True Economics

In  “Positions to be Examined” concerning national wealth, April 4, 1769, Benjamin Franklin rightly commented on how nationns may become wealthy and the origin of true wealth:

  • By war, which permits taking by force the wealth of other nations;
  • By trade, which to be profitable requires cheating. For example, if we give and receive an equal amount of goods and services through trade, there’s no profit other than that obtained in our own production cycle.
  • By agriculture, through which we plant the seeds and create new wealth as if by a miracle.

I have been asked many times, either in emails or phone conversations, what I thought was the nature of true wealth. I have had only one answer and it surprises most people. There is only one measure of wealth and that is RAW MATERIALS. The idea 0f raw material economics encapsulates the prime thought that there is NO TRUE WEALTH THAT DOES NOT COME FROM THE EARTH!

People argue that gold is a store of wealth, silver is a store of wealth, diamonds are a store of wealth. I agree that they are each a component of the raw materials economics but they are not the only stores of wealth. I can argue that oil is also a store of wealth, seeds are a store of wealth, grain, coal, natural gas are all components in raw materials economics. Now, I am sure that some will say, “Okay Codger, oil is a store of wealth because we have the idea of the petro-dollar keeping America afloat, but seeds?”

Yes, seeds. In 1983, the price of gold was generally between $375.00/oz. and $510.00/oz. At that time I operated a commercial greenhouse and purchsed tomato seeds from Bruinsma Seed Co. in the Netherlands for $528.00/oz. Today, it is not unusual to pay $1-2.00/seed for commercial cucumber seeds. With 750-850 seeds per ounce you can see how quickly you can pay $1700.00/oz. of seed.

Raw material economics is not to be confused with commodity trading on some pie-in-the-sky scheme called a commodities market. As I am sure all of you are aware of the government’s manipulation in the gold and silver market, so it is for the commodites market. It all began during the Roosevelt administration (FDR) when it was decided during the First Great Depression that Americans could not afford basic foodstuffs. Most Americans are not aware of the concept of PARITY. Simply stated, 100%parity is equal to the free market price set by the marketplace. Unfortunately, with a nation that was out of work and starving most Americans could not afford to purchse wheat, corn, salt, meat, or fiber for its true worth. So, our brilliant government devise a plan to reduce the price by 50%.

This fifty percent reduction in price caused many farmers to plow their crops under, pour milk into the rivers and reduce the size of their herds and flocks. In other words, they killed their livestock rather than sell it for less than it was worth.

Realizing they had made a mistake, one among many, Congress then decided that if the price is reduced 50% farmers must be compensated, in some nature, for the other 50%. This began the monstrous agricultural price support system in place today. Since it was necesaary to stimulate the production of certain key commodities the government “paid” farmers not to grow certain commodities and then promised low interest lows for seed, equipment, and to buy more land. This was the beginning of the end for free market driven commodities.

One thing Congress did not fully understand: if you take 50% of a farmer’s wealth and replace it with a low interest loan you have destroyed wealth, not created it. Before the A. A. A. (Agricultural Adjustment Act) farmer’s were free to sell the produce to the highest bidder and receive 100% of what they thought was a fair price. (As a farmer I know first hand that you NEVER get what you think it is worth.) After the A. A. A. the farmer received half of what he should have and now he has to pay the interest on his low interest load with half of the income he should have received. Sound familiar doesn’t it?

This is the very same system used by the Federal Reserve to sap the wealth from America as a whole. The Treasury Department authorizes the printing of a certain sum of money, say $100. The Treasury Department must now issue notes or bonds to equal this amount. This is taken as collateral by Osama Ben Bernanke who now gives approval for the money to be printed by the Treasury Department. Now the Treasury Department must pay the Federal Reserve not only the $100 but must also pay the interest which is varied and can be a fractional number or in the double digits like we saw in the late seventies.

The key here is that no WEALTH has been created, only money and now it has been devalued because the supply of money must now increase to “buy” back the bonds and notes. Each time this is done the money supply increases and the value of the money decreases. I think all of you know this and I simply repeat it here so you will see the similarity between what is happening to our money has also happened to our wealth but instead of having to pay 1%, 2%, 5% or 15% in interest, farmers have lost 50% and must pay interest on the remaining 50%.

Do you see now why only the Too Big Too Fail Factory Farms (TBTFFF) are the only ones prospering right now. Con-Agra, Archer-Daniels-Midland, etc are recipients of price supports (50% parity) and low interest loans and have the money to affect the legislation that favors their debt based farming practices. Small independent farmers are essentially barred from competition due to the SCALE of their operation. Instead, small farmers turn directly to consumers to interest them in farm fresh produce and Consumer Supported Agriculture.

Obviously, you can help by supporting your local Farmer’s Market, CSA”s or even by stopping at a roadside stand and buying eggs on the way home from work. Is the fix that simple? NO! We must have 100% parity in the system but as long as the current system benefits the TBTFFF and they have the money to have legislation that benefits them passed then the chances of seeing real wealth restored to this country  are slim to none.

But that is not the worst part. The average age of an American farmer is about 57 years old, which means in 5 years they will be eligible for reducded Social Security benefits and in 8 years full benefits. How many will continue to farm? Who knows? Why stay in a business where one half of your wealth is taken before it is produced?

Now, did I have a revelation overnight to discover this? No! I was very lucky to learn this from a brilliant man, Mr. Charles Walters, who is the founder of Acres USA and also NORM (National Organization for Raw Materials) and the man that has written the 5 Rules of Raw Material Economics. They are:

  1. The amount of raw materials removed from nature becomes humanity’s potential wealth.  The potential wealth of the materials determine the number and value of jobs available to produce, transport, process, manufacture, distribute and retail finished products made from these materials.
  2. The values placed on raw materials determine the amount of money that can be paid for the tools and services used to produce raw materials and controls the price and volume of tools and services purchased by raw materials producers.
  3. Tools and services purchased by raw materials producers and the tools and services purchased by other people during the same economic cycle becomes the original method of job creation and manifests all the wealth necessary to purchase all finished goods.
  4. A fair balance between the value placed on raw materials and the value placed on finished goods automatically creates healthy markets and manifests the wealth required to purchase all finished goods.
  5. The act of production times the fair value of production (AoP x FVoP = wealth), or the proper relationship between production and price, manifests all the wealth necessary for the debt free consumption of all finished goods.

Should you invest in gold and silver? Absolutely, for they are a store of wealth, taken from the earth. But in hard times the real value of gold and silver may be the food or seeds that they will purchase. Please, for the good of your family, invest in storable foods and seeds so that you will have in your survival plan the basic building blocks of wealth.

Good luck and God bless.

For more information about Raw Material Economics go to: http://www.acresusa.com/magazines/magazine.htm

10 comments to True Economics

  • sledmaster

    I totally agree with you. Wealth is only created from raw materials, taking a raw material and creating (making) something of use to society. Farming, mining, taking ore and creating steel, breeding and raising cattle, just creating food in general. Very good article. America WAS the richest nation in the world because the wealth at one time was distributed more evenly. In the 40’s and 50’s we “created” wealth, the is no way possible to be the richest nation in the world and send all of our jobs over seas and by being a “service” society, IMPOSSIBLE. Thanks for all the politicians that voted on legislation back in the mid to late 80’s that allowed our industrial base to leave the country. This is one of the biggest reasons, when this crash comes, it will be hell on earth. In past times we had an industrial base that we could create wealth with. We don’t have that anymore. Thanks Codger, excellent article

    • lastmanstanding

      Wealth was never distributed evenly…it was earned by those who fucking worked for it…our jobs were sent overseas because Americans have become lazy and worthless and wanted more money for less labor…thank the unions for that.

      Our nation was the wealthiest because people had pride and busted their asses to have food, clothing, shelter and savings…Now most Americans get that because of those of us that produce something.

      the politicians have always sucked and most won’t be able to stand in the sunshine once we have no economy.

      You are right about the hell on earth thing.

  • Brian

    The industries listed above are what I consider CORE industry. I would add energy production as well. Without these we have no foundation upon which to build more specialized or service related industries. Those are essentially parasitic in nature with the former but a good symbiotic relationship is established when each are allowed to grow to their natural equilibrium.
    Now we have a situation where the core industries have left or are strangled too near death. The foundation has turned into sand and all of the non-core industries are showing stress as less and less people have the capital to keep their services supplied with end users.
    Its a sad situation, and so many don’t get it.
    Farmings future strangled: http://dailycaller.com/2012/04/25/rural-kids-parents-angry-about-labor-dept-rule-banning-farm-chores/

  • Ben

    Excellent post C.

    You mentioned Con-Agra & ADM. Does Con Agra even make or process real food anymore?

    :)

    The scariest thing about some of these biggies like ADM, Con-Agra and especially Monsanto is what they could POTENTIALLY do to our valuable raw materials and earth bound wealth. The GMO nightmare that all of these companies are pushing is truly scary. What GMO’s can and will do to our crops and ecosystem are mind-boggling and nightmarish.

    • Country Codger

      Good question Ben but you will have to define REAL first> Yes, the process a form of food.

  • thankful

    This reminds me of economics in one lesson and the alpha strategy. One thing I would add is SKILLS. Skills are also a store of wealth. If you have the medical training of an emergency physician or an EMT you will be highly valued for your skills. If you know how to defend a retreat and are a good tactician you are a store of wealth because people will trade real goods for your skill. If you have seeds but don’t know the first thing about gardening, the wealth of the seeds won’t help you survive. I think cc wrote an article earlier about the necessary skills you should have.

    The dept of labor regulations for farms should be shunned or fought against. It’s a perfect 10th amendment issue. It’s not interstate commerce. But they could claim it’s for the “health” of the children (the overreaching health care bill). The harm this could cause is immense; shutting down all 4H, future farmers of America meetings and much more. These are programs that help our young people grow, and develop independence, which is what the globalist’s don’t want. Its oppression screws starting to rapidly tighten and it’s going to get a lot worse before it gets better.

    Here is the link to the law they are trying to pass against these farm regulations http://www.theblaze.com/stories/sens-thune-moran-introduce-bill-to-block-labor-dept-child-labor-farm-regs/.

    I think you’d be surprised how fast we could pick ourselves up again once the screws are off and we can again have our own industries here. We are extremely resourceful when we want to be. I think all our real entrepreneurs are just waiting for the right time.

    • Country Codger

      @Thankful
      I have written many articles dedicated to SkillSets. The more diverse the skillsets of a refuge the greater the chance of not only survival but victory.
      C.

  • …thnx CC, wealth of info for me that I hadn’t seen before.
    I would like to address the horrific effects that I see as an eventual result of GMO agri. With farmers now being threatened and fined merely for being downwind of a GMO mega-farm, with the effects upon the depleting bee population, the effects upon the health of consumers eating these crops, the damage to our soils and aquifers from these contorted franken-seeds, and most importantly the fact that we are slowly [if not exponentially] losing the most nutritious [heirloom] vegetables in our food chain with each growing season….how can we stop what is now a chain reaction??
    CC, maybe you can tell me if I am correct in saying that about the only way to save our highest quality strains is to begin a program of building up the seed base [bank] itself through enriched combination of hydroponics and cultured soil…maybe even brought into massive greenhouse environments with controlled support of their purity. I have a feeling that if we do not begin to protect and multiply the truly pure seed(s) that ….pretty soon they will be history!
    I am pretty new at agri, but I see this scenario as a probable future.
    …I agree also of the comments on skillsets. Most definitely, the more “hands-on” life skills one has, the more valuable one shall be in years soon to come. We tend to take for granted some of the skills that we have and don’t realize just how many people across the land have a hard time fixing a leaky faucet or “squaring a door” or harvesting seeds and even sprouting the seed itself. Most people get their “garden” by going to Lowe’s and buying potted tomatoes, peppers, berries, etc and would have NO IDEA what to do with a bag of seeds…once they had them.
    …This sort of knowledge is also, to a degree, the wealth of a nation. I think a nation is wealthiest if it is one whose majority of citizens are able to be self-sufficient and share that knowledge without prejudice.

    • Country Codger

      Jim,
      I have seed that was giving to me by my grandmother. I was just a little fella when she gave me my bean, pea and tomato crops. My uncle gave me samples of the tomato and bean crop. No matter what, I have seed that has been a part of my family’s heritage for over 100 years. It kept my family alive during the First Great Depression and now jus hink what will happen during the Second Great Depression.

  • […] plan the basic building blocks of wealth. Good luck and … … See the article here: True Economics | Don't Tread On Me ← Top Wealth Building Tip for Young Investors: Manage Debt […]

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