A few years ago during his Presidential Campaign, Ron Paul declared with assertion that, “We are all Austrians now.” This phrase caught the attention of many listening to his remarks with considerable surprise. At the time, people were uncertain about whether the reference was a nod to libertarianism or to the specific European Economy. As Paul’s campaigning furthered, he continued to use the theory of Austrian Economics as part of his political platform, yet still, fair weather listeners did not fully understand why he touted the principle. So, Austrian Economics – what is it, why is the theory gaining prevalence, and how can it apply to us today with whole life insurance. (Library of Economics and Liberty)
Austrian Economics Defined
The theory came about in the late 1800s by economist Carl Menger, when he published his book, Principles of Economics. Throughout the book, Menger discusses how economic theory can be determined universally by the analysis of man and his choices. According to Menger, freedom of choice is the crux to economic development. This theory can run parallel to Adam Smith’s Invisible Hand, and in short, Austrian Economics is considered a form of free market capitalism.
Why Austrian Economics?
Our economy has changed a number of times over. Regardless of the many liberties we have on a physical level (easy access to food, water and shelter), many feel our ultimate freedom – the freedom and power that comes with the use of the dollar – is being threatened by the dictates of the Federal Reserve and the use of a fiat currency.
Because our current system requires the intervention of a pseudo-government agency that raises and drops interest rates, it is often mentioned by free-market economists, how inaccurate the economy’s indicators have become.
Typically when high levels of control exist to provide relief in times of economic crises – like that from the Federal Reserve – the scales tip toward an imbalanced economy. This imbalance happens by way of people trusting an “untrue” interest rate that accounts for inflation and devaluation of the dollar, which then leads people into making poor fiscal decisions.
With Austrian Economics embracing subjective value theory (what a person is willing to pay determines price of good or service) is what helps a free market keep the economy in balance and economic indicators accurate. When indicators are accurate, people can make wise financial decisions when it comes to spending, saving and investing.
Austrian Economics and Life Insurance
Whole Life Insurance embraces Austrian Economics theory by using the product to infinitely bank. Instead of putting your money into a traditional bank account, or even an investment product, you can place the same money into a whole life policy and reap multiple advantages from your dollar like: liquidity, tax benefits, and a steady rate of return. This flexibility with whole life insurance is what puts you in control of your economy, instead of someone else. This wealth building strategy has been used by significant individuals for over a hundred years (The Kennedy Fortune) to make and maintain their prosperity.
Though Austrian Economics is not in full practice by our economy right now, you can, like the theory suggests, create your own properly balanced economy by infinitely banking with whole life insurance – hence, putting Austrian Economics in practice.