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Posts Tagged ‘Stock Market’

Coronavirus

CNBC headline on 2/21/20.  They want you to think it’s the Coronavirus that’s behind the stock market selloff, but the truth lies elsewhere.

“But we will certainly do whatever has gone out of our own mouth, to burn incense to the queen of heaven and pour out drink offerings to her, as we have done, we and our fathers, our kings and our princes, in the cities of Judah and in the streets of Jerusalem.  For then we had plenty of food, were well-off, and saw no trouble.”

  • Jeremiah 44:17

In his book Logic, Gordon Clark noted a number of informal logical fallacies.  On page 17, he mentioned, among others, a fallacy called in Latin post hoc ergo propter hoc, or as we would say it in English, “after this, therefore because of this.” This logical error, hereafter the post hoc fallacy, involves asserting that, because event B took place after event A, that A is what caused B.

Now it’s true that there can be a cause and effect relationship between an earlier event and a late event.  In Jeremiah 44, the prophet, speaking for God, states, “You have seen all the calamity that I have brought on Jerusalem…because of their wickedness which they have committed to provoke Me to anger.”  God makes it entirely clear in this passage that the prior disobedience of the people of Judah was the cause of his bringing judgment on Jerusalem.  We don’t have to guess at why the Babylonians leveled Jerusalem and burned the temple in 586 BC, God tells us explicitly both the cause and the effect.

Later in chapter 44, we get the reaction from the people to whom Jeremiah was prophesying.  As it turned out, they didn’t much care for his sermon. Part of their response to Jeremiah was a classic case of post hoc fallacy.  See if you can spot it.

But we will certainly do whatever has gone out of our own mouth, to burn incense to the queen of heaven and pour out drink offerings to her, as we have done, we and our fathers, our kings and our princes, in the cities of Judah and in the streets of Jerusalem.  For then we had plenty of food, were well-off, and saw no trouble. But since we stopped burning incense to the queen of heaven and pouring out drink offering to her, we have lacked everything and have been consumed by the sword and by famine (Jeremiah 44:17-18).

Did I say, see if you can spot it?  Reading this passage further, it seems to me that there are two post hoc fallacies to be found.  In the first place, the people argue that their burning incense and pouring out drink offerings were the cause of their prosperity when they were in the land, when, in fact, it was God’s grace that provided for them.  Second, they attributed their current state of exile to their worshipping the queen of heaven, when, in fact, the cause of their exile was God’s punishing them for their disobedience.

I bring up the preceding Biblical example of post hoc fallacy to introduce the main point of this post, which is to refute the linkage, put forward by mainstream financial reporters, the outbreak of the Corona virus in China is reason for the recent stock market sell off and spike in the price of gold.

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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

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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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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