by L. Carlos Lara
[Reprinted from the March 2017 edition of the Lara-Murphy-Report, LMR]
Editors’ note: The following article is based on the remarks Carlos Lara made at the February 2017 Infinite Banking Concept (IBC) “Think Tank” in Birmingham, Alabama. Lara’s remarks concerned the vision of The Nelson Nash Institute, its definitive difference, and overarching goals.
INTRODUCTION AND WELCOME
Good morning! I don’t know what could possibly make this day more exciting than it already is except to see our entire membership—all of us—here present, at one time. That would really be spectacular. I am sure we could fill three rooms this size. In fact we should probably set that as our number one goal for next year!
But for all of you that are here and have come all the way from Canada, the west coast, Florida, Texas, from the middle states of our country, and from the Northeast, thank you so much for being here and welcome to the 2107 IBC Think Tank!
One of the most positive experiences for me each year is attending this great event and it has a lot to do with the fact that I get to see everybody. It’s one thing to have an email exchange with you and perhaps even a text or phone conversation once in a while, but it is so much better to actually see you live and in person, to share a meal or two with you, and have the opportunity for a one on one conversation. It makes all the difference in the world. It is so good to see everyone and my hope is that your IBC Think Tank experience this week will be absolutely outstanding!
WHAT IS THE NELSON NASH INSTITUTE?
Speaking of differences, it was actually David Stearns who came up with the title to my talk for this morning—The Definitive Difference of The Nelson Nash Institute—and I like it. I think it is very appropriate.
It’s a great theme because so often people group the Nelson Nash Institute (NNI) in the same category with other organizations that have similarities with us. For example, we, like them, are also involved in the financial services industry. We speak about financial matters such as markets, taxes, inflation, etc., just like they do. And, some of these groups are even very supportive of Whole Life insurance like we are.
So definitely there are similarities, but I want us to be absolutely clear about this—we are distinctly different. To begin with, we have different goals and different means for achieving these goals. In essence, we do what we do in order to make a difference for good in the financial lives of people. We are seeking always to be a beacon of hope in this often confusing and corrupt world of ours.
But we’re specifically different in three very important areas. These three areas, which I am going to discuss now, mark the “definitive difference” of the Nelson Nash Institute.
As a backdrop and as a way to highlight these three important differences I would like to begin with a discussion on the concept of “credit.” The reason I want to begin here is because the term credit, like inflation, is very often misunderstood. Over the years this concept has been stripped of its true meaning to the point we no longer recognize it for what it is. This particular misconception sheds light on a very important argument I wish to make.
Credit, you see, has a very interesting definition. It is derived from the Latin word “credere,” which means, “to believe.” Isn’t that amazing! Of all things it could possibly mean, credit actually means to believe—to trust—to have faith. These are strong metaphors you will agree. This is because when credit is granted there is an exchange that takes place in economic value, in return for an expected payment of economic value in the future.
To envision what this may look like think for a moment of our national debt sitting right now at approximately $20 trillion. Now think of the individuals, the corporations, and the foreign governments that have extended credit to the United States for this enormous amount of money, and that they have done so believing the U.S. government will pay them back as promised. Can you imagine what would happen if that trust and confidence was suddenly lost? Of course you can comprehend it. It would be disastrous! So Credit, you see, is a powerful force that literally holds economies together by what many believe are nothing more than feelings.
After 40 years of working with businesses that get into serious financial trouble (these would be companies that have lost their credit or more accurately their credit worthiness), I have become somewhat experienced in how credit works.
In fact, 27 years ago I use to teach credit at a local college in Nashville, but not for college credit. I did this on behalf of the National Association of Credit Management so that its qualified members could sit for what they use to call the “ABCE” examination. A passing score on that particular exam gave credit executives the highest designation the NACM offered—the “Certified Credit Analyst” designation.
Once again, I say all this only to let you know that I do know a little something about credit. Yet I am convinced as sure as I am of standing here in front of you that financial professionals of this generation, as well as the financial professionals of every generation before this one, have no real understanding of what credit really is. Nor are financial professionals aware of credit’s powerful influence in the world. Now, you may be asking, how I can be so sure of this?
Well, as a personal testimony, what I hold in my hand is the actual textbook I was given to teach that particular course for the taking of that exam. Mind you, it’s a very thorough book on credit. It is 700 pages in length! It has 37 chapters covering the gamut, from high-level collection procedures to the U.S. Bankruptcy Code. You name it and it’s in here. The contributors to this book—many of whom are PhDs—reads like a who’s who of finance. This text is probably one of the main reasons I was able to read and understand the very difficult Dodd-Frank Act.
But here’s my point. Only one half of a page, I repeat, only one half of a page in this entire volume is devoted to the greatest generator of credit in our economy. Here I mean specifically the commercial banking system, and as this book puts it, “a system backed by the resources of the strong Federal Reserve.” And that’s it! No other explanations on this subject are to be found anywhere else in this entire 700-page manuscript.
So these high level executives left my classroom not knowing the true essence of credit, and the very source of credit problems in the U.S.. Of course this even included me, the instructor of the class! The truth about credit is simply not in this book. In fact, if it weren’t for the Austrian School of Economics, one would be hard pressed to find it in any financial book.
This is the insight of John Adams back in 1829. “All the perplexities, confusion and distress in America arise from the downright ignorance of the nature of money, credit and its circulation.” There it is in plain sight— it’s ignorance.
And what about John Maynard Keynes who bragged that “only one man in a million” could understand its workings. Much as I hate to admit it, he was right and that’s exactly the situation we have today. We see this especially in the financial services industry.
THE SOVEREIGNTY OF BANKING
Now I tell you all of this because history shows that going all the way back to the Assyrians and Babylonians, around 2500 BC, credit is synonymous with banking. In fact, credit is banking and it can be executed with goods, or services, or it can be done with money. Hence credit, which is banking, is sovereign in the economic realm. As Nelson likes to say it, “Banking Is.”
So the most definitive difference between them (these other organizations) and us (The Nelson Nash Institute [NNI]) is that the NNI specializes in teaching and training its membership of financial professionals, as well as members of the general public, in the fundamentals of banking. This of course encompasses the entire realm of finance, which is the management of money and credit. This includes finding the right location to warehouse them and where and how to best deploy them.
The NNI also teaches that the commercial banking system, which operates using “demand deposits,” is not the right headquarters for our money because it is flawed and thereby destructive to the economy. This is on account of “Fractional Reserve Banking,” which is enabled by the Federal Reserve. As Nelson says, “It’s in the hands of the wrong people!” So the NNI helps people choose the proper “alternate system” found in the insurance sector that not only does not practice fractional reserve banking, it simply cannot do it.
Now stop and take notice that this is an entirely unique stance within the financial services industry unlike any other. The NNI is clearly and totally different in its position in the marketplace. No one in the industry is thinking about it in this way or teaching it in this way. And more importantly, it is Austrian thinking in its perspective—NOT Keynesian.
Upon reading, Becoming Your Own Banker, I said to myself “only an Austrian could have possibly written this book.” Nelson and Austrian economics are inseparable! Nelson Nash is a 60-year veteran of Austrian economics and so now we too, as members of the NNI, are students of the same school of thinking. And of course this too sets us (the IBC practitioners), apart from anyone else in the industry.
Following in Nelson’s footsteps, I implore you to continue in your study of Austrian economics beyond the basic tenets that you learned in the IBC Practitioner’s course manual. Strive to grow and become proficient in it because it will help you in your daily life and work. Tomorrow afternoon I hope to show you exactly what I mean by that in my presentation of a real life case study to drive this point home.
Nevertheless, this unique stance does cause us some difficulty within the industry. By this I mean that we are easily misunderstood and consequently our stance is not generally embraced openly. But the good news is that this is all changing. The IBC Practitioner Program for financial professionals has gone a long way since its inception in 2013 to help remedy this.
In fact, 5 different Life Insurance companies reviewed your training manual to help us (the NNI Board) make sure it was industry compliant. Since it is industry compliant, it has made insurance companies be much more supportive of us than they once were, and that’s great news. But we do have a responsibility to the industry and the public that we serve.
OUR INTEGRITY
This is exactly where our integrity comes in. We must strive to become known in the industry for our outstanding integrity. Specifically this means we must not exaggerate our claims about IBC, especially in our marketing to the public. The bottom line is that the world must know and be fully confident that IBC is not a gimmick. Let’s allow the numbers to speak for themselves in every presentation that we make and give proper credit where credit is due.
This means that how we communicate Nelson’s core message is critically important and this will always come down to the integrity of the individual practitioner. This is one of the primary reasons why we now interview and hand pick our membership. Just so everybody is perfectly clear on this, this procedure was actually Nelson Nash’s idea and it has turned out to be a great one.
Anyone desiring to become an Authorized IBC Practitioner today must first go through an interview process with the Board before they are offered the opportunity to even take the course and apply for membership. It’s not so much about credentials, knowledge, and test scores. If interviewing candidates are not found to be like-minded as we are they will not be admitted into the program. This is easily detectable.
As an example, we have interviewed approximately 75 financial professionals within the last 12 months, but not all were accepted. Many that were accepted are still in the academic phase of the program. Others, when the Board felt that our mentorship program was a mandatory requirement for the acceptance of a particular individual, were placed in the competent hands of our IBC Mentors. In these special cases, IBC Mentors have the final say as to whether these individuals will be able to apply for membership or not at the end of their mentorship. So, as you can see, this type of quality control is also very unique within industry, which again, makes the NNI very different from all other similar organizations.
OUR MOVEMENT
Finally, our third definitive difference is our Movement. By this I mean of course the Building of the 10%. My objective this morning is not to get into describing the 10% because I am assuming you know very well what it is. We have spoken about it for years, we’ve written numerous LMR articles on the subject, and Bob and I have published several podcasts regarding it. Plus it is referenced in one of the textbooks, How Privatized Banking Really Works.
So it should be very obvious to everyone that we are a membership inspired and motivated by not only our founder, Nelson Nash, but by a movement with a powerful mission. This movement in its simple form aims and is determined to change the thinking of this nation (and Canada too!). This is an enormous goal that by itself makes us definitively different in the industry.
The absolute best news is that our movement is captivating the public as well as many financial professionals that are not yet part of our membership. They write to tell us about it. In the interviews many of the financial professionals start talking about it all on their own. In other words, the 10% movement is drawing people to us.
If you have never attended the IBC Seminar for the General Public you should witness it for yourself so you can gauge the receptiveness of the audience toward all of this. In four hours, Nelson, Bob, David and I cover the entire spectrum of IBC and bring it all together at the very end with the 10% movement that we represent. In that story, we tell what it does for them as individuals, what it does for them as business owners, and what it does for the benefit of our economy. When they come to us at the end of the Seminar wanting to know how they can get one of these IBC policies and get involved in the movement we point them to the Practitioner Finder and our Graduates. We point them to you.
One of the most important things you should leave with this weekend is understanding that the 10% movement is calibrated to make you wealthy. But please don’t misunderstand this statement. Your client also benefits and so do your client’s family and friends. This is the beauty of it. So do the insurance companies. And, so does the greater economy. Even we as an Institute benefit and God only knows how much we need the resources to keep growing. But you—you especially are made wealthy and are the catalysts in this building process. We know the general public will be safe in your hands. That’s why the Nelson Nash Institute sends the general public to you.
The thing to remember is that the 10% movement is monetized. That is what makes it grow. We all benefit financially from this movement as it spreads. Realizing this fact motivates us all the more to build it because of all the good that it does for everyone including our economy.
CONCLUSION
Most important of all and I will let this be my final remarks. The Nelson Nash Institute is the men and women (you and me) who will continue into the future carrying Nelson Nash’s legacy and core message to the world.
And what is Nelson Nash’s core message? It can be best summed up in Nelson’s own words: “Controlling the Banking function is the primary Goal. Dividend Paying Whole Life is the primary Means.”
This is the Nelson Nash Institute.