Structuring Big Money in The U.S.

You are a Champion!

Ross Perot has a website called Perot Charts because he’s big on Charts and he’s big on facts. I notice he has a quote from David Walker, CEO of the Peter G. Peterson Foundation.

If you read the background of people like Peter Peterson you will find that he’s an Investment Banker, billionaire, and Secretary of Commerce under Richard Nixon. I’ve read some of his books and he has a significant handle on the facts and his facts are very very troubling. I’ve read his solutions to the facts so I will just assume (I didn’t study his site) that Perot got his facts and solutions from people like Pete (very connected and intelligent people).

However, their solutions trouble me because their solutions come from the viewpoint of the Banking Industry and the rich. His solutions to entitlements will be privatization. What concerns me, for the general population, regarding his solutions relates really to one issue. That issue is the shifting of risk.

SHIFTING OF RISK:

Here’s a story to put this into perspective. You live in San Diego, CA in a million dollar home and have $10,000 in the bank. Frankly, in San Diego your million dollar home isn’t too big and your savings are poor. However, you need to shift your social security payment to investments and you need to self insure your health. These are natural solutions made by the rich every day.

Rich people self insure a portion of their risk, because it’s cheaper than insurance, and they would love to invest instead of put money into social security.  While you may go broke or create debt by self insurance that’s not true of the rich. Let’s look at a different fact situation. They may live in a $60 million dollar home and have millions in investments. YOU ARE NOT REMOTELY IN THEIR RISK SITUATION. The market may go bust, and they will still drive their luxury car to the grocery store. You will be in the soup line.

Let’s consider some real solutions to their factual information and charts:

1. You pay into the social security trust fund and the government (similar to University practices) invests your money in the market. They separate this fund from the general fund. The government assumes the market risk and you have no downside risk but you get to benefit from the investment growth.  The problem with social security has always been the structure. Think of the Billions earned if there had been a true fund invested in the market like they now want you to do on an individual basis.
2. You do exactly the same thing with Health Care. Premiums go to a fund invested in the market (just like the private insurance carriers do now). The first argument against this will be, “The Government can’t run health care!” You’re right they can’t. However, they can assume the risk and take the profit out of health care.

OTHER ISSUES:

1. Let’s move on to the National Debt. What creates money?  What creates the supply of money is debt or loans by the banking system. In fact, DEBT = MONEY.  Car, boat, house, and other loans (through the banking system) makes up the major portion of the money supply even though our government prints money.  Too much debt equals devaluation of the dollar, and less purchasing power, just like printing too much money causes inflation.
   

   Now, ask yourself this question about our money structure: “Instead of printing money, and paying no interest, why does our government (federal, state, and local) borrow money and pay interest?” After all, they do have the power to pay their bills with the money they print. Why does our government pay interest on debt? What am I saying? Just one simple example, Oklahoma builds a toll road and the federal government says, “Here’s the cash to pay for it (I printed the cash you need last night) just pay me back out of your small tolls–no interest please.” Where’s the turnpike bonds, investment banks, etc. in this equation? Not quite like aid to a foreign country (because Oklahoma would pay the principal back out of fees collected).

2. Defense Spending is huge and drives our economy.  For example, we can use this spending to get out of a recession (creating sales and jobs for defense contractors) or control resources around the world.  As a people we need to make sure the direction (goals) of defense spending is kept in check.
   
3. Let’s consider Big Oil next. Remember the simple accounting equation: Sales - expenses = profit? Oil company profits have tripled and that leads us to believe that forces are driving price other than simple supply and demand or cost to produce.  Elasticity of demand is a big issue in the cost of fuel.  Financial speculators (those who never take possession of the commodity) but are in the middle between suppliers and consumers need more control.  Supply risks (war premiums) are a significant factor too.  Also, as the price goes up more reserves (supply) become available due to various reserves becoming more economical to produce.  In other words, the supply is large in places like our own country and could be harvested.
   
4. Next, let’s look at taxes. I appreciate how much Mike Huckabee knows about taxes and tried to educated the Republicans in the primary election (particularly about the FairTax). His understanding on taxes would solve a lot of issues (perhaps the time is not right but I am convinced it will come). It will come because of issues raised by people like Ross Perot, Pete Peterson, and the weight of reality. Everyday I am amazed at people talking about “progressive taxation” because they don’t understand the game. Let’s say you have been paid $100 dollars and $50 dollars will go to taxes and living expenses. Do you really care how the $50 dollars is divided if you could get the same living expenses and taxes paid? The “progressive” part of taxes are charged back to you in the name of “Living Expenses.” If you don’t understand this then you need to spend some time on this issue. I think I’ve already amply pointed out that you are not in the same game the rich are playing. CORPS. DO NOT PAY TAXES PEOPLE PAY TAXES!
5. Finally, Gold is just “one” medium of exchange just like silver and oil. There’s not enough gold on this planet to back up our IOUs!

Don’t get caught in a rich mans game!

“The inability of the Colonists to get power to issue their own money permanently out of the hands of George III and the international bankers was the PRIME reason for the revolutionary war.” Benjamin Franklin

Debtor Nation

You are a Champion!

Here is a simplified story by Warren Buffet to help us understand our current national situation (article written in FORTUNE 2003).

What’s more important the interest rate (yield) on our mortgage and investments or the value of the dollar?

As an individual we can change our minds about investments, lifestyle, and taxes and begin to have an impact on our life.

What can we do?

• Think in terms of risk and determine how much risk we can handle (monetarily and psychologically). Each of us differ so there is no correct answer. Also, what is a high risk for me might be an insignificant risk for someone else.
• Think in terms of value and determine the value for yourself. The obvious example is the value of a car because we all know that most cars depreciate in value. On the other hand, a salesperson may need a nice car in order to promote their business.
• Think in terms of productivity and determine if this is a valuable way to spend time. We may like mowing the yard and that may be the right thing for us. For others, it would be a poor use of their time.
• Think in terms of giving and determine if we will be a giving person. Giving often returns significant dividends.
• Think in terms of yourself and determine not to control your neighbor. We can’t particularly educate our neighbor no matter how smart we are. He doesn’t now or will he ever think like we do.
• Think in terms of example and determine what kind of a person we are. If people will learn anything from us it will be observed in our life.
• Think for yourself because others may not have your best interest in mind. We learn to modify our behavior from childhood to adult and still realize that most people are selfish (including us). They may not blatantly lie to us but they may keep silent about the truth. “Be as smart as a serpent and as harmless as a dove.”
• Think about your ongoing learning and education because most of what we learn will be in an informal setting. What we learned yesterday is obsolete today. How interested are we in learning and keeping current?
• Think in terms of sowing because we shall all reap what we sow (cause and effect).
• Think about eternity and where we will spend it because this life is temporary. Our debt has been paid in full so be thankful to the creator.

VLJ Perfect Storm Coming Soon

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The perfect storm is developing for the VLJ (Very Light Jet) as jet fuel and airport security increases at the hub airports, and commercial airlines continue to limit service to smaller cities around the U.S.

Commercial air flights are currently experiencing the most significant paradigm shift we’ve seen in decades (even though it’s still under the radar screen).

My wife and I recently toured the Cessna plant where they are building the Mustang VLJ and Cessna already has a sizable sales backlog for their jet (certified for a single pilot). The same dynamic is occurring faster for the developer of the Eclipse VLJ (Eclipse Aviation) who already has a tremendous global market presence. Vern Raburn (with billionaire backers like Bill Gates) had the vision to transform and revolutionize air transportation.

The hub and spoke system is on its way to becoming a buggy (at least a modified buggy) and being replaced by light jets that have the ability to land at small airports. These high performance (fuel efficient) jets are capable of landing at the same air speed I use to land in a single engine Piper. This state-of-the-art jet paves the way for point-to-point jet traffic on the way to future jet planes that fly themselves (avoiding airport security and inconvenience).

The technology for state-of-the-art transportation has been around for a long time due to the development of military aircraft (drones), sophisticated avionics, and the most important of all–GPS systems and NASA. As usual, the 10,000 airports don’t appear to be keeping up with this innovation so we may see a pilot free plan develop faster in Europe than in the U.S. Who knows?

Of course, the major airlines will cry foul and give specious arguments why this revolution should be hindered or killed (to eliminate their potential competition). For example, the crowded skies argument is ridiculously false because computer avionics and GPS makes this argument false. As for security, commercial flights file flight plans and fighter jets are scrambled from various air bases when a hijack code is sent or the transponder is turned off or communication ceases. Military jets fly multiple times faster than any commercial airliner. And, of course, carry sophisticated weapons. Technology is available to take over a flight because, in that regard, a passenger plane is just a larger complicated version of your radio controlled model airplane.

You might find reading the book, free flight from airline hell to a new age of travel (2001), by James Fallows interesting. We can’t see the mistakes of 9/11 being repeated after such a horrific event. If Congress, and the hub and spoke airlines, can see a possible repeat of the homeland not being protected we need for them to explain why to the American people. In the private sector incompetent people are fired.

Safe guards should be the application of existing high tech innovation (not the removing of shoes at airports). As usual, this is quickly coming from the private sector responsible to customer demand and disgust with inconvenience.

As business travelers we look forward to this freedom!

Science versus Politics

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Quality science versus the politicians in the war on Obesity:

America has a serious obesity problem and Ph.D’s in Nutrition have been fighting an uphill battle for years. Over the years there have been several ephedra studies with similar conclusions to the above study.

Study Conclusion:

“A dietary supplement containing a low potency ephedra/caffeine mixture appeared safe and effective in causing loss of weight and body fat, and improving several metabolic parameters, including insulin sensitivity and lipid profiles when tested under physician supervision. Such supplements could be a useful tool to assist with weight loss.”

Of course, thousands of people already knew this because (like me) they used the particular product in this study for years. In fact, the herb ephedra has had documented use for well over 5,000 years. We admit that this product is not for everybody but how did this quality product go from warning labels to being completely banned?

Short History:

The conflict is long and the story is involved but the end of ephedra involved the media hype surrounding the death of a Baltimore Orioles pitcher Steve Bechler. While thousands of people have used various low dose ephedra products without incident for years, and various companies have made millions of dollars from the sell of these products, the only company (in the fragmented Nutrition Industry) that would continue to fight the FDA decision in court was a Utah based company named Nutraceutical Corp. with the assistance of attorney Jonathan Emord. While they won in the lower courts they could not win the FDA appeal or get a hearing before the Supreme Court. The suit contended that the FDA would not follow the laws passed by Congress (the major reason for the suit). Also, the FDA was charged as being inconsistent in its application because ephedra can still be obtained in tea bags, and synthetic drugs with some similar properties (cold medicines) can be obtained over-the-counter without prescription.

The FDA and the powerful House Committee on Energy and Commerce, under the chairmanship of Billy Tauzin Rep. 3rd Louisiana Congressional District, seized upon the Bechler moment to kill ephedra with its hearings. “This powerful committee is arguably the broadest (non-tax-oriented) jurisdiction of any Congressional committee.”

The rest of the story: “On January 3, 2005, the same day he left Congress, Tauzin began work as the head of the Pharmaceutical Research and Manufacturers of America, or PhRMA, a powerful trade group for pharmaceutical companies…. He is represented as the one single factor that has prevented the United States of America from adopting a publicly funded health care system for all (according to Wikipedia).”

Is ephedra/caffeine dead from now on? Scientist in major Universities know how very effective ephedra/caffeine is for sustained energy and weight management. Not only have they studied this they have thousands of testimonies of people who have used the products over a long period of time (outside of formal studies). And so, they need not be convinced and we suspect they will continue to have their influence. On the other hand, the unorganized Nutrition Industry cannot hope to have the influence and associations developed in congress by powerful interest groups and lobbyist for decades. Many consumers were outraged at the ephedra hearings, even to this day, but it takes more than outrage. Perhaps one day ephedra will get its day in court. Certainly this is a Constitutional issue regarding the basic freedoms and rights of citizens in a non socialist capitalist society.

While the Nutrition Industry is supported by the science it doesn’t have the funding to overcome powerful lobby groups, controlled (for profit) media, and fee based political government associations. Of course the industry (like the food industry) should continue to be monitored to insure safe and quality products. Americans, that believe in the freedom provided by the Constitution, will have to organize to get the scientific arm of government uncontrolled by the agenda of their political bosses and powerful special interest groups with large advertising budgets.

Sick and Tired?

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“Sick and tired of being sick and tired?”

I watched a report on CBS 60 Minutes giving us a strong example of the serious health crisis we face in our country today.

“Recently, 60 Minutes heard about an American relief organization that airdrops doctors and medicine into the jungles of the Amazon. It’s called Remote Area Medical, or “RAM” for short.

In a matter of hours, Remote Area Medical set up its massive clinic, for a weekend, in an exhibit hall in Knoxville, Tenn. Tools for dentists were laid out by the yard, optometrists prepared to make hundreds of pairs of glasses, general medical doctors set up for whatever might come though the door. Nearly everything is donated, and everyone is a volunteer. The care is free. But no one could say how many patients might show up.

The first clue came a little before midnight. Stan Brock, the founder of Remote Area Medical, opened the gate outside. The clinic wouldn’t open for seven hours, but people in pain didn’t want to chance being left out. State guardsmen came in for crowd control. They handed out what would become precious slips of paper - numbered tickets to board what amounted to a medical lifeboat.”

We can all see the train wreck coming down the track and it’s called “Baby Boomer Express” (1/3 of the population ready to retire?).

Demographics

The study of demographics is not theory because (aside from catastrophic events that might change the population numbers) the numbers are known. Many marketing and economic majors have studied demographics to try and determine how it will impact our future and how to best take advantage of the aging population. A really good study of the demographic reality and aging population was presented by Peter G. Peterson in his book Grey Dawn. Based on his book, I suspect we could use many younger immigrants because on page 52 in his book he makes this observation: “The U.S. working population will begin to decline in the year 2019.”

In the year 2000, when Peterson wrote his book, the percentage of people in Florida over the age of 65 was 19%. Here are the years that some major countries will reach that same ratio:

• 2003 - Italy
• 2006 - Japan
• 2006 - Germany
• 2016 - UK
• 2016 - France
• 2021 - Canada
• 2023 - US

Have you ever been to Florida? If you have you can begin to realize how different the world will be.

“Though the most rapid growth of the elderly population has yet to happen, the steadily rising profile of the elder consumer is already visible to most retail shoppers–with hair dye outselling baby formula, with diapers for all age groups stocked in drugstores, and with senior-cruise brochures replacing the ads for kids’ summer camps.”

“Just as boomers once overwhelmed the schools as children, the job market as they came of age, and the housing markets as mature adults, so too are they on track to overwhelm America’s retirement systems as they enter elderhood.”

However, as to retirement, taxes, illegal immigration, health care costs, etc. we will have a solution for those issues by default.

In fact, the “income tax system” has exactly the same demographic problems as social security but the solution is in the wings (FairTax). It will just be a matter of some time before the solution becomes very clear to enough people.

Also, if you want to watch an interesting video about money = debt and the banking system go to http://moneyasdebt.net/.

One of the major opportunities will be with the Health Care Industry (the next Trillion Dollar Industry). Read The Wellness Revolution by Paul Zane Pilzer (economist). That’s why the Nutrition Supplement industry is so good!

Industry Regulation

Not all government regulation is bad because it helps protect people from unscrupulous businesses that prey upon unsuspecting people.

If you are considering “doing the business” you have to accept the fact that MLM is heavily regulated, and certain MLM industry segments are even more heavily regulated than others. That’s just a fact.

However, keep in mind that “all” industry is regulated and at risk. Just pick up the newspaper or go online if you want to “understand” the political environment we live in today.

Is there personal risk associated with heavy regulation? You bet! If you don’t understand the government regulation imposed upon businesses, and the various reasons for regulation by politicians, you are even more at risk. Professor Michael E. Porter in his book Competitive Strategy, Techniques for Analyzing Industries and Competitors, certainly considers this aspect of business risk as does any quality business school and quality company management.

Of course, the same risk that applies to businesses applies to you by being in the business, and that requires your “due diligence” when picking a company. When your company fails because of government regulation you will fail. All your hard work will go down the drain with it.

Obviously, if the company you are with has quality management, and understands how to play in the game, they can turn this risk into a “competitive advantage.” Their competitors will be eliminated from business and they will benefit along with you. If possible, don’t get on the wrong side of that equation when picking a company because you will seldom if ever win.

BurnLounge shut down the network marketing part of their business and that means their Network Marketers have a problem. If that was a “right” decision or “wrong” decision by them (due to government action) the decision will still have a major impact on the Distributors (who are also their customers) trying to do the business. I have not personally “studied” this company so I have no opinion about BurnLounge.

Here’s one comment I read about this situation: “Instead, the company will focus on the free service, in which anybody with a Web site can become an online music retailer. Excellent move. The network marketing aspect seriously dampened my enthusiasm for what otherwise sounded like an interesting new way for artists to publicize their music. ” Would you agree with that statement? Yeah, perhaps if you are Amazon.com or Wal-Mart.

Free societies exist because of “rule of law and a level playing field” so even though you certainly can’t eliminate risk you can do these things:

• Look at the history of the company and how they deal with government regulators.
• Look at the quality of the management and/or the Board of Directors.
• If a Sci/Med Board is applicable look at the quality of the people on their board (they certainly don’t want their professional reputation tarnished because they have a lot at stake outside the company).
• Ask Key Employees questions about various pending government regulations that will impact their industry.
• The longer they have been in business, and the more influence they have in their industry, the better. Higher risk comes with start-ups (that doesn’t mean the risk is not worth it).
• Has their Compensation Plan been tested in the court system?  For example, the Stairstep Breakaway Plan is an older plan used by many of the top companies.  This plan is familiar to regulators and has a track record.

Take the time to educate yourself and be diligent when picking a Network Marketing Company to join.