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This is Going to Hurt, Part 3: Fed Money Printing Made Easy

Posted in Economics, Financial Markets, Financial News, tagged , , , on May 24, 2020| Leave a Comment »

Jerome Powell, Federal Reserve Chairman.

“We print it [money] digitally.  So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds or other government securities.  And that actually increases the money supply.”

I probably shouldn’t be, but I often am, amazed an God’s providential timing in providing illustrations of points I plan to talk about.  As I’ve been thinking about this series of posts, I planned this week to write about the Fed and the process of money, more properly currency, creation. 

In one respect, the process the Fed uses to bring currency into being is fairly easy to grasp.  On the other hand, it is so obviously fraudulent that it shocks people when they hear about it. “That simply can’t be.” is, I think, a fairly common reaction. 

In the Lord’s providence, and quite apart from any planning by me, it so happened that Jerome Powell, the Chairman of the Federal Reserve, was interviewed on 60 Minutes last Sunday by correspondent Scott Pelley of CBS News.  You can watch the full interview and ready the transcript here.  In my opinion, Pelley did a good job asking important questions of Powell, especially concerning the process by which the Fed prints money.  At one point, Pelley asked Powell about the Fed’s response to the coronavirus (CV) crisis, and Powell ticked off a list of the Fed’s market interventions.  Here’s what was said next,

PELLEY: Fair to say you simply flooded the system with money?

POWELL: Yes. We did. That’s another way to think about it. We did.

PELLEY: Where does it come from? Do you just print it?

POWELL: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds or other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.

There you have it.  The Fed chairman admitting on national television that the Fed creates money and uses it to buy, “Treasury Bills or bonds or other government guaranteed securities.”  He also noted that this activity, “actually increases the money supply.” 

What I would like to do in today’s post is to examine these statements – Powell’s saying that the Fed “creates money” and that this act “actually increases the money supply” – in greater detail.  Just how does the Fed create money and what are the effects of “increasing the money supply” on our daily lives? 

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This is Going to Hurt, Part 2: The Central Banking Monopoly

Posted in Central Banking, Financial Markets, Financial News, Uncategorized, tagged , , , , , , on May 17, 2020| Leave a Comment »

The_Phillip_Medhurst_Picture_Torah_122._Abraham_purchasing_Ephron._Genesis_cap_22_v_16._Hoet (2)
Abraham purchasing the cave of Machpelah from Ephron by Phillip Medhurst. Courtesy of Wikimedia Commons.

Abraham weighed out the silver for Ephron which he had named in the hearing of the sons of Heth, four hundred shekels of silver, currency of the merchants.

  • Genesis 23:16

In his lecture “Money, Freedom and the Bible,” John Robbins argued that the manufacturing of money was not a proper function of government, because there is no warrant for this in Scripture.  The Bible charges the civil magistrate with the duty to punish evildoers and reward the good.  There is no mention of anywhere in Scripture of God granting civil governments the right to manufacture money.

The first time I heard this many years ago, I was shocked by this idea.  “But all governments manufacture money,” I thought to myself.  “If the government didn’t supply money, who would?” I continued.

Of course, my initial objection can be answered by pointing out that simply because a thing is done does not logically imply that it ought to be done.  In the 18th century, David Hume famously made this point.

Secondly, concerning who would supply money in the absence of governments, the answer to this is the market would take care of this.  As Robbins noted in his lecture, there is such an example of this in Genesis 23, where Abraham pays for the field to bury Sarah by weighing 400 shekels of silver, “currency of the merchant.”  Note that it was not the currency of Pharaoh, nor the currency of the King of the Hittites that Abraham weighed out.  It was the currency of the merchants.  That is to say, it was a unit of money that arose from the common practice of the free market.  Importantly, it was not a government issued currency, neither was it the product of a government licensed central bank.

For that reason, that it arose in the marketplace and was privately managed by the merchants who used it, the shekel weighed out by Abraham was an honest unit of money.  The same cannot be said for sovereign currencies of our day.  Not only do they fail to maintain purchasing power, but they are deliberately designed to lose value over time.  To this author’s knowledge, there is not one honest currency in use today, including, and perhaps especially, the U.S. Dollar.

Last week’s post titled “This is Going to Hurt, Part 1: Honestly Facing our National Bankruptcy,” discussed the disastrous economic numbers coming out as a result of the government’s response to the coronavirus pandemic.  Please note, I did not write, “the disastrous economic numbers coming out as a result of the coronavirus pandemic,” but, “the disastrous economic numbers coming out as a result of the government’s response to the coronavirus pandemic.” It is not the Chinese coronavirus that caused over 30 million Americans to lose their jobs in the past six weeks, it is decision, more accurately decisions, of various government officials that have led to this disaster.

But oddly, as I also noted, the stock market has rebounded even as economic activity has made record declines.  How can this be?  The short answer to this question is money printing on a mind-blowing scale by the U.S. Federal Reserve, the central bank of the United States.

My purpose in this post is to lay out in non-technical language what a central bank is and what it does.  In subsequent posts, I shall illustrate the unbiblical, immoral nature of central banking by looking in detail at the origin, the workings and the disastrous effects Federal Reserve (the Fed) policy has had on our nation.

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This is Going to Hurt, Part 1: Honestly Facing our National Bankruptcy

Posted in Economics, Financial News, tagged , , , on May 10, 2020| 3 Comments »

Mnuchin.Unemployment
U.S. Treasury Secretary Steve Mnuchin warns that unemployment could reach 25%, a level equal to that of the Great Depression.  But according to economist John Williams, not only are we already at 25% unemployment, we’re well  past it.

Assuredly, I say to you, you will by no means get out of there till you have paid the last penny.

  • Matthew 5:26

“Trump administration is ‘willing to spend whatever it takes’ to mitigate coronavirus crisis says Steven Mnuchin as he continue to facilitate bipartisan negotiations – but admits unemployment could hit 25%.”

That somewhat longish headline leads a story from today, May 10, 2020, in the Daily Mail.  A few things are worth noting here.  First, the current economic crisis is called, inaccurately, the “coronavirus crisis.”  The massive unemployment and terrifying declines in industrial production that have hit the U.S. and other Western nations has not been caused by the coronavirus.  It is the government’s response to the coronavirus that is the immediate cause of the 20 + million private sector jobs lost in month of April.  To put that number is some perspective, the previous record monthly job loss number was 800,000 + which occurred during the height of the 2008 financial crisis in March 2009.  The virus did not shut down the economy and cause record job losses; the politicians and bureaucrats did.  By calling it the “coronavirus crisis,” politicians are attempting to shift the blame from themselves to a virus.

Second, the negotiations in which U.S. Treasury Secretary Steve Mnuchin is immersed involved more money printing by the Federal Reserve and more deficit spending by Congress.  The truth, that Fed money printing and prodigal spending by Congress are the root cause of our current economic crisis, is nowhere to be seen.  Treasury Secretary Mnuchin wants you to believe that the cure for our financial woes us is doing more of the same things that put us in this mess in the first place.

Third, note well that Steve Mnuchin is facilitating “bipartisan negotiations.” As a lifelong Republican – I’m from the Tea Party/Ron Paul wing of the Republican party, not the mainstream, but nevertheless I am a Republican – I hate to admit that the my own party is in part responsible for the incompetent and immoral response to the coronavirus, a response that has included doling out literally trillions of dollars, dollars all which had to be borrowed into existence by the combined efforts of Congress and the Fed.  I would like to blame all of this on the Democrats, but that simply would not be honest.  It is Democrats and Republicans conspiring together to spend money we don’t have in ways that were never authorized by the Constitution.  With a few exceptions, nary a peep of protest is heard from either party concerning the shockingly large spending programs already put in place, programs which Rep. Thomas Massie (R-KY) called, “the largest wealth transfer in history.”  And now Congress is colluding with the Trump administration on even more deficit spending.

Fourth, Steve Mnuchin admits that unemployment could hit 25%.  Here’s some news for Mr. Mnuchin, most likely unemployment is already well north of that figure.  Actually, it’s probably not news to him at all.  One suspects he already knows this.  What a lot of people don’t know is that the government changed the way it calculates unemployment.  In 1994, the Bureau of Labor Statistics (BLS) stopped counting long-term discouraged workers – a long term discouraged worker is someone who has not attempted to find work in the last four weeks – as unemployed.  Previous to that, such persons were included in the unemployment calculations released by the BLS.  John Williams is an economist who runs his own website called Shadow Stats.  Among the services he provides is a monthly calculation of the unemployment rate using the government’s old method.  Want to take a guess at where he puts current unemployment?  Try 35%!  If Williams’ numbers are anywhere near accurate, we already have a far worse employment situation than what occurred during the Great Depression, which is usually estimated at 25%.  Presumably, that’s the reason Mnuchin picked the number that he did.

So much for the Daily Mail’s headline.

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Coronavirus and Economic Collapse, Part 3: Lock ‘em Down

Posted in Financial Markets, Financial News, Uncategorized, tagged , , , , , on March 22, 2020| 4 Comments »

Yahoo_Limit Down_2020_03_22_802pm

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!

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The Ongoing Financial Crisis of 2008 Part 14: Practical Prepping, Necessities

Posted in Financial Markets, Financial News, Prepper, tagged , , , , , on November 17, 2019| 2 Comments »

Financial Crisis

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

Proverbs 22:3

The hits – negative economic news, that is – just keep coming.  To underscore what I mean by bad economic news, consider the following headlines from just last week:

Yet for all that, stocks hit a record high on Friday with the Dow closing above 28,000 for the first time.  CNBC’s headline on Thursday summed up the mainstream financial press’ exuberance quite well, “This is now the best bull market ever.”

How is it possible, on one hand, for there to be so much bad economic news and, on the other hand, for stocks to be hitting record highs?  We dealt with this topic last week, but this topic is of such importance that it bears additional commentary.  The answer to this question, to borrow a turn of phrase from one commentator I follow regularly, is that nothing’s real.  We have fake financial markets designed to manipulate your perception of reality.

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The Ongoing Financial Crisis of 2008 Part 13: Practical Career Prepping

Posted in Financial Markets, Financial News, Prepper, tagged , , , , , , on November 10, 2019| 1 Comment »

Financial Crisis

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.

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The Ongoing Financial Crisis of 2008 Part 12: Practical Financial Prepping (B)

Posted in Financial Markets, Financial News, Prepper, tagged , , , , , on November 3, 2019| 3 Comments »

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

    Proverbs 22:3

It’s been a couple weeks since my last posting in this series, but there certainly has been no break in the flow of events. In the intervening time since my last entry on 10/20/19, there have been several noteworthy bits of financial news. Of those, the most important was the announcement from the Fed this past Wednesday that they had decided to lower the Fed Funds rate another quarter point. This was the third time the Fed has lowered interest rates in the past three months.

Now any such decision by the Fed is important given the tremendous power of the Fed to push financial markets one way or the other. The big takeaway, however, is what this decision says about the Fed’s assessment of the economy. Despite all the propaganda from the administration saying the economy is doing great, the decision by a the Fed, or any other central bank, to lower interest rates is a tacit admission that the economy is not doing well. If the economy were doing well, the Fed would be raising rates, not reducing them.

When you add to the Fed’s lowering of interest rates the ongoing (permanent?) bailout of the overnight repo market and the restart of quantitative easing (i.e. money printing), it is obvious that the those closest to the situation think that the economy is seriously struggling.

One of the justifications put forward for lowering interest rates and money printing is that there is no price inflation. But even according the Consumer Price Index (CPI), the official measure of price inflation put out by the Bureau of Labor Statistics, the CPI-U (the broadest measure of inflation) rose 1.7% for the period September 2018 to September 2019. But beware of official government statistics! Over the years, the federal government has changed the way it measures inflation. And it should come as no surprise that the change has been in the direction lowering reported inflation.

Economist John Williams runs a website called Shadow Stats where he purports to calculate inflation the old fashioned way. His most recent calculations of the CPI-U tell a very different story from the figures put out by the Bureau of Labor Statistics (BLS). As you can see Williams most recent numbers come in a little higher than those of the BLS. According to Williams, the official method of calculating inflation used prior to 1990 shows inflation running at a more than 5% annual rate. If you look at this calculations with the pre-1980 method, the difference from the current official number is even more striking. The pre-1980 method of calculating inflation indicates that the current inflation rate is almost 10% annually!

If Williams is even close to being right, all this latest round of money printing by the Fed is like dumping gasoline on a raging fire, meaning we can expect to see much higher inflation numbers going forward.

Here’s a critical idea to keep in mind when talking about price inflation: Inflation is always and everywhere a monetary event. By this I mean that inflation is always the fault of money printing by central bankers. You can watch the evening news faithfully for decades on end and you will not hear this. Ditto with the financial channels such as CNBC and Fox Business. They will never tell you the simple reason for price inflation: Central bank money printing.

Why is this? It’s not an accidental oversight. The mainstream press is essentially the propaganda organ of the establishment, and central bank money printing is the financial black magic the establishment uses to increase its wealth and power at the expense of ordinary Americans. The powers that shouldn’t be – Washington politicians of both parties, Wall Street bankers and big shot investors together with a gaggle of academic theorists and news media talking heads – have a great scam going and do not want to let ordinary Americans know how badly their being ripped off and by whom.

To borrow a turn of phrase from Warren Buffett, “If you’ve been playing poker for half an hour at the table and you still don’t know who the patsy is, you’re the patsy.”

Ordinary Americans have been the patsies of the financial elite, of whom Warren Buffett is one, since the founding of the Fed over 100 years ago. The Fed’s inflation games are not only bad policy, they are also sinful in the eyes of God. The Bible unequivocally condemns “divers weights and measures” which God calls an “abomination” (see Proverbs 20:10 and 20:20 for example), which merchants of the day used to rip people off in much the same way central bankers, politicians and their super wealthy clients do today. It’s high time people woke of to this fact. End the Fed!

There’s much more that could be said about inflation and, Lord willing, I shall discuss this topic in greater depth in the future. For now, though, it is enough to know that 1) the cause of price inflation in money printing by the Fed, 2) the current method of measuring price inflation deliberately and significantly understates its true rate and 3) these facts are not reported in mainstream news outlets in order to keep the public in the dark about what is going on.

“So what,” you may ask, “does any of this inflation talk have to do with financial prepping?” Quite a lot, actually. If we understand that a falling dollar is the product of the Fed’s intentionally increasing the money supply too fast, we are positioned to understand ways of protecting ourselves against the ravages of price inflation.

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The Ongoing Financial Crisis of 2008 Part 11: Practical Financial Prepping

Posted in Financial Markets, Financial News, Prepper, Uncategorized, tagged , , , , , on October 20, 2019| 3 Comments »

Financial Crisis

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

    Proverbs 22:3

It was back in August that we began our look at the ongoing 2008 financial crisis. The immediate occasion for my writing on this topic was the sudden plunge in the US stock indices following the Federal Reserve’s decision to raise interest rates in late July. The market sold off hard, but managed to stabilize, or more accurately, was stabilized by the powers that be after a phone call by President Trump with three major bank CEO’s.

This was a similar situation to what happened around the end of the year in 2018. On December 23, the day before the Dow and S&P indices had their largest ever declines on Christmas Eve, Treasury Secretary Steve Mnuchin placed individual calls to America’s six largest banks – Brian Moynihan, Bank of America; Michael Corbat, Citi; David Solomon, Goldman Sachs; Jamie Dimon, JP Morgan Chase; James Gorman, Morgan Stanley; Tim Sloan, Wells Fargo. When the market re-opened after the Christmas break on December 26, the Dow closed up 1,086.25 points, the largest single day gain in the history of the index. This huge day was after a terrible December and in the absence of any news that would have caused a market surge.

Was there a relationship between Mnuchin’s call on December 23 and the blast off in the stock market three days later? While this can’t be formally proven, in the opinion of this author it is the most likely explanation. In short, I think that Mnuchin told these CEO’s to buy the market and that they obliged.

If my understanding is correct, this means that at least twice in the period of eight months orders came down from on high to rescue the stock markets. What, I would ask you, does this say about the state of our financial system? What are we to think of a system that requires this level of manipulation to keep from crashing?

Of course, calls from Trump and Mnuchin are not the only sort of manipulation in the financial system. In the short time that I’ve been writing this series, we’ve seen additional extraordinary measures taken by the Fed to prop up the system.

First there was the bailout of the overnight Repo market. Originally, this was to be for a few days in September. Next, they extended it to a couple weeks. Then it got pushed out to the second week of November, then it was January 2020. Just last week, Fed President James Bullard expressed his preference for a “standing repo facility.” By this he seems to mean that he wants the current repo market intervention by the Fed to become a permanent policy tool of the central bank.

And that’s not all. Last week on Wednesday, the Fed started QE4. With this latest iteration of what in 2008 was termed an “emergency policy,” the Fed will by purchasing $60 billion a month in T-Bill (T-Bills are short-term US Treasury debt instruments). Where, you ask, does the Fed get the $60 billion per month to conduct QE4? They get it by a process that, were you or I to try it, we’d be arrested. In short, they counterfeit it out of thin air.

Here’s another question you may want to ask yourself. If the economy is doing so great as we’re constantly being told by the mainstream financial press, why is the Fed running simultaneous bailouts of both the overnight repo market and the bond market, both of which are designed to prop up the stock market? The obvious answer is that, far from being the greatest economy ever, the US, and indeed the world’s, financial markets are a mess and getting messier by the day. All the hype you hear about how great the economy is doing is propaganda designed to keep you locked into the system for the benefit of those who run it.

In light of the enormous lies that are being told to the American people by government officials, by bankers, and by the press, in the opinion of this author it is imperative that God’s people hear the truth about the financial state of the country and some sound advice about how to take measures to protect themselves financially. That is the purpose of this week’s installment.

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The Ongoing Financial Crisis of 2008 Part 10: Biblical Prepping, A Few Practical Pointers

Posted in Financial Markets, Financial News, Prepper, tagged , , , , , on October 13, 2019| 6 Comments »

Financial Crisis

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

    Proverbs 22:3

“How did you go bankrupt?,” Bill asked. “Two ways,” Mike said. Gradually, then suddenly.”

That line from Hemmingway’s The Sun Also Rises could, I am sure, be repeated by many who have found themselves in serious financial trouble. A man can pile up debt for years with seemingly little consequence, until suddenly it all comes crashing down. Likewise, a scam artist can go on scamming, until one day his fraud is exposed. Think about Bernie Madoff whose Ponzi scheme blew up during the 2008 financial crisis.

One can find examples of the gradually then suddenly principle in the pages of Scripture as well. Psalm 73 records the psalmist’s lament that wicked men can do what they want and never seem to suffer the consequences of the actions. That is, until he understood that God would bring them “to desolation in a moment.”

Jonathan Edwards’ famous sermon “Sinners in the Hands of an Angry God” expounds a passage in Deuteronomy which expresses much the same idea as Pslam 73. “To me belongeth vengeance, and recompence; their foot shall slide in due time: for the day of their calamity is at hand, and the things that shall come upon them make haste.” In his exposition of Deuteronomy 32:35, Edwards wrote, “It implies that they [unbelievers] were always exposed to sudden unexpected destruction. As he that walks in slippery places is every moment liable to fall; he can’t foresee one moment whether he shall stand or fall the next; and when he does fall, he falls at once, without warning.”

Gradually, then suddenly. Was that not also the case with the men in Noah’s day? They were marrying and giving in marriage. Yet all the while they were adding to their sins, until, as Jesus said, the flood came and took them all away. They never saw it coming.

Much the same can be said of the Canaanites. It was told to Abraham in his day the iniquity of the Amorites was not yet fulfilled. That is, God would judge them, but not yet. Some four hundred plus years later, destruction cane swiftly. Gradually, then suddenly.

Or consider what happened to Israel once the nation was settled in Canaan. Despite God’s sending prophets to warn, gradually the people became more and more corrupt, until suddenly they were carried away into captivity. The Northern kingdom in 722 BC when Samaria was taken by the Assyrians, the southern in 586 BC with the fall of Jerusalem to Babylon.

Gradually, then suddenly. These ideas can be applied to America in our own day. A nation born out of the Protestant Reformation has gradually forgotten its roots, has gradually turned away from the source of its strength. And what are we to say about such a nation? What will be its end? If the Bible, and even secular history, are any guide, unless the Lord grants many repentance, quite obviously it is headed for a fall. Likely a sudden one at that.

But a sudden fall for America, if in fact it comes, and the West more generally, does not mean that American Christians or Christians in other Western nations have no defense and no hope. We shall look at this further in a few moments. But before we begin our discussion of practical pointers for Christian preppers, I would like to point out a couple of noteworthy announcements last week relative to the financial markets.

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The Ongoing Financial Crisis of 2008 Part 9: A Biblical Theory of Prepping (continued)

Posted in Financial Markets, Financial News, Prepper, tagged , , , on October 6, 2019| 1 Comment »

Financial Crisis

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

    Proverbs 22:3

In Part 8 of this series, we began formulating a Biblical theory of prepping. In Parts 4-7, we had looked at some examples of prepping in Scripture. While the examples of Noah, Lot and Joseph clearly establish that God approves of prepping, it seemed good to me to begin to articulate some of Christian prepping’s main components with an eye to defining the term.

In last week’s post, I closed by asking the question, For whom do we prep?, and answered, in part, that we prep for ourselves. It may seem strange to say that we prep for ourselves. After all, isn’t that just obvious? Not necessarily. The unchristian idea of altruism has so tainted many Christians’ thinking that some believers think that it is somehow sinful to think of their own interests. But although it is common to hear Christians deny they have a self interest, this is not a position consistent with the Scriptures.

Today, I’d like to continue, and hopefully conclude our discussion of the Biblical theory of prepping by exploring the other parties for whom Christians prep apart from themselves. But before we do that, I’d like to briefly review the financial news from last week.

When I began this series a couple of months ago, the stock market was recovering from a serious downturn in early August that was, apparently a reaction to the Fed’s decision to lower interest rates and the inversion of the Treasury yield curve. The Plunge Protection Team (PPT), apparently, saved the day once again, pushing the major stock indices out of correction territory. But even though the stock market has been stabilized and, at least on the surface, things seem normal, there are abundant signs that all is not well on Wall Street.

Just last week (September 29 – October 5), there were more signs of major problems in America’s economy. First, as MarketWatch reports, the Chicago Purchasing Managers’ Index (PMI) dropped in September for the third time in four months. The expected number was 50, but the index reported 47.1 in September. So what does all that mean? When it comes to the PMI, any reading above 50 means the economy is expanding, any reading below 50 indicates economic contraction. Not only did the September number come in well below expected, but it actually was the worst reading since 2009, around the time of the last financial crisis.

Second, the ongoing “repo madness.” Not only has the Fed been bailing out the overnight repo market to the tune of $75 billion every night, but last week pledged to continue the bailout. Originally, the Fed was going to supply funds to the repo market just for a few days. This was then extended to October 10. Friday, the New York Fed announced that it will “continue to boost liquidity in money markets [the repo market] into November.” Fund manager Dave Kranzler said of the repo operations that they will eventually morph into outright money printing. With every extension of the Fed’s repo market intervention, Kranzler’s evaluation comes closer and closer to being realized.

Third, the chances of a Fed interest rate cut in October are going up. The reason behind this seems to be the previously mentioned bad September PMI reading, which was not limited to just the US, but extended to other industrialized economies as well. Please keep in mind, the Fed cuts rates when it sees economic activity slowing down, either in an attempt to prevent a recession or to pull the economy out of one. If the US economy were really as strong as the Trump Administration would like people to believe, they would not at the same time be pushing the Fed to lower interest rates.

Fourth, layoffs. As was widely reported last week, Hewlett-Packard (HP) announced that it plans to cut its workforce by up to 16% and expects to cut between 7,000 and 9,000 jobs from its global workforce of 55,000. Kroger, America’s biggest grocer, announced plans to lay off hundreds of workers last week, as question arose about its turnaround plan.

In summary, last’s weeks economic news provided further evidence that the US and world economies are slowing down. It has been in anticipation of a significant economic shock that I undertook to write this series on prepping several weeks ago. Let us now continue to look at what the Bible says about prepping.

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