REAGANOMICS

In 1973, the world experienced a major shortage of oil. OPEC (Organization of
Petroleum Exporting Countries), of which there are currently 12, quadrupled the
price of oil, triggering a worldwide recession and inflation, and eventually
“stagflation” (stagnant growth and high inflation). Interest rates hit 18%. This
contributed to the view that managed or regulated capitalism (Keynesian
Economics) didn’t work. It was time to go back to the philosophy of unfettered
capitalism in which “the market dictates because the market is always right-- it is
self-correcting.” This made conditions ripe for the Margret Thatcher and Ronald
Reagan brand of economics. They set out to remove the regulations enacted
during the previous 40 years. Unions were curbed, state-owned enterprises were
privatized, price and income polices (i.e., wage or price controls) were scrapped,
top tax rates were lowered and regulation of the financial system was progressively
dismantled. The rationale was that, since there were no crises, regulations were
unnecessary. Was that true? Or was that a disconnect due to time, space and
motion? Perhaps there were no crises BECAUSE of regulations. Case in point,
since 1790, the U.S. has experienced 16 significant banking crises. In contrast,
Canada, with its numerous financial regulations and abundant lending, has endured
ZERO banking crises including during the Great Depression!

This leads us into our next Kabbalistic concept, Tikkun, or correction. Have you
ever asked yourself why you are here on earth? Why you were born? What is
your purpose? According to Kabbalah, we are all here for one reason and one
reason only-- to transform ourselves by correcting that which we did not correct in
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a previous lifetime. Now, you can choose to believe that or not, but one benefit of
that philosophy is how we view obstacles that we encounter. The Kabbalists
believe that what the rest of us call obstacles are not obstacles at all. They are
welcome opportunities sent our way to allow us to transform. So if you are a
person who has no patience, you may very well end up living in Los Angeles,
where you will battle traffic on the 405 Freeway everyday. To you that is an
obstacle, to the Kabbalist, that is an opportunity to correct your impatience. The
Hebrew word Tikkun literally translates to correction. Kabbalah teaches that we
all have our unigue tikkuns that we are born with in order to correct. Usually, they
are the patterns of negative or painful behavior that you keep repeating. If you fail
to correct, more "opportunities" will be sent your way, and they will likely increase
in their severity since you failed to correct previously. The greater the
obstacle/opportunity to overcome, the greater the transformation. Keep this is
mind as we proceed from economic crisis to economic crisis. For instance,
throughout history, do economic crises increase in severity? Do they increase in
frequency over time?

What does this concept of Tikkun have to do with regulations? The Kabbalistic
equivalent of regulation is known as restriction. We said earlier that we are all
born with the desire to receive. Another attribute that we are all born with,
according to Kabbalah, is a reactive nature. It is why we are ALL our own worst
enemy. Kabbalah actually teaches that we are our ONLY enemy, but we're not
going to explore that now. When we are reactive, that's not a choice, it comes
naturally to us. The choice is in resisting or restricting. It may be in letting go: of
anger, jealousy, of “being right,” or “acting for the self alone.” It may be resisting
the urge to do nothing, to be complacent, to be a victim or self-indulgent. The ear
needs an eardrum to resist in order to hear. A light bulb has a positive pole, a
negative pole and a filament. The filament acts as a resistor, pushing back the
positive current so it doesn't connect with the negative current and short circuit.
Without the resistance of the filament, there is no light. And without regulations,
the desire to receive meets the desire to act for the self alone and we have an
economic short circuit. We will talk a lot more about regulations throughout this
lecture.