Interlude
25 March 2009
Volume 11, Issue 12
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It seems like this whole
economic mess had its beginnings in the 1970s. I suppose you could blame it on
the Viet Nam war but that probably is a gross simplification. The music of that
era seems especially relevant today. Last week we began ÒThe War on SmallÓ with
the first line of a 1969 song: War – What is it good for? Absolutely
nothing!
This week as I was
researching the background for MondayÕs ÒSpecial Report - Prosperity MythÓ the
words of Simon and GarfunkelÕs 1970 song, ÒKeep The Customer SatisfiedÓ seemed
to be completely fitting. As long as the Prosperity Myth functioned smoothly
and everyone thought they were rich and secure, life was just ÒBobos in
ParadiseÓ to use the title of a David Brooks book, all that was required was to
ÒKeep the Customer Satisfied.Ó So we got more and better stuff cheaper and
cheaper. Hallelujah, material heaven here on earth!
In that customer
satisfaction mode, the recent worldwide love affair with President Barack Obama
is beginning to show some stress. Basically two thirds of the way through his
first 100 days, more and more comments and editorials, about not being up to
the job, not ready for prime time, inept management, out of touch, gallows
humor, punch drunk, a way to hell, and others are now being used. As his poll
numbers deteriorate rapidly with all but the political class, it doesnÕt seem
that reassuring when Congress has only continued or enhanced its numskull
performances dating from the Bush Administration. Then there is the debt
situation; it is impossible to even keep track of the various trillions here,
there, and everywhere.
Chorus:
It's The
Same Old Story
Everywhere
I Go,
I Get
Slandered,
Libeled,
I Hear
Words I Never Heard
In The
Bible
The truth however, it is
getting to the point where I want to use the words I never heard in the Bible to
describe forcefully what I see happening.
And I'm
One Step Ahead Of The Shoe Shine
Two
Steps Away From The County Line
Just
Trying To Keep My Customers Satisfied,
Satisfied.
It sure doesnÕt seem there
is much opportunity to even make it shining shoes today. And the other
customers are drawing back, putting off things they would not have even
considered seriously only a few months ago. But what should you do? The rules
are changing every hour and no one seems to think that this type of chaotic
change is an issue. The title of
the Album and the soundtrack pretty much sums up March 23, 2009. We are all
standing on a ÒBridge Over Troubled Water.Ó
Deputy
Sheriff Said To Me
Tell Me
What You Come Here For, Boy.
You
Better Get Your Bags And Flee.
You're
In Trouble Boy,
And
You're Heading Into More.
IÕm So Tired, O, So
Tired, Trying to Keep My Customers Satisfied.
If this isnÕt the best song
for today, I donÕt know what other might qualify?
Monday we began ÒThe
Prosperity MythÓ with the statement, ÒThe only thing we have to fear is reality
itself.Ó After I finished the number crunching in bed Sunday evening I began
ruminating on the findings. Two things came to mind.
The first was has no one
ever really looked at the data for about the last 40 years, showing the direct
relationship between the monetary base and our perceived prosperity reflected
in the Dow Average? I would have never picked it up, except by the divine
coincidence of working one week with historic Dow numbers as a logarithmic
growth curve, and a few days later seeing essentially the same graph used for
the monetary base. However any real knowledge I have in financial situations
was learned through natural, street or wildness sense. Hence I have a tendency
to look for unity in diversity where none seem outwardly to exist. That is the
use of statistics in natural conditions to show relationships that are many
times beyond human cognitive abilities.
How many Nobel Prize winners
in economics has the United States produced since 1970, and how many other wise
economic advisers have not seen, when you raise the monetary base, the stock
market Dow Average responds in a direct fashion? Perhaps the greatest kerfuffle
however, is that exponential growth of any type can continue indefinitely in a linear
world.
The second alternative is
that this was some sort of hidden knowledge in the economics community and they
decided to hide it from the folks, who just dumbly were hopefully investing in
their present, future, and retirement. Again maybe they believed that
exponential prosperity growth would continue indefinitely, but that again
denies the reality and shows absolutely no common sense. That has underlying
connotations of evil that leads to a greater understanding of something called
direct deceit, or some very sinister legal judgment.
No matter the source you
really cannot blame the current status of the American and world economies on
the Obama Administration. However if their solution is more government deficit
spending and trying to forge some big government – big business –
big labor coalitions, this will make their future extremely difficult. Direct
understatement intended. The futility of this endeavor is pointed out, as we
closed last weekÕs ÒWar on SmallÓ utilizing the Biblical reference of
Revelation 18:4-13.
Virtually all of American
evangelical Christianity has taught for a century the Christians will be
subject to The Rapture before these Revelation Mystery Babylon events take
place. But just a couple weeks ago a prophesy
by David Wilkerson of ÒCross and the SwitchbladeÓ fame issued a very
similar pronouncement regarding the soon demise of New York City. This seems to
reflect that if God does indeed speak through Brother David, and this prophesy
comes into reality, Rapture teachers might have to look seriously at The
Rapture as a pending present hope. Specifically in Biblical exegesis The
Rapture, or even ChristÕs Second Coming, are indicative statements of a future
reality.
The Revelation scripture
however, uses the imperative or command language to state, ÒCome out of her,
my people, lest you share in her sins, and lest you receive of her plagues. People are responsible for
obeying, or facing the consequences. Of course no one should take that
literally, the Bible is just a book of myths and God is here to see that I
obtain from the world Òpersonal peace and affluence.Ó These words come from
American theologian Francis Schaeffer, founder of the LÕAbri community and
author of many books, the most relevant is, ÒThe Coming Evangelical Disaster.Ó
ItÕs here folks and if you are looking for fingers to point to this current
mess, AmericaÕs evangelical Protestant church would be a good place to start.
As custodian of the
doctrines of the Reformation, this church has replaced the historic gospel of
GodÕs amazing grace offered alone in Jesus Christ, his death and resurrection
for sinful humans. What have they replaced the gospel with you may ask? If they
sold out for just stuff that might be a valid reason, but would be extremely
simplistic. What they really sold out for was the opportunity to move to the
good side of town and then out to the suburbs. Once there they built a big
building, started on radio, then television ministries, and then moved into the
political mainstream to teach simple moralism rather than proclaiming the
greatest story of all time.
The selfish Prosperity Myth
has destroyed AmericaÕs infrastructure. Some of that relates to bridges,
highways, energy supplies and distribution, but if we again only look there we
miss the greater devastation. What really was destroyed was AmericaÕs unique
work ethic and entrepreneurial spirit.
In the age of linear growth
and linear money, who you were was directly related to what you could expect
from life. The prime human values were reverence and integrity. You could
actually take those to the bank with a good idea and start a successful
business. If you needed more capital than the bank could prudently supply, they
would help you find someone with solid money who might help you succeed.
Everyone pretty much understood you could not finance a startup company of any
size with purely debt capital.
Once we started creating
money for the sake of debt and the Prosperity Myth, who you were was replaced
with what is your credit score. What directly related to your credit score, was
that you had a decent job, bought lots of stuff on time, and slowly and
steadily made payments. First you could by cars with nothing down, then came
houses, then you could defer payments for years, and finally you could buy an
inflated debt value house with no real job or money at all. It was all about
keeping the debt money circulating at ever faster and over broader markets. Soon
there was not enough debt capacity in the United States, so we turned a bunch
of debts into bogus securities and sold them to a gluttonous world market. This
is not free market capitalism, this is a Ponzi Scheme, which probably served as
the model for Bernie MadoffÕs investment opportunities.
In October 2007 came the
first crack in the exponential debt dam. We are told that no one saw or could
have seen it coming. As we have seen here at Wonder Springs this week, that is
a lie. The timing may have been questionable, but the crack was inevitable and so are the subsequent
results.
The real crime however is
the continued dung (a Bible word) that all this can be fixed by more and more
debt. The inevitable consequence of this debt will be greatly increased inflation,
only the magnitude is in question, related to how much of the spending can be
curtailed. It is going to get really nasty. That is the nature of reality,
sometimes things can get difficult and only the strong survive. That natural
law is called natural selection. Too big to fail is not natural law, it is
human stupidity and/or arrogance.
The so called conservative
statement that this debt is burdening our children doesnÕt even begin to face
the reality that the debt dam as burst, the true liquidity or wealth to refill
the reservoir is gone, even if we could rebuild the dam. That debt will be
repudiated after a lot of needless carnage. If you can handle it look at real
history, the examples are numerous, but Nazi Germany is most easily understood.
Talk is surfacing about
replacing the dollar as the worldÕs reserve currency. Considering Fed Chairman
BernankeÕs unchaperoned de facto dollar devaluation last week, that probability
looks much more certain. Led by the Chinese this new global money will allow
them to exchange their US debt into this new currency and AmericaÕs financial
horseplay and real prosperity are over for a very long time.
The strength of the United
States truly lies with her hardworking people and the blessed richness of the
land. None of that counts for anything in the current financial games being
played out in New York and Washington. The concept of being too big to fail
will take on new meaning when the country goes under. This will allow for the dinosaurs and behemoths to be replaced
with new opportunities for true diversity, equality, liberty, and
opportunities.
Just think of the wonderful
opportunities this will create. The time to begin working on those
opportunities is now. In the future high inflation world, todayÕs expensive
hard assets will be repaid with cheaper dollars. There are great deals in
asset-based reality. The bottom of the real estate bubble may be months to a
few years away, but with high inflation, they could turn out to be real
bargains.
Now is also time to
diversify your personal skills. Skills, especially manual skills, will allow
you to find work when and where it is available. But most important will be the
need for those who can create real wealth. Real linear wealth is created out of
real assets utilized by hard working people to do new things, and recreate old
things in new ways. That funding will have to come especially from equity
participation by those who have real capital wealth.
That capital is now fleeing
Wall Street and the too big to fail institutions. Once those capital rich
people understand the reality of the Prosperity Myth, (being a real myth) they
will begin to look for places to get returns that are completely impossible in
Wall Street investing. Of course those returns come with risk, but that risk
will be somewhat in the open, not hedged behind closed doors, being sent into
unknown places, with unknown debt leverage.
In this election a lot of
words were utilized discussing the disparity between the rich and the poor.
Contrary to the money redistributionists, the President being the prime
spokesman, with yappy dog followers in Congress, much of the wealth of which
they speak, is really not linear wealth, but part of the Prosperity Myth.
However, it only takes a little linear wealth to create more linear wealth and
sound money. That kind of prosperity does not evaporate, because it is invested
directly in real things, and it will continue until the end of time, for that
wealth comes from the principles of the inalienable rights given to mankind by
his Creator and the Natural Laws that the Creator established for our present
reality.
Take a deep breath, say a
little prayer, and understand except by the grace of God go I. After a short
pilgrimage the concept of Amazing Grace will take on a new and eternal meaning
and you will question why you ever believed in a human centered Prosperity
Myth.
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