Wednesday, May 8, 2013

Murphy versus North

Bob Murphy writes today:
I am running around because I’m about to go on a trip, but I wanted to drop a quick note to explain a major project I’ve been working on over the past year. I am a co-creator of The IBC Practitioner Program, a training program for financial professionals in Austrian economics and the “Infinite Banking Concept” (IBC). 
 Gary North wrote in 2009:
The concept is called "infinite banking." It's also called "become your own banker." It is really "Whole Life for Dummies With More Dollars Than Sense."
Here's the deal. You buy a high-commission policy. Then, after six years, the company lets you borrow against it. You pay the company interest -- to "yourself," the ads claim. 
If you know what whole life insurance is, there is nothing new here. Any whole life policy lets you do this. Then what's new? Packaging. They sell the same miserable policy to people with more money.[...]


  1. Ha! I love when you uncover the schisms, even if they are small, within the libertarian community.

    It helps us keep each other in check and keeps things lively.

    "Am I my brother's keeper?"

    I just pointed out to Vance, after he blogged about the hypocrisy of Sanford being elected that Ron Paul endorsed Sanford for that election.

    It'll be interesting to see if Vance posts a follow up blog on it @ LRC.

  2. Proverbs 6:16-19 --> There are six things that the Lord hates, seven that are an abomination to him: haughty eyes, a lying tongue, and hands that shed innocent blood, a heart that devises wicked plans, feet that make haste to run to evil, a false witness who breathes out lies, and one who sows discord among brothers.

  3. "one who sows discord among brothers"

    That's an interesting one. If your brother is misleading, mistaken, etc., et al, there will of course be some "discord" in addressing such.

    So the question in my mind is who is causing the discord and why.

    1. Sowing is an intentional act (planting) with the aim of arriving at discord.

    2. Granted, but I think it would be easy to suggest one is sowing discord when in reality there is a simply striving for the truth.

  4. I doubt Vance cares one way or the other if Ron Paul endorsed Sanford. So what? That fact certainly doesn't necessitate some kind of "follow up." Besides, Ron Paul isn't a "Family Values Republican." He may not even a be a Republican anymore.

    1. "That fact certainly doesn't necessitate some kind of "follow up."

      Well, it's hard to say you support Ron Paul on one hand while he's endorsing GOP candidates that you condemn(for whatever reason), which Vance did(in a round about way via bashing the electorate). So I'm going to disagree with you, I think Vance should address it.

      "He may not even a be a Republican anymore."

      I'm not so sure. I hope that's the case, really-I do. If you can point me to such a statement by Ron Paul that would be great.

      All I can remember is his continual declarations that he was a Republican during the primary last year. If there is one thing I'm quite sure Ron Paul is NOT, that is a liar or panderer.

    2. To clarify: I wasn't alluding to any public disavowal of the GOP or anything like that. I've not heard of any such thing. It simply seems reasonable that Paul, being no longer an elected official, is unlikely to bother identifying as a Republican anymore. I think a party affiliation only hurts him and his RPI at this point.

      That said, I think it's possible to generally support Ron Paul and not agree with his every deed or position.

    3. "I think a party affiliation only hurts him and his RPI at this point.

      That said, I think it's possible to generally support Ron Paul and not agree with his every deed or position."

      Great comment, I agree with you Ryan.

      I think it's time for Ron Paul to disavow the Republicans, and even further disavow the political system.

      That being said, this is the first time I 100% disagree with a political stance that Ron Paul has taken.

      His endorsement of Mark Sanford bothered me not because Sanford is of questionable moral character(but certainly I could make a case that an endorsement should not have happened on that basis)-BUT BECAUSE MARK SANFORD USED TAXPAYER FUNDS TO CHEAT ON HIS WIFE.

      This is not in question, it happened.(flying his entourage to Argentina)

      On that basis, I think Sandford went against a core principle of Ron Paul's...the stewardship of tax(stolen) money.

      It has been(is?) a core principle of Paul's for some time.

      His endorsement of Sanford does not jive with his long standing principles.

      I simply pointed this out to Vance, and I think it deserves an honest response by him.

      Like Wenzel, I find Vance a fearless advocate for the truth.

      I was hoping the legend that is Ron Paul would not scare him away from commenting on what seems to be a fundamental flaw in Paul's decision to endorse Sanford(as highlighted by Vance's own blog post today!)

      Best Regards and good talk Ryan.

  5. In Murphy's post, he refers to this book:

    Becoming Your Own Banker: Unlock the Infinite Banking Concept R. Nelson Nash

    I have never read this book.

    But how can one have infinite banking?

    Sounds like a con or another "money for nothing" scheme which as North has pointed out before, usually involves the sucker giving something away in order to get nothing back.

  6. I'm not familiar with infinite banking but if North is correct in his description of it then he is right in condemning it.

  7. I'm not going to get in a debate in the comments of somebody else's blog, but I will say this: I am personally practicing Infinite Banking, and with the way Nelson Nash advises that you structure your policy, you can start borrowing against it after the first premium payment. In real life, with my actual policy, I borrowed against it within the 5th month or so.

    So, North's very first statement about what it's all about, is demonstrably wrong. That might cast the rest of his critique into question too, in my opinion.

    1. You're a real financial genius. How much interest are you paying to borrow your own money? LOL

    2. Well, Murphy just verified the core of North's contention. It is a whole life policy where you borrow against you own money. michaelmcnulty is correct, how nuts is that, especially when all kinds of fees had to be taken out before you borrow against your own money.

      Why the hell is Murphy involved with this?

    3. I think IBC is awesome, and I buy gold and silver coins too. Whole life policies by themselves are not a good deal. Whole life policies with PUA riders on them, where you pay the maximum possible PUA, are a much, much better deal. If you start early, structure the policy correctly and keep it up through your life (why wouldn't you... you have to keep up your payments at least until your dividends cover your premiums - if nothing else, life insurance keeps you honest), you'll be able to take out loans as tax free income, due to the fact that your dividends will be enormous and can partially or totally cover the loans, later in life. And... when you do happen to eventually die you might as well pass on a heck of a lot more money than you put into it.

      I'm not sure what the earlier commenter meant when he said you have to pay fees before you take out your money. I have taken out a number of loans and there are no fees with my New York Life policy. Of course you pay interest. I'm paying roughly 5% right now. Certainly you pay a commission when you buy the policy, and of course a declining portion of your payments over time are for the purpose of insuring you. This is life insurance after all. But if you don't understand what PUAs are and how they work hugely to your advantage over vanilla whole life insurance, you are completely out of your league if you're negging on the IBC concept.

      The downside of life insurance denominated in dollars is that the dollar could or will eventually collapse. If you don't want to do it for that reason, that makes sense to me.

  8. OMG Murphy, this looks really pathetic. Why are you involved in any of this? Not only that, but you're associating Austrianism with this. Stocks may be a rigged game and same with the banking system, but you're shilling for a hokey scheme that is totally unnecessary. Just do the following: don't get into debt, save your money, pay cash for items you'd usually put on a credit card. There! No loans, no banker fees, no interest, and NO POINTLESS INFINITE BANKING CONCEPT!

    1. Also, use cash back or hotel/airline points credit cards, and pay your bills in full every month.

  9. Its like Keynes says ' we only owe it to ourselves'

  10. Has anyone here read one of Nash's book? I read one and found it moderately interesting. Suggesting that it is crazy or a scam by just taking Mr. Y2K's word is silly.

  11. The more I read about this concept the more it makes sense. I think what most people are forgetting is the long term of the program and the fact that this isn't an investment but more a savings vehicle for a place to put your cash. Where else can you put cash that is relatively safe as bank and earn more than the going rate of interest?

    I think it you read the books and look at it with an open mind it does have a place for someone who would like to do their part and get away from the system that is causing our financial mess.