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Financial Crisis

There were at least a three noteworthy events in the financial markets this past week. In the first place there was outgoing European Central Bank (ECB) head Mario Draghi’s announcement of what some are calling QE Infinity (Infinite Quantitative Easing). According to Draghi, the ECB will begin asset purchases at the rate of €20 billon per month for as long as it deems necessary, “to reinforce th accommodative impact of its polity rates.”

Translating all this central bank talk into plain English, Draghi has committed the ECB to counterfeit an absurd about of money on a monthly basis just to make sure the European economy doesn’t collapse. Further, there is no definite stopping point to this program. Draghi’s policy is both sinful and incompetent. It is sinful, because it violates the Bible’s clear teaching that differing weights and measures are an abomination to the Lord It is incompetent, because it fails not only to address the real reasons for the economic problems in the nations that use the Euro currency, but actually makes them worse.


Second was Donald Trump’s calling for the Federal Reserve to lower “interest rates down to ZERO , or less.” This is a remarkable statement by the President, and has left many asking why he made it. The short story is this, the American economy is not as good as what Trump and others have tried to convey and the President is concerned that, if the Fed doesn’t cut interest rates, the stock market will tank and the economy will fall into recession. Neither of these things would be good for his reelection chances.

Of course, neither a Zero Interest Rate Policy (ZIRP) nor a Negative Interest Rate Policy (NIRP) would be good for the country, especially for those who rely on interest income from their savings, but that doesn’t seem to matter to the President.

A third noteworthy item of financial news from last week was the sudden spike in the 10-year US Treasury interest rate. The 10-year US Treasury is considered the benchmark interest rate for the entire bond market. More than that, the 10-year Treasury is the benchmark which goes a long way to determining the price of stocks as well.

When interest rates move sharply upward, this means that the price paid for bonds has gone sharply down. Bond interest rates and bond prices move in opposite directions, much as the ends of a teeter-totter do. If yields are going up, this means that there is a selloff in the bond market.

So bonds are selling off, what does this mean? Peter Schiff and Gregory Mannarino have warned that this could portend a larger bond selloff as holders of US Treasuries become nervous about the financial condition of the US. Mannarino is of the opinion that China may be the major actor here.

Another interpretation is that the Exchange Stabilization Fund (ESF) – the ESF is part of the US Treasury Department – is manipulating the 10-year interest rate to make sure that the yield on the 10-year Treasury stays well above the yield on the 2-year Treasury, thus preventing an inverted yield curve, which is a strong recession indicator.

These moves in the bond market are important, yet most people don’t follow the bond market nearly as much as the stock market. But it’s the bond market that controls what goes on in the stock market, not the other way around. If we ever do get an uncontrolled selloff in the bond market – this would mean sharply higher interest rates, remember when bond prices go down, interest rates go up – you would see a simultaneous crash in all markets that derive their value from debt: stocks, and housing in particular.

Put another way, if the bond market tanks, the whole economy tanks.

One thing all three bits of news above have in common is that they are all related to what I’ve called the Ongoing Financial Crisis of 2008. My contention is that, due to the interventions of governments and central banks, the debt problem that triggered the 2008 global financial crisis not only was not solved, but actually made worse. Calls for QE Infinity, ZIRP, and NIRP together shaky bond markets are all symptoms of this.

In light of the fact that the serious problems with the West’s financial system have never been addresses, and given the foolishness of Western leaders, never will be voluntarily addressed, it seems wise to this author for Christians to take steps to protect themselves from a breakdown in the financial system now.

It is this need to get prepared and stay prepared, together with a conviction that very little has been written for Christians by Christians on this subject, that have prompted me to write this series in the first place.

As part of this series on the financial crisis and on getting prepared for it, I have been examining what the Bible has to say about prepping. As a Scripturalist – a Scripturalist is defined as one who believes that all knowledge is either expressly set forth, or can be derived by good and necessary inference, from the 66 books of the Bible – it is critical to ground all prepping the Word of God.

One question to ask is this, Does the Bible support prepping? The clear answer is, yes it does. This can been seen in the numerous, clear examples in the Scriptures of those took steps to prevent suffering and death, both their own and that of others, by taking preventive measures in the face of oncoming catastrophe. “A prudent man foresees evil and hides himself,” says Proverbs, “but the simple pass on and are punished.”

A second question to ask is, What should Christians do to get prepared? I contend that Christians must answer this question in the same as the first, by looking to the Scriptures. As part of this series, we’ve already looked at two examples, that of Noah and that of Lot. Today, I’d like to turn the reader’s attention to another obvious example from Genesis, the case of Joseph, Prime Minister of Egypt.

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Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

In a recent article titled “The monetary policy endgame,” Rick Rieder argued that central banks have two ways of creating inflation – inflation in this case being defined as rising consumer prices. The first is to create increased consumer demand through demand stimulus (lower interest rates). Secondly, Rieder argues, central banks can engage in monetary debasement. Continuing with his argument, Rieder contends that he believes central banks will turn to monetary debasement to achieve their stated inflation goals.

So what is monetary debasement? As the Investopedia link puts it, “Debasement refers to lowering the value of a currency, particularly one based on a precious metal, by adding metal of inferior value.”

But even though we don’t have a precious metals based monetary system doesn’t mean that governments can’t debase their currencies. As the Investopedia article on debasement goes on to say, “[D]ebasement [in fiat monetary systems] only requires that the government print more money, or since muc hmoney exists only in digital accounts, create more electronically.”

In light of the coming central bank driven currency debasement, Rieder asks the important question, “How should one position for such an endgame?” Rieder’s answer? “[A]ll of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say, real estate, and even hard assets that have historic value-relevance, such as gold.”

Rieder’s post is remarkable, not just for what he said, but also for who it is that said it. Rieder is not some tin foil hat wearing gold bug, but is a Chief Investment Officer (CIO) at BlackRock, a New York City based investment management firm that is the world’s largest asset manager with $6.84 trillion in assets under management as of June 2019. Put another way, BlackRock is Wall Street royalty. Further, Rieder’s post appeared on BlackRock’s blog, giving his statements the implicit approval of the firm itself.

Given the decades long propaganda campaign of hatred that has been directed at gold and at those who advocate for the return of gold to the financial system, Rieder’s comments are significant indeed.

There’s a lot to unpack in Rieder’s article, more than what can be discussed in this post. Lord willing, I shall return to his post at some point in the future. But I mention in today mainly to let readers know that mainstream financial analysts are quietly warning that the US dollar – and all other fiat currencies – are in trouble and likely to suffer significant devaluation in the not too distant future.

In light of warnings from Rieder and others, the application of Proverbs 22:3 to our current financial circumstances cannot be overstressed. Here we have a highly placed man at a highly respected financial firm going on record to warn us in advance that the Fed is going to debase the dollar. What is more, he provides for us sound advice on strategies savers can use to protect themselves.

In Scripture, we find several examples of men who were given advanced warning by God of coming disasters, and who, in faith, took action to save themselves and others. In last week’s installment, we looked at the case of Noah. This week, we shall continue our look at Biblical case studies in prepping with a review of Lot’s narrow escape from Sodom.

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Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

US Slaps New Tariffs On China; One Minute Later China Retaliates,” was the headline on ZeroHedge this morning. This, of course, is in reference to the US/China trade war which has been ongoing for the past two years.

Just last week, US stock markets rallies on reports that China was going to be “calm” in its response to the trade war. But in this headline we see that China immediately retaliated when the Trump administration imposed tariffs on $112 billion in Chinese imports. Whether China’s response, a decision to place higher tariffs on $75 billion of imports from the US, will be considered “calm” by American financial markets when they reopen on Tuesday after the Monday closure for Labor Day is a matter of opinion.

In the view of this author, come Tuesday the moves by the US and China to impose a new round of tariffs on each other likely will put downward pressure on US stocks, force money into bonds, drop long-dated US treasury yields further inverting the already inverted yield curve, and cause gold and silver to spike. This opinion comes with the usual caveats that things could change between now and Tuesday morning and that past performance does not guarantee future results.

I bring up the trade war, not because it’s the focus of this post, but just by way of warning that there is a lot of uncertainty in the financial markets, a great deal of which is caused by the geopolitical stresses in the world today, none of which seems likely to be resolved anytime soon.

And geopolitical stresses are not the only things that pose a threat to the well-being of private citizens of the US and the West generally. The Western financial system is in a state of collapse. Deficits and debts are out of control, yet there is no political will to address these issues. To date, politicians and central bankers have largely been able to hide the destructive effects of out of control spending government spending has had on the lives of average citizens, but this will not go on indefinitely.

Speaking of debtors, Jesus said in his Sermon on the Mount that, unless they settled with their creditors, they would be thrown in jail and not get out until they paid the last cent. In God’s economy, the books always balance in the end. Put another way, no debt goes unpaid. The once Christian West has managed to rack up the greatest debts in the history of mankind, and these debts most certainly will be paid in full. That payment will come in the form of currency devaluation, loss of standard of living and, probably, a loss of personal freedom as well.

So what are Christians, in particular, Western Christians to do in the face of the challenges facing our nations? In the first place, we must remember who it is we serve. The Lord Jesus Christ is our king and it is in his name we put our trust. Jesus never promised his people that they would have lives of perfect, uninterrupted bliss. On the contrary, he repeatedly warned his hearers that following him came at a cost. But Christ has promised that he will always be faithful and that our Father in heaven will supply our needs.

In the opinion of this author, barring the near-term return of the Lord Jesus Christ, there is no possible way for the West to avoid a major financial and political crisis in the next few years. But in light of the promises of Scripture – for example, “But seek ye first the kingdom of God, and his righteousness; and all these things (food and clothing) shall be added unto you” – Christians have no business falling into despair.

This leads me to my second point. Rather than falling into despair, we Christians need to get to work. That is to say, we need to get prepared for what is coming. We want to be the prudent man in the verse from Proverbs quoted at the top of this post and not as the fool who ignores all warnings signs and is punished for his failure to take reasonable action.

Put another way, recognizing potential dangers and making prudent preparations against them is part of the Christian enterprise.

In today’s post, beginning with Noah I’d like to begin exploring some of the major examples in Scripture of prepping and what applications these examples have for Christians in the early 21st century.

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Financial Crisis

They have also healed the hurt of My people slightly, saying, ‘Peace, peace!’ when there is no peace.

    – Jeremiah 6:14

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    – Proverbs 22:3

In his recent piece “11 Reasons Why So Many Experts Believe That A US Economic Crisis Is Imminent,” Michael Snyder makes the case that there are numerous and important economic indicators that are flashing red, warning us that a the next recession is imminent. I strongly suggest that you read it.

Predictions about the future are always difficult. Michael Snyder does not claim to be a prophet. Neither does this author. But God has given us his Word and the ability to reason from it. In the Scriptures we can learn the mind of God on what sound government is, what sound money is, and what pleases him as well as what incurs his wrath.

Gordon Clark and John Robbins both noted in their writings that the once Christian West is in a state of collapse and has been for some time. This collapse, which can be traced at least to the second half of the 19th century has advanced to the point where the nations that once rejoiced in the blessings of God brought about by the Christian Reformation of the 16th century are now falling apart before our very eyes.

It is beyond the scope of this series to look at all the ways in which the West is in collapse. Rather my focus has been on the failure of the Western financial system. That is quite enough for one series.

Getting back to Michael Snyder’s article after listing out the 11 economic danger signs, Snyder comments, “On the surface, the Trump administration is trying to assure us that everything is going to be just fine, but behind the scenes they appear to be preparing for the worst.”

Worth noting is that Michael Snyder is not some snowflake Trump hater. He’s a conservative Republican, but one who is honest enough to admit that the rhetoric out of the Trump administration does not match with the policies the President wants to pursue. Lowing interest rates and demanding Quantitative Easing – Quantitative Easing (QE) is a new term that came into common use during the 2008 financial crisis; QE is a roundabout way of saying “money printing,” which has the effect of destroying the value of the dollar – are measures designed to pull an economy out of a recession. These are not measures one uses when the economy is doing well, but when it is struggling.

It appears that Trump is concerned that the economy may tip over into recession before the 2020 presidential election. Were this to happen, it would weaken his chance of reelection.

Trump is right to be concerned. When the next recession hits, it likely will be much worse than the one we saw in 2008. In fact, many economic observers don’t speak of a coming recession. Rather, they speak of a coming Greater, or even Greatest, Depression.

Those who speak of a Greater Depression rest their case on the fact that the 2008 crisis was never dealt with honestly. The 2008 crisis was debt driven. There was too much debt in the financial system and not enough capital to service it. So what did governments and central banks do to “solve” the 2008 crisis? Unbelievably, they added more debt to the system!

While adding more debt to the system had the effect of reflating the collapsing bond market, stock market and housing bubbles and kicking the can down the road, not only did it not solve the debt problem, it actually made it much worse. As did the false prophets Jeremiah’s day, so too have done elected officials and central bankers in our time: They have healed the wounds of their people slightly.

I would like to be optimistic and say that the nations of the West will come to their senses and reject the policies, chief among them central banking, that have driven them to the point of bankruptcy, but it appears that this will not the case. There are simply too many powerful, vested interests to expect a change of course at this point. In the view of this author, it will take a major economic collapse before there is any opportunity for change.

But even an economic collapse of historic proportions will not be enough. As John Robbins has noted, events do not explain themselves, but must themselves be explained. Were an economic collapse to happen tomorrow, not a few people would take to the microphones of the MSM to declare that it is all the fault of too much liberty, that those who favor capitalism are to blame, and that what we need is more centralized government authority to pull us out of this mess and ensure that such a disaster won’t happen again.

Of course, such an explanation is nonsense. It is not too much economic and political liberty that has led the nations of the West to the brink of economic collapse, but too little. It is the central planners, the central bankers, the authoritarians and the socialists who have created this mess, and it is imperative that Christians point this out once the collapse occurs.

There is a sense in which Christians can be faulted for the collapse of the West, but not in the way that our enemies think. Our fault lies in the fact that we have not fought the good fight of faith as we ought to have. Too often we have been seduced, either by the pleasures of this world, by the so-called wisdom of this world, by our own laziness, by our own self-imposed ignorance, or by the fear of men, from teaching, rebuking, and correcting the enormous fallacies that have poured forth from both religious and secular thinkers over the past 150 years.

The ideas of Thomas Aquinas, Soren Kierkegaard, Karl Marx, Charles Darwin, Oscar Wilde, Sigmund Freud, Karl Barth, John Maynard Keynes and many others have replaced the systematic truth of the Scriptures in the West to the point that even many Christians have absorbed at least some of what these men taught under the mistaken notion that their ideas are Christian.

Christians in the late 19th and 20th centuries first lost the intellectual battle, and now their descendents are losing their countries.

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Financial Crisis

“In his book…A Christian View of Men and Things [Gordon] Clark comments that the growth of government is the greatest tragedy of the twentieth century.”

    – John W. Robbins, “The Growth of Government in the United States

The thesis underlying this series of posts and reflected in the series’ titles, is that the 2008 financial crisis never really went away. Yes, the stock market has recovered and gone on to hit new highs. Yes, we don’t see massive layoffs taking place or people standing in bread lines. So the visual cues that we expect in a financial crisis are not present.

Further, we see announcements in the press stating how strong the American economy is, and various statistics are brought forth to prove this, perhaps most notably a low unemployment rate.

Donald Trump has been very aggressive at touting the strength of the American economy. The day after the worst stock market plunge of 2019, the President tweeted, “The United States is now, by far, the Biggest, Strongest and Most Powerful Economy in the World, it is not even close! As other falter, we will only get stronger. Consumers are in the best shape ever, plenty of cash. Business Optimism is at an All Time High!”

Now at least some of this is likely true. Objectively speaking, America has the world’s largest economy as measured by Gross Domestic Product (GDP). But there are reasons to doubt some of the President’s other claims.

For example, while the President says that consumers are in the best shape ever, the very next day CNBC ran a story announcing that Americans are more indebted than ever before. This hardly supports the President’s claim that consumers are in the best shape ever.

And if the economy is doing so well, why, according to the Bureau of Labor Statistics, has the labor force participation rate never recovered to the pre-crisis level?

If everything is so great, why has President Trump publicly called for more Quantitative Easing (QE) and interest rate cuts? QE is a radical money printing scheme which was used by the Federal Reserve as an emergency measure to save the financial system in the 2008 crisis. Since QE is an emergency measure that was used to stave off financial collapse, why is it that, on the one hand, President Trump is telling us that the economy is doing great under his leadership, but, on the other hand, is calling for emergency QE as if the financial system were collapsing again?

Another item contradicting the official narrative that everything is awesome with the economy is the calls for interest rate cuts. In the link above, Trump was calling for the Fed to lower interest rates. In a strong economy, demand for money is reflected in rising, not falling, interest rates. If the President is calling for the Fed to lower interest rates, by implication, he is saying the economy is stalling out, not charging ahead.

In the opinion of this writer, the struggles of ordinary Americans to find work and to make ends meet are reflective of a financial system in disarray, not one experiencing rapid growth.

Further, it is my view that the economic problems roiling America stem from the fact the American government and financial elite have refused for more than a decade now to deal honestly with the serious financial crisis facing the United States. At the root of the problem is the Fed, America’s central bank. Central banking is inherently immoral, unchristian, and destructive of the legitimate interests of the great bulk of the American people.

One of the great evils that flows from central banking is another great plague of modern society: Big Government.

In the quote at the top of this page, John Robbins noted that Gordon Clark thought that the growth of government in the United States was the greatest tragedy of the twentieth century. Considering all the evils of that century, Clark’s statement is remarkable indeed.

It is the contention of this author that America is going bankrupt as a result of big government, a great evil which itself is the child of the prior great evil of central banking. Yet there is no serious attempt on the part of elected officials of either party to address this situation.

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Financial Crisis

A prudent man foresees evil and hides himself; The simple pass on and are punished.

    – Proverbs 27:12

In light of the recent upheavals in the financial markets, it seemed good to me to take this occasion to update my comments on ongoing financial crisis. I say ongoing, because it is my contention that the crisis that first manifested itself in 2008 has never really gone away.

In Ezekiel we read God’s complaint against the prophets of Israel. At one point he says, “Because, indeed, because they [the prophets] have seduced My people, saying, ‘Peace!’ when there is no peace – and one builds a wall, and they plaster it with untempered mortar – say to those who plaster it with untempered mortar, that it will fall. There will be flooding rain, and you, O great hailstones, shall fall; and a stormy wind shall tear it down. Surely, when the wall has fallen, will it not be said to you, ‘Where is the mortar with which you plastered it?’ ”

Such a wall, one built with untempered mortar, may appear sound. But when faced with the elements, it’s shoddy construction becomes evident to all.

In his Sermon on the Mount, Jesus expressed a similar idea when he compared the man who built his house on sand with the man who built upon the rock. For all we know, the house built on sand may have been beautiful in appearance, but it lacked a firm foundation and it fell. The house built on the rock took the beating and stood strong.

It is the contention of this author that the relative prosperity that the West has enjoyed since 2008 is rapidly coming to an end for the same reason that both Ezekiel and Jesus described: The real causes of the 2008 crisis have never been addressed, only papered over with fake solutions. Fakery, it would appear, is coming to an end.

In the following post, and perhaps posts, I’d like to explore at least some of the factors that are driving the West to bankruptcy. I’d also like to discuss what Christians can do to prepare themselves for the difficult financial times that lie ahead. Finally, I’d like to discuss what Christians can do once the collapse occurs to begin to rebuild our civilization on a sounder footing than we have today.

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