Ludwig Von Mises Predicts Credit Crisis
Posted by Orrin Woodward on June 18, 2012
Updated: After finishing Too Big to Fail by Andrew Sorkin, I had to update this post!
If the 1989 breakup of the Soviet Bloc countries didn’t humble all the Keynesian economists, then the 2007 credit-crisis finished the process. The Keynesian economists were confronted, yet again, with the difference between economic law and the fallacies bandied about in their numerous textbooks.
First, the Keynesians, with the communist bloc in near starvation, learned that communism didn’t work – something Mises had pointed out eighty years previous. Mises irrefutable theoretical answers – he proved that without a free market there was no price system; therefore, no economic calculations were possible – are now confirmed with hard data from the numerous failed communistic nations. China, shockingly, has more economic freedom than the United States today! This is what happens when America continues to dabble in Keynesianism (socialism light) and China, in an effort to improve results, rejected hard-line communism in favor of free-enterprise concepts. The world truly has been turned upside down. 🙂
Second, the Keynesians learned the banking system is a “house of cards,” surviving on a “confidence game,” where only the insiders know how highly leveraged the banks truly are. Without the $1.1 trillion bailout (TARP) from the USA government, the banking system would have “dominoed to destruction” – Bear-Stearns to Lehman Brothers, to Merrill Lynch, to AIG, to Morgan Stanley, even Goldman-Sachs was on the precipice before TARP. Andrew Sorkin’s book Too Big To Fail provides the reader with a front row seat and play-by-play descriptions of the events during the 2007-08 credit-crisis.
Third, and a preview of coming attractions, the Keynesians will learn that even all-powerful governments must obey economic law. They will witness a government “domino to destruction,” similar to banking systems near collapse; however, the governments have no one to backstop their violations of economic law and the collapse will be on a much greater scale. In other words, the government bailouts only delayed, rather than killed, the day of reckoning. The highly-linked leveraged debt dominos between countries are set up in precarious fashion. It will only take one country (Greece anyone?) to renege on its payments causing the next weakest country to follow suit, leading eventually to a world-wide economic collapse of the highly leveraged governments.
For the overly taxed citizens, “Humpy-Dumpty’s” fall will upset the markets and livelihoods in the short term. But, over time, it will free citizen leaders to create market-place solutions, rather than submit to the unworkable Statist-Keynesian global mindset. Essentially, history will teach the Keynesian that their measures were the problem, not the solution as advertised. Only a few voices, mainly Ludwig Von Mises with a nod to Friedrich Von Hayek, predicted the cycle of inflationary spending in the early twentieth century! Truth, in other words, was right under the global powers noses over 100 years ago, but it was denigrated because it went against their desire for FREE money and increased Statist’s control. I wrote about this in my book RESOLVED: 13 Resolutions for LIFE on how the whole credit-crisis is symptomatic of a bigger issue: the character-crisis.
Remember, when the Big Banks and Big Government first proposed taking over our nations money system, it was to eliminate the credit cycles; however, truth be told, it didn’t eliminate cycles, but only delayed them, making the waves bigger and the destruction greater when they finally crash upon the economy. Thankfully for the modern power-pundits, the masses remain ignorant of the Federal Reserve’s dismal track record. Unaware of the danger, the people’s lethargy is the power-brokers’ best security, allowing the inflationary money scam to consistently rob the producers for the benefit of the exploiters.
Indeed, it must be asked: why doesn’t anyone stand for truth in today’s modern age? I believe a huge part of it is that few people believe in truth anymore, and of the few who do, few are willing to do the heavy mental work involved to learn it. The goal of the Mental Fitness Challenge is to awaken people to the need for personal development and developing a foundation in which to learn, apply, and change oneself. Here is a fantastic article on Mises by Mark Spitznagel.
Sincerely,
By MARK SPITZNAGEL
Ludwig von Mises was snubbed by economists world-wide as he warned of a credit crisis in the 1920s. We ignore the great Austrian at our peril today.
Mises’s ideas on business cycles were spelled out in his 1912 tome “Theorie des Geldes und der Umlaufsmittel” (“The Theory of Money and Credit”). Not surprisingly few people noticed, as it was published only in German and wasn’t exactly a beach read at that.
Taking his cue from David Hume and David Ricardo, Mises explained how the banking system was endowed with the singular ability to expand credit and with it the money supply, and how this was magnified by government intervention. Left alone, interest rates would adjust such that only the amount of credit would be used as is voluntarily supplied and demanded. But when credit is force-fed beyond that (call it a credit gavage), grotesque things start to happen.
Government-imposed expansion of bank credit distorts our “time preferences,” or our desire for saving versus consumption. Government-imposed interest rates artificially below rates demanded by savers leads to increased borrowing and capital investment beyond what savers will provide. This causes temporarily higher employment, wages and consumption.
Ordinarily, any random spikes in credit would be quickly absorbed by the system—the pricing errors corrected, the half-baked investments liquidated, like a supple tree yielding to the wind and then returning. But when the government holds rates artificially low in order to feed ever higher capital investment in otherwise unsound, unsustainable businesses, it creates the conditions for a crash. Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.
The system is dramatically susceptible to errors, both on the policy side and on the entrepreneurial side. Government expansion of credit takes a system otherwise capable of adjustment and resilience and transforms it into one with tremendous cyclical volatility.
“Theorie des Geldes” did not become the playbook for policy makers. The 1920s were marked by the brave new era of the Federal Reserve system promoting inflationary credit expansion and with it permanent prosperity. The nerve of this Doubting-Thomas, perma-bear, crazy Kraut! Sadly, poor Ludwig was very nearly alone in warning of the collapse to come from this credit expansion. In mid-1929, he stubbornly turned down a lucrative job offer from the Viennese bank Kreditanstalt, much to the annoyance of his fiancée, proclaiming “A great crash is coming, and I don’t want my name in any way connected with it.”
We all know what happened next. Pretty much right out of Mises’s script, overleveraged banks (including Kreditanstalt) collapsed, businesses collapsed, employment collapsed. The brittle tree snapped. Following Mises’s logic, was this a failure of capitalism, or a failure of hubris?
Mises’s solution follows logically from his warnings. You can’t fix what’s broken by breaking it yet again. Stop the credit gavage. Stop inflating. Don’t encourage consumption, but rather encourage saving and the repayment of debt. Let all the lame businesses fail—no bailouts. (You see where I’m going with this.) The distortions must be removed or else the precipice from which the system will inevitably fall will simply grow higher and higher.
Mises started getting some much-deserved respect once “Theorie des Geldes” was finally published in English in 1934. It is unfortunate that it required such a disaster for people to take heed of what was the one predictive, scholarly explanation of what was happening.
But then, just Mises’s bad luck, along came John Maynard Keynes’s tome “The General Theory of Employment, Interest and Money” in 1936. Keynes was dapper, fresh and sophisticated. He even wrote in English! And the guy had chutzpah, fearlessly fighting the battle against unemployment by running the currency printing press and draining the government’s coffers.
He was the anti-Mises. So what if Keynes had lost his shirt in the stock-market crash. His book was peppered with fancy math (even Greek letters) and that meant rigor, modernity. To add insult to injury, Mises wasn’t even refuted by Keynes and his ilk. He was ignored.
Fast forward 70-some years, during which we saw Keynesianism’s repeated disappointments, the end of the gold standard, persistent inflation with intermittent inflationary recessions and banking crises, culminating in Alan Greenspan’s “Great Moderation” and a subsequent catastrophic collapse in housing and banking. Where do we find ourselves? At a point of profound insight gained through economic logic, trial and error, and objective empiricism? Or right back where we started?
With interest rates at zero, monetary engines humming as never before, and a self-proclaimed Keynesian government, we are back again embracing the brave new era of government-sponsored prosperity and debt. And, more than ever, the system is piling uncertainties on top of uncertainties, turning an otherwise resilient economy into a brittle one.
How curious it is that the guy who wrote the script depicting our never ending story of government-induced credit expansion, inflation and collapse has remained so persistently forgotten. Must we sit through yet another performance of this tragic tale?
Mr. Spitznagel is the founder and chief investment officer of the hedge fund Universa Investments LP, based in Santa Monica, Calif.
116 Responses to “Ludwig Von Mises Predicts Credit Crisis”
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Denny & Jeanne Fritch said
Great post, Orrin. Thanks!
Rosemarie Lewandowski said
I so appreciate the excellent, fact-filled information that you provide to us. Thanks so much Orrin.
James Pyka said
Orrin,
Great post, I’m always grateful to have leaders to filter truth to the masses.
James
Geneva said
I am amazed at how much I actually enjoy reading, learning & practicing economics. Thank you for continually & constantly educating us on truth.
Matt Mielke said
Thanks for today’s lesson in economics, Orrin! I oscillate between frustration and hope. I’m frustrated why would a group of people want to do this? So many families and individual lives destroyed in the process. But, my hope comes in the fact that it is no surprise people would do such awful things. We are all fallen individuals and the God who created us has given us hope by sending His perfect son, Jesus Christ,to save us. What does it have to do with economics? Everything! Once we pull ourselves of the pedestal of “I am the master” and give that designation to Christ, we start to see life through a different lens. One of humility and moral truth. Until that happens, we will continue the same cycle of craziness until Christ’s return in the end.
Eric C. Blomdahl said
Thanks for your awesome comment Matt…agree totally…fired up!!!!
matthew mooney said
What a great point Matt!Those lessons that Jesus taught us apply just as much today as they did then.A good I question is how can I halp. how can I serve. Thanks so much Matt
Dave Chatmon said
Orrin,
When I read this in “Resolved” I was shocked and began to wonder what we can do, when you taught this at the last LIFE seminar two weekends ago I understood so much more. Each time you teach this topic it helps me to understand what my personal role needs to be in this “Heavy Mental Lifting” area of my life and those I can reach!
Shame on our leaders for not doing something, but more shocking is shame of those who knew and stopped teaching the truth! It is up to this small group, this community of believers that this country is worth the battle that our fore fathers gave their life for!
Thanks for leading the charge; I have our flag in my hands! I wonder how many others are willing to grab our nation’s flag and run up this hill?
Stay the course and lead the charge!
Thanks
Dave Chatmon
Bill Eder said
Hey Dave:
Right with you long may this flag wave. How is it we become
“so soon old so late smart” ironicly heard this from my “German” ansestors. Dad lived through the depression and
forever told us to save even only dollar a week. Should have
listened then,again too soon old so late smart. Thank God for
the Life/team and it’s leadership.
Dave Chatmon said
Bill, you are exactly what we need! We need people with experience that have influence with others so they will be open to learning and listening to the truth!
Thanks for carrying the flag of truth!
Dave
Kurt Brandtjen said
Dave- we are in good hands with you assisting in leading the charge! All flags in hand! Freedom Builders indeed!
Dave Chatmon said
Thanks Kurt,
we need all the tradesmen to band together and use their skills to lead this nation…bring them to the truth; You are the only one that can.
Dave
Carolyn Serpe - TEAM Freedom Builders said
Right on Dad! I know that most of my generation feel as though they don’t need to know what is going on, this way they don’t have to do the “heavy mental lifting”. They feel as though we are so far lost that nothing they can do will help. I hope that through LIFE we can spread the truth and rebuild the belief and get people to hold the flag again.
– Carolyn –
Dave Chatmon said
Carolyn,
What is so wonderful about you and Chris is that you are studying the real information! You are not afraid and have the Courage needed to go out and bring folks to the information that life has to offer!
Lead by example and lead with LIFE, information that will allow people to change their own lives!
Love you
Dad
Charlie Willkomm said
How history is still so strong on how economic financial habits can reoccur if the right people are not putting the right practices and processes in place. Learning from the Resolved Book to learn how history can repeat in positive and negatives ways, we need to reeducate ourselves with and lead the small charges together to the larger communities to change the culture for a better future for the next generations. Dave I am with you to carry the flag to where it needs to be placed.
Charlie
Dave Chatmon said
We will fight this battle together along with the TEAM!
Chris Serpe said
Dave:
Like my wife said, it is sad to see how little individuals around are age don’t care to learn what is actually taking place in our society. I know of some that think they know what is taking place, but as we all know, you don’t know what you don’t know. I also know people who have no idea what is taking place and our content living a life of false truths and dependency on others to provide for them. Although it takes courage and strength to lead people towards information that will actually benefit them, you can count on Carolyn and myself to be with you and the others every step of the way.
Dave Chatmon said
Chris,
You have shown everyday that you will continue to fight for the truth. I think you are the leader that your age group is looking for!
Charge!
Dave
Dave ober said
Excellent article!
Mary Hermsen said
Agreed, Dave!
Bob said
Thanks Orrin. The more people exposed to the truth & begin digging their own wells before the house of cards totally collapses & become really thirsty,the better off individuals will be & a country saved as a result of educated people. LIFE Rocks!!!
Elizabeth Bondie said
Orrin,
Thank you for continually posting on educational topics such as this. I learned more in the 5 minutes it took me to read this than many will “learn” in the hours they spend watching the news!
Thank you for breaking complex issues down into digest-able facts and making it accessible to so many. At 1,000,000 people strong, the Leadership Revolution that YOU are Launching will be an unstoppable force of educated citizens. I am glad to be a part of the fight for Freedom with you!
I look forward to your next blog.
Many thanks,
Liz Bondie
Richard and Ida Kinsley said
Great post Orrin! Thanks for all you do!!!!
Bill Eder said
Thanks Orrin: We in this LIFE/TEAM organization are fortunate to
have leaders that provide us with great tools to learn what we don’t know. Thank God for you Laurie and all the PC leaders.
Chris Harvey said
GREAT BLOG ORRIN!!! Its great to see people who still care and go against the current motto of “Ignorance is Bliss!” Keep leading from the front!!!
Chris
Windy Stanton said
The way I see it, the only shot we have is to reach out to as many people as we can, as many people as will listen to us, and re-educate them. It’s just a matter of educating the masses. Your blog does an excellent job of that, as does the TEAM community and the LIFE website. I would love to see a LIFE TV channel! I might even turn cable back on for that. 😀
Marc Militello said
WELL SAID WINDY!
Will Johanning said
For all you students who took the Economics 101 course in college and never could quite get a grasp on the Keynesian philosophy, and if you wondered if you were dumb because of that, (that was me,)—this article is for you! This will explain and break-down the “why did this happen” historical questions for you.
Will Johanning said
Thanks Orrin! This article was so refreshing to my soul!
curtis spolar said
Hey buddy, Great post! Just when ya think we’ve hit bottom, someone keeps digging. And the people clap for their own demise. It fires me up knowing that our educational business meets people where their at. If they wont learn on their own then we’ll pay them. Thx bud! Curtis
Nathan Fox said
Great post Orrin!! What a great explanation of economics.
Peggi Kern said
Thanks for sharing the article, Orrin. I have lived a live of economic ignorance and just floated down the economic current created by our government, without asking questions. I’m so thankful that I’m now learning and my eyes are opened to ask questions, make different decisions for our family’s economy and be part of a community who believes we CAN and WILL make a difference!
Ryan Calovich said
Awesome post Orrin, thanks for taking the time to lead others to truth!
Steve Leurquin said
“Everyone looks smart for a while, but eventually the whole monstrosity collapses under its own weight through a credit contraction or, worse, a banking collapse.”
That’s the hard part with all of this. We have become such an instant gratification society that people can’t see in the short-term how badly this is going to hurt them in the long run and then they favor it with thunderous applause. I hope we can learn in time to enough to turn the tide.
Thanks for a great post Orrin.
Steve Leurquin
Eric C. Blomdahl said
Great comment Steve!
Amy Nelson said
Yes! This information needs to get out there.
I think of the story of the man planting oak seeds…not for himself but for his future grandchildren! This financial short term thinking will hurt our future children and they will end up paying for it!
Steve Leurquin said
Anything great takes time to develop!
Kristen Seidl said
Awesome post Orrin! I consistently remind myself of this question: “why doesn’t anyone stand for truth in today’s modern age? I believe a huge part of it is that few people believe in truth anymore, and of the few who do, few are willing to do the heavy mental work involved to learn it.” Once truth is studied and learned there are really only two choices, do something with it or run from it. Like you said, most want to run from it but I believe there is a large group of people who are doing something with the truth. Just like you said this weekend… we can feed our fear or feed our faith but the one we feed is the one that will win. My goal is to help as many people as possible feed their faith by pursuing truth so that we can win the money crisis battle this country is facing! Thanks for all you do to bring truth to the masses!
Joanne Brandtjen said
Great article Orrin! I am continually impressed with the legacy of Ludwig Von Mises- what an example! I love your comments Kristen. We are so blessed to be a part of LIFE!! With you, the other RT’s and the PC we WILL make a difference in this world! “Faith invites us to stay in the struggle and fight through, not deny that it exists.”
Bill Eder said
Nice girls!! So proud of both of you been privileged to watch how you have grown as leaders in the LIFE/TEAM and in your personal lives as well. Blessings always.
Amy Clark said
Thank you Orrin for your hunger for knowledge and your willingness to share.
Eric C. Blomdahl said
Great article Orrin! Your commitment to truth and courage to share it is very inspiring…keep doing what you do…we’re behind you 100%!
Scott Staley said
Great post Orrin.
It seems as if history is being repeated – so few people seem to want to learn from the past and are ‘shocked’ when its repeated.
Rob Robson said
Thank you so much Orrin! I remember hearing you and Chris talk about selling your paper investments and buying Gold and Silver back in 2002. You sounded pretty silly for 4 or 5 years with all of the fake real estate wealth that was being created. I sure wish I had taken your advise back then. The truth is always hard to sell as it means choosing to take your medicine now in order to prosper later. Printing presses and Greek math problems always sound more appealing. Sadly, it is most likely going to require a complete dollar collapse in order to return to sound money. At that point it will be our job to sell the world on free markets instead of the globalist (UN, IMF, etc.) agenda. I believe that LIFE has been called to lead the charge of the restoration of this type of truth in N. America and soon the world. What a great time to be alive!!
Josh Dames said
Great post!! Thx Orrin for taking the time to put together these great blog articles. I do recognize the majority of people out there are not being educated in leadership and freedom but we do thank you and the pc for creating the #1 learning organazation on the planet!!! Team/LIFE
Brandon Perry said
Orrin thank you for having the courage to educate people on this, and also share others peoples works and research. Had it not been for Team/LIFE I would have never learned any economic truth, just what everything thought to be true on jobsites (wich I’m learning is not a lot of truth!). Looking forward to the book you and Olvier wrote to be released.
Thanks,
Brandon
Steve Duba said
Thanks Orrin ! Education will be the mechanism that saves this country.I read abook a while ago and realized how much I missed .
Copyright 1966 by Robert Lekachman.”The Age Of Keynes”.Its been under our nose for a long time.Our role is to educate.Our greatest
threat is our lack of knowledge.Keep vigalant Orrin.We will prevail….
Elaine Mallios said
Great post Orrin. Spitznagel is a pretty smart guy. We have our work cut out for us to educate and inform as many people as we can. I honestly think people just don’t know. I certainly didn’t. Armed with some great LIFE materials and your blogs we can get it out there.
Wes Smith said
Orrin,
Thanks for that insight. I wish we could make people pay attention to truth. This article is a must read!
Mary Hermsen said
Paying attention to the truth….I like that concept. How unfortunate that people don’t even know where to find it today, or whom to believe. Our work is cut out for us!
Jenny Salter said
SUCH A GREAT POST ORRIN!!!! Wow we have so much to learn as a country! I am thankful everyday that the PC are such great students, and then get to turn around and be some of the worlds best teachers!!!!! Thanks for leading the charge!!!! God Bless!
matthew mooney said
Orrin thanks for a great post. I remember when i first read about von mises in RESOLVED.. it was facsinating. Then you and Chris followed up in the challlenge talk. WE the people have the power to make a change one person at a time. No one should be waiting on the “establishment” to fix a mess they made . It is up to each of us to learn share and champion the cause for change. Thanks for all you do!
Kristen Seidl said
Amen Matt! Proud of you for your courage to champion the change in your own life and the lives of many others!
Bill Eder said
Matt you rock! If people would have listen to the “crazy kraut” we might have avoid this mess we’re in. The ball is in our court so lets get er done. Amen & amen?
Kim Decker said
orrin its amazing to me how society can snub the great ones who really are making a difference as what the selected few are trying to do to you. YOU…you who have helped so many and continue to do so, are so giving in so many ways and where are the ones who talk…hiding behind the scenes too ashamed to really face you as they know they are speaking ALL LIES they speak as they don’t even know who you really stand for. If they did then they would love you as we do the LORD JESUS CHRIST because isn’t that what he also tried to do…help so many and look what the people did to him…HOW PATHETIC society is..so afraid of truth.
Orrin Woodward said
Kim, When people choose to live in darkness they will, of course, shoot at any lights. Jesus is the LIGHT and LIFE of the world. We are all little lights who can choose to burn brightly with our time on earth or live in darkness and shoot at the lights. There is no middle ground. I choose light and to encourage other people’s light! God Bless, Orrin
adriano troli said
Great post Orrin, and i love your explanation in this comment. Thanks for all that you do
Elaine Mallios said
Well spoken Orrin. My priest Fr. Mark Lichtenstien says that what is most amazing is people actually believe their own lies. That is plain astonishing. But if you think about it, how else could they justify their ridiculous fiscal policies.
Mike Bouknight said
Thank you Orrin for a great post. This ought to be required reading in every grade from middle school through college.
Mary Hermsen said
Great idea, Mike.
Alex Obiden said
It is absolutely incredible to me that schools teach math up to trigonometry, calculus, and beyond, but still our economics is a mess. How does that make sense? The information this blog provides is priceless to society today. Oh, how much a difference a little truth makes!
Bruce Gonzalez said
Great post, just makes you think what the people in charge were really thinking of.
Michele P. said
I am learning so much from these types of posts. Things that I should have learned years ago in school, but didn’t. Thanks for taking the time to put these out there for us to read and learn from!
Michele P.
Angela Doty said
Orrin,
Great post! Awsome article!
Phil Wall said
This is what we have been tasked to do, this is our blessing. Yes people have been blinded by upbringing, media, society etc, and we have been tasked to shed light on the truth. This is why I joined the TEAM because someone had the guts to come and share different thinking and build a relationship.
People aren’t stupid, they just don’t know what the 5% know. Giddy up lets go share the truth with the 95%!!!!
SJ Barakony said
Bob McEwen on ‘Freedom Isn’t Free’ ( one of my top 25 all time favs! ) = paraphrased, he said that 90% of economics was truly easy/simple to comprehend, but the politicians (let alone bankers, lobbyists, and bureaucrats = the aristocracy that Oliver DeMille clearly explained in his books) attempt to confuzzle it and keep the citizens they supposedly serve/represent in the dark.
Reading ‘How Should We Then Live?’ presently – Francis Schaeffer was so incredibly spot on. Reading this book has been a blessing to me – no wonder that its in the Top 50; he speaks exactly about when absolute truths faded out of the mass media/culture/society. And the fruit we have today is mainly rotten as a result.
LIFE *will* fix this! Standing in the gap … putting the feet down in the pool … 🙂
jimmy varghese said
had a coversation with a guy at the gym about this. he said theres no hope for america. i said im apart of an organization that is going to bring our country back!
Mary Hermsen said
I hope he listens to you, Jimmy, and joins us in the fight!
Greg Johnson said
Great article by Mr. Spitznagel of the hedge fund Universa Investments LP on Ludwig Von Mises. Orrin you are right in stating that so few in America and particularly those in American politics stand up for truth. As it is says in scripture the truth will set you free. We need to educate more and more citizens in North America regarding the the Federal Reserve and its relationship to the Federal Government. We need a greater level of financial intelligence in order to make better decisions so that our children and our children’s children still have an economy they can prosper in.
Thanks for taking a stand and using your book Resolved to open the door to a greater understanding of this important subject.
Jeff Manring said
Orrin, I love your introduction and this great article you’ve shared, which demonstrates just another example of Insanity. Top-Down problems require Bottom-Up solutions. Real change begins in the heart and will require 1.5 – 2.5% to take the Mental Fitness Challenge. We’ve got our work cut out for us. LET’S GO! Revolution!!
Jammie Fisher said
Hey Orrin, This was a great post. I learn more every time I read what you are studying about economics. It is sad as many have said the lack of knowledge, but I believe more than anything it is a lack of even knowing that there is something more to pursue that one does not already know about. I’m not sure if that makes sense, but being a teacher, and spending a huge part of my life in school I was taught that a certain set of things were truth and if you are in the same setting with others who have been taught the same things you don’t even know to look beyond that. It is probably pride to a degree, or I was just naive. You don’t know what you don’t know and if it isn’t causing a problem that you can see and you are convinced you do know, then why would you ever look. I share this because I have to remind myself where I was and just how important it is to share this information and the business that many of us started that caused us to find this information, rather than judge those who don’t know or aren’t yet studying. Had someone not done that I may still have NO idea and would be a part of the problem, rather than part of what I feel is the solution.
Thank you so much!
Peggi Kern said
Jammie, Thanks for you perspective and reminder of where I was at when I first started listening to Team info. I was like you, teaching in a school setting and I just didn’t know any different. As I began to listen and learn, I realized that my results in life were based on misinformation. You’ve reminded me to accept, approve and appreciate others right where they’re at. Then get out there and share this amazing business and let the information present itself. Well said, Jammie!
Dean Clouse said
Mises is one of the geniuses that I love to read. His predictions are spot on and solutions tested by time, but ignored by modernists. His gold standard theory is brilliant and workable. I’ll get into a discussion with a Keynesian on occasion about the gold standard and their response always ends with “there’s not enough gold in the world to back the American currency”. I wonder how long it will take them to see that their point refutes itself.
Great article Orrin!
Kristine Militello said
Orrin,
It seems it all comes own to one thing: the refusal to educate ourselves. Choose any of the 8 fs, and the more I learn the clearer it becomes we’ve stopped looking for the solution (that is usually the tough, character-based answer) and we fall far the glitzy quick fix!! Keep writing!! You have an excellent voice for teaching us who are reading and learning! Thank you.
Farrah Sargent said
I was in that situation Orrin. I was “taught” that I did not need to know all that gibberish. Of course, I just needed to go to college and get a safe and secure job. I was not going to have to worry about all that stuff. I learned how to be a great employee. I only had stirrings of thinking for myself that I ignored because of my outside influences. I am so thankful to be associated with a group who is committed to walking the narrow road and making sure I can too if I want. I would have missed out on so much of the opportunity life has to offer and God’s will for my life if it were not for the TEAM PC vision. Thank you for your tireless efforts to improve and take us all with you =)
Joe McGuire said
Thanks for this great post Orrin. It really gets to the heart of our economic woes. The LIFE business and the Mental Fitness Challenge is igniting a smoldering revolution of thought. The more the more people there are who understand these truths the quicker the solutions will be demanded. I’m so thankful to part of the solution. Thanks for your leadership Orrin
Richard and Ida Kinsley said
I agree Joe, the Mental Fitness Challenge ROCKs!!!! There is no other way to jump start someone on the path to different information that can change their lives.
Thank you for the opportunity to get around Jane and yourself as well as the other leaders of LIFE. This information that is provided by LIFE is life changing and the financial information is the best. It has totally change our lives and I love being able to provide the information to others.
Heidi said
Orrin, Whenever we get our LIFE CDs in the mail, I get excited that information like this article is getting into so many Westerners’ homes and minds. The ‘Introduction to Economics’ by Chris and you was great. ‘Corn, Closing, and Competition’ was eye opening as well, performing exactly what it describes: informing the people. And it will work again.
Keith Sieracki said
Awesome post! Words like “lethargy”, “ignore”, “failed”, and “leveraged” echo throughout these two articles and it embarrasses me as an American that I was niave to basic economics and financial structures as a young adult. Thanks Orrin and LIFE for the chance to be a part of a learning, thinking, evaluating, and changing organization. I commit to playing my part in turning this decline around so the USA can be an example to the world of a nation that admits, learns from, and fixes its mistakes.
Marie Claude Troli said
Keith, my senitments exactly. I’ve always just avoided to do with economics or politics. I never realized the importance in it. It’s good to know that we can all play a part in helping no matter how small we may think tat part is.
Scott Pfister said
We must get back to teaching history in the school.
Michael S. said
This is amazing imformation, I would of not found on my own. Thanks Orrin for the research on this topic.
John Burns said
I’m sharing this with some economist friends!
Sandra said
Orrin, thank you for such an enriched educational information. Reading and learning from history makes us want to go our and share the MFC information even more. God bless you!
Amy Nelson said
Thank you Orrin for getting this information out!!!
Marc Militello said
Economics is a subject that few people know anything about(including myself until TEAM and LIFE). Thanks for educating us and putting a spot light on the issues.
Peggi Kern said
I agree Marc. Not only was economics a subject that I didn’t know anything about, I felt it was too complicated for me to ever understand. TEAM and LIFE and taught it in a simple format that I’m just now beginning to grasp.
Nichole Bouchard said
Amen!! Love that line in Resolved, quoting Mises in Human Action, “Economics deals with society’s fundamental problems, it concerns everyone and belongs to all. It is the main and proper study of every citizen.” What an admonition to be committed to educating my children!
M. Fitzgerald said
I learn more from your blog about the world financial picture, history and life in general than I ever did at the University!
Tom Gavin said
Thank you for keeping the moral compass set True North.
Elam k Stoltzfus said
Wow !! We need to get this info out their fast !! Thanks for the great articles !!
Lisa Wicik said
Thank You Orrin for sharing information and bringing Mises to life for all of us who would never have realized all that he did and what he stood for.
Dan Hawkins said
Thanks for sharing your wisdom Orrin. This information needs to get out!
Kirk Birtles said
Orrin… great article! ‘You can’t fix what’s broken by breaking it again!’….love it! Thanks for always keeping us mindful of the truth among all the subterfuge and deception!! God bless, kb
Laurie Tallio said
I have to read this several times over, but I am understanding economics in a way that I never have before. Thank you!
John Graff said
Orrin,
After reading this blog, I re-listened to Larry on Economics-201. He reminds me of the stats that were made in June of last year, and I shudder to think what the new stats are and what they indicate, let alone the long term implications. May I re-recommend that anyone who wants a better understanding of how all the ‘pieces’ fit together; please take the time to study Chris and your book:” Leadership and Liberty”. This text is totally underrated!. Thanks Orrin
Yasminah Respes said
Awesome post, Orrin! It is scary that we naive enough to think that we won’t experience a collapse like many other countries. It takes a group of people to help change the direction that our country is going in. Thank you Orrin for sharing this information!
Jim Croyle said
Orrin, great article! Gets straight to the heart of it. It’s unfortunate that institutions of higher learning around the country tout Keynesian economics over Laissez-faire. My economics professor dismissed every attempt to discuss the merits of a free market. It was clear that, in order to get a passing grade, all of the students must adopt his point of view. It’s saddening that these are the people shaping the young minds of the next generation. The truly disturbing thing is that most students weren’t even inclined to challenge the professors’ position. Thanks for leading the charge. God Bless, JC.
Tim Johnson said
Orrin,
Another great economics post! Thanks for putting this out for all to learn!
Stephanie Asher said
Orrin,
What a great post and incredible insight on the economic crisis. Prior to the TEAM I was uneducated in this area and unaware of the brutal reality of how serious this is. Resolved helped me to have a better understanding of the crisis and why our economy is where it’s at. I agree with you that following truth is more important than any reward or recognition. I will continue to follow you and our leaders as we lead America to recovering our financial freedom. Thanks again.
Imelda Roman said
Wow, great information! There is so much to learn and to unlearn. Thank you Mr. Woodward for bringing truth forward.
kristen seidl said
Proud of you Imelda! Your hunger for learning is very impressive! You are going to have an amzing future!
Jason Dames said
I learn so much from your blog Orrin. Thank you Very much!!!
Valerie said
Great post! This is information sorely needed out there by the general public!
Owen Derry said
A few lifetimes ago, I was a commercial loan officer at what was then a medium-sized regional bank. A lot of customers were auto-related businesses – tier two or tier three suppliers. The bank was comfortable with businesses that had a debt to equity ratio of 1 to 1, and would in many cases go with debt to equity of 2 to 1 (twice as much debt as equity) and would take a mortgage on the owner’s house. Most banks would not touch anything as risky as a 2 to 1 debt to equity ratio.
Interestly enough, because banks are insured by the Federal government through the FDIC, and because of fractional reserve banking, their debt to equity ratios back then (and they have not changed that much today) were 8 to 1 or 10 to 1, that is, they are 4 to 5 times more highly leveraged than customers they didn’t want to lend to. For example, Citibank’s 2011 balance sheet (page 37 of their 10-K)shows roughly $1.7 trillion in liabilities and $0.18 trillion in equity which comes out to a D/E ratio of about 9.4 to 1. Based on their own credit standards, they would not lend to themselves.
But then, that’s where printing money comes in – just keep on printing it so the next generation has to solve the problem.
Orrin Woodward said
Owen, I LOVED this! You summed it up so well. Basically, the banks would never loan to a business as undercapitalized as 2 to 1 debt to equity; however, since they are 8:1, 9:1, and some investment banks were up to 32:1, the only person crazy enough to guarantee their loans was the Federal government! In other words, no private business would take the risk so our politicians volunteered the producers tax dollars to protect the investments and returns of the usurers. And, like what happened in late 2007, if the market downturns, due to rampant inflationary policies of the Fed Reserve, the American tax dollars will pick up the tab to ensure fractional reserve banking continues its dismal trail of destruction while receiving massive profits at producers expense! AMAZING! Thanks for the great information. Orrin
Nichole Bouchard said
I just finished this chapter in Resolved. The first time I read the book, I hardly grasped this chapter, just gleaned what I could and pushed through. This time I was able to track a little better. I’m believing when I read it again 6 months or so from now, I will even own more!! Praise God for growth and depth of thought!!
Peggi Kern said
That is another principle I’ve learned through Team. In the past, I would never read a book twice. I’m with you Nicole. Every time I re-read that chapter I gain a better understanding. I’ll keep reading until I understand.
titus jumper said
Man it is funny how people can be so off but have
the truth sitting right infront of them
Sarah H. said
So interesting! Thanks for teaching us such great things!
Harold Henslee said
When is this all going to hit the fan? My mother and father informed me yesterday, they had to take out a loan to fix there house. 0 interest for this amount of time and this and that.. if we pass away you have to take over the loan. They said they were sorry for having to do it they need to stay there, and I understand. They said you will be able to sell the house for x amount to pay it off but we all new it wasn’t going to be possible. Our leadership growth is taking place as we speak. Gota get this going.
Terry Arnold said
Orin, it is so refreshing to here someone systematically and logically lay out the truth. I believe most people recognize that their family budgets would collapse and are collapsing because they have not excercised sound economic principles. What makes them think that governments won’t do the same? I think you have identified the problem in your references what we are feeding our subconscious mind. To many Americans have bought into the government propaganda that there is a free lunch or the rich should pay for it. Thanks again for exposing the lie with the truth.
Terry Arnold
Steven Johnson said
So true free enterprise really has never been tried… here you show us again the ignorance of the experts!
Matt Ambrose said
Great article by Mark Spitzangel! Thanks for sharing this information in your blog. The LIFE Business financial principles are the proper voice on economics in the world. Keep speaking the truth… everyone needs to be given the chance to hear!
Bob Pollock said
Orrin,
Thanks for sharing the truth. People are hiding their heads in the sand.
Bob
Wildtarg said
That was fantastic, and I admit that Mark Spitznagel’s article was somewhat difficult to follow. I only have an excerpt and a quote:
“For the time will come when people will not put up with sound doctrine. Instead, to satisfy their own desires, they will gather to themselves a great number of teachers to say what their itching ears want to hear.”
-St. Paul, in a letter to his protege, Timothy