THE UGLY, THE BAD AND THE GOOD – (part 3 of 3) – The Good

In the first two parts of this series I set the stage with historical facts from two different eras that helped us understand the circumstances of 2014. You may well ask, “So what can be “The Good” about this frightening scenario?” – Lots.

We have the advantage that we ARE the United States and Canada. We have the biggest and best developed business infrastructure of any other nations on the globe. Regardless of oncoming economic events, that advantage won’t go away.

Certainly the world is too far down the slippery road to avoid a major economic downturn. But regardless of honest government reports that may be misleading and the happy to please mass media, we can’t avoid the consequences of really stupid economic decisions.

So the question really becomes who is gonna recover quickest and best. In this case, it is actually to our advantage that the rest of the major economic powers are sliding down the slope with us.

What are our advantages that will lead to a faster recovery, and maintain our position as the world’s top economy?

  1. We are producing as much natural gas as anyone in the world, with humongous reserves, and will become a net energy exporter by the mid-2020s.
  2. Our huge finds in shale oil, with the means to produce it should make us energy independent, and non-dependent on OPEC oil by that time also. This will give us a major lead over Europe, Japan, China and most of the rest of the world.
  3. Even if we slow down during the downturn, we still will have the most advanced and well developed manufacturing and technology infrastructure in the world. That also will not go away, and will be ready to swing into full gear as we come out of whatever situation that occurs.
  4. We have an experienced and solidly established business infrastructure and a well developed shipping, trucking and transport system to carry on commerce.
  5. We are known for innovating some of the worlds most advanced technology. Our brains are not going away.
  6. And do not ignore the robotics and 3D printing manufacturing systems that will bring down production costs to the point of being competitive on the world market again. We are far ahead of the rest of the world in developing these amazing technologies, and will remain that way assuming the government doesn’t tax away and over regulate the advantages with bureaucratic nonsense.
  7. We still have the biggest and best educated and trained middle class entrepreneurs in history. If we retain that edge, and focus on strengthening our middle class entrepreneurial system, No one can overtake us.
  8. And never underestimate the American free enterprise spirit! We might get down for a time, but we will never be stopped.
  9. America has always been at its best when it has had to overcome adversity and prove its mettle to the world. For better or for worse, it has that opportunity today.
  10. And don’t forget that we have the best developed agricultural system in the world!

Now please don’t let the good news get you all relaxed and complacent. We still face some very demanding economic times before the good stuff brings us back. Those who aren’t prepared will indeed suffer.

Remember that, during the Great Depression of the 1930s, 34 percent of the people suffered badly, 33 percent of the people more or less held their own, and 34 percent created new fortunes because they were prepared for economic change. Fortunes are developed during times of economic change, good OR bad.

Our duty is to educate and prepare ourselves to overcome economic uncertainty. In this economy, everyone needs options. Study entrepreneurship and business opportunities. Join with teams that are educating and preparing together. Sequester a cash reserve fund to take advantage of opportunities. In a downturn, cash is indeed king.

It has never been more important to get to know and understand your local government people and processes. Changing the misguided direction of a country starts at the bottom, not the top. A great resource for better understand those basic principles is the book LEADERSHIFT, by Orrin Woodward and Oliver DeMille.

We must truly redirect the economic path of our countries, and that is going to start from the middle class entrepreneur. This is an opportunity to become one of the founders of a new economy in our land. One based on free enterprise, minimal government interference, and a new spirit of adventure, based on common sense and the work ethic that made our countries great.

Ben Franklin commented on the half of a shining sun that was engraved on the back of George Washington’s chair during the Constitutional Convention. He asked if it would be a rising or setting sun.

We are determined that it becomes again a rising sun. Let’s become a new generation of founding fathers and mothers in countries with a renewed spirit of freedom. Let’s be courageous together! Will you join our leaders in founding a new spirit in our countries? Will you be courageous? Will you stand and shout “No More!” Will you hold the line with us? Time to create a new future in our land! And with God’s help, we will prevail!

Stand and join us!


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THE UGLY, THE BAD AND THE GOOD – (part 2 of 3) – The Bad

In the first part of this 3 part series, we made some contrasts between the days of ancient Rome and modern day America. In part 2, “The Bad”, we’ll look back a decade or so at our economic policies and their effects on today.

Everybody has heard about the young people in the United States, burdened with school debt and a poor job market, who have failed to launch.  Almost a third of 18- to 34-year-olds live with their parents.

But more shocking is the account of the growing number of people aged 50 to 64, people who normally would be in their peak earning years, forced by economic conditions to move in with their parents!

The LA Times reports that “older people are quietly moving in with their parents at twice the rate of their younger counterparts.”

And now the Gallup organization finds that almost a quarter of families in the U.S. are struggling to afford food for their families.

Why is this happening?  Because nearly a third of Americans who could work aren’t, either because they would earn less than their benefits, or relative to their experience, there are no reasonable jobs available. On top of that, most new jobs today are part time, to avoid the employer cost of the Healthcare Act that exempts employers from providing health insurance for part time employees or the jobs are in the lower income range. We actually have fewer full time jobs available today than in 2000, with a few million more adults competing for them. Our national inflation adjusted payroll is about equivalent to 1980.

Let’s go on: The United States has gotten so economically out of control that we now borrow 41 cents of every dollar we spend. How on earth do you get away with that? Well over any extended period of time you don’t!

We have gotten away with it in the last decade by selling our debt in the form of U.S. Treasury Bonds to anyone who would buy them. But as our debt exceeded any intelligent or sustainable level, the public and the rest of the world’s governments got worried about our ability to repay, and stopped buying our bonds. In the last two years, the Federal Reserve banking system (that independent group of U.S. and European super banks) has had to step in and purchase over 90% of our bond issues.

How does it do that? Simply by creating new money, essentially out of thin air, to purchase our treasury bonds with. But that has its own negative results, as I mentioned before, and can’t be done over any long period of time. In fact, the Federal Reserve has recently cut back its money creation from 85 billion dollars a month to a mere 45 billion monthly.  Where does that new money go? It goes into the largest banks and financial concerns. In other words, the pockets of the before mentioned wealthy elites (see part 1). Have you seen any positive effects in YOUR bank account from that over 4 trillion?

So where do we get the money to continue our out of control spending habit? That is a really scary issue that is going to have to be faced in the next few years. But at this point, we have created a debt and liability level that is so large that if continued, it basically guarantees some form of national bankruptcy for our grandchildren, if it can be put off that long.

What factors will determine the end of our gravy train?  Probably the most likely is that interest rates will go up from their artificially low historic levels. Right now we have to borrow the money to pay the interest on our debt. But if interest rates went up by even 3 or 4 percent, we would be spending nearly half of our total government income just to pay that interest, which would necessitate creating even more debt. The Federal Reserve has imposed an historically low interest rate on their newly minted money, but as that option runs out in the next few years, the rest of the world is not going to accept buying bonds that might not get paid back at a 1 or 2 percent return.

We have witnessed Spanish, Italian, Greek and many other country’s bond rates rising dramatically as the world increasingly worries about their stability. An artificially imposed low interest rate cannot be maintained forever in the real world– unfortunately reality will rear its ugly head in the not distant future.

The second likely factor might be that other major players in the world market stumble, and spark a worldwide downturn that would carry us along with it. Could that be possible? Could other countries be as dumb as we obviously seem to be?

Let’s look at the overall debt structure of the major world economies: A recent chart of the combined private and public debt of some of the largest 5 world economies as a percentage of their Gross Domestic Product (Or total annual income) is quite revealing.  Countries whose combined debt is over 150% of their GDP are considered “troubled”, and few countries historically have passed 200% without some form of economic turmoil.

The chart shows that Japan has reached over 650% of debt to GDP, Britain 544%, Europe (the Eurozone) 460%, China 420%, and the US lags behind at only 345%. The world has never experienced this astonishing level of indebtedness.  We are in uncharted waters.

Economists feel that a default or serious negative banking event by (in order of vulnerability) Japan, Southern Europe (which would drag in the more prosperous northern countries) or China, would start a negative chain of events that would affect the whole world, certainly bringing our economy with it.

What can we learn from these facts and present situation?  Read the final part of the series: “The Good”!


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THE UGLY, THE BAD AND THE GOOD – (part 1 of 3) – Fair Warning

I know its supposed to be the good, the bad and the ugly, but I’d rather get the bad stuff over with first.

Noted poet and author Oscar Wilde said “Marriage is the triumph of imagination over intelligence. Second marriage is the triumph of hope over experience.” In finance, by contrast, experience should always prevail over hope and realism over just wishful thinking.

Can we learn anything from history? I call this part “Fair Warning”; Let’s look at the Ugly, the Bad and the Good:

I want to thank John Mauldin in his Thoughts From the Frontline website for his perspective on the fall of the Roman Empire. I’m going to be contrasting, and switching from the past to present day, so I hope I don’t cause any confusion.

At its height, Rome claimed 120 million citizens and subjects, nearly half the world’s entire population at that time. OK, less than 20 million were citizens. The rest were inhabitants of countries who were under military and economic control, and supplied their produce and goods to Rome for its citizens to enjoy. It was much like today, where poorer and less developed countries are economically dependent on supplying their natural resources and cheaply produced products for wealthier nations to enjoy.

The Roman Empire’s land area stretched across 2.5 million square miles, more than the total of all West and East European countries today (with the exception of Russia).

So what caused this incredible republic turned empire to fall?

First, The evidence of Excessive Government Spending has been left everywhere: The Roman Forum, the Arch of Titus, and many more magnificent structures were built by the government out of pure marble and probably cost the Ancient Roman Empire the equivalent of hundreds of billions in the context of today’s economy. The Pantheon, a great circular temple, could easily have cost billions more, not to mention the Coliseums, the great Roman road systems and aqueducts. (By the way, the U.S. government has spent untold billions of dollars on one building –the largest building in the world– the Pentagon.) And we really do have a great road system.

And Rome’s coffers were further drained by the cost of its vast well equipped standing army of 500,000, spread all over much of the known world, whether welcome or not.  (I’m not even going to go there. I’m sure today that our bureaucrats and military personnel are welcome wherever they get sent.)

Nor was it cheap to keep the restless populace happy and distracted. Rome paid a fortune for its network of great games and spectacles — the equivalent in today’s terms of billions of dollars per year according to historians, which now, in proportion to their resources, would be the equivalent of only a tiny percentage of our professional sports expenditures in the U.S. today.

Plus, a huge portion of Roman citizens did not work. Their needs were supplied by a generous government. Because of that, Rome dug itself into a financial hole with huge pension liabilities owed to a growing mass of retired soldiers and bureaucrats, plus supporting an enabled population.

Did you know today that the U.S. federal and state governments employ nearly half of our working population, either directly or through contractors? And that over 40% of U.S. families receive some form of government check?

On top of that, the estimated unfunded liabilities of Social Security, Medicare and Medicaid, Government pensions and the new Healthcare Act are estimated at over 130 trillion dollars.

To put that in perspective, economists estimate the entire worth of all the world’s combined assets at about 62 trillion dollars. So “We The People” are liable for and responsible to ultimately pay more than double the assets of the entire world!

Second, Much Like the Western World Today, Rome Was Drained by Threats from the Middle East.  Recent studies are shifting much of the blame for Rome’s demise from the Goths and Huns of the North, to the Middle East, especially Persia (now Iran and Iraq), which Rome fought for hundreds of years, continually draining its resources.

First Rome battled the Parthian Empire, which included all of today’s Iran and Iraq.  Then, Rome battled the even larger Sassanid Persian Empire, encompassing not only today’s Iran and Iraq, but also Kuwait, Saudi Arabia, many Persian Gulf states, Afghanistan, Pakistan, Syria, Lebanon and other names familiar to some folks today.

Indeed, historian Peter Heather, in his recently published The Fall of the Roman Empire, suggests that it was Rome’s long entanglement with the Persian Gulf and Mid-East empires that largely sealed its fate.

It would sure seem crazy to get embroiled in that region that has successfully resisted change for thousands of years.

The Third Factor That Drove Rome to Ruin: Excessive Taxation!  In the early days of the Empire, the tax burden to Romans was minimal: Citizens paid a sales tax, but it was capped at only 1 percent. Land taxes were limited to 10 percent to 20 percent of the land’s yield, with no tax on property or homes. Inheritance taxes were only 5 percent. Import duties and tariffs were inconsequential. And there was a tiny per-person head tax, based on a regular census.

In this low-tax environment, the Roman economy prospered. But as the costs of maintaining the Imperial army and government grew, so did the tax burden.  Rome began to levy special income taxes and fees. The taxes became so onerous that heirs routinely declined large inheritances because they couldn’t afford to pay the required taxes, as a large part of the inheritance might consist of properties and physical assets, and be lacking enough cash to clear the estate taxes. Middle-class Romans, the entrepreneurial class, went bankrupt. And Upper-class Romans soon joined them.

Tax revenues plunged. Rome was strapped for cash, and it could no longer pay its bureaucrats or its professional soldiers who guarded its northern borders. Another pillar of the empire was crumbling.

Today, the U.S. legislature is raising the upper limit on personal income tax, and bringing back the Estate Tax, plus we have the honor of being rated the highest cost of doing business and corporate tax rate in the world.

The Fourth and Fatal Blow to Rome: Inflation!  When the Roman government needed more funding and couldn’t raise more tax revenue, it did what nearly all governments have done before and since: it manufactured more money and debased its currency.

For example, the silver content of the most common coin, the denarius, was a hefty 90 percent silver in the age of Nero. Two centuries later, by the reign of Claudius II, it was down to a meager 0.2 percent.

Interestingly enough, pre 1965 U.S. coins contained 90% silver, and today’s coins have zero silver content.

In Rome, the price of all goods surged dramatically as inflation raged. One historian estimates that the cost of a measure of Egyptian wheat rose from seven drachmas in the second century to 120,000 drachmas in the third century — an inflation of 15,000 percent.

Economists state that the U.S. dollar has lost over 93% of its purchasing power since 1913, and at an ever increasing rate. Ironically, that date coincides with the year the Federal Reserve and the Internal Revenue Service were created. That only puts us at 1,425 percent inflation since that time.

Historically, whenever a country has created excessive amounts of money, as that money filtered into the economy, massive inflation was certain to eventually follow, regardless of any government intervention.

Worthy of note, the Federal Reserve Banking System, our privately owned equivalent of a Central Bank, has created over 4 trillion dollars in the last 6 years to add to our 2008 currency base of 800 billion dollars. In other words, we have sextupled, or 6 timed our total money supply in 6 years. Substantial inflation must be the eventual result. In the long run, the natural laws of economics do not bow to government manipulation

And it was the combination of these factors, plus one basic cause, which resulted in Rome’s demise.

That basic cause of the fall of the Roman Empire was that it WAS an empire. Rome achieved greatness during the time that it was the Roman Republic, governed by its citizens, considered the best educated population in the world. But, when those citizens became pampered, complacent and enabled, they forgot the citizen strengths that had created their greatness, and allowed themselves to become an Empire, governed by the wealthy elite and their bureaucrats. At that point, civilization starts its decline. When the power is in the hands of the few, the citizens become servants.

I hope we can learn something from history! And not become ruled by an uncaring group of mega-wealthy elites.

By the way, did you know that the World Economic Council recently stated that 85 families now own 46% of the world’s wealth?  (let’s take a look at that in part 2)

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Is An Economic Winter Coming? – (a Rascal Radio Script)

World Finance

If you have been following US and world economics, or are just wondering what is really true about our seemingly pretty messed up economic situation, you may be pondering what the results are going to be over the next few years.  Is Quantitative Easing really working?   Can we somehow pay off what seems to be an enormous debt load?  Will we have inflation, and how will it affect my family and lifestyle?  Is it really that bad, and in spite of what governments are claiming all over the world, are we about to witness some uncomfortable financial decline?

World governments are all painting a positive picture of economic recovery, except it doesn’t appear obvious to anyone but them.  The Central Banks, who control each country’s money supply and interest rates, claim that they have everything under control by keeping interest rates artificially low and printing astounding amounts of money from thin air.

John Mauldin, in his “Thoughts From the Front Line”, says : “The fact that their models have been stunningly wrong (in real life) for decades seems to not diminish the vigor with which central bankers attempt to micromanage the economy.”

I thought I would give an update as we near the end of 2013 and look around us at the world we live in.  Economics is not just a US event, but we will start and end with the US as the largest world economy.

The US government reports that our employment picture is improving.  However, the increases in employment are mostly part time and low paying jobs.  In fact, our labor force participation rate is back at 1978 levels, with almost 40 million more people to feed!

They claim housing sales are climbing back, but over 60% are being purchased by investors and major corporations.  They are taking advantage of the huge amounts of foreclosures and depressed prices to buy cheap and hold or rent until future inflation hits.  Very few homes are being built or bought by first time home buyers, who are the heart of any real estate recovery.  Why?  Because of depressed incomes, high unemployment (especially at the younger ages) and the fact that banks are much stricter on credit requirements.

The government statistics show manufacturing production is increasing, but now manufacturers are sitting on huge inventories praying that sales increase.

Meanwhile, our government is spending over 60% more than our total income, which means they have to borrow over one and a half trillion dollars a year to keep even with their bills. How do you do that over many years?  Simple, you sell treasury bonds to whoever will loan you the money, hoping that by some miracle of hyperinflation you will be able to repay them down the road.

That brings us to our Federal Reserve banking system.  The Fed acts much as the other central banks around the world.  The Fed is an independent (for profit) conglomerate of 8 huge banking families from Europe and the US.  The Fed sets interest rates by the rate it charges our banking system for the money it prints and lends them.

Since the Fed has set interest rates artificially low to try and stimulate the public to borrow and spend more, no one is buying our low interest treasury bonds.   As a consequence, the Fed currently buys over 90% of US treasury bonds with the money it creates.  In order to do this, the Fed has quintupled the US currency supply in circulation in the last 5 years, from about 820 billion to over 4.2 trillion, so our banks are swimming in money.  How this doesn’t cause massive future inflation is a question that hasn’t been addressed as of yet.

But here’s the rub – The public isn’t borrowing the money!  Harry Dent comments: “The Fed wants consumers to borrow money.  To this end, the fed has printed gobs of new cash that are sitting idle at banks and has also forced interest rates to record lows.  Money is both plentiful and cheap.  But consumers – notably the older boomers, who have good credit scores and solid incomes – aren’t biting.  Instead, this group is working to pay down debt, not take on more.”  Our aging population is more worried about saving and investing for retirement than borrowing to go on spending sprees.

So private debt has actually decreased in the US since 2008 by over 100% of Gross Domestic Product (about 14 trillion dollars), while government debt has skyrocketed by over 100% of GDP.

In other words, our economy is actually in a stall mode, even while massive amounts of freshly printed money and huge amounts of debt are being poured into it!  Quantitative Easing is NOT working!

Now that I have beaten up on the US, it’s interesting to note that the next 4 largest world economies are in even worse shape!  Yes, it’s a global economic crisis!  We are not alone!

A recent chart of the combined private and public debt of some of the largest 5 world economies as a percentage of their GDP   is quite revealing.  Countries whose combined debt is over 150% of their GDP are considered “troubled”, and few countries historically have passed 200% without some form of economic turmoil.

The chart shows that Japan has reached over 650% of debt to GDP, Britain 544%, Europe (the Eurozone) 460%, China 420%, and the US lags behind at only 345%. The world has never experienced this astonishing level of indebtedness.  We are in uncharted waters.

Economists feel that a default or serious negative banking event by (in order of vulnerability) Japan, Southern Europe (which would drag in the more prosperous northern countries) or China, would start a negative chain of events that would affect the whole world.  We will explore those economies in a later cast.

So is winter coming?  Time will show.  Winter may be a bit harsh, but it certainly doesn’t destroy life.  Coat makers, snowmobile shops, 4 wheel drive manufacturers, winter sports stores and locations prosper in winter.  Why? Because they see opportunity instead of despair – and prepare to profit from change!

If we assume that winter is coming, then educating ourselves financially would be a very astute move.  What you don’t know WILL hurt you.  But what if you anticipated economic changes so that you were in a position to benefit from them?  What if you were in a position to advise and help people adjust to change?  Change doesn’t have to mean ‘bad’, it just means change.  Knowledgeable people who keep their heads and wits about them always reap benefits from change.

Understand that, in the event of some sort of economic downturn, the US will still come out of any decline as still the largest and most diversified economy on earth.  We have the most innovative and best trained entrepreneurial middle class in the world.  PLUS the new extraction technology for petroleum reserves should make us energy self sufficient –a huge economic benefit!

Those who learn and stay the course will be the champions of a renewed economy.  Winter might come, but we know where we hung the coats!

Until Next Time, Larry

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Created In Kind – (a Rascal Radio Script)

Altered Reality

I was talking with my granddaughter, who was telling me how excited she was about her anthropology class, and the facts of evolution.  I told her of my excitement when I first saw the remarkable chart from puddle to frog to man.  That is, until I studied the topic, and came to understand that the theory of evolution is only a theory, and seems not to stand up under scrutiny.  In fact, the Genesis account of an intelligent Creator is easier to back up with science than the wishful “It just all kind of started somehow” that a lot of the mainstream mindset is locked in to.

She was shocked, and informed me that her textbooks were absolutely certain that all scientists believed in evolution.

I asked if she had seen or was aware of a document that was recently signed by over 800 PHD scientists that reads, in part, “We are skeptical of claims for the ability of random mutation and natural selection to account for the complexity of life.”  The fact is that many of the world’s leading scientists believe in intelligent design.

In fact, Dr. Edgar Andrews, one of Europe’s premier molecular biologists, stated “The creation of life out of non life necessitates skill, knowledge and intelligence.  With all of our incredible technology, no one has been able to make a living thing out of non living molecules.  However, even if they did, it would only prove that the creation of life took intelligent, creative design.”  Even science law of biogenesis states that “Life always comes from life.”

Biophysicist Harold Morowitz compared the number of interactions needed to randomly produce a living cell with the total number of interactions available since the commonly agreed and assumed beginning of the universe.  His conclusion was that the mathematical probabilities are so small as to be statistically zero.  Most mathematical calculations conclude that a universe even 100 billion years old is still not old enough to provide the number of interactions needed to randomly produce a living cell.  Mathematician Hoyle comments:  “The current scenario of the (Darwinian) origin of life is about as likely as the assemblage of a Boeing 747 by a tornado whirling through a junkyard.”

John Blanchard says: “The strongest ‘creation evidence’ is man himself.  Unlike other creatures, man has something we call a ‘personality’; man makes intelligent choices, has a conscience and can distinguish between right and wrong.  Man is capable of love and compassion.  Where did man get these qualities?  Neither evolution nor an avalanche of accidents could have produced them.”

Scientists are in agreement that the ‘Big Bang” theory is the logical explanation of the origin of the universe as we know it, and that the universe began at a specific and finite time in the past.  Using that theory, the first law of thermodynamics (the conservation of matter) states, in layman’s terms, that matter can’t just pop into existence or create itself.  That would then imply that something external to the universe caused it to come into existence!

I think we all agree with the premise that the universe was somehow created, even if we disagree on the cause.  Now let’s talk about man, and how WE got here.

The mainstream theory that my granddaughter is taught, claims that Charles Darwin’s theory of evolution explains our existence.  Darwin’s theory says that life was a chance combination of chemicals that mixed together to form a one celled living organism.  That one celled organism then, over millions of years and through the processes of mutation and natural selection, led to all the species living today.

We understand mutation to be a rare, random and abrupt change in the properties of a living thing.  The theory of evolution says that random change in the organism ‘catches on’, and makes a favorable change that then repeats itself until another random favorable change adds to the organism, in time creating a continually improving organism through natural selection, where stronger organisms outrun weaker ones in the survival race.

Interestingly enough, molecular biologist Michael Denton (an agnostic) says that, in his opinion, “Life is a matter of design.  No matter how numerous they may be, mutations don’t appear to produce any kind of evolution.  The majority of mutations lead to structural impairment, genetic diseases and death.  The ratio of harmful to beneficial mutations is at least 10,000 to 1.  The odds of continually beneficial mutations accumulating to produce favorable change over any period of time become infinitesimal.”

Physicist Werner Gitt states “Mutations can only cause changes in existing information.  There can be no increase in information, and in general the results are injurious.  New blueprints cannot arise; mutations cannot be the source of new information.”

Charles Colson comments, “Since most mutations are harmful, if mutations accumulated, the result would be devolution, not evolution. Since the development of a single new organ may require thousands of mutations, Darwinists must hope that vast numbers of these rare beneficial mutations will happen in a single organism.  The improbabilities (of this) are staggering.”

Dr. Lee Spencer writes “Whoever thinks macroevolution can be made by mutations that lose information is (thinking) like the merchant that lost a little money on each sale, but believes he will make up for it in volume.  No mutation has ever been observed that added information to the genome.  The failure to observe even one mutation that adds information is more than a failure to find support for the theory.  It is evidence against the theory.  The human genome has more information than the bacterial genome.  Information cannot be built up by mutations that lose it (or fail to add to it).”

The theory then states that, after a mutation has occurred, the process of natural selection will sort out the good mutations, and promote that improved organism over its competitors.  Natural selection is needed to guide the changes that take place from one generation to another.

Referring again to molecular biologist Edgar Andrews, he further says “There are three good reasons why natural selection cannot cause evolution.  First, natural selection makes animals more alike than before, not different.”

He cites the example of rabbits.  If a mutation makes a rabbit faster, then that rabbit would perhaps breed a group of faster rabbits.  BUT they are just faster rabbits.  However, those rabbits survived well, and therefore had no impetus to become horses.  There is no historical record of one species becoming another.  Natural selection can improve a species’ adaptation to its environment, but doesn’t change it to another species.

His second reason:  “Natural selection could never bring about all the myriad of changes needed at the same time to turn one animal into another.  A hare may look like a rabbit that grew longer legs, but a zoologist would tell you that there are extreme differences between the two.  Even the basic blood proteins are different, along with many other basic body chemicals.  In fact, using a comparison of biochemicals, man is more closely related to pigs than to monkeys.”

“The third reason is that evolution is supposed to happen by millions of small changes over time.  To evolve a complicated organ like the eye, or even skin and hair, would need a large number of small changes in the genes of an animal.  It is obvious that a creature with an eye has advantages over one without an eye.  But what advantage has a creature that has evolved only part of an eye?  If the lens had evolved, but not the retina, the creature would be just as blind as before.  Even if the whole eye had evolved, the animal would still be blind until the optic nerve and brain cells had evolved.

The step by step evolution of organs is supposed to happen because each step gives the creature some advantage.  Obviously, hundreds of steps would have to occur before any advantage was produced from the evolving eye, and these steps could not therefore be guided by natural selection, which must see improvement in each step.

Imagine the complexity of properly ordering the code for just a strand of your DNA.  If you had 4 colors of paint, and could paint ten steps in any order you wished, you could paint the steps 1,048,576 different ways.  Now imagine only 100 steps in only a portion of a DNA molecule. That sequence could be ordered in over a million million ways.”  And this took place by a series of chance accidents?!!

And now let’s look further into the topic of irreducible complexity.  Charles Darwin wrote:  “If it could be demonstrated that any complex organ existed which could not possibly have been formed by numerous, successive, slight modifications, my theory would absolutely break down.”

Charles Colson writes:  “The fact that organisms are irreducibly complex is yet another argument that they could not have evolved piecemeal, one step at a time.

Take the example of the bat.  Evolutionists propose that the bat evolved from a small, mouse like creature whose forelimbs (the front toes) developed into wings by gradual steps.  But picture the steps:  As the front toes grow longer and the skin begins to form between them, the animal can no longer run without stumbling over them; and yet the forelimbs are not long enough to function as wings.  Therefore, during most of its hypothetical transitional stages, the poor creature would have limbs too long for running and too short for flying.  It would flop helplessly along and soon become extinct.

There is no conceivable pathway for bat wings to be formed in gradual stages.  And this conclusion is confirmed by the fossil record, where we find no transitional fossils leading up to bats.  The first time bats appear in the fossil record, they are already fully formed and virtually identical to modern bats.

The same pattern holds throughout the past, as we see in the fossil record.  The overwhelming pattern is that organisms appear fully formed, with variations clustered around a mean, and without any transitional stages leading up to them.”

Biochemist Mike Behe writes:  “As you search the professional literature of the last several decades, looking for articles that have been published even attempting to explain the possible Darwinian step by step origin of any of these systems, you will encounter a thundering silence.  Absolutely no one – not one scientist – has published any detailed proposal or explanation of the possible evolution of any such complex biochemical system.”

A microbiological research team, headed by molecular researchers Davis, Kenyon, and Thaxton writes: “It has proved impossible to arrange protein sequences in a series corresponding to the expected transitions from fish to amphibian to reptile to mammal.”

In fact, no transitional fossil, acting as a transitional stage leading from one species to another, has EVER been found among the millions of fossils discovered.

Even Richard Dawkins, biochemist, atheist, and well known spokesman for the evolutionary theory, when asked about the Cambrian fossil deposits, (the Cambrian Explosion) where many differing life forms were suddenly displayed all at once in one sediment layer with no previous fossil record stated: “It is as though they were just planted there, without any evolutionary history.”

Oh, Gracious me!

I’m going to wrap up with a little story borrowed from my friend Dr. Edgar Andrews.

I vividly remember him saying, “Almost all of the very top scientists in every field are creationists.  Mostly just the lower and mid level group of scientists need their science to be their God.”

Onto the story he told me:

“One day I was walking along the seashore when I saw something very colorful half buried in the sand.  Prodding it with my foot I saw that it was one of those small, solid rubber balls that bounce so well.  How did it get there?  You may think that a child playing on the beach the day before, had lost it, but here’s what really happened.

Many hundreds of years ago, on a tropical island, there grew, side by side, a coconut palm and a rubber tree.  One day a coconut fell from the top of the palm tree to the ground, striking a stone which chipped off a small piece of the coconut shell.

It was not long before the ants and other insects found the hole in the coconut and began to nibble away the inside of the nut, till eventually the hollow shell was left quite clean inside.

It so happened, about that time that a second nut fell from the palm tree.  In falling, it struck one of the main branches of the rubber tree, breaking off a piece of bark.  Naturally, the milky rubber latex began to flow from the damaged branch and dripped to the ground.

It so happened that the empty coconut shell lie directly below the damaged limb, with the small hole in the shell facing upwards.  By a wonderful coincidence the rubber latex began to drip directly into the hole until quite a pool of latex had collected in the shell.

Then a wind sprang up, carrying sand and dust across the island.  Some of the dust was mineral sulphur and some was from red colored rocks on the island.  The wind piled the dust against the coconut shell and quite a lot of dust found its way into the hole and settled on the rubber latex.

Finally, the wind brought a leaf, which settled over the hole, and latex drips then sealed this across the hole so that nothing could get in or out.  The sea, driven by a strong wind, surged over the beach and swept the coconut shell away.

As the shell bobbed up and down, tumbling over and over in the waves, the rubber latex mixed with the sulphur and the sand and rolled itself into a ball.  Now when the sulphur is heated with rubber it vulcanizes the rubber into a solid, elastic lump and this was just what happened.  The latex continued to be rolled around inside the much larger coconut shell while it was being vulcanized, and so took on a perfectly round shape.  The colored dust streaked the now elastic ball with bands of red and yellow.

Eventually, the coconut was dashed against some rocks and broke, releasing the ball, which floated and was finally thrown up on a beach where I found it.”

Sure sounds logical to me.  And this is the stuff our next generation is being taught as scientific truth!

As for me, I think I will go back to Genesis 1:1.  “In the beginning….”

Until Next Time, Larry

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Communication – (a Rascal Radio Script)


kə my ni káysh’n (Latin – “to share”)

Concise and understandable communication is extremely important in armies, business teams, families and life in general.  To say or write something is good.  To say or write something clearly is good.   BUT, the whole issue is worthless if you don’t make absolutely sure that the receiver of the communication understands what you are communicating.

How many times do we end up complaining “But that’s not what I said!”  or “That’s not what I meant”.  Making sure you are both understood, and in agreement about which topic you are discussing, can reduce considerable amounts of after the fact stress.  One of my favorite miss-communications is the infamous Abbott and Costello “Who’s On First” comedy routine:

A much more serious example of miss-communication occurred during the last part of the U.S. Civil War.  Few may have heard of the battle of Franklin, Tennessee, nevertheless this battle or incident played a critical roll near the end of the war.

Franklin is located just south of Nashville, which was a major railroad hub for the entire southern U.S., and at the time Nashville and was held by the Union army.  It was well stocked with ammunition, arms and food that could be shipped to and resupply the Union armies operating in the South.  If the Confederate army could capture the relatively lightly defended hub, their army could be resupplied and conceivably create a turning point in the war or prolonged it to await more favorable odds for the Confederates.

In a bid to reach Nashville before the Union army could reinforce it its supply hub, Confederate General Hood, with 33,000 veteran troops engaged in a running series of skirmishes with Union General Schofield, who had 36,000 troops, many of whom were relatively new.  The overall edge most probably belonged to Hood’s Confederates, who were more seasoned and able to maneuver more readily, since the Union troops were tasked with bringing along some 300 wagonloads of supplies to stockpile in Nashville (can you imagine 300 wagons loaded with ammunition, weapons, clothing and food?).

The Union army was being closely pursued by the Confederates, but was able to maintain its lead in the race to Nashville by crossing the bridge of the only major road (the Columbia Turnpike) over a river some twenty miles south of Franklin, and set up artillery to guard the crossing.

General Schofield then had sent riders to place several units along the river to make sure that Hood and his Confederates couldn’t cross in other areas.  The riders, however, weren’t well informed as to the locations to place the units, and missed one critical one.

Hood had discovered an unguarded ford 5 miles away, and crossed in that spot in an amazing 18 hour march that completely caught the Union army by surprise.

Suddenly, the Union army was outflanked, and found themselves behind the Confederates in the race to Nashville.  Schofield then sent his troops in an unusual nighttime dash up the turnpike to try and catch the Confederates and fight their way through, while the wagons trailed behind.

Meanwhile, General Hood arrived at a strategic area of high ground on both sides of the highway, and gave general orders to his Confederate commanders to station their troops alongside the highway and await the oncoming Union army, which he thought should arrive near midday the next afternoon.  He had given orders to one commander to station his soldiers across the road and therefore to act as a warning should troops arrive earlier than expected, but that commander’s order was countermanded by his superior officer who had been told to station beside the road and rest the troops.

Yup!  You guessed it!  As the Confederate troops, exhausted from their 18 hour march, set up camp and caught some much needed sleep and awaited the next day, the Union army, lead by the cavalry, and fast-marching along the road looking for a Confederate army to fight, barreled up the pike without encountering anyone to shoot at.  The confederate rear guard was rudely awakened by the rumbling of the 300 wagons and artillery pieces being driven up the road by a bunch of terrified draftsmen, guarded by no more than 1,000 troops, and being told by their officers to “hush up and drive real fast”!

The Confederate rearguard troops assumed that the troops encamped ahead of them would attack the supply train, and they, lacking other orders, would be responsible to cut off any retreating wagons.  So the Union wagoners drove by and gazed at the campfires of tens of thousands of enemy soldiers, some camped less than 100 yards from the road.

The commander of the main body of the Confederate army was camped a bit further along the road on high ground and as the Union army passed by untouched, his officers pleaded with him to be able to attack the troops from their position of advantage and hoping to capture the supply train.  The General, who was known as a cautious soldier, replied that he “had been given no order to attack, but had been told to hold his position and wait for further orders”.

As a consequence, General Hood was awakened by his officers to learn the news that the Yankees were ahead of him, again, and on their way to Franklin and the only major bridge crossing the Harpath River to Nashville.  Yes, there will be a sequel to this adventure, coming soon!

We know that most successful ventures stem from good communication, and most failures come from inadequate understanding.  Here are six steps to critical communication (but not necessarily for common conversation).

  1.  Agree on the subject matter to be discussed so that all understand the general topic.
  2.  Make sure that all parties understand the goal to be reached, or the end result you are looking for.
  3.  Make sure you share a common definition of terms, words or phrases, and QUICKLY point out any unclear content.
  4.  Have all parties review or repeat important points covered, including writing down critical points, and summarize the basic message for common understanding.
  5.  Agree on alternate backup plans for each point.
  6. Continue to communicate and review progress with all parties.

Just remember, if everybody understands what needs to be done, things get accomplished with a lot less stress for everyone concerned.  Good Luck!



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The Fitness Attitude – (Rascal Radio Script)

"Think Healthy"

“Think Healthy”

The Fitness Attitude

I asked myself, “Why did they ask me to talk about fitness?”  I’m an aging sports buff who isn’t nearly as flexible as I once was, and I’m certainly not a physical fitness guru or fanatic.  On the other hand, my doctor recently commented that my lab tests and blood pressure put me about 20 years younger than my present age of 65.

So I guess I’ll talk about stuff I do, in case you feel inclined to make it to my advanced age in somewhat reasonable health.

People often comment on my consistently very upbeat attitude.  Some of the comments are even complimentary!  In fact, I believe that a lot of staying reasonably fit and healthy is about ATTITUDE.  How you think (and as a result of your thinking, the habits you develop) is apt to be who you become physically, as well as mentally!  Good health is in many ways a decision!

Let’s start by discussing the attitudes we want to overcome:

1.)   The attitude of AVOIDANCE.  “I really don’t want to think about or focus on the health stuff or exercise right now, because….”  There are tons of “becauses” available to any quick minded avoidance seeker.  But, as my friend Curtis Spolar says, “A bad excuse or a good reason both have the same result!”

2.)   The attitude of SURRENDER.  Enough excuses over a period of time are apt to result

"Feed Your Attitude"

“Feed Your Attitude”

in accepting the effects of less than good health as normal.  “That’s just the way I am” or “I must have bad genetics” or “I’m just built that way” and “It’s just my age.”  Those excuses really don’t cut it when you are in the hospital with the physical ailment that you could have avoided or improved.

3.)   And we all have to kick the attitude of DEPENDENCY.  I was a medium level smoker when I was younger and stupider.  Certainly not doing enough to really hurt me, I thought.  Many years after I had quit, my right lung collapsed while we were at a convention.  Since I didn’t think it was more than maybe walking pneumonia, I didn’t seek immediate treatment.  Got lucky and was diagnosed by a lung specialist who told me that I was within an hour of going into a coma.  Turns out that taller men who smoke have a twenty percent or higher chance of developing “blebs” or blisters in their lungs, even if they quit.  When the blister bursts, it might be just bye bye for you.  Remember, as my mentor and life coach Orrin Woodward said to me “Leaders don’t smoke!”.  Too much of anything can develop a health threatening dependency.  Too much alchohol, sugar, salt, pain killers, sodas, fast food (remember, they don’t make french fries in France, they make them in Grease!)  The attitude of moderation can save your life!

4.)  And don’t fall into the attitude of PROCRASTINATION!  What you don’t get around to may get around to you!

Now let’s talk about the good stuff!  There are some attitudes that will turn you into a 200 pounds, 6 foot and 4 inch dynamic and handsome fitness guru (or 5’8” bikini body model) who excels at all aspects of life.  Well, maybe not, but they might extend your healthy life expectancy.

1.)  The most important attitude of all is the attitude of RESPONSIBILITY to yourself AND those who rely on your good health for THEIR welfare.  Remember that you may not be the only one that depends on you!

2.)   The attitude of SELF CONTROL is a critical first step.  No one is going to make the decisions involved in living a healthy lifestyle for you.  The habit of MODERATION is a part of this.  I really DON’T need a second helping of that great food.  Tea, water, non junked up coffee, beat the heck out of soda every time.  Dessert is a waist!  As Orrin says “It all ends up the same place, so don’t let it control you!”  Realistically, tomorrow I’m not going to care, or probably even remember, what I ate today.  That thought has saved me a lot of pounds.  Decide what you want to look and feel like, describe it, picture it, post it conspicuously, and go for it in a planned way.  Vibrant good health (just like financial success) should never be a surprise!  I have my target weight written in my calendar, and enter each day’s weight as a checkpoint.

3.)    Then I use the attitude of CONSISTENCY to make sure I abide by my exercise schedule by checking it off in my calendar every day.  My calendar is my every day attitude check!

4.)  Then comes the attitude of ACTION.  Thinking about it and planning it out will increase your knowledge.  That makes you smart.  But DOING something about it every day makes you fit and trim.  I would rather be smart AND good looking!

Being reasonably fit doesn’t take extraordinary effort – just ordinary stuff done consistently.   For example, I try to get up half an hour early, and do some stretching exercises and weights (or resistance tubes when I am travelling).  I don’t accomplish this every day, and in fact allow myself two skip days a week.  It doesn’t transform me into an Adonis, but it keeps me more flexible and trimmer.

You can’t wake up a half an hour earlier?  Then try some other common sense ordinary things, for instance; get off the TV or computer earlier so you can or do it at night.  Park away from the store a bit and walk or take the stairs.  You get the idea. 

"Healthy Foods"

“Healthy Foods”

Should you supplement?  I’m not a doctor, and certainly urge you to consult your doctor before changing any of your routines.  That having been said, assuming that you eat a reasonably balanced mix of leaner meats, fish, veggies and fruit (and drink lots of plain water), you probably don’t need tons of supplements.  But, since you DON’T eat the stuff I just mentioned regularly, you probably need a multi-vitamin.  Northern folks ALL need extra D3 in non sunshine months (in Michigan, that’s eight months a year).  Other than that, there are lots of natural supplements for specific conditions.  I am a strong believer in anti-oxidant products, and use the Mona Vie acai mixes every day.

I am believe that the FDA doesn’t necessarily have all the answers, so I examine natural alternatives as much as possible.  Case in point – I was having serious problems with my knee and hip joints, probably from overuse in sports.  The diagnosis was arthritis and the recommendation: pain killers and a possible hip and knee replacement.

I did some research, and eventually discovered some interesting advice on arthritis relief.  In the book titled ARTHRITIS INTERRUPTED by Steven Sinatra, MD  it was claimed that basic diet could greatly alleviate the pain, and even rebuild the joints. Although I was skeptical, I followed his dietary recommendations – nothing fancy or expensive (actually cheaper than the drugs I was going to be using).  Within just 6 months, I was playing volleyball and functioning pretty much normally.

I’m not giving medical advice, so am going to just list the foods that were recommended, and seemed very effective for me: Non-farm raised fish twice a week, and a quality fish oil supplement.  Green tea boiled with some ginger root, and tart red cherry juice, with some stevia for sweetness is a great drink!  Drop the carbonated sodas.  Get 20 minutes of sun, or supplement with D3.  No trans fats.  Cut down on potatoes and tomatoes, the nightshade group.  Eat lots of broccoli, spinach, squash, yogurt, Brazil nuts, flax seed, berries and pineapple.  But what I found most amazing was to make my own Glucosamine and Chondroitin soup.  Save your eggshells in the freezer, and then add them to beef or pork joints, or cook a chicken and save the bones.  Cook them with a little lemon juice for a couple hours.  Then strain the broth and throw in meat and vegetables for a great joint-rebuilding soup!

Fitness-StrechGet committed to your health; find the simple stuff that works for you and use the complicated when needed – let’s all enjoy a great and healthy long life!

Until next time, Larry

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Sheep, Wolves, and Sheepdogs (final)


I ask audiences all over three countries this question:  “Do you, in all seriousness, feel that your government lies to you?”  In every case, 100% of the crowd raises their hands to agree that their government purposely lies to them.

How did we get here?   Where are We The People?  It is so easy to blame an out of control, power mad government, but deep down, we really know the problem is a public who has given up on the idea of a representative government.  So who IS to blame?  I am going to quote a few passages from Stephen Palmer’s book Uncommon Sense :

“ As America speeds toward the proverbial cliff of imminent destruction, everyone is looking for someone to blame.  But who is to blame for our travails?”  Could it be….YES!  “It’s the millions of common citizens who aren’t educated enough to elect virtuous, courageous and wise leaders.  It’s the millions of American families who have failed to raise up those essential leaders in their own homes.

It’s the millions of Americans who hold their politicians to a higher standard than they hold themselves to—they sure expect their politicians to understand the Constitution, but they don’t understand it themselves.

It’s the millions of Americans who complain about high taxes, yet then turn around and accept government programs and benefits in the name of “Everyone else is doing it”.

It’s the millions of average Americans who claim that the Federal Reserve is evil—without even understanding how it works or what should replace it.  It’s the millions of Americans who vehemently denounce inflation and deficits while racking up their own credit cards and consuming more than they produce on a daily basis.

It’s the millions of Americans who were publicly appalled at Bill Clinton’s misdeeds in the Oval Office yet who are secretly addicted to pornography.

It’s the millions of Americans who forcefully proclaim their willingness to fight and die for America – while being unwilling to live for her by becoming liberally educated.  Our government is nothing but a reflection of the majority of American citizens.”

The core problem in America, as I see it, is that we have lost our vision of what our country is all about.  You can’t steer the vehicle if you don’t know where you are trying to go.  We have no ideal to work toward, as a government, state, communities, or as individuals.  We must shift our focus away from things beyond our control, to what we CAN control, starting with our own education.

To quote Mr. Palmer again:  “There is a solution.  Common Americans – you and I – can be empowered.  We can make a difference.  We simply need leverage.  Archimedes said “give me a lever and a place to stand, and I can move the world.”  Simply put, a small force can impact a larger force by shifting its relationship with and distance from the larger force.  In our case, it means that We the People can have profound impact on our colossal challenges by shifting our focus and our approach.                 This shift is initiated by stepping away from the things that we can’t do individually, and working instead   on the things we can do.” (individually and in small and expanding groups).

“We can’t fix or replace the Federal Reserve as individuals, but we can largely insulate ourselves from the effects of inflation through economic production and entrepreneurship.  We can’t stop the cancerous growth of the federal government, but we can decrease our personal dependence on it by living responsibly.  We can’t pay off the national debt, but we can live within our means as individuals and families.  We can’t stop filth in magazines and movies, but we can choose not to consume them.

Our leverage point, the only relevant and sustainable way for us to enact meaningful change, is to stop trying to fix other people, businesses and the government and to focus instead on reforming ourselves and building strong families who diligently live the principles of liberty.

Over time, and employed deeply enough by enough people, this fundamental and profound shift in focus makes the immense problems, forces, institutions and bureaucracies that rob us of freedom virtually obsolete.  Take away their support structures, and they collapse.

The only reason we have pornography is because people buy it.  The only reason we have an ineffective educational system is because people prefer to abdicate their educational responsibilities.  We have a vast network of entitlement programs because we don’t want to get our hands dirty in the hard work of true charity, so we delegate it to the government.

Government is an effect, not a cause.  We the People are the cause of the problems we face.  Of course, implicit in this is the understanding that we are also the source of the solutions.”

There exists a profound and history making document that states “We hold these truths to be self evident – That all men are created equal – That they are endowed by their Creator with certain unalienable rights – That among these rights are life, liberty, and the pursuit of happiness.  That in order to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed.”

Again to Mr. Palmer: “In a civilized nation, the government does nothing but protect unalienable rights, which leads to a culture of personal responsibility…..   Those who claim that high taxes and government programs are the price of civilization are in actuality saying that they are the price for not being civilized.  The only reason that they exist is because our citizens are losing their sense of personal responsibility and virtue.”

Come on, we are better than this!  America was born for greatness – and so were you and I!  Let’s step up and assume the responsibilities of citizenship that created this great nation, and assure a bright and proud future for our children’s children.

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Sheep, Wolves, and Sheepdogs


I often ask people “What do you feel is one of the major problems the U.S. faces?  I get responses like “Lack of Leadership”, “Declining moral standards” , Economic mismanagement”, “Government out of control”.  But they are missing the real problem.  The real problem is US!  We don’t know where we are,  where we are going,  or what to do when we get wherever we ARE going.

In a recent poll, the USA TODAY found that 83% of the population  are “Concerned” about the future of the US, and 65% feel that their children will have a lesser lifestyle than they enjoy today.

It’s easy to blame the government, but remember that governments don’t exist of themselves, but are created and supposedly directed by people.  Remember the document that starts: “WE THE PEOPLE, in order to FORM a more perfect union, ESTABLISH justice, ENSURE domestic tranquility, PROVIDE for the common defense, PROMOTE the general welfare, and SECURE the blessings of liberty for ourselves and our posterity, do hereby ORDAIN and ESTABLISH this Constitution for the United States of America.” (By the way, if there is a word or so out of order or missing, it is because I wrote the Preamble from memory.  I hope you can do the same!)  Those are eight action verbs, calling for a people to unite and be watchdogs over our liberties.  It didn’t say the government was responsible to be a watchdog over the people, but We The People are responsible to be watchdogs over our government, so that it doesn’t usurp our rights.  What has happened to We The People?

Have our country, our states, our communities, our families lost a vision around which to unite?  We need our common citizens to take the responsibility to educate themselves and lead ourselves back to common sense governance, instead of passively waiting for correction from above.  Thomas Paine said “Those who expect to reap the blessings of freedom must undergo the fatigue of supporting it.”  My friend Dan Hawkins says “If you are going too fast down the slide, time to put your sneakers down!”

Are we willing to accept our circumstances, or our responsibilities?

I am including an e-mail that no member of the mass media would publish, but it is critical reading:

This letter was written by Charles Grennel, U.S. Army, who spent two years in Iraq, and was a principal in putting together the first Iraq elections.  The letter was written to Jill Edwards, a student at the University of Washington who did not want to honor WW-II Congressional Medal of Honor winner Col. Gregory Boyington, a graduate of the University.  Ms. Edwards and other students and faculty did not think those who serve in the  U.S. armed services are appropriate role models.


To:  Edwards, Jill (student UW)


“Miss Edwards, I read of your student activity regarding the proposed memorial to Colonel Greg Boyington, USMC and a Medal of Honor winner. I suspect you will receive many angry emails from conservative people like me.

You may be too young to appreciate fully the sacrifices of generations of servicemen and servicewomen on whose shoulders you and your fellow students stand. I forgive you for the untutored ways of youth and your naiveté. It may be that you are simply a sheep. There’s no dishonor in being a sheep, as long as you know and accept what you are.

William J. Bennett, in a lecture to the United States Naval Academy November 24, 1997 said “Most of the people in our society are sheep. They are kind, gentle, productive creatures who can only hurt one another by accident. We may well be in the most violent times in history, but violence is still remarkably rare. This is because most citizens are kind, decent people, not capable of hurting each other except by accident or under extreme provocation. They are sheep.

Then there are the wolves who feed on the sheep without mercy. Do you believe there are wolves out there who will feed on the flock without mercy? You better believe it. There are evil men in this world and they are capable of evil deeds. The moment you forget that or pretend it is not so, you become a sheep. There is no safety in denial.

Then there are sheepdogs and I’m a sheepdog. I live to protect the flock and confront the wolf. If you have no capacity for violence then you are a healthy productive citizen, a sheep. If one has a capacity for violence and no empathy for one’s fellow citizens, then you have defined an aggressive sociopath, a wolf. But what if you have a capacity for violence, and a deep love for your fellow citizens? What do you have then? A sheepdog, a warrior, someone who is walking the unsheltered path.

Someone who can walk into the heart of darkness, into the universal human phobia, and walk out unscathed.

We know that the sheep live in denial; that is what makes them sheep.

They do not want to believe that there is evil in the world. They can accept the fact that fires can happen, which is why they want fire extinguishers, fire sprinklers, fire alarms and fire exits throughout their kid’s schools. But many of them are outraged at the idea of putting an armed police officer in their kid’s school. Our children are thousands of times more likely to be killed or seriously injured by school violence than fire, but the sheep’s only response to the possibility of violence is denial. The idea of someone coming to kill or harm their child is just too hard. So they choose the path of denial.

The sheep generally do not like the sheepdog. He looks a lot like the wolf. He has fangs and the capacity for violence. The difference, though, is that the sheepdog must not, cannot and will not ever harm the sheep. Any sheepdog that intentionally harms the lowliest little lamb will be punished and removed. The world cannot work any other way, at least not in a representative democracy or a republic such as ours. Still, the sheepdog disturbs the sheep. He is a constant reminder that there are wolves in the land.

They would prefer that he didn’t tell them where to go, or give them traffic tickets, or stand at the ready in our airports, in camouflage fatigues, holding an M-16. The sheep would much rather have the sheepdog cash in his fangs, spray paint himself white, and go “Baa.” Until the wolf shows up. Then the entire flock tries desperately to hide behind one lonely sheepdog.

The students, the victims, at Columbine High School were big, tough high school students, and under ordinary circumstances would not have had the time of day for a police officer. They were not bad kids; they just had nothing to say to a cop. When the school was under attack, however, and SWAT teams were clearing the rooms and hallways, the officers had to physically peel those clinging, sobbing kids off of them.

This is how the little lambs feel about their sheepdog when the wolf is at the door. Look at what happened after September 11, 2001 when the wolf pounded hard on the door. Remember how America, more than ever before, felt differently about their law enforcement officers and military personnel? Understand that there is nothing morally superior about being a sheepdog; it is just what you choose to be.

Also understand that a sheepdog is a funny critter. He is always sniffing around out on the perimeter, checking the breeze, barking at things that go bump in the night and yearning for a righteous battle. That is, the young sheepdogs yearn for a righteous battle. The old sheepdogs are a little older and wiser, but they move to the sound of the guns when needed, right along with the young ones.

Here is how the sheep and the sheepdog think differently. The sheep pretend the wolf will never come, but the sheepdog lives for that day.

After the attacks on September 11, 2001, most of the sheep, that is, most citizens in America said “Thank God I wasn’t on one of those planes.” The sheepdogs, the warriors, said “Dear God, I wish I could have been on one of those planes. Maybe I could have made a difference.” You want to be able to make a difference. There is nothing morally superior about the sheepdog, the warrior, but he does have one real advantage. Only one. And that is that he is able to survive and thrive in an environment that would destroy 98-percent of the population.

Research was conducted a few years ago with individuals convicted of violent crimes. These cons were in prison for serious, predatory crimes of violence: assaults, murders and killing law enforcement officers. The vast majority said they specifically targeted victims by body language:

Slumped walk, passive behavior and lack of awareness. They chose their victims like big cats do in Africa, when they select one out of the herd that is least able to protect itself.

Some people may be destined to be sheep and others might be genetically primed to be wolves or sheepdogs. But I believe that most people can choose which one they want to be, and I’m proud to say that more and more Americans are choosing to become sheepdogs.

Seven months after the attack on September 11, 2001, Todd Beamer was honored in his hometown of Cranbury, New Jersey. Todd, as you recall, was the man on Flight 93 over Pennsylvania who called on his cell phone to alert an operator from United Airlines about the hijacking. When they learned of the other three passenger planes that had been used as weapons, Todd and the other passengers confronted the terrorist hijackers. In one hour, a transformation occurred among the passengers — athletes, business people and parents — from sheep to sheepdogs and together they fought the wolves, ultimately saving an unknown number of lives on the ground.

Edmund Burke said “There is no safety for honest men except by believing all possible evil of evil men.” Here is the point I want to emphasize, especially to the thousands of police officers and soldiers I speak to each year. In nature the sheep, real sheep, are born as sheep. Sheepdogs are born that way, and so are wolves. They don’t have a choice.

But you are not a critter. As a human being, you can be whatever you want to be. It is a conscious, moral decision. If you want to be a sheep, then you can be a sheep and that is okay, but you must understand the price you pay. When the wolf comes, you and your loved ones are going to die if there is not a sheepdog there to protect you.

If you want to be a wolf, you can be one, but the sheepdogs are going to hunt you down and you will never have rest, safety, trust or love. But if you want to be a sheepdog and walk the warrior’s path, then you must make a conscious and moral decision every day to dedicate, equip and prepare yourself to thrive in that toxic, corrosive moment when the wolf comes knocking at the door.

This business of being a sheep or a sheepdog is not a “yes-no” dichotomy.

It is not an all-or-nothing, either-or choice. It is a matter of degrees, a continuum. On one end is an abject, head-in-the-sand-sheep and on the other end is the ultimate warrior. Few people exist completely on one end or the other. Most of us live somewhere in between.

Since 9-11 almost everyone in America took a step up that continuum, away from denial. The sheep took a few steps toward accepting and appreciating their warriors and the warriors started taking their job more seriously.

It’s OK to be a sheep, but do not kick the sheepdog. Indeed, the sheepdog may just run a little harder, strive to protect a little better and be fully prepared to pay an ultimate price in battle and spirit with the sheep moving from “Baa” to “Thanks.”

We do not call for gifts or freedoms beyond our lot. We just need a small pat on the head, a smile and a thank you to fill the emotional tank which is drained protecting the sheep. And, when our number is called by The Almighty, and day retreats into night, a small prayer before the heavens just may be in order to say thanks for letting you continue to be a sheep. And be grateful for the millions of American sheepdogs who permit you the freedom to express even bad ideas.”

Please remember, you don’t have to carry a rifle in order to be a Sheepdog, and a guardian of our liberty!




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Seven Factors Leading Us To An Economic Downturn (final)


Embracing Uncertainty In An Economic Downturn

What can the average American family do to not suffer our frightening Economic Downturn?  Become un-average and become aware.


OK, what would you do if you knew that there was a really serious and severe storm coming?  What commonsense things would you do to prepare?  Today, you have to think of the coming days as a storm and prepare for it.  In the storm of the 1930’s, the Great Depression, remember that 34% of the people suffered hardship, 32% held their own, and 34% of the people acquired wealth and were even able to help others because they WERE prepared, and understood what was happening.

You may not be able to change your state of preparedness overnight, but step by step you can make changes that will bring about great change for you and your family!

First, allocate at least 10% of your income to savings.  Then, get out of debt!  Certainly the tried and true strategy of focusing on paying off your highest interest debts comes first.  Then continue using that payment amount to double up on the next highest interest debt.  However in this low interest rate climate, I would first try to refinance any debt over 3% interest, including mortgages.  I would then use any extra income or money saved on payments to accrue as much savings as I can possibly put together.  In an economic downturn, cash is king!  What small (or large) extras could you do without in order to secure wealth in the future, or even prevent future hardship?

Do you really need a new car today if it causes you poverty in the future?  Can you put it off the purchase, or buy a used model?  Renting may be a more intelligent move than owning a house at this point.  Save the maintenance, insurance, taxes and mortgage money, and stay flexible to unknown conditions.  Remember that we still have over 14 million home foreclosures still in process.  The next real estate downturn may let you get one at a bargain price.  Do you have a budget that you are willing to stick with every day?  Are you willing to record every penny that you spend every day for a few months?  Do you really need cable TV, or at least can you get a lower cost channel package?  Do you need the sexiest new phone or I Pod?  Do you drink Starbucks or make your own in a thermos?  Eat out or pack it?  Consider bulk shopping, sales and coupons.  Ever heard of Groupon or similar services?  Could you start a car pool and making one shopping trip instead of several?  Do you DESPERATLY need that new whatever?  Have you re-quoted your insurance lately?  Do your kids desperately need their new whatever?  If so, can they earn it with odd jobs?  Have you planted a garden lately?  You would be amazed what you can harvest from a tiny space.

How much discomfort is it worth to survive or be rich in the future?  But the whole thing is just a joke if you lack seriousness and don’t put EVERY cent that you cut back or save away in your M.A.F.F.; your Make A Fortune Fund.  Even the change in your pocket adds up if put in a jar.  The self-discipline you exercise today could make your future rich!

If you are going to invest, stay conservative with energy, agriculture, gold and silver, or companies that cater to an aging population.

Why are people so interested in gold and silver?  Throughout history monetary metals like gold and silver have been regarded as true currency, regardless of economic fluctuations.  So people who are worried about the economy use it as a safe haven for their investments.  Gold and silver usually become much more valuable in times of economic distress.  But don’t count on us going back to a gold standard, even if it would be a great thing for our country.  A gold standard would keep policy makers from over expanding the economy, because they could only print money based on the value of our actual gold and silver holdings.  With a gold standard, the spending and borrowing spree would be over.  The present governmental structure would hate being restricted like that.

We do know that gold and silver will always have intrinsic value, and will become more valuable in times of economic distress.  It isn’t going to go away.  As Herbert Hoover said “We have gold because we don’t trust governments.”

Then, start learning about money, business, economics, entrepreneurship, communication and relationships.  Develop and expand your people skills.  People, not things, are the path to success.  The money you invest in your head can never be taken away, and is the key to wealth.  Join study-groups; explore what is available in your community.  Get money smart and people smart!


Find ways to become an entrepreneur, preferably with a team of like minded people.  In these economic times, it doesn’t matter how secure you feel your job or business is, you need options!  Explore optional income sources.

Then consider setting up a business opportunity fund either on your own, or with a chosen team of people.  Put together teams to explore the business opportunities in your community, especially those that are critical if government or larger businesses can no longer perform.

Get involved in community activities and organizations; get to know those people you should have gotten acquainted with all along and get involved with local government.  It is from the local community that the rebirth of our economy will spring if you find the right people to represent your community.

Are we going to come out of this economic setback all right.  There will be some hard years, but we will come out not only all right, but better than ever!  First, we truly have to change the economic thinking in our country.  A good economic cleansing will clear our minds.  Please remember, the positive side is that the US has the largest and most diversified economy on Earth, and will recover more rapidly than everyone else.  Also, our currency will remain as one of the world basic currencies if only because everyone else in the world will be taking a monetary bath at the same time.  Since we have the most successful entrepreneurial base (read middle class) in the world, we can adapt more rapidly and creatively.  I see this as a time of incredible opportunity for the people who are prepared and become prepared to take on these new challenges!

This is a time for personal strength and a time for courage.  A few verses from one of my favorite movie:

We were made to be courageous,  We were made to lead the way,  We could be the generation, That finally breaks the chains. We were warriors on the front lines, Standing unafraid,  But now we’re watchers on the sidelines,  While our families slip away.  Where are you, men of courage?  You were made for so much more,  Let the pounding of our hearts cry,  We will serve the Lord.  We were made to be courageous,  And we’re taking back the fight,  We were made to be courageous,  And it starts with us tonight!


Remember, my friends, we still are the greatest, most caring people in the world.  We will come back, we will take our country back, and we will win this one!

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Seven Factors Leading Us To An Economic Downturn (part 3)

Seven Factors Leading Us To An Economic Downturn (continued)

Demographics is factor 6 of 7

Harry Dent, a cyclical analyst, in his book The Coming Great Crash, gives us a picture of the movement of population groups through economic periods. The following graph shows the spending effect of different age groups on the economy:

demographics 1

As you can see, the 30 to 50 age groups are far and away the biggest spenders in the economy. In the U.S., because of the high cost of our exports, our Gross Domestic Product (GDP) depends for over 70% on internal or domestic consumption.
Now let’s look at the historical birth rates in our country:


They are tied together and here is how. You have heard about the Baby Boomers, that huge population group born from 1944 to 1955  after WWII? In the 1980’s and 90’s, they were moving through the highest two buying cycles (see previous graph).

Well, that largest population group in our history are now 57 to 68 years old, in other words they are in the lowest spending groups and they are being followed by a significantly lower population group. Do you see the relation with the Depression demographics? Not only does that slow our growth, but it makes it virtually impossible to attain the 4% GDP growth the government says is necessary to start working our way out of debt. In fact, in the last quarter of 2012 GDP growth was a negative tenth of a percent (-1/10%).
As proof, Europe’s baby boom coincided with our post WWII population boom, so they too  have an aging population. Europe is having dramatic financial difficulties throughout all industry sectors right now. They are also deeply in debt, and entered what looks like a long term declining recession in mid 2012. Further, Japan’s major population boom occurred after WWI and they are deeply in debt and have been in a serious recession for over 20 years.

Some of you may remember the 60’s and 70’s when everyone thought Japan was going to buy up the world. That was the time of Japan’s high spending consumer population group. It was 20 years ago when they entered the population cycle that Europe and the U.S. are just entering.  This may seem a bit scary, but knowing and understanding the truth at least allows you to prepare. What you don’t know about money and economics will whip you!

The 7th and last factor is the world economic situation and how it affects us.

As noted, Japan is in what seems to be a constant recession. As their economy started slowing, they started up the money printing presses just as we have done. They are still the world’s 3rd largest economy, but far and away the most indebted 1st world country. Their dependence on outside petroleum and agricultural products pretty much holds them at ransom to the rest of the world, especially as prices keep increasing, and their aging population’s lack of spending keeps their interior economy slow.

Many think China is poised to buy the world, yet China’s growth is slowing rapidly, and they are doing the “money creation out of thin air” thing as fast as anyone else. Their weak spots are a completely government controlled economy (which has never worked in history so far), a policy of 1 child per family, with a post WWII baby boom like ours, that puts them in a demographic situation even worse than ours, and an economy based primarily on exports, which aren’t happening in a world with a slowing appetite for their exports. Also, since their exports aren’t centered around basics like agriculture and petroleum, but are more non basic necessity items like Angry Bird pajamas, their exports have been cut severely. There are actually government-built manufacturing cities that would accommodate hundreds of thousands that are abandoned for lack of usefulness. They may actually beat us into the financial downturn that seems to be waiting, but are still the world’s number two economy.

Europe is generally a mess! The Eurozone, of 27 countries, is the world’s 4th largest economy, and the 3rd highest in debt. Portugal, Italy, Ireland, Greece and Spain (the so-called PIIGS countries) are in such a high level of debt and unemployment that they will almost certainly have to leave the Euro currency and go back to their own, which almost certainly will lead to default. Germany is leading the charge to bail out the worst cases, but their citizens are getting tired of the process. France has loaned so much money to the bad credit countries (up to 30 times their bank’s assets), that if they go, France is in trouble. The Eurozone has entered a recession several months ago, and looks like it is not going to emerge quickly.

So the biggest economies in the world are all messed up at the same time! How does that affect us? The US possesses the world’s largest economy (and the second most in debt), and given the fact that we are still the world’s currency reserve, we still have to get other countries to buy our exports, and that picture is getting bleaker and bleaker with a weakening world economy. Since our own population is cutting back on consumption, we need to get really innovative to stay on top of things. About our only real advantage is that the whole world is hurting, and we are still the biggest. If we would set an example of conservative economics, reduced debt and reduced government spending, less restrictive regulation of our business environment and an intelligent tax code, we could possibly work our way out of the situation. But since just the opposite is happening, and continues to happen, we may be the last to go, but it appears that we will indeed have to go through a severe financial crisis to clean up our economic house.

Here is a clip from a fictional HBO program call Newsroom featuring actor Jeff Daniels (with some sound track edits):

Perhaps we have slipped, but we are still the greatest people on earth, and I believe that we can be the greatest country in the world again!

So let me recap. The 7 factors that are working together to bring us to a financial downturn are:  #1) The 1913 Establishment of the Federal Reserve.  #2) Going off the gold standard in 1971.  #3) Pricing ourselves out of the manufacturing arena,  increasing the cost of our goods and massive unemployment.  #4) Loose banking and financial regulation.  #5) Government debt.  #6) Demographics.   #7) Global economic downturn.

So what can we do? Let’s talk next time.

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Seven Factors Leading Us To An Economic Downturn (part 2)


Money graphThat takes us to factor four; Pricing ourselves out of the manufacturing market so that our Gross Domestic Product (GDP) couldn’t grow, creating massive unemployment. Through the years, the U.S. had developed the highest corporate tax rate, the highest regulatory cost and the highest labor cost in the world. Major corporations moved operations overseas. We have fewer jobs today than we had in 2000, with 30 million more people. Suddenly unemployed people couldn’t pay their mortgages.

Of course, the government says that unemployment is only around 8%, and is improving. But that is the optimistic figure called U3 that the media publishes. It is put out by the Bureau of Labor Statistics (BLS), and includes only people currently on the official unemployment rolls. Let me quote from Harry Dent, an internationally known cyclical analyst. “The unemployment number of U3 is the prettiest, most uplifting figure the government can report. It cuts out the marginally attached, the discouraged, and the group who haven’t looked for a job in 12 months. This number also doesn’t distinguish among those working 40 hours a week at a good job, those working 20 hours a week stocking shelves at night for minimum wage because they want a full time job but can’t find it, and those working minimum wage jobs because there are no openings in their field. This group, called the underemployed and underutilized, are actually reported by the BLS as U6, a number a lot closer to what we see as unemployment. According to U6, we are over 17% unemployed and underutilized. This number suggests that 1 in 6 Americans that want a job are essentially unemployed.”

Or tens of millions of people more than they are telling us!

Bad news for the newest generation work force! Over half of our under age 25 population are essentially unemployed or underemployed!

The next factor is a government which has progressively tried throwing money at the symptoms, instead of working on solutions for the basic problems.

For a quick overview: In 2011, the U.S. received $2.3 trillion, and spent $3.95 trillion, so had to borrow $1.65 trillion (or about 4.4 billion a day), creating a current national debt of $17 trillion. On top of that, unfunded future liabilities are estimated at $110 trillion (S.S. etc).

Let’s take 8 zeros off, and make it your household budget. Your household income was $23,000. You spent $39,500, and had to put $16,500 on your Visa card. So you are borrowing 60% over and above what you are making.

That brought your Visa balance to a bit over $170,000, but don’t forget that you have a mortgage of $1,100,000 that you are committed to.Govt Debt

In other words, in any responsible accounting terms, the government is bankrupt!

And not just the federal government. 45 states ran a deficit last year, and it looks worse this year. Add up total consumer debt, and American taxpayers have about $40 trillion to pay off just to get back to even. That is around half a million dollars per family, and is not counting the over $100 trillion of long term unfunded debt.

How have we even survived long enough to get in this much trouble? That brings us back to the Federal Reserve.

At the beginning of 2008, the U.S. had a total of $800 billion in M1 or currency worldwide. As the world currency reserve, that was enough to serve the entire world’s need for currency for international trade.

We then had the mortgage crisis from the Real Estate bubble collapse, so the Fed created another $800 billion to rebuild their and others bank balances.

Does that make inflation happen? Well, if I had 100 shares of stock, and I issued another 100 shares without increasing my assets, that would cut the value of my first 100 shares in half.

Now, inflation would start gradually, and build up more and more as the excess currency flows into the economy, sort of like “how do you go bankrupt? Slowly, slowly, and then all at once!”

So then in the next three years, The Fed created $1 trillion with Quantitative Easing 1, $800 billion with Quantitative Easing 2, and now another $85 billion a month with Operation Twist and Quantitative Easing 3, which should result in another trillion in the next few months. QE3, however, has no end point, but will be done, “As long as necessary”.

In government speak, that means until Jesus comes!Fed Res

We have added $3.6 trillion to a base of $800 billion, and now have over $4 trillion in currency value, or we have multiplied our money supply by over 4 times in less than 5 years and as it enters the economy, that seriously decreases the value of each dollar.

Most independent economists predict shrinkage of purchasing power of the dollar by 75% by 2016. That means that if you are spending $100 a week on groceries now, you will be spending over $400 a week on the same groceries by 2016.

People will suffer, but that will help the bank and the Federal Reserve balance sheets look better, and the government will be possibly more able to meet their commitments if they can do it in devalued dollars. As The Market Oracle newsletter says, “The Federal Reserve’s policy is focused on saving the banks, not on saving the economy.”

People ask me how come we haven’t seen any strong effects yet, since it’s been 3 years. We have.

The government says that inflation is only around 4%. That isn’t runaway inflation. But, as I said, most of the effects occur slowly, and then more and more rapidly.

If you go to, and enter CPI or Consumer Price Index (the government inflation figure), you will notice a sentence with an asterisk under that figure. The qualifying statement goes something like this: “In order to compile this figure, several volatile components have been omitted, as they would act to skew the results.” If you look further, you will find that these omitted parts of the whole picture are Food, Gasoline and Energy, certainly nothing that the average household would have to use!

According to the Goldman Sachs Commodity Food Index and the Hoisington Review and Outlook Report, in the last two and a half years, food prices have increased 48%, petroleum prices 82%, and energy prices over 80%.

If you combine those figures with the average household budget, our inflation is actually between 14 and 18 percent. That makes a 75% devaluation by 2016 reasonable to assume.

Isn’t the Federal Reserve keeping interest rates low to hold inflation down?

You don’t stop an unstoppable force with a movable object. Keeping interest rates low to counter inflation only works as long as the world has faith that you can pay them back. Right now, the Federal Reserve is buying up our bonds and mortgage securities, because nobody else seems too eager to do so. They, however, are nearing their credibility limit. Remember also that inflation is a positive factor for a bank, and the Federal Reserve is a private bank.

Let me quote from Hoisington Review again. “The unintended consequence of these Federal Reserve actions, however, is to actually slow economic activity. The real CPI rose significantly in QE1 and QE2. These price increases had a devastating effect on worker’s incomes. Wages did not respond to commodity price changes; therefore, there was an approximate 3% decline in real average hourly earnings in both years. When prices of basic necessities rise, the greatest burden is on those with the lowest incomes, since more of their budget is allocated to the basic necessities such as food, energy and fuel.” So much for the government concern for the poor. Last two factors coming up next!

Thank you for finding “” and reading my economics blog, “Embracing Uncertainty”. Be sure to read from Orrin Woodward, Chris Brady, and all of our leader’s blogs that are available in our top menu link “TEAM Blogs”. Until next time, Larry




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Seven Factors Leading Us To An Economic Downturn (part 1)



People ask me; “ You mean the government isn’t going to be able to fix it?”

The government is one of the major causes of the problem, so it doesn’t appear they are able or willing to take the responsibility to fix it.

Yes, there are a bunch of causes, and many of them are working together to create the problem, but certainly a responsible government would help.  Neither party has shown the necessary financial responsibility for many years to correct a system that has gone haywire.  It is not a political party problem, it is a system problem.

For example, everyone is talking about the fiscal cliff.  The Fiscal cliff, which forcibly curtailed some spending, has done nothing meaningful to control the estimated $1.35 trillion yearly deficit, other than to punish the people primarily responsible for producing financial growth with increased taxes. ( Side note of interest:  a couple of months ago, the richest man in France, Bernard Arnault, applied for Belgian citizenship immediately after it was announced that the new socialist government in France would tax all income over $1 million at 75%.  French newspapers are calling him a traitor.  He has just been joined by actor Gerard Depardieu and industrialist Louis Vuitton.  In fact, Major French businesses are having to hire managers in other countries, so they won’t be taxed in France).

By the way, people in our country making over $1 million are now taxed at 39.6%, plus 6-8% state and city tax, plus Medicare tax, plus property tax, plus tax on capital gains on assets purchased with after tax dollars, and federal estate and state inheritance taxes over 30% for larger estates.  We are looking more French all the time!

Since a part of the deal is going to have to be the increase of our allowable debt ceiling, and congress just passed a temporary UNLIMITED increase, it does appear that we will continue to develop a debt that is not repayable by any stretch of the imagination, unless we tremendously devalue our currency, which would be devastating for the American public.

But, it’s not just the government. There are at least 7 factors that have led us to our present situation.

If we were to work chronologically, we would start with the 1913 creation of the Federal Reserve as an independent financial institution, a bank not under the checks and balances of our government that creates and controls our money supply.

The Fed is an independent bank, owned by 5 European and 3 U.S. banks that create our currency, and control our interest rates and money supply.

If you want proof, pull out a U.S. bill of any size.  You will notice that on the front, across the very top of the bill, are the words, “Federal Reserve Note”.  It’s a loan to the U.S. from the Federal Reserve.

I’m going to come back to the Fed in a few minutes.  Let’s talk about factor number two; the U.S. going off the gold standard in 1971.

The gold standard kept governments financially responsible, because they could not spend or create more money than they could back with their gold reserves.  Removing that constraint put governments in a position to create money to spend at their leisure, called fiat money.  When any government is allowed to create money out of thin air, they historically have done so.

So let me recap.  Setting up the Fed so our government is not in control of our money supply, and then going off the gold standard, so the government could spend money irresponsibly, put us in a position to really mess up!

Then, factor three was to have such loose banking requirements and oversight that our banks and financial institutions got themselves in trouble through greed and loose regulation.

For example, our fractionalized banking system allows a bank to loan 90% of its actual assets (like your savings account) to the public.  That note then becomes an asset that they can loan 90% of, which produces a note that they can loan 90% of…..  So From $100,000, they could loan $90,000, then $81,000 then $72,000…..  Approximately $995,000 from each $100,000 or about 10 times their assets.

So what if a bunch of people want their money all at once? We will discuss the remaining factors in the next posting, Seven Factors Leading Us To An Economic Downturn (part 2).

Thank you for finding “” and reading my economics blog, “Embracing Uncertainty”. Be sure to read from Orrin Woodward, Chris Brady, and all of our leader’s blogs that are available in our top menu link “TEAM Blogs”. Until next time, Larry

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Bubbles and more bubbles


Lets look at seven major bubbles that have effected the US economy. First a bubble is an over expanded (or blown up too big) factor in the economy.  How does a bubble form?  When an outside source of interference in the economy (like the government or central banks) interferes with the natural ebb and boundaries, a bubble is formed.  This  flow of economic events  pushes a sector beyond its normal boundaries.   As each bubble we discuss explodes, or starts substantially leaking, it puts additional pressure on all the bubbles, but primarily on the bubble directly below it.

Taking into account that this is a greatly simplified explanation, let’s take the seven bubbles in the US economy in descending order, remembering that some have exploded, putting pressure on the next bubble, and some have only sprung leaks.  Those seven bubbles are:  Unemployment, Real Estate, The Stock Market, Private Debt, Discretionary Spending, The Dollar, and Government Debt.


As I discussed in the previous blog, the Information Age told on us.  It told the world (and our major manufacturing companies) that we had developed the highest regulatory cost, the highest corporate tax rate, and the highest labor rate in the world.  As a consequence of that over inflated cost of production bubble, over 20,000,000 jobs disappeared, or leaked, into foreign lands.  We have yet to recapture those jobs.  Unfortunately, the government has artificially created millions of band-aid government  jobs, which don’t add to our Gross Domestic Product(GDP).  Actual industrial jobs have decreased another 20% in the last 5 years.  Our understated unemployment figures don’t reflect those who have run out of their benefits, have given up looking, or are grossly under-employed.  True unemployment figures are estimated at between 15 and 18 percent.  That bubble has virtually exploded, and will take years and a lot of creative thinking to repair.

Real Estate:

A perfect example of a bubble!  In the period from 2000 to 2007, housing values increased by 80%.  However, housing values are irrevocably tied to household income (based on the ability to pay mortgage or rent payments).  In that same period, household income only increased by 2%.  The result was an enormous bubble of artificial and non-sustainable value.  When that bubble inevitably burst, US households lost over $10 trillion in asset value.

Stock Market:

Another example of bubblehood!  The stock market increased by 1,400%, or 14 times, from 1982 to 2007.  Stock values in a free economy are tied to increases in business earnings or the Gross Domestic Product (GDP).  During that period, business earnings increased only 3 times, and GDP only 2 times.  With the increased unemployment, and the plummet in housing equity, the market had to drop to a closer relationship to its true valuation.  Since that time, the printing of over 4 times our 2007 currency supply has reinflated the bubble, but it is a shaky bubble at best.  In fact, latest stats are that the Dow yield is now 2.56%, far below its classic danger level of 3.5%.

Private Debt:

Our household ability to borrow was suddenly seriously curtailed.  We had relied on increasing housing values, a healthy stock market and steady employment income as borrowing leverage.  With the partial bursting of those bubbles, the  total assets of the average US household fell to negative $22,000, leaving us little or no room for increased debt.  Of course, at that time the banks started to tighten up credit restrictions, making the situation even more severe.  Again, a bubble based on artificial economics.  Todays artificially low interest rates are meaningless if you can’t get credit, so they benefit mostly government and big bank borrowers.

Discretionary Spending:

If I am at risk of unemployment, my house has dropped its equity, I lost a bunch in the stock market and I can’t get any credit, my purchases of non necessity items may indeed decline.  In fact I may be one of  those 32% whose credit cards are maxed and overdue!  Unfortunately, my discretionary purchases have been very important in keeping consumer demand high and the economy booming.  Ouch!  Another bubble.

The US Dollar:

If the government overreacts to the pressure of the preceeding bubbles, and decides to “stimulate” the economy with currency injections, another dangerous bubble, which almost inevitably leads to serious inflationary pressure, is created.  Moving from an M1 currency supply of 800 billion in 2007 to over 3 trillion in 2012 must certainly devalue the dollar, thereby inflating the cost of anything it buys.

Government Debt:

And finally, if the government decides to finance the currency injections by borrowing, and if the government is dramatically overspending its income, we can accumulate such an enormous debt that the public and other countries lose confidence in our ability to repay.  If that were to happen, and it caused us to lose our position as the world currency reserve, it would be catastrophic. I will go over our present (precarious) financial position in the next posting.

Thank you for finding “” and reading my economics blog, “Embracing Uncertainty”. Be sure to read from Orrin Woodward, Chris Brady, and all of our leader’s blogs that are available in our top menu link “TEAM Blogs”. Until next time, Larry

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America’s Economic Ages:




The Agricultural Age — North America was founded by groups of hardy individuals who felt they would rather starve in the forests of the new continent than stand in the breadlines of Europe. Thus began the North American Agricultural Age, which stood for over 300 years as our primary economic driver. This was an age of high individual responsibility and low governmental interference in everyday life. Communities were close knit groups of mutually supportive people with common principles who relied upon one another for support of the common good.

The Industrial Age — Then, as the country needed more infrastructure, more plowshares, roads and tools, the 150 year Industrial Age came into being as people started coming in from the farms and developing cottage industries. These small enterprises became giants, and grew into the greatest manufacturing nation on earth. During this time, we became less reliant on the results of our own actions, and more dependent on the decisions of others (owners, bosses, unions). Government became more active in our everyday lives, as we became more divorced from community and community responsibilities.

The Corporate Age — From that era, in the 1960s, emerged an economic age that is just now being recognized as an age of its own, the Corporate Age. This was the age of the monolithic, multinational corporation. These gigantic companies became the predominant economic force in our country. All education and advice centered around securing a position with AT&T, IBM,GM, Ford, etc. Our population became almost completely economically dependent on the actions of Big Business and an ever growing Big Government.

The Information Age — And finally, about 1995 came the much ballyhooed era of instant gratification, the Information Age. Everything we wanted to know about anything anywhere, at our fingertips. What a boon to business, innovation, research and knowledge! But with three gigantic holes in the bucket!
First hole: The Information Age told on us! Our multinational companies decided to become more multi than national. It told the world that the U.S. had developed the world’s highest corporate tax rate, the highest cost regulatory environment, and the world’s highest labor cost, resulting in an average production cost of over $30 per hour for most manufactured goods. The Information Age told our mega corporations that production costs in Mexico were under $5 per hour, and under $2 per hour in China and India. As a result, 20 million jobs and 42,400 factories went away over a ten year period.
Second hole: Two men in a garage could handle the information age technologies nicely, so we couldn’t replace all those lost jobs.
Third hole: Our educational system had converted to training people for jobs with the mega companies, and success in the information age requires business training and entrepreneurial knowledge, so all those displaced jobholders were not trained to take advantage of the new opportunities.

Now suddenly, most economists and a few informed politicians are saying that the next economic era must of necessity be the Entrepreneurial Age, and we must teach business and entrepreneurial skills to our populace. We are going to have to replace those millions of lost cash flows with business incomes, and regrow the business communities in our country.

The central issues? Funding, Training and Failure rate. Because of these issues, we don’t believe our future lies just in convincing millions of untrained, underfunded people to jump into industry and face the higher than 80% failure rate that is the fate of new business starts.

But, we do believe that the next necessary economic age is the age of the Entrepreneurial community.

This is an age when potential entrepreneurs band into teams or communities to study and share necessary skills, to mutually support and help maintain one another enterprises, and to study the needs of the community so as to develop needed business ventures. While individual entrepreneurs have a high failure rate, a team of mutually supporting business people might become virtually unstoppable; more about this concept later. Next week, the Bubbles in our economy.

Thank you for finding “” and reading my economics blog, “Embracing Uncertainty”. Be sure to read from Orrin Woodward, Chris Brady, and all of our leader’s blogs that are available in our top menu link “TEAM Blogs”. Until next time, Larry

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Economics 101

canstockphoto4571857Are we in as much economic trouble as the media is saying?   Nope!  we are in a lot more trouble than that!   Let’s  look at some of the expert’s opinions…  David Walker — Comptroller General of the U.S. for over 10 years, resigned in 2008.  “The system is broken.  We are in a financial crisis that Americans are uninformed about and unaware of.” Charles Goyette — author, television and radio economic commentator.   “The US debt is so understated that it amounts to accounting fraud.” Michael Maloney — advisor to the Kiyosaki Group.   “I believe that not only will the US decline and see it’s dollar crash, but it is already on the way.”

Paul Krugman — Economics Nobel Prize winner.  “We are well into the realm of Depression economics.” Harry Dent — noted cyclical economist writes of  The Coming Great Depression. Doug Casey –Casey Research, labels it “The Greater Depression”. Adrian Day’s Global Analyst — “We are a long way from the bottom in both the economic decline and the credit crisis, with no end in sight.”–

Michael Checkan — Asset Strategies, Inc. — “How will this debt ever be repaid?  The only politically acceptable solution is to print more money and devalue the dollar.” Greg McCoach — The Mining Speculator — “The world is on the precipice of a worldwide financial disaster due to failed Keynesian economic thinking.  At this point there is no way around it.” Bill Gross — manager of Pimco, the worlds largest bondholder, has cut their holdings of US treasury bonds to zero, and is now selling them short.

Sam Zell — the most successful real estate investor of all time, on CNBC.  “My single biggest concern is the loss of the dollar as the world currency reserve.” Porter Stansbury — Stansbury and Associates.  “America will eventually lose its world reserve currency status and our debt crisis will lead to massive inflation.  We are heading into a crisis that will be far worse than anyone has yet realized, and will result in a significant decline in our standard of living.”

Thomas Woods — NY Times bestselling economics author.  “We are moving toward a trillion dollars a year just in government interest payments on our debt.”  (total US govt income is 2.3 trillion dollars)  ” But it is not as bad as the coming collapse of the major government entitlement programs.  Social Security and Medicare are underfunded by an astonishing $111 trillion.  It is not possible to tax, borrow or print our way out of that.”

If you think all that is depressing, wait til next blog, when I give you some actual facts and figures!  Is all lost?  Not yet.  We can prepare, and help the financial wounds over time, but it ain’t gonna be pleasant.  Economics is an unforgiving science, and we will pay for our financial dalliance at some time, the later the worse!  If you want some more background, and possible solutions, you might refer to Orrin Woodward and Chris Brady’s “Introduction to Economics” CD, from the Team’s LIFE collection, or Chris Brady’s CD “Camel in the Tent”.  Both of these are available in the “Today’s Economy and Your Money” CD pack from LIFE.

Or you can ignore all this, but remember “He who keeps his head in the sand leaves some vulnerable parts exposed”. I’ll provide more detail in my next post.

Thank you for finding “” and reading my economics blog, “Embracing Uncertainty”. Be sure to read from Orrin Woodward, Chris Brady, and all of our leader’s blogs that are available in our top menu link “TEAM Blogs”. Until next time, Larry

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