amount of money is constant and fixed, and the distribution is as uniform as it gets.  Like all closed thermodynamic systems, it obeys the First and Second Laws: energy is always constant and maximum entropy always reigns supreme, barring statistical fluctuations due to random events (e.g. gambling).

Money obeys these laws too.  If you have a closed system (like this refugee camp) then there can be no increase in money and the distribution is, if not initially then certainly before very long, more or less uniform.  The laws of money stipulate that for an increase in value to occur, the system must be open, and there must be resources from which the participants can create value.  As soon as that is the case, then value-producing exchanges can begin and wealth expands at a more or less predictable rate.

The $6 Million Dollar Chicken.
Now suppose some enterprising outsiders learn about this camp full of millionaires. Imagine they cut a hole in the fence, and offer to sell a breeding pair of chickens to some of the inmates.  How much would they be worth?  A million dollars?  Each?  A quorum of inmates might see the potential value and pool their money, outbidding the others, and buy the rooster and chicken for as much as, say, $12 Million.

This one small hole in the fence completely and fundamentally changes the dynamic inside the camp.  Eggs start to sell for $100,000 each.  Chicks sell for $1,000,000 each.  Businesses spring up, skills suddenly become valuable, and wealth begins to be created.

Let's imagine that one person pays $50 Million to another to build a chicken coop.  An interesting thing happens the moment it is finished.  The wealth of the camp jumps by $50M.  How?  Well, the builder now has $50M, and the owner has a $50M chicken coop.  That's a total wealth of $100M.  Where resources are available, wealth expands as fast as people can create value.

One thing we learn is that the total amount of money in open economies is never fixed.  For one person to get rich does not mean that another must get poor. In fact, exactly the opposite is true.  When one person gets rich, it is virtually always because he or she created a lot of value for a lot of people. All those people are actually ENRICHED by that one person's rise to riches.  Logically, we should be celebrating our successful rich people, not tearing them down or blaming them for problems that have nothing to do with them.  Those are the irrational superstitions I mentioned last time and false emotional associations people have about money that cause them to react in such an illogical, irrational way. They choose to focus on the few exceptions, like the occasional airplane that crashes. Those are the aberrations where people have taken money for which they did not create equivalent value.  In the long run, that type of activity is unsustainable and ultimately fails.

But like airplane crashes, those are the flights we hear about on TV while ignoring the millions of successful landings that happen every year.  There are over ten million millionaires in the world today, and over 1,200 billionaires.  The vast majority of them got rich by making YOU richer.  Think about that next time you ignorantly disparage the rich.

*   *   *   *   *

The improbable refugee camp of this parable demonstrates another essential point.  In the closed camp, how much was the one million dollars that each  inmate owned actually worth?  When there was nothing to buy and the distribution was uniform, the value of the money was zero.  That's right: one million dollars can sometimes be worth nothing at all.  That is an extreme example, but the same mechanism of currency devaluation applies elsewhere, even in open, productive systems.

When a government prints large amounts of currency, unless there is an equivalent amount of value being produced somewhere in the country, the currency becomes devalued.  In other words, you have inflation of prices since each dollar contains proportionally less actual value.  Cash has value only when it has been exchanged for value.

Devaluation of currency also occurs when you give away large amounts of cash.  There is no exchange of value, and therefore the cash has no value initially.  This lack of value diffuses thorough the economy, and the total circulating currency is devalued in proportion to the amount that was handed out.  Giving cash to the needy is therefore harmful to the needy as well as to everyone else. It is a gross unkindness to give them something of no value that they do not actually need.

If you want to relieve the needy, give food, clothing and shelter, and then only in emergencies.  To do otherwise creates a dependency that is an even worse unkindness to those you are attempting to help.  It's like giving away free morphine for everyone to take in case someone gets a headache.  Using it routinely creates addiction and diminishes humanity.  But use in an emergency does not result in dependency and can be extremely beneficial.

If you want to help the long term needy, do not give food and clothing, and do not under any circumstances give cash.  Instead, give education and opportunity in generous measure.  Give them the means to labor for their own support with human dignity.  Giving someone meaningful work even if it is hard, unpleasant labor is the greatest kindness you can give.  And before you call me a heartless scrooge, you should know that someone was once kind to me in exactly this way, giving me the chance to do some very hard, hot, dirty uncomfortable labor, for which I am extremely grateful.  It added tremendously to my humanity, whereas cash handouts would have dehumanized me.

We are creators - that is our nature.  Being human means being a creator of value, and to deny someone the opportunity to be human is inhuman.

Friday, January 4, 2013

How Money Works, Part I

Munnie! Monet!  Moolah! Dosh! Dineros! Scratch!
Cabbage! Loot! Wad!
For something that affects people's lives to such an extraordinary degree and is the central topic of both political debate and armed conflict all around the globe, Money is woefully misunderstood.  Many people I know hold deeply ignorant superstitions about money, highly conflicted emotional childhood associations with the subject, and strident noisy opinions on how it is supposed to work which are embarrassingly at variance to the way things actually are.

My belief is that in order to have any sort of thoughtful conversation about the issues facing this planet including the economy, poverty, hunger, disease, immigration, war, environment, energy, climate; in short, the very survival of the human species, we need to have a serious chat about How Money Works.

Yet some of you will say, "Money isn't everything!  There is much more to life, and money just isn't as important as you are making it out to be."  This is a prime example of those ignorant superstitions I mentioned before. Money is important.  It does matter.  The Preacher or Koheleth of Bible fame instructs, "A feast is made for laughter, and wine maketh merry: but money answereth all things."  (Eccl. 10:19)  Money forms the central part of the answer to every practical question in this world.  We will shortly discover that every living thing on this earth uses money in some form and that it is inseparably intertwined with the very concept of Life itself.

And the place to start is as self-evident as anything could be.  We need to know what we're even talking about.  We need to define "money."  To help us get there, let's first consider the question of gold.

Why is gold "valuable?" By which I mean, why does it have value.  What is Value, even?  A value is something that is important to you.  When you are hungry, food occupies your attention and you "want" some.  It is essential to you.  It is a value.  It has value. Everything even remotely associated with food likewise assumes a value:  crop seeds, farming implements, land, labor, storage, cooking utensils, fuel, culinary skill, transport of food, and the list goes on indefinitely.

When you are cold, warmth becomes important to you.  It has value, and everything associated with warmth assumes some of that value as well, such as clothing, fuel, shelter, labor for the provision of both, the right to occupy shelter, the space and land occupied by shelter and fuel, the security of that space, and so in indefinitely.  In short, value means survival, which is the one universal interest of all life.

Everything of value fills a need for somebody, is something of importance to someone, holds somebody's undivided attention, and is in at least some degree of demand.  An object has value if some organism (e.g. a human) wants it and needs it.  Is that plain enough?  That's the meaning of value.

There are different kinds of value, too.  An item may have immediate, realized value or merely the possibility of future value.  I distinguish between potential value and realized value through this slightly whimsical example.  Suppose I have a fish and you have an egg.  (Notice how easily Ownership arises as a natural, organic law?  It is a fundamental concept like gravity that cannot be overturned by any blackguard decree.)  Now suppose that I, having a fish, do not like fish so much, and you, with your egg, are not really in the mood for eggs today.

While the fish and the egg have the possibility of value not just as food but as desirable food, that full value is not being achieved in these circumstances.  The potential value is not currently being realized.  But suppose you and I reach an agreement in which we trade your egg for my fish, because you happen to like fish more and I happen to like eggs more.  Now how much value exists?  After the trade, the full value of both items can be realized upon consumption, and value has been created or increased by the mere act of exchange.

The following day I might be tempted to look for another fish, not because I like fish, but because I expect to be able to exchange the fish for something I like even more, such as an egg.  Catching a fish only creates a part of the value for me.  Exchanging the fish creates the rest of it. Initially, it has potential value, while its full value only becomes a reality upon consumption.  (This illustrates why all economic theories that consider only the production of goods and not the value of commerce and trade are complete bollocks.)

If this exchange continues for some time, I might, because of the difficulty of catching a fish and the relative abundance of eggs, no longer be satisfied with one egg per fish.  I might be able to negotiate, say, a dozen eggs for my fish.  Thus the "price" of a fish is a dozen eggs, and the "price" of a dozen eggs is one fish.  Nevertheless, value is still increased every time a willing exchange takes place. Both parties want more what the other has to offer, and both parties therefore gain.

Here's another example.  A tree grows in a field, and expends a tremendous amount of energy, time, risk and resources into producing a crop of fruit.  There's a lot of potential value stored in the fruit, but they are of little value to the tree.  Why did it even bother?  Because of first importance to the species is its continuation.  Animals and birds will seek out the fruit, of immediate value to them as food, energy, social and breeding advantage, and in exchange they will provide the essential service of dispersing that tree's seeds far and wide. Both parties gain.

Some may point out that this exchange is not really an exchange of value because it is not made consciously or deliberately, but on an instinctive, evolutionary level.  This is an unacceptable quibble, since most credit card purchases are made on exactly the same basis.  The economies of nature are every bit as taut and efficient as the stock market.

Certain species of ants actually keep livestock: tiny animals that are kindly husbanded by the ants and produce food that the ants prefer to anything they can scrounge on the ground.  The exchange is a fair one: the insect animal gains food and protection; the ants gain food security.  If it wasn't value for value and a gain for both parties, the system would break down and a different one would evolved.  This is continually happening, in fact, since no exchange is ever absolutely perfect due to the ever-shifting value of everything.  Some pushing and shoving is a necessary part of life.

With this clearer understanding of value, we can finally talk about the value of gold.  Gold has potential value as a commodity.  In ancient times it was one of a very few metals that was easy to work, though hard to find, and would not normally oxidize for anything.  It lasted virtually forever and you never had to clean it, and so humans endowed it with a mystical, divine aura.  Literally.  The elemental symbol "Au" comes from its Latin name aurum, meaning "shining dawn" that is the origin of our word for the alleged supernatural glow about one's person.

Gold electrical connectors are awesome.
The realized value of gold originally came from its ability to transfer that aura to the possessor and bestow him or her with social status. (Being a soft metal, it is quite useless for making tools or weapons.)  Feeling significant and socially connected is one of a humans' basic instinctual needs as an organism. We still use the commodity today for exactly those purposes in various forms of jewelry, decoration, tokens of distinction, mating status, or hierarchical position.  We also use gold in technology for providing incorruptible and reliable mechanical and electrical components used in virtually every machine made today, the true value of which can in every case be traced back to our fundamental instinctual needs, all of which are ultimately reducible to survival of the organism.  In short, gold helps us survive.

So if gold has become more, not less, valuable to us, why then is the price of gold no higher now than at most times in history, in comparable terms?  I mean, compared to the price of food, clothing, shelter, and labor, why is gold as cheap now as it was fifty, one hundred, or even thousands of years ago?

The reason is that price and value relate to one another in reference to the relative abundance.  Value may increase or decrease, abundance may increase or decrease, and so price is not a fundamental quantity but entirely derivative. Gold is today relatively in abundance thanks to more and bigger mines and advanced mineral extraction technologies, while at the same time the former industrial uses of gold (for manufacturing currency in the form of coinage, much more about which in a future post) are now obsolete.  Gold is no longer required in such enormous volumes, and so its "real" price remains more or less where it has been for millennia.

Did you see what we did there?  We slipped in the concept of money by talking about price, without defining either one.  Now that we have a suitably large reference frame that includes all of life and all of earth's entire history, we can finally do what we started out to do, which is to define money, a concept that far transcends mere human invention or arbitrary constructs or systems.  Once that is done we can (in following posts) begin to answer questions about price, currency, trade, scarcity, labor, charity, taxes, and all that jazz.

What is money?  Most people immediately respond that money is dollars.  Duh.  But what about euros, yen, pesos and pounds?  "Oh," they say, "I forgot about them foreigners. Ok, then, money is any kind of currency.  Cash, if you please."

And that person would be spectacularly incorrect.  Ever hear of a bank account?  They don't exactly keep stacks of dollar bills in a box with your name on it.  They only keep a running total of your deposits and withdrawals, and "your" cash is handed out to someone else to use until it ends up back at the bank again.  For you, they only store a number in a computer.  It's still money, but it sure ain't hard currency of any denomination.

Is money therefore defined as all currency in circulation plus all bank deposits?  Never mind defining just what exactly a "bank" is or isn't.  If you have $50 on an Amazon gift card, that's definitely money, no doubt about it.

Yet it's no more than a tautology to say that money is circulating currency plus deposits.  What makes money Money?  Why do dollars and euros, much less their virtual equivalents on deposit, have any value at all?  In my youth I was taught that dollars only have value as long as people think they do. That is a stinking, fetid load of codswallop.  And completely false, too.

Money is any means of storing, transferring and negotiating value.  Dollars and euros have value because someone has exchanged value for them and will generally only exchange them again for as much value as they can negotiate.  Coins are valuable not for the price of the metal in them, but for the face denomination that they represent as tokens of exchange.

Money is your way of keeping track of the value that you produce so that you get exactly what you've earned.  If you don't seem to have enough money, it isn't the money's fault.  You either haven't been keeping track very well of the value you create, or undervaluing it, or losing value in ill-considered exchanges, or you haven't been producing enough value to ensure your own survival.

I go even further than this in defining money.  Here it is possible to have honest disagreements with economists wearing bow-ties and herringbone jackets with elbow patches.  I define everything with potential value that is owned or controlled by an organism or groups of organisms (humans, perhaps) that can or potentially can be traded, negotiated, bartered or exchanged, as Money.  Some people disagree and call all that stuff  "Wealth."  But in the end, words aren't important, because wealth and money work the same way and follow the same fundamental rules.

Stay tuned for Part II of How Money Works in which we describe those natural laws which wealth (money) obeys.