Fibonacci Financial

Posts Tagged ‘Ludwig von Mises’

One of the Real “Secrets” to

Rapid Wealth Creation

Is Leveraging Your Resources

One of the pervasive facts of life is that RESOURCES ARE SCARCE (contrary to what is being peddled by those who exploit the arrested adolescents among us who desire to hang on to a magical world view). One of the scarcest resources we encounter is the incredibly short life span we each have. But, dear readers, there are power tools to help us gain massive amounts of leverage over our time and money.

Are these tools in your “Living Optimally Tool Box”?

La Vida LOCA – Yes, if you are not living La Vida LOCA, you are definitely squandering a lot of time and money (and missing out on a lot of fun).

The 80/20 rule is an incredible tool for getting much more out of life.

Optimal F (a money management tool) will move you towards your wealth accumulation goals faster than a shot of NOS. This is the ultimate wealth turbocharger.

La Vida LOCA – IS The Ultimate Win-Win Strategy

If you want those little fibonacci bunnies working overtime for you, learn to live La Vida LOCA.

One of the most powerful and little understood laws of economics is the Law of Comparative Advantage (LOCA).

Nobel Laureate (1969) Paul Samuelson was once challenged by the mathematician Stanislaw Ulam to “name me one proposition in all of the social sciences which is both true and non-trivial”

It was several years later that he thought of the correct response: comparative advantage. “That it is logically true need not be argued before a mathematician: that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them”

You’ll notice that Noble Laureate Paul Samuelson indicated that its power was not grasped or believed by many important and intelligent men (I am sure all the intelligent women got it the first time). It is imperative for my readers to learn and understand the LOCA. Fortunately Jeff Tucker at Mises.org wrote a brilliant short essay exlaining the LOCA. Take five and let Jeff explain the LOCA to you.

The short explanation of the LOCA goes like this:

There are two primates Super Sapien and little Bongo. They both know how to make stone tools and grow bananas. Super Sapien is better than little Bongo at both tasks. BUT Super Sapien is far better than little Bongo at making tools. That is Super Sapien has a comparative advantage in tool making and little Bongo has a comparative advantage in growing bananas. The counter-intuitive fact is that if Super Sapien concentrates on making tools and if little Bongo concentrates on growing bananas and they trade tools for bananas – THEY BOTH WILL END UP WITH MORE TOOLS AND BANANAS !!!. I know Super Sapien will be sorely tempted to do both because he is more efficient at both tasks (It can be very counter intuitive to pass off a task to someone who just can’t do it as well as we can) If he does, he will end up with fewer tools and bananas. I know little Bongo will want to do his own thing to avoid exploitation by that big monkey. If he does he will end up with fewer tools and bananas. Follow common sense and ignore the power of the LOCA and it will impoverish you. If you skipped reading Jeff’s article, you won’t really Grok the LOCA enough to unleash its power in your life. So, go read Jeff’s article

Of all professionals, dentists seem to really get the LOCA idea. Every dentist can perform the job of a dental hygienist and clean/polish their patients teeth. But instead the dentist hires a dental hygienist and makes $150 an hour drilling teeth instead of $35 an hour polishing them. I still smile as I watch highly paid professionals with very little spare time doing their own personal accounting. Most of them bring in a lot of revenue but never seem to have a handle on their finances. The simple solution once they Groked the LOCA would be to hire a personal finance bookkeeper and they would both be far better off. Besides both being better off financially, the piece of mind the professional would have would add many years to their life.

Now go LEVERAGE YOURSELF and Live La Vida LOCA and Rica

Want to live La Vida LOCA, focus on whatever you are really good at (your comparative advantage) and outsource the other stuff !!! – You will have more time and money if you do! DO THE MATH.

Ok, time for Brain Share – please give the LOCA some serious thought and share your ideas with the other readers on how to exploit the power of the LOCA in both our personal and professional lives.

PS: If you found this valuable or interesting PLEASE let me know  by dropping me a comment!