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Archive for the ‘Financial News’ Category

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 CrisisTrump touts ‘strongest economy in the world’ after disappointing jobs report,” ran a recent headline that managed to capture both the official line of the Trump administration and the contrasting reality portrayed by many recent underlying economic data points.

The February 2019 jobs report, released in early March, was expected to show a gain of 190,000 jobs, but instead reflected a gain of only 20,000. That’s a big miss in anybody’s book.

Now one could argue that President Trump’s statement is not negated by the disappointing jobs report. The US could indeed have the strongest economy in the world – depending on how one defines “strong” – and still do a face plant when it comes to the production of new jobs. All that is required for these two ideas to be true at the same time is for the rest of the world to be in a bigger mess than the US.

It is the contention, however, of this author that, in spite of all the talk of a booming economy coming from the Administration and from various sources on Wall Street and in the media, the US economy is not doing well and, in fact, is very likely headed into recession. It may actually be in recession as of this writing. Below are thirteen reasons why this author thinks so.

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