Paul Pilzer's books, Next Generation Millionaires and Wellness Revolution are available on the Team site. thanks, Orrin

I wish I would have known about this blog along time ago... I have been with TEAM for 4 years, recently decided that its time to take this opportunity seriously. I have a few serious questions about where you stand a few subjects...

Paul Pilzer who i have read The Next Millionaires, His Bio states that he was a economic adviser to 2 presidents, so this pretty much puts him in the Keynesian/ Reaganomics class of economists. I have been studying economics on my own since being introduced to the Ron Paul campaign and Peter Schiff.

questions:
1) are you familiar with Peter Schiff ( guessing so by the Mises video)

- if so I find my self in a weird sort of Orwellin Doublethink Between Schiff, Pilzer and Friedman. I don't think you can believe in Keynesian economics and Austrian economics at the same time. are we following Pilzer because he is say what a Wellness company wants to hear?

right from your blog.....

I love the quote from F. A. Hayek that states, “Nothing is more securely lodged than the ignorance of the experts.” Have you ever wondered what ignorance might be lodged in our current beliefs in different fields of study?

I look forward to your response and seeing you in Madison on Friday!!

I did a little research on Pauls view of our current situation and I can't disagree more. If you want a


October 13, 2008 Comments of Professor Paul Zane Pilzer on the Current Economic Crisis and the $810 Billion Bailout




1. The Economic Ability to Afford the $810 Billion Bailout

I believe that our nation can easily afford the $810 billion bailout of banks and home mortgages. Our national debt is about $10 trillion (that’s $10,000 billion), which is a very-affordable 68% of our $15 trillion Gross Domestic Product (GDP). This is roughly equivalent to having a $68,000 mortgage on your home when the family’s take-home income is $100,000/year. Adding $810 billion to the $10 trillion national debt is akin to adding $8,100 to your $68,000 mortgage. While the additional debt is unfortunate, it will not bankrupt the nation or lead to rampant inflation.

2. Estimated Cost of the Mortgage-Backed Securities Crisis

I estimate that, by the time the dust settles, the mortgage crisis will have cost the nation approximately $150 billion. It may actually cost much less. The mortgage-backed security issue is similar to Y2K (the computer-related fears that were rampant as the year 2000 approached), which the media widely exaggerated by a factor of 10 or more. There are 160 million American households, of which approximately 102 million are owner-occupied homes. Assuming there are approximately 90 million mortgages, with 3% of them in foreclosure, and that half of this 3% will be foreclosed on at an average loss of $100,000 each, the total loss would be $135 billion.

Moreover, the current mortgage foreclosure problem is very regional and there is no “one size fits all” solution. Six of the states have more than half of the total problem, and for different reasons. The foreclosure problem in California, Florida, and Arizona is primarily caused by overbuilding, while the problem in Michigan and Ohio is primarily caused by unemployment (mostly in the automobile industry).

3. The Real Crisis Could Be Mismanaging the Banking Crisis

I am less optimistic about a potential worldwide depression that could result from mismanaging our current banking crisis. The 228 congressmen and congresswomen who voted "No" on the original bailout package in September were either ignorant of the relevant financial issues or were selfishly grandstanding for personal political gain--and for either reason should be voted out of office this fall.

As an American, and a sometimes politician, my words cannot express how proud I was last month when both Presidential candidates suspended their campaigns, flew to Washington, and worked the phones all night to get their political colleagues to vote for the banking bailout. I was delighted to see that our primary system had worked so well in fielding Presidential candidates of such character. This was another great example of how well God has blessed our nation.

Today, our “currency” is our banking system. Imagine what would happen if I were to take all of your cash from you and put a freeze on your credit cards and checking account. How would you pay your mortgage and housing expenses, procure food for your family, or even drive to work? How would employers be able to run their businesses and pay their employees? That’s what could happen if we allow major banks to fail indiscriminately. Covering the liabilities of all of the banks may not be fair, but it is necessary to keep our economy solvent at any cost.

4. Our Greatest Risk May Be Credit Default Swaps (CDS)

A bigger issue, the magnitude of which is still unknown, is Credit Default Swaps (CDS). A CDS is an unregulated (and usually unreported) guarantee of a financial instrument, typically by a financial institution. Many of these CDS's were issued by traders who didn't think of them as risk because they simultaneously hedged their risk with another (relatively riskless) institution. And, in fact, they were relatively riskless--until various major players (starting with Lehman Brothers and leading to AIG) became insolvent.

Consider a bookmaker taking a $1 million bet from Person A with 2-to-1 odds that Candidate A will win the election, and simultaneously taking an offsetting 2-to-1 $1 million bet from Person B that Candidate B will win the election. The bookmaker earns a 2% fee ($20,000), and when Candidate A wins the election the bookmaker collects $1 million from Person B and pays $1 million to Person A.






Now, what happens if the losing bettor goes bankrupt? The bookmaker, who thought of himself as hedged, is out $980,000, and cannot pay Person A. Moreover, Person A, who was expecting the $1 million, needed that money to pay off many other bettors. Multiply this by thousands of bettors for each bookmaker to the tune of tens of trillions (yes, trillions) of dollars and you can see the magnitude of the potential problem.

CDSs are really "insurance without regulation.” Insurance is a highly regulated industry where insurers are required to keep reserves and disclose their risks, yet the majority of CDS's were not even recorded as risk, for a multitude of reasons. As a former financial industry executive (Citibank), and a former financial regulator (Reagan Administration), my colleagues and I are working on ways to ascertain the size of the CDS problem and ensure that our Treasury has the tools they need to put out each financial firestorm as it occurs.

5. The Future of the American Economy

Ultimately, the economy will survive this crisis and will actually be much stronger as a result of it. As a nation, we have become too complacent, and there are many ways in which we can improve—both economically and spiritually. Family-by-family and friend-by-friend, I am already seeing people reflect on what is truly important in their lives and focus on what they have left rather than on what they have already lost.

My short-term views on the economy change daily, and, during the last 45 days, I have been wrong more than I have been right. However, as of today, I am expecting a continuing short-term decline in the Dow this fall and then a long sustained recovery of the stock market for several months after the election.

6. The Future of the World Economy

I am less optimistic about the economic impact on lesser nations--the poorer people of the world will feel the wrath of an economic decline much sooner and much harder than people in the United States.

In the Wild West of the 1800s, you put your money not in the bank that paid the highest interest, but in the bank that was the most stable and had the strongest security guards. In the Great Depression of the 1930s, there was no safe haven for capital, as the United States was just another nation in the worldwide depression.

This time, the enormous military power of the United States, coupled with our political stability, makes the U.S. a safe haven for investors worldwide. This flight to safety of capital is already occurring—driving the short-term interest rate of treasuries to almost zero percent. Unfortunately, much of this money now flowing to the U.S. is the seed capital from wealthy investors in poorer nations—capital that the average person in these nations sorely needs to sustain his or her basic livelihood, and that these nations need to fuel their own economic recovery.

Conclusion

Thank you for listening. I wish I had more time, and more ability without violating confidences, to share with you everything I see right now.

As the father of four small children, I am very optimistic about the long-term outlook for the American economy and our American way of life. I am equally pessimistic about what could happen if we mismanage the banking crisis over the next few months—although, so far, I am impressed by the actions taken by our current administration since the crisis emerged on September 15, 2008.

I am also gravely concerned about the impact of this crisis on the people of other nations, particularly those nations that do not yet have the stability, strength, and faith of the people of the United States. The people of the world need American leadership today more than at any time since World War II.

God bless you.
God bless America.
God bless us all.

Paul Zane Pilzer

I don't agree with all of Paul's views either, but I don't believe that I would post much if I had to believe everything that somoneone believed to post. Paul Pilzer is Jewish and I am Christian, but that doesn't mean we don't have common ground in the health and wellness field. I remember Paul's thoughts ont he national debt back in 1993 and I disagreed with them then as I do now. He still makes you think and that is the key! thanks, Orrin

do you know of any other sources you recommend to enhance my knowledge of the wellness industry? The world NEEDS TEAM in times like this more than ever before!! I expect central Wisconsin to wake up to the wellness industry fairly, soon we are generally a year or so behind in all trends, in my opinion.

Adam

In Madoff We Trust


As the multi-billion dollar Ponzi scheme orchestrated by Wall Street insider Bernard Madoff unravels in the media spotlight, the nation is being presented with a rare opportunity to understand the true nature of many of our most cherished financial structures. Hopefully we have the wisdom to connect the dots.

Although the $50 billion loss engineered by Madoff is truly a staggering accomplishment (and was done using old-fashioned fraud rather than the mathematical wizardry that has characterized Wall Street’s recent larcenies) the size of the scheme pales in comparison to the multi-trillion dollar Ponzi structures run by the United States government. In fact, rather than looking to jail Madoff, President-elect Obama should consider making him our new Treasury secretary. If not that, at least make him the czar of something!

Madoff’s inspiration came from Charles Ponzi, the Italian-born American immigrant who promoted an investment plan in the early 1900s’ that traded postal coupons. Rather than paying investors from legitimate investment returns, Ponzi hit upon the innovative idea of paying out early investors with money collected from new investors. By creating an illusion of success, interest in his investment plan ballooned. Over time the schemes have become known by many other names, such as chain letters or pyramid schemes. They are united by the fact that they always fail in the end.

When the influx of new investors inevitably slows to the point where distributions to current investors can no longer be maintained, investors look to withdraw funds. When this happens, the entire structure falls apart. The profits received by those who “invested” early as well so any funds skimmed off by the promoter, are offset by all the losses of those who came late to the party.

To a large extent, the same concept has driven the major asset bubbles of the last decade. Given the ridiculously high valuations that were assigned to tech stocks and real estate during their respective booms, the only way the bubbles could be perpetuated was if newer “investors” could be found to pay even more outrageous prices (the greater fool). But when these new buyers balked, the whole structure crumbled. Although there was no Ponzi or Madoff to orchestrate these manias, the entire financial and economic apparatus of the country had successfully convinced the public that “investments” in tech stocks and condominiums were bullet proof and that the supply of new buyers was endless.

Unfortunately, the Ponzi economy doesn’t stop there. A chain letter is no more viable when run by governments than when run by private citizens. However, government orchestrated pyramids have the advantage of required participation. As a result, they can maintain the illusion of viability for several generations. But the longer such schemes operate the larger will be the losses when they ultimately collapse.

The Social Security Administration runs its “trust funds” with precisely the same methods used by Madoff and Ponzi. As money is collected by from current workers, the funds are then dispersed to those already receiving benefits. None of the funds collected are actually invested, so no investment returns are ever generated. Those currently paying into the system are expected to receive their returns based on the “contribution” made by future workers. This is the classic definition of a Ponzi scheme. The only difference is that Ponzi didn’t own a printing press.

The United States Government runs its own balance sheet based on the Ponzi principal as well. Our national debt always grows and never shrinks. As existing debt matures, proceeds are repaid by issuing new debt. Interest payments on existing debt are also made by selling new debt to investors. The whole scheme depends on an ever growing supply of new lenders, or the willingness of existing lenders, to continue to roll over maturing notes. Of course, as was the case with Madoff, if enough of our creditors want their money back, the music stops playing.

In Madoff’s case, the rug pulling was provided by the huge financial losses suffered by some of his clients in other non-Madoff investments. When enough of these clients looked to sell some of their apparently well-performing Madoff assets to help offset such losses, the scam collapsed. The same thing could befall the United States Government. Now that China and our other creditors are looking to spend some of their U.S. Treasury holdings to stimulate their own economies, look for a similar outcome with even more dire implications.

The main difference is that while Madoff took elaborate steps to conceal his scheme, the U.S. government operates in broad daylight. It truly is amazing how faith in government is so pervasive that many can believe that politicians will succeed where private individuals fail, and that governments are somehow immune to the economic laws that govern the rest of society. Like those unfortunate to have been duped by Madoff and Ponzi, the world is in for a rude awakening.

For a more in depth analysis of our financial problems and the inherent dangers they pose for the U.S. economy and U.S. dollar denominated investments, read my new book “Crash Proof: How to Profit from the Coming Economic Collapse.”

It was a pleasure to shake your hand and speak with your wife last Saturday. I am new to team Monavie and Sunday I hit the ground running after hearing you both speak in Madison, WI. I loved your talk about the little flame and guarding that flame and nurturing it until it becomes a raging fire. I believe that if you reach for the moon, you may land on a star. I have a lot to learn, dreams to accomplish and because of TEAM and the support of all of our leaders I know it can happen and will. Thanks so much for all you do to help all our dreams become reallity. Go TEAM. Susan Huffman