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“Behind the ostensible government sits enthroned an invisible government owing no allegiance and acknowledging no responsibility to the people. To destroy this invisible government, to befoul the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day.”

– Theodore Roosevelt, April 19, 1906

The difference between a politician and a statesman is simple: Politicians live by consensus and public polls, statesmen live by convictions and personal principles.

Back in 1776, “Common Sense” by Thomas Paine was written to advocate absolute American independence from the mother country, England. In this little book appeared all the arguments made in favor of separation, each being stated with great clearness and force, yet with such simplicity as to bring them within the comprehension of all classes of readers.

Now, 229 years later, central bankers think themselves in charge of America and the rest of the world’s economic future. They have decided the world can no longer risk having free currency markets, so they issued a communique asserting that “excess volatility and disorderly movements in exchange rates are undesirable for economic growth” in 2004.

But I disagree with central banker’s approach on the basis of common sense, which tells us that manipulating financial markets, for whatever reason, simply postpones the inevitable. Just as the law of gravity may be temporarily suspended artificially, what goes up must eventually come down.

Common sense also tells us every paper currency in history – which is unredeemable in a hard asset – will ultimately fall to its true value: ZERO! Including the mighty U.S. dollar.

Central bankers pretend otherwise, but they succeed only because so few Americans are willing to take the time to learn from history and use their common sense.

Let’s see what else we can learn from our founders about common sense economics.

Ending the blame game

Instead of blaming, America’s founders took responsibility. They willingly shed their blood and gave up personal fortunes to secure our future and the personal freedoms we hold dear. Yet today the majority still want someone else to be in charge, to be the responsible party.

American statesmen like James Madison assumed future generations would choose wise leaders to represent them and govern by putting the common good of the country ahead of their personal interest. They deduced that, if elected, officials violated our trust they would be removed from office and never re-elected. Perhaps they did not factor in the high level of public complacency we have today.

No, the Founding Fathers never foresaw that the population would become so caught up in the pursuit of wealth that they would vote their pocketbooks rather than their conscience. They thought “We the People” would always do the right thing because they always sought to do the right thing. History seems to prove that was a bad assumption.

Sadly, most economists, let alone most Americans, can not even define the word “money” today, so when it disappears quickly, they’re frustrated that their luck has run out and must blame someone.

Perhaps the best way to end the blame game is to understand the money “game” well before playing it at all.

Work, risk & luck

There are only three ways to create wealth:

  1. Work
  2. Take risks
  3. Rely on luck

There was a time in America when great invention and marvelous discoveries were sought after for the primary purpose of improving mankind. Most of America’s great inventors cared more about making the world a better place than about the wealth that might follow. Men and women like Edison, Salk, Franklin and Pasteur are good examples.

Today, the masses want “wealth” without risk or much work, but with lots of good luck – following them around like a shadow in the afternoon. Much of this ignorance is due to the rise of a lottery mentality, which is promoted in almost every sphere of life today.

There was also a time when savings was a sign of maturity – when debt was shunned like the plague. But not today – it is just the opposite – and now Americans can’t figure out why they feel like they are walking up a down escalator, financially. I believe we live in the greatest country of opportunity in the world, but we must keep things in proper prospective.

Yet when someone or some group in society doesn’t have enough “wealth,” the liberal reaction is often to blame someone or something else. Rarely do we consider that the reason someone doesn’t have a job could be that they are just plain lazy or not skilled to do the job right. Or if you didn’t make as much money as your friend on an investment, could it be he was willing to take more risk than you?

Long ago, I learned the harder you work, the luckier you get. Until we begin to take personal responsibility for our financial future and stop playing the blame game, I expect growing volatility in the financial markets – which will be reflected in higher inflation and commodity prices. It’s just common sense.

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