Archive for September, 2009

The Economic Sign of September 24th, 2009

Monday, September 28th, 2009

The following interview reveals the unannounced intent of the G20 meeting in Pittsburgh.  Gold is money and fiat currency survives on perception and the willingness of society to put confidence in a governing entity.  The intent is to bring forth a global currency and let the dollar die a slow death. With over $60 Trillion in liabilities, the U.S. is between a rock and a hard place.  The IMF is the anointed entity by the powers of the current system to be the global bank and is a precursor to a one world government.

James G. Rickards is Senior Managing Director for Market Intelligence at Omnis.  He provides a clear and concise assessment of the battle raging in the markets relative to the U.S. Dollar vs. gold & silver.  One must remember that the market is bigger than any government and will ultimately win the battle.

Can the Fed control an orderly decline of the U.S. Dollar?  Their track record suggests that they can’t.

Will the market remain asleep during this decline?  History tells us that volatility and sleepless nights are ahead for many.

 

 

Kevin Warsh, Fed Governor’s op-ed piece: http://online.wsj.com/article/SB10001424052970204488304574433041058334138.html

 

The most applicable phrase in Scripture for this sign is: “Then suddenly”!

From Consumer to Saver

Friday, September 25th, 2009

The average American family is in defense mode.  The days of lavish spending are over and the consumer is now demanding lower prices with his actions.  The Administration is trying to keep the wheels on the wagon by ramping up Federal spending to take up some of the slack but it is not working too well.  Leaders are trying to change our psychology by telling us the worst is over but I don’t think it is working.  The American culture has operated on either greed or fear and after a few decades of decadent behavior, fear has replaced greed.  Purchases are being delayed or eliminated.  After everyone’s 401K has become “201K”, the baby boomers are now attempting to hoard what is left of their retirement.

The commercial real estate tsunami is arriving soon.  Luxury hotels have a real problem in getting people to occupy their $850 rooms.  Restaurants that had wait times last year have immediate seating available.  Panera Bread restaurants’ traffic is down based on my unofficial survey whereas Chick-Fil-A restaurants are growing with their value menu at a $5 price point.  Home gardening will continue to flourish while $$-$$$$ restaurants will be offering specials and a new lower priced menu in an attempt to attract patrons.

I have been preaching that “Cash is King” for the last few years.  Those with cash may soon be able to buy assets at a deeply discounted level.  However, one must question if they even need the assets that will become available.  Another theme of mine has been to “simplify”.  With that path comes a reduction in “things” that were bought on emotion and have very little usefulness to the household other than collecting dust.  People are now finding that there is no need for all of that stuff that is simply taking up space.  As people get rid of the surplus, there will be less desire to increase living space.  And the cycle of reduction continues….  The unwinding of the decades of consumption will take some time before new consumption will surface.  People will have to forget about these times before the consumption cycle begins again.  In the meantime, the Administration will continue to create money and credit to entice the people to spend again.

Obama is taking this opportunity to push through an energy policy that will surely push energy prices through the roof.  In his budget, he is eliminating intangible drilling cost (IDC) and depletion deductions.  That may not mean much to you but it is the one incentive for investment dollars to fund drilling programs.  If these deductions are eliminated, most independent oil & gas exploration in the U.S. will cease thus increasing the decline curve of our production.  As production decreases, the prices of existing oil & gas will increase.  The oil & gas industry is a capital intensive industry that supports manufacturing, services, and provides a notable tax base for many state and county budgets.  Obama’s advisors don’t seem to understand that “going green” requires an orderly transition and you don’t cut off your current source of energy until the replacement (whatever it may be) is ramped up.  What are these guys thinking?  Building optimistic budgeting/financial scenarios on a PC rarely reflects reality and their assumption will come back and bite them as well as the American public.

Interest rates are where the battle lines will be drawn.  Savers would rather make 1 to 3% on their money than to risk the principal.  Consider this, if you have a 6% note on your home mortgage, you make more money by paying on it than risking your money in the market.  In the end, you own your home and have one less thing to worry about.  When alternatives promised higher returns, there was no incentive to pay off the home loan but times have changed.

Gold took a notable drop while the G20 is in town.  Once again, the boys have orchestrated a perception that the Dollar is recovering.  With the U.S. continuing to go hyperbolic with budget deficits that have not been seen in over 60 years, the dollar will be sacrificed to keep the politicians in office.  Restraint is not in the politicians’ dictionary.

I expect a “black swan” event to take place soon, maybe within 24-36 months.  An unexpected event has a dramatic psychological effect on the population and takes its focus off of the current pain and redirects it to a new, patriotic path.  The current Administration is starting a trade war with China, our largest creditor.  We may win the battle but lose the war on this economic front.  Whatever happens, I recommend that you continue the path of simplification, low or no debt, and minimize cash outflows where ever possible.  Remember the days when we didn’t have air conditioning and slept with the windows open?

The "W" in Recession

Sunday, September 13th, 2009

Many economists were projecting a “V” shaped recession and the Fed has already said that the worst is over.  You may have missed the 60 Minutes story on the next phase of the bubble bursting so I have added it below.  I disagree with the final statement of the interviewee.  Wall Street may be forward looking but that does not necessarily translate to profits for the average investor.  I believe we are in a bear market rally only to plunge again once the sentiment of the public turns south again.

 

 

The Waterfall Effect of Control

Saturday, September 12th, 2009

Throughout history we can see the effects of control over people.  Governing bodies start out with noble intentions but human nature takes over and ultimately causes collapse.  Only when the governing body is led by Our Heavenly Father can the intent and direction of the “system” or group be sustained and maintained.  The group can be as small as two- husband and wife.  In the U.S., the divorce rate is high and among Christians it is regrettably at the same level as the overall.  In looking at the fundamental issue of failure, we only have to look as far as the pattern of King Saul in Scripture.  King Saul’s reign started because the people wanted a king, an intermediary between them and The Lord God Almighty.  They rejected the idea of “hearing” Our Heavenly Father but wanted another means to communicate with the Creator of Heaven and Earth.  They wanted to exist under the control of a man rather than under the command of Our Heavenly Father.  They acknowledged HIM but wanted to keep their distance, similar to the time in the wilderness where Moses took the position of intermediary.  The conferred their authority to man.

The cycle begins with some type of enticement of the eyes and promise of prosperity.  Saul’s physical qualities were appealing to the people and his father was a mighty man of power.  Often, man assumes that GOD must have favored a person with good looks, wealth, or intelligence thus entitling him to be the leader of the people.  Saul was such a man:

1 Samuel 9:2  And he had a son, whose name [was] Saul, a choice young man, and a goodly: and [there was] not among the children of Israel a goodlier person than he: from his shoulders and upward [he was] higher than any of the people.

Saul’s father was named “Kish” whose name comes from a root word meaning “to lay bait or lure, lay a snare, lure”.  That should have been our first clue that Saul’s kingdom would not end well.

The next phase of the cycle is to seek out another man’s revelation as your basis of action rather than hearing the voice of Our Heavenly Father for yourself.  Men tend to be lazy and will attach themselves to those who appear to have a direct line to Our Heavenly Father.  During the last 100 years, there have been many ministries who have had loyal followings and attained great wealth because of this reality.  Massive church buildings have been erected only to see them become empty once the twilight of the ministry arrived.  Relying on another man’s ability to hear, subjects you to his weaknesses as well as his revelation.  Saul lacked revelation and did what any man would do, find someone that has it:

1Samuel 9:6 And he said unto him, Behold now, [there is] in this city a man of God, and [he is] an honourable man; all that he saith cometh surely to pass: now let us go thither; peradventure he can shew us our way that we should go.

Samuel was able to hear the voice of Our Heavenly Father and his fruit proved it.  The problem we encounter today is that we have selective memories when it comes to fruitfulness, especially of ourselves.  We judge ourselves by our intentions and everyone else by their actions.  The recent prosperity message in the church centered around the “give to get” mentality.  If you will give into my ministry, you will be financially blessed.  This was Saul’s orientation.  He felt he must pay for revelation:

1Samuel 9:7 Then said Saul to his servant, But, behold, [if] we go, what shall we bring the man? for the bread is spent in our vessels, and [there is] not a present to bring to the man of God: what have we?

The third phase of the cycle will be temporary success.  This is viewed as a sign of an endorsement from the Throne of GOD.  Our Heavenly Father will use a man or a group to fulfill a need of the Kingdom even when their conscious intention or purpose may appear to oppose the Kingdom.  The idols of their heart ensnare them and ultimately bring forth death and destruction.  Saul was encouraged by “the Spirit of the Lord” coming upon him, he was empowered to fulfill this .  Everything seemed to be going well until Samuel revealed the reality of their direction:

1Samuel 10:19  And ye have this day rejected your God, who himself saved you out of all your adversities and your tribulations; and ye have said unto him, [Nay], but set a king over us. Now therefore present yourselves before the LORD by your tribes, and by your thousands.

This phase may last for days or centuries.  Our Heavenly Father will expose the hearts of the people during this time.  Repentance can change the course of events destined to take place.  Death and destruction are not necessary.  Our Heavenly Father’s longsuffering allows us to see the error of our ways and avoid the required judgment of continuing on the path of error.  The path of judgment may at time appear to be the path of blessing.  Our Heavenly Father will spare no expense to expose the idols in our hearts.  He will use our tendency to “assume” during the exposure process.  Soon gratitude is replaced with arrogance and those in charge will walk around “believing their own press”.  Their stated desire to serve is replaced with their entitlement to rule.

Samuel spoke to the people and reminded them of their sin for they were given a second chance.  They did repent.  Samuel then put them on notice:

1Samuel 12:15  But if ye will not obey the voice of the LORD, but rebel against the commandment of the LORD, then shall the hand of the LORD be against you, as [it was] against your fathers.

However, King Saul usurped the covenant made:

1Sa 13:13-14
13 And Samuel said to Saul, Thou hast done foolishly: thou hast not kept the commandment of the LORD thy God, which he commanded thee: for now would the LORD have established thy kingdom upon Israel for ever.

14 But now thy kingdom shall not continue: the LORD hath sought him a man after his own heart, and the LORD hath commanded him [to be] captain over his people, because thou hast not kept [that] which the LORD commanded thee.

Phase four of the cycle produces the “Waterfall Effect”.  King Saul continues his “entitled” position and exploits the people by taking the best for himself at the expense of others.  This begins the process of removing the protective covering of Our Heavenly Father.  Saul’s controlling spirit tries to kill David, the anointed of Our Heavenly Father in order to protect the “status quo”.  Government will begin to look at anyone who challenges their current path as being an enemy of the state.  They will be placed in the “conspiracy” category.  Free speech is replaced with “politically acceptable” rhetoric.  I’m ok, you’re ok.  Sin is now redefined at alternative lifestyle.  The desire to hear Our Heavenly Father evaporates.  Government promises the world only to deliver bondage.  Government no longer lives by the foundation of its beginnings.  Previous vows, covenants, and commitments go by the wayside and slowly the government takes on a life of its own and rebels against its original mandate:

1Samuel 15:23 For rebellion [is as] the sin of witchcraft, and stubbornness [is as] iniquity and idolatry. Because thou hast rejected the word of the LORD, he hath also rejected thee from [being] king.

1Samuel 16:23 And it came to pass, when the [evil] spirit from God was upon Saul…

Once the covering of Our Heavenly Father was lifted, Saul became plagued by an evil spirit.  How would you like to be subject to someone in charge with these problems?  Samuel anointed David to replace Saul which was like placing a target on his back.  Saul’s quest for power meant that he must eliminate anyone who would challenge his authority, the hallmark of a controlling spirit.  Saul is finally notified of who is adversary is:

1Samuel 28:16 Then said Samuel, Wherefore then dost thou ask of me, seeing the LORD is departed from thee, and is become thine enemy?

How would you like to be classified as an enemy of THE LORD?  Once the determination was made, Saul’s days were numbered.  His kingdom did not die a slow death but ended abruptly with his suicide.

When we listen to our egos rather than seek to hear Our Father’s voice, we begin our path to destruction.  The ego will produce a counterfeit reality that may last awhile, but the direction is assured.  Adam walked with GOD.  He didn’t need volumes of information from the internet nor did he need to communicate only by written or texted word.  He enjoyed a face to face relationship in the Garden.  Once the Word of GOD was judged to be wrong and man partook of the fruit, he was removed from this close relationship.  His goatlike ego had proved to be his downfall.  Jesus, the last Adam, restored our ability to fellowship with Our Heavenly Father.  We do not need another man to be our intermediary for Christ has satisfied that need.

From a macroeconomic view, this cycle plays out throughout history.  Rome enjoyed a multi-century empire only to fall within a short period of time.  Empires never die a slow death but are known in Scripture by the sub-title “Then suddenly”.  Each of us should do a fruit assessment to see if we are pursuing a counterfeit reality or seeking to walk with Our Heavenly Father.  Are we relying on a surrogate to do our “hearing”?  If so, make things right with Our Heavenly Father.  Pursuit of the alternative will only bring forth disappointment in your life.  The time is short.

U.S. Dollar 911

Friday, September 11th, 2009

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Gold closed at $1,006.20.  China is buying gold with its Dollar Reserves.  Previous attempts by the Plunge Protection Team to keep the price of gold under $1,000 succeeded until this week.  This is the highest weekly close for gold ever.  The above chart looks pretty bullish.

Kingdom Economics 101

Wednesday, September 9th, 2009

The Kingdom of GOD is based on abundance, the kingdom of man is based on scarcity.

This website has provided much detail about the current financial system since after all, we are operating in this system.  All of us want to obtain or retain wealth so that we can carry on the affairs of our lives.  Food, shelter, and clothing are all necessities that require payment of some kind.  In the kingdom of scarcity, there are those in control who want to dictate who gets what, the King Saul mentality.  It is important for us to view the other system which supersedes this system: The Kingdom of GOD.

Healthcare:  The U.S. spends trillions in healthcare every year and the Administration wants to establish a $2 Trillion guaranteed healthcare plan.  Healthcare costs in the Kingdom: $0.  Jesus healed the multitudes.  The following provides us a list of HIS healthcare ministry

  • Healing of a nobleman’s son (John 4:46-54)
  • Delivering a man in the synagogue from demonic spirits (Mark 1:21-28; Luke 4:31-37)
  • Healing Peter’s mother-in-law (Mark 1:29-31; Luke 4:38-39; Matthew 8:14-15)
  • Cleansing a leper (Mark 1:40-45; Matthew 8:1-4)
  • Healing a paralytic (Mark 2:1-12; Matthew 9:2-8; Luke 5:17-26)
  • Healing of the man at Bethesda (John 5:1-15)
  • Healing a man with a withered hand (Luke 6:6-11; Matthew 12:9-13; Mark 3:1-5)
  • Healing the Centurion’s servant (Luke 7: 1-10; Matthew 8:5-13)
  • Raising the widow’s son (Luke 7:11-16)
  • Casting out a dumb and blind spirit (Luke 11:14-26; Matthew 12:22-32; Mark 3:22-30)
  • Healing a man possessed by demons at Gadara (Mark 5:1-20; Matthew 8:28; Luke 8:26)
  • Healing a woman with an issue of blood (Mark 5:25-34; Matthew 9:18-26; Luke 8:40-56)
  • Raising Jairus’ daughter (Mark 5:21-43)
  • Healing of two blind men (Matthew 9:27-31
  • Casting out a spirit (Matthew 9:32-34)
  • Delivering the Syrophoenician’s daughter (Matthew 15:21-28)
  • Healing a deaf and dumb man (Mark 7:31-37)
  • Healing the blind man of Bethsaida (Mark 8:22-26)
  • Casting demons out of a lunatic boy (Mark 9:14-29; Matthew 17:14-21; Luke 9:37-42)
  • Healing a man born blind (John 9:1-41)
  • Healing a woman with an 18-year infirmity (Luke 13:10-17)
  • Healing a man with dropsy (or edema) (Luke 14:1-6)
  • Raising Lazarus (John 11:1-46)
  • Cleansing of ten lepers (Luke 17:11-19)
  • Healing blind Bartimeaus (Mark 10:46-52)
  • Healing of Malchus’ ear (Luke 22:49-51)

Shouldn’t we be focusing on “alternative” healthcare?  As my colleague Dr. Vince Speckhart has said, “The body is designed to heal itself”.  The current economic system is chemical based and generates thousands of toxins that are absorbed into our bodies and cause our bodies to malfunction.  Our current solution is to treat the results of toxic interference with pharmaceuticals that add to the toxic overload.  We each have a unique history of toxic absorption and require a uniquely formed solution.  Jesus’ healing ministry tended to focus on “acute” problems.  Could it be that we are expected to resolve chronic problems before they turn into acute problems?  Isn’t that what stewardship is all about?  Cleansing the body is just one facet of The Kingdom Economy.  What would happen if our bodies were detoxified and operated as designed?  What would the average healthcare cost per family be reduced to if most of the chronic conditions were resolved and brought to conclusion?  My guess is a hundred bucks per month, max!

We should focus on two things in this area:

1. unlocking the healing ministry of Jesus which will only come by the revelation of Love.

2. pursuing revelation of reversing the toxic accumulation of the body.

Fruitfulness

Wednesday, September 9th, 2009

Economics is all about producing good fruit.

Mat 7:15-18

15  “Beware of false prophets, who come to you in sheep’s clothing, but inwardly they are ravenous wolves. 

16  “You will know them by their fruits. Do men gather grapes from thornbushes or figs from thistles? 

17  “Even so, every good tree bears good fruit, but a bad tree bears bad fruit.

18  “A good tree cannot bear bad fruit, nor can a bad tree bear good fruit.

19  “Every tree that does not bear good fruit is cut down and thrown into the fire.

In the 1980′s I learned a valuable lesson in understanding the Kingdom of God versus the kingdom of man: fruitfulness.  I was in a situation with another person where both of us thought we heard Our Heavenly Father concerning a subject of interest to both of us.  However, the other person’s view was the opposite view to mine.  We both loved the Lord and sought to walk according to HIS principles but one of us was right and the other was wrong.  That was the reality.  I sought Our Heavenly Father for an answer to this situation.  I didn’t mind being wrong, I just wanted to know the truth of the matter.  HIS answer was, “Look at the fruit in both of your lives in this area, the one who has produced good fruit in this particular area has the revelation, the other does not”.  Little did I know at the time that this nugget of wisdom was so needful in my walk throughout the following decades.  We cannot judge the person but we are to judge the fruit.

Gen 1:11  And God said, Let the earth bring forth grass, the herb yielding seed, [and] the fruit tree yielding fruit after his kind, whose seed [is] in itself, upon the earth: and it was so

When Our Heavenly Father created this world, HE set a law in place: a tree will yield fruit after his kind.  An apple tree cannot yield oranges, you can count on it.  This is a simple reality but in human affairs it does require some discernment and often one must take a few steps back and consider the big picture.  As Christians we are always looking for a connection with others and hoping that the next connection will bring forth The Kingdom of God thus we place our faith in the future rather than the “now”.  Often the connection being sought after has some scarce resource tied to it, usually money, but sometimes it is a prophecy or a vision.  If we could just make the connection, our ship of prosperity will come in.  Unfortunately that is not how it works.

Hearing from Our Heavenly Father and acting on His Word produces revelation, faith, and fruitfulness.  So often, we try to attach ourselves to the revelation of others hoping to enjoy the same fruit as them.  We emulate their success expecting the same but it never seems to work out that way.  Why?  It is because their success is based on their gifts and calling.  When we try to attach ourselves to their calling, we become usurpers and receive Our Heavenly Father’s judgment and correction for that action.  What we effectively do is substitute “hearing Our Heavenly Father” with another person’s revelation only to find that unfruitful results are produced.  When you try to align yourself with another person because of a prophetic word given to him or her, you exalt that person above Our Heavenly Father and that can produce disastrous results.  Yes we should appreciate someone else’s gifts but moreover we should focus on the gift giver.  The people exalted King Saul and his Pentecostal mentality is alive and well today among the brethren.

We must be quiet in order to hear Our Heavenly Father.  We must stop our minds from racing through all of those scenarios that constantly vie for our attention.  We must set aside all of those burdens that would redirect our attention.  We must declutter our lives in order to hear and we must prepare ourselves for answers that may take us out of our comfort zone.  A revelation is an answer to our problem or situation that exists at a higher level of understanding.  The solution to the problem is never found at the level where the problem was created.  Have you ever wondered why a person who is in the midst of a problem just cannot see the solution when it is so obvious to you?  If they could just rise above the problem, the solution becomes obvious.  Since Our Heavenly Father operates in the highest realm, why not listen to HIS solution and direction.

Faith requires that once we hear from Our Heavenly Father, we act accordingly.  “Faith without works or fruit is dead.”  When Our Heavenly Father tells us to do something, our biggest challenge is to be obedient.  Obedience does not add to His Word but simply carries it out.  Our ego wants to take control of Our Father’s Word and effectively judge it to be insufficient.  Isn’t that what happened in the Garden of Eden?  Oftentimes Our Heavenly Father will require us to walk by faith knowing that this walk will be tried and tested.  We must resist the temptation to add or subtract what Our Heavenly Father spoke to us and walk out His Word as directed.  This is overcoming our ego so that we will mature and be given greater things to do for the Kingdom.  A good steward faithfully takes direction and fulfills the wishes of his Lord.  He does not go back to his Lord and negotiate in an attempt to manipulate the Lord’s plan.  If you keep asking Our Heavenly Father the same question, HE will give you the answer according to the idols of your heart.  Jesus revealed that there are multiple levels of faith: no faith, little faith, great faith.  The soldier of great faith saw no need to negotiate a different “word” from Jesus in order to satisfy his ego.

Once we hear and by faith walk out the revelation given, good fruit will come forth.  There will not be a lot of confusion or noise surrounding this fruit.  There will be no question whether you heard Our Heavenly Father speak for His Word does not return to Him void.  If you are being plagued by problems, hindrances, failures, etc. you must become a fruit inspector and stop the path you are on.  Some men rationalize unfruitfulness by assuming they have taken on an Old Testament prophet’s mantle.  Did not the Blood of Jesus eliminate the need to operate in the Old Testament fashion?  Isn’t our Covenant a better one?  Was Jesus required to carry around a wooden yoke to suffer in a prophetic manner on our behalf?  The fruitfulness of Jesus should be our standard of comparison, not other men.  It is no wonder that there were four Gospels written about His earthly ministry.  Each Gospel provided another view of His example.

Are you bearing good fruit, bad fruit, or no fruit at all?  Do not be dismayed, it can be easily corrected.  Repent, turn from your current path.  Be still and listen.  I knew one man who waited two weeks after he isolated himself from “the world” before he could hear anything.  For each of us it is different.  Write down all the issues you are dealing with.  In another column, write down your “good fruit”.  Be open and truthful.  Have you been living a lie?  Once you repent, you now open yourself up to start afresh.  Our Heavenly Father’s mercy is greater than anything you are guilty of.  Quit looking at other men or women when defining your life.  Their gifts are not your gifts.  Our Heavenly Father may bring you together with others to satisfy a need of the Kingdom but don’t assume that just because they have a calling similar to yours that they will automatically participate with you.  Both of you will find peace when the need to work together arises.  In the meantime, you should love all men.  You should not be a stumblingblock by allowing your ego to hinder their progress.  There is plenty of room in the Kingdom for all to participate and be fruitful.  When Our Heavenly Father puts you together with another person, be content and focus on the mission at hand.  If you are not immediately fruitful, it may be a timing issue.  You may need to mature before the fruitfulness comes.  Jesus spent 33 1/2 years to complete His earthly calling.  Don’t be impatient.  If you are operating in your calling, you will produce good fruit.  You may require some adjustment in your thinking along the way but be assured as you become a man after GOD’S own Heart, good fruit will come forth.

Are you sharing your good fruit with others or hoarding it for yourself?  As you sow good fruit into other people’s lives, more fruit will abound!  That is the economic effect of The Kingdom of GOD!

Creating Derivatives for "Death", etc.

Tuesday, September 8th, 2009

At last, Wall Street has figured out how to make money on “Death”.  They are planning a new product that will securitize life insurance policies thus tapping into the $26 Trillion life insurance market.  I have personally seen an elderly person taking out a life insurance policy and selling it for a discounted portion of the proceeds that will be paid out at his death.  The beneficiaries pay the premiums on behalf of the elderly, relying on the actuary tables to protect their investment.  Put a bunch of these policies together and create a security called “life settlement bond” you can sell in the market.  What will they think of next?  See: http://www.marketwatch.com/story/life-settlements-could-be-wall-streets-next-act-2009-09-06

Solving the Debt Crisis with more Debt?

As of the 1st quarter of 2009, the total net debt versus the U.S. Gross Domestic Product stood at 372%, the highest ever.  This compares to 301.4% in 1933 during the Great Depression.  Back then, we were a manufacturing country but that is no longer the case.  The self interest of elected officials dictates that the electorate feel no pain so that each official can be reelected.  This prevailing attitude of self interest is perpetuated by future promises of wealth.  You can simply track net worth of most past elected officials and see a surprising success of growth in net worth.  Whether it be $5 million book deals or prestigious positions on the Board of Directors of major corporations, it is uncanny how smart public servants become while in office.  Getting elected is all about personal economics it seems and it matters not to what political affiliation you belong.

The current system mentality looks at the “free lunch” method of economics as the preferred path.  Past trade agreements opened the borders to allow corporations to easily exploit other labor pools for a short term flush of profit.  After all, their bonuses depended on attaining profit goals with regard to the long term effects.  Jack Welch of GE fame was well regarded in business circles due to his innovative management strategies and leadership style.  His net worth is estimated at $720 Million.  He moved the company away from manufacturing to financial paper products and GE Credit contributed substantially to his success.  Now GE is suspected by some industry observers of having notable derivative problems.  Only time and disclosure will tell.

China may default on derivatives

China is losing patience with the arrogant behavior of the American view of financial markets.  They are taking steps to prepare themselves for life after the U.S. Dollar. See: http://www.economist.com/businessfinance/displaystory.cfm?story_id=14365060

China is now encouraging its citizens to invest in gold and silver

What would happen if you added 1.3 billion potential investors to a particular market?  China understands the economics behind the “Golden Rule”: He who has the gold, rules.  Americans have been duped into investing in paper investments and giving up their hard assets.  This has allowed Wall Street to exploit paper asset value and extract wealth from the individual participants with the help of little or no regulation over their predatory business practices.  China has been burnt by Wall Street but may have the last laugh.  The dollar-centric world may be on its last leg.  If China did read the history books of how the U.S. Dollar became the world’s reserve currency, they would conclude that whoever owns the most gold can force the others to conform to that nation’s economic direction.  As the U.S. is creating a bigger black hole of debt, China is buying up commodities around the world.  With over $2 Trillion in reserves, they can put a floor in the price of most commodities, especially gold.  By the way, gold just surpassed $1,000 for a third time.

China may eliminate exports of certain critical metals including those critical to computer disk drive manufacturing.  Russia and China have the world’s only source of rare earth minerals that are used in building hybrid automobiles. See: http://www.proactiveinvestors.com.au/companies/news/2301/arafura-resources-is-well-placed-as-china-tightens-rare-earths-global-supplies-2301.html

One thing is clear, China is growing in strength and the U.S. is declining.

Rev 16:12 And the sixth angel poured out his vial upon the great river Euphrates; and the water thereof was dried up, that the way of the kings of the east might be prepared.

Are the “kings of the east” China?

Does the river Euphrates mean that the “Fruitfulness” of the West is drying up?  Another meaning of Euphrates is “Sweet Water”.

Selah!

Self Interest: The End of the "Rule of Law"

Tuesday, September 1st, 2009

With about 900 banks expected to fail, the U.S. Economy will move into a second wave of problems.  A recent trip to Ft. Myers, Florida, revealed a substantial glut of commercial real estate properties standing vacant with no expected rental income in the future.  The newest Target store looked like a ghost town.  Needless to say, we did not have to wait in the checkout line.  This is indicative of those areas who enjoyed double-digit growth over the last few years in the real estate bubble.  Prepare for the next bubble to pop.

Bubblenomics

In times like this,new words are created to describe the events being observed.  The word that best describes the current response to our economic woes is “Bubblenomics”.  Monetary policy is being used to address structural issues with our economy.  Money can’t fix a loss of manufacturing jobs by printing more and the average American’s productive capacity is underutilized.  We need to create or build to provide a foundation for a strong economy.  Historically, savings and investment provide the needed capital for new businesses and products.  It will be found that Alan Greenspan failed as the Chairman of the Fed and savings rates should not have been pushed to extreme lows thereby punishing the savers.  He managed to interrupt the natural cycle only to evoke a more severe correction on the bust portion of the cycle.  In the meantime economic policies promoted “globalization” of manufacturing by moving plants offshore and undermining the productive use of our human resources in favor of building a “services & financial” economy which has proven to be disastrous.  That move enriched a few on Wall Street and Washington but hurt the manufacturing states.

Cyclical Realities

The weather is made up of short cycles as well as long-term cycles and when these cycles converge on each other, we tend to get extreme weather.  The same is true in the economic realm.  History shows that we have boom/bust cycles occurring rather frequently.  However there are longer term cycles that have been observed to have more notable effects on the economy and society.  For instance there is a 51.6 year cycle has been studied since the Civil War and has proven to be rather accurate.  We have entered the down cycle and with the convergence of the short term cycles (thereby increasing the amplitude), it sets the stage for $3,000 gold prices.

Reserve Currency

What prompted the world to establish the U.S. Dollar as the world’s reserve currency?  First of all, the U.S. had 76% of the world’s gold in its possession after WWII.  Secondly, we were the world’s arms dealer and food supplier.  Mankind’s thinking runs in cyclical patterns and when one generation begins to die out, the next generation’s self interest kicks in and starts the process over again.  We only need to look at Spain and Great Britain to see what a former World power looks like.

All of the above point to the spiral of Self Interest.  In the 60′s the pressure against the U.S. Dollar began (51.6 year cycle).  It culminated when Nixon closed the Gold Window which was prompted by the action of the French wanting to hold gold over dollars.  Inflation had begun in the U.S. and those dollars were declining in relative value.  Terms such as “greater good” mask the true term of “self interest”.  What then surfaced was the battle of self interest between the government and the people.  Social security is a great example.  Government installed social security as a way of helping the retired people to sustain themselves after their productive years.  All of us were required to withhold part of our wages with the promise we would receive benefits at retirement.  What a noble cause!  Fast forward a few decades and now those funds have been replaced by IOU’s and the threat of insolvency is at hand.  What happened to all of our money as well as the employer matched funds that were deposited with the U.S. Treasury?  That money is gone!  It was used for the “greater good” by the various administrations who “borrowed” our money without our specific permission.  If any of us did that at a private level, we would be put behind bars.  The Rule of Law has given way to the path of Marxism.  “Marxism is an economic political theory by which law is considered an instrument of oppression and control, and which the ruling class uses against the working class.”  The complacency of the average American has allowed government to pursue a path whereby laws prefer the lobbyists of large corporations who fund reelection campaigns.  Have you ever noticed how difficult it has been to have campaign financing reform?  Why is it that Congress has their own retirement and healthcare benefits?  Why do Congressmen get preferential treatment when breaking the law?  The recent judicial decisions upholding the view that imminent domain needs could trump private land ownership is just another example of the issue of self interest.  As the rule of law disintegrates, property laws vanish and people will no longer attempt to hold property, in fear of confiscation.

The rule of law is in the hands of 545 people in Washington.  The recent bailouts of the “too big to fail” corporations and banks have brought to surface the change in the rule of law to the rule of self interest.  Even though the President includes the “rule of law” in many speeches, self interests rule now.  Goldman Sachs has been the indirect recipient of substantial bailout funds authorized by government officials who were former Goldman executives.  Our Heavenly Father will reconcile the books of this path of self interest.  It may not be this Friday or next, but you can be assured HE will!