IMPORTANT DISCLAIMER: In no way shape or form is this post aligning itself with any particular economic school, political party or ideology like the Austrian School of Economics, Keynesian(s), Saltwater/Freshwater Economist, Democrat, Libertarian, Republican, Left, Right, Socialist etc. The purpose of this post is a conversational starter about the questionable merits of interest. Although this topic is highly controversial and the world at large has accepted interest as the norm, it’s worth having a debate on the distortions that interest brings into the economy.

Shout out to Br. Halit for giving me the title for this post, originally titled The Case for NO Interest. I am no Islamic scholar or fancy economist. I’m a student of Islam and life. Although I don’t have the vast econ-textbook knowledge like many official economist, by the good graces of Allah, I do have common sense and a pragmatic mind. With all the thousands of economist around the world, only a few of them had the insight to foresee the recent 2008 financial crisis, not to mention past crises. Doesn’t mean that we don’t need economists, but I see a lot rear-view/hindsight economists out there. I wrote this post due to my interest, no pun intended, in understanding the Islamic law regarding the prohibition of Riba (interest). Many of the themes of this post are related to Islam. If you have a problem with that and topics that have to do with Allah (God) make you too uncomfortable, then you should go here:

Table of Contents

1. Allah’s (God) ruling on Interest
2. I’m NOT Interested
3. Economic Sophistry
4. A Fair Alternative to Interest
5. Conclusion

Allah’s (God) ruling on Interest

The purpose of this post is a conversational starter on the questionable merits of interest. In addition I’m doing a bit of education here for non-Muslims because they ask me question after question after I tell them that interest is prohibited in Islam. I will address some of their questions in this post. Regardless of your way of life, clearly there is room for discussion on abolishing interest based transactions. From an Islamic perspective, Riba (Interest) is prohibited. Taking interest or charging interest is prohibited. A transaction can be prohibited by adding money on top of money (giving or taking) or by overpricing assets that are sold to the public. In Islam, every financial action should be just. You can profit, but not at the gross expense of others. The whole point of Islamic finance is to create a proper balance between the basic needs of society and the profitability of those business transactions that impact that society. In today’s world of secular based ideology, a person in power can justify any act through legal sophistry, even if the act undermines the person and the surrounding community. In Islam, you don’t “Rob Peter to Pay Paul“, then wrap an act or law in some fancy legalese, while ignoring the financial imbalances and “moral hazard” that is inserted into the economic system.

In my view, this is the root of the problem. As long as their are lawyers, financiers, investors, and government regulators that can justify questionable financial acts with legal and economic sophistry, we could have continued systemic problems. It’s not just Islam that prohibits usury (interest), but every monotheistic religion has prohibited usury. Over time, with re-writing and revisions of theological law, the use of usury has been used as an acceptable mechanism for profit. Allah knows best, but I do believe that interest is 1 head of a 5 headed demon of what is wrong with the economy. In addition to interest, clearly we are suffering from a ethical problem, financial illiteracy problem, debt burden problem, regulatory reform problem and definitely a hubris problem.

I’m NOT interested

When I get into discussions on economics and Islam, while making it clear that Islam does NOT allow interest based transactions, many people ask “Well how do you make any money in Islam?”. That would be like me saying “Hey I don’t drink alcohol”. Then they ask me, “Well how do you quench your thirst”?

I find it strange that the same people who say “Hey, let the free and fair market take it’s due course”, are the same people that aren’t as excited to deal with the burden of all that “free market” activity when the economy collapses. I like to call these people “Fair Weather Market/Economy Capitalists”. All the interest in the world couldn’t even save two major investment firms in 2008, Bear Stearns and Lehman Brothers. What about AIG? Those are just the more recent victims and had other firms not been bailed out, many more would have gone under. Remember Long Term Capital Management in the 1990s? I thought interest was supposed to account for risk over time? Uh, what happened?

What is so interesting is if you talk to the so-called “interest specialists” about interest they will give you some economic sophistry on how interest is needed for true capitalism or interest is not responsible for our economic missteps. Being that interest is so tightly coupled to our economy how could anyone believe that interest isn’t part of the problem when many of the 140 financial crises we’ve had since 1978 had to do with debt or interest rates. Many times they will quote me some “classical theory of interest-esque or time preference theory” response or something similar to the Wiki definition below:

Definition

Compound interest is very similar to simple interest; however, with time, the difference becomes considerably larger. This difference is because unpaid interest is added to the balance due. Put another way, the borrower is charged interest on previous interest.

Did you folks just get what I just typed? Lets also keep in mind that these are “THEORIES“, not laws. Charging interest on previous interest. And this is what we call an equitable transaction? Says who? The gatekeepers of the economy? Or I should earn a return on money that I have not earned? I guess the supermarket should charge me double the “regular” price of milk because they built the supermarket, bought the trucks to deliver the milk, hired people to put the milk on the shelves, etc.

The typical response:

You see that’s how it works. It’s absurd to think that someone shouldn’t pay for money over time. Look, the consensus is clear, we smart people say so, and we have the theories (not laws) and dusty economic books to prove that interest is needed for capital markets, so get over it. Don’t let me quote Jeremy Bentham.

Absurd huh? I guess as long as we are using text book definitions, here is the text book definition of alcohol (Ethanol):

Any of a series of hydroxyl compounds, the simplest of which are derived from saturated hydrocarbons, have the general formula CnH2n+1OH, and include ethanol and methanol.

“Of course, there is nothing in that definition that seems harmful, right?” Just a bunch of hydroxyls and hydrocarbon atoms doing the bounding “two step”.

Lets just ignore the amount of murders, car accidents,alcoholism, addiction, rapes, drug abuse, broken families, bankruptcies, domestic violence, financial cost to the health care system, human cost to livelihood, brain damage, etc that this psychoactive drug contributes to and all is well. Nothing but a lipstick on a pig. As long as we dress it up with sophisticated language and words that only phds and so called “economists” can understand, we should be happy to deal with interest in the economy.

Economic Sophistry

What is even more perplexing, is you’ll have pro-interest individuals stating, “Hey, without interest we wouldn’t have the proper growth in the global economy” Really? Do these individuals realize how many times governments and monarchies around the world since the French Revolution have literally printed themselves out of an economic crisis (yes printing money out of thin air) while debasing the currency and sending inflation through the roof? [See A Free Nation Deep in Debt by James McDonald] Is this what free and fair market is? Whenever I get into deep trouble just print more money to fix the problem and still call the system a free and fair market? Fractional Reserve banking? We arbitrarily choose who the winners and losers (bailouts) are in the economy and then call it a “free and fair” market? Is this not hubris?

I’m curious what the economies around the world would look like if money wasn’t printed out of thin air to “fix” the economy? Oh, no problem, well just have deficits that we will never ever pay back. Can you imagine an American citizen telling the IRS, “Oh hey don’t worry about my debt, that is just a deficit and I’ll just carry it over for the remainder of my life while printing up money from my house to pay for new bills. See, I fixed the problem”. And this is what they call a “free and fair” market? With that being said I am not for the printing of money because this is just another form of interest, not to mention it is a economically flawed approach to monetary policy. With all the interest that is being charged, none of it was enough to account for risk over time. The current crisis is yet another indicator that the same Wall Street titans that profit off of interest based financial instruments are nothing but “welfare” corporations who got done in by the same interest they charged. In fancy econ-world talk they call this “over-leveraged”. This is just another word for “Hey I can’t pay this loan back with interest”. Every major bank/investment firm was almost insolvent, if not insolvent in 2008. You name it, Citibank, Lehman, UBS etc, and some banks like Washington Mutual have been banished to bankruptcy land, never to be seen again.

As Nassim Taleb states in Black Swan regarding the Savings and Loan Crisis:

The same happened in 1983 with money center banks losing cumulatively every penny ever made, and in 1991-1992 when the Savings and Loans industry became history.

Take a look at the “free and fair” market looks like with bailout after bailout since the 1970s:
http://www.propublica.org/special/government-bailouts

So what happened banks and investment firms? Wasn’t interest and your high returning investments supposed to dig you out of the hole when financial disruptions strike? Apparently not. So if interest is not even a mechanism that can properly account for risk over time, then why are we doing it in the first place? Don’t be fooled by the fancy language, “Re-capitalize” is just another fancy word for “Corporate Wic Check”. Instead of food, the tax payers are buying toxic assets. I would use the term “buying” lightly. “Off-Balance Sheet” has now become another word for “hiding risky assets that I know would completely deteriorate my companies net worth and possibly make my company insolvent”.

Fictitious Banker Convo:

Banker: Uh Mr. Oxford I noticed that you had 40K in credit card debt. I think this is going to be a problem with getting you that loan.
Me: Oh no problem, you see you actually weren’t supposed to see that. I have this thing called “off balanced sheet” which hides that 40K debt so my balance sheet looks better than it is.
Banker: Hmm, okay that makes sense, why would I want to get an accurate representation of the risk. That just preposterous. Ha ha ha (laughs nervously)
Me: Exactly, I kind of felt the same way, so can I get a “do over”?
Banker: Sure. You are approved.

The stalwart supporters of interest are like the following story:
Let’s say a bunch of engineers (Bankers and Investment Firms) create a recycling water cleansing system (RWCS). They say that as long as you have 800,000 liters of water (cash) in the system, the system can maintain itself. Whatever run off (bad investments) and natural evaporation (risk) that happens will be replenished by natural rain fall (interest and fractional reserve banking) and the efficiency of the system extracting more water out of the system (profitable investments). Then over time, instead of 800,000 plus liters of water in the system, the amount decreases by 50,000 liters every 3 months. By year 3 the water system is struggling with only 200,000 liters. Even with natural rain fall subsidizing the system, they still can’t cut it. Now instead of admitting that the recycling water cleansing system is not working, the engineers siphon water from the Atlantic Ocean (Bailouts and printed money) into the RWCS to artificially bring back the system up to 800,000 liters of water while patting themselves on the back and stating “Hey look, our system works. All we need is the occasional water subsidy and we are in business”.

What a sad state of affairs. Are we so blind?

A Fair Alternative to Interest

Some might read this and think I’m some wacko dogmatic socialist. As if creating a profit mechanism that is an alternative to interest based profit makes you a socialist. Ha! I’m no “Capitalist” which means my motivation in life is not just profit. When I do business, I’m for making a profit but not at the expense of what Allah has intelligently decreed for society at large. In addition, equality and being just is more important than mere profit, and it’s not like that ideology has served ALL of society well, considering the current circumstances. A title I’ll steal from John Kim which is a Capital Anarchy. This is what we are dealing with in the 21st century. Many people outside of Islam might believe that people who believe in following the guidelines of Quran and the Shariah of Allah (SWT) are bunch of mindless drones that don’t actually reflect and ponder on those same rulings with proper intellect. This is far from the truth. When I found out that usury (interest) was prohibited in Islam, I spent a substantial amount of time researching the law and the mathematics behind the prohibition. Not to mention, that are many Islamic scholars who can elaborate even beyond my amateur approach to explains Riba and it’s consequences to the global economy. If you are interested in thinking outside of the box, hit me up on Facebook and I’ll give you the sources. There are some sources below too.

As I said earlier, there are lawful ways to profit that don’t involve interest. I’ll use the example of buying a house, which is a business transaction that most people can relate to. I touched on the Islamic Financing option in my the First Part of Economics Made Simple Renting vs Buying a Home.

As you can see the transaction is a equitable one that balances the risk. Each party owns their fair share of the investment, which brings me to my next point of Profit-Sharing also know as Mudarabah. You can read about more Islamic Financing options from here. There over 8 different options and all of these options cover various financing needs, whether a line of credit is needed, financing of large purchase items like a house, etc.

I don’t see how one of the main approaches from various venture capital firms is something that cannot be utilized in more areas of finance. If profit sharing was so inefficient why do multi-million dollar VC companies exist? Why don’t they charge interest on the money they lent you? It’s simple, what ever you put in is what ever you get out of the investment. If you own 25% of the investment you get 25% of the ROI (Return on Investment). If you own 66.6823% of the investment you get 66.6823% of the ROI. What is also very beneficial with this model is it allows people with smaller amounts of liquidity to get in on the ground floor of a particular investment. Very similar to how a fractional shares work.

Check this out:
Just imagine that a supermarket wanted to move into your neighborhood. Instead of going to a bank with interest, the locals of the community can become investors too. So the total start-up cost for the supermarket, let’s call it GroceryMart, Inc need 20 million dollars. The company has the first 10 million. So they go to an Islamic bank for the 7 million and that Bank now own 35% and the rest of the 3 million is financed by the local community giving them 15% of the business. If anyone wants to offload their shares, you find another buyer or negotiate with GroceryMart.

As income streams into the business, money is equally distributed based on the percentage of ownership or other contractually negotiated payment schedule. In the contract it is stipulated that at any point in time GroceryMart can put in a bid to buy out shares of the other share holders. No different than when a company on the stock market buys back shares. Now what is great about this scenario is the risk is evenly distributed. If the business does well, we all do well and if the business does bad we all do bad. Although I mentioned the stock market example, none of these shares can be traded or bid up in price. The only way the values of the shares go up, is if the company brings in more income.

There are couple things that are accomplished with this one tactic of Islamic Finance:

1. Risk is evenly distributed based on how much you put into the business
2. There is no compounding interest that is exponentially accruing on one side of the business transaction.
3. This will actually allow people who don’t have a lot of disposable income to become investors. No different than buying fractional shares. This will greatly contribute in upping the financial literacy of the community and create a starting point for non-wealthy individuals to invest in simple straight forward businesses.
4. No more winner take all.
5. No distortion of assets from speculation and interest. Because there is no interest we don’t have wild swings in asset valuations running away from the actual value of the asset. (Very similar to what happened to the housing market in 2008)

Now some may argue that this methodology is crude or inflexible and might not maximize the highest potential for profitability. I would ask, in comparison to what? To the current so-called “free and fair” market that gets the luxury of being bailed out with printed money out of thin air whenever an economic financial crisis happens? Since the 1900s we have never had a market that did NOT have the luxury of being bailed out. In just about every instance there was never enough interest earned to properly cover the inherent risk over time. So not only do the banks and investment houses get the luxury of charging interest which is supposed to account for risk over time, but when their risked based models fail miserably the tax-payers have to bail them out. If this is a “free and fair” market, then maybe we should go back to sharecropping because this is no different.

Conclusion

I would like to reiterate that this post is a conversational starter. I would like for pro-interest individuals to watch the movie Life and Debt, or read the history of how IMF and World Bank policies have “benefited” the countries that they have done business with, or read about PayDay loans, or the 1978 Marquette Decision, or The History of the Credit Card by Frontline or any financial crisis that has happened since the 1900s. In every circumstance interest was involved which distorted the true value of assets in the market or the interest rate that banks were charging were incorrectly pegged against the assets that they were holding. In many instances, the wealth was completely wiped out be taking on loans with interest. Also keep in mind if we had let the “free and fair market’ play out, there would be way more companies going under. What we are seeing today is a fraction of bank failures due to this fiat currency/interest/fractional reserve based system artificially propping up the system.

Some might argue about savings and not getting interest. In today’s fiat based economy a dollar today is not a dollar tomorrow. The amazing part is no one every asks the big word..Why? Well, if I’m a government and I keep printing money out of thin air and dumping it all over the economy, that’s is going to lead to inflation and that milk, beans, bread or whatever is going to keep going up in price. Reserve banking (not fractional reserve banking) and stopping the demonic practice of printing money out of thin air would dramatically help in keeping prices tame. There is no reason why prices shouldn’t go down if there is not enough savings and resources in the global economy to buy everything. It’s almost impossible to know what the true price is of anything because of all this tinkering with the money supply.

In addition to this, how on earth can we trust a practice that financially punishes the most vulnerable people on the planet with higher rates of interest? Is that just? To add insult to injury now these “Credit Card Banksters” want to charge annual fees on credit cards users who don’t use their card as revolvers. What type of nonsense is this? Should we just continue this practice because the so-called financial specialist in their ivory towers say so? I would also ask those same individuals that claim to adhere to any one of the monotheistic religions to re-read their religious doctrine and put the use of usury under a microscope.

Here are some links to get you started

Bible: Kings James Bible on Usury
Torah: Judaic Ruling on Usury
Quran: Quranic Ruling on Interest

Profit sharing is class independent. It’s fair, transparent and easy to implement. With true profit-sharing, there is no distortion of the money supply (whether through interest or printing money out of thin air). For the most part, every dollar can be accounted for.

Even Warrent Buffet had to admit the following:

But Mr Buffett argues that such highly complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system.

He gave this warning in 2003.

How much financial carnage do we have to see to understand that interest distorts markets? Are we not tired of being thrown around like a rag doll in the economy by the so-called “financial czars” and “phd interest specialists” who act like they are the gate keepers of this economy? Do you actually feel like this market is fair or you actually feel that you have economic freedom in such a distorted market?

God willing, the root to proper economic prosperity is transparency, financial equality (ethical capitalism), efficient production, fair competition which is underscored by socially responsible driven economy. These 5 principles should underscore our financial decisions and destroy the 5 demons of the economy I mentioned earlier. Not speculation, wild gyration in interest rates, and corrupt laws that protect corporate malfeasance.

If you are going to live and die by the gun of “Russian Roulette” interest, I find it quite hypocritical for the same individuals to expect the bailout ambulances to come running to their rescue.

I refuse to sit as a back seat driver and go for the ride with “financial legalese that justifies interest, which no one can understand” driving and “economic sophistry” riding shot-gun. It’s time to pull over and get out the late model White Ivory Tower EX Edition sedan.

• Warning Against Riba Transactions
  http://abdurrahman.org/economics/ribaIbnBaz.doc
• Foreclosures Are More Profitable Than Loan Modifications, According To New Report
  http://www.huffingtonpost.com/2009/10/21/perverse-incentives-lead_n_328378.html
• How massive student loan debts are sinking American dreams and causing a national economic headache.
  http://www.pbs.org/now/shows/525/index.html
• Nassim Taleb
  http://rs.resalliance.org/2008/09/17/financial-resilience-taleb-and-mandelbrot-reflect-on-crisis/

This post is well over due but as you know, I have a Boo Bear to deal with, so time is of the essence.

This past Valentines Day I was left speechless with disgust as I witnessed the most horrific scene at our local Applebee’s.

As most of you know, my husband and I do not celebrate Valentines Day for a number of reasons. However, Malik’s mom was visiting us that day and wanted to go out for lunch. Her choice of venue: Applebees. Now, since arriving in the US in 2007, I have never experienced Valentines Day in a public way. Malik and I always stay home on this day; so, to my surprise, I was shocked, literally, into silence, when I witnessed the following scenario.

As we were half way through our meal, a young couple was seated next to us for lunch. At first, everything seemed to be in place. Here was a young man taking his lady out for a meal. Sweet, right? Guess again.

About 15 minutes after they were seated, their food had arrived. From there everything went down hill for this poor young man. His date instantly threw a tantrum. With raised eyebrows, piercing eyes and deathly tone she stated “what is this? This is not broccoli!” For a moment, I looked up at her like she was crazy. That lasted a moment though because it turned out she was a total nut. Her date was like a scared puppy dog, confused on what to do; yet, he signaled for the waiter to come over.

As the waiter approached, she said “what is this? I asked for broccoli.” So, the waiter stated that they were out of broccoli since it was a busy business day and that they had served the mixed seasonal vegetables instead. With her eyebrows now at a 90 degree angle and her eyes piercing anger and fear into her boyfrind and then the waiter, she demanded “I want to speak to the manager.” I thought to myself, how odd, all this hullabaloo over a side of seasonal vegetables.

The manager approached, apologizing for the lack of broccoli, stating that he would change the entire meal with no charge. At this, the young woman just rolled her eyes, looked at her date and waved her hand NO! The manager continued to explain the situation further but she was not willing to hear another word.

After about a 7 minute argument about broccoli and seasonal vegetables the lady stands up, puts her coat on, glares at her date and walks out of the restaurant; leaving her date fumbling with his meal, glasses, keys and wallet. I was in complete and utter shock, as were so many other customers there that afternoon.

This is just one incident that I witnessed of many similarly maddening situations. The sad part about all of this is that I realize that for too many women, a relationship is rarely about the quality time spent together and more so about where they dine, what gifts they receive, what holidays are celebrated and how they define appreciation.

Ladies, a strong and successful relationship is not built or based on what restaurant you dine at or what vegetables come with your side. Ladies, stop looking and man-made holidays for love and appreciation. Focus on finding a good man who loves you 365 days a year, who appreciates you 365 days a year, who will be a good husband to you 365 days a year, who will be a good father to your children 365 days a year and who will randomly show you his love in his own way through the year.

Men, PLEASE STOP CATERING TO WOMENS INSECURITIES AND MAN-MADE HOLIDAYS. Give only when YOU want to and avoid forced traditions because you think it is expected of you. Show your woman your love in your own unique way. Once you begin to do that you will be happier, sincerer and more respected.

Our beautiful son that Allah has blessed us with. Mashallah.

O mankind! Lo! We have created you male and female, and have made you nations and tribes that ye may know one another. Lo! the noblest of you, in the sight of Allah, is the best in conduct. Lo! Allah is Knower, Aware. – Surah al-Hujurat 49:13

I cease to understand why people cannot live united without scrutiny and judgment.

I was in Brooklyn yesterday with Malik and Saud. We were in the Atlantic Avenue/Flatbush Avenue vicinity running errands and enjoying the sun. In the span of one hour I observed so much unsaid criticism that I was reaffirmed with the notion that people have no trust in one another and fear the different.

First scenario:

As we entered a halal meat market all seemed fine; or, so I thought. As we approached the butcher at the back of the store I started to feel an instant resentment. I couldn’t figure it out at first but later put two and two together. Before the butcher served us, he was helping an Palestinian woman. His tone was very respectful, extremely courteous and ever so attentive. After she was handed (by hand from butcher to lady) her goods, he respectfully greeted her with an “Asalaam Alaikum” and she was on her way.

Now, it was our turn to be helped. I noticed instantly that the butcher’s entire demeanor had shifted. He went from respectful and helpful to passive and dull. Malik began to order what we needed politely. Yet there was hardly any response from the butcher. He assisted us in an almost tomb-like manner avoiding eye contact when he could.

After our chicken and ground beef was sliced and cut, it was left on the counter top with no “Asalaam Alaikum,” “thank you,” “do you need anything else,” or even a head nod. He proceeded to talk to his fellow butchers’, share some jokes and cut a sheep. As he turned to carry the sheep onto the weighing scale, he realized we were still standing there. Yes, we still needed some more items. Malik spoke first, letting him know that we still needed to order some more items.

Malik proceeded to order chicken breasts. At this point I decided to interfere and speak in Arabic as I realized we were receiving such special treatment as he assumed we were not Arabs. In Arabic, I asked him to slice the chicken breasts thin. He responded automatically by mocking me. I had used a Saudi word for slice and he was Palestinian and did not think my term was appropriate. He mocked me by repeating my word twice and then saying in English “you mean slice.” I, in turn, reiterated my same term back to him twice. He realized I was not amused and silently continued to slice the chicken.

His demeanor changed a little after this brief encounter in Arabic and he decided to ask if we would like anything else. We said no thank you and proceeded to the check out counter.

Second scenario:

We were still at the meat market when two Muslim sisters walk in.
First, she proceeded to let the salesman know that she was unhappy with the Quran plaque being on the floor outside. I agree. The plaque should not be on the floor with Quranic verses and Allah’s names. However, it was HOW she approached him. She walked in and very disrespectfully says “the plaque…on the floor…there’s Allah’s name on it.” She said it in such a unclear and arrogant manner that the salesman was baffled at first, as was I, as I had no clue what she was mumbling about. A situation like that can be dealt with in one simple politely stated sentence…”sir, the Quran plaque that you have outside on the floor should be removed as it is haram.” End of story.

Second, the scrutiny Malik and I got from one of the two sisters was unbelievable. First, she heard Malik say, Inshallah. This automatically led to a glare at me from her. She looked me up and down then proceeded to look at Malik up and down too. This type of scrutiny of “where are they from?” “Why is she not in hijab?” or whatever else was going through her mind is totally un-Islamic. We should not be judging each other all the time without knowing.

Third, a non-Muslim Caucasian woman was in the store purchasing some items. The same Muslim woman who glared at me and Malik was now literally twisting her eyebrows up, curling her lip, glaring at this woman up and down while telling her friend “what is she doing in here?” through eye contact.

Third scenario:

Malik and I decided to do shopping at Atlantic Center Mall. Once again, the scrutiny begins. Now, instead of Arab Muslims or African American Muslim women glaring at Malik and I; it was now African American women glaring at us because we are an interracial couple. Amongst the many glares at Malik, then me, then Saud, then back up at Malik and I again; one particular woman stood out.

While at DSW standing in line at the cashier, this woman decides to completely stop her shopping spree to eyeball me and Malik. She was not discreet about it nor was she polite. She just stood near the bag section and glared at us both until we had finished paying and left the store.

I deal with this regularly but am utterly fed up with all this negativity. Whether it be Arabs, African Americans, Whites, Africans, Latino/as’, South East Asians or Caribbeans’; I am sick and tired of peoples glares, judgments, assumptions and scrutiny. I truly feel that people need to work on their biases and insecurities. People need to learn to be more tolerant of others regardless of race, religion, class and ethnicity. It is not mine, Malik’s nor Saud’s problem if you cannot deal with your own insecurities. Find another way to deal with it! And if one more person labels America as the great melting pot, I think I will have to slap some sense into their head.

Well, at least I enjoyed my fish and chips from the Chipshop.

As I walk up the New York City blocks I see the sprinkle of puffed red heart pillows with “I Love You”, stuffed teddy bears laced in red, big bright roses on display, a sea of red stained cards in the window and lets not forget the mind numbing television advertisements from Zales, DeBeers, Hallmark, 1-800 Flowers and countless others pushing their products like a drug dealer on the hunt for another crack sale. Sometimes I wonder: How many millions of men/women will be dragged along and exploited for gifts and merriment because Valentine of Terni was martyred during the persecution under Emperor Aurelian? Why any human being in his or her right mind would obligate their significant other to mindlessly participate in a tradition that does not consider their true intentions and feelings is…well… disturbing, not to mention extremely unhealthy for the relationship. Below is an excerpt from a post a did a while back Why are our Relationships so Disastrous?. :

Valentine’s Day

By far the most hated, dreaded and feared day for hundreds of millions of young adult men around the world. I’ll never forget the first time I was indoctrinated with this pagan tradition. It usually starts out around kindergarten during an innocent class project where you create little valentines cards then give them to your classmates. For some daring students, they might give each other plastic flowers. Maybe we were even tasked to create a little Valentine’s Day card for our mother and father. We bring these little crayola stained pieces of construction paper home for our parents and there are instant smiles from ear to ear. Awww..how cute.

As the grades go by, and we enter into adulthood, somehow the stakes start getting a lot higher. The construction paper made card has now transformed to $5 dollar hallmark cards. The plastic flowers have now transformed to $100-$200 dollar roses. The McDonalds meal for 2 has now transformed to expensive dinners, and so on and so forth. Expensive gift exchanges for the so-called “sake of love”. The amazing part about this whole entire charade is not once, and I do mean this literally, once did any person ever ask me, “Do you want to express yourself to me in this way”? One of the biggest issues with Valentines Day is it’s a corporate tradition. A mindless tradition that has been imposed on men, with no consideration of our feelings or how we’d like to express ourselves. Just do what you are told and keep you mouth shut. No human being wants to be told how to do something and when they should do it, and if they don’t do it, they are seen as loveless and inconsiderate. What happened to the other 364 days of the year? Let me be clear, although most men don’t have the nerve to actually tell the truth about how they feel about Valentine’s Day, I’ll be the first to put out the truth. Most men hate this day. They do it with much contempt and actually resent you for imposing such a ridiculous pagan holiday on them. They do it, because they don’t want to hear you complain. Not all women do this, but I have talked to enough of my married friends, to know that they would rather jump into a pit of sharks than go through another mindless and imposed routine of Valentine’s Day.

How do you think a man feels when he has to bow down to a tradition because society says so? For the record I love my wife and don’t need the help of some foolish pagan tradition that was spawned from some Christian martyr name Valentine of Tern that was killed by Catholics in the 200th century. I find it ironic that the fans of Valentine’s Day talk about how important it is to feel special. Hmm…let’s look at the definition again, shall we?

Special: Surpassing what is common or usual; exceptional: a special occasion; a special treat.

It’s interesting that a person would feel special on a day that billions of people mindlessly do the same thing. Same ole overpriced flowers, over-crowded restaurants, stale chocolate, etc. “Joe” and “Jane” public expecting gifts and other forms of lavish treatment because of the killing of the now so-called St Valentine. I treat my wife like a queen everyday, and I don’t have to prove my love on Valentine’s Day. As if our whole entire relationship is riding on the perfection of this one day. I’m not saying that there aren’t some merits to spending quality time with your significant other and making them feel special, but how Valentine’s Day became the de-facto standard day of love is just ridiculous. Most men resent being financial fleeced for the so-called sake of love, and if they go against this day, they are treated like hot steaming pile of smelly garbage. No venom could be hotter than the criticism you’ll get if you don’t participate in the Valentine’s Day routine.

When you really love someone one, you come to an intelligent consensus on the minor and the major things in life, not to mention you are mindful of their true feelings. When Sarah and I feel like treating each other to something, it’s dynamic. There is no concrete prescription to our love. It flows like water and effortlessly moves about however it sees fit. Every molecule moving to the next moment in a shapeless, but controlled fashion. On Valentine’s Day, I look at the glib and distant faces of the men, and I have to laugh. Why? Because I was there and remember the deep seated resentment I had for being told like dog, how I should express the love I had in my heart. As if, Valentine’s Day is the only moment where I have to prove myself to my significant other. I’m sure there are some women who feel the way a lot of guys do on V-Day, but they are few and far between.

Immersion Blender

To be honest, I have no idea where I heard about this product, but someone told me that we should own a hand-blender. The first time I saw this product, it reminded me of the handle of a lightsaber. However, over time this product has become a staple of our kitchen. I use it for porridge, smoothies, sauces, mixing, etc. I think my mother gave it to us as a housewarming gift. The key to the blender is all the extra gadgets that come with it, especially the chopper. We use this to cut up our veggies (garlic, onion, pepper, ginger, etc) for our meats. It will cut your food preparation time in half.

Space Bags

The first time I saw the infomercial for this product, I said “What a Scam”. Then we realized that we were running out of space in the closets and we were scrambling for space. I was like a junky (literally because I had so much junk in my apartment) looking for a “space” hit. Enter the Space Bag, and it completely changed our life. This thing really does work, and it’s cool seeing all your clothes, comforters, and children just shrink 20% of it’s normal size. Okay just kidding, our son Saud does not go in the bag and I wouldn’t advise using the space bag for this purpose. Now keep in mind that the infomercial really exaggerates (just like the picture) the space capability of the bags, but it’s pretty darn close. The key to the space bag is to not create more space so you can buy more junk. In conjunction with getting rid of stuff you don’t need and using the space bag, your spacial needs will increase exponentially.

Baby Bjorn: Active Carrier

We just recently bought this wonderful product and we replaced our old baby carrier by Mothercare. Before I get into how smart the product engineers are for Baby Bjorn lets first get into how the product engineers from Mothercare need to go back to the drawing board when it comes to product design. There are so many straps on this thing and in the most odd places that only a human octopus (if there was such a thing) would be able to put this thing on. Now lets go to baby carrier bliss, with the Baby Bjorn Active Carrier. Not only do we use this when we’re on the go, but we also use it to put Saud to sleep. I’ll just put him in the carrier and sway him, and nighty-night. Not to mention my wife uses it with Saud while she is doing things around the house. It’s the greatest thing since slice bread. Easy to put on and easy to take off. This is a one person job, you don’t need two people to do this. The straps are colored coded with snap-in safety locks so you know that everything is strapped in perfectly. This really changed our life, and with a child running around at 9 months, it’s even more of God send. Alhamdulilah.

Breville Juicer Elite

Okay there is one problem with me listing this product…uh I don’t own it now, but I will own it soon. The current juicer I have, the Jack Lalanne Power Juicer is good, but I know it’s on it’s way out. After using it roughly 2 times a week for a couple months, I can see it that it’s about to go. I’ve heard great things about the Breville juicer and if you are really into juicing, best to go with this model. BTW, I don’t work for Breville, I just think this juicer is great. I mean look at it…it just makes you want to not only juice your veggies and fruits, but probably juice your socks, books, batteries, etc. I mean look at that thing…it can probably juice steel.

Apple corer/slicer

This is one of those products that when you look at it, you just can’t believe that it actually does what it says. In it’s simplicity is where the genius is. This has come very handy for making my son’s food, as we make all his baby food from scratch. What is really nice about this product is it’s cheap, sturdy, and effective. With all the new product design science and ergonomics flowing into the kitchen gadgetry industry you can find a corer/slicers that have nice rubber plates with palm-friendly handles to make it real easy to put all your force on top of the apple to core and slice it in one clean swoop. You can also use it for picnics and gatherings because it allows you to core and slice a lot of apples or pears in a short amount of time.

Logitech Illuminated keyboard

One thing you notice when you have a new baby in the house is you have to be extremely quiet. Every single thing wakes the baby up. A creak of the wood you step on can wake them up. A thought of worrying about waking them up, can wake them up. Now that my wife and I have self-trained ourselves under the school of house robbery and ninja techniques, we can probably walk through a lion’s den drenched in lambs blood and go unnoticed. The Logitech Illuminated keyboard was the answer. Being the techno-addict that I am, I’m always on the computer. Sometimes my wife would be feeding Saud in the next room and my relentless typing would wake the baby up. At the same time we’d have to keep the room darker than darth vadar’s helmet so Saud would remain sleeping, once it was time to put him in his crib. With the Logitech’s laptop-silent keys and keyboard light show I was in techno paradise. Even if you don’t have a child, get this keyboard.

Titan Peeler

This is the second infomercial product that made the list, and once again, I had my doubts. First off, this peeler is insane. Titan is really an understatement. You can peel in any direction. This thing can probably peel rust off of metal and keep on peeling. It’s quick, sharp, and easy to clean. It comes with two peelers, small and large. And when they show them peeling Pineapples, it’s not a joke. You can really do that with the Titan peeler. Great addition to our arsenal of kitchen utensils and gadgetry.

Libman Tornado Mop

It took some time to find this mop, but this is my second Libman Tornado Mop (got rid of the first one because the mop head got really dirty but didn’t realize I could of just bought the mop head replacement and not the whole mop). However, what is really nice about this mop is it has 3 green scrub bands sown right into the mop head to prevent tangling and it really uproots that dirt that just doesn’t want to budge. If that wasn’t enough it has this ratchet design lock that allows you to twist and hold the mop head in a squeeze position to squeeze out the water without touching the mop head. I mean…who wants to get all down and dirty old-school style while breaking your back and hands squeezing putrid water from a mop? They really took all the hard work out of mopping and engineered it into a mop with ease.

ACME Bags™ Workhorse

In our quest to “get green” my wife and I started searching for the ultimate reusable shopping bag. I saw the insulated ones at Whole Wallet..oh I mean Whole Foods, but I didn’t want to be a walking advertisement for Whole Foods. It’s enough that they take all my dollars. I don’t need to give them free advertising. So we were looking for a nice reusable bag that was strong and durable while keeping an eye on costs. After looking at Baggu and ACME, we decided on ACME. As you can see in the picture this ingenious little bag folds into a tiny bag smaller than the size of deck of cards which is stitched into the inside of the bag. If your going to look for “go green” products I would suggest going to reusablebags.com. Although the Workhorse edition of the ACME Bag is great, you will probably need a couple ACME Bags™ EarthTote bags to round out the all the reusable bags you’ll need for grocery shopping. The workhouse edition can be easily dropped in a pocket or handbag. It’s actually one of things that I carry with me when I leave the house. So when I do the three pocket check (now the 4 pocket check), it’s house keys, wallet, cellphone, and acme bag. It’s kind of cool just rolling up to the register with my little pouch and then…BAM! it’s bag. You should see the stares. Sometimes I wonder if people think I’m unfolding a mask to rob the joint. However, it’s a great bag and very durable.

Da Innanet’ (the Internet)

Although the the internet is not necessarily a product, it’s more of a service that you have access to (home, workplace, public, etc). I have the internet as my 10th product because without it I wouldn’t be able to find all these great products. I only knew they were great products after scouring the net for reviews from various sources. Not to mention finding great books that can give you insightful information on just about anything you want to know. The internet is your friend. Use it wisely.

Honorable mentions

Northface Women’s Arctic Parka

Let’s get right to it. My wife hates the cold and since she’s been in NY, she has been shivering every since. We bought different jackets, but nothing worked. So this past December, Sarah (my wife) bought the Northface Arctic Parka. You want to know how warm this thing is? Well my wife doesn’t even know whether it’s cold or not outside anymore..Yeah that’s how warm it is. You want to know how warm it is? When people stand next to my wife and she is wearing the parka, people next to her get warm. (like those outside restaurant lamps). You want to know how warm it is? The sun goes to Northface for warming tips and techniques. There must be little nanomites creating mini campfires in the lining of the jacket to keep my wife so warm. She loves her parka.

Beaba: Baby Cook 4 in 1 Food Prep & Blender

As you can see I have quite a few baby related products on this list. Before I bring this post to an end, I have to mention this genius of a product. This cute little blender allows you to create baby food from scratch. Whether you are using meat, veggies, fruits, whatever, this blender can do it. As a matter of fact the recipe book that we bought with the blender are meals that you can probably make for yourself, and not just your baby. It will cut down on the cooking time and you know where the food is coming from because you made it yourself. With all the preservatives and chemicals in a lot of food (including baby food), we figured this was our best option. We buy organic veggies/fruits/halal meat and make the baby food with this machine. It’s bit on the pricey side, but worth every penny.

One thing that is really fascinating about juicing is the beautiful array of colors that come out of the juicer. It’s almost like having access to your own personal “vegetable rainbow” right inside of your house. No rain required for this rainbow. Since our trip to the New York Botanical Gardens, my wife and I are really getting back in the swing of things in regards to our health . I’m not exactly sure if somehow we were subliminally hit with some under the subconscious brain-wave signal by the NYBG, in a “Manchurian Candidate” type of way, but we have just been nuts for getting our diet and body correct. I mean, really correct.

We just signed up for a new gym membership at Planet Fitness (Sorry Bally’s but we are cancelling our membership). This past weekend we watched Food, Inc, which is probably the most compelling documentary on understanding the politics and business of food production I have ever seen. I would suggest everyone watch this film. Okay so what does this have to do with having purple on the brain? We just started juicing again and yesterday we had a tomato, apple and beet drink. Keep in mind that I really hate beets, but in juice form with apples, I love it. One thing I noticed is the rich beet purple that seems to overtake most drinks regardless of other vegetables or fruits that are added. Hence I had purple on the brain. Not to mention there have been studies through biochemical evidence that uridine monophosphate (UMP) found in beets, apparently increases brain synapse activity. Right now we have the JackLaLanne Power Juicer, but there is a bit of pulp and it is a bit damp. I’m not sure how much this thing is going to hold up because the beets really put stress on the blade and motor. I have my eyes on the Breville Juice Fountain Elite Juicer 800JEXL. Inshallah I’lll get that next year. It’s the Bentley of juicers. More extraction and less pulp, not to mention dry pulp.

Our new juicing regiment comes with a diet full of fruits and vegetables. Not like we weren’t doing this before but we are really getting serious about this. So here is our short “healthy thinking” to-do list:

1. Juice at least two times a day
2. Exercise daily for about 30 minutes to an hour (minimum)
3. Have fruits and vegetable with every meal
4. Sweets and fried foods are on the weekends. (and maybe sneak one treat during the week)
5. Keep our mind and thoughts clean. Be careful of what type of information we take in, especially information that falls into the category of tel-LIE-vision, or HIS-story. All information is not created equal nor is the content trivial or innocent.

• Farm Forward
  Farm Forward implements innovative strategies to promote conscientious food choices, reduce farm animal suffering, and advance sustainable agriculture.
  http://www.farmforward.com
• Save a Cow, Eat a Vegetarian? Let’s All Agree: Factory Farming is the Real Evil, Not Vegans
  http://planetgreen.discovery.com/food-health/cow-factory-farming-evil.html
• Breville Juice Fountain Elite 800JEXL
  http://www.brevilleusa.com/juicing/die-cast-juice-fountain-elite.html
• The Big Book of Juices and Smoothies: 365 Natural Blends for Health and Vitality Every Day
  http://www.amazon.com/Big-Book-Juices-Smoothies/dp/184483266X/ref=pd_sim_b_6

I meant to write this blog post about a month ago, and I’m still bringing the final touches on the last installment of Economics Made Simple, The Case for NO Interest. However there are other pressing issues that have just as much to do with economics and that is you own personal health. If you want to jump straight to the Banana Coconut Porridge recipe AKA Banana Morning Surprise, click here. (this will take you straight to the recipe). I came up with the porridge recipe after a bit of frustration with the powdered banana cinnamon porridge mix I used to buy from the local Jamaican store that just took way too long to make and required continuous mixing throughout the entire 20 minute cook time. Even then the mix would be lumpy, uneven, and if you didn’t add the right amount of sugar, the porridge would taste awful.

About a month ago a co-worker of mine provided me with a really great set of Raw food restaurants in NYC and recipe books. The Raw Food links and information are below. As some of you know, I used to be be a vegetarian…well actually a “Fishetarian“. Last year I went back to meat, but that doesn’t mean I don’t want a healthy diet. What I’m looking for is balance. A healthy amount of fruits and vegetables with a bit of meat. Last week me and the family went to The New York Botanical Garden in the Bronx. This is a really fascinating place. Just beautiful trees, vegetation, streams, and food markets that really put you at peace. I was so overwhelmed that we decided to get a yearly membership. On $120.00 a year. That’s $10 bucks a month!

I found a very fascinating book at the NYBG bookstore called What to Eat by Marion Nestle. Here’s a simple explanation straight from the book:

Marion Nestle’s What to Eat is a new guide for a new era in American food and nutrition the-the one book that tells you everything you need to know about food, with clarity, insight, wit, and wisdom.

A good friend of mine on FB posted, you are what you eat. So simple, so true, and often ignored. I would even go a step further and say you are what you think. We often ignore our mental health, while staying squarely focused on the physical.

So in the last couple weeks, I have felt a need to re-focus my efforts on taking a more aggressive approach to my own personal health. I just recently bought World’s Most Hardest Exercises and I’m looking to step my exercise game up. With all the talk about health-care, clearly there is a need for Preventive Behaviorism Healthcare (PBHC). What is PBHC? Being proactive about your health before you get some debilitating illness or sickness etc. It has been estimated that up 25% of every dollar spent on healthcare is related to personal neglect. Even if the number was 10%, that would still be too much. Just think of the efficiencies that can happen by just eating right and exercising. I know, it’s easier said than done, and there are whole host of political, regulatory reform, misinformation on eating habit, food education, class issues, that need to be addressed to bring about proper health care reform, but change starts with us. Not the just the government and private healthcare firms.

Is it any surprise to anyone that the most obese country in the world is suffering from a healthcare crisis? Is it any surprise to anyone that we know the top realty t.v. shows but don’t know what our local politician’s position is for true healthcare reform? Is any surprise to anyone that gossip blogs, nonsensical videos on YouTube, and other lude forms of entertainment get more traffic than intelligent discussions on ideas for healthcare reform on the likes of fora.tv, cpan.org, catoinstitute.org, etc but yet we still wonder why the government and private companies take advantage of our laziness? Is it any surprise to anyone that the number one way (if you haven’t already been inflicted with some debilitating disease) to “healthcare reform” is a low-fat diet, exercise, no smoking (of anything), no abusing your brain with illegal drugs, low sugar, low salt and clean living so you can stay out of the hospital in the first place?

Most times when people say “health care”, they immediately think of taking care of some physical ailment. But what about our mental health? Do we ever think about the types of things that we watch on television and how that impacts our social behavior? Do we ever think about our spiritual health? Do we ever think about how healthy we are in regards to controlling our desires? Do we ever think about how healthy we are in regards to respecting the people around us? How healthy is our sense of compassion for others who are less fortunate? How healthy is our sense of purpose in this world? How healthy is our general knowledge regarding pressing matters around the world? How healthy is our ability to have insight, intellect, and humility?

Healthcare Reform is more than just what the government or private healthcare firms have in store for us once the bill gets passed (Already passed in the House), but is truly about accountability towards our own personal health and helping the people around us.

Banana Coconut Porridge AKA Banana Morning Surprise
(1 serving)

Prep Time: 5 minutes | Ready In: 15 minutes

Ingredients:

• Instant Cream of Wheat (1 serving size)
  I actually use the instant Cream of Wheat so this is the only synthetic part but you can use regular Cream of Wheat if you like (takes more time)
• *1 Banana
• *2-3 good shakes of Cinnamon
• 1 teaspoon of Coconut Milk
• 1 Tablespoon of Wheatgerm (Kretschmer Honey Crunch Wheat Germ preferred)
• * 1 good shake of Nutmeg
• 2/3 Cups of Organic Mlik
• (optional) Handful of Blueberries or Strawberries
• (optional) chocolate chips

Directions:

1. Create the Cream of Wheat with the 2/3 Cup of Millk
2. Drop the banana(s) in the hot Cream of Wheat and blend till merged (Best to use a hand blender)
3. Add in Cinnamon, Nutmeg and Wheatgerm, and Coconut Milk while blender is on (as needed)
4. Drop in blueberries or strawberries.
5. Enjoy!

* If you want a stronger or sweeter banana taste you can add two bananas for each serving. As much or as little cinnamon as you like. Depends on your preference.

Obviously the chocolate chips somewhat moves it out of the “healthy” category but it’s nice to have every now and then. (probably can use organic cocoa for this) it melts real nice in the hot cereal

• Raw Food Made Easy For 1 or 2 People by Jennifer Cornbleet
• Raw: The Uncook Book: New Vegetarian Food for Life Juliano Brotman and Erika Lenkert
  
• Raw for Thirty: Raw food documentary about the people with diabetes
  http://www.rawfor30days.com/index_coast.html

One of the most painful things to see is how pundits, cable networks, commercials, and hearsay can dominate the headlines, but practical financial advice on how to stabilize the economy fall to the waste-side. So the latest distraction is a Dow 10000 and other personalities selling the idea that only the government can dig us out of this economic mess. If it wasn’t clear before, let me elaborate who the guilty parties are in this current economic mess:

• Federal Reserve Bank aka The Government
• Financial apathy among the citizens of the United State of America
• Poor ethics among various investment houses, housing appraisers, rating agencies, mortgage brokers, commercial banks, especially Freddie Mac and Fannie Mae
• Unintelligent Regulation
• Capitalism (sike)

No matter what anyone says, capitalism is not the problem for the current economic crisis. Unethical individuals taking advantage of the financially naive, coupled with a rogue Federal Reserve Bank that clearly has mixed intentions is the core problem. I’m no psychologist but I’m going to be the first to offer a condition that has plagued Americans since the FED was instituted. It’s called Historic Economic Amnesia (HEA) Syndrome:

It’s the inability to grasp past guidelines of economic history and current financial events to prevent future prediction errors.

As soon as a tiny spark hits the economy, we forget about what sound economic policy really is. We also forget who the villains are who created this problem in the first place. We also forget that our financial decisions are a big part of economic policy. What really boils my blood is to see the same individuals who caused the problem claiming that they have the answer. As I said in a earlier post, we are going to the arsonist who burned our house down for advice on how to put out fires. Of course an arsonist probably understands creating and putting out fires more so than the average person, but clearly there is a ethical problem.

I have seen this author on several news shows (Morning Joe, GPS) in the last couple days; his name is Robert Skidelsky. His new book Keynes: The Return of the Master explains the career of John Maynard Keynes and his influence on today’s economic policy decisions. If you don’t have the patience to read Keynes’s original classic The General Theory of Employment, Interest and Money, this book will serve as a “Keynes in 24 hours” overview.

I would also suggest folks to watch the documentary Broke: The New American Dream. It serves as a good reminder of what we are dealing with.

• Keynes: The Return of the Master by Robert Skidelsky
• Foundation for Economic Education
  http://fee.org/
• Broke: The New American Dream.

IMPORTANT DISCLAIMER: In no way shape or form is this post endorsing the use of usury (interest) or gambling when terms like debt, savings, lottery, credit cards, loan, borrow, etc are used. This is merely an explanation of my experiences with saving, debt, and credit cards.

Welcome to Part III of Economics Made Simple. I hope you have enjoyed the the first two parts of this series and if you haven’t had the moment to dig into the first two parts, the links are below.

1. Part I: Renting vs Buying a home
2. Part II: Why Can’t I Make Ends Meet?
   (How I found the Austrian School of Economics)
3. Part III: Saving Money vs Serfdom
4. Part IV: Casino Capitalism

At first I titled this post Saving vs Being an Idiot, To be honest, that title was a bit harsh, and I’m not here to demonize anyone or make them feel bad. What I really want to do is send a message that the alternative to preserving your money (AKA Saving), could potentially be a form of serfdom . Piggying-back of F.A Hayek classic book The Road to Serfdom, it’s important to understand where the road leads if we decide to treat money as if it grows on trees. So what does being a Serf or to be in Serfdom mean? Here is the definition:

A person in bondage or servitude.

Can you see where I’m going with this? Rather than bore you with a whole bunch of “savings rules”, (that most people ignore anyway), I’m going to go into a story about myself and how I went from a destroyer of money to preserver of money. Let’s begin, shall we?

Table of Contents

1. Mi av chree job (Patios to English translation: I have three jobs)
2. Syra-cash University
3. Rockbottom
4. Conclusion
5. Articles that will scare you into saving Money

Mi av chree job

So growing up in a West Indian/Jamaican family the importance of saving money or as my mother says “Saving for a Rainy Day” is one of those things that is drilled into your head as soon as you come out of the womb. I wouldn’t be surprised if my parents handed me a shovel and newborn work permit to get started at the nearest construction site. Although I jest a bit here, this ideology was one of the most important life skills that my parents gave to me. So as soon as I hit fifteen I got my work permit and started to get busy on the work grind. Very strange things start happening when you start working and you live in a Jamaican household. Similar to the parody of the Jamaican family called the Headley’s on In Living Colour, where having dozens of jobs was the joke, in real life, things aren’t so different.

No, I didn’t have 10 concurrent jobs, but I most certainly could not have 1 job. If you have 1 job in a Jamaican household, you might as well be seen as someone who is unemployed. With 2 jobs you are officially working, and with 3 jobs you are doing extra credit, if you will. So I started working at Waldbaums Supermarket in East Meadow, NY (Long Island) pushing carts. Not a very exciting job, but the $4.25 an hour was better than no dollars a hour. Right after school I would rush to do my 4:00pm to 9:30pm shift. Having 1 job was good during high school, but as the summer approaches, in probably the most natural and normal voice, my mother says “Su, wen ya start ya sekon job?” (Patios to English Translation So, when do you start your second job?”). As if that was what in the plans for my summer! Rather than dodge the question with, “What second job?”, I said “Oh, yeah..I’ll..um look around.”.

So my mother worked at EAB (European American Back) at the time, it is now Ciitbank, and I was able to get into the teller program at the bank. By the time the summer hit, I was promoted to cashier at Waldbaums, so I had a bit of experience handling money. Getting the teller job was not only a natural transition for me, but double the money I was making at Waldbaums. So I would work at the bank during the day (8am to 4pm) then rush over to Waldbaums to do my 6pm to 10pm shift. I always worked on weekends at Waldbaums and especially Sunday to get the time and a half. My weekend shift at Waldbaums started to get later and later. They needed me for the night shift, the 4pm to 11pm shift. Sometimes up until midnight. So that left a huge pocket of time during the day on weekends. Uh oh, step in mom dukes “Yu hav nuff tyme ina di day, huh?”. (Patios to English Translation: You have a lot of time in the day, huh?”. This my friends is a very passive aggressive way of saying “Hey, you have way to much time during the day, time for another job”.

So a friend of my mother, Bobby, big Italian guy that was known as “The Grape”, had a construction business. He needed help cutting down trees and busting up concrete for contract jobs around Long Island. I have no idea where Bobby is today, but let me tell you, this dude was the sweetest and nicest guy ever. He would bring fresh “muzzerallla” for my mother that was probably the best “muzzerella” I ever had. He’d buy lunch for the working crew and was just really easy going guy. Of course you had to work your behind off, but that was expected from a guy like Bobby. The job was roughly $100 bucks a day. At this point I feel like the Jamaican version of the Rothschild’s children. I had never seen or made so much money in one day. So I did a couple jobs with Bobby during the summers until it was time to go to college.

So there you have it folks, 3 jobs. I was a great saver then. I would save about 80% of my paycheck and use the rest for cds, clothes, and movies. With those jobs I was able to save about $4,000 to $5,000 dollars. That’s about $6,500 dollars in today’s dollars. Not bad. I would end up using this money for books for college, but during college I would reverse all my diligent and prudent savings practices which I will elaborate in the next section.

Syra-cash University

There is something very strange about going to college. It’s like the anticipation of going on a roller coaster for the first time. Although the anticipation of being sky-rocketed to 2-3 gs of force has you laced with fear and excitement, you can’t wait till the moment where you are at the top of the peak, and you are driven down at over 100 miles an hour down the track. Like any roller coaster with cork screws and swift roundabouts, if you are not careful you can get sick or even injure yourself. College is no different. Syracuse U. (or as I like to jokingly say Syra-cash University) was by far one of the most expensive, beneficial, and culturally diverse experiences I’ve every had in my life. Although I’m very close to paying off my school loans completely, one of the first experiences I’ll never forget is walking up on campus and seeing a row of tables with these professionally looking men and women standing before a stack of several dozen crispy white t-shirts. Before I can even blink, The nice women with the blonde hair and pearly whites says, “Sign-up for this credit card and get a FREE T-shirt”. Wow, I’ve only been on campus less than 10 minutes and I’m already getting “free” stuff. Not only do I get 10K in credit, but I get a t-shirt out it of it. Little did I know that this so-called “free” t-shirt was going to cost me almost 14K in credit card debt later on. That was the most expensive free gift anyone has given me, thanks a lot!

One of the most seductive parts of the credit card is it’s ability to fulfill the desire of instant gratification. In less than 1/100th of a second you can get whatever your heart desires. Need new shoes or clothes?, no problem, need new T.V.? no problem, need to go eat a nice restaurant? no problem, get depressed or sad and need to feel better, no problem, need to pay off the blasted credit card that got me into debt, PROBLEM. Here is a good example of what I’m talking about. There was this great little sandwich spot called Kostas. I mean, their cheesesteaks were the best. Yes, no disrespect to Philly but better than your cheesesteaks. Yes, Syracuse makes better cheesesteaks than you, get over it. However these cheesy steak subs of delight (Cheesesteak with onions, peppers, lettuce, tomato and mayo) cost me $1,000 dollars in one semester! I was to Kostas what a drug addict is to a heroin dealer. My mother called me, “Yu maad? Cyan spen dis tipe a muny an jus sanwige” (Patios to English Translation: Are you crazy?!! You can’t spend this type of money on sandwiches). Of course she was right, and there would be a host of other little subtle weekly expenses that would eventually balloon my credit card debt to 10K after I graduated from college.

After I graduated from college, my addiction to debt wasn’t getting any better. Now keep in mind that I always made the minimum payment aka share cropping payment. Like a share cropper you never ever grow or earn enough to make ends meets. All you are doing is rolling yourself into more and more debt, which was very typical of the share croppers during the 19th century. I never missed a payment, but my debt burden was not getting any smaller. Now it time to hit rock bottom.

Rock Bottom

So you would think getting a fancy job at one of the largest health care companies would stop the debt spiral, right? No. So instead of batting down the “cost of living” hatches and paying off my debts, I increased my standard of living, hence plunging me into more debt. To be honest, I wasn’t one of those debtors that buy huge expensive items. I was the most dangerous kind. I’m was what you call the “here and there” credit card user. I just used to it here and there for things I really didn’t need. My expenses, (car note, insurance, rent, etc) at the time were pretty manageable but it was the other “here and there” type of expenses that was doing me in. To be honest I can’t even remember half the stuff I bought, but by the time I was ready to move back in NY in 2000, I had less saved in my bank account than what I had saved in high school with over 12K in credit card debt. I couldn’t believe it. No only did I not have anything saved for a “rainy day”, but even a puddle of water could wipe me out. Although I was “cash poor”, I did have money in my retirement investments, but relative to how much I was making, it was a sad state of affairs.

So I moved back home and spent a couple years rebuilding my savings and getting back on track. Started reading tons of books on savings, investing, managing debt, and got so good at it, I could actually start giving advice to other people. My debt situation was self-inflicted. Through all the years I had a credit card, I never had any financial emergency where I had to wipe my savings out and go to my credit cards. I was living a way of life that I could not afford. I wasn’t living withing my means, and my debt was getting so overwhelming that every dollar I had was going to my debts. I’m happy to say I don’t have any credit card debt.

Conclusion

Every person’s debt story is different, but if there is one area that we need to be mindful of, is our psychology towards money. All the “getting rid of debt” guidelines in the world won’t mean anything, if you don’t have a hold on your desires, behavior, and a understanding of how you view material objects and self. In addition, many of us need to up our financial literacy. I’ve heard of people who literally did not know that they had to pay the debt back on their credit cards. They just thought is was free money. Nor did they know what compounding interest, debt-to-equity ratio, or what a FICO score is. If you don’t know what these things are, then you should not have a credit card.

Not only was my debt burden financially debilitating, but it also took away my freedom of mobility. It was like carrying around a ton of bricks on my back with fetters on my legs. Just think about all the opportunities that you miss out on. At the time, I couldn’t give as much to charity, help family when needed, not to mention I did not have money around if an emergency happened, and could not re-invest any resources in myself/career or even other entrepreneurial endeavors. However you look at it, it’s a Road to Serfdom, and if I can help it (Inshallah), I hope to never experience that type of slavery again. Man, 1st Financial Bank got me good, but it was one of the most important lessons of financial wherewithal and debt management that I have ever experienced.

Before I bring this post to a close, I’ll leave you with two very significant quotes from Nassim Nicholas Taleb’s Black Swan: The Impact of the Highly Improbable that should heighten your awareness on some of the very dangerous psychological ideologies that many times, have led us to stray into making poor financial decisions. One is “Cheap Signaling and the other is the “Prediction error”.

Cheap Signaling, pg 6

There were some obvious benefits in showing one’s ability to act on one’s opinions, and not compromising an inch to avoid “offending” or bothering others. I was in a state of rage and didn’t care what my parents (and grandfather) thought of me. This made them quite scared of me, so I could not afford to back down, or even blink. Had I concealed my participation in the riot (as many friends did) and been discovered, instead of being openly defiant, I am certain that I would have been treated as a black sheep. It is one thing to be cosmetically defiant of authority by wearing unconventional clothes—what social scientists and economists call “cheap signaling”—and another to prove willingness to translate belief into action.

Prediction error, pg 194-195

I searched the literature of cognitive science for any research on “future blindness” and found nothing. But in literature on happiness I did find an examination of our chronic errors in prediction that will make us happy.

This prediction error works as follows. You are about to buy a new car. It is going to change your life, elevate your status, and make your commute a vacation. It is so quiet that you can hardly tell if the engine is on, so you can listen to Rachimanioff’s nocturnes on the highway. This new car will bring you to a permanently elevated plateau of contentment. People will think, he has a great car, every time they see you. Yet you forget the last time you bought a car, you also had the same expectations. You do not anticipate that the effect of the new car will eventually wane and that you will revert to the initial condition, as you did last time. A few weeks after you drive you new car out of the showroom, it will become dull. If you had expected this, you probably would not have bought it.

You are about to commit a prediction error that you have already made. Yet it would cost so little to introspect!

Articles that will scare you into saving money

• The Collapse of Personal Savings Rate in America
  http://www.billshrink.com/blog/personal-savings-rate/
• Why do so many NFL players go bankrupt?
  http://sports.yahoo.com/nfl/blog/shutdown_corner/post/Why-do-so-many-NFL-players-go-bankrupt-?urn=nfl,190555
• Income Inequality Is At An All-Time High
  http://www.huffingtonpost.com/2009/08/14/income-inequality-is-at-a_n_259516.html
• Winning Lotto numbers not always the ticket to dreams, success
  http://www2.tbo.com/content/2009/oct/01/winning-lotto-numbers-not-always-ticket-dreams-suc/

IMPORTANT DISCLAIMER: In no way shape or form is this post endorsing the use of usury (interest) when terms like FED funds rate, credit, mortgage, stock market, investment, savings, loan, borrow, etc are used. This is merely an explanation of my fact finding mission on the different economic theories that have impacted the thinking of different economist across the world, and how this thinking has impacted the economic policy of the United States of America.

WIHTJ fans, sorry it took me so long to write Part II of Economics Made Simple. The series covers the following topics:

1. Part I: Renting vs Buying a home
2. Part II: Why Can’t I Make Ends Meet?
   (How I found the Austrian School of Economics)
3. Part III: Saving Money vs Serfdom
4. Part IV: Casino Capitalism

Table of Contents

1. Introduction
2. The Austrians and Mises
3. John Maynard Keynes
4. Conclusion
5. Economic Resources that will increase your Financial Neurons

After completing the first version of this blog post, I decided to send it to my good friend JP, who does the blog But What the Hell do I Know I wanted to get some honest feed back on my Keynesian vs Austrian School post. In so many nice and friendly words he was able to tell me…well..it sucked. Every now and then it’s good to eat some humble pie. So I did (that pie was pretty good), and I went back to the drawing board. Keep in mind that I consider my boy JP quite a seasoned economist, albeit unofficial, when it comes to the Keynesian and Austrian school, so I knew I had to go back to the drawing board.

In the first version, I tried to make a case for which economic school is a better approach (which I failed at) or attempt at framing what each school is (which I failed to do) or not distort what the Austrian or Keynes school is (which I mistakenly did). Unfortunately I lost track of what I really wanted to do. I will forgo the Herculean tasks of comparing each school and explain how I found the Austrian School of Economics. What I really wanted to do was frame the following rhetorical and general questions:

• Hey did you know that there is this economic school of thought that was driven by John Maynard Keynes, and this same school of thought dominates a lot of economic policy in the United States of America?
• In addition, did you know that the Federal Reserve Bank (FED) dominates economic policy in the United States of America? Do you know what the Federal Reserve Bank does?
• Why do we have financial crises and what is the root of how they get started, what caused them, and what fixed them?
• Did you know that there is a school of economic thought called the Austrian School of Economics, that is actually trying to offer a model that explains how the economic world works around us, but at the same time being humble enough to know they can’t understand every single move in the economy because it is a dynamic amoeba-like entity that has way too many variables to track?
• Are you aware that to understand this economic mess that it will take more than reading this short blog, but months and months, if not years of grueling eye-busting reading of books, articles, podcasts, etc.
• Are you aware that you are about to stop reading this blog post, because of what I said in the previous bullet?
• Are you aware that making the sacrifice to acquire this knowledge will make you probably make you more informed about why U.S. policy is the way that it is and when you vote (hopefully), you’ll actually have a clue (better) about why you are voting?
• Do you want to understand what true Healthcare reform means?
• Is it important for you to understand the true pros and cons of government policy decisions in the United Sates of America?

Now that you know the precursor, lets give it another go….

Introduction

I was probably hit by the “financial education” bug when I started cleaning up my debt situation around 2000. I’ve been waving the “Hey Folks, America’s household debt is unsustainable” flag for more than 10 years. I never knew what the source of the problem was, but watching the debt-to-asset ratio skyrocket while concurrently seeing the personal savings rate plummet was not a sign of good times to come. To be honest, I had no idea what was in store for the U.S Economy 8 years later. All I knew was that this is not a good situation. An eye opener for me was two things. The stock market bubble of 2000 and the last years financial collapse in October of 2008.

I played around in the stock market for several years. (Buying individual stocks) By following a true value investing/contrarian approach I was able to do pretty well. By adhering to those principles of investing prudence, raking across the 8-K and the 10-K while taking into account the intrinsic value of a companies stock, I was able to avoid a lot of the pitfalls that lured people into the “speculation” stock market bubble of 2000. Yes I made mistakes, but not deal breakers. I never cared whether we were in a bear or bull market. Bear and Bull markets do and don’t matter. (It depends on the situation). Stock market bubbles get headlines, but it’s the diligent investor who spends time understanding what he or she is investing in who wins in the end. This type of effort takes work, which is why most people will invest in whatever is coming from the “water cooler”

After 2000 I didn’t get into anything more than just personal finance. Around 2007 to 2008, the calamity started with Bear Sterns, Lehman Brothers, AIG, the housing market bubble, billion dollar bailouts for banks, investment houses, etc, and thats when it all started. Before these events, I was not aware of how tightly wound the FED was around the U.S. government. Other than the FED moving the fed funds rate up and down to allegedly “cool” or “heat up” the economy, that’s pretty much all I knew. I didn’t know the history of the FED, when the FED was started, not to mention what type of batting average the FED had in stabilizing the economy. I grew some “Rothbardian” legs, if you will, and the rest is history.

Mises and the Austrians

My first entrance into understanding the tip of “Austrian Economic” iceberg was a site called Mises.org. If the Austrian School of Economics was a trunk of a tree, this would be one of many branches off the trunk. For the sake of not making the same mistake twice, I’m going to leave it to you to go to mises.org and assess whether the information is useful or not. They have a wonderful blog called Mises Daily and it’s chock full of morsels of econ delights that will whet your appetite for information.

Lets be honest. Even at the introductory level, this is pretty heavy stuff, but that shouldn’t deter you. I do believe that one of the reasons why Americans are in the fog of economic war when it comes to U.S economic policy is they don’t understand the “whys” of a particular policy decision. Nor do we know where to go to get that information. If you go to the FED website, and click on one of their documents you would need a phd in economics to understand what they are talking about. We often fall back on our ideological partisan heels, without trying to truly understand the merits and consequences of certain policy decision. Should we have a minimum wage tax? What are the impacts of having a central bank that dials the economy up and down at will? What is the true impact of the Cash for Clunkers initiative on the economy? What was the involvement of the FED with past and present financial crises? What are the economic solutions available for bringing countries out of poverty and what examples do we have of countries that have already achieved this?

I could go on and on, but these are just a sample of questions about the things that impact our day-to-day lives. Now check out the latest Google Trends. Do you see any broad searches like “Federal Reserve Bank’, “Keynesian Economics”, “Austrian Business Cycle Theory” etc? These are three very powerful terms that you should familiarize yourself with, yet they never ever enter into our stratosphere of topics. Are we surprised that the FED can swoop in and not have any idea where 9 trillion dollars went and the Americans are more concerned about fictitious “death panels” in healthcare or whether the Obama earned the right to get the Nobel Peace Prize? We have bigger fish to fry, check out this shocker:

John Maynard Keynes

The first time I heard about anything related to Keynes was through mises.org. I had no intentions of investigating the ideologies of Keynesian Economics, but many of the ideologies from Keynes have weaved themselves into the current economic policy of the United States of America. I wanted to get at the heart of what inspires the U.S. government to do what they do. I’ll provide resources at the end of this blog post that will get you up to speed on who Keynes is and how his ideologies have influenced U.S. economic policy. There is a lot of history there, and it will take you a while to churn through all the books, articles, and videos about Keynes. Here is a good start: http://en.wikipedia.org/wiki/Keynesian_economics (Keynesians Economics).

Clearly Keynesian economics has made a huge comeback in recent years due to the current collapse of the economy. Are We All Keynesians Now?. I wonder what Keynes would say if he saw this current crisis? I’m sure Paul Krugman would be delighted. Keynes most famous work is the The General Theory of Employment Interest and Money. This is what what put Keynes on the map.

Conclusion

This post is about awareness. I have come to realize that not understanding the history of U.S. economic policy has not served me, or anyone else well. Especially those who consider themselves poor, downtrodden or apathetic about the political process. How are we to make educated decisions about government policy if we don’t understand what it is and how it works? How are to support bills that are created in the house and senate if we don’t understand what is being passed into law? I felt that my understanding about presidential candidates, tax policy, U.S economic policy decisions, local state regulations, etc could be compromised by not understanding the context of these economic policies I mentioned above. As a matter of fact, this is more important than what your party affiliation is. This is not a left or right wing post. This is not a pro free-market or pro socialism post. This is a post about making informed decisions and holding our government accountable, including ourselves. Regardless of whether you consider yourself someone on the left, conservative, right, republican, democrat, independent, rich, poor, middle-class, wealthy, religious, atheist, deprived, a victim, a power broker, keynesian, austrian, libertarian, socialist, indifferent, etc, you should consider what I just wrote in this post. Being a blind ideologue is easy, but spending the time to understand things properly is more difficult which is why most people choose the former instead of the latter. Two things to remember, there is no such thing as a free lunch and a government is only as good as the people who support it.

Books

• Economics in One Lesson by Henry Hazlitt
• The General Theory of Employment, Interest, and Money by John Maynard Keynes
• Road to Serfdom by F.A. Hayek
• Wealth of Nations by Adam Smith
• The Return of Depression Economics and the Crisis of 2008 by Paul Krugman
• America’s Great Depression by Murray N. Rothbard
• Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse by Thomas E. Woods Jr. and Ron Paul