Feeds:
Posts
Comments

Archive for the ‘Mammon’ Category

What these “Hirelings” mean when they say God wants to “bless” the faithful with earthly riches is that they are the ones to be “blessed” with money of those foolish enough to hand it over to them!

from MSN:

The ministry of a prominent Georgia megachurch pastor and evangelist who teaches that God wants to bless the faithful with earthly riches is seeking donations to buy a luxury jet valued at more than $65 million.

The website of Creflo Dollar Ministries asked people Friday to “Sow your love gift of any amount” to help the ministry buy a Gulfstream G650 airplane. Dollar and his wife, Taffi, are co-pastors of World Changers International Church in College Park, just south of Atlanta.

Dollar is one of the most prominent African-American preachers based around Atlanta who have built successful ministries on the prosperity gospel. Ministers in this tradition often hold up their own wealth as evidence that the teaching works.

The ministry’s current plane, acquired in 1999, was built in 1984, has traveled more than 4 million miles and is no longer safe, spokesman Juda Engelmayer said. On a recent trip overseas, one of the engines failed, but the pilot was able to land safely and no one was injured, the ministry’s website says.

“(W)e are asking members, partners, and supporters of this ministry to assist us in acquiring a Gulfstream G650 airplane so that Pastors Creflo and Taffi and World Changers Church International can continue to blanket the globe with the Gospel of grace,” the ministry’s website says.

Gulfstream’s website lists an asking price of $67,950,000 for a G650 with a flight record of 1,616 hours and 625 landings since it entered service in mid-December.

Members of the ministry travel for much of the year bringing their message, food and supplies to people around the world, Engelmayer said. They need a plane that’s fuel efficient, faster, with enough cargo capacity and enough seats, he said.

The G650 “flies at more than 92 percent of the speed of sound,” typically holds about 18 seated passengers and can take off with a maximum weight of 99,600, according to Gulfstream’s website.

Numerous online reports quoted the ministry website as saying: “We are believing for 200,000 people to give contributions of 300 US dollars or more to turn this dream into a reality.”

On Friday afternoon, that line was gone, and the website instead said: “Your love gift of any amount will be greatly appreciated.”

When asked about the change, Engelmayer replied in an email: “The ministry operates on the goodness of its followers and has always been a donor based organization. Every gift given is heartfelt and appreciated, and people who wish will give at the level comfortable to their situation and ability.”

Soon after that, the website’s entire page about the plane appeared disabled.

Dollar, who has five children, is a native of College Park and says he received a vision for the church in 1986. He held the first service in front of eight people in an elementary school cafeteria. His ministry grew quickly and the church moved into its current 8,500-seat sanctuary, on Dec. 24, 1995.

Dollar said in a 2007 interview with The Associated Press that he renounced his church salary, and his income comes only from personal investments, including a real estate business and horse breeding company called Dollar Ranch. He’s also published more than 30 books, focusing mostly on family and life issues, including debt management.

He said he can get up to $100,000 for a single appearance on his packed schedule of speaking engagements.

Read Full Post »

“I believe we are nearing the time of persecution in our nation. When the only public voices for Christianity are apostate religious church leaders and organizations, I believe that the net of persecution will then fall on the American Church very swiftly. The true Church is being scattered—slowly and systematically. Right now I do not know of one medium or even small Church of true believers that is standing against the current apostasy. I also do not know of any highly visible professing Christian that is doing so.”

from TruthKeepers:

A Prophetic Warning to the Church (March 4, 2003 1:56 pm)

In my opinion every true follower of Jesus Christ needs to be completely aware of the time that we are living in. If we are not in the last-days, then it is a trial run that is so close that the dangers are nearly identical. Therefore, we need to take heed of the many warnings in God’s Word concerning the great time of deception.

First, we need to recognize how powerful that the deception will be. It will be so powerful that the only means of surviving it will be the indwelling of the Holy Spirit.
(Mat 24:24 NKJV) “For false christs and false prophets will rise and show great signs and wonders to deceive, if possible, even the elect.

Satan will pull out all the stops, hold back nothing, pour out everything in his bag of dirty tricks, and the spiritual atmosphere will be too strong for people who have not spiritually prepared themselves to resist it.
(2 Th 2:9-12 NKJV) The coming of the lawless one is according to the working of Satan, with all power, signs, and lying wonders, {10} and with all unrighteous deception among those who perish, because they did not receive the love of the truth, that they might be saved. {11} And for this reason God will send them strong delusion, that they should believe the lie, {12} that they all may be condemned who did not believe the truth but had pleasure in unrighteousness.

The spiritual atmosphere will be diametrically opposed to the atmosphere of a great revival. During times of great revival even lost people feel the effects of the renewal of passion for God. During great revivals, sin is driven back into the darkness. Evil workers are exposed for the charlatans that they are. False doctrine is denounced. Prayer meetings and church services take precedence over secular activities. Even the laws of the nation are reflective of the revival.

Today, there are deep doldrums in Christianity. Liars and other phonies are honored while at the same time people who speak the truth are dishonored and persecuted. Homosexuals are ordained as Christian ministers and professing Christians are accepting their ministry. There is little passion for God or His Word manifested publicly. Sodomites not only are pouring out of the darkness to stand proudly in public view, but they have infected our government, public education, and almost every other area of society. False doctrines pour from pulpits, out of religious television, lining the bookshelves of religious bookstores, and inundate the entire religious realm. Practically no one will attend a prayer meeting. Even a school event can replace a church meeting. Our nation’s laws are becoming increasingly reflective of the satanic activity in our government.

I personally know pastors who have given up trying to pastor in this atmosphere. I know other pastors who appear to be just barely hanging on. Many professing Christians are simply flowing with the degradation of the great apostasy; marching to the cadence of Satan. Other Christians are feeling the overwhelming effects of it all. They cannot find an honest assembly of true followers of Christ. Every day they fight feelings of discouragement and depression. The joy of the Lord is very difficult to express and they battle daily with feelings of hopelessness, emptiness, and isolation.

This is the time that we have been warned about. We should understand that every godly act and characteristic is going to be more difficult to perform and maintain. Prayer is a battle. Temptation to loosen ones grip on eternal life is constant and pressing. Urges to relax and roll with the flow, follow the herd, do what everyone else is doing, never ceases the attempt to infiltrate our spirits. Evil workers of unrighteousness appear as workers of righteousness. In fact, it is difficult in some cases to tell the difference on the surface. They appear as ministers and people of righteousness. One should remember to listen to the Holy Spirit warning signals in their spirit. Consider their fruit. What have they ever done for Christ? Ignore how they make you feel or their flattering words and comforting ways. Reject the sensationalism of lying signs and wonders. Remember that few people are driven to hell. Most of them are led there by deceptive spirits.
(2 Cor 11:12-15 NKJV) But what I do, I will also continue to do, that I may cut off the opportunity from those who desire an opportunity to be regarded just as we are in the things of which they boast. {13} For such are false apostles, deceitful workers, transforming themselves into apostles of Christ. {14} And no wonder! For Satan himself transforms himself into an angel of light. {15} Therefore it is no great thing if his ministers also transform themselves into ministers of righteousness, whose end will be according to their works.

God’s Word declares that the one act that will doom people to deception and delusion is rejecting love for the truth. The very thing that could save those who are deceived is the thing that they reject. The Holy Spirit is the Spirit of truth. If He is in us, we will not be deceived. We can walk through barrenness and never thirst or hunger. We will be filled with righteousness. We can master the deceptive time and rise above the clouds of evil lying signs and wonders.

When people reject love for the truth, the Holy Spirit will depart. They will be left to their own devices to defend themselves against the great deception of the last-days. God will not permit them to be shocked into returning to the truth. If they will not receive His love, His Word, His Son, and His Spirit, they do not deserve heaven. Neither do they deserve to be driven into heaven by specter of fearful calamities. Instead, they will be sent a strong delusion so that they will believe the lie and be damned.

In times past, when catastrophic events occurred, people flocked to church services in fear for their souls. Oklahoma City churches reported huge increases in attendance after the Murrah building was bombed. In a few months, the attendance was back to normal. Evidently, those people went back to their old ways of living under the cloud of deception. The very striking fact about the aftermath of 9-11-01 was that many people did not look to Christian leaders for comfort and answers. Instead, they flocked to events where an evil ecumenical mixture of wizards, witches, and other evil workers of darkness joined with professing Christians to pray for the nation. We saw no increase in attendance in our Fellowship.

This may indicate that the great delusion has been delivered to the earth and the package may be opened. If so, people who stand in the shadows, who are trying to live on the fringes of true Christianity, who play on both sides of the fence, who fail to develop passion and intimacy with God, are in deep, serious, trouble. We were warned by God’s Word and His prophets that this time would come. In my opinion, it is here. I encourage everyone not to settle for a casual relationship with God. Don’t settle for a passionless, nonchalant, church meeting where you are not inspired or challenged to stay fresh in your relationship with God. Don’t let your guard down. The hour is late and the time is short. Stand your ground and keep your armor on.

It is going to get very difficult in the last of the last-days, but the most dangerous time is during this initial wave of deception. The reason is because we have gotten used to the blessings of Christianity in a democratic nation. We can get in our vehicles on Sunday morning and there are many church buildings within a short drive from our homes. Someone else preaches to us, teaches us, and does almost every other thing for us. All we have to do is show up. What kind of Christians has this type of “Churchanity” produced? I do not mean to be offensive here, but for the sake of clarity I must be blunt with my answer. In most cases it has produced people that cannot take care of themselves spiritually. Instead, they depend on the three-per-week (or less) church services to keep them spiritual and inspired, and most of them only attend occasionally. They are weak, pampered, religious at the best, and at the worst they are lost, malformed and mutated by years of lack of growth and a viable experience with God. As such, they are no threat to the kingdom of darkness and no benefit to the kingdom of light.

Now, we are going to have to adapt steadfastness of faith to the harshness of the time that we are in. Christians should have been building themselves spiritually during the times of peace. If we had been actually assimilating and applying the Word of God that we have been inundated with, then we would have more than been prepared for this evil time.

We’ve been taught to be weak, to live weak, to need church meetings to a degree that God never intended. Certainly we find strength in fellowship and it is a tremendous blessing to hear the Word of God taught or preached by someone who is anointed. But if we have not developed the practice of feeding ourselves, what are we going to do in the tough times? Paralyzed people and babies have to be fed, but healthy and mature people feed themselves.

Men need to become and remain strong in the Lord and begin taking responsibility for their spiritual duties. The time is coming when men will have to teach their own families. We need to get tough, knowledgeable, and spiritually strong. All of us need to become prayer intercessors. I believe that it is time to consider what is eating up our time and make some serious choices about our activities. If it comes to the point that we cannot find a church building to meet in where God is present and people are sincere, then the only option is to meet in our homes. However, there were times when the Church was even denied that privilege. They had to meet in catacombs and other places that do not even remotely resemble a church building.

I believe we are nearing the time of persecution in our nation. When the only public voices for Christianity are apostate religious church leaders and organizations, I believe that the net of persecution will then fall on the American Church very swiftly. The true Church is being scattered—slowly and systematically. Right now I do not know of one medium or even small Church of true believers that is standing against the current apostasy. I also do not know of any highly visible professing Christian that is doing so.

I could say a lot more, but let me conclude with one more point. The key to understanding that this current apostasy is not going to be resisted by most professing Christians is in the way most of them perceive Christianity. The only way that so many hirelings could be in pastorates is if most of the people want it to be this way. I heard one of the deadest sermons I have ever heard one Sunday morning while visiting a church meeting. A toxic religious mixture oozed from the pulpit and entered the hearts of people who loved to be poisoned so. The sad thing about that church is that it is growing steadily in number. I thought the man might be sick, but I was informed that he was in good health. In other words, he preached that way on purpose. This is the standard for most church meetings today. It does not resemble biblical Christianity. What it is I cannot tell. What it is not is a meeting of true Christians who are aware of the time and striving for intimacy with God. May God help us to understand what is happening!
The prophets prophesy falsely, And the priests rule by their own power; And My people love to have it so. But what will you do in the end? (Jer 5:31 NKJV)

Read Full Post »

 “Beware of false prophets, who come to you in sheep’s clothing, but inwardly they are ravenous wolves. You will know them by their fruits.” – Matthew 7:15-16

false teachers

Read Full Post »

From NBC News

Paul Crouch, who built what has been called the world’s largest Christian broadcasting network, has died. He was 79.

Trinity Broadcasting Network reported Saturday that Crouch died after a decade-long fight with degenerative heart disease.

A message was left for Crouch’s grandson Brandon, who wrote about Crouch’s death on his Twitter page.

Crouch and his wife Jan founded the network in 1973 and grew it into an international Christian empire that beams prosperity gospel programming to every continent but Antarctica around the clock. The programming promises that if the faithful sacrifice for their belief, God will reward them with material wealth.

Based in Costa Mesa, the network says it has 84 satellite channels and more than 18,000 television and cable affiliates as well as a Christian amusement park in Orlando.

Read Full Post »

It is called “privatizing the profits and socializing the losses”

from Worldview Weekend:

Have you ever wondered how the big banks make such enormous mountains of money?  Well, the truth is that much of it is made by gambling recklessly.  If they win on their bets, they become fabulously wealthy.  If they lose on their bets, they know that the government will come in and arrange for the banks to be bailed out because they are “too big to fail”.  Either they will be bailed out by the government using our tax dollars, or as we just witnessed in Cyprus, they will be allowed to “recapitalize” themselves by stealing money directly from our bank accounts.  So if they win, they win big.  If they lose, someone else will come in and clean up the mess.  This creates a tremendous incentive for the bankers to “go for it”, because there is simply not enough pain in this equation for those that are taking the risks.  If the big Wall Street banks had been allowed to collapse back in 2008, that would have caused a massive change of behavior on Wall Street.  But instead, the big banks are still recklessly gambling with our money as if the last financial crisis never even happened.  In the end, the reckless behavior of these big banks is going to cause the entire global financial system to collapse.

Have you noticed how most news reports about Cyprus don’t even get into the reasons why the big banks in Cyprus collapsed?

Well, the truth is that they collapsed because they were making incredibly reckless bets with the money that had been entrusted to them.  In a recent article, Ron Paul explained how the situation played out once the bets started to go bad…

The dramatic recent events in Cyprus have highlighted the fundamental weakness in the European banking system and the extreme fragility of fractional reserve banking. Cypriot banks invested heavily in Greek sovereign debt, and last summer’s Greek debt restructuring resulted in losses equivalent to more than 25 percent of Cyprus’ GDP. These banks then took their bad investments to the government, demanding a bailout from an already beleaguered Cypriot treasury. The government of Cyprus then turned to the European Union (EU) for a bailout.

If those bets had turned out to be profitable, the bankers would have kept all of the profits.  But those bets turned out to be big losers, and private bank accounts in Cyprus are now being raided to pay the bill.  Unfortunately, as Ron Paul noted, what just happened in Cyprus is already being touted as a “template” for future bank bailouts all over the globe…

The elites in the EU and IMF failed to learn their lesson from the popular backlash to these tax proposals, and have openly talked about using Cyprus as a template for future bank bailouts. This raises the prospect of raids on bank accounts, pension funds, and any investments the government can get its hands on. In other words, no one’s money is safe in any financial institution in Europe. Bank runs are now a certainty in future crises, as the people realize that they do not really own the money in their accounts. How long before bureaucrat and banker try that here?

Unfortunately, all of this is the predictable result of a fiat paper money system combined with fractional reserve banking. When governments and banks collude to monopolize the monetary system so that they can create money out of thin air, the result is a business cycle that wreaks havoc on the economy. Pyramiding more and more loans on top of a tiny base of money will create an economic house of cards just waiting to collapse. The situation in Cyprus should be both a lesson and a warning to the United States.

This is an example of what can happen when the dominoes start to fall.  The banks of Cyprus failed because Greek debt went bad.  And the Greeks were using derivatives to try to hide the true scope of their debt problems.  The following is what Jim Sinclair recently told King World News…

When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.

Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives.

As I have written about so many times, the global quadrillion dollar derivatives bubble is one of the greatest threats that the global financial system is facing.  As Sinclair explained to King World News, when this derivatives bubble bursts and the losses start soaring, the big banks are going to want to raid private bank accounts just like the banks in Cyprus were able to…

What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole. What Cyprus will reveal is that losses do not stop with the bank’s capital. Losses roar right through bank capital and take depositors’ money.

This could have all been avoided if we had allowed the big Wall Street banks to collapse back in 2008.  Reckless behavior would have been greatly punished and banks would have chosen to do business differently in the future.

David Stockman, the former director of the Office of Management and Budget under President Ronald Reagan, says that because we bailed out the big banks it was a signal to them that they could go back and freely engage in the same kind of reckless behavior that they were involved in previously…

Essentially there was a cleansing run on the wholesale funding market in the canyons of Wall Street going on. It would have worked its will, just like JP Morgan allowed it to happen in 1907 when we did not have the Fed getting in the way. Because they stopped it in its tracks after the AIG bailout and then all the alphabet soup of different lines that the Fed threw out, and then the enactment of TARP, the last two investment banks standing were rescued, Goldman and Morgan [Stanley], and they should not have been. As a result of being rescued and having the cleansing liquidation of rotten balance sheets stopped, within a few weeks and certainly months they were back to the same old games, such that Goldman Sachs got $10 billion dollars for the fiscal year that started three months later after that check went out, which was October 2008. For the fiscal 2009 year, Goldman Sachs generated what I call a $29 billion surplus – $13 billion of net income after tax, and on top of that $16 billion of salaries and bonuses, 95% of it which was bonuses.

Therefore, the idea that they were on death’s door does not stack up. Even if they had been, it would not make any difference to the health of the financial system. These firms are supposed to come and go, and if people make really bad bets, if they have a trillion dollar balance sheet with six, seven, eight hundred billion dollars worth of hot-money short-term funding, then they ought to take their just reward, because it would create lessons, it would create discipline. So all the new firms that would have been formed out of the remnants of Goldman Sachs where everybody lost their stock values – which for most of these partners is tens of millions, hundreds of millions – when they formed a new firm, I doubt whether they would have gone back to the old game. What happened was the Fed stopped everything in its tracks, kept Goldman Sachs intact, the reckless Goldman Sachs and the reckless Morgan Stanley, everyone quickly recovered their stock value and the game continues. This is one of the evils that comes from this kind of deep intervention in the capital and money markets.

The lessons that we were supposed to learn from the crisis of 2008 have not been learned.

Instead, the lure of huge returns and big bonuses has caused a return to the exact same behavior that caused the crisis of 2008 in the first place.  The following is one example of this phenomenon from a recent article by Wolf Richter…

The craziness on Wall Street, the reckless for-the-moment-only behavior that led to the Financial Crisis, is back.

This time it’s Citigroup that is once again concocting “synthetic” securities, like those that had wreaked havoc five years ago. And once again, it’s using them to shuffle off risks through the filters of Wall Street to people who might never know.

What bubbled to the surface is that Citigroup is selling synthetic securities that yield 13% to 15% annually—synthetic because they’re based on credit derivatives. Apparently, Citi has a bunch of shipping loans on its books, and it’s trying to protect itself against default. In return for succulent interest payments, investors will take on some of the risks of these loans.

Yes, the Dow hit another new all-time high today.  But the derivatives bubble that hangs over the global economy like a sword of Damocles could burst at literally any moment.  When it does, the damage is going to be incalculable.

In a previous article entitled “Why Is The World Economy Doomed? The Global Financial Pyramid Scheme By The Numbers”, I noted a couple of statistics that show why derivatives are such an enormous problem…

-$212,525,587,000,000 – According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States.  But those banks only have total assets of about 8.9 trillion dollars combined.  In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.

-$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total notional value of all global derivatives generally fall within this range.  At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.

When the derivatives bubble finally bursts, where are we going to get the trillions upon trillions of dollars that will be needed to “fix” things this time?

And sadly, the reality is that we are quickly running out of time.

It is important to keep watching Europe.  As I noted the other day, the European banking system as a whole is leveraged about 26 to 1 at this point.  When Lehman Brothers finally collapsed, it was leveraged about 30 to 1.

And the economic crisis over in Europe just continues to get worse.  It was announced on Tuesday that the unemployment rate in the eurozone is at an all-time record high of 12 percent, and the latest manufacturing numbers show that manufacturing activity over in Europe is in the process of collapsing.

So don’t be fooled by the fact that the Dow keeps setting new all-time record highs.  This bubble of false hope will be very short-lived.

The unfortunate truth is that the global financial system is a complete and total mess, and at this point a collapse appears to be inevitable.

Read Full Post »

“The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse.”

from The New York Times:

The Dow Jones and Standard & Poor’s 500 indexes reached record highs on Thursday, having completely erased the losses since the stock market’s last peak, in 2007. But instead of cheering, we should be very afraid.

Over the last 13 years, the stock market has twice crashed and touched off a recession: American households lost $5 trillion in the 2000 dot-com bust and more than $7 trillion in the 2007 housing crash. Sooner or later — within a few years, I predict — this latest Wall Street bubble, inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains, will explode, too.

Since the S.&P. 500 first reached its current level, in March 2000, the mad money printers at the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion). Yet during that stretch, economic output has grown by an average of 1.7 percent a year (the slowest since the Civil War); real business investment has crawled forward at only 0.8 percent per year; and the payroll job count has crept up at a negligible 0.1 percent annually. Real median family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent. The real net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.

So the Main Street economy is failing while Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills. By default, the Fed has resorted to a radical, uncharted spree of money printing. But the flood of liquidity, instead of spurring banks to lend and corporations to spend, has stayed trapped in the canyons of Wall Street, where it is inflating yet another unsustainable bubble.

When it bursts, there will be no new round of bailouts like the ones the banks got in 2008. Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.

THIS dyspeptic prospect results from the fact that we are now state-wrecked. With only brief interruptions, we’ve had eight decades of increasingly frenetic fiscal and monetary policy activism intended to counter the cyclical bumps and grinds of the free market and its purported tendency to underproduce jobs and economic output. The toll has been heavy.

As the federal government and its central-bank sidekick, the Fed, have groped for one goal after another — smoothing out the business cycle, minimizing inflation and unemployment at the same time, rolling out a giant social insurance blanket, promoting homeownership, subsidizing medical care, propping up old industries (agriculture, automobiles) and fostering new ones (“clean” energy, biotechnology) and, above all, bailing out Wall Street — they have now succumbed to overload, overreach and outside capture by powerful interests. The modern Keynesian state is broke, paralyzed and mired in empty ritual incantations about stimulating “demand,” even as it fosters a mutant crony capitalism that periodically lavishes the top 1 percent with speculative windfalls.

The culprits are bipartisan, though you’d never guess that from the blather that passes for political discourse these days. The state-wreck originated in 1933, when Franklin D. Roosevelt opted for fiat money (currency not fundamentally backed by gold), economic nationalism and capitalist cartels in agriculture and industry.

Under the exigencies of World War II (which did far more to end the Depression than the New Deal did), the state got hugely bloated, but remarkably, the bloat was put into brief remission during a midcentury golden era of sound money and fiscal rectitude with Dwight D. Eisenhower in the White House and William McChesney Martin Jr. at the Fed.

Then came Lyndon B. Johnson’s “guns and butter” excesses, which were intensified over one perfidious weekend at Camp David, Md., in 1971, when Richard M. Nixon essentially defaulted on the nation’s debt obligations by finally ending the convertibility of gold to the dollar. That one act — arguably a sin graver than Watergate — meant the end of national financial discipline and the start of a four-decade spree during which we have lived high on the hog, running a cumulative $8 trillion current-account deficit. In effect, America underwent an internal leveraged buyout, raising our ratio of total debt (public and private) to economic output to about 3.6 from its historic level of about 1.6. Hence the $30 trillion in excess debt (more than half the total debt, $56 trillion) that hangs over the American economy today.

This explosion of borrowing was the stepchild of the floating-money contraption deposited in the Nixon White House by Milton Friedman, the supposed hero of free-market economics who in fact sowed the seed for a never-ending expansion of the money supply. The Fed, which celebrates its centenary this year, fueled a roaring inflation in goods and commodities during the 1970s that was brought under control only by the iron resolve of Paul A. Volcker, its chairman from 1979 to 1987.

Under his successor, the lapsed hero Alan Greenspan, the Fed dropped Friedman’s penurious rules for monetary expansion, keeping interest rates too low for too long and flooding Wall Street with freshly minted cash. What became known as the “Greenspan put” — the implicit assumption that the Fed would step in if asset prices dropped, as they did after the 1987 stock-market crash — was reinforced by the Fed’s unforgivable 1998 bailout of the hedge fund Long-Term Capital Management.

That Mr. Greenspan’s loose monetary policies didn’t set off inflation was only because domestic prices for goods and labor were crushed by the huge flow of imports from the factories of Asia. By offshoring America’s tradable-goods sector, the Fed kept the Consumer Price Index contained, but also permitted the excess liquidity to foster a roaring inflation in financial assets. Mr. Greenspan’s pandering incited the greatest equity boom in history, with the stock market rising fivefold between the 1987 crash and the 2000 dot-com bust.

Soon Americans stopped saving and consumed everything they earned and all they could borrow. The Asians, burned by their own 1997 financial crisis, were happy to oblige us. They — China and Japan above all — accumulated huge dollar reserves, transforming their central banks into a string of monetary roach motels where sovereign debt goes in but never comes out. We’ve been living on borrowed time — and spending Asians’ borrowed dimes.

This dynamic reinforced the Reaganite shibboleth that “deficits don’t matter” and the fact that nearly $5 trillion of the nation’s $12 trillion in “publicly held” debt is actually sequestered in the vaults of central banks. The destruction of fiscal rectitude under Ronald Reagan — one reason I resigned as his budget chief in 1985 — was the greatest of his many dramatic acts. It created a template for the Republicans’ utter abandonment of the balanced-budget policies of Calvin Coolidge and allowed George W. Bush to dive into the deep end, bankrupting the nation through two misbegotten and unfinanced wars, a giant expansion of Medicare and a tax-cutting spree for the wealthy that turned K Street lobbyists into the de facto office of national tax policy. In effect, the G.O.P. embraced Keynesianism — for the wealthy.

The explosion of the housing market, abetted by phony credit ratings, securitization shenanigans and willful malpractice by mortgage lenders, originators and brokers, has been well documented. Less known is the balance-sheet explosion among the top 10 Wall Street banks during the eight years ending in 2008. Though their tiny sliver of equity capital hardly grew, their dependence on unstable “hot money” soared as the regulatory harness the Glass-Steagall Act had wisely imposed during the Depression was totally dismantled.

Within weeks of the Lehman Brothers bankruptcy in September 2008, Washington, with Wall Street’s gun to its head, propped up the remnants of this financial mess in a panic-stricken melee of bailouts and money-printing that is the single most shameful chapter in American financial history.

There was never a remote threat of a Great Depression 2.0 or of a financial nuclear winter, contrary to the dire warnings of Ben S. Bernanke, the Fed chairman since 2006. The Great Fear — manifested by the stock market plunge when the House voted down the TARP bailout before caving and passing it — was purely another Wall Street concoction. Had President Bush and his Goldman Sachs adviser (a k a Treasury Secretary) Henry M. Paulson Jr. stood firm, the crisis would have burned out on its own and meted out to speculators the losses they so richly deserved. The Main Street banking system was never in serious jeopardy, ATMs were not going dark and the money market industry was not imploding.

Instead, the White House, Congress and the Fed, under Mr. Bush and then President Obama, made a series of desperate, reckless maneuvers that were not only unnecessary but ruinous. The auto bailouts, for example, simply shifted jobs around — particularly to the aging, electorally vital Rust Belt — rather than saving them. The “green energy” component of Mr. Obama’s stimulus was mainly a nearly $1 billion giveaway to crony capitalists, like the venture capitalist John Doerr and the self-proclaimed outer-space visionary Elon Musk, to make new toys for the affluent.

Less than 5 percent of the $800 billion Obama stimulus went to the truly needy for food stamps, earned-income tax credits and other forms of poverty relief. The preponderant share ended up in money dumps to state and local governments, pork-barrel infrastructure projects, business tax loopholes and indiscriminate middle-class tax cuts. The Democratic Keynesians, as intellectually bankrupt as their Republican counterparts (though less hypocritical), had no solution beyond handing out borrowed money to consumers, hoping they would buy a lawn mower, a flat-screen TV or, at least, dinner at Red Lobster.

But even Mr. Obama’s hopelessly glib policies could not match the audacity of the Fed, which dropped interest rates to zero and then digitally printed new money at the astounding rate of $600 million per hour. Fast-money speculators have been “purchasing” giant piles of Treasury debt and mortgage-backed securities, almost entirely by using short-term overnight money borrowed at essentially zero cost, thanks to the Fed. Uncle Ben has lined their pockets.

If and when the Fed — which now promises to get unemployment below 6.5 percent as long as inflation doesn’t exceed 2.5 percent — even hints at shrinking its balance sheet, it will elicit a tidal wave of sell orders, because even a modest drop in bond prices would destroy the arbitrageurs’ profits. Notwithstanding Mr. Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making.

While the Fed fiddles, Congress burns. Self-titled fiscal hawks like Paul D. Ryan, the chairman of the House Budget Committee, are terrified of telling the truth: that the 10-year deficit is actually $15 trillion to $20 trillion, far larger than the Congressional Budget Office’s estimate of $7 trillion. Its latest forecast, which imagines 16.4 million new jobs in the next decade, compared with only 2.5 million in the last 10 years, is only one of the more extreme examples of Washington’s delusions.

Even a supposedly “bold” measure — linking the cost-of-living adjustment for Social Security payments to a different kind of inflation index — would save just $200 billion over a decade, amounting to hardly 1 percent of the problem. Mr. Ryan’s latest budget shamelessly gives Social Security and Medicare a 10-year pass, notwithstanding that a fair portion of their nearly $19 trillion cost over that decade would go to the affluent elderly. At the same time, his proposal for draconian 30 percent cuts over a decade on the $7 trillion safety net — Medicaid, food stamps and the earned-income tax credit — is another front in the G.O.P.’s war against the 99 percent.

Without any changes, over the next decade or so, the gross federal debt, now nearly $17 trillion, will hurtle toward $30 trillion and soar to 150 percent of gross domestic product from around 105 percent today. Since our constitutional stasis rules out any prospect of a “grand bargain,” the nation’s fiscal collapse will play out incrementally, like a Greek/Cypriot tragedy, in carefully choreographed crises over debt ceilings, continuing resolutions and temporary budgetary patches.

The future is bleak. The greatest construction boom in recorded history — China’s money dump on infrastructure over the last 15 years — is slowing. Brazil, India, Russia, Turkey, South Africa and all the other growing middle-income nations cannot make up for the shortfall in demand. The American machinery of monetary and fiscal stimulus has reached its limits. Japan is sinking into old-age bankruptcy and Europe into welfare-state senescence. The new rulers enthroned in Beijing last year know that after two decades of wild lending, speculation and building, even they will face a day of reckoning, too.

THE state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices — a form of inflation that the Fed fecklessly disregards in calculating inflation.

These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen. It would necessitate a sweeping divorce of the state and the market economy. It would require a renunciation of crony capitalism and its first cousin: Keynesian economics in all its forms. The state would need to get out of the business of imperial hubris, economic uplift and social insurance and shift its focus to managing and financing an effective, affordable, means-tested safety net.

All this would require drastic deflation of the realm of politics and the abolition of incumbency itself, because the machinery of the state and the machinery of re-election have become conterminous. Prying them apart would entail sweeping constitutional surgery: amendments to give the president and members of Congress a single six-year term, with no re-election; providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks); and prohibiting, for life, lobbying by anyone who has been on a legislative or executive payroll. It would also require overturning Citizens United and mandating that Congress pass a balanced budget, or face an automatic sequester of spending.

It would also require purging the corrosive financialization that has turned the economy into a giant casino since the 1970s. This would mean putting the great Wall Street banks out in the cold to compete as at-risk free enterprises, without access to cheap Fed loans or deposit insurance. Banks would be able to take deposits and make commercial loans, but be banned from trading, underwriting and money management in all its forms.

It would require, finally, benching the Fed’s central planners, and restoring the central bank’s original mission: to provide liquidity in times of crisis but never to buy government debt or try to micromanage the economy. Getting the Fed out of the financial markets is the only way to put free markets and genuine wealth creation back into capitalism.

That, of course, will never happen because there are trillions of dollars of assets, from Shanghai skyscrapers to Fortune 1000 stocks to the latest housing market “recovery,” artificially propped up by the Fed’s interest-rate repression. The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is.

David A. Stockman is a former Republican congressman from Michigan, President Ronald Reagan’s budget director from 1981 to 1985 and the author, most recently, of “The Great Deformation: The Corruption of Capitalism in America.”

Read Full Post »

Revelation 3:14-17:

“And unto the angel of the church of the Laodiceans write; These things saith the Amen, the faithful and true witness, the beginning of the creation of God;  I know thy works, that thou art neither cold nor hot: I would thou wert cold or hot.  So then because thou art lukewarm, and neither cold nor hot, I will spue thee out of my mouth.  Because thou sayest, I am rich, and increased with goods, and have need of nothing; and knowest not that thou art wretched, and miserable, and poor, and blind, and naked:”

from Slate:

Pope Francis is not just the spiritual leader of one of the world’s major religions: He’s also the head of what’s probably the wealthiest institution in the entire world. The Catholic Church’s global spending matches the annual revenues of the planet’s largest firms, and its assets—huge amounts of real estate, St. Patrick’s Cathedral, Vatican City, some of the world’s greatest art—surely exceed those of any corporation by an order of magnitude.*

But it turns out to be surprisingly difficult to understand exactly how rich the church is. That’s in part because church finances are complicated. But it’s also because, in the United States at least, churches in general are exempted from the financial reporting and disclosure requirements that otherwise apply to nonprofit groups. And it turns out, that exemption may have undesirable consequences.

The main thing we know about Catholic Church finance is that in cash flow terms, the United States is by far the most important branch. America is a rich country with a large population of Catholics. What’s more, America’s Catholic population is a religious minority. That’s meant that, rather than using political clout to influence the shape of mainstream government institutions, as in an overwhelmingly Catholic country such as Brazil, the Catholic Church in the United States has created a parallel state: a vast web of schools, hospitals, universities, and charities that serve millions of clients.

Our best window into the overall financial picture of American Catholicism comes from a 2012 investigation by the Economist, which offered a rough-and-ready estimate of $170 billion in annual spending, of which almost $150 billion is associated with church-affiliated hospitals and institutions of higher education. The operating budget for ordinary parishes, at around $11 billion a year, is a relatively small share, and Catholic Charities is a smaller share still.

Apple and General Motors, by way of comparison, each had revenue of about $150 billion worldwide in Fiscal Year 2012. Legally speaking, there is no such thing as “the Catholic Church,” which is why these finances get so complicated. As far as the law is concerned, each diocese is a separate legal entity, incorporated in the states where it operates. Generally speaking, they are organized as what’s known as a corporation sole—a legal corporation wholly controlled by the individual bishop rather than a board of directors—and not officially part of any larger transnational spiritual organization. This has led to conflicts during the sex abuse scandals. Lawsuits have caused disputes about how deep the church’s pockets go and who should pay.

On several occasions, abuse-related litigation has inspired dioceses to declare bankruptcy, which offers a rare window into the internal financial organization of the institution. Individual parishes, though operating under the umbrella of the relevant bishop, have a fair degree of financial autonomy. They conduct separate fundraising and maintain separate expenses. That way, parish donors can feel they’re bolstering their particular community and not an impersonal bureaucracy. But it’s common for parish investment funds within a single diocese to be pooled. When a diocese declares bankruptcy, this raises the question of whether pooled parish investment funds are available to be seized by the bishop’s creditors or whether they exist separately.

As a fascinating article in this month’s American Bankruptcy Institute Journal explains, the status of parish investment funds depends on some very subtle details. Both the Diocese of Milwaukee and the Diocese of Wilmington ran pooled investment funds in which a single account simply noted how much each parish had contributed. The difference is that in Wilmington, Del., operating funds were also mingled into the pooled account, whereas in Milwaukee they were kept separate. That small difference ended up costing Wilmington parishes $74 million in exposure to Episcopal creditors. At the same time, as a matter of Canon Law individual parishes can be wholly “suppressed,” merged into other parishes, or otherwise divided up, essentially at the discretion of the bishop—notwithstanding the existence of separate bank accounts. This authority suggests that the diocese does indeed wholly own and control its parishes, but church officials take advantage of the ambiguity, sometimes claiming to fully control its parishes, sometimes—for legal reasons—arguing that the parishes are wholly independent entities.

Given America’s diverse religious landscape, the Catholic Church is hardly unique in taking advantage of the First Amendment to engage in some opaque accounting. It’s simply the largest player in this game. Lawrence Wright’s recent Scientology exposé, Going Clear, reveals egregious exploitation of religious privileges for the personal financial benefit of church leaders. Or consider the case of the Tennessee pastor arrested on money laundering and drug charges only because a local TV news investigation revealed that he was using donations to pay off what amounted to personal debts.

The legal framework that allows for this funny business has been constructed in the name of religious freedom but hardly seems required by that important principle. America has a robust ecology of secular nonprofit groups that manage to abide by fairly stringent accounting and disclosure standards. These help donors know where their money is going and reassure residual claimants that there’s some consistent theory of whose assets are whose. Religion is big business—the Catholic Church the biggest of all—and it deserves to be treated as such in the relevant ways.

Read Full Post »

from Got Questions:

Materialism is defined as “the preoccupation with material things ratherthan intellectual or spiritual things.” If a Christian is preoccupied with material things, it is definitely wrong. That is not to say we cannot have material things, but the obsession with acquiring and caring for “stuff” is a dangerous thing for the Christian, for two reasons.

First, any preoccupation, obsession or fascination with anything other than God is sinful and is displeasing to God. We are to “love the Lord, your God, with all your heart, and with all your soul, and with all your might” (Deuteronomy 6:5), which is, according to Jesus, the first and greatest commandment (Matthew 22:37-38). Therefore, God is the only thing we can (and should) occupy ourselves with habitually. He alone is worthy of our complete attention, love and service. To offer these things to anything, or anyone, else is idolatry.

Second, when we concern ourselves with the material world, we are easily drawn in by the “deceitfulness of wealth” (Mark 4:19), thinking that we will be happy or fulfilled or content if only we had more of whatever it is we are chasing. This is a lie from the father of lies, Satan. He wants us to be chasing after something he knows will never satisfy us so we will be kept from pursuing that which is the only thing that can satisfy—God Himself. Luke 16:13 tells us we “cannot serve both God and money.” We must seek to be content with what we have, and materialism is the exact opposite of that contentment. It causes us to strive for more and more and more, all the while telling us that this will be the answer to all our needs and dreams. The Bible tells us that a person’s “life is not in the abundance of the things which he possesses” (Luke 12:15) and that we are to “seek first the kingdom of God and His righteousness” (Matthew 6:33).

If materialism was ever to satisfy anyone, it would have been Solomon, the richest king the world has ever known. He had absolutely everything and had more of it than anyone, and yet he found it was all worthless and futile. It did not produce happiness or the satisfaction our souls long for. He declared, “Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income” (Ecclesiastes 5:10). In the end, Solomon came to the conclusion that we are to “fear God, and keep His commandments. For this is the whole duty of  man” (Ecclesiastes 12:13).

Read Full Post »

It pretty much tells you what “Mr. Schuller” is about when he thinks “ministry” is about his family being “owed millions”

from The Los Angeles Times:

Dressed in a crisp black suit, the 86-year-old founder of the Crystal Cathedral sat in the downtown Los Angeles Bankruptcy Court on Thursday, hoping to get a final few million from the ministry that once carried his booming sermons to people around the world.

The Rev. Robert H. Schuller was in court on the first day of what is expected to be a 10-day trial to settle the monetary claims that were made during the 2010 bankruptcy of the ministry, which is the home of “Hour of Power,” its trademark television show.

If the claims — estimated to be in the millions of dollars — are paid to the family, it could seriously jeopardize the future of Crystal Cathedral Ministries, Chief Executive John Charles said.

“If they pay everything they are asked, then there will be no money for the cathedral,” he said Thursday.

Schuller was accompanied by his wife, Arvella, daughter Carol Milner and son-in-law Timothy Milner, who also have asked for compensation. They are set to testify Friday.

The four allege that Crystal Cathedral Ministries owes them for copyright infringement, intellectual property violations and unpaid contracts.

The family’s claims have delayed about $12.5 million in payments to other creditors. Because the case has dragged on so long, many of the church vendors have sold their claims to companies that buy debt.

The ministry, founded in 1955 with a mere $500, grew to international prominence. At one point, the audience for its television show was estimated to stand at 20 million.

So influential was Schuller that he was routinely sought out by political leaders. In 1997 he had breakfast with President Clinton, and that night Clinton quoted Schuller in his State of the Union address.

Schuller said in court documents that he once counted celebrities such as John Wayne, Frank Sinatra, Lucille Ball and Johnny and June Cash as friends.

As his fame increased, his ministry became known for its extravagant Christmas pageants, which featured flying angels and live farm animals. Schuller said in court documents that he was the church’s main fundraiser.

A central element of the case is a transition agreement between Schuller and his wife and the church, which guaranteed them compensation in their later years.

Schuller claims that he allowed the ministry to use the family’s intellectual property, but that the ministry began to exploit his work in ways that he had “never contemplated” such as by selling recordings of him online.

“We did not understand it,” Schuller said in a court document, referring to the Internet. “I have never and would never give CCM consent to use my intellectual property in ways that I could not understand.”

Attorneys for the ministry allege that the family treated the church as their own personal treasure chest, rather than a nonprofit corporation.

“As the money flowed in, Dr. and Mrs. Schuller doled out to themselves, their children and their spouses lavish compensation and perquisites that were either completely gratuitous or wholly disproportionate to the services that they were purportedly providing to the debtor,” ministry attorneys said in a court filing.

When church income began to decline in the early 2000s, the family “failed to change their ways” and continued to raid the “charitable purse,” a filing said.

From 1993 to 2010, four family members received compensation totaling more than $12.7 million. When the ministry filed for bankruptcy in 2010 with more than $50 million in debt, 20 relatives were being paid a total of more than $1.9 million a year, filings indicate.

In November 2011, the church was sold to the Roman Catholic Diocese of Orange in a bankruptcy deal. The ministry is scheduled to move to a nearby Garden Grove church next summer.

When Schuller exited the courtroom Thursday, he appeared to be in good spirits.

“Thank you all very much,” he told the opposing attorneys with a smile.

Read Full Post »

I believe this will be the most likely outcome due to the rampant GREED of the Banking Industry and Wall Street. The level of debt in the world today is unprecedented and the only way for the world to crawl out from under this debt load is for governments to take over the printing of money and cancel all private debts.

from The Daily Telegraph:

One could slash private debt by 100pc of GDP, boost growth, stabilize prices, and dethrone bankers all at the same time. It could be done cleanly and painlessly, by legislative command, far more quickly than anybody imagined.

The conjuring trick is to replace our system of private bank-created money — roughly 97pc of the money supply — with state-created money. We return to the historical norm, before Charles II placed control of the money supply in private hands with the English Free Coinage Act of 1666.

Specifically, it means an assault on “fractional reserve banking”. If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money out of thin air.

The nation regains sovereign control over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. Accounting legerdemain will do the rest. That at least is the argument.

Some readers may already have seen the IMF study, by Jaromir Benes and Michael Kumhof, which came out in August and has begun to acquire a cult following around the world.

Entitled “The Chicago Plan Revisited“, it revives the scheme first put forward by professors Henry Simons and Irving Fisher in 1936 during the ferment of creative thinking in the late Depression.

Irving Fisher thought credit cycles led to an unhealthy concentration of wealth. He saw it with his own eyes in the early 1930s as creditors foreclosed on destitute farmers, seizing their land or buying it for a pittance at the bottom of the cycle.

The farmers found a way of defending themselves in the end. They muscled together at “one dollar auctions”, buying each other’s property back for almost nothing. Any carpet-bagger who tried to bid higher was beaten to a pulp.

Benes and Kumhof argue that credit-cycle trauma – caused by private money creation – dates deep into history and lies at the root of debt jubilees in the ancient religions of Mesopotian and the Middle East.

Harvest cycles led to systemic defaults thousands of years ago, with forfeiture of collateral, and concentration of wealth in the hands of lenders. These episodes were not just caused by weather, as long thought. They were amplified by the effects of credit.

The Athenian leader Solon implemented the first known Chicago Plan/New Deal in 599 BC to relieve farmers in hock to oligarchs enjoying private coinage. He cancelled debts, restituted lands seized by creditors, set floor-prices for commodities (much like Franklin Roosevelt), and consciously flooded the money supply with state-issued “debt-free” coinage.

The Romans sent a delegation to study Solon’s reforms 150 years later and copied the ideas, setting up their own fiat money system under Lex Aternia in 454 BC.

It is a myth – innocently propagated by the great Adam Smith – that money developed as a commodity-based or gold-linked means of exchange. Gold was always highly valued, but that is another story. Metal-lovers often conflate the two issues.

Anthropological studies show that social fiat currencies began with the dawn of time. The Spartans banned gold coins, replacing them with iron disks of little intrinsic value. The early Romans used bronze tablets. Their worth was entirely determined by law – a doctrine made explicit by Aristotle in his Ethics – like the dollar, the euro, or sterling today.

Some argue that Rome began to lose its solidarity spirit when it allowed an oligarchy to develop a private silver-based coinage during the Punic Wars. Money slipped control of the Senate. You could call it Rome’s shadow banking system. Evidence suggests that it became a machine for elite wealth accumulation.

Unchallenged sovereign or Papal control over currencies persisted through the Middle Ages until England broke the mould in 1666. Benes and Kumhof say this was the start of the boom-bust era.

One might equally say that this opened the way to England’s agricultural revolution in the early 18th Century, the industrial revolution soon after, and the greatest economic and technological leap ever seen. But let us not quibble.

The original authors of the Chicago Plan were responding to the Great Depression. They believed it was possible to prevent the social havoc caused by wild swings from boom to bust, and to do so without crimping economic dynamism.

The benign side-effect of their proposals would be a switch from national debt to national surplus, as if by magic. “Because under the Chicago Plan banks have to borrow reserves from the treasury to fully back liabilities, the government acquires a very large asset vis-à-vis banks. Our analysis finds that the government is left with a much lower, in fact negative, net debt burden.”

The IMF paper says total liabilities of the US financial system – including shadow banking – are about 200pc of GDP. The new reserve rule would create a windfall. This would be used for a “potentially a very large, buy-back of private debt”, perhaps 100pc of GDP.

While Washington would issue much more fiat money, this would not be redeemable. It would be an equity of the commonwealth, not debt.

The key of the Chicago Plan was to separate the “monetary and credit functions” of the banking system. “The quantity of money and the quantity of credit would become completely independent of each other.”

Private lenders would no longer be able to create new deposits “ex nihilo”. New bank credit would have to be financed by retained earnings.

“The control of credit growth would become much more straightforward because banks would no longer be able, as they are today, to generate their own funding, deposits, in the act of lending, an extraordinary privilege that is not enjoyed by any other type of business,” says the IMF paper.

“Rather, banks would become what many erroneously believe them to be today, pure intermediaries that depend on obtaining outside funding before being able to lend.”

The US Federal Reserve would take real control over the money supply for the first time, making it easier to manage inflation. It was precisely for this reason that Milton Friedman called for 100pc reserve backing in 1967. Even the great free marketeer implicitly favoured a clamp-down on private money.

The switch would engender a 10pc boost to long-arm economic output. “None of these benefits come at the expense of diminishing the core useful functions of a private financial system.”

Simons and Fisher were flying blind in the 1930s. They lacked the modern instruments needed to crunch the numbers, so the IMF team has now done it for them — using the `DSGE’ stochastic model now de rigueur in high economics, loved and hated in equal measure.

The finding is startling. Simons and Fisher understated their claims. It is perhaps possible to confront the banking plutocracy head without endangering the economy.

Benes and Kumhof make large claims. They leave me baffled, to be honest. Readers who want the technical details can make their own judgement by studying the text here.

The IMF duo have supporters. Professor Richard Werner from Southampton University – who coined the term quantitative easing (QE) in the 1990s — testified to Britain’s Vickers Commission that a switch to state-money would have major welfare gains. He was backed by the campaign group Positive Money and the New Economics Foundation.

The theory also has strong critics. Tim Congdon from International Monetary Research says banks are in a sense already being forced to increase reserves by EU rules, Basel III rules, and gold-plated variants in the UK. The effect has been to choke lending to the private sector.

He argues that is the chief reason why the world economy remains stuck in near-slump, and why central banks are having to cushion the shock with QE.

“If you enacted this plan, it would devastate bank profits and cause a massive deflationary disaster. There would have to do `QE squared’ to offset it,” he said.

The result would be a huge shift in bank balance sheets from private lending to government securities. This happened during World War Two, but that was the anomalous cost of defeating Fascism.

To do this on a permanent basis in peace-time would be to change in the nature of western capitalism. “People wouldn’t be able to get money from banks. There would be huge damage to the efficiency of the economy,” he said.

Arguably, it would smother freedom and enthrone a Leviathan state. It might be even more irksome in the long run than rule by bankers.

Personally, I am a long way from reaching an conclusion in this extraordinary debate. Let it run, and let us all fight until we flush out the arguments.

One thing is sure. The City of London will have great trouble earning its keep if any variant of the Chicago Plan ever gains wide support.

Read Full Post »

« Newer Posts - Older Posts »

%d bloggers like this: