Wealthology Read online

  In the realm of money, business and economics, we can learn much more in the absence of excess prosperity (after the nut trees have been deforested) than we could in the midst of it.

  If we‘re ready, open and willing, experience is a great teacher. So what did my experience teach me about creating lasting wealth?

  A: That anyone (or society) who wants to create lasting wealth must master four principles: Entrepreneurship, Economic Literacy, Capital Management and Productivity. Whenever wealth is created or destroyed, it results from the use or avoidance of these four principles.

  “I always wanted to be somebody, but now I realize I should have been more specific” ~Lily Tomlin.

  Be Wealthy, Don’t be Rich

  You can become rich by using a single principle, but if you don‘t learn and use all four together, you won‘t have lasting wealth. There‘s a big difference between being rich and being wealthy. Contrary to popular belief, few people can become rich while just about everyone can become wealthy. Being rich depends on circumstance, luck, constant work or a natural ability which usually shows up as a single, dominant trait.

  Wealth, on the other hand, is a result of ―wealth consciousness‖, an accurate understanding of how we squirrels really make our nuts.

  You may call it economics but the idea of teaching you economics is as depressing to me as it might be to you. Economics today is an anemic, haphazard and dishonest profession. Such dishonesty is made plain in that there are different ―schools of economics.‖

  Wading through the charlatans, government bureaucrats and Wall Street sponsored economists has required a considerable amount of work, time and money. You can bypass the idiocy, dishonesty and confusion I had to swim through to get a clear understanding of money, prosperity and economics by reading my letters.

  “If a man empties his purse into his head, no one can take it from him.” ~Benjamin Franklin.

  What is Wealth? It‘s important that we define wealth since these four principles are designed to create it. I define wealth as owning assets that produce an amount of income that‘s greater than our living expenses.

  Financial freedom depends on passive, positive cash flow—but that must start from within. It‘s a product of mind and heart. You can‘t have positive cash flow unless you learn how to be an entrepreneur, how to manage your capital, how to be productive and how to think like a good nutconomist.

  “Son, if you really want something in this life, you have to work for it. Now quiet! They"re about to announce the lottery numbers.” ~Homer Simpson

  It’s Easy to Learn but… Once wealth consciousness is understood, the process of becoming wealthy will be easier because you‘ll understand the only principles that produce lasting wealth. You‘ll be able to explain market conditions, see opportunities and dangers without having to rely on biased advisers, nutconomists or greedy brokers.

  Sadly, we live in a dishonest world. Modern squirrels use their intellect as a weapon in much the same way prehistoric ones used spears or swords to kill enemies. We‘re still savages, people are still brutal—the only difference is that, in prehistoric times, identifying your enemy was simpler. In today‘s world, politics and marketing has perfected the art of getting people to do things that are not in their best interest by concealing information, obscuring reality, appealing to fear or making veiled threats.

  Here‘s an example. While doing some research, I came across this quote on the U.S. Treasury‘s website: ―The United States debt, foreign and domestic, was the price of liberty.‖ Here‘s what the Treasury is really saying: ―If you want to keep your freedom, you better let us do what we want with your money. If you don‘t let us run up huge debts, you‘ll be at risk of losing everything you‘ve got, all that you love and hold dear.‖

  This appeal to freedom through voluntary enslavement works like magic in Squirrelmerica as it does elsewhere. As soon as our governments tell people it‘s fighting for freedom, the free, dissenting, independent, spirit recoils into a fetal position and dies. The air out of dissent is miraculously let out and people fall in line, even becoming cheerleaders in their own demise.

  It‘s no wonder America‘s always at war—the War on Communism, the War on Poverty, the War on Drugs, the War on Terror, etc. Government has found a button in all of us that can be pushed to get us to do what it wants. Propaganda works with our minds, with our ideas and the fears we harbor inside. The source of all our problems resides in our hearts.

  So as easy as it is to understand wealth consciousness, we make it more difficult than it has to be. But we must not judge ourselves for failing to understand the economy. Understanding it is also difficult because the economics profession is dishonest.

  “Courage is not simply one of the virtues, but the form of every virtue at the testing point.” ~C.S. Lewis.

  The Rules of Adding Still Apply! Our central bank (the Federal Reserve) has done something quite fascinating— it‘s actually convinced the American people that the rules of adding and subtracting they learned in 1st grade don‘t apply to the field of economics. Their ―distinguished‖ economists tell us ―deficits don‘t matter.‖

  But if deficits don‘t matter, neither do profits, since profits are just the flip side of deficits. And if neither deficits nor surpluses matter, why should anyone work? Why don‘t we just print $1 million, hand it to every American and be done with it?

  To understand a bit more about the Federal Reserve propaganda machine, search for an online article entitled, ―Priceless: How the Federal Reserve Bought the Economics Profession.‖ This is the crazy, truth confiscating and truth suffocating environment you may be coming into Kidus.

  A lot of people in Squirrelmerica feel like tiny ships in turbulent, stormy nutconomic waters. Unfortunately, all the captains and navigators happen to be drunk. Instead of navigating away from financial storms, they head directly into the midst of the very storm they‘ve helped create. After reading what I‘ve got to say in the following letters, you‘ll no longer feel like a tiny ship lost in the sea of global capitalism without knowing where to dock your little boat, what to do with your money.

  I once also felt lost in deep, dark nutconomic waters. Like many others lately, I see that the American political and economic system isn‘t only dishonest but also incompetent even if their intentions are good.

  The average American doesn‘t know, for example, about a secret tax that eats up anywhere between 6 to 9% of their income every single year. They may not know about it because they don‘t understand what money is or how it works. This is why they need to build the principles of capital management and economic literacy.

  There‘s a way to avoid this secret tax but first, we must know it‘s there to begin with; all economic and financial inequality rests on our own ignorance and a lack of self-confidence in our ability to make good financial decisions.

  The secret tax is just one way the system is unfair if we‘re unaware of how it works. In fact, we can even use the unfairness and deceit of the nutconomic system to our own benefit. Education has the habit of turning every pessimist into an optimist. When it comes to financial matters, ignorance isn‘t bliss. Every nutconomic system (except pure capitalism) is, in part, rigged to benefit some at the expense of others.

  The nut making process doesn‘t have to be a mystery if you allow it not to be so. We must be willing to give up control of what we think we know to learn something new. We must give up any preconceived ideas about money and the wealth building process. Willful ignorance brings us only one thing: A state of virtual nonexistence. We can only truly exist, if we do so in truth. We can only be prosperous if we believe the right assumptions.

  “A gap in our awareness is a gap in our existence.” ~Anonymous.

  How it Works: A Story

  Let me explain the importance of using these four principles together through a story. We know that some squirrels can get rich through natural ability, luck, perseverance or an innate entrepreneurial sense. But they may lose
the money they‘ve made using their entrepreneurial skill if they haven‘t learned some of the other skills. They may be able to start the wealth creation process but unable to sustain it. Singer Toni Braxton is a great example of this fast-start, slow financial death scenario. Our world is filled with plenty of people who come into some money but end up losing it all in a surprisingly short amount of time.

  One good entrepreneur (true story—you‘ll learn his identity when we revisit the story), for example, made over $100 million in the computer software business. His entrepreneurial ability earned him an enormous amount of money. But in a few short years, his fortune dropped to $4 million. Why did he lose $96 million?

  He lost his fortune because he lacked economic literacy. Without knowing it, he had crossed over into a different industry when he got into real estate.

  Computer software and real estate are two very different industries. Economic literacy would have pointed out how they were different (it‘s not what you think it is). Knowing the difference could‘ve saved this entrepreneur $96 million. Now that you see the value, I hope you‘ll pay attention. I wish someone had taught me these things when I first arrived in Squirrelmerica from Squirrelthopia.

  Your Loving Uncle, Akinaw.

  Part I

  The Secrets of Entrepreneurship

  The Only Way Money is Made

  Dear Kidus, As a child living in the outskirts of Ethiopia, I remember dreaming about what Squirrelmerica was like. I grew up thinking it was a land of opportunity where you could create a free, prosperous life if you worked hard for it. After having lived here for decades, I‘ve got a more holistic understanding of nutconomics. I‘ve learned three important things about creating prosperity in the Squirrelmerican economic system.

  Hard Work is Penalized

  First, you can forget about becoming rich through hard work. The hard work gospel is taught from elementary school through college but it‘s an outdated gospel. Squirrelmerica is still the land of opportunity but only for the squirrels who know how to work smart. Hard work can no longer give Americans the same quality of life previous generations experienced. Nowadays it takes two squirrels working outside the tree to afford the same nuts prior generations used to enjoy with one working squirrel.

  Smart work, in my view, consists of one thing—knowing how an economic system creates and destroys wealth (knowing the rules).

  One of these rules is that our economic system actually penalizes hard work. America‘s middle class, for example, pay a much larger percentage of their incomes in taxes than the wealthiest squirrels in our forests. A little economic investigation would reveal the rules used by the wealthy can be used by anyone else. Income inequality is always self imposed through an alliance with ignorance.

  Everything has a price, and if you‘re willing to pay the same price others have paid to get what they‘ve got, you‘ll get those things too. Paying the price for financial freedom starts with education and ends with experience; initially, it takes a lot of reading, experimenting, courage and study.

  “I am looking for a lot of men who have an infinite capacity to not know what can"t be done.” ~Henry Ford.

  The Will to Let Go

  Secondly, I‘ve learned that even if people realize that outdated ideas don‘t serve their financial interests, they‘re unwilling to let go of them. Immigrants like us have the advantage of being pragmatic. Our goal is to create the prosperity we wouldn‘t have had, had we not come to Squirrelmerica. It‘s difficult to grow up without paved roads or plumbing and not want to take advantage of the opportunity in front of us. Growing up in the Ethiopian countryside, we didn‘t have $100 pairs of Air Jordans—we just had air; we had no shoes.

  “Courage is contagious. When a brave man takes a stand, the spines of others are often stiffened.” ~Billy Graham.

  Appeal to Authority Works Thirdly, I‘ve seen that Squirrelmericans are subjected to a deafening chorus of financial and economic experts who are either really incompetent, insincere or paid propagandists for special interests. Economists generally have two clients—Wall Street and the Federal Government. The Wall Street/government propaganda machine works like magic.

  For example, the other day I was watching a financial news network with a friend. An economist from a prestigious university was talking about the state of the economy. When he said something a five year old could understand to be complete nonsense, I said, ―I can‘t believe this guy is saying this, he‘s out of his mind.‖

  Immediately after I said that my friend replied, ―He can‘t be wrong, he teaches at Berkley.‖ I was astounded that he‘d give credence to complete nonsense although he knew very little about economics. A lot of people who listened to these experts are now experiencing a lot of hurt, pain, sorrow and anxiety.

  We must forget all we"ve learned or heard about money (and the experts we heard it from) in order to build a new foundation for lasting wealth. We must ignore the human temptation to give in to authority.

  “A learned man has always riches in himself.” ~The Phaedrus.

  The Principle of Entrepreneurship Of the major economic ideas we must relearn, entrepreneurship is at the top of the list. Eighty five percent of people who have become millionaires did so by owning their own business. Nine out of the top ten billionaires on Forbes magazine‘s yearly ranking had entrepreneurial parents.

  The art of entrepreneurship is our path to success. Learning how to be a nutpreneur is your gateway to financial freedom. Without learning this skill, you can‘t be prosperous. There‘s no other way to become financially free, vacation around the world, or retire early.

  The other skills I mentioned (capital management, economic literacy and productivity) only serve to apply this initial starting point.

  “It"s true hard work never killed anybody, but I figure, why take the chance?” ~Ronald Reagan.

  How Entrepreneurs Make Money Whether we‘re investors, wage workers, or business owners, we all do the same thing; if anyone plans or makes decisions, that person is an entrepreneur. If you plan to work for someone else, you‘re using entrepreneurial skills to decide whom to work for. If you manage your own money, you‘re an entrepreneur because you put your money where you expect growth.

  If someone else manages your money for you, you‘re still an entrepreneur because you expect the person to whom you outsource money decisions to grow the value of your portfolio. So what‘s the definition of an entrepreneur?

  It‘s this: Nutpreneurs are in the business of forecasting future nut crops. We make decisions today based on where we think the market will be tomorrow. Everyone does this guessing consciously or unconsciously. Those who do it consciously make more money than those who don‘t. All human motivation is based on a guess, a promise that if we go through a series of steps, if we perform certain acts, we‘ll get something for it when we‘re done. Dogs only do tricks if they can expect a treat.

  We may go our whole lives without being aware we get paid to predict; but that‘s all we get paid for. Entrepreneurs don‘t get paid for physical work, they get paid to think, predict, and calculate.

  “Prepare your work outside and make it ready for yourself in the field; afterwards, then, build your house” ~Proverbs 24:7.

  Seeing in the Dark

  You can learn a lot about life at the gym. You can, for example, understand just how competitive guys can be. One of my most memorable gym experiences was when this huge bodybuilder, who must‘ve had self esteem the size of a pea, was groaning like he was having a baby every time he picked up weights. I mean it was so loud, people were looking at each other wondering what his issue was. When it comes to competition, guys can do some dumb things.

  In the realm of business, there‘s a lot more on the line than just losing face—you can lose a lot of money if you‘re not competitive. Our definition of entrepreneurs as forecasters helps us understand how to be competitive. Being able to predict what others can‘t—being able to see what others don‘t, is the meaning of being comp
etitive.

  In general this ability pays off big. I once heard someone say that Warren Buffett was just one of those people ―who can see in the dark.‖ There aren‘t that many people who can see in the dark. That‘s why those who can are paid a lot of money. Your job as an entrepreneur is to develop the best night vision goggles you can find.

  “You"ll see it when you believe it.” ~Dr. Wayne Dyer.

  A $600 Million Business Lesson Successful people ask questions others aren‘t willing to ask and they‘re sometimes ridiculed for doing so. No matter how difficult it may be, you must get in the habit of being an independent thinker. Only independent thinkers can remain flexible to changes that take place in the world of business and adapt.

  I once briefly talked with the founder of the 99 cent stores. I shook the hands that built a fortune of $600 million and asked, ―Do you have any words of advice for a young entrepreneur?‖ Without hesitating, he looked at me with a smile and said, ―Just do something other people aren‘t doing.‖ That‘s the kind of mentality that pays off big.

  He‘s saying that we‘re not the only forecasters in business. Other entrepreneurs also make bets on where they think the market‘s headed. If you want to start a new business, the amount of money you make depends on whether other people are thinking the same thing. If everyone else knows about a good fishing spot and more fishermen show up, there‘ll be fewer fish to go around. Opportunities can be discounted. Your job is to find a new fishing spot before the word‘s out and rent space to others when it‘s found out.

  That‘s another way of saying you must be a contrarian thinker to be wildly successful. A contrarian thinker is someone like Warren Buffett. One of his investment principles, is to ―be fearful when others are greedy and to be greedy when others are fearful.‖ That way of thinking guarantees that he‘ll find only the unspoiled fishing holes.