October2001 BANKNOTESisaquarterlynewsletterpublishedbyInfiniteBankingConcepts R.NelsonNash,Editor [email protected] VERYSPECIALTHANKSto TONYWALKERofBowlingGreen,KYforputting togetherthreegroupsofhisclientsandprospectsforseminarsinhishometownon September6and7.Whatanoutstandingjobhedid!Itwasaprivilegetomeetallof them.Thereshouldbesomegoodresultsfromthatactivity. AndjustafewdayslaterIwenttoSanDiego,CAforagroupofagentsthatwere th th assembledthroughtheeffortsof LEELOPEZ onthe10 and11 .

Leeandhis assistant,Gloria,didagreatjob,too,inmakingallthearrangementsfortheseminar. Thanks,LeeandGloria.Leeismyideaoftheperfectgentleman.

th Unfortunately,weallwillrememberthe11 whatatragicday!Imsurethatwasthe furthestthingfromallourmindsearlierthatmorning.Ofcourse,allflightswere cancelledandtherewastheproblemof gettingbacktoBirmingham,AL.Tomyrescue camethegoodgracesof MIKEWOOD,whotookmeuptoLongBeachandarranged th formetostayatthehomeofhismotheruntilIcouldarrangeaflightoutonthe14 . Mikeevengotupat4:00a.m.totakemetoLAXairporttocatchmyflight.After arrivingattheparkinglotittookonehourofstandinginlinetogettheshuttletothe terminal thentwomorehoursoflinestoseeaticketagentandcheckbaggage.No flightswereavailabletoBirmingham andthebestIcoulddowascatchonetoNashville, TN.Itwassupposedtotakeoffat9:00a.m.butnocompleteflightcrewwasavailable. Wefinallytookoffat1:00p.m.MywifehadtodrivetoNashvilletopickmeupandwe finallyarrivedhomeat11:30p.m.Whataweek!

ThefollowingweekmywifeaccompaniedmetoSunValley,IDtodoaseminarfor clientsof ALBERTOURANGA.Whatabeautifulplace!Wethoroughlyenjoyedthe hospitalityofAlbertoandtheopportunitytomeethisclients andhisassistant,Karen. Wealsohadtheopportunityofdiningwith KENASHCOM andhiswife,wholivein thesamevillage. Then,itwasontoSaltLakeCitywherewestayedatthemarvelousBLUEBOARINN inMidway,UToperatedbyJayandSandyNiederhauser.Theyaretheparentsofthe wifeof MIKESINGER(oftheDetroitarea).Ifyouareeverinthatarea thisisthe placetostay!!TheareaisknownasSoldierHollowandwillbeoneoftheprimarysites fortheupcomingWinterOlympics,February2002.Thirtypercentofthemedalstobe awardedwillbeearnedatthissite.
ST OCTOBER1 wasthefirstanniversaryofmybook,BECOMINGYOUROWN BANKER.10,050copiesweresoldinthefirstyearofitsexistence Ihavesomany peopletothankfor thesuccessofit.Imtrulyamazedatwhatishappening.Truly,my cuprunnethover.Togiveyouanideaofitjustlookatthethreelettersthatfollow:

WHATOTHERSARESAYING DearNelson, Ireceivedyourbooktodayat6pm,andit'snowmidnightandIjust finishedit. Theepiphanycameonpage54duringthetruckexample. I'mnowabornagainbankerandamdelightedtohavediscoveredallthis throughthehelpofyouviaKimButlerviaRobertKiyosaki. I'm24andaftersellingmyinternetcompanylastyear,I'mmoving totheStatesfromAustraliaasaconsultantandnowsoontobebanker. Theconceptsare180degreesfromwhatIwouldhaveexpectedafew yearsago. ThankyouverymuchforyourbookandIhopethatIcanreturnthe goodfortunetoyouinthefuture. Regards, LincolnGasking ________________________________________________________________________ MrNash, MynameisGregNoerrandI'ma32yearoldtruckdriver fromMooresville,IN. I'vebeendrivingforalmost10yearsandsaving formyretirementforonly5years. Afriend,BruceJMaginnof The FinancialResourceGroupofIndiana,gavemeacopyofyourbook. I lostanightssleepbecauseof thatbook. Onarecentnight,Ihadgonetobedandcouldn'tsleep. I justwasn'ttired. Myusualremedyistoreadacoupleof chapters fromsometextbook. ThatworkedinHighSchoolandstilldoestoday. Unfortunately/Fortunately thebookIchoosethatnightwas"Becoming YourOwnBanker TheInfiniteBankingConcept." Itwastoogoodto putdown. Ireadthewholebook. IwasexcitedthatIhadalready startedapolicyandfinallyunderstoodwhatthatpolicywasaboutand howIcouldbenefitfromit. Iwasalsokickingmyself,thatIdidn't havethisinformationyearsago. If IhadonlyknownwhenIfirst starteddriving,mynetworthwouldbefourtofivetimeslargerandI couldlookforwardtoanearlyretirement. Thenextmorning,stillawake,Iputin10hoursofdriving. I drankmorecoffeethatafternoonthanIusuallydrinkallweeklong. I've recentlyplacedanorderfor20morecopiesofyourbook. I'mgoingto sharethemwiththemanypeopleIcareabout. I'mconfidentthatI'll

havemorethanenoughwhenIretireandI'mhappythatmybeneficiaries willbewelltakencareofinthefuture. Infact,mybeneficiaries willreceiveacopyof yourbookaswell. I'mverygladthatyoucameupwiththeInfiniteBankingConcept andIamextremelygladthatyouwrotethisbook. Thankyouverymuch! Gregory E.Noerr DearMr.Nash: IreadthebookBecomingYourOwnBankerTheinfiniteBankingConcepttwodays afterIreceivedit.ItwassointerestingthatIcouldnotputitdownuntilIfinishedit.I haveneverdonethatwithabookbefore.Ijustwanttosaythanksforyourinsightsand knowledgethatyouhaveshared.Iplantousetheconceptsimmediately. KimButler fromthePartnersforProsperitygroupwillhelpmesetuprealsystemstobecomemy ownbanker.Thatisdefinitelyaninfinitebankingconcept. Iwouldliketoorderacaseof10bookstospreadthewordaboutthisinterestingconcept. Ihaveenclosedacheckfor$85.00alongwitha$17.00checkfortheinitialbook.Also,I haveenclosedaprepaidselfaddressedAirborneExpresslabel. Sincerely, TonyBraddock Thesethreemen arenotinthelifeinsurancebusinessbut,asyoucansee,theyare enthusedaboutsharingthemessageofthebookwithothers.Thisoughttotellusall something!

Ifyouarewealthyyoucanbeprodigalforalongertimethanifyouarepoor but, eventually,prodigalitywillcatchupwithyouandyouwillendupsloppinghogs. PaulCleveland,PhD,Birmngham,SouthernCollege Tentativeeffortsleadtotentativeoutcomes.Thereforegiveyourselffullytoyour endeavors.Decidetobuildyourcharacterthroughexcellentactionsanddeterminetopay thepriceofaworthygoal. Epictetus,RomanTeacherandPhilosopher,A.D.55135

TheFederalReserveHasDestroyedtheMeaningof Saving
byEricEnglund Forthosewhounderstandthedangersofcentralbanking,itshouldnotcomeasasurprise thattheFederalReservessystematicdebasementofthedollarhasalsoledtothe debasementofourlanguage(inthiscase,theverymeaningofsaving).Inturn,the debasementofourlanguagehasledtodangerousfinancialbehavioronthepartofthe commonman.Whatisatriskhereismorethanoursavingsandcapitalformation. Nothinglessthanlibertyisatstakehere.Letmeexplain. Inafreemarketsociety(whichwouldincludea100%golddollar),anaturaltendency wouldbeforthepricesofgoodsandservicestodecreaseovertime.Thebeautyofagold dollaristhat,conversely,itspurchasingpowerwouldincreaseovertime.Therefore, settingasidepartofonesmoneyincome(assavings)wouldbeanattractiveproposition fortwokeyreasons.First,asmentionedabove,thepurchasingpowerofmoneywould increaseovertime,thusrewardingsavings.Secondly,abankwouldpaythesaverinterest whichisanadditionalrewardforsaving.Clearly,havinga100%golddollarwould provideaneconomicenvironmentconducivetosaving. SincetheestablishmentoftheFederalReserve,in1913,theU.S.dollarhaslostover95% ofitspurchasingpower.Hence,itisnotsurprisingthattheFederalReservesreckless inflationhasledtothecommonmansexpectationforthedollartolosevalueovertime. AstheFederalReserveintensifiestherateatwhichitcreatesmoneyoutofthinair,the commonmansbehavior(inthesphereofpersonalfinance)tendstochangeforthe worse.Heisledtospeculateinresponsetoaconstantlydepreciatingcurrency. Withtheexpectationformoneytolosevalueovertime,thereisatendencyforpeopleto seekhigherratesofreturnthanofferedbypassbooksavingsaccounts,certificatesof deposit,andothersavingsvehicles.Duringparticularlyacuteperiodsofmoneycreation bytheFederalReserve(inthe1920sandthe1990sforexample),thecommonman turnedtothestockmarketinsearchofhigherratesofreturn.However,itisclearthatthe commonmandoesnotunderstandthathisbehaviorhadchangedfrombeingasaverto becomingaspeculator.Hereinliesthekeyastohowthedebasementofourcurrencyhas ledtothedebasementofourlanguage(i.e.eliminatingtheword"speculation"fromWall Streetsvernacularandultimatelyreplacingitwith"saving"). Asaquickaside,itiscrucialtounderstandthatinvestingisspending,andthusthe oppositeofsaving.Therefore,speculatingfallsintothecategoryof spendingaswell (perhapsrecklessspendingwouldbeabetterdescription). Thecorruptionofwhatitmeanstosaveoccurredincrementally.Thefirststepwasto eliminatethedistinctionbetween"investment"and"speculation"incommonstocks.In BenjaminGrahamandDavidL.Doddsclassictextbook SecurityAnalysis,theauthors

pointoutthat:"Aninvestmentoperationisonewhich,uponthoroughanalysis,promises safetyofprincipalandanadequatereturn.Operationsnotmeetingtheserequirementsare speculative."MostAmericansareeconomicallyilliterate(thankslargelytopublic schools)andmostcertainlycannotperformbasicsecurityanalysissuchasreading(and understanding)acompanysbalancesheetandincomestatement(whichatrueinvestor shouldbeabletodo).However,WallStreetknowsthatpeopledonotwanttobecalled speculatorseventhoughmostindividualinvestorsreallyare.Onthispoint,Benjamin Grahamstated(inhiswonderfulbookTheIntelligentInvestor):"intheveryeasy languageofWallStreet,everyonewhobuysorsellsasecurityhasbecomeaninvestor regardlessofwhathebuys,orforwhatpurpose,oratwhatprice,orwhetherforcashor onmargin."Indeed,BenjaminGrahamwasontosomethinghere.Thecorruptionofour languagecanleadtorecklessbehavioronthepartofthecommonman(i.e.speculatingin thenameofinvesting).Inthesamebook,Mr.Grahamconveyedthefollowingwarning: "Thedistinctionbetweeninvestmentandspeculationhasalwaysbeenausefuloneandits disappearanceisacauseforconcern.WehaveoftensaidthatWallStreetasaninstitution wouldbewelladvisedtoreinstatethisdistinctionandtoemphasizeitinallitsdealings withthepublic.Otherwisethestockexchangesmaysomedaybeblamedforheavy losses,whichthosewhosufferedthemhadnotbeenproperlywarnedagainst." UnfortunatelyforWallStreetandtheilleducatedcommonman,GrahamandDodds wisewordshavefallenupondeafears. WiththeadventoftheIndividualRetirementAccount(IRA),the401K,theKeoghPlan, andThriftIncentivePlans,cameafurthercorruptionofourlanguage.Allofthese aforementionedinvestment(speculation)vehicleshavebeenbroadlymislabeledas retirementsavingsaccounts.Intalkingtoacquaintances,colleagues,friends,andfamily, itisdisturbingtoconsistentlyfindthatpeoplethinkthatsimplyputtingasideaportionof currentincome,topurchasecommonstocksandmutualfunds(foraretirementsavings account),isthesamethingassaving.Iknowindividualswhohavepurchasedhightech mutualfunds,aggressivegrowthfunds(andspecificstockssuchasAmazon.comand CiscoSystems)fortheirretirementsavingsaccounts.Toaperson,eachonebelievedthat foregoingcurrentconsumptiontospeculate(byGrahamandDoddsaccuratedefinition) wasequivalenttosaving.Heck,themeaningofsavinghasbeensodebasedthatsome peopleevenbelievethatpayingdownmortgagedebtisaformofsaving.Indeed,Wall Streetanditsfederalwatchdog(theSecuritiesandExchangeCommission)absolutely refusetousethewordspeculationinitspropercontext.Instead,wenowcallspeculation "saving".Thus,thedebasementoftheincrediblyimportantword(saving)hasbecome complete(savefortheadherentsofAustrianeconomics). Howdidtheproblemofspeculation,ininternetstocks,techstocks,andothercommon stocks,reachsuchmassiveproportions?WedoknowthattheFederalReservecreated massiveamountsofmoneyaftertheLongTermCapital Managementfiasco(in1998), andinflatedfurther(inearly1999)inanticipationofaY2Kdisaster(thusprovidingthe liquidityforrampantstockspeculation).Moreover,asshouldbeclearbynow,the meaningofthewordsavinghasbeencorruptedtothepointthatsheerspeculationhas becomethepathtosafety,comfort,andpersonalwelfareinthepresent,andinones retirementyears.So,onceagain,howhastheproblemof speculation,incommonstocks,

occurredonsuchamassivescale?LudwigvonMisesprovidesananswerinhasmagnum opusHumanAction.Hestates(onpage46of TheScholarsEdition): Commonmandoesnotspeculateaboutthegreatproblems.Withregardtothem hereliesuponotherpeoplesauthority,hebehavesas"everydecentfellowmust behave,"heislikeasheepintheherd.Itispreciselythisintellectualinertiathat characterizesamanasacommonman.Yetthecommonmandoeschoose.He choosestoadopttraditionalpatternsorpatternsadoptedbyotherpeoplebecause heisconvincedthatthisprocedureisbestfittedtoachievehisownwelfare.And heisreadytochangehisideologyandconsequentlyhismodeofactionwhenever hebecomesconvincedthatthiswouldbetterservehisowninterests. Undoubtedly,millionsofAmericansfollowedtheherdintothestockmarketseekingthe "selfish"interestoffinancialsecurity(convincedthathismoneywassafeaslongashe wasinthestockmarketforthelongterm).Thecommonmanhasbeenduped,byour corruptedlanguage,intospeculatinginthenameofsaving.Indeed,aneconomic environment,dominatedbyaneverdepreciatingcurrency(thankstotheFederal Reserve),canleadtothecorruptionofourlanguageandtoriskyfinancialbehavioronthe partofthecommonman. Withtheeconomyclearlyweakeningandthefiatmoney,jetfuelledrideonthestock marketplummetingbacktoearth,Americansarebecomingquiteconcernedabouttheir "savings".Toquelltheseconcerns,brokers(suchasCharlesSchwab)arerunningad campaignstosoothebrokeragecustomersnerveswiththeirresponsibleplatitudethat yourmoneyissafe,inthestockmarket,aslongasyouareinitforthelongterm(sound familiar?).Justrelax,AlanGreenspansseveninterestratecutsin2001willcometothe rescue.Allwillbewell. Asthethreemajorstockindices(theDowJonesIndustrials,theS&P500,andthe NASDAQ)regressbacktotheirrespectivemeans,muchfurtherfinancialpainliesahead forAmericans.Withsuchpaininevitablycomescallsforgovernmentaction.Perhapsthe FederalReservewillincrementallycutshortterminterestratesto0% (justlookatJapan). Perhapslargebrokeragehouseswillhavetobebailedoutattaxpayerexpense(doesthis smelllikeajustificationfortaxhikes?).Intheeventtheeconomybustsintoadeep depression,beassuredthatanother"newdeal"typeofschemewillbehatchedin Washington,D.C.Allofthiswillcomeattheexpenseoffurthererodingourliberty. Sohereisaquicksummary.Intheperniciouseconomicenvironmentcreatedbythe FederalReservescontinuousdebasementofourmoney,itisclearthatasimple,yet crucial,wordsuchas"saving"canliterallyloseitsmeaning.Inturn,itisapparentthat Americanshavespeculatedinthenameofsaving.Thiscanonlyleadtoeconomic disaster,moregovernmentintervention,andeventually,lossof liberty. F.A.Hayekunderstoodtheextremedangerofcorruptingourlanguage.In TheFatal Conceit:TheErrorsofSocialism,Hayekdedicatedanentirechapter(titled"Our PoisonedLanguage")tothistopic.Heopenedthischapterwithachillingquotefrom

Confucius:"Whenwordslosetheirmeaningpeoplewilllosetheirliberty."Debasingthe verymeaningofsavingmayprovetobeacripplingblowtoourfreemarketsocietyand, thus,ourliberty.ForthiswecanlaytheblameatthedoorstepoftheFederalReserveand itsinflationarypolicies. September7,2001 EricEnglund[sendhimmail],whohasanMBAfromBoiseStateUniversity,isasurety bondunderwriterinBellevue,WA. Ericsmessageissoveryimportant!Ihopethatyouwillreaditasmanytimesasittakes togetitfirmlyimplantedintoyourmind.Thanks,Eric!

Ifonepaystheminimumrequiredpaymentonacreditcardeachmonthuntilthedebtis fullyamortized,itwilltakeover30yearstodoso! Ofcourse,whenthestockmarketopenedonSeptember17alltheindiceswentdown because,asP.J.ORourkesaysinhisbook, EatTheRich,Whenweownanyfinancial instrument,whatwebasicallyownisanopinion. Thecashvaluesofmylifeinsurancepolicieswentupthatday,andthedaybefore,and thedaybeforethat.Whatsmore,theywillgoupagaintomorrow.Icancountonit it isnotanopinion.

September11,2001: TheDaytheCrisisArrived?
byStevenYates 1. WithTuesdaysnightmarishscenesofthecrumblingtowersoftheWorldTradeCenter andtheburnedoutsectionofthePentagonstillfreshinourminds,itmightbeusefulto revisitabookthatcreatedastirwhenitfirstappearedinJanuaryof1997:TheFourth Turning:AnAmericanProphecy,byhistoriansWilliamStraussandNeilHowe.Strauss andHowedidnotpredictanythingasspecificasanassaultontheWorldTradeCenter andthePentagon.Buttheydidpredictthatsomethingshockingwouldhappentothis countryearlyinthe2000decade,andtheresultwouldbeaseismicshiftinthecountrys overallmood. TheFourthTurning offersacyclicalaccountofU.S.history.Asatheoryofhistory,it isntperfect,andwouldneversatisfythosewhoneedexactitude.Butitisworth

pondering.StraussandHowemakeuseoftheindisputablefactthatourhistoryhasbeen punctuatedbycrisisprecipitatingeventsthatoccurredanaverageofjustover70years apart.Aperiodofcrisisfollowedeachevent,andthecountryemergedchanged.In1787, agroupofmenconvenedin PhiladelphiatorevisetheArticlesofConfederation.They emergedfrombehindcloseddoorswithadifferentdocument:theConstitutionofthe UnitedStatesofAmerica.Abattleensuedovertheacceptabilityofthenewdocument, withbattlelinesdrawnbetweenthesocalledFederalistswhofavoredratification(James Madison,JohnJay,andsoon)andthesocalledAntifederalistswhobelievedthenew Constitutiongavethefederalgovernmentitcreatedtoomuchpower(RichardHenryLee, forexample,orcohortssuchasGeorgeMason).OutofthatbattleemergedourBillof Rights. FastforwardtoDecemberof1860.ThatwasthemonthandyearSouthCarolinasigned itsOrdinanceofSecession.Earlyin1861severalotherSouthernstatesfollowedSouth CarolinaoutoftheUnionandestablishedtheConfederateStatesofAmerica.This triggeredthenextmajorcrisisregardlessofwhatwebelievecausedthedevastatingwar thatfollowed,orwhowasright.Notethenumberyearselapsed:73. Fastforwardagain.In Octoberof1929,thebottomfelloutofthestockmarket.The effectsimmediatelysnowballed,andseveraleconomiesweretraumatized.Therewere casesofpeoplelosingeverythingandcommittingsuicide.Thewhirlwindofexuberance thatcharacterizedthe1920swasshattered.ThestagewassetfortheGreatDepression and,eventually,theSecondWorldWar.Again,thecountrywastransformed.Asbefore, wearenotherediscussingwhodidwhattowhom,orwhowasresponsibleweareonly observingthetimespan:69years. ThenumberofyearsbetweenthestockmarketcrashtoSeptember11,2001:roughlysix weeksshyof72.Dothearithmetic.Eitherthisisanamazingcoincidenceoritreflectsa pattern,orsystem. 2. AccordingtoWilliamStraussandNeilHowe,eachofthecyclesofhistoryisdividedinto foursmallerunitscalledturnings,eachturninglastinganywherefromadozenorsoto20 yearsandeachcharacterizedbyitsowndistinctmood.Transitionsfromoneturningto thenextcanbepropelledbyanastyjolt,oraturningcanyieldtoitssuccessorsmoothly andalmostunnoticedasoldpreoccupationsgrowstaleandarereplacedbynewones.The firstturninginanynewcycleisaHigh.ThesecondturningiscalledanAwakening.The third,anUnraveling.Crisesareactuallythefourthturningfromwhich TheFourth Turningderivesitsname. Highsbeginwhenthecountryachievesagivenselfdefinition.AccordingtoStraussand Howe,theyareperiodsofstronginstitutions,identificationwiththembyindividuals, respectforthe"triedandtrue,"andculturaloptimism.Theyoffertheperiod19471963 asexemplifyingourmostrecentHigh.Awakeningsbeginwhensomethingoccurstocall theinstitutionsandvaluesintoquestion.OurmostrecentAwakeningnodoubtbegan

withtheassassinationofPresidentJohnF.Kennedy.Therecanbenodoubtthatthis eventjoltedthenationalconsciousness.Itisamazinghowmanypeoplecanremember wheretheywereandwhattheyweredoingwhentheyreceivedwordthat thePresidentof theUnitedStateshadbeenshot(includingmyselfeventhoughIwasonlysixyearsold). ThissenseofshocktranscendedpartyloyaltyonedidnothavetoagreewithKennedys policiestohavesensedthatthecountryhadbeenchangedovernight.Ifthemoodofa Highisshattered,however,itsculturaloptimismtendstobecarriedoverandrecastinthe formofvarioussortsofextremeidealism,evenUtopianism.Considertheperiodthat beganin1964andprobablyendedintheearly1980s.Itfeaturedcivilrightsactivism, feminism,environmentalismandsoon.Thesemovementschallengedthedominant institutionsandvaluesofsociety,butpresumedanunbridledoptimismabouthuman naturethatheldouthopefortransformingeveryinstitutioninsociety. AnUnravelingbeginswhennotjusttheoldinstitutionsbutthenewmovementsrunout ofsteam.Theutopiashavenotmaterializedpeoplehavegrowncynicalandindifferent, andoptimismisreplacedeitherbypessimismorescapism.Manypeoplesawinthe Reaganeraaresurgenceofnationalhonorandarepudiationoftheexcessesofthelate 1960sand1970s.Theproblemwas,theresurgencewasmorecosmeticthansubstantive itwasmoreexemplifiedinmoviessuchasRambothaninsubstantivenational achievement.WhiletheeconomyarguablyimprovedandSovietCommunism disintegrated,ourculturealsodeteriorated.Theexcessesofthetwopreviousdecades merelywentunderground,andwouldreappearwithavengeanceduringthe1990s. MovementsthatbeginduringanAwakeningdisplaytheirdarkesttendenciesduringan Unraveling(thetransformationofcivilrightsandfeminismintoidentitypolitics,political correctnessandthoughtcontrol).Awakeningsmayyieldimportantandusefulideasand movementsforexample,theLibertarianPartystartedduring1973.Itis,inthisview, theproductofanAwakening.ButduringanUnraveling,thebestofsuchmovementsmay seemtolosetheirmomentum,theirconceptsofrightstranslating(atleastforsome adherents)intoIhavearighttodoasIplease,anotionmorelikelytoyieldchaosthan freedom.Astalecynicismandlatenthostilitypermeatestheculture. BillClintonwastheperfectpersontopresideoveranUnraveling.Herewasamandriven bytheneedforpowerandrecognition,hisprimaryconcernbeinghis"placeinhistory." Hewillberememberedforhislustforfemalestaffers,hiscynicalmanipulationsofthe military(e.g.,bombingSudantoremoveattentionfromMonicaLewinskystestimony) andhistorturedrationalizations("Itdependsonwhatthemeaningofisis.").Hisunholy Regimedeepenedpubliccynicismandhelpedpropelthecountryeverdeeperintoa materialismasvulnerabletoFedmanufacturedboomsasitwascomplacentaboutits abilitytocontroltheentireworld. Finally,accordingtoStraussandHowe,anUnravelingendswithabang:thatis,withan eventthatsendsshockwavesthroughtheentirecountry and,perhaps,theentireworld. ThemoodshiftsintoCrisismode.DuringthatCrisis,oldpreoccupationsaresuddenly irrelevant,andnewalliancesformed.AstheCrisisprogresses,itmaybepuncturedby additionalshocks,e.g.,theattackonPearlHarborwhichwenowknowthetyrant Rooseveltknewwascoming.Butwealsoseeactsoftremendousheroism(e.g.,inWorld

WarII).Crises,unliketheotherfourturnings,mayatpointsseemstochallengethevery survivalofthecountry.Whentheyend,thecountryhasanewconceptionofitself for betterorforworse. 3. Threeadditionalpointsareworthmaking.First,itshouldbeclearthatwearediscussing tendencieshere,notabsolutesthatapplytoeverypersonorinstitution.Turningsare actuallyverycomplex,andgeneratesubculturesoftheirown.TherewereBeatniks duringthe1950sandYoungRepublicansduringthelate1960sand1970s.Butbothwere essentiallyoutsidergroupstheydidnotdefineordominatethemoodoftheperiod. Arguably,WilliamWhytesTheOrganizationMandidmoretospellouttheformereras philosophyoflifethanJackKerouacsOntheRoad.Hippiesandrockandrolldefined anddominated ourmostpreviousAwakening.Genuineconservatives(whichmanifestly didnotincludeRichardNixon)allbutdisappearedthosewhosethinkinghearkenedback tothe"happydays"thatprecededtheKennedyassassinationweresimplyignored. Finally,politicianslikeClintonandJanetRenowillforeverbeassociatedwiththe1990s thesocalledChristianRightslowlyfellapart. Secondpoint:thiscyclicaltendencyisnotuniquetoourownhistoryortimes.Strauss andHowebelievetheyhavetracedthecyclesandturningsofhistoryallthewaybackto the1400s.Theyofferthedetailsinpp.12338oftheirbookintheformofachart.They donotdwelloverlyonthecyclesandturningsthatprecedemodernhistory,because althoughitconstitutessupportingevidencefortheirvisionnoneoftheeventsinvolved helpmaketheirargumentandwarningrelevanttoday. Thirdandfinalpoint:noturningiseitherallgoodorallbad.ConsiderUnravelings.The termhasanegativeconnotation,butthesystemic"unfreezing"thatoccursduringan Unravelingallowsforinnovationsofallkinds,themostimportantbeingtechnological. TheUnravelingthatbeganaround1914andendedin1929gaveustheautomobile.Our ownperiodhasgivenustheInternetandtheWorldWideWeb.Newsandcommentary sitesontheWebhaveproventobethemostformidablemeansofcounteringthepower hungerandstalecynicismoftheClintonistasandotherstatists.Ontheotherhand,of course,thepastseveralyearshavearguablyachievednewheights(ordepths)of materialism.Academehasdisintegratedintoacollectiveorgyofpoliticalcorrectness,and gettingideasrelatedtothiscountrysfoundingprincipleshaveoftenseemedlikepulling teeth.Whiletherearesignsofreligiousrevival,andwhileanumberofChristianshave remainedsomewhatvisiblecriticsoftheClintonerastatusquo,byandlargeoursociety 19842001wasdrivenbysecularpreoccupations:technology,theeconomy,andspecial interestpoliticalagendas. 4. TheFourthTurningpredictedatthebeginningof1997thatsomethingwouldhappenin thethennearfuturethatwouldsendshockwavesthroughthecountry.Irecallthinking, asIwatchedthehorrifyingeventsunfoldontelevisionTuesdaymorning,thatnowmight

10

beagoodtimetodigthisbookout.Acoupleofpeoplewhoknewofmyinterestinit pattedmeontheback,tellingmeIhadbeenright. Actually,Iwouldprefernottohavebeenright.StraussandHowehaveavisionofhistory thatisdisturbinglyfatalistic,suggestingthatbecauseofbroadtendenciestheremight havebeenlittlewecouldhavedonetopreventwhathappenedonSeptember11,2001. Theirtheoryincorporatesakindofgenerationbasedsociologyholdingthatdifferent turningsproducedifferentkindsofgenerations.AHerogenerationisbornduringan UnravelingandcomesofageduringaCrisis.ThosewhofoughtandwonWorldWarII arecertainlycandidatesforHeroesinthissense.ASilentgenerationisbornduringa CrisisandmaturesduringaHigh.Thinkagainofthe"organizationman,"the"maninthe grayflannelsuit"whoexistedintheshadowsoftheHeroes.AProphetgenerationisborn duringaHighandcomesofageduringanAwakening.Thinkofthehippies,rockstars, civilrightsactivistsandalsothefoundersofthemodernLibertarianParty.The ProphetsBabyBoomersareindeedadiverselot,butallsharedavisionthattheworld tocomecouldbebetterthantheworldthatwas.Andfinally,aNomadgenerationisborn duringanAwakeningandcomesofageduringanUnraveling.Nomadstendtofindtheir ownselfdefinitions,whetheritbetryingtofoundahightechsoftwarecompanyor joiningthegothsubculture.Whilemanyareverycreative,othershavenogoalsorlarger visionofsocietyandfindthemselvessimplydriftingthroughlife.Afewembraceviolent andnihilisticphilosophiestheresultisaColumbinemassacre. Howdothesedifferencesemerge?Eachgeneration,accordingtotheStraussandHowe, isshapedinlargepartbythetimesinwhichitgrowsupandbytheattitudesofits parentgeneration.TheHeroes,havingcomeofageduringtheDepressionandthenbeing sentoffthefightinWorldWarII,hadasenseoftheprecariousnessofhumanlife. Freedomandprosperitywerenotgivenstheywerenotentitlementsbuthadtobeearned throughspecificcoursesofaction.EventhoughtheyneverreadMises,theHeroes absorbedenoughbasiceconomicsbylivingintheworldasitistobeabletocraftthe societyofthe1950s. However,theyalsotendedtooverprotectandspoiltheirchildren:theProphets orBaby Boomers.Thelattergrewupwithasenseofentitlementinsteadofprecariousnessa dangerousmindset,ifwewantagenerationcapableofmaintainingafreesociety.The Prophets,becauseoftheirnonchalanceaboutlifesprecariousness,begantounderprotect theirownoffspring,theNomadstodays"GenerationX."Havinggrownupwithout firmrules,manyofthelatterhaveremainedsingleortreatedmarriageasmerelyone "lifestylechoice"amongmany hencethebreakdownofthefamilyandthesenseof manyyouththattheyareontheirown.Again,thesearetendenciesanddonotdescribe everyonetherearemanystrong,stablefamiliesoutthere. Now,of course,manyoftodaysNomadshavechildrenoftheirown,andtheoldestof thosechildrenarestartingtocomeofage.ThechildrenofNomadsbecomeHeroes.This isindeedanimportantgeneration.StraussandHowepredictthatthosewhobegantobe born around1984andwhoseleadingedgeisnowmovingthroughthehighschoolsofthe country,willhavetoshouldertheenormousresponsibilityofpullingthecountrythrough

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thenextCrisisasdidtheHeroeswhofoughtandwonWorldWarII.Theirlatestbook addressesMillennialsRising:TheNextGreatGeneration. 5. Letusattempttoapplyallthis.WehavesaidthatTheFourthTurningpredictedthat somethingliketheattackontheWorldTradeCentertowersandthePentagonwasgoing tohappen.OurmostrecentUnravelingincludedtheirrationalforeignpolicyofthepast twopresidentialadministrationsandhelpedcreatetheconditionsfortheattacksby fomentingresentmentagainstthiscountry.Ourmaterialism,our"liberated"attitudes aboutwomen(forexample),combinedwithU.S.economicprowessandmilitarymight, alsoadduptoaperceivedthreattoanIslamicfundamentalistculture.Thishelpsexplain whytheIranianswhooustedtheShahofIranbackin1980calledoursocietythe"Great Satan."Peoplefearandtendtodemonizewhattheydonotunderstand. Thisdoesnot,ofcourse,justifythehorribleattacksthatoccurredlastTuesday,andit doesnotmeanthatsomekindofresponseisntcalledfor.Butanyresponsebyour fearlessleadershadbetterbethoughtthroughverycarefully,becauseactionshave consequencesandmatterscouldendupbeingmadeworse.Wehaveanenemythat manifestlydoesnotthinklikewedoorwagewaraccordingtoourrules.Wehavefought andwonwarsonopenbattlefields,butmissilesandarmiesareineffectiveagainst guerrillasandundergroundcellssuchasthosedirectedbyBinLadenwhoprovideno cleantargetstohit.Sowhatcanwedo?Onethingweshoulddoimmediatelyisabandon interventionismasaforeignpolicy.Themeansnolongerattemptingtoforce "democracy"and"Westernvalues"(oftenthoseofsecularismandmaterialism)on peopleswhodontwantthem.ItmeansresurrectingGeorgeWashingtonswarning against"foreignentanglements."Weshouldalsodomoretoprotectourborders.Weneed torealizethatourindividualismhasbeenbothourstrengthandourweakness.Wealone asindividualscan(uptoapoint)defineourselvesandfindourownway,whetheras entrepreneursorasphilosophers(orboth).Thishasunleashedthegreatestprosperitythe worldhasevenseen.Butbecauseofitwe(especiallyAmericanwhites)lackthekindof ethnicidentitythatcharacterizesmostothergroupsintherestoftheworld.Wealonesee ourselvesprimarilyasindividualswithoutrealizingthatmostoftherestoftheworlddoes notlookatpeoplethisway.Thismakesusvulnerable,becausebytreatingpeopleas individualswehavemadeiteasyforthosewhowishusharmtogainaccesstooursoil. Thissimplyhastostop.Ibelievewewillhavenochoiceintheupcomingmonthsexcept toengageinwhatliberalscalldiscrimination.Weneedtosayit:noonewhowasntborn hereisentitledtobehere.Thiscallsforprotectingourborders,insteadofopeningthem topeoplewhonotonlyknownothingofindividualismandConstitutionallybased republicanvaluesbutmightwishusharm.Otherpeoplesoftheworldwilllikelyhaveto discoveraConstitutionallybasedrepublicanformofgovernmentforthemselves,ornot atall.TheUnitedStatessimplycannotcarrythemonitsbackandevenifitcould,if indigenouspeoplesdonotwantourhelpthenoureffortswillonlygenerateresentment andhatred. 6.

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ThereisastillmoreominouswarningembodiedinTheFourthTurning,andStraussand Howeseemnottohavenoticedit:duringeachpreviousCrisisperiod,thecentral governmentincreasedinpower.ThefederalgovernmentcreatedbytheU.S.Constitution waslargerandmorecentralizedthanthatoftheArticlesofConfederation,andthiswas whatbotheredtheAntifederalists.Then,asJefferyRogersHummelwasabletoshowin greatdetailinhismasterful EmancipatingSlaves,EnslavingFreeMen,whatemerged after1865wasmoreapowerfulstatethanhadexistedin1860.Itwasvulnerabletoforces alreadyatworkthatwouldserveupstillmorecentralization,intheform ofacentral bank,theIRS,etc.Nooneseriouslydoubts,finally,thattheCrashof1929setthestage fortheriseofthewelfarestateunderFranklinDelanoRoosevelt.Rooseveltspolicies werethoseofaCrisis. Crisisprecipitatingeventsarefundamentallydestabilizing.Instabilityiseasytoexploit. Whattrulyjoltingeventsdo,inthehandsofpoliticiansandmastermanipulatorsboth behindthescenesandinthemassmedia,iscreateasenseofpanicinthemindsofthe publicthatcanbeassuagedonlyif"weallpulltogetherandtrustourleaders."Weare alreadyseeingthisinthesuddenoutburstsofpatriotismvisibleeverywhere,withpeople puttingAmericanflagsontheircars,wearingthemontheirlapelsatwork,etc. Everywhere,though,too,onehearsrenewedconcernsforpublicsafety.Thismakesus evermorevulnerabletothosewhowouldtakeawaywhatremainsofourliberties.A numberofpollsallshowthatthemajorityofthepublicwillsacrificepersonalfreedoms inordertofeelsafer!Therefore,thereisnowadangerthattheAmericanpublicmight serveitselfuponasilverplattertoaNewWorldOrderregimethatwouldemergeat somepointintheensuingCrisis,leavingusinthehandsofafullfledgedpolicestate. Thisregimewouldbeadefactodictatorshipofsuperelitesthatmightevenbeidentified withbythemajorityofpeoplewhenitarrived!ThenextHighwouldbefarlessfreethan anyofitspredecessors.Unfortunately,alltoomanypeopleprefersafetytofreedom,and theytrustthegovernmentmorethantheyshould. ThecountrysshiftingintoaCrisismodewilldoubtlesspropelenormouschanges.These changeswillbeasdifficulttopredictasanyhistoricalspecifics.Theymightpropela revivalofreligiousconviction,asopposedtothematerialismthathascharacterizedthe mostrecentdecadethismightleadtoalongtermtrendtowardprivate,Christian educationandagainstfailed"publicschools."Thechangesmightalsovaultinto prominencemovementsthathavebeendismissedoutofhandinthe"mainstream,"such asthosefavoringthesecessionofvariousstatesorgroupsofstatesfromthecentral governmentinWashington,thatgovernmentsblundershavinghadahandin precipitatingtheCrisis.Crisesareperiodsofgreatdangeranddestabilization.Nodoubt thequestionwillsoonbefloated:couldthefederalgovernmentandtheinternational supereliteshaveknowninadvancethatanassaultsomewhereonU.S.soilwascoming,in amannersimilartoRooseveltshavingknowninadvanceaboutPearlHarbor.Istherea behindthesceneseffortunderwaytofomentamajorwarintheMiddleEast,withthe fullcooperationofWashingtonelites?Wars,afterall,helpelitesconsolidatepower. Time,hopefully,willhelpanswersuchdisturbingquestions,andiftheanswerisYes,this couldengenderasensethatsecessionfromtheWashingtongovernmentisourlast,best hopeforliberty.

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Ourcurrentaceintheholeisthatwiththiscognitivemachineryaboutcycles,turnings, andtheiradvantagesaswellasdangers,wehavethepotentialtocontrolthechanges aheadinsteadofallowingthemtocontrolus.Thatwouldbeanenormousand unprecedentedachievement,becauseinthiscase,outofthisCrisiscouldemergeforthe firsttimeinover200yearsthefirstnewculturethatisfreerthanitspredecessors.That wouldbeaHighworthcelebrating!Butonlyifwearewillingtodowhatisnecessaryto ensureit.Thisincludesensuringthatwevaluelibertymorethanmeresecurity,andagree toacknowledgethelegitimacyonlyofagovernmentthatknowsitsplaceandrecognizes thatoneofitslegitimatefunctionsistheprotectionofourborders. September15,2001 StevenYates[sendhimmail]hasaPh.D.inPhilosophyandistheauthorofCivil Wrongs:WhatWentWrongWithAffirmativeAction (ICSPress,1994).Heisa professionalwriteratworkonanumberofprojectsincludingaworkofpolitical philosophy. AfterreadingStevensarticleIrememberedthattheformerUSSRlastedalittleover70 years.Andthen,withfurtherrecollection,recallthattheabominableideaofSocial SecurityinAmericastartedin1937.Add70yearsorsotothatfigureandthiswillbethe timethatrealitywillsetin anditwillallcomeapart.Thereisnowaytoreform that monster.Thereisnorightwaytodowrong!Socialism,nomatterwhatsweetsounding namewegiveit,canneverwork.

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