Nelson Nash’s Becoming Your Own Banker: PART II Lesson 3 The Golden Rule

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The Golden Rule — Those who have the Gold make the rules!  We all have the tendency to chuckle when we see this perversion of a principle that was learned in childhood, one that serves us very well – that we should do unto others as we would have them do unto us!  But this corruption is very true, also!  I think that it is a pity that it is not often looked upon with favor.  Perhaps it is because we have almost lost the concept of what capitalism is all about.  The common man has become so infatuated with living for today that the importance of saving – of creating wealth – is all but a lost value.  The American savings rate is miserably low.  At the time of this writing it has been negative for over eighteen months.

As a result, someone else must provide the capital that is necessary to sustain our way of life.  This strategy carries with it a very high cost, and we all suffer the consequences.  It all begins with faulty premises.

Let me build the case this way – what could be more idyllic than a marriage of Japanese capital and Mexican labor?  Here is one group of people who need employment desperately and there is another group that has more money than you can imagine!  If we can only get them together on a project, it would be paradise!

A number of years back Panasonic wanted to build a plant in Mexico to solve the obvious equation.  But, in the infinite wisdom of the Mexican government at that time, they required that Mexicans should own 51% of the business.  That means Mexicans control the business.

The typical Japanese strategy runs something like this – you put money into a business, and you should expect to lose money for five years. When you start making money you should plow it all back into the business for five more years.  Only after this time should you expect to take money out of the business.  But, the typical Mexican outlook on a business venture is to demand a bonus at the very start – like the signing bonus for a star athlete!

Do I have to tell you what happened?  Panasonic pulled out of Mexico and went somewhere else where capital is appreciated and managed with care.  Who won and who lost in the story?  Panasonic had the Gold and so they made the rules!  It can be no other way.  Capital is a responsibility and should be treated with great respect.  If not, then all parties involved will lose.  It is really difficult to write or talk about this fact, perhaps because it is so blatantly obvious.

When you have a large amount of cash on hand all sorts of good opportunities will appear, and you can also negotiate very favorable purchase prices. If this understanding were generally accepted and practiced widely among the population many of life’s problems would disappear.

A word of caution is in order – do not think that everyone must conduct his financial affairs in this manner.? It is not a numbers game.  Individuals can reap the rewards that such discipline yields.  In fact, we all need to remind ourselves that whatever you do in the financial world is compared with what everyone else is doing.

Then, why is there general despair in our country regarding financial matters?  Why are people “paying through the nose” for capital?  Why the feelings of helplessness and futility?  I say again, it all begins with faulty premises.  We all operate from a paradigm and the Infinite Banking Concept is a major paradigm shift for most people.

This explains what I mean when I say, “Most people know there is a play going on out in the financial world – but they don’t understand it.  Worse than that, they can’t get the characters in the play straight!”  Recalling that Shakespeare said, “All of the world is a stage and the people are the actors thereon.”  People just don’t play their proper role in the scheme of things.  They have abdicated their opportunity/responsibility as it pertains to the banking function in the economy.  They are depending on someone else to perform that job – and that character in the play is making most of the money!  And rightly so, because of The Golden Rule – those who have the gold make the rules!  It can be no other way.