In Bubbles We Trust

You have heard me saying it now for some years...."If creating wealth were as easy as printing dollars...there wouldn't be a poor person in the entire world...because every government could just print more money until everyone had enough!"

Of course, we all know that while printing money is necessary at some base level, you can't print TOO MUCH because you risk the possibility that confidence in the paper money will plummet if investors start to doubt the sincerity of the currency.

"But Dennis....maybe there are people running our financial system that are WAY smarter than us...and they can massage, cajole, and manipulate our paper money and create some sort of synergy or magic that will allow the illusion of paper money to last forever?!  This time it's different!"

Ummmm.....no.  This time isn't any different and it never will be.  But now that the USA has created so much debt, they may not have any choice but to keep printing money to pay principal and interest payments on all that debt.

Let me remind you that the 10 Year Treasury is down around 2%.  So what do you think will happen to the US Gov't's balance sheet when that interest rate goes to 4%, 5% or 7%?

It won't look good...because we can't even run our books right when interest rates on our debt are the lowest they have EVER BEEN!!

Policymakers and societies at large are desperately waging their fight against the consequences of their past choices. Again, they have turned to the spurious advice of humanist shaman advisers and prophets — namely, macroeconomists and monetary theorists — who didn’t recognize nor anticipate the current problems to begin with. Their hope and presumption is that money — its manipulation, fabrication and supply — along with the magic hand signals and opaque hints of the monetary policymakers will surmount the chronic problems of our times.

Most would agree that the viewpoints found here will be mostly in contradiction to those that dominate the secular mainstream. That is not to say that a moral perspective or a Biblical world view would disqualify one from participating in investment decisions or economic diagnosis. On the contrary, in our opinion. If anything, it adds understanding to the nature of human actions. Nonetheless, many Biblically-based viewpoints would be in contradiction with the secular consensus and economic theories promoted on Wall Street. Why? Because, for all intents and purposes, modern-day economics does not deal with the issue of morality and instead focuses only upon its amoral theories.

Let’s return to our discussion of the trials of policymakers and leaders of nations. Of course, no one expects monetary policies to solve things like endemic poverty or malnutrition. Yet, similarly, the amoral monetary policies being perpetrated by the major central banks of the world today will not correct conditions of extreme wealth distribution, aging populations, post-Familialism, and various other global and ethical imbalances either. That is why policymakers are indeed becoming ever more desperate. Their potions aren’t working as of late.

Japan, its economy having stagnated for some two decades, piling up immense government debts during this period, finally threw all caution to the wind, recklessly depreciating its currency (yen). Lately, Chinese leaders are worrying that the economic slowdown that has recently gripped their nation might spin out of control and trigger a massive deluge of debt defaults. What to do? Plunge further into debt and try to reinstate the unsustainable policies that led to the current problems in the first place? To date, Japan’s actions have not spurred any recovery (nor is this likely to happen).

The same frustrations are being experienced by most countries, including the U.S. Unstable economic conditions extend from Brazil to Russia. Were conditions to deteriorate further, the world would find itself in a most dangerous condition, with a return to recessionary conditions at a time when interest rates are already low (in fact, at negative levels after adjustment for inflation).

We have a world-wide condition of desperation and fear of the future. Who or what can provide any hope? At present, it is seen to be central bankers and monetary policymakers. They are venerated as never before … the new, secular priesthood.

At this late date, here in the early 21st century, fomenting bigger financial bubbles would be attributable to much greater hubris. Crucially, it would require a further collusion of policymakers, Wall Street, and the elites of the corporate world to fan up a greater “wealth effect.” As Keynes noted in reference to the financial bubble of the 1930s, it required a collective (and silent) agreement of the major players to “play the game.” Such a conspiracy would have little to do with fundamentals but rather is driven by a collective larcenous sentiment. Evil times will breed evil actions and delusions.

Also to be seen is a spirit of abandon and opportunism amongst the many financial players. “Let’s have another financial bubble.” “‘Come,’ each one cries, ‘let me get wine! Let us drink our fill of beer! And tomorrow will be like today, or even far better’” (Isaiah 56:12). “‘Let us eat and drink,’ you say, ‘for tomorrow we die!’” (Isaiah 22:13).

Consider this quote from Job. His observation will surely come to pass some day and applies to collective humanism. “Though the pride of the godless person reaches to the heavens and his head touches the clouds, […] He will spit out the riches he swallowed; God will make his stomach vomit them up” (Job 20:6,15).

Here:  http://www.raptureready.com/featured/hahn/h111.html

Friends, certainly we can't know exactly WHEN this bubble of false debt and printed money will pop...but we KNOW that it's going to.

When nations worship false gods there can NEVER be a good ending...so let's remember to stay grounded in the Word of God and keep our minds set on eternal things.  Furthermore, let's remember to reconcile ourselves for HOW we will behave when judgment does come.  We are promised to escape the wrath of God but there is no such promise that we will escape the discipline and judgment of God as long as we are inhabitants of this fallen world.

It seems more and more likely that when this current bubble does pop that it will result in a WORLDWIDE FINANCIAL CRISIS...the likes of which has NEVER been seen before.

Of course this will usher in the calls from around the globe of, "Send us a man, any man, that has answers for us and can lead us out of the abyss...and we will accept him!"

It would appear that the path continues to be paved for the coming Antichrist....