Economics 101

Our Whole Financial System is Phony

By Bill Bonner, editor, The Bill Bonner Letter

If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?

—Alice’s Adventures in Wonderland

The Dow rose the fifth week in a row last week, ending with a 120-point jump on Friday.

This has put the index firmly in the black for 2016.

Well, this is a showdown, isn’t it?

Either us…or the great mass of investors—one of us is wrong.

In the weeks to come, we’ll find out who. (Notice to new readers: It could go either way.)

Everything Is Nonsense

Wait a minute…

Our old friend Rob Marstrand, who writes at OfWealth.com, explains why the great mass of investors has little to do with it. Apparently, corporations have nothing better to do with their money than buy their own shares.

There’s a dirty little secret in the U.S. stock market. Corporate America is paying out more cash to shareholders than it earns in profits. This means there’s nothing left to invest in business growth. It also means debt levels are going up, increasing risk…

Analysis by Bloomberg shows that those companies are on track to spend $590 billion a year on buybacks in 2016, at the first-quarter rate. That would be even more than the last point of peak buybacks – at the previous market top in 2007, just before the last crash.

Put simply, companies are spending record amounts of cash on buybacks at precisely the wrong time (as usual): when stocks are extremely expensive.

It’s an Alice in Wonderland world. Everything is nonsense. Stocks are going up. That should mean things are looking up for business. Which should mean that companies have plenty of worthwhile new capital investments to make—new machinery, new factories, new products, and more distribution.

And if things are looking up for business, it should mean things are looking up for their employees.

More jobs. Higher wages. And since stock prices are not far from record highs—after clawing their way back up the mountain over the last five weeks—it must mean that things are looking up all over, right?

Rats!

We’re All Mad Here…

Time is the ultimate unyielding human resource. And the ultimate measure of a society’s wealth is how much you can get paid per hour.

Cometh another depressing report for millennials from conservative website Red Alert Politics:

Compared to the national average, you are poorer than most people of your age in the past. The youngest millennials are the worst off. In 1979, the average American 20 to 24 years old had average incomes 10.1% below the national average. Today, it’s 31.5% below the average.

Not that we’re going to whine on behalf of the young. They’re doing their own whining at the ballot box. The youngest voters are going for the oldest candidate: democratic socialist Bernie Sanders.

But what entertains us today is the nonsense of the entire system.

“We’re all mad here,” says Wonderland’s Cheshire Cat…perhaps anticipating Janet Yellen’s Fed.

Actually, the whole system is not just mad. It is also corrupt and phony.

A Phony System

It begins with PHONY MONEY.

Dollars are supposed to represent wealth. How do you get wealth? By working, investing, and saving, right?

But after 1971—when President Nixon ended the direct convertibility of dollars to gold—the Fed created new dollars with no wealth backing them.

Post-1971 dollars are IOUs from Uncle Sam, nothing more. The Fed carries them on its books as a liability.

Then there is the problem of PHONY SAVINGS.

In a healthy economy, you earn money, and you save part of it. This can be lent out, as credit, to fund new projects and earn interest. Savings, and credit, are limited. They are based on real surplus wealth.

But in today’s mad system, central banks and banks create credit out of thin air…using nothing but keystrokes on a computer. No savings are needed.

Savers might as well not bother. Thanks to the Fed’s regime of ultra-low interest rates, over the past 10 years Bloomberg estimates that about $8 trillion has been confiscated from savers—money they should have earned in interest.

On top of this, the government has a PHONY FISCAL POLICY.

It borrows phony money from banks in return for Treasury bonds. Under QE, the Fed then buys these bonds from the banks. The Treasury then pays the Fed interest on these bonds…the Fed then gives this interest back to the Treasury.

Neat, huh?

It’s free money for the feds. They borrow nothing for nothing…and everyone pretends it’s real.

This is all made possible by PHONY MONETARY POLICY.

The Fed sets interest rates at the lowest levels in history. So borrowers—especially the largest borrower in history, the U.S. government—can get funds cheaply.

This is done to strengthen the economy, but the economy grows weaker under the burden of so much more debt.

Corrupt and Fraudulent

This all leads to a PHONY STOCK MARKET, in which corporate bosses use the cheap money to loot their own businesses.

Companies borrow heavily to buy back their own shares and cancel them. This increases the earnings per share of the outstanding shares, boosting their value. Top execs then collect fat bonuses based on rising share prices. Shareholders get a temporary boost as their stocks go up, but their businesses are weakened by the additional debt.

And the entire system creates PHONY WEALTH.

This is not capitalism. It’s phony, crony capitalism. Its phony money leads to phony investments—short-term speculations…scams…and rent-seeking.

These do not build real wealth; they extract real wealth from the rest of the economy and shift it to the well-connected sectors.

Here’s how it works in housing, for example.

The banks get the phony money and lend it to house buyers. They collect interest on “money” that cost them next to nothing. Naturally, they lend more and more…in order to maximize their own income. This leads to rising house prices…and eventually, a bust, when too many people own too much money on houses they can’t really afford.

This is what happened in 2007. Home buyers couldn’t make their payments. Home prices fell. Families lost their homes. And then, even the banks were in trouble.

So, the Fed came and bailed out the banks, so the extraction could continue.

And today, almost every one of America’s taxpayers continues to make payments to the credit industry—for student loans, housing loans, auto loans, credit cards—transferring more and more real wealth from the people who earned it to the privileged elite.

But it is not just Wall Street that comes out ahead. The entire Deep State complex is at the heart of the nonsensical, corrupt, and fraudulent system…

Expecting the Mad Hatter to protect you? Or the Cheshire Cat?

Good luck with that!

Regards,

Bill

Abolish The Police, Police Abuse, Power Trip

Canon City Protester

This is an interesting video of a guy from Denver protesting the police at 12th and Royal Gorge Boulevard on 3/31/16.

https://www.youtube.com/watch?v=uDXeZ60epfk

It was weird that the one cop stepped into traffic. It was also very wasteful of taxpayer money to have all those cops show up. At least it stopped them from writing traffic tickets.

The protester said the battery went dead on his phone, but shortly after it did, the cops left him alone.

I don’t like the vulgarity he uses, but loud and boisterous harangue is protected speech in this country. It’s as if someone informed the Canon City PD of that in the past.

 

Christianity, Theonomy

Another Proof of Theonomy

On Friday’s post about natural law, the guy arguing that we ought to be governed by natural law said that there are contradictions between Christ’s law, and civil law. I’d say that is impossible. How can any part of God’s law contradict itself?

lntheonomy

First of all, if you don’t know what the aspects of God’s law are, here is a quick explanation. For this discussion, there will be five aspects of God’s law. The moral, civil and ceremonial are divisions of the Old Testament law given to Moses. That law is beautiful, and perfect (Psalm 19:7). Christians ought to love God’s law (Psalm 119).The moral law: The Ten Commandments are a summary of the moral law. They define what sin is. The vast majority of Christians think that this law remains in effect today.

  1. The moral law: The Ten Commandments are a summary of the moral law. They define what sin is. The vast majority of Christians think that this law remains in effect today.
  2. The ceremonial law: These laws include laws about the Old Testament priesthood and sacrifices and diets, etc. These laws were fulfilled by Christ on the cross. They aren’t applicable today.
  3. The civil law: It isn’t always clear cut how these would apply today. Some seem to be combined with ceremonial law, but where they are clear, the New Testament never says they aren’t in effect today.
  4. The natural law: Is referenced a couple times in Scripture. It is the law written on our hearts, and even those who’ve never heard of the Bible will be judged by it.
  5. The law of Christ: I think there is some divergence here among Christians, but I think there is only one position on this that makes sense, which is the subject of this post.

The natural law guy I discussed this with gave examples from what Jesus said in the Sermon on the Mount, and said this is the law of Christ (which I agree) and that if government operated under the law of Christ, they would cease to exist. I think that is preposterous. It is a misunderstanding of what Jesus said in the Sermon on the Mount, and sets up all kinds of contradictions. But, the gist is that Jesus was speaking of personal morality not civil law. In Romans 12, it says that we shouldn’t take revenge on those who wrong us, but let the government take care of it. Obviously, Paul wasn’t contradicting Jesus, as Paul was inspired to write by Jesus.

So what is the law of Christ? It is the laws that are applicable to us today. Jesus said, “If you love Me, you will keep My commandments” (John 14:15). He is expecting us to be clear on what His commandments are and obey Him. The laws of Christ can’t contradict any previous laws, though the ceremonial laws are fulfilled. The moral law of the Old Testament is part of it. Furthermore, when Jesus says, for example, that lust is adultery in the Sermon on the Mount, He wasn’t adding to the moral law. Lust was adultery in the Old Testament as well, even if it wasn’t ever spelled out. Jesus wasn’t adding to the law, or changing the law, but expounding on it.

The law of God is a reflection of His character. If you were to say that the law of Christ contradicted the civil law, you’re causing all kinds of problems. The moral law of the Old Testament was perfectly consistent with the civil law of the Old Testament. The civil laws are the case laws of moral infractions. In Exodus 20, God gives Moses the Ten Commandments. In Exodus 21, there are civil laws—application of the moral laws given in the previous chapter. You can’t tell me there is a contradiction between the civil law and the moral law. If you did, you’re saying there are contradictions between Exodus 20 and Exodus 21.

The Sixth Commandment is “You shall not murder.” What is murder? When someone breaks into your house and you kill him, is that murder? That question is answered in the civil law. (The Bible doesn’t line up with Colorado law).

The New Testament says murderers will have their part in the lake of fire (Revelation 21:8-9), but it never defines murder. When Nazis murdered Jews that was legal under German law, but does anyone think that if the Nazis don’t repent they won’t go to hell for that? If I murder someone under the civil law, but it is legal under Colorado law, does anyone think that I won’t go to hell for that? Does the law of the land make any difference when I’m standing before God? Does God care about Colorado law?

All that to say that the best law and the only law consistent with the moral law is the civil law of the Old Testament. This is called theonomy.

The church better get this figured out. We can’t afford 100 more years of the stupidity we’ve had, and the self-contradictory mush of this natural law guy. This kind of biblical ignorance isn’t going to defeat tyranny as he was hoping.

Christianity, Theonomy

Is Natural Law A Valid Concept

Some Christians who are opposed to a Christian theocracy governing a country like to tout natural law. Natural law was also popular among the founding fathers. I’ve been looking forward to discussing natural law with someone, and I have pasted the conversation below.

Natural law is a phrase that is found in the Bible. The way the Bible talks about it is the law that is written on our hearts. Our conscience reflects natural law, and it is the minimum standard we’ll all be held to on Judgment Day–even those who never had access to Scripture.

But thank God that everyone reading this has access to Scripture. We don’t have to wander in the dark trying to figure out what natural law is when the law is spelled out explicitly in Scripture. Natural law would have to be completely consistent with Old Testament law and any changes to the law found in the New Testament. It wouldn’t make any sense for natural law to contradict Scripture.

So, it seems to me that those who say we ought to govern by natural law but not by Scripture are setting up their own contradictions. All we have to do is point out the contradictions.

Every human being on earth lives in a theocracy. The only question is whether it will be a Christian theocracy governed by God’s law or a pagan theocracy governed by a false god. The choice seems obvious to me.

—————— ME

I don’t mean to post a long list of questions for you to answer in detail. Hopefully short answers will suffice.

1. How do we find out what natural law is?
2. Do you believe God’s law revealed in Scripture contradicts natural law?
3. If there are no contradictions, why wouldn’t we just say government ought to operate under God’s law which is most clearly revealed in Scripture?
4. Jesus said, “All authority in heaven and earth has been given to me…” (Matthew 28:18-20). Does Christ’s authority include authority over government?
5. Jesus said, “Whoever is not with me is against me” (Matthew 12:30). If our government and constitution don’t acknowledge the lordship of Christ, do you think they are for or against Christ?

When a Muslim government cuts off a thief’s hand, is that just or unjust? When a Mexican sneaks across the border, would it be acceptable for the government to shoot him? The Bible speaks on these questions and ALL other questions of civil law and justice. If you reject God’s law, all you have to go on is your opinion.

You might not like Muslims cutting of a thief’s hand, but his arbitrary opinion is just as (in)valid as your arbitrary opinion. Go to a Trump rally and ask whether we should shoot illegal Mexicans crossing the border. (I’ve heard some of them say we should.) Are you going to respond by quoting Cicero and appealing to natural law? I would quote Leviticus 19:34, and say that anyone who shoots a Mexican “illegally”crossing the border will stand before God as a murderer on Judgment Day, whether they have the blessing of Congress or not.

—————— THE NATURAL LAW MAN

1. How do we find out what natural law is? (According to Cicero in the first century B.C. “reason and rationale of one made in God’s reveals Natural Law”)
2. Do you believe God’s law revealed in Scripture contradicts natural law? Christ’s NEW Commandmant to “love one another as I have loved you” (John 13:35)? Is that the Law to which you refer? If so, then NO.
3. If there are no contradictions, why wouldn’t we just say government ought to operate under God’s law which is most clearly revealed in Scripture? Which Law, CHRIST’S LAW? If that’s the Law which you intend, then re-read the first paragraph of the post. IF YOU MEAN THE MOSAIC LAW – then the only issue you have is “remembering the Sabbath” – “lying” (which the government of the United States has never outlawed except in case of treason) and a host of other problems (what’s appropriate for the punishment of “adultery” for example – in the Mosaic Law it was stoning).
4. Jesus said, “All authority in heaven and earth has been given to me…” (Matthew 28:18-20). Does Christ’s authority include authority over government? YES. God called the evil Baybloynian Empire (“my servant”), even though Babylon had nothing to do with Yahweh.
5. Jesus said, “Whoever is not with me is against me” (Matthew 12:30). If our government and constitution don’t acknowledge the lordship of Christ, do you think they are for or against Christ? All governments, whether they ‘acknowledge Christ or not’ (America’s Founding Documents make NO MENTION of Christ) are still “God’s servants” to “punish the evil doer.”

When a Muslim government cuts off a thief’s hand, is that just or unjust? NO When a Mexican sneaks across the border, would it be acceptable for the government to shoot him? NO The Bible speaks on these questions and ALL other questions of civil law and justice. If you reject God’s law, all you have to go on is your opinion.

—————— ME

You said, “Christ’s NEW Commandment to “love one another as I have loved you” (John 13:35)? Is that the Law to which you refer? If so, then NO.”

It sounds like you think there are contradictions between the law of Christ and the law of Moses. Of course the law of Moses is given by Yahweh. Jesus is Yahweh, which is Trinitarianism 101. When Jesus said, “Love your neighbor as yourself” He was quoting Leviticus 19:18. That is hardly a new (as in the something young definition) law that Jesus was instituting.

Furthermore, I don’t think there is any contradiction between what Jesus said and the Old Testament. It’s just that some of the laws are fulfilled by Christ. We obey some of them by trusting in Christ for salvation (ceremonial), and some of them are still binding (at least the moral law).

3. You said there’s no contradiction between natural law and Christ’s law. Then you said read the first paragraph to see the problem with operating under the law of Christ. So I’m confused.

Before Christ, Cicero said, “It is a sin to try to alter this law, nor is it allowable to repeal any part of it, and it is impossible to abolish it entirely.” Yet you say there is a contradiction between Mosaic civil law and natural law. Are you saying the Mosaic civil law was unjust? Hebrews 2:2 says it is just. Or maybe natural law changed after Christ, and Cicero was just incorrect?

5. You didn’t answer the question.

When a Muslim government cuts off a thief’s hand, they’re punishing evil, right? But how do you know what the proper punishment for theft is without looking into Scripture? Scripture provides the only absolute standard of justice. Natural law and reasoning are wholly inadequate for determining the proper punishment for thieves.

You said, “America’s Founding Documents make NO MENTION of Christ”. I’d be content with the Declaration of Independence reference to the Creator (assuming they were referring to the God of the Bible; I don’t know whether they were or not). But the Constitution is antichrist and unbiblical in many ways. It has certainly not been successful in what it set out to accomplish as 55 million dead babies would attest.

Thanks for your responses.

Abolish The Police, Christianity, Theonomy

I Found a Better Rush

I grew up listening to Rush Limbaugh. I learned a lot from him. The issue I see now, is that he talks about freedom and limited government, but doesn’t call for the end of public school and Social Security, etc. He doesn’t make any mention of the Bible’s teaching on these subjects. But pastors don’t either.

R.J. Rushdoony (the better Rush) figured out what the Bible teaches on so many topics of life, and wrote tons of books. I’ve thought about some of what he’s saying here, and it’s good to know I’m not the first Christian to ever think about these things. There were probably thousands of Christians in the early church, and then Rush and then me. Here’s the quote referring  to early Christians, and their employment under Caesar:

As Christ’s servants or slaves, bought with a price, they could not voluntarily enslave themselves to men.

As a result, while Christians could be office-bearers under Caesar, they were servants of Christ alone. They could not, unlike modern office-bearers, see themselves as servants of the people, or servants of the state. They were Christ’s servants, “bought with a price.”

The early church had serious weaknesses which far surpass those of the church today, but its strength was far greater. There was a reason for this. First as Williams has pointed out, the faithful were a community, and a responsible community. Second, the early church was aware of its conflict with the world; now, there is little sense of conflict. It would not occur to a church, its officers, or its members today to raise such questions as these: Is a judge who does not challenge the humanistic law which is taking over our country faithful to Christ? Is he the servant of the people, or the state, or is he Christ’s servant? Is a union member who does not work against the humanistic and coercive tactics of the unions faithful to the Lord? Can employers and workers disregard Ephesians 6:5-9 and be counted as godly? We do not yet accept pimps and prostitutes into church membership, but can we legitimately accept antinomians who assume that a verbal profession of faith can replace a disavowal of Christ in their works?