Infinite Banking Capital Theory with Ryan Griggs

This is why I don't like net worth figures. You know, cnbc, Entrepreneur Magazine Inc. Or whatever, all the various, you know, they have the list, the Forbes, they have the list of the wealthiest people and then they talk in terms of how much capital the people have. All those lists should are not in terms of wealth, they're in terms of capital. They're the list of who are ostensibly the most capitalized. But nothing. There's no complementary index or ranking of whether or not that net worth, whether or not that capital is liquid. Now, for a lot of people it is, right? Warren Buffett can go to bank of America and say, listen, send me a loan. You know, Jeff Bezos can do it. So there's probably a degree of liquidity that goes along with it. But who knows what the list would look like if it was recalculated and say, you know, cash equivalent capital, who knows what that would look like? Another I don't like net worth figures to really understand someone's financial situation. And I don't even care much about what the level of income is. I care about the history of income increases, I care about the expense experience, how much of that income are we spending and then I care about about high quality capital.

What is capital and how on earth can you create as much as you want using participating whole life insurance? We are joined today by our good friend Ryan Griggs, who is an Austrian economist, an authorized infinite Banking practitioner, founder and CEO of Griggs Capital Strategies. Now, you may know Ryan because he's been on our podcast before. And of course he has his own podcast with his colleague, his mentor and his great friend, our great friend James Nethery. And they host the Banking with Life podcast. We encourage all of our listeners to check that out. It's a wonderful show, wonderful program. He has spoken twice at the Nelson Nash Institute, at the annual Think Tank conference, wonderful sessions. And of course he has an incredible blog, very popular blog on medium with over 200,000 words on the infinite banking concept. So we are going to speak to that a little bit today and we're just so grateful to have you joining us again, Ryan. We did say in our last episode we'd have you back. And finally here we are many, many months later and we're happy to spend this time with you. How you doing, sir?

I'm very well. Thank you for the introduction. I appreciate it. It's always good to talk to y', all, my Canadian comrades and IVC Land.

I appreciate the word comrades there. That was a. Was that a socialist Dig. No, I'm just kidding. Click.

He hangs up. He ends the zoom meeting.

Hello? Ryan? Ryan, are you there?

Ryan, it's always great to be with you. And you know, we were chatting just a little bit earlier about some things as it relates to the message, the message of becoming your own banker, the infinite banking concept, of course, founded by the late R. Nelson Nash, a mentor to all of us and so many others, and that there's a lot of noise going on in the marketplace because the message is being proliferated in the marketplace in a way that has obviously a marketing angle to it and using terms like, hey, if you want to learn the concept of the truly wealthy, and just to name one. But the one thing that I think we really admire about you and the good work that you're doing and that our viewers and subscribers and listeners will all get great value from, is that you really take the time to think in preparation for articles that you write to help people see things from a different vantage point, but also to really bring clarity to what's most important. Most recently, you had authored an article that is just outstanding. We're obviously going to provide a link to that in the show notes. But can you maybe share with our subscribers and viewers what inspired you, what inspired you to write the article and maybe give us a little context of what led up to it and what inspired you to create a response?

Sure, yeah. And I appreciate the preface you provided there to all that. Very nice of you and flattering. So our good friend Dave Ramsey, being a bit facetious, but very popular radio show host, I would call him a financial entertainer. People who talk about things financial in an entertaining fashion, has a very popular YouTube channel where he will take snippets of his radio show, sort of conventional terrestrial radio show, and take portions of that that are videoed and of course, audio recorded and posted up on the Internet. And every so often, three to six months or so it seems, there's somebody who calls in about something related to ibc. Due to the infinite banking concept. It's either self banking, bank on yourself, banking with life insurance, you know, some iteration of the word bank with dividend paying, whole life insurance. And my impression of it, my characterization of it, is that Ramsey takes the opportunity to sort of tee off and get into his classic angry central, eastern, Southern sort of hokey down home rhetoric, right? Goes into a lengthy diatribe, or it's very polemic and people love that. Or people like the, you know, the sort of off the cuff, righteously indignant sort of attitude. And which is all fine. You know, I'm all for Brett. I did a lot of debates in high school, and I'm all for rhetoric. And there's no. I get, I get these things. I get people spite, digression. But I get clients who. New clients who be talking to me. And we're just asking, I'm asking about their background and financial management and whatnot. And they'll eventually say, well, you know, I've read some of Dave Ramsey's stuff and, you know, I don't want you to get angry. And they think I'll be mad at her for having listened to Dave Ramsey. And I don't know, maybe I don't specify or clarify or communicate clearly enough. What I don't like about his message, it isn't that I'm against saving. You know, the whole debt snowball thing and getting out of debt. You know, the debtor is enslaved to the lender. No kidding. You know, okay, it's all. It's all great to be out of conventional debt. And I get that. The problem is that all successful deceptions are half true, right? And yeah, saving is good, no kidding. But what we then go and do with the rest, dump it all into mutual funds or some sort of stock market deal or what have you. The other half of his story, of his narrative is what I've got a problem with. And that's we can all agree about basic financial stuff, right? Saving is better than not. Sure, but that leaves a whole lot. And we could talk about it in terms of capital. Richard, I'm glad you mentioned capital. And Jason, you noted that I try to come from a different perspective than the contemporary financial industry. My background was as an Austrian economist. I wanted to be a professor, and my focus was money banking and capital theory. In fact, the subject of my dissertation is capital theory in the Austrian tradition. I think what's missing from the contemporary financial advisory discussion, just the general financial advisory discussion between client and advisor, is capital. If we're not talking about capital and capital maximization and optimal deployment of capital over the course of an individual's lifetime and then intergenerational, you're not having a general financial advisory discussion. You're talking about something else.

Right.

And that capital. The reason I bring up that capital point is that that's what's missing from all of Dave's diatribes. It's all. It comes down to rates and, you know, of course, the evil commissioned life insurance agent, oh my gosh, can't get anywhere near him, might get some capitalism on you.

None of the people that are recommended or that are worked with through his various organizations or whatever would earn a commission.

Right, right. And it's part of the anti capitalist mindset. Ludwig von Mises called it the anti capitalist mindset. It's all income at the end of the day. You can call it revenue, you can call it sales, you can call it commission, you can call it fee, you can call it whatever you want, it's income. Right, yeah. And you can state a fee as a percentage in terms of whatever the investment outlay is. And that's essentially what a commission is, a percentage of some other cash flow. So the arbitrary, I mean, we know what it is. It's indulging that contemporary suspicion, that sort of gut feeling of commissioned agents. Unfortunately, there's plenty of agents out there who have earned their negative reputation. So it does make it difficult on others who. Yeah, you know, it's okay to earn income, generate revenue, enjoy a profit, but if the particular means by which that is done is the so called commission, then yes, you're easily lumped into this stack of reprehensible people who are not to be trusted. Yeah. So that's the background, that's the context. Dave was going into one of his regular three to six months being off on, you know, a caller calls in. Dave has a co host there typically with him, who I'm pretty sure could be speculated, pretty sure that it's one of the people in his ELP network, his, his network of licensed providers or what have you. People who pay him a monthly fee, don't call it a commission, but they're paying him something to participate on his platform, which, you know, fine, go for it. But you compare the fact that you account for the fact that there's likely some financial remuneration there in the background with no value at. I mean, God bless the guy, he's probably nice, probably has great clients. Nothing against him personally, but all he was there to do was say that, you know, the idea of paying premium into a dividend, paying whole life policy so that you can get a policy loan and turn around and take your money back out is like stacking rocks up on one side of the yard and then carrying them back and forth. I mean, part of me is, it's absurd. It's totally absurd. And part of me gets frustrated with it. But the other part is like people have to, at some point people have to realize that this is not an honest, straightforward evaluation or response to what people like us are talking.

Right. I think that's Part of what Nelson was looking for. That's why he spoke so much about financial noise, which is what we're describing here as a scenario of. It's the pristine scenario of financial noise. And he would say we're just looking to find fertile soil and we want to plant high quality seeds. So the viewer who's watching this program, who's able to say, wait a second, something doesn't seem right in that description, there's got to be more to it than that. That's the ideal candidate of someone who is looking to get into that exploration of what's really behind the scenes, what's behind the curtain, as it were, in this conversation that's being had in this, well, half assed conversation. So I think that, you know, what we're doing with our podcast and with you guys is that you're trying to get conversations going with people who are ready to say, wait a second, what I heard on, you know, Dave or some other financial entertainers program that doesn't kind of sit right. There's something seems a little bit off with that. There's got to be more to it. Well, the reality is there is more to it. Now it's time to go and get off your butt and do some extra research.

It reminds me of some of the fundamental messages that Nelson shared with us so often during the time that we were blessed to know him. And he would first and foremost remind people that banking is a process, it's not a product. And he would ask that question that begged thought and he said most people would rather die than think. And everything begins with the way that we think. Who is the banker in your life today? Someone must perform that function. It can and it should be you. And all of this other nonsense and comparison of you should purchase term life insurance and invest your money into mutual funds earnings, an average 12% rate of return as Mr. Ramsey espouses. And that whole life insurance is not for anyone.

That overcharging for the death benefit.

This is just not even a discussion in the same time zone. If we move the conversation to who's controlling the banking function as it relates to your needs. And that understanding again that everything begins with the way that we think. And the icing on the cake that if you don't understand the problem, the solution just won't matter to you. And that's what's missing and that's really the message that we continue sharing with the general public, is that if you feel like there's something fundamentally wrong with the financial system and you can't quite put your finger on it. Then we again take them to the question and people say, wow, yeah, you know what? I'm not the banker in my life. And what on earth does becoming your own banker mean? And bringing them back to the book and bringing them back to the message. Because Nelson also said, and I can't recollect verbatim what, how exactly he phrased this, but it had something to do with the. The impact of this cannot be communicated through argument. It's more caught than it is taught. And so you can share knowledge. But we've all found ourselves in situations where we may feel compelled or drawn into an argumentative approach. And we, we've just got to continue to take a step back from that and say, hold on a second, let me ask you a question. Who is the banker in your life today? Well, what about the rate of return? And what about commissions that advisors make? And what about this and what about that? Look, it's a personal economic system, monetary system, with a death benefit thrown in for good measure. We've had to fulfill our duty of care of delivering death benefit to grieving families. Not one of those grieving families firstly has ever said, gosh, I wish the check was for less. And not one had ever said, you know, I'm really thinking that rather than the 1.25 million that you've showed up with income tax free, I really wished I had inherited taxable accounts like mutual funds.

I really wish I was going through that probate process.

Not one, not one has ever said that. And the discussion again comes back to Mr. Ramsey's take on dividend paying, participating, whole life insurance. I think Mr. Ramsey, when you think of the great advisors out there, and there are many great advisors out there, with all due respect to our colleagues in the profession, many, many great advisors out there who possess attributes, character, professionalism, gratitude, appreciation, caring for their clients. I think Mr. Ramsey could learn a thing or two about that. With all due respect.

Yeah, the hostility, the nastiness, the person, you know, the personal attacks, the ad hominem, which in any other context we're having, a professional discussion would be pegged immediately for as a failure to put together a coherent argument, the reversion to the ad hominem stuff. It's like, obviously we're getting away from the substance of the discussion and the merits of the various arguments. And I want to be. I feel like sometimes we, the industry IBC folks, we say that we don't agree with what Dave has to say about whole life and then about Investing. And I don't know, at least in my world, I try to pin that down very specifically. Like, what exactly is it that's wrong with what he's saying? And you referenced the idea of a 12% annualized rate of return in some sort of stock market and pick your number. 8, 10, 12. I don't care, I don't care what the number is. The issue that's not being addressed, and this doesn't have to do with Dave in particular, though he falls under this subset. It has to do. I was complaining about Facebook, which is the most productive thing one could do during their time, but I was complaining to Facebook about a conventional financial paradigm in general. It does not address the business cycle. It does not address that every five to ten years we have these serious crises where the value of things like titles, companies traded in the stock market, like real estate, things that, as Austrians would say, are at the top of the structure of production, things that are the prices of which are very vulnerable to changes in interest rates, which in turn are very vulnerable to changes in the rate of acceleration of money supply growth, which I have an academic journal article paper coming out on. But all beside the point. The fundamental point is that we have a fractional reserve banking system in North America, in the west, throughout the world. And the natural, predictable causal result of a fractional reserve banking system are these booms and busts, these periods of tremendous increase in the value of, say, company titles traded in the stock market. And then these crisis periods where they plummet and fall off a cliff, right? This is 08. This is the stock market bust. This is the end of the 80s, every five to 10 years. And there's a whole other discussion to be had about how we can see that coming before it happens. But the fact is that it does happen. And even the people on CNBC and the conventional financial people all see it, they all recognize it, right? So this isn't up for dispute. This is the, this is a fact of the, the financial and economic arena in which we live. Okay, so here's the problem. We talk about 12% annualized rates of return over what time period? You know, people will choose some arbitrary time period and say, well, look, I, I can put numbers into an Excel sheet and I can calculate an internal rate of return. It's like, okay, but here's the problem. You're using historical figures. When are you going to retire in the future? When will that unpredictable, hopefully never will come, severe disease or injury come? When will this. In other words, when will a need for capital in the future make itself known to you, when exactly will that happen in that uncertain future? I don't know. You don't know, and the advisor doesn't know. Okay.

And the likelihood of your account values being on the upper side, your retirement date doesn't correlate to the whims of a stock market or any market of any kind. It's just a random date in the future. Well, if you were, you know, quote unquote, doing the, you know, world vision of retirement in 2008, when everything crashed, guess what? You were working five extra years or may or more in order to make that event happen because the timing didn't.

Work out for you. Exactly. So that is the. And you're right on it. That is the problem with using historical performance to talk about what you should do for something in the future, because we have no idea whether that. That whatever you call it, I don't like retirement. Nelson didn't like retirement. I get it. But if there comes a time in the future where you want passive income of some sort, the fact remains that we will not know, and you cannot know whether or not that will be in a crisis period, whether or not that will be during, shortly after, just before a major economic recession or depression, a major crisis that will cause the. The account value that you're depending upon to provide that ongoing cash flow late in life, it will cause it to become uncertain. And so it's like that. That's why I kind of. I don't. People. I've been accused that there's a whole hate group. There's a Banking with Life hate group, by the way, on Facebook. And awesome.

Must be doing something right then.

That's what people tell me. And one of the things is, I'm accused of being arrogant and condescending. It's like, well, if you saw things the way I saw them, you'd get frustrated, too, because telling people that they ought to make financial decisions based on arbitrarily selected historical data using some internal rate of return calculation, and then saying, well, that's the basis upon which you're going to go plan for your financial future, if that doesn't irritate people, then we just don't have a full understanding of what's going on because that should irritate people.

I'd be curious to see what the dialogue would be on Mr. Ramsey's radio show if someone in that position with a commercial bank reached out and said, hey, listen, we're considering reestablishing Tier 1 capital, and we understand that you have a problem with participating, dividend paying, whole life insurance. So would it be your recommendation that as a commercial bank we put all of our capital into mutual funds? Is that what we're understanding? Dave Ramsey said something that was actually intelligent. I heard him say it and I've repeated it myself because there is absolute truth to it. And he said what money does is amplify more of who you are. So if you're a total complete jerk, the more money you have, the more of a total complete jerk you will be. And Mr. Ramsey is absolutely, and I believe that, you know, he's a believer and he, I'm sure that he's got, you know, a special place in his heart for kindness and for maybe some humility and hopefully hasn't lost all inspiration to learn something new. But our role in dialogue with someone like him is not to be argumentative.

Absolutely. I say all the time I have no interest in convincing anybody of anything. I'm not here to persuade anybody to change anybody's mind. Jason, you've said it. I know James has said it, Nelson has said it. A man convinced his own will is of the same opinion still. And so I have no interest. And so when I get the people who they want to call, they want to debate, they want to try to convince or change my mind on something that pertains to the philosophy of ibc, which I learned from Nelson, I learned from James, I'm not interested. I'm not interested. Likewise, I don't expect Dave to be interested in taking instruction from me, you know, so the way I view it, it's the same thing that I view with the 1090 guys who talk about, you know, the mutilated structures of the dividend paying whole life contracts. It's like, look, you can eat fast food if you want that. It's quick, it's easy, it's well marketed, it'll taste good. At the moment, you can go get that. Now, you might want to have a discussion about whether that's healthy for you long term.

Right.

There may be some other considerations to evaluate that you might care for. The speed by which the food gets from the kitchen to your hand is not the sole determining factor of where you should go to eat.

Usually that stuff speeds through you the other end too. I mean, it's a full process right there.

Garbage in, garbage out. But look, that's available. If people want that, they can go get it, want to be capitalized. If they want to be immune from the business cycle. Right? That's the alternative. We talk about how the business cycle poses a significant problem to this conventional financial framework that relies on so called annualized rates of return. The solution is to just opt out of that. Build capital, build this accumulated value in something that is not exposed to the market. And Jason, you had mentioned something too, and Nelson used to say it, you know, this is a personal monetary system with the death benefit thrown in for good measure. I have found people who, they'll call and they'll say, you know, I care about cash value growth. I don't care about the death benefit. I want as much cash value and as little death benefit as possible. And I'm like, this is of course, before we get into the part where I make the case that cash value is a function of death benefit.

Absolutely.

You don't get cash value without a death benefit. If the cash value equals the death benefit at age 121, James has said this. Do you want a big death benefit or a little one?

Well, and we're still at age 100 here in Canada.

100. Okay.

Yeah.

And the largest mutual life company in the country has repeatedly indicated that they don't have plans presently to adjust that.

Interesting.

You know, it's the cold, Ryan. See, it's the cold. It gets in our bones. If you. And we just can't make it past that 100 mark.

Well, that's no problem. Do the policies just endow if the insured gets to that age?

Yeah.

And so if you. Again, if we, if we go back to. And gosh, you know, we. Not an episode can go by without giving credit to and appreciation for our Nelson Nash. Because the more we see, the more we see we didn't see. And when Nelson said it so poignantly that this process of becoming your own banker is not about addressing the yield of an investment. It's all about how you go about financing the things in your life which can certainly include investments. And so it's. For people who are researching this process, the tendency can be. And the. Pardon me, let me try that again. Get the fishing rod out. Catch it.

There we go.

The proliferation of the message in the marketplace is product focused. We want to try to convince you that a participating dividend paying whole life insurance contract is a much better product than putting your money into some colorfully named mutual fund. And Nelson, had he been sitting here today, would say, you're missing the point entirely. If you believe that the process of becoming your own banker has anything to do with life insurance, then you are sorely mistaken because it has nothing to do with it, it's just a tool. And if you put the best tool to get the job done in the hands of an incompetent, not only will that person not turn out any good work with the tool, they'll likely break the damn tool. And I can't emphasize enough to people who are researching this that not only reading our Nelson Nash's book and speaking to an authorized infinite banking practitioner who can demonstrate through experience their credible knowledge on this process, connecting with someone like Ryan, reading, reading what he is publishing will serve you well because you will see it from a different perspective. Eliminate the noise, get to an understanding, especially as it relates to the importance of capital formation in your life. We all need the use of money for as long as we're here. Whatever that medium of exchange is, whatever that form of money is, digital or paper or otherwise, and it has to, it must reside somewhere. What better place to have it reside than here?

Now, that's one of the most beautiful things that Ryan identifies in this article we're talking about. So there's so much good in this article, and you referenced a minute ago, Ryan, about the death benefit. You know, do you want a big one or a little one at age 121? Well, the death benefit and the cash value is simply a net present value assessment of what that future death benefit is going to be. And here's something that we teach people about because again, that same comment, well, I want the one with the biggest cash value. I don't care about the death benefit. I'm like, well, hold on a second. The only way you can get the cash value is to ramp up the death benefit. It's the only way because it's not. You pay a premium and you get cash value. No, I'm sorry, You pay a premium and you get a base death benefit. And if the premium is structured well, you also will be buying a new chunk of death benefit, which is the equivalent to a single premium miniature life policy just stacked on top of the one you have. So there's a sequence of operation. You probably drive a car, Ryan. When you go to get in your car, do you just jump through the windshield and the car just turns on and drives you, or do you open the door, you use the key, you start the engine, maybe you put on your seatbelt, and then you check for if there's anyone behind you as you back out of your driveway. There's a sequence of operation before you go from A to B. Right. It doesn't. You can't like revert those steps in Any way. So there's a sequence of operation with participating whole life insurance. First of all you got to get approved. You know, there's whole things about that. But you get the policy, then you pay a premium. Nothing happens unless you pay a premium. You insert a premium and in that premium, if a portion of that premium is a paid up additions rider, well guess what? That buys a chunk of death benefit first. Death benefit is accumulated first and then a corresponding chunk of relative cash value towards equaling that future cash flow of the death benefit is created. It's a simultaneous transaction, but one happens before the other. That's the sequence. And so you cannot get the cash value you're looking for without accumulating the death benefit. So it's the death benefit that then drags cash value kicking and screaming all the way to an equalization point at age 100 in Canada, 121 in the States. Cash must equal the death benefit by the maturity of that contract. The cash has to play, it has to follow the leader. The death benefit is the leader.

Yeah, it's all how. And I go through this with every client. I tell people that Nelson said if you know what's going on, you'll know what to do. And my role in this is just to help you understand what's going on. Once you understand what's going on, you'll know what to do. I'm not going to tell you to do anything. I don't tell people how much premium to pay. And I'm going back to the whole persuade you, convince you kind of stuff. I don't do any of that. We're just here to understand what's going on. Unfortunately, the industry has really failed magnificently, I mean the conventional financial industry to convey what dividend paying whole life insurance is to their people, you know, even on their own terms. It's a problem. Like if the goal of a conventional financial services industry was to sell a substantial portion of death benefit because that's what they cared about. Well, an individual who wants to do the infinite banking concept is going to end up getting a whole bunch of death benefit anyway. So you start to ask, well why isn't this more popular? And it gets into the problems with assets under management, the compensation model, it's a separate point. But you know, we've brought up capital a couple times. I want to pin it down specifically. So capital is the monetary value of an asset with acquisitive purpose. The monetary value of an asset with acquisitive purpose. It's equity in a home. It's you know, the value of a checking account. It's a, it's a hypothetical value or it's an abstract thing. You think, you know, take the housing example, for instance. A home or piece of property is only worth what, what somebody else will pay for it necessarily in the future. And so we can only judge. We can, we can make an educated judgment, but we can only judge what we think somebody else in the future, however short or long term we're looking, we can only judge how much that person may be willing to pay. And we can use comparables and so on and so forth. But at the end of the day, that future sale price is unknown. We do know how much debt, if any, has to be paid towards the lending instrument we use to buy the property in the first place. And then with the idea of what the market value is, we subtract the debt owed and there you have your equity. But because the equity portion, the capital portion, is the difference between a hypothetical future number and a real number, we know that this capital figure in most context is of an uncertain quantity. You can sort of guess closely at what the equity or the capital is in real estate or what have you, but that's capital. And in the article I mentioned it further. And again, talking about getting back to Dave and how we can start to tell that he's really not speak. You said it early on, Jason and I wrote something like ships passing in the night because we're using different language. You know, he said he's on another planet or in another book. You know, we are in a sense talking past each other because we're not, like I said at the beginning, not with Dave. It's not a conversation of capital. And you, we. The reason I bring that up is you can you notice that he talks a lot about money, but never about capital. You know, it's always about, do you have the money? Well, money's. Look, don't get me wrong, money's great, but money is simply the general medium of exchange. It's the thing we use to facilitate exchange in order to acquire the stuff we want to fulfill our preferences, our needs and wants. That's all it is. And monies have changed in the past. This occurred to me. People sometimes object to the idea of IBC on the basis that, well, in the US it's valued in the US dollar. And don't you know that what's happening with the dollar and the collapse no longer the world reserve currency is going to change? I'm like, yeah, yeah. Do you know that in Canada, they sell life insurance. Do you know that they don't use the US Dollar as the money up in Canada, but they still have life insurance. You know, it's. If you can do, you can have this product, you can establish this relationship, Richard, which is what you were getting to, between a future value and a net present value in any money. What we need is some money. There has to be a money to use. And we need property rights, we need contracts. If we've got contracts, if we've got property, if we've got money, then we can establish relationships between future values and present values. And so long as we can do that and we have sufficient mortality experience and all the other things that go along with running a mutual life insurance company, we can get these contracts and we can start to harness capital. We can harness purchasing power. The longer. I had a little aha moment. I think it was earlier this year, late last year, that whenever we're paying a premium, it's really about siphoning off this incoming cash flow, about harnessing it, about harnessing as much of it as we can, given our ability to pay premium and secure, in a sense, securing it for ourselves, off into the future where it's going to grow faster and be available for our collateralization and use when to use what for what we want, when we want, to repay, if we want.

And is there any downside whatsoever that anyone can identify to ever increasing uninterrupted daily cash value accumulation? Can we objectively identify one, just one downside to that?

This is sort of indirect. I think the one downside for people is having to separate themselves from their preconceived idea. And I think, especially for people like Dave, conventional people, economists, my gosh, people who have built up an identity, a professional identity that is intertwined tightly with these conventional ideas. I think the weight or the cost involved with letting go of those preconceived ideas, letting go of those foundational building blocks of their identity, is too much of a cost. It won't happen. But to your. I think the substance of your point, it's no, you cannot have too much capital. I was thinking of this earlier word, a very medically intense couple of years here in the world. That's as far as I'll say it. But, you know, the medical professionals have this much better terminology, I find, with respect to their problems than finance and economics people do with ours. There's this idea of a prophylaxis, of something you take on, a preventative measure to ward off things that you expect in the future. And this, the idea came to me that capital, the best version of which is called cash value and dividend paying a life insurance capital is economic prophylaxis. It's the thing you, it's the thing you take, the thing that you search out and keep so that when those bad things come, recessions, depressions, financial crises in the economic sense, you're ready. And the people who are well capitalized when, not if, when these financial crises occur, they're the ones who make it through. In fact, if they have substantial access to capital, they're the ones who prosper. Because it's a blue light special, everything's going on sale. If you can get access to capital, you're gonna swipe up some pretty good deals.

And as you mentioned in your article and in other points that you've made outside of that, capital on demand. And so when you have, whether it's ready, accessible capital, whether it's surplus capital, however you want to characterize it, is that going to exacerbate or solve a financial problem?

Exactly.

And is it going to prevent you or enable you to capitalize on an opportunity that tracked you down? So again, everything begins with the way that we think and the message of becoming your own banker. The infinite banking concept is ridiculously simple.

Your identification of when these future problems happen and when your need of capital, you don't know when your need of capital is going to exist. But the current environment, the last two years of medical shenanigans taking place globally, many people worldwide have had a desperate need of capital because they've lost jobs, they can't go to work, our business has to close, we're shut down and blah, blah, blah. So they're pulling levers and strings all over the place in their financial life to try to find a way to access capital because they don't have any. And the places where they thought they were storing it have a barrier of restrictions on them. Like I can't get out of whatever my RSP, my 401k, whatever these tax qualified plans, or it's locked up in my house, but I'm not working anymore because I got forced out of my job in one day's notice or my business got shut down. And so even though I have all this money in my house that I paid off, I can't touch a dime of it because no lender, a third party lender, will look at me in that situation. Which means you have, you have, you may have capital somewhere, but you have zero access, you got no liquidity, which Means your problem just went and got amplified. It's like you poured gasoline on your problem. So this, this idea that you can. You can have this preventative measure pill which is participating, paying whole life insurance, which is the. I love the way you say this, by the way. The systematic optimal capital accumulation. When you pay a premium, that's what you're creating. You are. You're no longer having to worry about those situations which will appear. It is inevitable. There is no way around a situation in your future lifespan if you're a listener to this where there's not going to become some requirement for you to access capital quickly. Well, the only way you can have it is if you have it.

Right. Right. I talk about you can the way I. And this is a very exciting thing I'm going to do with this in the future. But that's all coming down the pike. But you can think of capital in terms of its quantity and then you can think of the asset in which capital accumulates in terms of its quality for the purposes of capitalization, for the purposes of accumulation and deployment. And you can imagine the various assets on the planet. You can rank order them in terms of their quality, in terms of their efficacy for the purposes of capital accumulation and deployment. There's not to pick on real estate, but there are problems with real estate. There's an upper limit on how. On the value of these properties. The upper limit is what somebody else is willing to pay. Your equity is not going. Your equity can't increase beyond the market value of the home. The market value of the home defines the limit for the capital you can generate. There ease of access to the degree of access to and the certainty with which you can access it. Right. That everyone is used to. We take it for granted. People don't even articulate it. These terms that outside capital loans have to be applied for. We have to ask somebody else's permission for them. And it's up to them. Like Nelson said, those with the goal make the rules. They're the ones who determine what sort of we have that we have terminology for it. Liquidity crises, financial crises are characterized by liquidity events. This euphemistic sterile term, lack of access to capital, prohibited access to capital. I don't know what's going on up in Canada, but in the US major commercial banks are starting to end their practice of providing home equity lines of credit.

I think it all began with Wells Fargo. Is that right?

Wells Farado. Yes, Fargo. Excuse me.

They started doing that and they did that in like 0708. As well as the crisis, the financial crisis started to take place. The same situation. They froze them. They froze whatever HELOC you had and they turned it into a blended principal and interest payment, which was often higher than the payment you were making, which further exasperated consumer bankruptcies and so forth for people.

They wanted to resubordinate the debt.

And.

And it's in the, it's in your contract. You signed a contract and they got the title. They have, they have that's registered on the title of the property, the deed. So you. They can make those changes. It's probably in the paperwork and it's in one of those 25 pages of.

Fine print that you sign. Yeah, yeah. Without reading, probably. Which, I mean, my gosh, the binder of papers. I get it. But so, yes, I doubt that the.

Individual who asked you to sign it even knows what's in the document.

Oh, yeah, absolutely. No question. Here, sign this.

What is it?

I don't know. Yeah, yeah. So, I mean, we've talked a lot, so access to capital is vitally important. Just, just having, having. This is why I don't like net worth figures. You know, cnbc, Entrepreneur Magazine, Inc. Or whatever, all the various, you know, they have the list, the Forbes, they have the list of the wealthiest people and then they talk in terms of how much capital do people have? All those lists are not in terms of wealth, they're in terms of capital. They're the list of who are ostensibly the most capitalized. But nothing. There's no complementary index or ranking of whether or not that net worth, whether or not that capital is liquid. Now, for a lot of people it is. Right? Warren Buffett can go to bank of America and say, listen, send me a loan. You know, Jeff Bezos can do it. So there's probably a degree of liquidity that goes along with it, but who knows what the list would look like if it was recalculated and say, cash equivalent capital. Who knows what that would look like? Another, I don't like net worth figures to really understand someone's financial situation. And I don't even care much about what the level of income is. I care about the history of income increases. I care about the expense experience, how much of that income are we spending? And then I care about high quality capital. And that's really. It shouldn't just be me. I'm not pulling that out of nowhere. Everybody should care about that. Those are the things that really matter because that's what's going to determine your experience in these negative crises. But Jason, you had mentioned it earlier, and it's something that Nelson pointed out. This is a series, maybe half of my dissertation is this relationship between capital and opportunity. Because we can talk all day about part three of becoming your own banker. It's better to finance the purchase of a vehicle through the IBC method than it is through the CV method or cash or the conventional financial system all day. And that's true. And what Nelson showed is correct, no question. But then there's the story he tells in building your warehouse of wealth, where a friend of his, a pilot friend, who had a bunch of land and encountered a sudden need for capital, was willing to sell that land at a discount to Nelson. And because Nelson was well capitalized, he could buy it. And then of course, the guy came back around for more and then cut the price down again. And then 15 years later, however long it was then Nelson financed it when he sold it. I mean, how many.

15% interest for 10 years.

Yeah. Okay, what's the full rate of return on that? There's this whole thing about internal rates of return. How fast does the cash value grow? When do I go cash on cash? It's like, it's unfortunate in that it's economically incoherent because what we're doing with IBC is not investing, we're capitalizing. And we cannot, should not, evaluate dividend paying, whole life in terms of investing. It's like talking about medical procedures in culinary terms. We're doing two different things, right? And so we should use the language appropriate to what we're doing. But then beyond that, beyond just the economic talk about missing the forest for the trees, man. I mean, there's. I'm starting to see this in my own life. I'm starting to see it in the stories my clients are telling me about the things that come along that come their way. I used to get a little irked at the question of, well, what do I do with my cash value? What should I be taking loans and taking policy loans for? And as I've become wiser, I realized that it's a perfectly legitimate question, don't get me wrong, but I think people generally, genuinely and generally haven't considered the relationship between capital, between the amount of money they could get to if they needed it, and the investment, or the entrepreneurial opportunity landscape. The way I've come to explain it is that your access to high quality capital will transform the economic landscape. The more capital you can get to, the greater the scope and the greater the depth of the landscape of possibility. All day Long, all day long. Things that you previously couldn't become involved in, things that wouldn't even make themselves apparent to you, are now not only potentially possible, but you may be the only one with the capital able to get it. Yeah. You know, and we. But they're both valid. Right. We should talk about the relative efficacy in terms of financing the things you're going to finance anyway through policy loans, through the IBC method all day. But we also should point out, and it's in, Nelson, it's in building your warehouse of wealth, the relationship between capital and opportunity. Because that's the positive motivator. You know, sometimes I think, you know, 10 years, 20 years down the line, how would you like to have access to your lifetime profits?

Well, and speaking to the human condition, one of which is really important to overcome as it relates to, directly to the formation of this capital is Nelson shared something.

Richard.

Gosh, this was, he was in Edmonton, it was in I think 2013. And he said to us, it was the first time I heard it anyway. He said, introduce me to someone who's paid a premium for more than seven years and I will have met someone who's conquered Parkinson's law.

Yeah, absolutely.

Because we were asking questions about the twin sister example and he was educating us on that. And that's when he why did you.

Choose seven years, Nelson?

And that, that was his response.

That's why.

It's a lesson, lesson within a lesson in a spreadsheet.

Yeah. And the beautiful thing is too, once we really understand what's going on in IBC and in dividend paying, whole life in particular, and you know how cash value is going to change and grow and grow at an increasing rate over time. You know, we start to look 20, 30 years out and say, look, these are the easiest payments you are ever going to make. You know, you pay a premium in and you get a multiple in cash value accumulation growth that year. Oh my God. Not only is that going to be an easy payment to make, you're going to wish there was a 0 or 2 or 3 added onto it. Yeah, right.

And it's not just about capital formation, it's about capitalization. You didn't get that multiple of cash value growth in that year because you paid the premium that year. You got it because of the capitalization.

That occurred beginning day one, that effective compounding. And it's another intersection point with the conventional financial industry where they talk about the eighth wonder of the world, the power of compounding. It's like none of you sell an asset in which you can achieve compounding because the value of the thing is going to go down at some point. You have to have guaranteed growth. Yeah. You can't interrupt it. If compounding is so great, then those folks are the ones who should be beating my door down. Beating your guys door down.

Yeah. The other time that, that, the biggest other time that it gets killed. That compounding factor is when these, you know, financial hurdles come up, these recessionary periods, the business cycle rears its ugly head. Things shift, things change. In your unique marketplace, whatever your sector, if it's oil or lumber, like whatever it is that's going on in your neck of the woods and all of a sudden, boom, everything shifts. You need capital. What do you do? You pull it out of that thing where it was supposed to compound. No more compounding. And it's not, it's not no more compounding. Like it's a multi generational decision. If you've got family, kids or something you care about, you got 100 grand in XYZ fund or stock or piece of real estate, you sell that real estate, you sell that stuff, you close it out, you realize your gain or whatever it is, you have your, your, Your dollars or U.S. american, Canadian dollars to go put it back to work somewhere. You've lost the compound potential in that for the rest of your natural life and the life of every future generation that ever follows you, that's a permanent transfer away from your family lineage.

Yeah.

And then, whereas if you're, you know, implementing this process by actually practicing it in your life and you're utilizing the tool to implement it, well, when graduation comes and there's a windfall, well, that windfall not only would have corrected a lot of financial mistakes that you've made throughout your lifetime, but it also returns to you the equivalent plus more of perhaps if you look at it from this vantage point, maybe all of the income tax that you've ever paid and that money comes back not because it is a tax return, a tax refund per se, but it's just numerically, it could be the same or more.

Or more, yeah.

And so you're replenishing the well, you're filling up the aquarium again. And so what downside can we attribute to that? No, I'd rather not get the equivalent or more of that back. In fact, I don't think I'm taxed enough. Like I should pay more now and again. It's just Nelson described it best. It's an exercise in imagination. And everything begins with the way that we think that's why Nelson said he.

Never paid taxes throughout his life. He says, plus one, minus one. What do you get? You know, he's like, well, I, I get Social Security. Well, didn't I have to put money, you know, like the, the amount they're going to take in taxes for me for my annual income is the equivalent to what that Social Security check is, which means the money comes in from the Social Security and I send it right back to those guys who are going to take it out of my back pocket. One, minus one zero. It's, it's a net effect. The net effect is zero. And, and because he was, he flew for the National Guard to, to do his passion, his love, his hobby of being a pilot, they paid him to do that. Well, that was the equivalent, what he earned in that position was the equivalent of what he paid in taxes throughout his entire life. He basically never paid taxes because the net effect was zero across his lifespan.

And remember him sharing that.

Jason? Yeah. I wanted to make sure we touched on something you said earlier on, or at least mentioned in passing, that one of these financial Entertainment things on YouTube was talking about how only the wealthy can do it. And I see that sometimes, too. People talking about big old premium numbers, they show up, put up an illustration or an Excel sheet with numbers that ostensibly came from an illustration, and it's 100 grand a year and $500,000 a year. I think we should make a point to convey that as long as you are spending less than you make, you're capitalizing somewhere, and it might as well be in the place that you own and control and can borrow against that will.

Very good point.

I don't like the, just kind of like condescending, this kind of bullying attitude. You know, you got to make a certain amount. I've heard of guys who are telling people that what IBC is, is this particular policy. Here's the premium number, right? This is what an IBC policy is. Here's the premium number. Here's what that structure is. You can take it or leave it.

If people knew and perhaps even studied Nelson as much as we and many of our colleagues have, we would remember that Nelson said it the best. You don't have to be rich to get into the banking business. Someone or some organization must perform that function. It can, and it should be you. Nowhere in becoming your own banker or building your warehouse of wealth or the case for ibc did Nelson say.

Let.

Me introduce you to a concept of the truly wealthy. If somebody could pin. If somebody could point that out. To me, then I would stand corrected.

And the other part of it too is that it's not even about wealth. It's not even about material goods and services.

Money is not wealth.

Yeah.

Period, Full stop. We don't have to go into the marketplace and be communicating using language like that. Yeah, let's, let's bring it back to the simplistic. Let's bring it back to the reality that at present isn't it true that all your money is flowing through the books of someone else's bank? That true? Yes or no? Whether you're wealthy, middle class, lower middle class, poor, destitute, whatever, money's flowing. At some point it's going to flow through our hands. But does it not end up right back in the banking system? Yes or no? Don't have to be wealthy to understand that. That's the phenomenon. That's what's going on out there.

I think there's an argument to be made too that the people who are low income have an even more urgent need to accumulate capital.

I would agree.

Because you're oh so much closer to that sustenance level. And all the more important that you have capital for when the AC goes out or you've got to, you finally do get a new job and you got to go get a wardrobe to go with it. It's all the more urgently pressing. Whereas for somebody who is of higher income level, okay, maybe it's the difference between the kind of house that you go buy at the next real estate auction. Right. But you're still going to have a nice dinner at night, you know. Yeah. So I think it becomes even more.

More in the very institution that's controlling that function as it relates to your needs. That very institution itself accumulates substantial bank owned life insurance dividend paying, participating whole life insurance. Now granted, the commercial banking system cannot utilize those contracts the way that the three of us can personally. The commercial bank can't go and take a policy loan and buy a piece of real estate. It's tier one capital. So the utilization of the tool is different, but the appreciation of that tool is absolutely different than what somebody like Mr. Ramsey espouses about that tool. So Mr. Ramsey, please post, please post a video, please post a video and humor us and tell us why the commercial banks are so stupid for putting so much capital into these instruments. Tell us why. And so, as Nelson would say, and forgive me, but what a fool.

Yeah, what a fool. And one thing I have to be able to touch on this, especially because we're talking about Dave and his influence in the church. There's a whole other level. But I'm curious how it works in Canada. One of the things that I am on fire about, like I really want to see happen in the US is IBC in the church, in the charitable giving world, in the not for profit or income tax exempt world. Do you guys see much of that? Is the tax system similar in that respect, but there are these non profit entities or.

Yeah, I would say that there are pockets of that that I've been aware of, I guess over the years. But speaking to that from a different vantage point, many people often ask, well, what would happen if won't the government step in and shut this down or take this tool away? So I'm a member of the Conference for Advanced Life Underwriting. It's a fraternity of professionals who are consulted regularly by the Minister of Finance Office here in Canada.

Interesting.

Your equivalent of the Internal Revenue Service, the Canada Revenue Agency. Talk about a gross misclassification. And so the consultation, the government's position is that these contracts solve a social problem. They don't want the general public to become even more dependent upon programs that the government has no capital to fund. Frankly, that's why there are so many incentives to donate money to charity. And so in the eyes of bureaucrats and government officials, this tool solves a social problem. The death benefit certainly has to have merit as it relates to the fact that this tool is exempt. It is the greatest exemption that exists in the Canadian tax code as well as the US Tax code. However, when people try to again go into the marketplace and start talking about, here are ways that you can get around the tax man and here are ways that you can tap dance around. Well, you're just inviting, you're inviting a fox into the hen house. And brings me to this analogy. Our viewers or subscribers have heard this often, but it's worth mentioning here. Nelson said to us many years ago, he said, I want you to picture for a moment that we're in the middle of the Sahara desert and we're in this tent and we've got everything we need. It's air conditioned, we have water, we have food. We're comfortable. Now, Jason, without doing this quickly, slowly take a look over your left shoulder because a camel just poked its head in our tent, say, okay, Nelson. And you'd say, well, if we don't do something immediately to take care of that, we're going to end up with the whole camel in our tent, aren't we? And I said, yeah. And he said, all right. Well, that camel is the irs. Keep the camel out of your tent. It was just a perfect analogy.

Right.

But anyway, I digress.

Well, the reason I bring it up is that we can give cash and you donate cash to a charitable organization, but there are people who manage these organizations that if they were to preemptively pass, would serve as a tremendous loss to the organization. Yeah, there are donors, other donors to those organizations that as they passed, would constitute a loss to the organization. In other words, there's all sorts of insurable interest in that nonprofit world, just like there is in the for profit, just like there is in the individual arenas. And I, I don't know if it's because of the competitive thing in me, but you know, I see Dave and these financial Peace University things in the church and in religious organizations and charitable organizations more broadly, and I just think about what could be achieved if IBC were to be adopted in that charitable giving context and what it would mean for the respective missions of the various not for profit entities. You know, James and I have talked about it too. He's very good about going through about how, you know, the board or the elders at the church, they rotate the, a good chunk of the congregation, they rotate the staff at the, at the church, they rotate. Yeah. You know, so income, these folks establishing this insurable interest all the time. I'm about this close with a few clients who have very, very close relationships, either personal or professional, with church leadership. And I'm going to do cartwheels outside in the sun as soon as we can get it into a not for profit setting. I mean, you consider after one, two generations, that organization, so long as the ideas can be translated down through the ensuing future leadership, become self funding, financially independent in perpetuity.

Yeah. And you know, even, even at the, at the, you know, individual level, the donation level, a lot of people will, you know, there's, there's ways that you can adjust the method by which you're doing your tithing by running some or a portion of that through a policy that you now have additional protection for you and your family. It doesn't hinder your ability to meet your obligations and your desire to maintain that tithing relationship. In fact, if anything, it probably has a dramatic enhancement. Maybe short term, there might be a small short term gap, but there's probably a vastly substantial, higher, longer output on what contribution you can make to something you care about.

Right. Yep.

Very good point. Ryan, always a pleasure. And we will have you back again if you're agreeable.

Oh, I'm Agreeable very much. I always enjoy it.

Any final thoughts on capital you want to leave our viewers lists with for today?

I frequently find myself going back to this, but the first time I spoke at the Nelson Asch Institute and this is a great bookend. Richard, you mentioned at the beginning in 2019 a talk called why Nelson is an Heir to Manger. Heir H E I R the Manger M E N G E R Y Nelson is an heir to manger. And there's some slides there and you get a little more background about myself. But that was the first time publicly that I explained that and it's with slides. So it's much more clear cut and sort of rigorously laid out. Nelson was right there in the front. You could hear him going encouragingly supporting from the front row. If people want to know more about that perspective, they should watch that. Richie, you mentioned my Medium blog. I'm sure you guys will put a link in there from the URL, but they can find more about that there. Yeah, and start having conversations about capital. If you're a financial advisor person, conversations are not about capital or about banking, then you're not, you are not having a general financial advisory conversation. You're talking about something else. That other thing could be fine. You know, there's a place for tax liability management for sure. There's, you know, you want to talk about certain kinds of investing, great. But the foundation of your own personal, your own family monetary system of your own personal or family economy is capital. And the conversation should be about capital, where to do it and how best to get to it. Optimal accumulation, optimal deployment. And that to me and my sort of economic brain, that's what the IBC is. It is a method for the optimal accumulation and deployment of capital. And anybody of any income level can do it. And you know, just last thing I'll say, be wary of the noise. Like Jason says, this is a process, it's not a product. I don't know if we said it this time, but it's a fact that you, the individual, you are the greatest influence on the outcome of this process. You, not the structure, not the company from which it comes. You. So if you land on a channel or wherever, whatever you're watching is beating you over the head with structure, just take it as a considered, as an alternative viewpoint that, you know, maybe they've missed the mark, maybe they haven't really caught the IBC the way Nelson taught it.

That is genius. Well done, Ryan.

Thank you, sir. Thank you guys.

You can drop your mic, but I don't. I don't want you to break your mic. Yeah, don't do that.

Don't drop your mic.

Well, that.

Gentleman, Ryan, a pleasure. And for folks who are watching on the YouTubes, if you just look right over here, there's going to be a recommended list of additional content videos that we would encourage you to continue your journey of learning. And if you're a subscriber, welcome back. We appreciate you very much. So, gentlemen, make the rest of your week great. And Ryan, we're definitely going to have you back and I'm going to continue to pressure you on the book. I. I think.

Please do.

Next year is too long. You gotta get it out there. The world needs it.

So we should have a Canadian chapter in there somewhere.

Yeah, there would almost be some merit in having a little bit of Canadian content in there. But, Ryan, thank you sincerely again, for being so generous with your time. Give our best to James and to everybody on the team, and we will have you back real soon.

Awesome. Thanks, Joel. My pleasure.