Leo Crocker Rogers: The time for clichés is here. One is, “Never change a winning game; always change a losing game.” Another is: “When you are losing, go back to basics.”Financially, there is a simple concept to be understood. Money cannot make money. Interest on money does not add value to the money.
The time for clichés is here. One is, “Never change a winning game; always change a losing game.” Another is: “When you are losing, go back to basics.”
Financially, there is a simple concept to be understood. Money cannot make money. Interest on money does not add value to the money. Thus loans are not a precursor to advancing a society. Simply put, money is not organic. We do not expect water to make water, and we should not expect money to make money. Such expectations are folly; loans ultimately make a society die of thirst.
The latest Rasmussen Report from February 2009 states that 73 percent of adults trust the American people more than their political leaders. Do 92 percent trust themselves more than bankers? If so, mattress money deposits are rising.
Today, the U.S. government is loaning trillions of dollars to pay off previous loans. Even Pooh Bear would shake his head at that. Consider two hypothetical communities. Which has the greater “social rate of return”?
A man wishes to put a house on his land so he needs to fell some of his trees. He needs help. Others are meagerly living as is he. One has a cow, one a sheep, another an old car, but none have trees.
To obtain lumber, he promises the others, if they help, they can have some of the forest. From the lumber, all build houses for their wife and children. The man expands his forest operation. Cow-man swaps some wood for a bull and starts a herd. Sheep-man does the same. Car-man upgrades to a truck, which hauls the trees.
This is the beginning of their neighborhood. Their children stay with their families and help all become more rooted. Their businesses grow. They build a church and a neighborhood meeting place.
In time, the man passes on, but his son and other sons and daughters expand their beginnings and begin to trade with other communities. Generation after generation, they become more savvy about the weather and about building machines that reduce their workload, which extends their life span.
At no time, however, is a cent of money printed or exchanged. Not printing money is significant in Community One, but more significant is that without money there are no loans. Even more significant is that without loans there is no parasitic interest.
Life in this mantra is stable because all deals are straight-up and the economy is genuine. Busted deals happen. There are losses, but seldom from greed. One does not steal from a friend or enemy. Money represents “goods and services,” not numbers on paper. When broken deals occur, others help by softening the blow.
Three concepts give permanent stability to Community One:
• People know each other and that brings honesty.
• The added value of the community is based on the work that is tradable to another person.
• There is no money.
This community is similar to Community One. However, to provide for an easier exchange of goods and services, Community Two prints money. It’s interesting how just printing the money brings down the community.
Community Two starts with same growth pattern, but with the money, it grows faster than Community One. Why? Because the money concept allows a leveraging of personal and business growth through the power of the “loan.”
A business expands faster by borrowing and using loan money than using a company’s limited profits. Amazingly, just the simple concept of “money” makes this faster growth possible.
Unfortunately, however, what were once straight-up deals become money-making schemes.
Amid the effort to add value to Community Two through labor and services that bring profits, money is paid to those who provide the loan money. Moving money from person to person generates pseudo profits, called interest, or more cleverly stated, the “time value of money.” These money-moving folk are called bankers and insurers. They are the intermediaries between those who have grown trees, cows, sheep, and upgraded to a truck and those who intend to grow trees, cows, sheep, and upgrade to a truck.
COMPARING OUR COMMUNITIES
Now, could those of Community Two wishing to become business people have done so without the bankers?
Absolutely, yes. They could have worked for those that had established businesses, saved their money and used it to seed their own business. But with banks, they did not have to wait.
They borrow to start, grow, and even to meet payroll. And who makes the most money? The clever “time value of money” folk, the money handlers who build their buildings of glass. You can feel it coming.
Interest is not the fruit of labor or service. Loans are simply a time compressor. They allow things to happen now that should not happen until the fruit of labor paves the way. The “time value of money” — interest — is an ominous shadow following each loan. To dispel the dark shadow of loans and their interest, new financial words are used: “postponed payment options,” “interest-free loans,” “zero base risk swap,” etc.
These Las Vegas glitz words have two effects. One, they give credence to the financial world. Two, they confuse the real world enough that clear thinking people just let the shadow persist. The worst thing a moral person can do is not take action when righteousness is needed. The act of omission is devastating.
Banks offer loans, and the loans with interest are parasites (“An organism which lives in or on another organism and benefits at the other’s expense”) that grow on a community. And like in any growing forest, the sparkling mistletoe parasite eventually kills the trees of production. Community Two will fail.
Clearly, the nature of life in Community Two is more glorious than in Community One. It is the difference between living in Boise, Idaho, and Anaheim, Calif. — potatoes vs. Disneyland.
Money cannot make money regardless of how one paints that picture. Only value-added effort adds to a community. Money is only a score card for the added value.
It is not the Community One farmers, ranchers and manufacturers, the value-added service agencies, that pull the teeth of society. It is the clever money manipulators of Community Two — Enron, Arthur Andersen, Bear Stearns, Bernard L. Madoff, Allen Stanford, AIG, Bank of America, Merrill Lynch, etc. — those that lend and manipulate money.
TIME FOR CHANGE
It is time to change all right but not to borrow money from the future to pay the debts of the past and certainly not for the debts of the present.
Saying “Spending money grows an economy” is like saying “Practice makes perfect.” Wisdom says differently. Wisdom says only “Perfect practice makes perfect,” just as only “Value-added effort grows an economy.”
Money is not organic. Labor is. Rethink borrowing.