What Would Our Founding Fathers Think if They were Alive Today?

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I believe the Founding Fathers would surely be proud of the vastness and strength of the United States, but they would be strongly disappointed with how we’ve come to interpret the Constitution.

Furthermore, they would be even more disappointed with the fact we have created a central bank that artificially foments growth and debases our currency through fraudulent monetary policy.

The Framers warned about our country and capitalist structure suffering from a central bank that purposefully imbalances the market in order to create phony credit and fake booms in the business cycle. The size and scope of the federal government, the incredible power of the Federal Reserve, and our empire overseas all would be considered perversions of the U.S. Constitution.

Surely they would be very proud that the United States has built some of the most amazing cities that the world has ever seen. They would in fact probably be surprised that the country they founded went on to become the greatest economic machine in the history of the world, and they would be absolutely astounded by things like our interstate highway system and the Internet.

However, there are quite a number of things that they would be horrified about as well and they never would have believed this would ever happen to the United States of America. Things such as …

  1. The Federal Reserve devaluing the U.S. dollar by over 95 percent since 1913 and using this strategy to create the biggest mountain of government debt in the history of the world.
  2. The U.S. Court of Appeals for the Ninth Circuit ruling that U.S. government agents can legally sneak onto your property in the middle of the night, place a secret GPS device on the bottom of your car and keep track of you everywhere that you go.
  3. The U.S. government accumulating a national debt that is rapidly approaching the 18 trillion dollar mark.
  4. Americans now owing more than $1.1 trillion on student loans, which is more than the total amount that Americans owe on their credit cards.
  5. Americans wasting an astounding amount of food. According to a study by the California Integrated Waste Management board, 63 percent of the average supermarket’s waste stream is food. When you break that down, it means that each supermarket wastes approximately 3,000 pounds of food each year.
  6. Manufacturing employment in the United States falling by 40 percent since 1979.
  7. The number of Americans with manufacturing jobs today in 2014 being smaller than the number of Americans who were employed in manufacturing in 1950.
  8. Over 45 million Americans enrolled in the food stamp program now considered “the new normal” and Americans continuing to drop into poverty in astounding numbers.
  9. Barak Obama backing a proposal to create a national database that will store the DNA of all individuals who have been arrested, even if they end up not being convicted of a crime.
  10. The average American worker now paying literally dozens of different kinds of taxes each year.
  11. Christians now being arrested and thrown in jail in some areas of the United States for quietly passing out Christian literature on public sidewalks.
  12. Nearly half of all Americans now using prescription drugs on a regular basis.
  13. Americans now spending large amounts of cash now viewed as “potential criminals” by the U.S. government in 2013.
  14. New full body security scanners going into airports all across the United States now actually seeing through our clothing and producing very clear and very detailed images of our exposed bodies as we walk through them.
  15. The U.S. government spending an amount of money equivalent to approximately 25.4 percent of GDP this year.
  16. 10,000 people making today 30% of the total income in the United States.
  17. 61% of Americans between the ages of 44 and 75 saying today that running out money was their biggest fear. The remaining 39% saying death was scarier.
  18. 28% of all U.S. households – according to one recent survey – having at least one person that is currently searching for a full-time job.
  19. Major international organizations actually proposing that the United States start considering the adoption of a truly global currency.
  20. One group of high school students making national headlines recently revealing that a security guard ordered them to stop singing the national anthem during a visit to the Lincoln Memorial.

It is clear that most of the challenges that are found in the US today and for that matter, throughout most of the developed world stem from a number of causes including but not limited to the facts that:

  • industrialization is maturing, which creates a huge systematic failure as there were no proactive measures taken to address it – middle income jobs are and will continue to disappear, which creates a huge hole in a society
  • values have shifted since the founding fathers, including a world of much more self-interest and creativity versus hard-work and benefit ‘for all’
  • many individuals with no conscience are now running government and businesses – on the surface they will give the appearance of caring but actions speak louder, and clearly others do not matter
  • financial system has become very mature and is run by brilliant self-serving individuals that have one goal – higher and higher profits short-term, which creates systematic failure and risks that sooner or later will break the system
  • governments inability to run such a large system, as what the US has become – goal is to get re-elected which creates huge problems given their perception (and maybe reality) that the populace wants benefits today, not the future
  • overall values of people have shifted from community to self; from giving to receiving; from kindness to aloof – we may be forced to change back
  • Unparalleled hubris and arrogance getting people in more trouble, and the US is unfortunately perceived that way – empires have fallen based on such beliefs
  • general level of unhappiness in society and people, shown by such things as the masses on anti-depressants to try to get through life; or the addictions in society including drugs, alcohol and television – all clearly not leading to a productive society

But perhaps most of all, our founders would be absolutely disgusted that the land where Americans could once be free to pursue life, liberty and the pursuit of happiness has become so tightly regulated and controlled that Americans dare not even squeak without the permission of the federal government.

Needless to say, our founders would certainly not understand many of our institutions or many of the advanced technologies that we have today….. But without a doubt they would be able to grasp how far we have fallen as a nation and how far we have strayed from the fundamental principles that they enshrined in our founding documents. The United States is a much different place today than it was in 1776, and unfortunately many of the changes have been for the worse.

The Founding Fathers did THEIR job, and now it is up to us to do OUR job!

Are you up to it?

Share your thoughts…

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Is Greed Good for the Goal of Improving Society?

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Remember the infamous quote of villain financier Gordon Gekko in the movie Wall Street…back in 1987?

“I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, that greed–for lack of a better word–is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms–greed for life, for money, for love, knowledge–has marked the upward surge of mankind. And greed–you mark my words–will not only save Teldar Paper, but that other malfunctioning corporation called the USA”.

I guess in this context, Gekko is using “greed” to define the constant desire for more, whether someone else has it or not.  He likens it to an evolutionary drive, that the need for more makes us figure out how to get it faster, more efficiently, and ultimately, easier.  And that this, in turn, results in benefits to everyone.

This is clearly a very particular definition of greed, and if you look at it from that perspective, it is indeed “good” in that it is a simple motivator that derives benefits beyond the individual actor.  In essence, it’s an “ends justify the means” argument.

Though this was quoted over two decades ago in one of the most controversial Hollywood movies ever, it resonates more than ever today… The only difference is that it is occurring at a much bigger scale.

So what do you make of it? Is greed good?

I guess as with any question like this, we need to start with the word “good.”

It is a fault of our language that “good” is most often used in an unqualified way. This is a symptom of our natural preference for dualistic thought. So what does unqualified ‘good’ mean?

Is greed good if your goal is monetary gain?  Absolutely, it’s the prime motivator.  Is greed good if your goal is running a successful soup kitchen?  Probably not.

Is greed “good” for the goal of living a happy life?  It could be, because it motivates you to improve your life in very real ways; on the other hand, there’s a fair amount of research that indicates over-attachment to material belongings draws your focus from other aspects of life that pay higher happiness dividends (personal relationships, self-improvement, etc).

Is greed “good” for the goal of improving society?  I doubt it.  I suppose it could motivate you to amass more resources, which you could then apply to humanitarian causes, but a very greedy person would probably also be unlikely to part with it.

Another way to use the unqualified “good” is as a sort of estimated sum of how effective greed is for helping you meet each of your goals, weighted by priority.  Let’s call this the “all-in-all” meaning.

So, is greed “good” in the all-in-all sense?  Will greed help you live a happier life?

From a wide-scope approach, it might be said that an economy of greedy people is an economy of motivated, productive workers.  This might be true, to a certain extent.  However, a society of extremely greedy people would mean a society of very stingy people; I doubt a country of greedy financiers, sitting on their money would lead to a robust, healthy economy.

But this is all about your average person.  Aberrations exist.  What if you’re not like most people?  What if poverty starvation is a serious possibility in your life?  Well then yes, greed would be a good thing to have.  What if material wealth is the big thing that makes you happy?  The only thing that makes you happy?  What if greed is your only motivator, the only thing that gets you out of bed and drives you to accomplish?  Then yes, having greed would be good in relation to your goals.  You might get better results though from examining your priorities and possibly changing your goals.

So in general, I would say that a little greed is good; it’s nature’s way of getting you to take care of your self-interests.  It’s also one of the major forces that keep societies progressing past the survival point.  Too much greed though poisons you.  There are countless examples of callous damage done to the world by the business community, and the only cause we can point to is human greed.

Bottom Line: I believe greed is ‘good’ only to the extent that it can be channeled productively.  Most of modern greed leads to people skimming money off of the productive and creative members of society; it results in many people with enormous intelligence and capability dedicating their lives to essentially worthless endeavors (such as predicting minor movements in stocks, bonds, currencies, etc.).  It also leads to frivolous lawsuits, ‘gaming the system’, overcharging and overbilling, etc.  It also leads individuals to steal and engage in other criminal activities.  Greed – when it leads one to invent, create, increase productivity, work harder, etc. can be good.  But it doesn’t always or even rarely has that effect.

I have no problem with people that amass large amounts of wealth — but if it pools up, it leads to problems. Wealth, like water, needs to move. Ideally that motion through society will be generated by the heavenly virtue that is classically contrasted with the deadly sin of greed.

Share your thoughts…

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Monetizing your Knowledge – Convert Knowledge into Money

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It is amazing the number of people  I meet on a daily basis who have all kinds of knowledge stored in their brains but still have not figured out yet how to convert all this knowledge into money.

Can this be achieved? … Well, here are my personal thoughts.

  1. Knowledge does not convert into money. Knowledge is the multiplier for work. Work converts into money. It is only challenging to say the least to convert knowledge into money if one is not willing to put any work to support their knowledge with. So for all the day dreamers out there, it all starts with “smart work”.
  2. Work is not translated into dollars until you find people willing to embrace your product or service. In other words, unless you have knowledge that others 1) need in its raw form, 2) cannot acquire on their own, and 3) are willing to pay for, then knowledge by itself is just potential. Like a car with no gas. Combine knowledge with the energy/effort needed to apply it to a purpose, you might get somewhere.
  3. Stop thinking and start doing. Most people would rather talk and not perform any actual work. They’re thinkers, not doers. Or, it could be that they are scared to fail, or find out that their knowledge isn’t all that unique or important.  Start executing and lose the fear.
  4. Be realistic. One cannot expect to make it rich by writing a book on the fact that the earth is egg-shaped, or photosynthesis. People know that already. So unless you write very well, or become a teacher, or something of the kind, you will not convert knowledge into money.
  5. Master networking. At the end of the day, unless you have an insane amount of practical knowledge, you’re going to be less successful than the people who are really good at networking. Big businesses these days are shifting towards looking for people who can network, rather than people with theoretical knowledge about their business, because they figure that when you’re doing a degree in higher education you don’t actually learn to work for someone, and you don’t necessarily learn the skills that you’ll need for the job they want you to do; so the idea is that they take someone who has a personality suited to generating contacts and networking between businesses (which is not something you can easily teach) and teach them the skills they’ll need to work the job (which is something that is easily taught).

Bottom Line: Knowledge is the application of intelligence.  There are some smart people who can rattle off facts and figures but can’t think their way out of a wet paper bag.  Most investors have the facts and figures of the stock market which are readily available but how do you put that together to formulate a winning strategy and do so more often than not?  That takes knowledge of the broader environment to understand how a product might be received in the general buying public and take off when the raw numbers might indicate just a so-so reaction.  That kind of knowledge comes with time and experience.  You need to learn from those that possess such knowledge and learn the skills yourself.

Every type of knowledge is not born equal. Their value fluctuate according to the times, and according to each situation. You may either flow towards areas of knowledge which are known to generate money or figure out a niche where your knowledge is considered to be of value to other people.

Money is only one of the values knowledge can be turned into, either directly or indirectly, through monetizable activities. Those activities which bring material wealth are mostly of concern to the poor or greedy, because they depend so much on it. Once our basic needs are taken care of, most of us will be on the lookout for those values which have little to do with money, but can sometimes be acquired in exchange of it. Since material wealth is a socially constructed phenomena, knowledge ought to be subjected to market trends, as a tool, a service or a product, in order to be transformed into numbers in a bank account. (Oddly so, money can be one of the less tangible and most fictional of values created by knowledge. Such monkeys we are…)

To sum it up, look around you. Ask yourself how you and your knowledge can be of service to others. Develop a business model around an area of activity which can sustain itself through the value it brings to others. Learn to enjoy knowledge for itself and never forget why people are willing to pay for it.

Share your thoughts…

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Making the Capital Markets Smarter Some Food for Thought

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I have finally come to the realization; after 30 years on Wall Street and Silicon Valley, that our capital markets are simply obsolete and that it’s high time for a new technology that allocates money and other resources far more efficiently than both our actual technology and government. The current VC/entrepreneurship worlds are in a mess, and to their credit, the players are doing some serious introspection. But mostly, it is still business as usual.

I have nothing against VCs and angels. Most are extremely smart people. But the world of problems and opportunities is now so complex and fragmented that any system that relies on “bottleneck star-spotting talent” is doomed to hit its limits in short order. Peer investing, crowd funding, the transparent processes of Angel List, and bootstrapping are the beginnings of alternate models, but they simply don’t move enough money around yet. This is the reason Silicon Valley seems like such a messed up place to outsiders: the world’s highest concentration of extraordinary talent is being funneled towards some of its most unimportant problems (and in fact, towards work that exacerbates rather than improves things).

People in the Valley, I find, believe in the myth that theirs is an efficient free market economy of investment and that attempting to “direct” the entrepreneurial energy will kill it. This is laughable. The system is explicitly set up to direct entrepreneurial attention in extremely non-free ways. The entire region is wired to the capricious opinions of a few key people, who drive not only their own investments, but via imitation, the money of  lazier thinkers. Even if these people were 1000x geniuses with wonderful intentions for the world and preternatural ability to direct money in the right ways, there would still be a huge shortfall in the diversity of intelligence needed to make the money they control truly “smart” money. The money may be smarter than average investor Wall Street money, but it is nowhere near as smart as it could be.

A very simple measure of this is simply the high degree of localization of investment. Ghemawat in World 3.0 tracks liquidity and global flow of venture capital and estimates that the lion’s share of investment happens within 20 miles or so of the investor. This happens because the investors mitigate the risks of their own limited knowledge by only investing in companies that set up shop locally, down the street. To get the money, entrepreneurs flood to the location of the money rather than the location of the markets/problems to be solved. Some justify this by pointing to the advantages of high concentrations of talent. While this is certainly valuable, there is a very high cost paid in not being close to the problems and market opportunities. People who have the market intelligence to solve water management problems are not going to emerge out of water-rich Northern California. They are going to emerge in Southern California, Nevada and Arizona. If you try to put out a call for “water management ideas” in Silicon Valley because all the 10x engineers and serial entrepreneurs are located there, you will get brilliant ideas for social networks where water-technologists can interrupt each others’ attention, rather than ideas that actually help manage water better.  So simply creating a technology that lowers the geographic distance risks of investment would be a huge plus. If a Valley VC firm could invest in an Africa-based entrepreneur with only 10x the risk of investing in a University Ave. firm, instead of 1000x, money flows would change DRASTICALLY.

The misutilization of talent is in fact so extreme I would rather invest in an average hustler and a non 10-x engineer team who are near an actual important market/problem than in a 10x super-star team in Palo Alto. Sure the latter would execute far more brilliantly and with all the latest technical tricks. But they are at a far higher risk of solving the wrong problem and then struggling to find a market. We are reaching diminishing returns from investing in the right team in the wrong place. Investing in even mediocre teams in the right place should provide good returns by comparison, on problems that actually matter and map to interesting markets.

There is a just-so excuse I’ve heard in the Valley lately, that you can’t figure out a market before hand, and that a startup is an organization designed to “search for a business model.” True, but in a way, we’ve had to invent this whole Lean Startup process to efficiently “hunt” for markets primarily because startups are in the wrong place.

In a way the Lean Startup is a Californian solution to a problem created by trying to do everything in California in the first place. I believe that at some point you should get out of the building to be an entrepreneur. I think that’s WAY too weak. You have to get out of California. If you’ve ever tried literally “walking out of a building” in SoMA or University Ave., you know that you’ve basically not left the building at all.

Much less efficient models may end up working well if you simply made the “hunt” part easier by NOT trying to solve every damn problem while sitting in some coffee place at University Ave. It seems idiotic that I actually have to explicitly argue that a startup focusing on making money by delivering mobile banking services in Africa should…. be located in Africa. No amount of screaming that “all the 10x engineers are here!” will convince me that Silicon Valley is the right place to solve that particular problem. By extrapolation, I refuse to believe that most of the important business opportunities are somehow magically accessible to people sitting in California. 90% of the opportunities require you to leave the building…. California I mean.

Better geographical distribution of entrepreneurial talent and money near markets and problems is merely one way to make the capital markets”smarter.” There’s tons of others.

Please share your thoughts.

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Coming out with “Out of the Box” Ideas for your Non-Profit

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Having as of today been involved in founding and running the Financial Policy Council for four years now, I am often asked how to come out with the most innovative ideas to turn a nonprofit into a truly unique organization.

The answer is simple… It all boils down to how you generate your ideas and then going about executing on them.

After all, coming up with good ideas is not hard. It just takes focus. So how do you acquire this focus?

Here’s some food for thought…

  1. Find a problem you’re obsessed with solving or you’re passionate about improving and delve in it in full force. After all, building a nonprofit is an obsession, an occupation, a disease, an addiction, a fascination, an absurdity, a fate. It is not a hobby. Those who do it must do it. Life has taught me that the most miserable people I know are those who are obsessed with themselves; the happiest people I know are those who lose themselves in the service of others… So by and large, I have come to realize that if we complain about life, it is because we are thinking only of ourselves. If we are happy it is because we are fulfilled with a cause bigger than us.
  2. Read a lot. This process of thinking about things will build new connections and your brain will start seeing patterns and synthesizing new thoughts around it. On the same note, start writing any ideas you have down. This will force you to organize your thoughts and think more deeply about them. During this process, you will find more ideas are generated as well. Come to think of it deeper, the brain is an interesting thing. As you begin to learn about new ideas, it will start firing neurons around related ideas as you learn to remember these ideas. I think of it as an encoding engine. Many ideas might have similar patterns, and rather than remembering each idea separately, your mind will forget most of the details, but instead will “encode” the differences/similarities of this particular idea to another idea. In fact, it’s almost like none of these ideas are completely unique, but it is the synthesis of thought and ideas that leads you to seemingly “out of the box” new ideas.
  3. Brainstorm extensively. The first and only rule of brainstorming is that there are no bad ideas. You can always strike down an idea and refine your strategies after coming up with several possibilities, so don’t set limitations from the get-go, it’ll ruin the mood. Brainstorming when done right automatically begets more brainstorming, so you want to keep the environment as open as possible. Whether you’re alone or with a group (preferable)…. Some ways to go about it:
    * Give everyone a pad and a writing utensil, present them with the prompt, and give them a limited amount of time (1-2 minutes, pressure works wonders here) to generate as many ideas/solutions as they can, writing each one down on a single post it (no details as to execution of said idea necessary at this point–that’s later). Once time’s up, throw all the post-its on a wall and start sorting them by whatever category system you like. You’ll start noticing that multiple people will often have the same idea, and this should be a sign that these are either a) too easy and not worth it or b) smart. By the way, it’s pretty common for people to have more ideas while in the process of sorting–write those down and throw those up too. By the time you’re done, you should have an awesome, pre-sorted springboard of possibilities to discuss and refine.
    * Think outside the box. Get stupid, gross, impossible, whatever. Then take those ideas, and figure out how to make them work no matter what. You’d be amazed what a group can come up with once they get past the notion that something’s not possible.
    * Engage in a deep multi-faceted dialogue. Why? Because no idea is really completely new – so a solid, unique idea really means combining a range of perspectives into a one coherent one.
  4. Collaborate. I understand the pride behind the origination of ideas. You allow yourself to be that frustrated for that long because you want the recognition as “that guy” or “that girl” who came up with the brilliant new idea. The thing is, that shouldn’t matter. All it is is another obstacle for the birth of ideas. Collaboration provides an extremely powerful tool, another perspective. Discussion and outside perspective can open your eyes to new avenues. Bouncing around ideas with a colleague is a refreshing, encouraging, and exciting process. Don’t think that you have to go it alone when it comes to producing ideas. As long as it gets created, who cares who gets the credit?
  5. Put on someone else’s shoes. When you’re stuck coming up with ideas and have no one to collaborate with, it would serve you well to try adopting someone else’s perspective, and “put yourself in their shoes.” Figuratively. Choose an individual you admire most, and deeply consider how they might approach your particular problem. Really, all you’re doing is attacking your problem from a different mindset, but imagining yourself as a different person makes it easier for your brain to make a change in thinking.
  6. Never censor yourself. Run with crazy permutations in your mind a step or two past where conventional considerations would have eliminated them… they might veer back into practical territory.

After all is said and done, I believe that just about every successful organization is based on an unoriginal idea, beautifully executed.

I will share with you in my next blog how to best execute on ideas.

Stay tuned and in the meantime share your thoughts.

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