by R. Nelson Nash
It is time to re-examine the origin of the word — ruminate. To do so we will have to understand “Cow Biology”: A cow has four stomachs. The rumen is the first — and by far — the largest compartment of the stomach of a ruminant from which food is regurgitated for rumination. She eats grass and chews on it in the first stage of digestion. She swallows it and it passes into the second stage of digestion in the rumen where it remains for a certain period.
Then she regurgitates a portion of it at a time which is called the “cud.” She “chews the cud” for a spell to get more nourishment from it and swallows it again before passing it on to the next stomach, etc.
So, we can use this example as a model for understanding The Infinite Banking Concept. IBC is all about how you think — and it is quite different from how most folks think. Very often it is difficult for most folks to understand IBC when first exposed to it because of the plethora of financial noise that prevails in our world.
Earlier in this series of articles I quoted Merriam-Webster’s definition on ruminating — to go over in the mind repeatedly and often casually or slowly. So, in our world it would be like the cow “chewing the cud” to get as much nutrition out of grass as possible — we have got to ruminate the Infinite Banking Concept in our minds to completely understand its’ power before adopting it in our lives.
There are many who think they understand IBC but in reality, it is just superficial knowledge. Furthermore, there are even those who really do understand it intellectually — but they don’t understand it emotionally. They might say, “I have had it demonstrated by others that IBC is a valid concept but it’s just another way to sell whole life insurance. If I adopt this idea in my own life, what will my friends think?” It is amazing the power of peer pressure. Why else would there be so many polls conducted that occupy so much of our time?
If you are one who is learning this concept you must relax and keep “chewing the cud.” There are many people who have read Becoming Your Own Banker over 30+ times who say, “ I learned something new every time I read it.” Their copy of the book is dog-eared, underlined, or highlighted on nearly every page. It is almost falling apart from handling. That’s good because now they need to buy another copy!
If you are one who understands IBC and are introducing it to someone for the first time you must learn to be patient with that person. Realize the financial noise that this person has been subjected to for so many years is rather overwhelming.
So, with this refresher, let’s go back to where I left off in the last article. We examined “real money” as a token of services rendered, or goods provided. In contrast there is other money being used in our financial world that has nothing representing value of services rendered or goods provided. It’s money created out of thin air by the bankers. It is fiat money —and the volume of it in circulation is overwhelmingly greater than the volume of “real money.”
This has produced a very hostile financial environment in which we have to endure, and it leads to thoughts of despair in the lives of many people. I am trying to demonstrate that one can survive —- and thrive — even in such an environment. But it will require a complete secession from the way we have been taught by the banking world. It will involve recognizing what is really happening.
In my last article we took an actual look at a subject that occupies the thoughts and conversations of so many people — the Income Tax. I revealed that last year my wife and I paid $30.000.00 (“real money”) to a government bureau and we received $40,283.00 (fiat money) from another government bureau. So, I have question to you — did we really pay any income tax? By ruminating on this question, it looks to me like we really paid income taxes with fiat money from SS — not “real money” as conventional thought would conclude.
Further explanation of what really happened is that we received $3,356.92 of fiat money per month from Social Security — a government bureau — and every quarter of the year we sent $7,500.00 of it back to a different government bureau. $40,283.00 fiat money income and $30,000.00 fiat money paid back to them means we received a surplus of $10,283 of fiat money.
To avoid throwing too many numerical facts at you, I deliberately deferred telling you last time that I also received $13,284.00 in retirement income from my 28 years of flying airplanes for the National Guard. You can bet your life that it was fiat money!
So, $13,284.00 plus $10,283.00 surplus fiat money from SS amounts to $23,567.00 of fiat money income to us. What did we do with that?
All of my cash is stored in the 43 policies Mary and I own but have since given away to members of my family. Even so, our Form 1040 tax return last year showed we had a total income of $169,701.00. In planning our financial future 66 years ago my wife and I made a commitment two or three months before our marriage that we would always tithe 10% of our income to our church. That means $16,970.00 went there.
$23,567.00 fiat money income less $16,970.00 left us $6,597.00 surplus to give to other worthwhile causes such as the Mises Institute and The Foundation for Economic Education plus some other educational organizations.
Hopefully you can see that we live very well on “real money” income from services provided to others under free contract with them. These people paid us with “real money” they earned from providing goods and/or services they had provided to others.
While doing this pondering and ruminating I discovered that I have never paid income tax in my lifetime. I don’t remember paying any income tax during my two years of Air Force duty during 1952 to 1954. Maybe it is because the amount must have been so small that it doesn’t register in my memory.
In 1956 I became an aviator with the Army National Guard. The money I earned from part time activity of flying airplanes was most definitely fiat money paid from the government. This fiat money greatly exceeded any income tax that I paid down through the years. Someone might say, “Yes, but you had to spend a portion of your valuable time in flying those airplanes.”
My response would be, “And you spent a portion of your valuable time playing golf. You also spent lots of money for country club dues, travel to tournaments, buying new equipment every time a manufacturer comes up with a new type of golf club. And you probably have a personal golf cart! Yes, that is your hobby and you need a diversion from your work day activity.”
During my lifetime I have played a few rounds of golf, too. But flying airplanes has been my hobby for most of my life. Flying airplanes is much more fun. Furthermore, I was able to fly some airplanes with the NG that I could not afford to fly as a civilian. The Beechcraft Baron was a real joy! And if I tried to tell you about the Helio Courier you would not know what I was describing.
Yes, my situation was unique. But, so is yours. We are all different. But, if you are endowed with the spirit of an entrepreneur and can learn to ponder and ruminate on the power of The Infinite Banking Concept then you can find ways to survive — and thrive — in this hostile financial world.
If you know what is really happening, then you will know what to do. It’s all about how you think!