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Posts Tagged ‘Money and Banking’

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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Financial Crisis

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

    Proverbs 22:3

In a recent article titled “The monetary policy endgame,” Rick Rieder argued that central banks have two ways of creating inflation – inflation in this case being defined as rising consumer prices. The first is to create increased consumer demand through demand stimulus (lower interest rates). Secondly, Rieder argues, central banks can engage in monetary debasement. Continuing with his argument, Rieder contends that he believes central banks will turn to monetary debasement to achieve their stated inflation goals.

So what is monetary debasement? As the Investopedia link puts it, “Debasement refers to lowering the value of a currency, particularly one based on a precious metal, by adding metal of inferior value.”

But even though we don’t have a precious metals based monetary system doesn’t mean that governments can’t debase their currencies. As the Investopedia article on debasement goes on to say, “[D]ebasement [in fiat monetary systems] only requires that the government print more money, or since muc hmoney exists only in digital accounts, create more electronically.”

In light of the coming central bank driven currency debasement, Rieder asks the important question, “How should one position for such an endgame?” Rieder’s answer? “[A]ll of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say, real estate, and even hard assets that have historic value-relevance, such as gold.”

Rieder’s post is remarkable, not just for what he said, but also for who it is that said it. Rieder is not some tin foil hat wearing gold bug, but is a Chief Investment Officer (CIO) at BlackRock, a New York City based investment management firm that is the world’s largest asset manager with $6.84 trillion in assets under management as of June 2019. Put another way, BlackRock is Wall Street royalty. Further, Rieder’s post appeared on BlackRock’s blog, giving his statements the implicit approval of the firm itself.

Given the decades long propaganda campaign of hatred that has been directed at gold and at those who advocate for the return of gold to the financial system, Rieder’s comments are significant indeed.

There’s a lot to unpack in Rieder’s article, more than what can be discussed in this post. Lord willing, I shall return to his post at some point in the future. But I mention in today mainly to let readers know that mainstream financial analysts are quietly warning that the US dollar – and all other fiat currencies – are in trouble and likely to suffer significant devaluation in the not too distant future.

In light of warnings from Rieder and others, the application of Proverbs 22:3 to our current financial circumstances cannot be overstressed. Here we have a highly placed man at a highly respected financial firm going on record to warn us in advance that the Fed is going to debase the dollar. What is more, he provides for us sound advice on strategies savers can use to protect themselves.

In Scripture, we find several examples of men who were given advanced warning by God of coming disasters, and who, in faith, took action to save themselves and others. In last week’s installment, we looked at the case of Noah. This week, we shall continue our look at Biblical case studies in prepping with a review of Lot’s narrow escape from Sodom.

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Happy April Fool’s Day! And good April Fool that I am, I find myself hard at work once again to bring you my weekly blogging awesomeness.

Well, okay. Maybe awesomeness is a little too strong. I’ll settle for weekly blogging not-too-horribleness.

At any rate, I am kinda pumped about this week’s topic, namely the Federal Reserve. In short, I’m fed up with it.

But more than that, there are few things in life that bring joy to my heart more than the thought of dishing out a good beat down to ne’er do well boys and girls at the dear Federal Reserve.

I find it, how shall I say….cathartic. Yes, that’s it! Cathartic! And since it’s been a little while since I’ve dissed the Fed, I expect that it will prove all the more so.

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rinkeby-riots

A policeman inspects a burned out vehicle following the riots in Rinkeby, Stockholm.

Some things seem to naturally go together. Peanut butter and jelly come to mind as a natural pairing. Baseball and summertime? I’m in. Even the terms “blowhard” and “politician” evoke a certain warmth of familiarity within me.

 

But riots and Sweden??!! Surely, you jest! Nevertheless, as they say, truth is stranger than fiction…

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Money, so they say, is the root of all evil today.

– Pink Floyd

An email came to my inbox recently claiming that people who hold to the Scriptures think “money is the root of all evil.” The notion that the Bible teaches money is evil is quite common. Pink Floyd referenced this idea in their hit “Money,” and people often repeat this idea in everyday conversation.

goldBut as is the case with other popular ideas ascribed to the Bible – for example, most Americans mistakenly think “God helps those who help themselves” is a Bible verse; and how many times have you heard someone take Jesus’ words “Judge not” as a general prohibition against making necessary ethical distinctions? – this one is also wide of the mark. And it is wide of the mark in at least two ways. First, the quote itself is not accurate. And second, when the quote is presented accurately, the true meaning of this verse is seen to be quite different from what is in the popular mind.

The actual quote is found in 1 Timothy 6:18 and reads, “For the love of money is a root of all kinds of evil” (New King James). The language of the Authorized Version is “For the love of money is the root of all evil.” When comparing either of these two translations with the popular version of the quote, it becomes readily apparent that the big difference is that the Bible identifies, not money itself, but the love of money as the root of all sorts of evil.

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uncle_sam_supplying_federal_reserve_fiat_debt.jpg

Ever since the spring of 2009 when The-Powers-That-Be (TPTB) were out there claiming to see “green shoots” everywhere, the public has been treated to a non-stop propaganda campaign pushing the narrative of economic recovery.

President Obama himself proclaimed his belief in the strength of the American economy, stating for all the world to hear in his 2016 State of the Union Address that anyone who doubted everything was awesome in the main street economy was, to use his words, “peddling fiction.”

And surely Obama couldn’t be wrong. After all, good doctor Ben Bernanke spent several years injecting the US economy with his concoction of Zero Interest Rate Policy (ZIRP) and three rounds of Quantitative Easing (QE). How could anyone doubt but that the wise heads at the Fed have cured what ails us? The stock market just set a new record!

But if you dig down beneath the surface, you’ll find that everything is not awesome. Corporate earnings are down for the fifth quarter in a row. According to the report on Factset, “The second quarter [2016] marks the first time the index has recorded five consecutive quarters of year-over-year declines in earnings since Q3 2008 through Q3 2009.” In other words, corporate earnings haven’t had a losing streak this long since the height of the last financial crisis.

Or take worker productivity, a measure of hourly output per worker, which has declined now for three straight quarters. As the Reuters article pointed out, “U.S. nonfarm productivity unexpectedly fell in the second quarter, pointing to sustained weakness that could raise concerns about corporate profits and companies’ ability to maintain their recent robust pace of hiring.” No kidding.

But why is worker productivity in the US declining? The Reuters article fails to provide a reason. So let me suggest one possibility: businesses are no longer investing in property, plant and equipment, the very things that drive productivity. As Forbes reports, “Corporate executives now shy away from capital spending. Companies are spending money to cut costs – labor cost especially, and also electricity – but few companies are increasing productive capacity.”

So what have executive been spending on if not new productive capacity? Stock buybacks that serve to boost earnings per share and increase bonuses. “Stock buybacks by big American companies are near a historical peak [as of May 2014], but the practice appears to do little to improve their underlying operations and robs them of money for research and future growth. USA Today’s John Waggoner calls stock buybacks a ‘sugar high’,” as John Morgan reports.

Morgan goes on to cite a 1999 quote from Warren Buffett, who said, “Repurchases are all the rage, but are all too often made for an unstated and, in our view, an ignoble reason: to pump or support the stock price.”

Let’s see then, we have stock markets at near record levels, while at the same time corporate earnings are on the decline as worker productivity erodes, which very likely is a consequence of businesses showing greater interest in engineering stock buy-backs rather than in capital spending. Sure sounds like a plan for long-term economic success to me.

I’ve mentioned only a few data points to illustrate that the economy, far from being robust, is in reality quite weak. But for more of the same, consider the following nine ugly charts. Obama’s term in office is highlighted in red.


Things that should be going up in a healthy economy – Labor Force Participation Rate, Median Family Income, Home Ownership – are all going dramatically down. Those items that one would expect to see going down if the economy really were as good as The-Powers-That-Be tell us – Food Stamps, Federal Debt, Money Printing, Healthcare Costs – are going straight up.

These charts tell a very different story from what Obama’s putting out. Maybe he’s the one peddling fiction.

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Please click the link below the story quoting Pippa Malmgren stating “there’s no price discovery anymore” http://www.zerohedge.com/news/2015-02-23/ex-plunge-protection-team-whistleblower-governments-control-markets-there-no-price-d

Please click the following link for Sean Gerety’s article Faith Alive http://www.trinityfoundation.org/latest.php

 

 

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