In the past several days, American’s confidence in the workings of our economic system have been stirred and shaken by a series of events beginning with the troubles at IndyMac Bank based in Pasadena California. The bank was taken over by federal banking authorities after a stream of depositors yanked their money from the crippled bank. The confidence of the IndyMac customers was understandably shaken and that feeling quickly promoted questions from depositors at many American banks. I’d describe it as a small “p” panic. Being a self labeled “fundamentalist capitalist” I sat down to think about what has gotten out of alignment with the way America is doing business.

Few Americans under 50 years of age have read enough history to know that we’ve been here before. In fact, there are some strong parallels between current events and those of the early 1930s when Franklin Delano Roosevelt was running for president as the country was dealing with great economic upheaval. His 1933 inaugural speech could serve as a model for the person who places his hand on the bible to take the oath of office in 2009. It has become known as the “nothing to fear” speech. Here are a couple of excerpts. “I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our people impels. This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.”

“Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.” Do these words have a special resonance for you today? It is my belief that the presidential candidates of both parties should read and reread Roosevelt’s words until the spirit of the speech becomes part of their political DNA.

Most people have little to no understanding of the causes and effects that have created the current economic climate and those who do are being characterized as near heretics.  You know that truth is in trouble and things are shaky when the media is being blamed for fanning flames of hysteria regarding our economic outlook. The simple truth is that it has taken decades of destructive business and government policies along with years of rampant greed and corruption to badly weaken the world's largest economy.

It is easy to see that I’m no economist and my observations are based on the most fundamental principles of business and commerce learned from simple observations of history. Here are some of those principles. Durable wealth is created only when people create goods and services that are valued in the marketplace. Money is never truly lost, it simply moves from one set of pockets to another. Money is like water, it flows into places where it is comfortable and can gather in pools. There are always opportunities to make money by matching supply with demand but over time those opportunities move to different sectors of the business world. There are always people working while you are sleeping (literally or figuratively) so don’t be surprised if they eventually own what once belonged to you. No matter what the Federal Reserve Bank or congress does, up and down cycles are the natural order of things and they will prevail.

I have the good fortune to know some very wealthy and accomplished people and the wealthiest among that group simply says “nothing is free Nelson.” In this time of obfuscation and disbelief, I do believe him.