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Location: New Mexico

Publications: Japji Sahib: The Song of the Soul by Guru Nanak translated by Ek Ong Kaar Kaur Khalsa. Anand Sahib: The Song of Bliss by Guru Amar Das translated by Ek Ong Kaar Kaur Khalsa. Available through www.sikhdharma.org.

Friday, September 19, 2008

Back to Basics

If I know anything at all about money, it’s because of my father.

His is the kind of story that probably could never happen today. Worked his way in RCA up the corporate ladder – having attended, but never completed, college. Eventually, he landed as the head of the International Finance Division for RCA’s broadcast equipment area. He and his team traveled around the world brokering deals for the sale of RCA color television equipment to (among others) Monaco TV, the Brazilian government, and all of those televangelists who came along in the 1970s. He even has a story about almost having Ted Turner thrown into jail when Turner tried to intervene during a repo of some RCA broadcast equipment. Back when Turner was just starting out. There are a lot of big names we know – the personalities who built the content side of the broadcast industry. My dad is known among the people who built the actual infrastructure. He’s one of the people who helped lay the railroad, so to speak.

When I was growing up, every Sunday morning after church, the family would sit around the dining room table having breakfast together. When my dad wasn’t traveling, he used Sunday breakfast as his opportunity to pontificate on the topics that the priest couldn’t explain: finance, money and the world.

I remember when I was maybe 12 or 13 years old that my dad decided to have a long talk with me about it one day. A talk about money. How it worked. How it really worked. He went back in history to how commerce got started - people trading cows for food, (something like that, the memory of my 12 year old self says). And how eventually currency formed – as a kind of convenience. But when currency started, there was always something to back it up. Land. Metal. Something. Money just didn’t exist on its own, in a vacuum. Money represented wealth that was held somewhere. It was a symbol of something of value that actually existed.

The US dollar, for instance, was originally backed by gold. The gold standard, he told me. Every single US dollar used to be accounted for by gold stored in the US Treasury. Then, he explained, President Richard Nixon got rid of the gold standard. And after that happened – and with banks using more and more computers – money was nothing more than a bunch of numbers showing up on a computer screen. Someone pressed a button – and blip blip - the numbers showed up on a different computer screen. That’s all there was to it. There wasn’t anything else. There wasn’t any gold or cows or land to back up the money. Nothing to see. Nothing to touch. Nothing really there. Just a bunch of numbers on a computer screen and that was it.

But why did it work? he asked me. Why did it work? It was very important to him – that I understood what he was saying. He was explaining something crucial about the world that day. Something that he wanted me to get. Why did it work? Why did money work – when there was nothing there?

It worked, he told me, because people have confidence in it. That was the only reason. People have confidence in it. So it works. The moment people lose confidence – it won’t work anymore.

Never deal with money, was the lesson he gave me. There’s nothing there. Deal with people’s confidence.

Eventually, my dad left RCA. Took a job as a CFO at a broadcast corporation where he stayed pretty settled for the next 25 years, until he retired. The older I get and the more I see of the world, the more I realize what an accomplishment it is for someone to stay in that kind of position with one company for that many years. Talking with my father, I’ve asked him what his secret to success was. It usually boils down to two main points.

First – always keep your word. For my dad, his word is his bond. Some people, when it comes to money, they play games, get greedy, mislead or slip something into the contract without the other person knowing. My dad never did it. Once he gave his word – that was it. The deal was done. What that meant was that he put everything he had into the negotiating. My dad is a son of a gun to negotiate with. But once he gives his word – it’s gold. And that earned him trust and that earned him respect.

He’s also a no-nonsense guy who understood his job clearly. “I control the money,” he said. “It’s my job to make people justify why they need it. If they can’t justify it – they don’t get it. I don’t play favorites. I’m hard on everyone.”

Making people justify why they need it. Having a standard. Having a set of rules around which the money is lent and spent. It shows a respect. A respect that a company has money and assets because of the work that has been done in the past. That profit, those assets have been earned through people’s work. And to keep the company functioning and healthy, you have to treat those assets respectfully. Be responsible about how you use them.

I'm not sure that these are the lessons one would learn in an MBA course. I've never done my MBA. Whatever I learned about money, I learned from my father during Sunday morning breakfast. But I do know those values kept my father successful in finance his whole life – company profitable, people employed, owners happy, bonuses at the end of every year. Because he knew from his work that there’s nothing really there. Nothing except the confidence of the people who keep the whole thing moving.

Watching the financial woes on Wall Street this week, I wonder if some of what my father taught me when I was young might be useful to pass along. The stories above are a couple examples. But some other lessons he taught me along the way:

Investment is gambling. Period. It’s a gamble. If you lose the gamble, you lose the money. There’s a risk involved. Like horses. The more unlikely it is that the horse will win, the higher the return if it manages to cross the finishing line first. But no matter how many charts people show you, how many pitches they give you – when you invest, you are making a bet. And if you lose the bet- the lose it. So only bet with what you can afford to lose. If you can’t afford to lose it, don’t invest it.

A good financial spreadsheet is where your assets and your savings are more than your debt. It’s OK to borrow if you are borrowing for an actual asset like a car or a house or some television equipment. And with some assets, you can write off the interest on your taxes. Just make sure the assets you own and your savings are more than your debt.

Never borrow to buy clothes or to go out to a restaurant. Credit card debt will eat you alive.

Money is people’s livelihoods. Don’t forget it. It’s not just about the bottom line. People have to make a living. People have to get paid. Make them work for it. Appreciate them for the hard work. It’s what creates the profit. But remember – you manage the money for the employees wages and the profit. It all has to work together.

The middle class is the bedrock of our economy. You don’t have to be rich to be happy. You don’t have to be rich to have a good life. Where there’s a lot of wealth – people go crazy. They do crazy things to get it. They do crazy things to keep it. Never turn your back on God for money. Keep your word, have integrity, be grateful and remember – enough is enough.

Work hard. Save. Know that investments are a gamble. Deal with people’s confidence. Keep your word. If someone wants the money, make him justify it. Protect the bottom line and be a good custodian of people’s livelihoods.

These aren’t the values that make you rich quick. But they are the values the give you success, stature and respect over a lifetime.

Back to basics.

Perhaps the folks on Wall Street could use the reminder.


Anonymous Anonymous said...

I was once told, in Gurbani it says greed kills greed. Greed built the markets and because greed its collapsing still further. But more importantly the world is changing on a subtle level. People and ourselves will go to extremes. Both positive and negative. All must be conscious of our actions because we must be able to define from righteous and non-righteous before anything else. The boundary between righteous and non-righteous may often be grey, that is why the untangeble wisdom of dhian gained through simran/meditation is crucial, especially at this coming time.

Sat Naam Jio

3:58 AM  
Blogger Gurvinderpal said...

wow this was amazing bhen ji...

9:17 PM  

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