Is the World Economy Trapped in a “Death Spiral”?

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“the latest metaphor being used is even more dramatic. Leading economists are talking about being trapped in a death spiral.”

Everybody is looking for ways to describe the dire state of the world economy.

Some have used Crisis with a capital C, a sinking Titanic or a perfect storm. These are all dramatic expressions to describe a very serious situation. However, the latest metaphor being used is even more dramatic. Leading economists are talking about being trapped in a “death spiral.”

A February 4 report by Citi market strategists chronicles “a circular reference death spiral,” caused by a strong dollar, weaker oil/commodity prices, recession and serious equity problems. It is not just a single sequence of these factors that is happening, but a downward succession of recurring factors that calls to mind the death spiral metaphor.

Related article: Is this the Big One? 

All this means the world economy is in big trouble. Particularly worrisome is what some are calling the coming “Oilmageddon” — yet another apocalyptical reference.

Crude oil prices have plummeted some 70 percent since the middle of 2014. Since oil is traded in American dollars, the recent rise of the dollar by more than 20 percent against a basket of world currencies has compounded the crisis. In addition, bad news from China’s slowing and debt-ridden economy is weighing heavily on global prospects for growth. Above all, economists fear that America will enter into recession, which will have worldwide repercussions.




As a result, forecasts for global growth are down significantly. Policymakers everywhere, especially in emerging countries, have thrown all sorts of emergency measures and stimuli at the crisis. They are running out of tools from the Keynesian toolbox to “fix” the crisis.

Jonathan Stubbs, head of the team that produced the Citi study, believes these policymakers must try to “regain credibility” over the coming months so as to avoid a full global recession and “dangerous disorder across financial markets.”

“The stakes are high,” Stubs claims, “perhaps higher than they have ever been in the post-World War II era.”

The irony of the situation is that the present world capital-C Crisis is not the result of shortcomings, scarcity, or lack of economic production. The alarming threats found in works like Paul Ehrlich’s “The Population Bomb “(1968) have not come to pass. The planetary ecosystem is not reaching the limits of what it can sustain.

Quite the contrary, the economic system is working just fine. There is plenty of everything – oil, metals, and food. Nations have been gorging themselves on low-interest credit to the point of destabilizing markets. Grains and foodstuff are also plentiful and cheap. Overabundance is the problem. Economists are complaining that inflation rates are too low and deflation, not inflation, is a danger.

The present capital-C Crisis points to a system that is frenzied and out of balance. There is what might be called a frenetic intemperance in markets whereby people are compelled to desire everything, instantly, and effortlessly. This intemperance has turned the world economy into a party economy that never seems to stop; it has built up a credit card culture with an ever-increasing spending limit and monthly payment.

To use a comparison, the global market economy is like a very healthy and robust humanSubscription5.2 body. It is capable of working hard and generating an enormous amount of wealth. But there is also a drug called frenetic intemperance that enters into the veins of this healthy body and wreaks havoc upon its systems. It can even stimulate the muscles to work harder and make the body hyperactive, but it creates an enormous imbalance that frequently causes the whole system to crash.

The present problem is that this drug of frenetic intemperance is undermining and now dominating a robust global economy; it’s spiraling out of control. Is it a death spiral? Only time will tell, but meanwhile, we are running out of metaphors.

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Five Ways Student Loans Are Ruining Our Economy and Culture

Five Ways Student Loans Are Ruining Our Economy and Culture

“A July report of the Federal Reserve Bank of Philadelphia finds that student loans have increased tenfold since 1999.”

As the fall semester begins, students are attending classes and incurring great debt.

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A July report of the Federal Reserve Bank of Philadelphia finds that student loans have increased tenfold since 1999. Even worse is the acceleration of this debt over the last eight years. Since 2007, loans doubled from $537 billion to more than $1 trillion today.

The ballooning of student loans is fueled by the idea that everyone should go to college. The problem is that most students have to go to the bank before going to college. Many students secure loans even though they are not sure what they want to study. Others just go because everyone else is going. Universities have responded to growing credit demand by making loans easy to secure.

The Philadelphia Fed’s report now says this policy is misguided. The surge of students on loans is not helping the economy, but ruining it.

1. Starting Life With a Handicap

The first reason why this policy does not work is because students on loans leave college with an average of $28,000 in debt. This weighs them down exactly during the time when they need to build resources to establish a family and career.


The problem becomes worse because the debt load comes when the graduate will be earning less because of a lack of experience. The graduate thus enters life as an adult with a severe handicap that dampens demand and initiative so necessary to a healthy economy.

2. Jobs Without a Future

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“Student loans are also responsible for a decreasing number of young entrepreneurs in start-up businesses.”

The second reason why student loans are ruining the economy? They discourage graduates from taking risks and initiatives that help economies. Usually young people are full of energy and ideas which can be a great stimulus for an economy.

Now risk adverse graduates laden with debt are flocking to existing companies to find “safe” jobs to pay off their burdens. They often accept jobs that have no relation to the degree they paid so much to obtain.

3. The Illusion of a Degree

Another reason is that the practice is not living up to the promises of success. Student loans often ruin the possibility of benefiting from a degree. It is now becoming increasingly clear that a university degree is not an instant ticket to success that promises higher lifetime earnings and better well being.

In fact, the Philadelphia Fed’s report finds that many students would be better off without a degree especially among those 17% that are delinquent in their debt payments.

4. Fewer Young Entrepreneurs

Student loans are also responsible for a decreasing number of young entrepreneurs in start-up businesses. The graduate with loans has neither the money nor credit with which to start a business. As a result, young people are not becoming entrepreneurs and the number of small businesses, which make up half of the nation’s economy, is declining.

The Kauffman Foundation, for example, has found that the number of new entrepreneurs between the ages of 20 to 34 fell to 23% of all new start-ups in 2013. The number is down from 35% in 1996. Such a decline could have grave consequences in the future.

5. Time Bomb

Finally, student loans are increasingly going unpaid. Default on loans is a trillion dollar time bomb just waiting to explode with horrific consequences for our economy.

Some want to present taxpayer subsidized student loans as a way of building the nation’sfree subscription future. However, it is fast becoming clear that it not only hurts the students who often carry their debt for decades but it also burdens the taxpayer who is left to pay the bill. All this pulls down the economy and discourages growth. Should the bubble burst, it could trigger an economic crisis.

Student loans are supposed to guarantee success and bolster today’s hobbling economic “recovery.” Instead, these loans are contributing to the problem they were supposed to solve.

Moreover, it is creating a culture of entitlement and irresponsibility. One has to ask: What ever happened to the days when students only went to college when they knew what they were going to become and had the money to pay for it?

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Misjudging the Judgment of Consumers

Misjudging the Judgment of Consumers

“the idea of man as the ‘rational optimizer'”

Much of modern economic thought is based on the idea of man as the “rational optimizer” who always judges his needs and efficiently uses the means at hand to reach his goal. The market supposedly reflects this idea of man.

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However, recent studies from the more psychologically based school of “behavioral economics” report opposite findings. Examples such as credit card debt and weigh gains show a lack of judgment on the part of many. Cultural scholar Matthew Crawford reports that, “In general we are terrible at estimating probabilities. We are not so much rational optimizers as creatures who rely on biases and crude heuristics for making important decisions.”


(Taken from Matthew B. Crawford, The World Beyond Your Head: On Becoming An Individual in an Age of Distraction, Farrar, Straus and Giroux, New York, 2015, p. 36.)

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Eight Ways to Cultivate the Heart and Soul of an Economy

Eight Ways to Cultivate the Heart and Soul of an Economy

“A healthy economy is fundamental for a thriving society.”

by Dennis Best*

A healthy economy is fundamental for a thriving society. Thus, the role of economics is to help maintain societal wealth and secure the means to more comfortable living for a people.

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A healthy economy blesses its people with financial security, the means to afford higher quality foods, goods and services, better education, better living conditions, less crime and the means to combat poverty. In a thriving economy, people also can afford to devote more time to community, government and spiritual involvement, which helps ensure a proper moral compass for our leaders, the preservation of justice, and greater blessings from God. It naturally follows, therefore, that the role of the economist is very important; and when poor judgment is expressed, it can be absolutely detrimental.

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When an economy is not performing well, it should lead a nation’s leaders to re-examine their economic policies and make appropriate adjustments. Yet over the years, this has not happened with the present American economy. The cost of living is continually rising while purchasing power diminishes. A frenetic intemperance has consumed the culture, leading to frustration, resentment and outrageous spending habits. The federal government receives more in taxes than any other country in the world, yet is trillions of dollars in debt, borrowing hundreds of billions more every year, and continues to cry that it needs even more money!


Most families find it impossible to make ends meet without both spouses working, many of them holding down two jobs, and still the Federal Reserve says average household credit card debt is near $16,000 and the average home owners have only 38% equity in their homes (down from 61% just 10 years ago) and 23% of mortgagees owe more than their homes are worth. The rate of inflation makes it almost impossible to maintain sufficient savings for a person to retire, and the rising cost of healthcare can wipe out a person’s life’s savings with a single severe illness. What are the economists missing in their equations that have left our nation in this state?

The book, Return to Order: From a Frenzied Economy to an Organic Christian Society, The book Return to Order: From A Frenzied Economy to An Organic Christian Society – Where We’ve Been, How We Got Here, and Where We Need to Go (Hard Cover)points out that economics must involve more than just mathematical equations. Equations require quantifiable, measurable inputs. The book’s author, John Horvat II, claims that, while such data has its role, it is not the only way to help an economy.

Modern economists make the mistake of treating economics as an exact science like physics or chemistry. As a result, they only accept metrics that can be plugged into equations to reach their conclusions.

However, there are critical, unquantifiable factors that must also be taken into consideration. These are factors that change opinions and motivations, which result in changes in spending habits, work performance, and investment decisions. These include unforeseen factors that stem from the heart and soul of men, unforeseen acts of God, or spontaneous acts of heroism and self-sacrifice that can change the course of history (and economies). These things cannot be translated into a mathematical algorithm. They also generate enormous amounts of wealth and value that do not appear on the ledgers.

The first such factor is the family. It is an economic powerhouse, which generates goods and services that often go unreported. Sociologist Robert Nisbet adds to this list of factors “associations and incentives nourished by the non-economic processes of kinship, religion, and various other forms of social relationships.” And French historian Fernand Braudel spoke of “the vast world of self-sufficiency,” which describes the many uncompensated activities that account for immense material and spiritual wealth within society.

Propagating these unquantifiable elements are local, cultural and religious associations that are sources of culture, arts, civic spirit, and works of charity. These elements foster strong family and community ties that build solidarity, promote integrity, and inspire community service. Sociologists refer to them as “social capital” – a social fabric that creates the conditions for trust, compassion, and personal responsibility that has an enormous value. All of this has a profound effect on our economy, reins in frenetic intemperance and promotes civic responsibility, yet it is often ignored by our economists.

Such considerations are also disregarded by many of our more liberal leaders and economic intellectuals who recognize that the promotion of these stabilizing economic factors runs contrary to their liberal agenda and desire for big government. Indeed, there is a great fight in America today between those who seek to reinforce what can be termed the “heart and soul” of economy and those who seek to suppress it. “The only thing necessary for the triumph of evil is for good men to do nothing.” May God help us and His Church recognize this problem, and give us the determination and the means to reverse it.

Eight Ways to Touch the Heart and Soul of the Economy

1. Make use of these unreported areas of economy by relying on the family, community and church when you can.

2. Make yourself available to help others through family, community and faith institutions that freely help others and build trust.

3. Build relationships of trust with those who you deal with and thus increase your social capital.

4. Enjoy religious and cultural events that enrich your life with minimal costs.

5. Always introduce a human element in your business dealings, which will create value by building up relationships of familiarity and trust.

6. Do not be over-rigid in your business dealings with others. Allow room for helping Subscription8.11others, accommodating their needs and building trust.

7. Always strive to build up your community with true principles and involvement.

8. Trust in God and ask His aid in all necessities.

All of these things money cannot buy.

Paying Not to Wait

Paying Not to Wait

“This is due, in large part, to modern man’s agitated spirit and insatiable craving for instant gratification.”

*by Norman Fulkerson

The thing which man most desires in this life is happiness. Yet it is the most illusive of treasures. This is due, in large part, to modern man’s agitated spirit and insatiable craving for instant gratification.

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This can be seen in a new mobile device games craze. Things have come a long way since the Angry Birds sensation which became a cultural phenomenon. For a measly 99 cents it was yours, no strings attached; with the exception of the one which kept the player tethered to their smart phone for hours on end.

Mobile-game designers have gotten smarter than even their client’s phone. They now produce what appears to be free fun with more alluring role playing games. Once hooked you suddenly realize how true is the age-old adage “nothing in life is free.”


Perhaps none is more enticing and popular than Clash of Clans which allows a player to have his own village within a particular clan. The fun part for those who choose this particular mode of distraction are the wars that are waged with rival clans. Since some of these imaginary clashes take place in minutes, players can crush their opponents during those frequent lulls in a person’s day.

One man was so obsessed with the game he literally wrapped his iPad in plastic and continued waging his virtual war while taking a shower.[1]

This game is so engaging the creators even provide what amounts to a Surgeon General’s Warning if you have been on for 24 hours straight. But just as the label on a cigarette package ─ which no one reads ─ the Clan-fanatic is more likely to avoid the suggestion to stop with the same indifference. Paraphrasing the cigarette addict, it could be said of them, “If you got ’em, play ’em.”

Practice Patience or Pay

There will always be people to defend such apparently harmless amusements. For example, reformed cocaine addicts have given testimony of their ability to get off the white powder by playing Clash of Clans.[2] One such man, whose wife left him over his drug addiction, describes being able to kick the habit after only fifteen minutes of play time. “I know my wife’s not coming back,” he says, “but at least I have my clan to keep me company.”[3]

Not surprisingly many of the Clash of Clans game designers were drug abusers themselves who have simply “channeled that seedy lifestyle into a game.”[4] Now they are drawing dividends from those incapable of going without a different kind of “high.” Whereas Clash of Clans provides increments of free fun, players can speed up the process of village building by purchasing such things as virtual gems with real world money.

The Candy Crush Saga puzzle game, another wildly popular diversion from reality, uses a similar tactic. After the initial free download players can enjoy free turns. The problem occurs when the free turns run out. Players are thus presented with two choices. They can either wait twenty minutes for the next free turn or fork out 99 cents for five more turns, immediately.

This “wait or pay” tactic can be excruciatingly painful for the game addicts. Not surprisingly many will inevitably cave in to temptation.

With the help of game analytics provider Gondola, which has “analyzed 90 million players,” game developers are snaring what a recent Wall Street Journal article aptly termed “whales.”[5] Through the information provided by Gondola they are able to keep the customer engaged by lowering the cost for a particular customer through their “dynamic pricing engine.” The cost of “weapons” or “in-game currency” is conveniently adjusted to the individual. Clash of Clans and Candy Crush Saga are but two examples of mobile-games which have now become a profitable way for some to make a very easy living off the vice of others, and there are many.

What begins with pennies ends up being $50 to $100 a month for the coveted “whales.” While they only make up less than 3% of gamers, the total dollar amount for those paying for virtual fun items is staggering. In the US alone $1.51 billion was spent last year by those who could not wait for their next fix. Worldwide in-game purchases are expected to top 23 billion this year.[6]

Happiness Finds Us

This is obviously not just an economic problem however, it is also spiritual. The addictive aspect of such meaningless distractions is but one example of what John Horvat defines in his book Return to Order as “frenetic intemperance.” Pounding virtual opponents in Clash of Clans might satisfy a disordered passion but those glued to their phones miss the thing which brings most happiness in this life. It is what Mr. Horvat defines as the sublime; a form of excellence that inspires awe. Such things can be found throughout the created universe and cause the observer to exclaim, “Wow!”

This is exactly where the mobile-game addicts are being sadly misled. They imagine they can find happiness whereas true happiness is something that finds us, if we are patient. Nathaniel Hawthorne said it best: “Happiness is like a butterfly, which, when pursued, is always just beyond your grasp, but which, if you will sit down quietly, may alight upon you.”

It is more than a bit ironic that the inspiration for this article came while visiting the Subscription5.3Hawaiian Islands which are veritable jewel boxes God placed in the middle of the Pacific Ocean. It is called the “Rainbow State” because of the frequent appearance of multicolored arches produced by the Divine brush.

They are but one of the marvels placed within the fingertips of a now frenetically intemperate mankind that often go unseen and, oh, how sad, unappreciated. The greatest joys in life, and the ones we most often remember, are those which we did not expect to find. This is unendurable for the intemperate who would rather pay for that which distracts rather than wait for the sublime.

1.Paul Tassi, “Spending A Week With Supercell’s ‘Clash of Clans’” in Forbes Magazine, at http://www.forbes.com/sites/insertcoin/2014/02/26/spending-a-week-with-supercells-clash-of-clans/ accessed June 2, 2015. 
2.“Former Cocaine Users Overcome Addiction by Becoming Dependent on Clash of Clans” at http://www.p4rgaming.com/former-cocaine-users-overcome-addiction-by-becoming-dependent-on-clash-of-clans/ accessed June 2, 2015. 
3.Ibid. 
4.Ibid. 
5.Sarah E. Needleman, “Mobile-Game Makers Hunt for Whales” in The Wall Street Journal, May 11, 2015 
6.Ibid. 

Video: Is the World Economy Like the Titanic Without Lifeboats?

Video: Is the World Economy Like the Titanic Without Lifeboats?

“If the allusion to the Titanic is not bad enough, the economist adds that the ship has no lifeboats”

Written by Matthew Miller*

There are many who believe that an economic crash worse than 2008 is on its way.

Read the popular article: We Must Resist the Temptation to Secession

In a video episode of Return to Order Insights, author John Horvat comments on the coming economic crisis based on a report by HSBC chief economist Stephen King. In mid-May, King issued a grim 17-page report titled “The World Economy’s Titanic Problem.” If the allusion to the Titanic is not bad enough, the economist adds that the ship has no lifeboats should a crash or recession occur.


Listen to Mr. Horvat’s short video commentary below.

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A Founding Father on the Dangers of Credit

A Founding Father on the Dangers of Credit

“the early days of the republic saw many who did not like systems of easy credit”

America did not always have a credit system like the present one. Rather, the early days of the republic saw many who did not like systems of easy credit and saw the dangers of overextended credit as a threat to the ordinary people who might become engulfed in debt.

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John Adams denounced credit as responsible for “most of the Luxury and Folly which has yet infected our People.” He declared that anyone who could devise a way to abolish credit forever “would deserve a Statue to his Memory” (Stephen M. Klugewicz and Lenore T. Ealy, History, on Proper Principles, Essays in Honor of Forrest McDonnald, ISI Books, Wilmington, Del., 2010, p. 265).


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The Origins of America’s Debt Culture

The Origins of America’s Debt Culture

“By the end of the 1950s, a whopping two-thirds of American households were saddled by some type of debt.”

The mid-twentieth century was really the origin of America’s culture of debt. Prior to that time, debt was looked upon as enslaving and even shameful. It was only by the clever crafting of debt as an entitlement that Americans embraced credit wholeheartedly.

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In the twenties, the installment plan opened the door to debt since it facilitated the buying of so many of the cars, televisions, furniture, and other appliances found in the American home, the new nerve center of consumption. The financing of the home itself through mortgage debt made Americans comfortable with the idea of debt in general.


In his book, Shiny Objects: Why We Spend Money We Don’t Have in Search of Happiness We Can’t Buy, author James A. Roberts explains that “In the period spanning 1929 to 1955, Americans spent approximately six times more on personal loans while installment borrowing increased from $3.1 billion to $29 billion. By the end of the 1950s, a whopping two-thirds of American households were saddled by some type of debt.”

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Consumers Drowning in Debt

Consumers Drowning in Debt

“The average American consumer will have a total of thirteen credit obligations on record.”

Author James A. Roberts notes that consumers are in trouble because they have so many debt instruments. The average American consumer will have a total of thirteen credit obligations on record.

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What is the nature of these obligations?

They usually involve an average of nine credit cards. These include store and gas cards.

Consumers also carry an average of three installment loans which, especially include car loans and student loans.


The most common and costly credit obligation is tied to home mortgages. From 2000-2008, mortgage debt grew from $6.9 trillion to $14.6 trillion – roughly a 110-percent increase.

(Taken from James A. Roberts, Shiny Objects: Why We Spend Money We Don’t Have in Search of Happiness We Can’t Buy, New York: HarperOne, 2011, p. 114.)

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America’s Need for Leadership Provokes Book Giveaway

 America’s Need for Leadership Provokes Book Giveaway America’s Need for Leadership Provokes Book GiveawayConservative thought-leaders/authors unite with solutions for a hero-starved country

CHANDLER, AZ (April 7, 2015) – Technology usurping human interaction. A bloated debt burden coupled with renewed and poisonous subprime lending. The nation’s diluted position as a global leader. America’s critical need for leadership and a renewed moral compass is bringing two well-known, conservative authors together to provide solutions to address the nation’s social and economic chaos.

John Horvat II, an internationally followed speaker and scholar and author of the highly lauded book, Return to Order: From a Frenzied Economy to an Organic Christian Society, and Normal Fulkerson, author of An American Knight, are joining to provide presentations to groups around the country in 2015. And as part of their campaign to get America back on track, a free copy of An American Knight, The Life of Colonel John W. Ripley, USMC, will accompany each purchase of Return to Order.


An American Knight captures, in an outstanding way, the qualities of a man who mentored me after I received my own Navy Cross. While I considered Col. Ripley a close friend, I learned some interesting things about him from the book, including his “Huckleberry Finn” days growing up in Radford, Virginia, as well as invaluable lessons about fatherhood through humorous, yet wise anecdotal examples of how he raised his own children,” said Sgt. Jeremiah Workman, Navy Cross recipient and author of, In the Shadow of the Sword: A Marine’s Journey of War, Heroism, and Redemption.

In their powerful dual presentation, Fulkerson provides some of those anecdotes and other inspiring lessons in leadership with his speech, “How Role Models Can Inspire the Family: The Case of Col. John Ripley USMC.” Fulkerson demonstrates how effective role models can change family dynamics and inspire a hero-starved society. An American Knight is in its fourth printing and is the Military Writers Society of America 2010 gold medal winner (biography).

“This book about a man of integrity and honor is one which every American needs to read,” Workman adds. “Thankfully, Norman Fulkerson has provided the story of a great man that will no doubt inspire future generations of other true patriots to follow the path so bravely charted by Col. John Ripley.”

John Horvat II, vice president of The American Society for the Defense of Tradition, Family and Property (TFP) and author of hundreds of published articles in addition to Return to Order shares his solutions for a better America during his half of the presentation. The book is the fruit of 20 years of research and is the backbone and doctrinal basis for this non-partisan, nonprofit effort to help provide a moral compass for a country losing its way.

“When we hack down the moral firewalls that restrain us, we also take down the supporting pillars that prevent society’s collapse,” Horvat said in a recent article.

Return to Order has sold more than 30,000 copies and has received dozens of endorsements. Horvat’s solutions for America have been heard by over a million people through presentations in more than five-dozen cities and over 200 radio and television interviews. He also contributes to media outlets such as American Thinker, CNS News, TheBlaze.com, The Christian Post, FOX News, The Wall Street Journal and The Washington Times.

To purchase a copy of Return to Order and receive an electronic version of An American Free subscriptionKnight, please click here. To purchase a copy of Return to Order for $18.65 (a 15 percent discount) and receive a free hardcover copy of An American Knight, please click here. Shipping is free. To subscribe to the weekly Return to Order newsletter, click here.

For more information or to request a presentation by Horvat and Fulkerson, contact Linda F. Radke at 480-940-8182, or email fivestarpublications@gmail.com.