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Subscribe] FinalCall.com News - Refer This Page Business & Money
“It sounds complicated, but it’s really fairly simple. Banks lent hundreds of billions of dollars to homebuyers who can’t pay them back. Wall Street took the risky debt, dressed it up as fancy securities, and sold it around the world as safe investments. It sounds like a shell game or Ponzi scheme; in some ways, it was a house of cards rife with corruption, greed, and negligence.” “Those who swallow usury cannot arise except as he arises whom the devil prostrates by (his) touch. That is because they say, Trading is only like usury. And Allah has allowed trading and forbidden usury...” “Blessed is the man who finds wisdom, the man who gains understanding, for she is more profitable than silver and yields better returns than gold.” Proverbs 3: 13 -14 “If LeBron James Were An IPO, I’d Buy It.” “The purpose of God is what makes you valuable.” What is a Ponzi scheme? The official United States government’s Security and Exchange Commission (SEC) website (http://www.sec.gov) offers the following definition: “Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40 percent return in just 90 days compared with 5 percent for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons. Decades later, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.” ***** On more than one occasion, I have heard Brother Jabril Muhammad state that one day in the 1960s he asked the Honorable Elijah Muhammad the following question: “Dear Holy Apostle, how does one know/learn what one is born to do?” Brother Jabril said that without hesitation, the Honorable Elijah Muhammad answered, “Brother, Allah has given us all many talents, but each a talent we can perform perfectly.” Those words often come to mind when individuals ask me where they should invest their money or ask me to point them in the direction of a profitable investment available in this world’s financial markets. Of all of the various forms of capital or wealth—there is none greater or more valuable than that which exists in the heart and talent of other human beings. And there is no greater opportunity for financial wealth creation than investing in the organized labor and capital represented by human beings working together toward a common goal, in trade or commerce or business. This area has been debated for years, but history shows that when the masses of the people are herded into seeking a life of luxury through “get rich quick” schemes; something-for-nothing financial vehicles; or debt pyramid arrangements, the end result is eventually a crash, bust or crisis for that community, society or nation’s economy. The current mortgage crisis is just the latest example of this. To learn of other examples in recorded history read Extraordinary Popular Delusions & the Madness of Crowds by Charles Mackay and Manias, Panics, and Crashes; A History of Financial Crises by Charles P. Kindleberger. The words that the Honorable Elijah Muhammad gave to Brother Jabril years ago, if properly understood, represent a wise summation of a critical aspect of the basis of an entire economy, and suggest how we all might find the greatest form of wealth creation- not in “Ponzi schemes,” “shell games” and financial instruments—but within one another. Generally speaking, an entrepreneur is one who perceives an opportunity or conceives of an idea and creates an organization to pursue it. That organization is called a business. Still generally speaking, every business in the Western world, that is not part of a bartering system (barter is the trade of goods and services without money), revolves around three factors: ideas, money, and networks of human beings (as staff/management, suppliers and customers). Of these three factors, the relationship between the idea and the human network is the most important. And one will often find that when they seek capital or investment for their business, the area that the potential investor is most concerned with is not money (as they are capable of providing that) or the idea (as good ideas are plentiful), but the human network essential to the execution of the idea. The best investors and economists in the world, that I have spoken to or worked with have all confirmed for me that it is the human network of the business where its most unique and ultimate form of value lies. ***** In terms of financial investments—as certain aspects of the global financial market unwind, become unstable or crash and collapse—I believe that clearly land and that which comes from it, over time: food, clothing, shelter and commodities (oil, precious metals etc...) are wise investments. But land and commodities require human capital—the combined intelligence and labor of human beings—to exploit and truly make valuable. Taking paper money and investing it in the stock or bond market or the purchase of land and commodities is a form of wealth creation, certainly. But it is nothing when compared to the infinite source of value that takes place when human beings invest in the talent, skills and interests of one another (and the organization of such), whether in a society or business. As the Holy Qur’an makes clear, trade and commerce is not like usury [In Islam there are primarily two forms of usury: (1) the charging of interest or excessive interest on loans or 2) the exchange and return of the same good or service in different measurements or valuations, over time]. And an economy based on the organized talent of human beings is not like one based upon financial shell games and schemes rooted in greed and corruption. This is what makes the spiritual development of the human being such an important economic task. If the greatest value or wealth lies within us, then the means by which we discover our talents, develop them, and unite them with others is a critical process that cannot be marginalized or diminished. This is why the preacher and educator are so important and influential. The word education comes from the Latin word educare, which means “to draw out,” or “to rear or bring up.” The very best of preachers and educators realizes that even underneath talent there is a spiritual essence, at its root, that gives it an ultimate value and purpose. On that point, I am reminded of these words from the Honorable Elijah Muhammad to the Honorable Minister Louis Farrakhan, contained in “Closing The Gap,” “Now Brother, you are a very talented man, but your greatest talent is in the spiritual.” Making money and profits through the wise use of finances is indeed a science in and of itself; and it has a very important role to play in ending poverty and economic development and growth; but one must always remember that finance is a branch of economics, not the other way around. Paper money, and its wise management, only allows us to store, account for, and denominate wealth, and goods and services in an economy. It is not those goods and services or the ultimate wealth, in and of itself. By pursuing the development of people and not the accumulation of paper money; by seeking the Kingdom of God, and not all things—we will find that which is more valuable than all of the physical wealth that is in the earth. (Cedric Muhammad is a business and political economist who advises entrepreneurs and small businesses through his company, CM Cap (http://www.cmcap.com/). He can be reached via e-mail at cedric@cmcap.com. His weekly “Cedric Muhammad and Black Coffee Program” can be viewed every Wednesday from 12 p.m. to 4 p.m. EST at The Black Coffee Channel by visiting http://www.blackcoffeechannel.com/.)
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