Do not give in to evil, but proceed ever more boldly against it.

Winston Churchill once wrote:

There are few words which are used more loosely than the word “Civilization.” What does it mean? It means a society based upon the opinion of civilians. It means that violence, the rule of warriors and despotic chiefs, the conditions of camps and warfare, of riot and tyranny, give place to parliaments where laws are made, and independent courts of justice in which over long periods those laws are maintained.

That is Civilization—and in its soil grow continually freedom, comfort and culture. When Civilization reigns, in any country, a wider and less harassed life is afforded to the masses of the people. The traditions of the past are cherished, and the inheritance bequeathed to us by former wise or valiant men becomes a rich estate to be enjoyed and used by all.

Today, this view is becoming increasingly ignored as the State seeks to gain more power over society. In the video below I discuss some of the ramifications of the Rule of Law on liberty in Western Civilization.

Sincerely,

Orrin Woodward – LIFE Leadership Chairman of the Board

Thomas Woods – Meltdown

The Austrian business-cycle theory is the missing factor in today’s economic discussions. It connects the dots on so many seemingly disparate data points and explains systematically what everyone else is treating as isolated events. Unfortunately, the business-cycle theory is rarely discussed and almost never truly understood by today’s talking heads.

The Austrian School of economics is the only school that has developed a working model of how savings and investment needs work together to create the natural rate of interest. No where is there a need for the central banks Statist central planning interventions to artificially lower the interest rates.

This, in fact, is why the theory is kept from mainstream discussions because it places the blame for the Global Financial Crisis where it belongs, namely, on the State’s partnership with the central banks to run the banking system cartel. The banking cartel is designed to protect the fraudulent fractional reserve banking system from collapsing upon itself. 

LIFE Leadership is set to release the first of my planned three book series on society and the State titled And Justice for All. The book will be available at the June Columbus major function. In the book, I describe how the State intervenes within society, allegedly to serve the populace, but actually to increase its power. I go on to describe how these State interventions affect society.  

Justice for all is the goal of every righteous society, but the government must be restrained to perform only its intended functions to accomplish the assignment. Who guards the guardians? This ought to be the question asked by all concerned citizens to ensure the destructive Five Laws of Decline do not destroy the productive Six Duties of Society.

Here is a brief summary on the business-cycle and Thomas Woods excellent book Meltdown from the Mises Institute. I highly encourage everyone to read this book as it is the best simple description of the business-cycle theory.

Sincerely,

Orrin Woodward – LIFE Leadership’s Chairman of the Board

Austrian business-cycle theory is straightforward, for those willing to devote the necessary time to study praxeology. But therein lies a problem. The average person lacks the patience to read Human Action and Man, Economy, and State. How then can he acquire the rudiments of Austrian cycle theory and grasp why the theory is true? To set the question aside, on the grounds that it is unnecessary for the man in the street to bother with such matters, is a counsel of despair. If the public does not understand the economics of depression, there is little hope that we can avoid disastrous government policies. Unless the free market receives sufficient popular support, our economic future is bleak.

Woods supplies just what we need. With great clarity, he shows that the Austrian theory of the cycle is firmly grounded in common sense. Additionally — and here his skill as a trained historian comes to the fore — he shows that Austrian theory explains not only the Great Depression but other less-well-known economic downturns as well. When the government followed a “hands-off” policy, recovery from a downturn was rapid; when, as most notably was the case in the New Deal, government tried to take control, the economy sputtered.

The basics of Austrian cycle theory fall readily into place once one considers a fundamental point: the economy can grow only by producing more goods. An expansion of the money supply does not suffice. Efforts to get something for nothing, by the government’s deficit spending or by an expansion of the money supply, cannot produce lasting prosperity.

The speed with which an economy grows depends on the extent to which people prefer present goods to future goods. Other things being equal, people always prefer satisfaction in the present; but the extent to which this preference prevails is crucial for economic development. In order to obtain more consumer goods than are immediately available, people must postpone satisfaction by saving, enabling a greater production of capital goods to occur.

The extent that they are willing to do so determines the rate of economic growth.

The preference people have for the present forms the main part of the rate of interest: Mises called this the originary rate of interest. This rate registers the way people allocate resources between consumption and production.

Trouble arises when the government, by increasing the supply of bank credit, depresses the money rate of interest below the natural rate. Businessmen, seeing that money is available, invest in capital-goods industries, and the result is a boom.

Once the monetary expansion stops, the boom cannot be sustained. The entrepreneurs who expanded their production of capital goods need more money to sustain their projects, but not enough is available at an interest rate that will secure for them a positive return. In the absence of monetary expansion, the rate of interest rises, since time preference has not changed (or at least there is no reason to assume it has.) At the higher rate of interest that now prevails, formerly profitable enterprises now have to be liquidated. This process of liquidation is precisely the depression.

Lady Justice

I am so excited to be finally releasing the first of a trilogy of books on the never-ending power-struggle between the State and Society in human history. And Justice for All will be released at the LIFE Leadership Major Convention in Columbus Ohio in June. I am so thankful to the LIFE Leaders who have blessed me with their friendship, thoughts, and suggestions to make this book better.

A special thanks to my amazing wife Laurie Woodward and our two youngest sons (Lance and Jeremy) for participating in our family discussions upon the concepts in this book. I have experienced first-hand the growth of these two teenager of their knowledge of the roles of the State and Society. 

Here is a short segment from the book to illustrate the power of ideas in one’s life.

Sincerely,

Orrin Woodward

Author Warren T. Brookes captures how the duality within human nature and methods for creating wealth has led to a division within the science of economics as well:

One view, defined by Adam Smith and Jean-Baptist Say, is that wealth is primarily metaphysical, the results of ideas, imagination, innovation, and individual creativity, and is therefore, relatively speaking, unlimited, susceptible to great growth and development . . . After all, if wealth truly is metaphysical, the result more of mind than matter, the “wealth of nations” has to be seen as the direct result of the creative activity of individuals and the degree to which that activity is either liberated or restricted by governmental, trade, or societal structures and strictures . . . The other, espoused by Thomas Malthus and Karl Marx, contends that wealth is essentially and primarily physical, and therefore ultimately finite. The modern presentation of this view argues that since usable energy is steadily diminishing into entropy, all wealth is really cost to be shared more equitably . . .  If one believes that wealth is primarily a function of material resources, and is therefore limited (or declining), it is only natural that one would see the role of economic policy as the just and collective conservation, distribution, and redistribution of these limited resources until the end is reached.

Smith and Say believe wealth is metaphysical, and since ideas are unlimited, society should employ the “economics means” of wealth creation to raise the tide of humanity and its societal ships. In contrast, Malthus and Marx believe wealth is physical, and since resources are limited, society should employ the “political means” of wealth expropriation to direct the tide equitably between societal ships. This divergence in economic thought relates back to the divergence in methods to create wealth which tracks back to the divergence within man himself.

One of the key objectives of this book is to educate leaders in the systematic interactions between these two opposing forces within society.  For only when this is understood can we achieve long lasting concord within society.  Towards that end, there are three questions that must be answered in order to achieve enduring concord within society.

1. What areas of society prosper best under liberty and persuasion?
2. What is the proper role of government within society to ensure justice for all?
3. How does society check government’s “monopoly of force” from expanding into areas it doesn’t belong?

The Six Duties of Society (SDS) and the Five Laws of Decline (FLD) are present in every human society because it the seeds of both processes are inherent within the human heart. LIFE Leadership is a company that focuses on expanding the SDS and restraining the FLD. In a similar fashion, every successful society rises under the impetus of the SDS and eventually falls when the FLD kill it.

I promise that anyone who reads history with an SDS and FLD mindset will see it everywhere. For instance, the following video about the Greeks and the Power Pendulum is from a talk I gave last year. Listen to the video and tell me where else you have seen the FLD working within society.

Sincerely,

Orrin Woodward

Jesus Huerta de Soto

In Hernando de Soto’s fantastic book Money, Bank Credit, and Economic Cycles, he uses a simple example from Robinson Crusoe to explain how savings is essential for the free enterprise process. Understanding these concepts at the simplest levels helps one decipher the more complicated cases in today’s modern economies. I have spent the last year really studying the fractional reserve banking (FRB) methods and now realize the highly inflationary nature of this process.

Unfortunately, the modern State’s marriage to the banking system has only exacerbated the ill effects of FRB by juicing the whole process with fiat money created through the central banks. Thus, the money supply grows precipitously during the Boom process and banks enjoy massive profits until the borrowers (both business and consumers) realize their inability to repay the debts at the now inflated prices cause the the monetary expansion. Of course, this leads to the Bust when debt defaults rapidly reverse the FRB monetary expansion.

LIFE Leadership is just months away from releasing my new book And Justice for All that reveals the SDS and FLD and how they interact within society. Increasingly, entrepreneurs are failing because they can no longer make accurate predictions based upon current prices thanks to the Boom/Bust FRB cycles. With that said, however, I am not a doom and gloom person as I believe the truth sets you free. It’s time for We the People to learn, live, and apply truth in the areas of finances (both personally, professionally, and societally) and restore the American (along with every other societies) Dream for the next-generation.

Here is part I of a two part series.

Sincerely,

Orrin Woodward

The sine qua non for producing capital goods is saving, or the relinquishment or postponement of immediate consumption. Indeed in an action process the actor will only be able to reach successive and increasingly time-consuming intermediate stages if he has first sacrificed the chance to undertake actions which would produce a more immediate result. In other words, he must give up the achievement of immediate ends which would satisfy current human needs (consumption).

To illustrate this important concept, we will use the example given by Böhm-Bawerk to explain the process of saving and investment in capital goods carried out by an individual actor in an isolated situation, such as Robinson Crusoe on his island. Let us suppose that Robinson Crusoe has just arrived on his island and spends his time picking berries by hand, his only means of subsistence. Each day he devotes all of his efforts to gathering berries, and he picks enough to survive and can even eat a few extra daily.

After several weeks on this diet, Robinson Crusoe makes the entrepreneurial discovery that with a wooden stick several meters long, he could reach higher and further, strike the bushes with force and gather the necessary berries much quicker. The only problem is that he estimates it could take him five whole days to find a suitable tree from which to take the stick and then to prepare it by pulling off its branches, leaves, and imperfections. During this time he will be compelled to interrupt his berry picking. If he wants to produce the stick, he will have to reduce his consumption of berries for a time and store the remainder in a basket until he has enough to survive for five days, the predicted duration of the production process of the wooden stick.

After planning his action, Robinson Crusoe decides to undertake it, and therefore he must first save a portion of the berries he picks by hand each day, reducing his consumption by that amount. This clearly means he must make an inevitable sacrifice, which he nevertheless deems well worth his effort in relation to the goal he longs to achieve. So he decides to reduce his consumption (in other words, to save) for several weeks while storing his leftover berries in a basket until he has accumulated an amount he believes will be sufficient to sustain him while he produces the stick. This example shows that each process of investment in capital goods requires prior saving; that is, a decrease in consumption, which must fall below its potential level.

Once Robinson Crusoe has saved enough berries, he spends five days searching for a branch from which to make his wooden stick, separating it from the tree and perfecting it. What does he eat during the five days it takes him to prepare the stick, a production process which forces him to interrupt his daily harvest of berries? He simply consumes the berries he accumulated in the basket over the preceding several-week period during which he saved the necessary portion from his handpicked berries and experienced some hunger. In this way, if Robinson Crusoe’s calculations were correct, at the end of five days he will have the stick (a capital good), which represents an intermediate stage removed in time (by five days of saving) from the immediate processes of the berry production (by hand) which up to that point had occupied him.

With the finished stick Robinson Crusoe can reach places inaccessible to him by hand and strike the bushes with force, multiplying his production of berries by ten. As a result, from that point on his stick enables him to gather in one-tenth of a day the berries he needs to survive, and he can spend the rest of his time resting or pursuing subsequent goals that are much more important to him (like building a hut or hunting animals to vary his diet and make clothes).