What is the utility of the bank?

Posted on June 1, 2015 by PaoloDS

Probably you are used to the presence of the banks in the society. And you are used to bring the money you earn to a bank. To withdraw the banknotes from the cash machines of the bank. To ask them for a loan, if you have to buy a house.

In short, you see it since forever… you use it since forever… but did you ever ask yourself exactly what is a bank? And what is its utility? Today I try to explain it to you, casting a new light on its nature and making you understand why, actually, the bank represents mostly a problem for the modern society.

For some aspects, nothing special

For some aspects, a bank is a commercial activity similar to all the others, in fact it’s a company that works with the purpose of making money.

From this point of view, it is perfectly identical to the butcher, the barber, the bar in the neighborhood. In the morning the employees of the bank wake up, executive, cashier, financial advisor, and they go to the office to give their labor contribution to make the bank earn more money, in change of a salary.

For one aspect, slightly special

But a bank often doesn’t have only one office, it has many offices, in different cities and often also in different nations. In fact it’s a corporation, a huge company, tentacular. And this is already a first remarkable difference with the little shop of the butcher.

But so far there’s not even anything too strange: there are a lot of corporations in the modern globalized world. For example, in addition to the banking corporations there are other types: food corporations (eg. mcdonalds, ferrero), fashion corporations (eg. versace, dolce e gabbana), consultancy corporations (eg. accenture, ibm), technology corporations (eg. apple, samsung).

For one aspect, SUPER SPECIAL

But there is one characteristic that makes the bank unique, absolutely unique.

All the other activities, from the little shop to the big non-banking corporations, earn money because they provide goods or services in return. The butcher provides meat. The barber provides the haircut service. The fashion corporation provides clothes. The supermarket provides food. The bar provides coffee. And so on.

What does the bank provide? The answer is: a gigantic nothing. The banking activity is the only one in which money is earned without providing any good or service in return. All the bank does is moving money. So the bank earns money… to move money! If you think about it it’s a very weird characteristic, that surely no other company in the world has.

It’s weird, in fact, that while all the other commercial activities revolve around “something” (meat, shoes, clothes…) with the desire of earning money, the banking activity revolves exactly around money, with the desire of earning money. It is very close to this object, for the very own nature of its activity.

This proximity gave birth to some really interesting situations.

They earn money with your money

A first interesting situation is the fact that the banking corporations have become so powerful, with time, that they influenced the approval of laws that give them huge advantages. These laws would probably be considered “scandalous” if made for any other commercial activity… that is not the banking one.

A notable example is the fractional reserve, i.e. the bank has the duty of maintaining in its office only a small fraction of the money you deposit, they can use all the rest the way they like: making loans to other people (earning money on it) and do speculations of all types.

The bank puts in circulation money that is not theirs to earn money, and this is the reason why, if you go to the bank and ask to withdraw 10.000 of your dollars from your account, two things happen.

First: you have to reserve them. The reason is simply that they don’t have that money in the office. Second: they’ll make up a lot of stories when they receive a request of this type. The reason is that, for them, that amount is worth much more than it is worth for you: by making loans with that money n times, since often after each loan the money comes back in the bank deposited by someone else, they can “magically” multiply the amount.

Paper money

Another interestinf fact is that the central object of the banking business, i.e. the money itself, it’s been transformed with time. For the worse.

Some time ago, the bank had some duties regarding money, meaning that they could only put in circulation banknotes if they had a corrispondence in gold in their safes. Let’s say that they could issue a banknote of 100 only if they really had 100 pieces of gold in their safes.

Now, this duty has been eliminated: money has become fiat, meaning that it doesn’t have any bond with gold anymore. The bank issues big quantities of banknotes, without having in their safes gold that actually covers those banknotes. This means that the banknotes are really just some pieces of paper, and their values is based now just on the reputation. A reputation that exists only until there is the ignorance, in the masses, of what money really is.

I want to clarify why it is important, in a negative way, that the banks got rid of the duty to own gold that corresponds to the banknotes they issue.

Gold is very different from the paper banknotes. Gold has intrinsic value, meaning that it has physical characteristics that make it perfect for medical, technological, industrial applications. Real life applications, that can improve people’s life. Instead, with paper you can’t do much more than lighting up a fire.

But gold is limited in the world: there is a certain amount and not more, and extracting it is also complicated. Paper instead is very easy to produce. So the move with which the banks got rid of the obligation to issue banknotes only if covered by the gold that they own, gave them the opportunity to create wealth for themselves… based on nothing.

More powerful than governments

A second situation is that with time the banks have become even more powerful than the governments of the nations. This is valid also for other types of corporations today, but the banks are definitely first in line.

The situation evolved in a way that today many heads of the governments, when they have to take decisions, almost always have to consult the bankers. Even more: often they have to ask permission to the bankers… and sometimes they even have to obey to the bankers.

When you hear in the news that the debt grows constantly (did you ever hear that the debt is diminishing?), the creditor of that debt are the banks. The reason is that these pieces of paper that we use to pay stuff, they print it and they lend it to the government, and the government commits to return it in the future with the interests.

But… how will the government pay the interests, if money is printed by the banks only, and it only has the money it borrowed previously? Simple: it will ask to more money to borrow, making other debt, always more debt. Debt that can’t ever be repaid.

This is the reason why it’s said, maybe you heard this already, that “money is debt”. They’re the same thing. Take a banknote in your hand and look at it. That banknote has been lent by the banks to your government, with the agreement that your government, one day, will give back as much as it’s written on the banknote… more the interests.

The bank doesn’t produce anything

I want to repeat and remark the central message of this article: the bank doesn’t produce any useful value for the society. At best, it can be defined as a freeloader that makes money thanks to the job of other people, a parasite. What people really need is food, clothes, medicine, technology, culture, art, and not a circus that make useless paper spin around.

The most humble workers, like the shoe repairer, or the farmer who grows potatoes, they produce an immense value for the society compared to that of the bank, whose concrete action is just to move money around.

Do you work in a bank?

Every morning millions of people in the world wake up, jump in the car and go to work for a bank. Lines at the bank offices, computers munching data, executives doing meeting, it would be nice to have an animation that could show daily how much motion is produced by the banking system in the globe. To realize, indeed, how much energy is sucked by this industry that produces the galactic nothing, apart from moving money. It would be comic and tragic at the same time.

Now, and if you’re inside this industry? And if you’re an employee who works at a branch? What if you’re an accountant? Or you’re the head of a branch? Or you’re a super-head of the european central bank? Or you even come from a family of bankers?

In this case I would say that there are two possibilities.

The first is that you’re in that place because you are unaware of the real nature of the company you’re working for every day (or at least you were before reading this). This unawareness is very frequent at the “lowest” levels of the chain, but I am sure that also many executives work for a bank without being fully aware of what is the real meaning of the company they work for.

I’ve been part of this group. I found myself working for a bank in the past. Actually as an external consultant, for few years, and in the technologic sector, but I’ve been definitely a small active part of this industry.

Those were the years when I understood what “bank” means, and that comprehension has been for me one of the strongest motivations to leave that job. I like to think that I can give, with my job, a contribution to make the world a better place, to help others, to produce something that can have a true impact of the life of people.

The idea of using my time -and my labor talent- in a circus that makes useless paper spin around is really depressing for me. I like what the professor of dead poet society says: life is a big poem, in which each of us has the chance of adding a verse. I surely don’t want that my verse is to have spent 40 years manipulating useless pieces of paper. Today I can imagine a million other ways to give more value to the society than I would do working in a bank. An example is providing education, writing articles like this.

The second possibility is that you live in denial. You know how the banking system really works, but you silence every voice that tells you that you’re contributing, with your work, to a futile cause.

The resources that your bank uses could be used to create concrete wellbeing, to make people happy, rather than load them with debt? You prefer not to think about it. You put your tie on and go to work without asking yourself too many questions. Similarly to those paople who eat meat produced industrially, when you ask them “but do you know how that is produced?” they reply “oh I don’t want to know, otherwise I will end up eating nothing”. Blue pill.

What is the adtantage of knowing this?

I want to clarify one thing: the people who understand how the banking system works and what is the utility of the banks (a big nothing) are a minority today, and will be minority still for quite a while. The majority of people are still unable to understand this mechanism, or they’re not interested in understanding it.

If you, instead, are among those who have reached this comprehension, and I hope I have given a little contribution, then in what position are you?

Well, you continue to play in a world where the bank is part of the rules. It’s unlikely that you will be able to do anything without entering in contact with the bank. The job salary is sent directly to the bank. You have to make bank cheques to buy a house. Everybody keeps on considering paper banknotes valuable objects, so they will ask you for them in return for any good or service.

But you can do several things. First, if like me you think that the meaning of life is to give to the world your unique and wonderful talents, you will stop employing these talents in a bank, if you work there.

Some time ago I watched an interview to some personality, I don’t remember who it was, who was asked “what would you do if you’d be elected president of the Federal Reserve?” and replied “I would shut it down”. I thought it was a great answer, because it’s exactly what I would do if I’d be put in command of such a mega-banking association.

Other thing, you can stop subsidizing this useless circus with your savings. Aware that the entire world sits on a giant paper ball that could burn in any moment, you can turn your savings into commodities (like gold and silver) that preserve their value with time, rather than keep on focusing on modern money that loses value gradually, every day, because its value depends on the decisions of the government and the banks.

Understanding how volatile the value of money is will free you from an enormous distraction. It will make you assign more value to other things, for example your time. It will help you understand that the indoctrination that you received since you were a kid, telling you that money is so important, is just an indoctrination. As soon as you reassign the proper importance to your time, you can use it in activities that make life more enjoyable and adventurous. And this looks like a big advantage to me.

Useful readings

To better understand the banking system I recomment two great books: the real story of money, health and religion by Loren Howe and you can profit from a monetary crisis by Harry Browne, that contains very intelligent advice on how to manage your savings. In the first book, instead, there’s a famous quotation that I write here too:

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. -Henry Ford-

It says a lot. A lot!

Notes: Translated from the corresponding article written in Italian, published in this blog on September 12, 2014.

What is the “system”?

Posted on February 4, 2015 by PaoloDS

The system is essentially made of three parts. It is important that you identify them, before you can free yourself from their combined action.

1. the GOVERNMENT. Many of us grow in a society where the government is considered something necessary, useful, worth a lot of attention. It’s commonly assumed that the politicians in the government have the most important role in the society, because they are seen as “the ones” who are responsible to produce positive changes, and to create better life conditions for the citizens. I think that these expectations are largely unjustified.

Yes, the politicians impact a lot of things with their decisions, but the nature of their role is commonly misunderstood, and the importance of their role is excessively emphasized.

The politicians are mere movers of resources. All they do is to gather public money through the taxes and, after keeping a fraction to pay their comfortable salaries, they redistridute that money to the various sectors, using certain criteria (for example they give 20% to army, 15% education, 16% health care, 17% tourism…). This is their job, simply explained. Similarly to internet routers that route data to various computers, the politicians route public money to various sectors.

So the important question is: what criteria do they use to assign the money? How do they decide which sector deserves more, and which sector deserves less?

If they have good intentions (they work trying to serve the citizens), they assign the money according to what they think it’s best for the citizens. But even in this case, their perception of what the citizens need is usually distorted. Many politicians spend long hours in pompous palaces, do massive paperwork, get lost in the bureocracy. The more time they spend inside the government’s machinery, the more they get distant from the citizens. And not only they get lost in the bureocracy, they also get lost in ideologies (“we are democrats and you are republicans“), and get lost in the ego (“we and right and you are wrong“), as result their action becomes highly ineffective.

Then there are those who don’t have good intentions, and this is not a rare case. Many politicians enter the government paid by the citizens to serve the citizens, but end up working to serve themselves, instead. So the criteria they adopt to route the public money is to get as many personal advantages as possible. They give more to the institutions who work damaging the citizens (for example financing lotteries, cigarette producers, food corporations that use harmful chemicals), subtracting resources to the institutions who work for the citizens (like hospitals and schools). This way they get “favors”, usually money and power, from the institutions who work damaging the citizens.

In both cases consider that the government works on the principle of group consciousness: there will always be a number of its decisions that will go against your interests. As consequence, shifting a lot of sovereignity from yourself to the government, hoping that it will make things right for you, is a losing strategy.

2. the MEDIA. Most mainstream media work in extremely deep symbiosis with the government. In fact, the reason why many of us tend to consider the government so important and useful is that, since we were kids, we have been watching its politicians in the news, constantly.

Think about it: when you turn on the tv, what news are given first? Usually it’s something about the government. The president said this. The prime minister said that. The opposition said that other thing. Debate over a new law. We are constantly informed about what the government is doing, and this implicitely creates inside of us the mindset “knowing what the government is doing is important”.

Mainstream media insistently put the government under the spotlight, and often using a very benevolent light: the government’s inadequacies are overlooked, its scarce results magnified. Why? Because they exchange favors, of course. The media that tailor the news in a way useful for the government obtain funds, jobs, favorable laws (all financed by the citizens with their taxes). In return the government can continue its action, as its politicians keep on appearing with suits and ties in the news every day.

Also in the other sectors, the events presented by the media are rarely depicted objectively to inform the audience, but are manipulated to produce a desired reaction instead, to carry an agenda. Most people watch the news on tv and get consequently indignant, scared, discouraged, without even realizing that that’s exactly the emotional response that the person who packaged the news wanted.

The process of selecting which events to show and which events not to show is crucial. Why wars that produce hundreds of deaths are shown and debated for months, while others that produce many thousands are ignored? Why studies that prove the safety of a food chemical are shown, while others that expose its health hazards are ignored? Usually it’s because some lobby makes more money with the first options.

It can argued that pure, objective facts don’t exist, and that everyone who would have to assemble the news would have to do a selection, inevitably adding his personal bias and carrying his own agenda. I agree with this, but then I think it’s very important to try to understand what is the agenda in each case. When you read an article or watch the news, do you see behind the lines the intention of informing the audience, or the intention of manipulating the audience? And in both cases, why? I encourage you to exercise your own critical thinking to answer these questions.

One final, important note: it’s a false myth that it’s important to check the news regularly “to stay updated”. I actually consider checking the news regularly as a very counterproductive habit. The reason is that most news by the mainstream media are about events that will only scare you, issues you can’t do anything about, or things that have nothing to do with you. In the best case they’re a source of distraction, in the worst case they’ll make you seriously depressed.

3. the CORPORATIONS. These are big companies that work for profits, usually with offices/shops in many different countries around the globe.

Corporations exist in almost every sector, from banks to food, toys, clothing, furniture, electronics, cars, tobacco. With a huge focus on making money and the power derived from their gigantic dimensions, many of these corporations developed a predatory behaviour and stopped seing people as people, but as “consumers”. They push a model of non sustainable development which is eventually destined to crash.

The corporations are deeply interconnected with the other two parts of the system: their executives have frequent meetings with the heads of the governments, and they buy plenty of media space to advertise their products.

It’s important to notice that most citizens of a nation don’t realize that behind the decisions of their government there’s frequently a corporation. They only see the government itself, which is the most visible part of the system, without considering that its politicians are often forced to deal with corporations for all the major decisions. Forced, of course, when they are not men put there from the corporations themselves.

Are there corporations powerful enough to control the governments of the nations? Of course: banks. Banks are the most powerful type of corporation without any doubt, and they built a complex financial system which is very hard to understand for the average citizen, and that gives them huge competitive advantages in the market. This without providing any useful value in return.

Of course not all the corporations are this powerful, and not of all them market products of such fake value as paper money. However, selling stuff of questionable value with the endorsement of the governments and using marketing tricks in the media is a common trait of many corporations in the modern world.

The endorsement of the governments explain why crazy things happen under a model of globalization. For example in my country, Italy (currently the world’s largest kiwifruit producer), I often encounter kiwis coming from New Zealand in the supermarket. There’s clearly someone who decided it’s more convenient -for them- to carry kiwis from the other side of the planet rather than from the farmer nearby.

And about the marketing tricks, you just need to turn on the tv to see the plethora of ads related to snacks full of refined sugar and flavor “enhancers”, clothes and shoes that make us “beautiful”, loans that allow us to be owners of houses and cars that are status symbols, latest versions of electronic gadgets that make our previous ones obsolete, and so on.

I think that this consumistic model, pushed by the corporations, will not last. But even until it does, it creates a lot of problems because it spreads the illusion that we become happy by adding objects to our lives. Instead, just the opposite is true: “the best things in life aren’t things”.

Notes: more about the non sustainable model of development pushed by the corporations is explained very well in the documentary “The story of stuff”.

How to earn money without working

Posted on December 10, 2014 by PaoloDS

Earning money without working is perfectly possible, and it’s also a very smart way to earn money.

It’s not necessary to do any scam or anything illegal, and I specify this because, let’s say it, there are a lot of scams behind this idea. In this article instead I’ll explain how to succeed at it, giving you so many reasons to earn money without having a “regular” job, that having a job will not seem like something desirable anymore, but a calamity, like it seems to me today!

Since I often say that it’s necessary to get rid of the dumb burdens to make room for the smart alternatives, I want to start by explaining why earning money through a job is the dumbest way to earn money. And here I refer to the typical employee job, where you are locked 40 and more hours per week in an office or a workshop, often with your time monitored by a magnetic badge o by your boss.

(if you’re earning money exactly in this way, don’t take it bad. It’s easy to fall into this mechanism, in fact I also spent years trapped in an office, before arriving to the conclusions that I’m about to explain).

Why is it dumb? Simple: because you only earn money when you are working. Don’t you realize that this is a problem? Money flows to you only when you are at work. In the exact moment you lay down the pen and leave the office, you stop earning money. As soon as you leave the tools and get out of the workshop, money stops entering your account.

This is how a lot of jobs are conceived: you get paid for the hours, the salary is tied to the time you spend at work. And doesn’t it seem dumb to you?

Have you ever thought, instead, that you could earn money also when you are NOT working? When you’re sleeping perhaps? When you’re on vacation? When you’re spending time with your family? Well think about it now because it’s possible, and actually in the world many people are doing it already. If you want to do it as well, all you have to do is to switch from systems that produce active income to systems that produce passive income.

The common employee job is a system that produces active income, because you only earn money when you’re actively working. I list in another article the many reasons why this work model is often a failure, but here I want to debunk a myth about it, shocking you with a huge revelation:

The world doesn’t give a damn about how many hours you spend in the office

Really, only a small handful of people cares about how much time you spend at work. Among these there is your boss, who often is one of those who got brainwashed himself, to make him believe that this work model is the only possible one. And among these there are your colleagues, who often hate their job, but unconsciously become active part of a slavery-like job system because they check each other’s times, to make sure also others are suffering from it.

And all the rest of the world? There are many sectors in which the rest of the world will never know how many hours it took you to produce the good/service you’re producing, or they will be totally not interested. The only thing the rest of the world cares about, in fact, is the good/service itself. If it’s valid, they will buy it anyway.

Maybe for you this article is worth more, if I reveal that rather than one hour it took me ten hours to write it? Maybe the bread that you buy from the baker is worth more, if you discover that rather than half an hour he worked three hours to make it? Do you decide to buy the bread for its taste… or for how many hours the baker worked to produce it?

It’s obvious that this idea of tying the money that you earn to how much time you spend actively working is a nonsense. It doesn’t matter that the school system trained you specifically to search for a time-bound job, and it’s not important that “everybody” earns money exactly in this way.

The fact that “everybody” sell their time doesn’t mean that selling your time is a good idea, the contrary: it’s the dumb burden you have to get rid of if you want to make room for a different way of producing income, the smart alternative that really leads you to earn money without working most of your time. The alternative is a system that creates passive income.

What is passive income?

Passive income is the income generated by a web site on which there are ads (the “banners”). If the web site works and has interesting contents, in the night you’re actually sleeping while on the other side of the world, let’s say in Italy, an italian clicks on your ad and makes you earn few cents. You earned money while you were sleeping.

Passive income is generated by an apartment -of which you’re the owner or maybe you just have the permission to subrent it- that you rent to someone. Periodically you’ll receive payments from the guests without any need for you to work, apart from organizing sporadic maintenance.

A vending machine selling snacks, placed in a public building, is a simple and effective source of passive income. Periodically you have to refill it with snacks, but for the rest of the time you don’t need to work at it: you can rest or do other activities, in the meanwhile the vending machine keeps on generating income for you.

All the products that come from creative work, for example the books you write, the music you compose, the movies you make, once they’re completed and put on the market will make you earn money without working anymore. At every sale you will receive the “royalties”. Sometimes you don’t even need to create new products, but you can use the public domain resources, for example ancient classical music, to create a passive income system.

Financial investments are another source of passive income. Examples of this type are precious metals, foreign currencies, stocks. You buy these at a certain moment, then as time goes on -time in which you will not work- their value increases.

Notice that this last field is a bit treacherous: you need a lot of time to decipher the world of finance, surrounded by a lot of false and misleading information, before you can invest intelligently. Naturally, if you’re trapped in an office job 40 hours a week you don’t have any chance of deciphering anything, just because you’re too busy selling your time to the employer and you don’t have time to get informed on what’s best to buy.

A lot of other examples can be made: investments on internet domains, art, patents on inventions, buying and renting industrial machines, generally a lot of entrepreneurial jobs produce passive income, but I don’t want to list all of them now, I’ll probably do it in another article. Here instead I want to highlight some aspects that the sources of passive income have in common.

You don’t earn money by never working

The contrary, a lot of these systems require extra work especially in the initial phase, to be “launched”. But once they’re launched…

You earn money without working all the rest of the time

This second fact will motivate you strongly to create passive income systems, if like me you assign a gigantic value to the possibility of getting rid of a hourly job nonsense. It’s true, you have to make a bigger effort at the beginning, but the fact that after it you can keep on earning money without working for years, often for all the rest of life, is really amazing.

Let’s start from the creation. Building a passive income system can require big initial efforts. The nature of the efforts depends on the type of system that you choose. For example, builing a web site has the advantage that it has a very low initial cost (hosting + domain) but it surely requires a lot of effort in the first phase to fill it with high quality contents, original, that attract many internet users.

Buying an apartment to rent out requires a big initial investment (but consider that during the periods of “crisis” you can successfully buy with few tens of thousands of dollars) and also some stress to find the right apartment, deal with real estate agents, lawyers and do the paperwork.

Entering in the sector of vending machines can be difficult, because a lot of public buildings are already managed by big companies well estabished “in the business”, and they hardly leave any room for new competitors. You have to make some extra effort to find new opportunities. For example you can start by putting a machine in the music school of your friend, or in the touristic apartment -in which there’s a frequent turnover of guests- of your relative.

Producing creative work is definitely not easy. Creating music, movies, or books that people are willing to pay for takes talent (it’s also true that you will hardly develop any creative talent by staying locked in an office, doing repetitive work). Also “re-packaging” public domain resources in a way that people will like requires a certain amount of work.

Financial investments cost study. A lot of study time to understand how finance works, which products will really gain value with time, and which products to avoid. Avoiding the advice of many financial advisors who populate the bank offices can be a great start. I suggest instead to start by understanding the -paramount- difference between finance and real economy.

So, the most difficult phase is without any doubt the initial one, the launch phase. But once this phase is over everything runs really smoothly: the system you built continues to deliver value without need of your constant intervention, and at this point you get rewarded for the value it delivers, rather than for the time you spend working.

“How much” automatic your passive income system must be, you decide it. The system can get close to be perfectly passive, meaning that once it’s created it’s practically not needed anymore that you work on it, and all you do is to receive the earnings, for example the financial investments or the royalties for a book.

The system can also be partially passive, for example an internet web site can make you earn money without working most of the time, but it’s still necessary to do periodic updates. An apartment that you rent out makes money flow to your account for most of the time while you’re doing something else, but from time to time you have to do maintenance or deal with possible problems of your guests.

Naturally I advise to create passive income systems that are in line with your interests, this way even if these systems are not 100% passive you will feel like working on them, to maintain them, or even improve them.

Remember that the quality of anything that you produce, whatever good or service it is, takes off if you work on it with passion. This is why I think that if many people would reach economic freedom by stopping to earn money through “regular jobs”, and would start instead to earn money through systems based on their passions and talents, the entire society would greatly benefit from it. There would simply be more quality goods and services available in the market.

Decouple your income from your work

In general, I consider very desirable that my income is as much as possible decoupled from how much time I work and where I work. Instead I want to earn money in proportion to the value that I produce and deliver to people. This because I realized, as I wrote above, the after all people don’t care about how I produced that value, but they care about the value itself.

I also consider desirable that there are automatic systems (and the growing technology is a formidable ally in this) that take care of delivering the value that I produce to people, so in the meanwhile I can use my life for activities that make me happy. For example writing, traveling, making comic videos, staying with family and friends are all activities that make me happy.

Get paid for the value you produce, not for the time you spend in the office

I write this in blue because I consider it the key advice of this article. Focus on creating and then delivering value to people, rather than worrying to comply with weekly schedules that interest only to a small group of office employees (on a world population of billions).

Value is what people desire or need. As long as you care about creating and delivering value to people, you will always find ways to earn money without working most of your time. This because you have the possibility to only create the value (starting the passive systems that I mentioned above), while you can delegate the delivery to technology or coworkers.

For example, if you choose to generate passive income through a web site, you only have to create the site and fill it with contents. Pay attention to create contents that are valid in the long term (for example I expect that this article will continue to be interesting for many years, if I’d write an article about the last model of cell phone it would stop being interesting as soon as the next model comes out). Once the site is ready it’s the server that takes care of delivering the value to a very wide audience, and with ridiculously low costs by the way.

A less virtual example is the apartment to rent out. You create the “value” by buying the apartment, doing rehabs, refurnishing it, installing all the services. After that you can pay an agency to manage the delivery of that value: an agent will find the guests, assist them, do maintenance, periodic cleaning, or other services that you can decide together.

Similar case with the vending machines: you can delegate to a coworker the periodic refilling operations and make the business perfectly passive. At that point you’ll be completely free from the phase of delivery of the value.

It depends on you a lot. For example, I have friends who systematically rent out their apartment to tourists. For some of them maintenance and interactions with the guests are rather pleasant, so they prefer to manage in person also these aspects of their business. This way they have the disadvantage of an income system which is only partially passive, but the advantage of saving the costs of the agency.

Others prefer to delegate everything to an agency: their system has the advantage of getting close to be perfectly passive, but the disadvantage of having to pay the agency.

How many passive income systems is better to build?

I think that it’s definitely useful to build more than one passive income system, in different sectors.This way, even if one of them stops working for events you didn’t predict (for example you buy an apartment in a touristic city to rent it out, but after few years the tourist flow in that city drops drastically) you still have sources of income that allow you to not return to work by hours.

Examples of combinations are: renting out apartments + web sites + precious metals, or: publishing books + publishing videos in internet + stocks, or: vending machines + online shops.

(remember to always prefer evergreen topics for your web sites, books, videos, rather than current news topics, for which the interest grows and dies within few days. Only the first ones are suited to produce passive income, the second ones require continuous work to “chase” the news.)

Consider that every system requires initial efforts to be created, so it’s not convenient to aim at 20 different passive systems, but that’s not even necessary. Often 2-3 passive systems guarantee a good diversification, and they can already produce earnings comparable to those of many employee workers. In addition, if like me you give more importance to your lifestyle than to money, you’ll want to keep things as simple as possible, avoiding to create an empire of systems that at the end would complicate your life.

Ok, if you arrived here reading it’s probably because what I wrote so far makes a lot of sense to you. But still, maybe while you were reading a couple of doubts appeared in your mind. Let’s see if I guess what they are.

Well. Isn’t earning money without working immoral?

Not working most of your time is generally seen as deprecable. Are you ready to be deprecated? I live without working most of my time and I don’t feel guilty for this.

Actually, I feel rather proud for projects that I created (online in internet an offline in the real life) that served thousands of people. I surely would feel rather guilty if instead, like it was happening when I had a regular job and I was doing consultancy work in the offices, I would still get paid to spend 8 hours “at work”, of which 4 really producing and 4 wasting time between email, phone, meaningless meetings, social networks or half asleep in front of a monitor for the post-lunch digestion.

I am convinced that working few hours per day, on the right projects and in the periods in which there is more energy, is the real recipe for productivity. And I even venture to predict that it will be a main trend for the future: people will work few hours per day and almost exclusively in creative sectors (painting, music, poetry…), while the machines will take care of the other jobs.

So do yourself a favor: be ahead of time and save yourself from the nonsense of badge swiping. Many unproductive employee jobs in which people are trapped will end up being done by the machines anyway. You can focus and acquire economic freedom now already, building passive income systems that do good to you and to others.

Ok, but not everybody can leave all the jobs

Naturally there are sectors that are not suited to produce passive income. A shop salesman needs to be physicaly in the shop during the opening time. An airport security agent needs to work in the check points at specific times. A programmer needs to be in the office in contact with the colleagues of the project, during the day.

In these examples there’s necessarily a strong bound between how much the worker earns and how much time he spends in the workplace.

The news is that exactly in this type of jobs, the active income jobs, the bound between income and labor often becomes a blackmail for the worker, who, if he wants to earn enough money to live, has to work dozens of hours every week, without having any time left for all the other aspects of life.

Many active income jobs could already be done in smaller doses, with part-time contracts, and in fact they would have much more sense this way. Unfortunately the opposite is done, there’s a dumb system that regulates the market. How crazy is it, that a person has to ask for permission to the boss if he wants to travel and explore a bit the world he lives in (often receiving a no)? Or that he has to ask for permission to spend time with family and friends?

It’s not convenient to repeat continuously “I hate my job” and “I hate monday” like many people do. You are not forced to choose this type of jobs. I wrote this article to make you see that now, already there are alternatives, systems that really allow you to earn money without working most of your time. Look around you and you’ll start to notice that many people live this way.

If you’re trapped in a time-bound job, start to build passive systems that produce flows of automatic income. Once the flows will be enough to pay your expenses, you’ll be able to get rid of the time-bound job and reach economic freedom.

To make it remember to focus on the right phylosophy: get paid for the value that you create and deliver to people.

Notes: this article has been inspired by the popular article “10 reasons why you should never get a job” by Steve Pavlina, of which I considered useful to write my personal version, a bit different. June 12, 2016: fixed few grammar errors and rephrased better few parts.

3 Shifts that improve your life conditions

Posted on September 18, 2014 by PaoloDS

The following are three shifts that I strongly suggest, as they can improve your life conditions. On the left, the “entities” that are more popular today. The best thing you can do is to move your focus away from these, and orientate it towards the entities at the right. Let’s see why.1. Shift your focus from finance to economy. When I was younger I used to say that “economy is terribly boring”. Today I find it very interesting and exciting. The problem is that, when I was younger, I was confusing the two things. What I believed to be the economy was actually finance. Unfortunately, this is still a common belief for a wide spread of the population.

There is an overexposure of finance in the media today, that keep on talking about banks, paper money, indexes and graphics, as if they were meaningful topics. But they are not. All these things are related to a parasitic financial estabilishment that adds no practical value to the life of people. Real economy, instead, is the science that studies the desires of people, and how people behave in the free market to meet these desires.

Free from the intervertion of governments and banks, real economy truly serves the desires of everyone. Once you shift your focus on it, you will not be distracted and conditioned by the finance uselessness anymore, and you will put your desires first.2. Shift your focus from religion to spirituality. The main problem with religions is that they are human institutions. While many of them are founded on spiritual principles, with time they have taken a detour. Consider that most religions are hundreds or thousands of years old. There’s been plenty of time for groups of power to distort the spiritual messages, so to obtain privileges and control over the masses.

Getting rid of religious dogmas is a necessary step to make room for something else. …what else? When people are unsatisfied with religions, their typical first reaction is to embrace materialism. In this stage there is the belief that science has all the answers. I went through it. At this stage you believe that humans, animals and plants are machines without purpose. Evolution is going nowehere. There is usually no familiarity with the concept of consciousness, and if there is some, then it’s reserved only to humans. Animals, plants, object, the planet, the universe, they’re all unconscious.

The step further, once you realize that this vision is limiting as well, is in a direction that I label as “spirituality”, for simplicity. At this stage you start to see less coincindences in the events that happen, and find more purpose instead. You understand that reality is a projection of the mind, and that the mind itself is not strictly closed in your brain, but it’s also outside of you. This is a very complex topic and I will not expand the discussion here, but I want to remark that shifting to a spiritual vision comes with great advantages: it increases the connection with your inner self, it makes you listen more to your intuition, and pushes you to work with determination to achieve your dreams. Because you know they are achievable.

To clarify how religion and spirituality are different, click here.

3. Shift your focus from diet to nutrition. I made an entire video to explain why diets don’t work. Diets are usually stressful and orientated to the short term. They rarely help you mantain an ideal weight for long. In addition, a serious problem is that typically the main focus of diets is not health, but “shape”. Diets are all about quantity (of calories), but they rarely concentrate of the quality (of nutrients).

It’s smart to stop worrying about diets and develop a knowledge about nutrition, instead. It will give you two crucial advantages. First, if you eat mostly nutrient-dense foods, you can basically eat as much as you want without getting fat. Second, this way your body and your mind will get the fuel they really need. This is especially important for the mind: I think that it’s a greatly underestimated fact that the foods we eat impact our mental clarity.

I advice to stop wasting time with diets and pay bigger attention to nutrition. If you don’t know much about it, start to learn. Nutrition is the absolute #1 impact factor on your health.

PAOLO ds

Category Archives: EN Economy