Lux Lucet

In the US, reports about the presidential elections continue to dominate the new. No surprise there. It’s the world’s longest running reality show, and people just can’t seem to get enough. Or, at least, the people who run the news networks can’t seem to get enough.

At any rate, there are important events going on around the world. And one of the most important and underreported – at least in the US – stories out there is, to paraphrase that most profound question asked by the Clash…

Should they stay or should they go?

I’m referring here to the so-called Brexit, short for British Exit, the June 23rd referendum in Great Britain in which voters will decide whether the nation will remain a part of the European Union (EU) or not.

All the meddling, globalist, master of the universe types, Barak Obama being a prime example of this noxious genus, are urging the British public to vote to stay in the EU. That right there is reason enough for Britain to make a bee line for the EU exit. But there’s more to it than that.

Quick, name a prominent EU official. My guess is that hardly anyone outside of Europe could do so. But according to Brexit the Movie,the same could be said for most who live under the baleful influence of the EU.

Apparently it’s very difficult to determine who’s in charge of the many tentacled Byzantine bureaucracy that is the EU superstate. This lack of transparency is surely intentional, creating a relationship between the rulers and the ruled that resembles more that of feudal Europe than that which exists in a modern constitutional republic.

One striking result of this lack of governmental accountability is that, at least according to the video, there are an estimated 10,000 elite EU bureaucrats who make more than the Prime Minister of the UK.

As Richard Bennett and Michael de Semlyn pointed out in Papal Rome and the European Union, the Roman Catholic Church-State has long been one of the EU’s biggest supporters. Here’s hoping there’s enough bulldog left in the British to tell the EU to take its stifling, top-down regulatory statism and get lost.

The great treasury dump of 2016

Unless you follow the financial news, it likely comes as a surprise to find out that the bond market is much larger than the stock market. In 2012, the total value of the US stock market came in at $21 trillion. A lot of money to be sure. But much smaller than the value of the bond market which was valued at a cool $37 trillion.

When it comes to understanding the world of finance, it is more important to keep an eye on the bond market than the Down Jones average or the S&P. For it is the bond market that determines the most important price in the entire economy, the price of money, also known as the interest rate.

The key to understanding the bond market is what is sometimes called the bond teeter-totter. The teeter-tooter is a way of explaining the inverse relationship that holds between the price of bonds and the rate of interest. As the price of bonds goes up, the interest rate goes down. The opposite holds true as well. When bonds go down in price, interest rates increase.

With these tidbits in mind, consider what CNN is reporting about the ongoing selloff of US treasury bonds. US treasuries are considered among the safest investments in the world. The market for US treasuries – these are bonds issued by the US federal government – is huge, with foreign governments holding about $16 trillion worth of them.

The significance of what CNN says about the selloff of US treasuries – foreign governments are dumping their US treasuries at the fastest pace since 1978 – is that it implies a lower price for bonds, and thus a higher rate of interest.

This is a big deal.

Why? Because the world’s central banks are doing everything in their power to hold interest rates down. They do this to make borrowing easier, believing that lowing interest rates encourage governments, businesses and individuals to borrow and spend more money than they would if interest rates were higher, thus stimulating economic growth.

And low interest rates work…until they don’t.

The downside to artificially low interest rates is that that it encourages governments, businesses and private citizens all to max out their credit cards, believing that interest rates will always remain low.

But what if they don’t?

What if the lenders – those who own the bonds issued by the US government – start to get nervous? Maybe they think Uncle Sam has taken on too much debt and won’t be able to repay it. Or perhaps foreign governments that own treasuries need to sell them to support their own failing currencies

When lots of treasuries come on the market all at once, this increases the supply of treasuries on the market. And as economics 101 tells us, all things being equal, an increase in supply of a good implies a drop in its price. And a drop in the price of treasuries means an increase in the interest rate.

The US federal government is the most indebted entity in world history. It can barely afford its debt at the current near zero rate. It cannot afford an increase in the interest rate. Should interest rates suddenly spike as a result of a treasury dump, this would spell serious problems for the world financial system.

Through the Federal Reserve and the Exchange Stabilization Fund (ESF), the US federal government has the ability to manipulate markets to keep interest rates artificially low…for now.

But if the Fed and the ESF lose control of the bond market at some point causing interest rates shoot sharply higher, and it is not impossible that this could happen, things will get real interesting real fast in the world of finance.

Redeemer staffer encourages immorality

Christian News is reporting that Casey Fulgenzi, a member of Redeemer Presbyterian Church in New York, “identifies as a progressive who doesn’t believe homosexuality is sinful and is part of a so-called church plant whose leader recently made recommendations to do away with male/female-separated restrooms nationwide.”

Considering the many and significant errors promulgated by Redeemer and its pastor Tim Keller over the years, it’s not at all that surprising to read that one of the church’s staffers would proffer heretical opinions on the subject of homosexuality.

It’s not surprising, but at the same time, it’s sad and frustrating to see a prominent ministry sow such confusion in the body of Christ.

It doesn’t take a Martin Luther to know the mind of God on homosexuality: he hates it. And those who practice homosexuality will not, as Paul clearly tells us, inherit the kingdom of God.

But what about those Christian teachers – and here I’m using “Christian” to mean teachers who name the name of Christ – that say otherwise?

These men will have to stand before the judgment seat of Christ. And unless they repent, it will not go well for them.

And the same goes for those who support the ministries of such men. John tells us that a man who associates with false teachers shares in their evil deeds.