THARS GOLD IN THEM THAR REDNECKS

Now I am not a sophisticated investor. I stick to the basics, I buy things cheap, and try to sell them high. I do fairly well at this when I engage in it. But, money is a fascinating subject and I study it. Lately I've been reading a book on investing and one of the methods it suggested was to invest in dividend paying stocks. And, I am sophisticated enough to understand that. I buy a small chunk of the company and they pay me my share of the profits every so often. I get that. It's nearly as simple as buy low sell high. Even I can understand that.

So, just as if I have any money to throw at the market I was futzing around and looking up dividend paying stocks, and found  a couple of things. First off they're hard to find.  Second stocks that pay a decent return are even more rare. But they are out there. However, the most amusing thing I found was that apparently, there's gold in rednecks. The average dividend is 3% or less, but World Wrestling Entertainment pays nearly 11%. That's right those dudes with strange names, and in funny spandex costumes pay like a slot machine. Not as good as real estate stocks mind you, but right up there. I'm sure that says something about our society, but I have no idea what. In the meantime I'll be watching WWE on the street if it takes a dip I may buy a share or two.

WHY NOT STUDY THE MILLIONAIRES?

Several years ago I read a book called, “The Millionaire Mind,” by a Dr. Stanley J. Thomas. Dr. Thomas was a professor of marketing at Georgia State University in 1996 when “The Millionaire Mind,” was first published. Since then he has transitioned in to a researcher and writer on the the rich and how they got that way. He now has a total of seven books to his credit, and is probably the foremost, and definitely the best known expert on millionaires and how they got to be millionaires. Heck, he may be the ONLY expert on millionaires and how they got to be millionaires. He's certainly the only one that I've ever heard of.

I'll tell you a secret though, he ain't that original. At least not in how he obtained his knowledge. He employed the simple method of finding them and asking them, “How did you get rich?” And, while it may be effective, it's not something new. My father used to tell me to do that when I had a car that I couldn't diagnose as a teenager way back in stone ages of the 1980s. Granted Dr. Thomas used more scientific methodology than just asking them out right. He had them take surveys and studied them as some scientist study lab rats while they were filling out the study.  And, he did extensive interviews with many of them.  But, he did get them to voluntarily participate. Trust me, the rich are VERY difficult to force into anything.

Here's what blows me away though is that we tend to teach by emulation  nearly all other subjects, but not when it comes to money. Why is that I wonder? Actually I don't wonder, I don't even care why it is that we won't study money the same way we study other subjects, I just want to change it. I do think though the reason why has to do with the love/hate relationship we all have with money. We all want it, but we don't want anyone else to have it. So rather than study those with money we vilify them, and hold them in scorn. Heck we even attempt to tax them back to our level with a confiscatory 'progressive' tax system. But, if we'd just take the time to learn about them, and how they go to be rich we'd all benefit. First off we'd know that if we didn't get rich, or at least self sufficient that the fault was all ours. Which may be part of why we don't study them. Who wants to take responsibility for themselves after all? And, we'd learn how they did it so that we would have the choice to do it ourselves.

But, it's not just millionaires that Dr. Thomas studied. First he studied the demographic of millionaires, and found that some huge incorrect perceptions about the rich. First off he found that most of them are indeed first generation rich, and that their children are financially self sufficient. Which leads me to believe that studying them is not some hopeless study of life's lottery winners. It's a study of repeatable behavior. With that in mind I think that developing a curriculum based on his work and making it required learning in our schools is something we must start doing immediately.

MORE ABOUT MONEY

I have been having an online debate with a gentleman who thinks the whole problem with our economy is the banking system. Particularly the fractional reserve banking structure we have. (Thank you sir, for that term, I knew the mechanics but not the name prior to our debate.) The basic idea is that because the Federal Reserve Bank can literally create money out of nothing we have this inflationary cycle. Well, he's right, as far as he goes. And, the Federal Reserve Bank is one of the most corrupt and evil entities in the nation right now. Which is made much worse because we have zero oversight, and no way to get any.


But, what he and those like him miss in blaming the Federal Reserve Bank is the real root of the issue. And, that is that we are on a Fiat Money system as opposed to a Commodity Money system. You see commodity money is simply money backed by a commodity. Mostly gold, but the earliest version 5,000 years ago was Mesopotamia who used the Shekel which was a measure of barley. So the first money was one of the ingredients of beer. Gotta love that. But, their money was backed by something. Granted it was a consumable good, but it was something you could lay your hands on


Fiat money on the other hand is backed by the “full faith and credit of the government.” I use quotations for a reason. That reason being that almost no one has full faith in any government, and for good reason. Putting that aside though let's examine what happens to fiat money on a historical cycle.


Most civilizations start out with a commodity money type system. Whether it is backed by barley, gold, or widgets doesn't matter. The currency is backed by SOMETHING. For the Dollar it was the gold standard. Then the government realizes that unless the supply of that commodity is grown they can't grow their power as fast as they'd like so they move the currency off the standard and it becomes a fiat currency.


Initially not a problem, they can now create money by simply firing up the printing press, and giving said money away causes them to be liked and able to stay in power. Here we took the Dollar off the gold standard in the 1970s.


But, and this is where it gets silly, everyone seems to lose sight of the fact that unless it's backed by some service or good money is just worthless paper. So, the powers in charge, in order to stay in charge, have to print and give away more of these now worthless pieces of paper to appease those that keep them in power. Remind you of any politicians you know? But, eventually everyone realizes that those pieces of paper are indeed worthless, and the currency collapses. Then a new currency has to emerge, hopefully backed by a commodity, and the cycle starts all over.


Some say this is happening to the Dollar right now. I would not disagree with that, but don't know for sure that it's this cycle that will cause the ultimate collapse. I can tell you though that every fiat currency in the history of the world has eventually become worth nothing. I wish I had a solution, but other than teaching this history to our kids so that future generations can avoid going off their commodity I don't have one, and I fear it is to late for the Dollar.

WHAT IS MONEY?

What is money? Stupid question on the surface isn't it? I mean we all know that money is those little pieces of paper and metal that represent... Yeah, here's where it gets sticky. For some reason this is where most people lose sight of what money exactly is. Money is just the representation of the idea of how much service you have given your fellow man. That's all. When you give a farmer on the side of the road five bucks for a basket of tomatoes you are saying, “I value your service in producing these tomatoes five dollars worth.”

So, if you want to be honest and able to look yourself in the mirror realize that your only value is the value of how well serve your fellow man. Set about serving your fellow man in the best way you are able, and the money will follow. If you're good you can serve man as much as Bill Gates, but no matter if you just serve man as much as the McDonald's clerk you will still KNOW how much your service is valued, and you will have the physical representation to prove how much you have served your fellow man. If you're not happy with the amount of that money your service provides, then change how or what you do to serve your fellow man.

Just be aware of some traps. For instance often when when people think of government money they don't realize the cost. You see, no matter how money is routed to you ultimately some service has to have been produced. For some reason when that money doesn't come directly from the person who received the service the person who received the service doesn't value the service. But it doesn't matter if you produce the service, I receive it, I pay taxes, and then you collect from the government, or you produce the service, I receive it, and I pay you directly. Either way ultimately you have had to produce a service and I had to pay. That's a law of nature ranking right up there with Newton's Law of Gravity. For money to be anything more than paper and bits of metal something had to be produced. All the paper and metal bits do is represent that service in a portable form that allows me to transform my service of appliance repair into tomatoes. All getting it free from the government does is put in a middle man that will take his cut both ways. Which is why as Heinlein says, TANSTAAFL. Or for you non Heinlein fans out there, “There Ain't No Such Think As A Free Lunch.” So think long and hard about free money from the government, it's not really free, and it may not really be money if there is/was no service produced to back it up.

Some other time I will get into the evil of government money, but for now realize that all money really does is represent the value you and your fellow man place on your service to your fellow man.