Rick Koerber and Producer Revolution..

[ChelC]

I've been reading Economics for Real People, and kept thinking of this thread. I highly recommend the book thus far even though it starts out with insulting simplicity, it seems to pull that together as the book progresses.

I think I've finally found a way to put into words why I hate this producer revolution stuff.

The chapter I've been reading discusses the economic roles of the entrepreneur, the capitalist, the worker and the consumer. It points out that at its most basic level an entrepreneur is simply a person who makes decisions based on the ever changing actions of humans. He uses what he knows about people to speculate on an uncertain future. We typically think of entrepreneurs only as those who create a business, but by this definition we all act as entrepreneurs when we make decisions based on an uncertain future. Should I buy the car now or will I benefit by waiting until the price drops? Should I switch careers because the market is becoming saturated? You get the idea.

The capitalist is one who saves for future benefit. He either buys a property today banking on making profit over time, he loans money, etc. Most of us fill this role as well. We save money for retirement, we invest, etc.

The worker doesn't represent those who are employed by someone, but those who work for a perceived benefit. The entrepreneur who speculates on the future is a worker as is the toothpaste cap sorter, or the land owner collecting rent.

Lastly, we are all consumers. Consumers drive the economy. Without consumption there is no engine... no reason for producing goods, and human nature wouldn't have us working without a percieved benefit. It is our desire for consumption which causes us to act as entrepreneurs, capitalists, and workers.

What then is a net consumer or a net producer? Just as soon as you produce more than can be consumed you are consuming with your excess and waste. Is it even possible to consume more than you produce in a free market? If you don't produce value you don't get paid. If you don't get paid you don't consume. Similarly, is it possible in a free market to be a net producer? Every move you make is for a percieved benefit. The fact that you created a business doesn't make you a producer. The entrepreneur, capitalist and worker all have a hand in production, and all have a hand in consumption. The free market balances itself by our very human nature. Net consumers are only able to exist by theft. Government redistribution of wealth or the deadbeat down the road who steals to survive.

For Rick Koerber to talk about the free market in the same breath as he encourages people to be net producers simply makes no sense! The wealthy may produce more than I, but they balance that with their consumption or their desire for future consumption.

[buffalo_girl]

So...how is Rick Koerber's 'money from assets' enterprise doing now? Will his derivatives be eligible for bailout?

[FTC]

Well, "the mansion" is now owned by Washington Mutual. It was sold at auction on Monday, Oct. 27th for $2,400,000. There were no bidders, so it was bought back by the bank. However, we all know that the FDIC took Washington Mutual and gave it to JP Morgan Chase. Actually, its a little surprising that there were no bidders; the land alone is worth more than $1.5 million. The house is only worth somewhere in the $500,000's. So, the auction price was a little on the upper side of fair market value. Over time, it will be about right. Not many people (except for banks) have $2.4 million cash.
An interesting personal tidbit, I work for Chase. I guess that means I have some fractional ownership of "the mansion" now. Maybe enough to get a glass of water from time to time. hehe
Anyways, just who really owns it is kinda up in limbo - I think it would be Chase since they got everything Washington Mutual owned. Who doesn't own it is Rick and gang. However, until the eviction gets completed, they can still (technically/legally) live there. A fast eviction can be done in around 30 days. Typically, they take 2-3 months. I'm sure there's stall tactics that can be put to use to delay it. In any case, I would expect to be seeing some real-estate agent's sign in the front yard in the next week or so. Two real-estate agents are gonna be making $70,000+ each off that sale.
Some odd things. For some reason, Rick purchased the property from Gabriel for $4,500,000 - but then still let it go to auction. Huh? Also, the trust deed Rick had put together was dated Sept. 1, 2007, but not notarized until August 12, 2008. Huh? Granted, Rick and Gabriel are buddies and business partners, so while technically Gabriel is obligated to pay Rick back, if Rick doesn't make a fuss, Gabriel really doesn't have to. One has to wonder what was done with the money? Obviously, it wasn't used to pay the mortgage - the bank still foreclosed. And it was never applied as satisfaction for the Washington Mutual loan. Maybe they're waiting until after the foreclosure is complete and then buy it back. I guess so. That, in essence, screws over the bank so that they can have the house at half price. Screw over a bank to get a house - I don't see which of Rick's principles that falls under. Somehow, somewhere, $1,695,000 of that $4,095,000 got paid. On top of that, about $700,000 of the 2nd mortgage was paid to Harbor Real Asset Fund (still owing a bit under $500,000). With Washington Mutual/Chase foreclosing, that 2nd will get wiped out. We've come back to screw-over-another-lender-to-keep-a-house again. On top of all that, Gabriel's credit is seriously muddied at this point. He won't be getting conventional lending from banks for the next 2-7 years. Well, I guess he can, but the interest rates will be sky high. And most likely won't be loans more than $417,000. Oh, and let's not forget the nearly $12,000 of property taxes coming up in the next month. Fun fun. Maybe the city will put a tax lein on the property. Then they can all buy it back in 5 years for $60,000. I think I'll start saving now. Anyways, if Rick and company don't do something to keep the house, they are looking at a $2+ million loss.

Back in July, Rick sent this out:

Real Estate Rescue Training - Cost $995

Individuals who want to learn how to avoid foreclosure, avoid losing a home, or simply how to best manage a difficult real estate situation are HIGHLY ENCOURAGED to attend. The afternoon portion will be structured like a lab where I will take actual scenarios of attendees and brainstorm solutions with real properties and real situations - on the spot!

I will guarantee anyone who chooses to implement the plan I'll demonstrate at the event, that they can keep the home they are looking to save - or sell it successfully without foreclosure in less than 30 days. Details will be delivered after you register for the event - all attendees will be eligible for a full refund if it the training does not exceed expectations and the request is within 24 hours of event completion. I am very excited about this event. If you'd like to attend please email me directly.

Rick can save others' homes, but not his? And he wants people to pay him $1000 bucks to hear how he will save their house? I have heard people spew out "do as I say, not as I do", but I've only heard it from salesmen trying to get money from my wallet to fill their's.
Another item, Rick notarized the $4,095,000 Trust Deed (loan) to Gabriel twice - first with his Claud Rick Koerber and then the next day with C. Rick Koerber. The conclusion I draw from this is that he's either attempting some smoke-and-mirrors something, or he doesn't really know what he's doing. Going with the stance that he's trying to be legit, one would think that he would do this stuff once and do it right. Instead, it appears as though he's trying multiple "close enough" things in hopes that one of them will stick. Or fixing mistakes of attention to detail. And he wants people to pay him to learn about his "skills" in real-estate? And he wants people to give him money to invest in more real-estate? Will he ever bring up the foreclosure of "the mansion" in any of his seminars or classes? Pay Rick and/or his company(s) $1000 and you can find out!

[creator]

For Rick Koerber to talk about the free market in the same breath as he encourages people to be net producers simply makes no sense! The wealthy may produce more than I, but they balance that with their consumption or their desire for future consumption.

Chelc,
Your description of a "net producer" and such was a good description of what the "producer revolution" is supposed to be. (And the idea/concept of the producer revolution actually comes from Ayn Rand and other philosophers).

I don't get what it is that doesn't make sense about relating the free-market to being a net producer? Isn't that something we should all strive to be? A net producer? and isn't the free market the system that will facilitate that to the greatest extent?

When you say the rich balance their production with consumption, that's just your opinion... maybe some rich do that, but don't you think there are others that are "rich" who actually produce more than they consume? Don't you think God wants us all to be "rich"? and what is the definition of "rich"? I don't believe that you can set a dollar amount to the definition of rich. When it comes to being wealthy, I believe that a truly wealthy person is one that is a net producer and is also succeeding in the other aspects of life: religious, spiritual, physica, mental, social, etc.

[ChelC]

Maybe you should read this book because apparently I haven't explained it that well. I'll give it one more shot.

I'll start off how the book does with a man on a deserted island. There really isn't an economy at this point, but each of his decisions are made based on value that he assigns to different tasks. He decides to find something to eat which becomes his first preference and has the highest value because without it, he'll starve. So he sets about catching rats to eat. At some point he becomes tired and at some point he decides that he values sleep more than the next rat he'll catch. This is to illustrate that he is simply trading his labor for his most pressing want, and value isn't fixed.

I'm doing a horrendous injustice to this book, but skipping ahead, a woman finds her way to the island. They each have different resources and abilities. Let's say that she isn't so good at catching rats, but she has seeds and plants some corn. The dude has more rats than he really wants and she has more corn than she wants, so they make a trade. He is willing to give up four rats for his first bucket of corn, at which point he values more corn slightly less. For his second bucket of corn, he would be willing to trade three rats, after two buckets of corn he would worry about storing it, so he decides that he would only be willing to give up one rat for the third bucket.

Likewise, the woman really wants a rat to eat, because she's sick of corn. She's willing to give up her first bucket of corn for only two rats, she doesn't like rat jerky and has a limited time to eat the rats, so her value also decreases with her second bucket of corn being traded for three rats, and it just isn't worth her time at all to trade more.

Where the two parties meet, they trade. They both are acting as entrepreneurs, workers and consumers.

We can complicate this system all sorts of ways, but a person is still making their decisions based on what they value most at the time... they are all consumers, and there is no excess production to create a net producer. When the man catches too many rats, they rot. If he builds too many rat traps they sit their taking up space and are of no use. If she produces an excess of corn, same story. In a free market system there cannot be a net consumer, because one is trading his labor (or something otherwise valued) for something else. When he ceases to produce value, he ceases to be rewarded with an ability to consume.

A housewife produces no income, but her husband values her nevertheless. Even an infant produces (the book doesn't suggest this, it's my suggestion) because his parents value his life more than the resources they give to him. So the infant produces some level of satisfaction for the parent. Even when we give to charity, it's an even trade or it wouldn't be made. We value the blessings or satisfaction of giving to the person more than we value the money.

Are you following me here?

[shadow]

I would throw in there the parable of the talents.
The story in the book has created it's own chacters. In real life characters are different and so is the situation. What if the man hated corn or what if the lady hated rats (I couldn't imagine why)? In the real world what about people that get into too much debt? Have they consumed more than they are producing? (still consuming, but not producing)

[howdy123]

Some odd things. For some reason, Rick purchased the property from Gabriel for $4,500,000 - but then still let it go to auction. Huh? Also, the trust deed Rick had put together was dated Sept. 1, 2007, but not notarized until August 12, 2008. Huh? Granted, Rick and Gabriel are buddies and business partners, so while technically Gabriel is obligated to pay Rick back, if Rick doesn't make a fuss, Gabriel really doesn't have to. One has to wonder what was done with the money? Obviously, it wasn't used to pay the mortgage - the bank still foreclosed. And it was never applied as satisfaction for the Washington Mutual loan. Maybe they're waiting until after the foreclosure is complete and then buy it back. I guess so. That, in essence, screws over the bank so that they can have the house at half price. Screw over a bank to get a house - I don't see which of Rick's principles that falls under. Somehow, somewhere, $1,695,000 of that $4,095,000 got paid. On top of that, about $700,000 of the 2nd mortgage was paid to Harbor Real Asset Fund (still owing a bit under $500,000). With Washington Mutual/Chase foreclosing, that 2nd will get wiped out. We've come back to screw-over-another-lender-to-keep-a-house again.

I don't understand real estate, finance, or foreclosures very well. Can someone explain to me why the above is odd? Sure, it's odd that it took almost a year to get a trust deed notorized but 1) why does it need to be notorized and 2) is there some kind of advantage to not having it notorized?

Does the bank not have a say in who they sell the house back too? Would they even sell it to Rick considering he was part of the problem?

Another item, Rick notarized the $4,095,000 Trust Deed (loan) to Gabriel twice - first with his Claud Rick Koerber and then the next day with C. Rick Koerber. The conclusion I draw from this is that he's either attempting some smoke-and-mirrors something, or he doesn't really know what he's doing. Going with the stance that he's trying to be legit, one would think that he would do this stuff once and do it right. Instead, it appears as though he's trying multiple "close enough" things in hopes that one of them will stick. Or fixing mistakes of attention to detail.

Explain the smoke-and-mirrors Rick may be engaged in? Again, not knowing anything about real estate, I'm trying to understand what, exactly, might be going on.

[ChelC]

I would throw in there the parable of the talents.
The story in the book has created it's own chacters. In real life characters are different and so is the situation. What if the man hated corn or what if the lady hated rats (I couldn't imagine why)? In the real world what about people that get into too much debt? Have they consumed more than they are producing? (still consuming, but not producing)

I understand that, but still the person in debt is providing something to the investor - interest. It's still an even exchange. He isn't taking advantage of the investor any more than the investor is taking advantage of him. One or the other may believe after the fact that the deal was a mistake, but at the time it was made, it was an even exchange.

My point here is not to say that a bum on the street is just as good a person as Bill Gates, though it's possible he is. One's economic position isn't a measure of morality. My point is simply to illustrate that there isn't really such a thing as a net producer or a net consumer. I find the whole thing a bit self righteous. Are we all equally good or bad? Of course not, and the scale of morality is big one with a lot of variables. I don't understand the whole point of this consumer/producer garbage and it's always bothered me. This book helped my to pinpoint why.

Our focus should be on becoming Christlike and charitable and near as I can tell from reading about the Savior his priorities weren't in obtaining wealth, and he didn't rely upon wealth to bless others. I see no purpose in placing ourselves or others into boxes with labels, and I don't think it can be done honestly anyhow. Is a man alone on an island a producer or a consumer? He's both! I think the producer revolution has an extremely narrow vision of what a producer is, and I think it's insulting.

[buffalo_girl]

Somehow, somewhere, $1,695,000 of that $4,095,000 got paid.

Well...if Mr. Kroeber had wrangled up a little over 2,400 folks to plunk down their $995 a piece, he would have had the balance!

He was stalling with hopes of a big turnout for his seminar. It didn't come forth.

The seminar from which he would have gleaned the needed balance of $2,400,000 would have been the object lesson, the practicum as it were, for the students. They, in turn, could have held their own seminars, charging $995 per student thus earning the back payments on their own mortgages. You see how these things work?

I'm not convinced this type of digital voodoo has anything whatsoever to do with true productivity. I'll stay with the sheep-to-woven-cloth scheme I'm in to. And...I'm not asking anyone to pay a fee to do it for me.

[shadow]

I understand that, but still the person in debt is providing something to the investor - interest. It's still an even exchange. He isn't taking advantage of the investor any more than the investor is taking advantage of him. One or the other may believe after the fact that the deal was a mistake, but at the time it was made, it was an even exchange.

So the economy as a whole is equal. But what of the individuals? I wouldn't classify the person in debt making interest payments as being a producer. He could be depending on what he's doing with the money borrowed, but lets say he bought a big TV, a comfy recliner, a little fridge full of pop and a couple of bags of chips and spends his time watching American Idol, basically living Marks life . He's consuming that money not producing anything with it. The guy who lent him the money is producing interest off the loan. Same idea as the parable of the talents.
This doesn't have to be money. What about the guy exchanging his time watching TV and sleeping-in compared to the guy learning a trade and spending time perfecting that trade? One is learning so he can go to the market and exchange his talents (produce), the other is hiding in his dark living room consuming his life away.

[ChelC]

I'm not suggesting those people are equal, but if the "consumer" on the couch were producing nothing he wouldn't have the means to consume. In the free market he wouldn't be sitting on welfare, but he'd have to be producing something to remain alive. It could be that he is producing just enough to get by. It could be that he makes his wife happy and she likes supporting the bum on the couch in exchange. It could be any number of things, but I don't believe that in a free market it is possible to be a net consumer. Likewise, let's say I "produce" computers. I make billions of dollars and this allows me to serve others. Is it a better use of my time? For sure! Does it make me a net producer? No. I trade my labor and resources for that which I value more. Maybe I value a big number in my bank account more than my time. Maybe I value the looks on the faces of the school children who I donate computers to more than the computers. Maybe I value the tax credit more. The point is that I'm trading what I produce for something I value more, which is consumption. If we aren't going to use this broad a brush with the definitions of production and consumption, then we would have to limit this to physical production, in which case the toothpaste cap sorter is one up on the toothpaste factory owner, because he's physically contributing to production. Well, maybe not one up, but at least equal. The owner isn't moving goods, he's paying others to do it, and gaining capital by doing so.

[ChelC]

As I reread this, I can tell it sounds like I'm speaking Chinese. I know what I'm trying to say, but the words to make it clear elude me. Sorry. If I can think of a better way to word things I'll do it later, but for now you'll just have to use bablefish to read it.

[howdy123]

Listen to Buffalo Girl. She knows what she's talking about.

And Rick, I know you're obsessed with reading posts about you. Please explain which principles you and Gabe violated.

Thanks!

[pjbrownie]

Those who can't do -- teach.

Why is Utah the MLM capital of the world, AND the bankruptcy capital?

It's not a surprise to me. Mormonism used to eschew much of the capitalist system until if was forced by the Federal government as part of statehood to sell all of its cooperatives by the Guilded Gandianton bunch in Washington DC. Now we wholeheartedly embrace it, along with its massive inequities. We forget that it is a lesser law.

When Samuel the Lamanite prophecied against the Nephites, he did so on the basis of their love of money and riches. The Prophet Joseph considered property our great stumbling block. Each time there was persecution, it was an effect of a property dispute 1) The Kirtland Safety Society, 2) The Land Grabbing at Far West, 3) The Foster and Law property disputes in Nauvoo. In each of these cases, people thought they were owed by God a certain amount of property and prosperity and in each case when they either lost property or were aked to give up property, accusations of Joseph being a false prophet were thrown. Each led to the Saints ultimately being expelled by the whipping up of angry apostates.

[Proud 2b Peculiar]

Ezra Taft Benson on the position of the church on Socialism/food stamps/Educational debt

http://www.youtube.com/watch?v=isLB2oH3Mew

[creator]

Are you following me here?....they are all consumers, and there is no excess production to create a net producer. When the man catches too many rats, they rot. If he builds too many rat traps they sit their taking up space and are of no use....

Chelc,
I like all of your descriptions of producing/consuming. Sounds like a good book.

I think I understand what you are saying, that there can't be a net producer because if you produce too much it goes to waste?... I think we agree on the principles involved but just have different definitions?.. let me explain. So let's say the guy catches lots and lots of rats, way more than he can eat... so he sells them to others. In exchange he now has millions of dollars... or thousands of buckets of wheat, corn, grains stored away... is he not then a net producer? He's only consuming what he can eat and then he has excess which he sold. Maybe he even gives away all the excess... I would still see him as a net producer because he's producing more than he personally consumes. Whereas a net consumer would be eating more rats than he can pay for and getting into debt.

Using your example again "When the man catches too many rats, they rot. If he builds too many rat traps they sit their taking up space and are of no use"... If the many catches more rats than he can eat, he'll trade/sell/give them away. He's a net producer.

I guess when it comes down to it... I think of a net producer as someone that has more income than expenses (someone who is not in debt). What do you call that? (if not a net producer)?

[jbalm]

I guess when it comes down to it... I think of a net producer as someone that has more income than expenses (someone who is not in debt). What do you call that? (if not a net producer)?

Solvent.

[ChelC]

I guess when it comes down to it... I think of a net producer as someone that has more income than expenses (someone who is not in debt). What do you call that? (if not a net producer)?

I call that rare.

Seriously, I'm not arguing with the fact that we should be wise with our resources. I'm talking about this with no moral judgement. Production doesn't become productive until it benefits someone, which is when it is consumed. Saving is wise, but just who is benefitting from the dollars in your account which just sit there (we can talk about the capital earned from interest if you'd like but I'm keeping this simple). If a man never opens and uses his wheat storage, it really has no worth, except perhaps to that man as a novelty. If he never intends to use it, or never does, it was consumed when it became an ornament on his shelf. Sitting on his shelf it is useless until the moment of it's consumption... so at what point is he considered a net producer? So my argument is based on the assumption that true production is useful, or else it's non productive. It isn't useful until it's used.

If Rick Koerber wanted to argue that we should follow the guidance of the gospel and all seek to have savings and food storage, I'd say "Amen!" It's the title of "producer" that seems meaningless and self righteous.

[creator]

If Rick Koerber wanted to argue that we should follow the guidance of the gospel and all seek to have savings and food storage, I'd say "Amen!" It's the title of "producer" that seems meaningless and self righteous.

I hope you don't think I agree with everything Rick Koerber says. I don't... however, I have learned a lot from him. I am sure though that the full meaning I give to being a producer/consumer is different than Rick would define it. I've taken what he has taught and also analyzed it against others I have studied like Ayn Rand, Cleon Skousen, Ezra Taft Benson, Oliver DeMille, Founding Fathers, etc...

Rather than focusing on telling people to be producers... I would actually favor having everyone persue being an Entrepreneur, an Independent (as Thomas Jefferson put it)... someone with initiative that thinks for themselves and seeks to make the world a better place.

[ChelC]

Then I would agree with that, of course accepting my definition of entrepreneur.

As a SAHM and homeschooler, I'm not producing monetary value, and I consume a lot. My husband doesn't consume all that he makes, I help and so do our children. That doesn't make me a net consumer and he a net producer. It just makes us a family. My husband and I have an even exchange - and that remains true when I fail to get all the housework done or he takes a week of vacation.

[Proud 2b Peculiar]

being a producer does not equal monetary increase.

People are the source of true wealth. You teaching your son may have more value then anything you would be paid at an hourly rate or etc etc... you get what I am saying.

[creator]

As a SAHM and homeschooler, I'm not producing monetary value, and I consume a lot. My husband doesn't consume all that he makes, I help and so do our children. That doesn't make me a net consumer and he a net producer. It just makes us a family. My husband and I have an even exchange - and that remains true when I fail to get all the housework done or he takes a week of vacation.

Like you pointed out, being a SAHM and homeschooler (like my wife) you may not be producing monetary value, but you are definitely producing value. (being a net producer ). When I think about production and value it's not about dollars, it's about anything I consider to be valuable. It could be knowledge, skills, food, tools, dollars, shelter, etc.

Really, the only person who gets to decide if you are a "producer", or whatever you want to call it, is YOU! Because only you know what you value. You could have 0 dollars and consider yourself the wealthiest person on earth because of what you do have in life, whether that be your family, your life, your knoweldge, your relationship with God, etc.

[tmac]

I don't seem to have much time for the forum any more, but this has always been an issue that I'm interested in. I think this is the one and only issue that ChelC and I have ever really locked horns about.

I agree that defining the whole producer/consumer equation in financial terms can sometimes distort the true picture. There are many ways to produce and be productive, not all of which have simple economic formulas. And likewise, as ChelC reminded us last Spring, there are always exceptions to the rule, like the handicapped baby she talked about.

Since the concept of "net producer" seems more difficult to understand and agree upon, let's focus on "net consumer." And for ease of discussion, it is often tempting to resort to simple financial equations. But I think it's fair to say that those who do not live within their means; those that consume more than they produce, are net consumers. The vast majority of people in 21st century American society fit into that category.

On the other hand, those (and here we could talk about it terms of a family unit) who produce more food, widgets and money than they consume can be considered net producers. Let's say that between them, a family -- husband, wife and kids -- produce sufficient goods, services, money, etc., to cover and at least equal the value of what they consume, then they would be net producers, and hypothetically any overage would be the resulting "net."

I don't know about the law of consecration, but under the United Order, as it was practiced, there would be no opportunity to accumulate the overage resulting from net production. It would be contributed back into the pool to assist those who, for whatever reason, were not net producers or simply had greater needs, and needed assistance. That could be widows, fatherless, elderly, disabled, etc., all the exceptions to the rule(s), that provide/produce opportunities for others to receive blessings by helping them.

I don't see the problem with discussing the issue in those basic terms. Like Jbalm says, those who are net producers are "solvent." They live within their means. They don't consume more than they produce.

Isn't that a worthwhile objective that everyone should aspire to?

[ChelC]

Yes it is a worthwhile objective. I've always used a broad brush. To me there isn't a point in seperating out financial standing as some sort of barometer. Obey the prophet... that's enough for me in that arena. What about the rich old twit of a person who everyone hates. You know, the guy who yells at kids who walk on the grass, whose only relatives that visit are those hoping to inherit something. That guy makes a lot of money, but so what? I'm not that impressed about that. Then there are the Mother Theresa's of the world who contribute to the world, but might fall into the "producer" economic box. Why use an economic model as a form of judging right and wrong at all? It's stupid. It seems disingenuous to me, almost as bad as people paying for prayers.

[howdy123]

Anyone have an update on Rick?

Is he still living in the foreclosed, Alpine mansion?