Lux Lucet

Yahoo finance reports US stock futures in ‘limit down’ status on Sunday, 3/22/2020.  Worth noting is Yahoo’s attribution of the crisis to the “coronavirus crisis.”  This is incorrect.  Our financial crisis is the responsibility of the Fed and those who justify and encourage its ungodly practices of debt creation, monetary debasement and bailouts.

“And we know that all things work together for good to those who love God, to those who are called according to his purpose.”

Romans 8:28

That was an interesting week.  Last week, I’m talking about.  The one where, if we are still working, we’re doing so from makeshift home offices, the one where governors are locking down the citizenry of entire states and shutting down their economies, the one where the financial markets continue of crash at a rate comparable to, or even exceeding, that of 1929, and this at a time when the Fed is printing more funny money faster than it ever has.

It would seem that Humpty Dumpty indeed has fallen, and all the king’s horses and men are working feverishly to put him back together.  Will they succeed?  That depends on your definition of success.  It may well be that by printing enough money and bailing out not just individual companies, but entire industries, the powers that be may succeed in extending the current politico-financial system a bit longer.  Maybe another year of so.  Who knows?  Longer term, it is doubtful that the current governmental and financial structures currently in place will be able to survive in their current form.  Change is going to happen.

Just to give you a idea about how desperate some in the political establishment haver become, last week a member of Congress suggested  that the federal government provide every person in America – she did not say citizens, but every person in America, which includes, among others, illegal aliens – with a pre-loaded debit card in the amount of $2,000, which would be renewed with $1,000 per month for a year.  That works out to $660 billion for the first month, then $330 Billion for the next eleven months.  If I’ve done my math correctly, this works out to almost $4.2 trillion.

How does she plan to pay for it?  This Congresswoman, Rashida Tlaib (D-Mich.), wants the Treasury to issue two $1 trillion platinum coins, have the Fed purchase the coins, then have the Treasury sweep the funds into the Treasury General account, from which the money would be disbursed to “every person in America.”

This is nothing but a massive dollar devaluation scheme, not unlike what FDR did in 1933-34 when he forced everyone to turn in his physical gold, then devalued the dollar about 70% against gold.  The biggest difference is that Tlaib’s scheme would be far more aggressive in devaluing the dollar, meaning it would be massively inflationary.  This can easily be seen if we consider the current price os platinum and the amount of investment grade platinum that is currently available.  The current price of platinum in US dollars is $618.61.  According to this article, there are about 8 million total ounces of investment grade platinum bullion available in the world.  At current prices, this means the total value of all investible platinum is about $5 billion.  If the US federal government used this entire 8 million ounces to mint two huge coins weighing 4 million ounces each, this implies that the dollar would be devalued against platinum to approx. 1/400 of its current value.  Put another way, platinum would go from $618.62 per ounce to around $247,444 per ounce.  Other prices would rise accordingly.  Put another way, the dollar would lose 99.75% of its value against platinum.  This is even enough to make an inflationist such as FDR blush.

Of course, it’s highly doubtful that, even if Tlaib’s scheme were put into practice, the coins – if you can call a 4 million troy ounce object a coin at all – would almost certainly be far smaller than in my example above.  This means that the devaluation of the dollar would be far greater than 99.75%

Further, Tlaib claims that her scheme is deficit-neutral, not requiring any new debt to be issued.  Perhaps I’m missing something here or have done my math wrong, but the cost of her program for one year is more than double the $2 Trillion value of her two proposed coins, so where does the other $2 trillion plus come from?

I went through the above exercise in some detail just to give you an example of the sort of absurd nonsense that passes for thinking among our leaders in Washington.  And while Tlaib’s scheme is ridiculous, it’s really not all that much more absurd than proposals being floated by the Trump administration.  Trump is talking about bailing out whole industries, having the federal government own stock of bailed out companies and sending checks to everyone as well.  President Trump himself has gone on record arguing for negative interest rates and quantitative easing.

As in 2008, so it is in 2020.  Government officials are running around with their hair on fire desperately trying to fix a debt crisis by, wait for it…taking on more debt!

Economic Collapse is the Main Event, Coronavirus the Sideshow

Over the years, I have always been amazed at how the Fed manages to avoid serious scrutiny and blame for the enormous damage its policies have inflicted on the American people.

I’m convinced that you could watch or read mainstream news for decades on end and come away with no better understanding of the true reason for price inflation and the business cycle than you had at the beginning.  This is not by accident.  It’s by design.

When I was a boy in the 1970’s, I remember well how the word “inflation” was on everyone’s lips.  And well it should have been.  When President Nixon removed the last vestiges of the gold standard in August 1971, the value of the dollar plummeted due to the Fed’s printing too much money.  According to financial analyst Dave Kranzler, the definition of inflation is the rate of growth of the money supply over and above the rate of growth in wealth output.  Inflation is not rising prices, rising prices are the result of inflation, which is always and everywhere the result of the actions of central banks.

Yet even as a boy in the 1970’2, I remember hearing nothing at all about the Fed printing too much money.  What I do recall, though, is a lot of talk about rising oil prices being the result of the evil Arab oil sheiks of OPEC or frosts in the Florida orange groves, or failures of the coffee crops in Columbia.  It other words, the reason you paid so much more at the gas pump or at the grocery store had nothing whatsoever to do with the Fed’s money printing, it was all the result of outside forces quite beyond the control of good people at the Fed, who were working tirelessly, heroically even, to mitigate them.

As a squid famously disappears behind a cloud of ink, so too did the Fed disappear behind a cloud of economic gobbledygook.

Fast forward to 2008.  The Fed, we are told, once again heroically rode to the rescue, saving capitalism from the collapse of the housing market and the attendant financial derivatives associated with it.  Of course, the official outlets failed to mention that the Fed was intimately involved in blowing the housing bubble in the first place, the bursting of which was the proximate cause of the 2008 crisis.

Move ahead another twelve years to the present day.  The Fed has spent the intervening decade plus artificially boosting asset prices – stocks, bonds, housing, oil – to levels far beyond where they would be if the market were allowed to do its job of establishing fair value.  It has done this both by overt means – holding interest rates far below where the free market would set them, quantitative easing (money printing) and jawboning (propaganda) – and very likely by covert means – collaborating with the Plunge Protection Team (of which the Fed chairman is a member) by buying and selling assets to ensure that financial markets remain in the “correct” range.

Here’s the problem from the Fed’s perspective: It’s difficult, perhaps impossible, to indefinitely sustain a scam.  In the case of the Fed, its scam, which in present form started in 1913, has just about run its course.  I do not doubt for a moment that the big brains at the Fed know this and know it well.  If they want to continue their money printing scheme, they are going to have to make some changes to the way they do business.

But they can’t be seen as incompetent rubes, or, worse yet, as intentionally dishonest.  No.  What they need is a good cover story.  In the opinion of this author, that is the purpose, or at least one of the purposes of the coronavirus panic of 2020.  It gives the Fed the cover it needs once again to shift the blame from its destructive policies to an outside event that no one possibly could have foreseen coming.

So, do I mean to suggest that the Fed and/or its associates in the Deep State started the coronavirus pandemic to cover the collapse of the old financial system and the transition to a new one?  Well, let’s just say I think it’s one possible explanation for the current coronavirus terror.  Another possible explanation is that the Fed and its minions are simply using the event as cover for their money printing and bailout schemes, which, even at this early stage of the 2020 financial crisis, exceed anything that was done twelve years ago.

In any event, the Fed, at least so far, has managed to escape blame in the eyes of most people for the economic downturn.  Generally speaking, people seem to have bought the notion that the current stock market crash is the “coronavirus crash” and has nothing whatsoever to do with the Fed and its policies.

The truth is far different.  The ongoing, historic stock market crash has everything to do with the Fed and its evil policies of money printing, market manipulation and propaganda.  This is not the coronavirus crash.  This is another Fed crash.  They own it.

But by blaming the crash on the coronavirus – who could have foreseen such a thing! – the Fed has carte blanche to print money and to intervene in the economy in new ways that would never be tolerated under normal conditions.  For example, there is serious talk about the Fed purchasing corporate bonds and stocks, two asset classes that it has never officially held.  If you or I want to buy financial assets, we have to work to get the money.  The Fed, on the other hand, they just have to create the money out of thin air with a mouse click.  Nice work if you can get it.

This is a lot like an arsonist who sets fire to a house and then rides to the rescue in on a firetruck to put it out.

A Christian Response

The first key to a Christian response to all this economic and monetary nonsense is for Christians to think like Christians and not secularists.  The Bible has a systematic monopoly on truth, including economic truth.  When it comes to money, there is no scriptural basis for a debt-based, central band issued fiat currency such as we see issued by the Fed or the world’s other central banks.  Money, as the supply and demand for other goods and services, is properly a good that arises in the free market, apart from any intervention by governments.  Scripture does not give civil governments the power to manufacture money.

By coining money, civil governments usurp a function that does not properly belong to them.  Since governments have been in the business of issuing money, it may sound strange to many ears to hear that it is not their job, but this is one of the implications of Scripture.  Ask yourself, what two functions does Paul give to civil government in Romans 13?  The answer is, punish evildoers and praise the good, which I understand to mean enacting legislation consistent with the Word of God.  There is no language here about manufacturing money or most of the other functions civil governments have arrogated to themselves.

The second key to a Christian response to the current monetary madness is for Christians to begin speaking and writing about economics, criticizing the foolish wisdom of the world and teaching the truth of the Word of God on this matter.

Think about this for a moment.  The world’s financial system is in crisis, not because of the coronavirus, but because of the crushing and rapidly growing debt burden on individuals, businesses and governments.  And what do the wise men of this age propose as a solution?  More debt!  As Gregory Mannarino noted in a recent podcast, this is like pouring water on a drowning man.  It’s madness!  Yet adding debt to an already overly indebted financial system is the only solution central bankers, congressmen, treasury secretaries and presidents seem to know.

This must end.  Either we the people remove from power the central bankers, academics and politicians who support this madness, or we become their debt slaves forever.

It is Christians alone who have the power to speak authoritatively from the Word of God to cast down the arguments of this age.  Remember, Paul wrote to Timothy that the Word of God was thoroughly equipped a man to reprove, to correct and to instruct in righteousness.  This authority of the Word of God is not limited just to the things we commonly think of as Christian subjects, the law and the gospel for example.  Yes, the Word of God concerns those things.  But on whatever subject the Bible speaks, it speaks authoritatively.  The Bible speaks about economics and sound money; therefore, the Bible speaks authoritatively on these subjects.

And what does the Bible say about our current monetary policy and those who advocate it?  God hates it and calls it an abomination. It is a system of theft and domination.  Those who push more debt on a people already drowning in debt and those who profit from it will not escape his judgment.

A third key to a Christian response to our current economic crisis is to know that it is from God.  The Westminster Shorter Catechism defines the decrees of God as, “His eternal purpose, according to the counsel of his will, whereby, for his own glory, he hath foreordained whatsoever comes to pass.”  Note well the part about “all things.”  It doesn’t say just the things we like, but “all things.”  Our current financial crisis is from the hand of God.  He foreordained it from before the foundation of the world.

A found key to a Christian response is to know that it is for our good.  Now not just anyone can say this.  The unbeliever has no right to say that an economic crisis is for his good.  This is a privilege unique to believers in the Lord Jesus Christ.  The apostle Paul tells us that, “all things work together for good, to those that love God, to those who are called according to His purpose.”

So just how is a financial crisis supposed to work for the good to the believer?  I suppose the number of possibilities here is endless.  One fairly obvious possibility is that the financial crisis serves as an occasion for Christians to dig into their Bibles to see if the Word of God really has anything to say about economics.  If they do this, they will find at least two things.  First, yes, the Bible has a lot to say about economics.  Second, it thoroughly condemns secular economics, both in its theory and in its practice, including the current system of central banking with its debt-based fiat currencies that are guaranteed, not only to lose value, but over time to go to zero.  Another possibility is that Christians begin to write and speak on the subject of economics.  Doubtless, they will receive opposition.  But that will serve as an opportunity to do further apologetics work and to bring the discussion back to Jesus Christ and the gospel.

In closing, I would like to encourage my readers to fear not.  If I’m correct, we’re in the early stages of what likely will prove to be a years long, and at times painful, process of economic reset.  The current crop of king’s horses and king’s men are working as hard as they can to prop up a broken economic system.  One fueled by a century of unsound economic and monetary theory and practice.  This system is coming to an end.  What system we get next has everything to do with the ideas that control the minds of the men who put it in place.  Some people are convinced that the collapse of the current system will usher in a new era of sound money and freedom.  But it is also possible that something even worse than what we currently have could come to be.

For example, a few years ago The Pontifical Council for Justice and Peace released an 18-page document titled “Towards Reforming the International Financial and Monetary Systems in the Context of Global Public Authority.”  Reporting on this document, Reuters noted that it denounced “the idolatry of the market” and “called for the establishment of ‘a supranational authority’ with worldwide scope and ‘universal jurisdiction’ to guide economic policies and decisions” and for “‘ a central world bank.’” That’s world government, folks.  Antichrist, it seems, is determined to live down to what was prophesied of him in the Book of Revelation.

But whether our current economic crisis is the one that leads to the tyranny of a “supranational authority with worldwide scope” and a “kind of ‘central world bank’” as the Pontifical Council would like to see, or whether we can look forward to a new and more just politico-economic system based on sound money, private property and limited government, Christians have the obligation before God to speak his truth on matters political and economic both to unbelievers and believers alike.

Who knows how the Lord my bless our work?

EXTRA NOTE:  As was the case last week, US stock futures are ‘limit down’ as I prepare to post this article at 7:21 pm on 3/22/2020. While listening to a podcast yesterday featuring some men who’s economic and investing judgment I trust, one of them raised the possibility that markets won’t open on Monday, 3/23.  This is a distinct possibility given the Trump administration’s emphasis on maintaining high stock market valuations.  In light of the literally trillions of dollars in loans and bailouts the Fed has publicly pledged in just the last two weeks, and given the high likelihood that they are doing even more behind the scenes, all which activities are designed to bolster confidence in the markets and stop their slide, the continuing pressure on US stock indices underscores the seriousness of the problems facing our financial system.

On top of all that, just this afternoon Ohio Governor Mike DeWine has issued a “shelter in place” order for the entire State of Ohio.  Lord willing, I will address this issue another time.