The Relation between Infinite Banking and Austrian Economics — Bob Murphy, PhD


It’s ironic that the infinite banking concept provides an immediate implementation of the sort of thing that the Austrian economists have been talking about for decades about how it is that we can achieve privatized banking — returning money and banking back to the private sector. You would think that the Austrian movement would embrace it wholeheartedly and what’s even more ironic is that Nelson Nash himself for decades has been one of the biggest boosters of Austrian economics in general — when he goes to his seminars — pushing people towards the Mises Institute, Foundation for economic education, other outlets like that, so there’s this natural affinity and yet even after Carlos and I had our book come out — it was virtual silence from the Austrian camp, and I think there’s at least two main reasons, so one is simply that It’s a difficult concept to understand that people just don’t even know much about permanent life insurance, and so we’re asking them to take a lot of time to sit down and learn something new, and if you’re worried about rising prices and the collapse of the dollar on the surface it seems like life insurance isn’t something you’d be interested in and so I think that’s fundamentally the reason that a lot of Austrians haven’t embraced this when for all sorts of reasons, I mean Murray Rothbard in particularly loved insurance companies. I mean he had them as the foundation of how you would phase back government services and the legitimate services he thought would be replaced by insurance companies are something operating similar to that model, so there’s a ton of affinity between Austrian economics and the insurance sector and I think just Austrians need to give this a chance and really read it and not just take the word of others who say life insurance is a silly investment. If you’re worried about inflation like many Austrians are and they say wait a minute, but life insurance that’s a dollar denominated assets, so Bernanke is destroying the dollar I’m just gonna go buy gold and what I try to explain to these people is look it’s not that the infinite banking concept is telling you to invest in life insurance. It’s not that there’s this whole range of possible investments, and we’re saying you want to get into treasuries and just do it through an insurance company as a middleman. That’s not what it is. It’s saying it’s a headquarters for your money. You’re not tying your hands — the whole point is you’re becoming your own banker, so if you want to go make an investment in gold when you think the time is right, you can still do that. You just borrow against your life insurance cash values and you go buy a gold if you think that’s the right investment to make at the right time. So the thing that everyone needs to realize is whether we like it or not the dollar right now is the medium of exchange. That is our money right now in the US economy. It’s not gold. It should be gold. If the government didn’t use coercion back in 1933 it still would be. Gold would be the real money, but it’s not right now it’s the dollar and when we go and I give talks at libertarian events they pay me with checks denominated in dollars. They don’t give me gold and why don’t they? Because I have to pay my bills in dollars. So if they gave me gold I would just have to go to a dealer and sell it and get the dollar so I could pay my utilities and so forth and go to the grocery store, so given that we deal in dollars right now the infinite banking concept shows the the best way to manage those dollar flows in and out of your household or your portfolio if you will and It’s not tying your hands. You can go buy gold if you want to when the time is right…

3 thoughts on “The Relation between Infinite Banking and Austrian Economics — Bob Murphy, PhD

  • I think many people, libertarians included, make the assumption they can't afford the premiums. This might be true for some people but I'm learning that premiums don't have to be very high.
    Also, there seems to be a bottleneck on practitioner's. To find a local IBC practitioner, within driving distance, limits choices. There aren't many for most people. If you live near a large city then you might find one or two but choice is limited. Many people prefer the ability to meet with an insurance agent face to face. Someone seeking this type of policy can more easily find an agent from a mutual company who is not an IBC practitioner to set up a dividend paying whole life policy, but there's fear it won't be tailored correctly for IBC.
    I think this is the hold up for, not just libertarians, but everyone interested.

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