Lux Lucet

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

    Proverbs 22:3

“Dow hits record as stock market rally extends into 5th week” ran Monday’s AP headline. The same day, CNBC was even more ebullient, proclaiming “After Dow hits a record, analysts believe these stocks will lead the measure to its next milestone.” So what shall I say? The past three months I’ve been writing series talking about the ongoing financial crisis of 2008 and not only are the stock markets refusing to crash, they’re hitting records highs! To make matters worse, Yahoo reports that “Gold Suffers Worst Week in Three Years as Bulls Run for Cover.”

I guess I should just give up writing about financial matters, right?

Or maybe not.

You see, my thesis that the American economy has never recovered from the 2008 financial crisis is not based upon where the Dow or S&P averages close or the price action of gold and silver in a particular week.

As a Scripturalist, that is, as someone who believes that the Bible has a systematic monopoly on truth, I seek to analyze the markets and the overall economy, not by what the day’s headlines report, but by the propositions found in the Word of God.

When looked at in light of the Scriptures, we can see that what is hyped as the greatest economy ever is, in reality, a house built upon sand, which, in the opinion of this author, the coming economic storms will sweep away.

Consider the stock market. While CNBC and the AP produce headlines trumpeting record high stock markets, these reports fail to mention anything about the obvious, in your face steps being taken by the Fed in connection with the Trump administration to push stock markets higher.

• The repo market bailout: This is a type of money printing. As I’ve mentioned elsewhere in this series, interest rates in the overnight repo market – the overnight repo market is where institutional borrowers take extremely short-term loans, typically paid back the next day – blew up in September, which prompted the Fed to step in to drive interest rates back down. To date, there has been no adequate explanation for the reason repo market interest rates jumped so high so fast. The bailout of the repo market is a form of money printing which drives interest rates down and pushes stocks higher.
  
• QE4: QE is another form of money printing. Although officialdom does not acknowledge it as QE4, the Fed’s move to begin purchasing $60 billion in T-Bills each month is, in fact, QE4. QE is designed to push interest rates down and stock prices up.
  
• Lowering interest rates: As with the first two items listed, lowering interest rates is the same thing as money printing. The Fed voted to lower the Fed Funds interest rates for the third time in October. Lowering the Fed Funds rate helps lower interest rates and push stock prices up.
  

In summary, the Fed has taken three significant steps to lower interest rates and boost stocks – all which involve money printing by the Fed – in just the past six to seven weeks. Is it any wonder, then, that stocks are going up?

But, as you may expect, there’s a price to be paid for all this money printing: price inflation. Essentially, the Fed, with Donald Trump’s approval and encouragement, is trashing the dollar to boost stock prices.

The rising stock market explains, at least in part, the decline in gold and silver prices as well. Why is this? Gold and silver are seen as defensive assets by most investors as opposed to stocks which are considered risk assets. When the economy is perceived as doing poorly, cash tends to move out of risk assets – that is to say stocks – and into defensive assets – defensive assets include bonds as well as the precious metals. On the other hand, when investors perceive the economy as doing well, they tend to move cash out of defensive assets and into risk assets.

The Fed, by manipulating interest rates lower, forces cash out of bonds and into stocks. This is because as interest rates go down, there is less incentive for investors to hold bonds, so they tend to move into stocks. Rising stock prices signal to investors that the economy is doing well and thus even more money leaves bonds and precious metals and moves into stocks.

Put another way, by manipulating interest rates, the Fed manipulates investor psychology, causing them to perceive that the economy is better than it actually is, thus causing money to flow to the stock market which pushes the stock indices up.

Propaganda is another way governments and central banks manipulate markets. One of the biggest sources of economic cheer leading is none other than President Trump himself. He’s constantly talking up the jobs report and taking credit for all time high stock prices both on his Twitter feed and at his rallies. Another way he affects the stock market is through news releases about supposed breakthroughs in the China trade war. His tweets and administration press releases are expertly timed to give markets a jolt when they appear to be flagging.

In addition to money printing and propaganda, there is the matter of behind the scenes market manipulation by the Plunge Protection Team (PPT). I have written extensively about the PPT elsewhere and do not have the space to discuss this point in full today. Suffice it for now to say that the PPT has the ability to boost favored markets – stocks, bonds, real estate, oil – and suppress those out of favor with the powers that be- gold, silver and crypto currencies.

But beyond money printing, propaganda and market manipulation artificially boosting stocks, there’s the issue that the economy is not the stock market. Despite the fact, and actually in part because of the fact, that the stock market is hitting record highs, many Americans are struggling as if the economy already were in recession. Consider a the following stories.

As Michael Snyder reports, “We Haven’t Seen A Manufacturing Slowdown Like This Since The Last Financial Crisis.” In his piece, Snyder reports that the Chicago Purchasing Managers Index has fallen to a level last seen during the financial crisis.

Just yesterday, Zero Hedge ran a story “53 Million Americans Drowning In Cycle Of Low-Wage Work.” According to this article, 53 million workers, about 44% of the American workforce, earns on average $10.22 per hour and bring home less than $20,000 per year. Further, large numbers of these low-wage workers have significant debts such as student loans, auto loans and credit card balances.

A third headline of note from last week was a story in Bloomberg with the headline “Richest 1% of Americans Close to Surpassing Wealth of Middle Class.” The reason for this? Huge stock market gains by the wealthy. What the article doesn’t mention is that those outsized gains are to a large degree due to the money printing, propaganda and market manipulation described above. In a 2013 Wall Street Journal article titled “Andrew Huszar: Confessions of a Quantitative Easer,” Huzar, the man tapped by the Fed to run the Fed’s first QE program in 2009 admits that QE is “the greatest backdoor Wall Street bailout of all time.”

QE Wall Street bailouts do wonders for the already rich and well-connected who own the majority of stocks and real estate assets. For main street, the result more often is rising prices and stagnant wages resulting in a low-wage financial death spiral as described in the story above where over 40% of the American work force is making about $10 an hour.

Huzar continues by saying QE really didn’t work to boost the economy as advertised, unless, he adds, you’re Wall Street. “Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.”

So, what is a Scripturalist to make of all this? Here we have a stock market rally based on propaganda (lying), money printing (stealing) and market manipulation (lying and stealing) which has had the effect of boosting asset prices and pushing income and wealth inequality to previously unseen levels while suppressing the price of real assets such as gold and silver (more lying and stealing).

Is an economy based on lying and stealing sustainable? Well, that depends. “Depends on what?,” you may ask. It depends on your time frame. The powers that be have been able to sustain the American economy on smoke and mirrors for over ten years, so yes, such an economy can go on for a while, even a much longer while than most Fed critics could ever guess.

But we know from Scripture that God “by no means clears the guilty” but will, in fact, judge them. Unless you believe that the central bankers, Wall Streeters and politicians who enable them, men who have done so much damage to the American economy and society, are able to forever get away with their lies and theft, it is reasonable to expect our current artificially propped up markets to crash and for the lies that sustained them to be revealed.

For that reason, we Christians need to be ready for a major shock to the financial system. This is why I consider it imperative for God’s people to, as it were, brace for impact. This is what prepping is for.

For this week’s prepping discussion, I’d like to point out some things Christians can do career-wise to get ready for the coming economic downturn.

Practical Career Prepping

“Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree.”

    – Martin Luther

I sometimes think that talking about Christian prepping has a lot in common with Christian evangelism. For a Christian evangelist to be effective, he must first preach the law. We sinners like to think of ourselves as naturally righteous, but the preaching of the law shows that is a delusion. It’s only once a sinner is convinced that he has no righteous of his own that he is ready to hear the Gospel of Christ, who perfectly fulfilled the law and whose righteousness is imputed to us when we trust in his name, causing us to appear in the eyes of God as if we never sinned and “blotting out the handwriting of the ordinances that was against us.”

Just as Gospel preaching is a bad news / good news proposition, so too is any discussion of Christian prepping. I have written a lot of bad news today. It’s a scary thing to contemplate the collapse of our current economic order. But just as a skilled evangelist aims to point those in despair over their hopeless sin problem to Christ Jesus, so too do I think it obligation to point Christian preppers to the same source. My point in writing all this bad news is not to drive you to despair, but to drive you to trust in Christ to get you through the tough times that lie ahead.

The Martin Luther quote at the top of this section is, I believe, apropos the Christian prepper here in 2019. Just as Martin Luther would plant his apple tree in the face of disaster, so too ought we Christians to make confident preparations in the face of today’s looming crises. One of the ways we can prepare is by strengthening our career position.

What do I mean by this? For one, we need to be sure that we’re bringing a servant attitude to our places of work. As one who has struggled with his attitude over the years, I speak as one who has not always done this. But as Scripture tells us, “Servants, obey in all things your masters according to the flesh; not with eyeservice, as menpleasers; but in singleness of heart, fearing God.”

This command is in effect in all times and places, but takes on special significance in times of financial stress. The reason for this is not hard to see. When the economy tanks and the layoffs begin in earnest, who do you think has the best chance of keeping his job? The manpleaser who applies himself only when the boss is looking, or the faithful Christian who does his best always as one fearing God?

Second, we ought to honestly ask ourselves how well we are using our God-given talents. As this article notes, the modern use of the term “talent” is a figurative use of the same word which, in the ancient world, was a weight of money.

In Jesus parable of the talents, the two diligent servants were rewarded for the wise use of the talents that were given to them. One the other hand, the servant who hid his talent in the ground was cursed as a “wicked and lazy servant.”

All of us have different gifts, different callings, and different life situations. For that reason, there is no one size fits all instruction I can give you that fits your specific situation. But that said, the general Biblical principle that we can take away from Jesus parable is that none of us has the right to abuse his talent. To the contrary, we are to make good use of the gifts God has entrusted to us, for we will have to give an account to him.

So what does this mean for Christians from a practical standpoint? For one, it means taking advantage of the opportunities God places before us. Many people spend years working at their jobs and make little or no effort to learn anything new. This is a mistake, regardless of what field we work in.

As Christians, we should always be looking for ways to improve our skill level and productivity. Maybe this means going to night school to get training toward a certification or degree. Maybe this means moving from your current employer if he doesn’t offer any training options and taking a job somewhere else that encourages employees to grow. From my own working experience, I can tell you that employers vary greatly in this respect. If you don’t have the opportunity to learn and move up where you are, go somewhere you can.

A third way of career prepping is to find ways to make money working for yourself. No one says that you have to spend your entire life as an employee. Find ways to develop marketable skills you can use to supplement your income from your day job. There are two basic ways you can work for yourself: offer a service or produce a product. In some ways, producing a product is the better option, as it allows you to earn passive income, whereas services earn you money only while you’re working.

Self-employment is, admittedly, a skill I have yet to master. So if you find that thought of earning side income working for yourself daunting, I understand. But if you’re like me and intrigued by the idea of finding a way to boost your income through self-employment, you may want to take advantage of a free eCourse called The Amazon GPS. This course teaches you how to become a seller on Amazon. Now you may think that you don’t want to sell on Amazon. But that said, this course will at least teach you the basics of electronic marketing, one of the ways many people have supplemented their income.

Another way to make money online is to start a blog or YouTube channel. Now there’s no guarantee that your stuff will go viral and make serious money, but how will you know if you don’t try?

Of course, there are many other ways to make self-employment income that don’t involve online businesses.

The point is, having a side business is a way of creating a second stream of income, which can be a big help in circumstances where the economy is struggling and job loss is a real possibility.

Closing Thoughts

Although the economy appears on the surface to be doing well, a closer examination of the financial system strongly suggests that it’s a house of cards ready to collapse. The prospect of economic collapse is, without a doubt, scary, even for those of us who are Christians.

But as Christians, we ought not to be terrified and without hope at the prospect of financial collapse as if we were Gentiles who do not know God. Those in Christ Jesus do know God and are heirs of the promises of Christ, who has told us he would provide for us.

As Christians, we need to take a page out of Martin Luther’s playbook and, figuratively speaking, plant our career apple tree, even if it means planting it in the face of looming financial disaster.

In this we can be confident, it is Christ who holds the future and it is he who is both faithful and able to keep his promises to those who call upon him.